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Commons Chamber

Volume 507: debated on Tuesday 16 March 2010

House of Commons

Tuesday 16 March 2010

The House met at half-past Two o’clock


[Mr. Speaker in the Chair]

Oral Answers to Questions


The Chancellor of the Exchequer was asked—

Government Holdings

1. What recent discussions he has had with United Kingdom Financial Investments Ltd on its management of Government holdings in lending banks. (322185)

As you will be aware, Mr. Speaker, the Chancellor of the Exchequer is at a meeting of European Finance Ministers in Brussels today. However, he and the Treasury hold frequent discussions with United Kingdom Financial Investments Ltd on a range of topics related to the Government’s holdings in financial institutions, in line with the UK Financial Investment’s framework document and investment mandate.

Given that the Government have reduced competition among high street banks, does the Minister not recognise that many small and medium-sized businesses will be frustrated by an economic recovery, because they will be unable to access finance on the terms that they need for expansion and recovery? Is it not the Government’s responsibility to ensure that they can do that, so will he do something about it rather than being passive on the sidelines?

We are certainly not being passive on the sidelines. As the House is well aware, the Government have negotiated binding commitments with RBS and Lloyds Banking Group on lending to businesses, as well as mortgage lending. We have taken further actions to help small, growing companies, through the enterprise finance guarantee, which has been a big success in lending to small businesses, and through intermediate lending by the European Investment Bank. We have also seen EIB loans at cheap rates to help companies through the recovery, which is what we all want to see.

Like many hon. Members, I have probably spoken to more constituents over recent months than I would normally, and there is still a huge amount of anger among my constituents—and, I suspect, many others—about bankers’ bonuses. They feel that, as the Government have a stake in a number of such institutions, perhaps they should have taken a lot more action to curtail the amount that bankers are still being paid.

The whole House will have had representations from constituents on the issue of bankers’ bonuses. My hon. Friend will be aware that UKFI manages the Government’s interests in RBS, Lloyds Banking Group, Northern Rock and Bradford & Bingley on an arm’s length basis. It is not in the interests of shareholders, including the taxpayer, for banks to lose key profit-making staff, but we have to ensure an appropriate balance. As she will be aware, RBS made a commitment to pay the minimum possible, to protect the banking franchise, and it is in investment banking where that issue is most apparent. On behalf of the Government, UKFI took independent analysis and looked at sector averages in coming to its conclusions, and it was entirely appropriate that it showed that due diligence.

On lending banking, has the Chancellor yet modified his opposition to Mr. Paul Volcker’s view, which is strongly supported by President Obama, that it is a mistake for commercial banks to allow their depositors to run the risk of their money being handled by investment banks?

No, I do not think that the Chancellor has changed his views on that. Indeed, he has clearly expressed the view to the House on a number of occasions that he does not believe the causes of the current financial crisis to have been brought about as a result of a failure to implement Glass-Steagall and split investment banking from ordinary commercial banking. Both types of banks have got into difficulty over the past couple of years. What is important is that we pay due attention to ensuring the effective regulation of the banks. That is the approach that we have adopted, which is why we have introduced recovery and resolution plans, for instance, as part of our new legislative programme.

Budget 2009

2. What recent assessment he has made of the effect on the economy of his Department’s policies introduced in Budget 2009. (322186)

Order. I think that the Chief Secretary was seeking to group this question with Question 12.

12. What recent assessment he has made of the effect on the economy of his Department’s policies introduced in Budget 2009. (322196)

In the past year more than 3.5 million people have been helped off benefits and back into work, while more than 300,000 people have been helped to stay in their homes and more than 160,000 businesses have been helped to defer more than £5 billion in taxes. Together, those measures have helped our economy return to growth.

Will my right hon. Friend join me in congratulating the partnership of Yorkshire Forward, the local authority, West Yorkshire MPs and local businesses, which has been so successful in saving the Halifax brand, as well as the maximum number of jobs in my constituency? Can he also tell the House what further he can do to support jobs in my constituency?

I am pleased that because of the measures that we have taken over the past year, unemployment in my hon. Friend’s constituency is not only lower than the UK average, but lower than the average for Yorkshire and the Humber. Thanks to the Government help that has been put in place, the partnerships to which she referred have now delivered more than 350 jobs to the local community. We have no plans to take away that support, which is helping to get people back into work. We still provide the young person’s guarantee which helps young people to obtain jobs when they have been out of work for six months, and extra help is also available to those aged over 25 who are in that position.

May I stress the importance of capital expenditure to the Merseyside and Cheshire area, and, in that context, the importance of a decision on the proposed Mersey gateway bridge, which will create hundreds of construction jobs and many thousands of jobs thereafter? Will my right hon. Friend talk to his colleagues in the Department for Transport about the need for an early decision?

I congratulate my hon. Friend on the consistency with which he has championed that project over the past few years. It will make a great deal of difference to the local economy: I understand that it is worth 4,000 or 5,000 jobs to his area. As he will know, the Government have brought forward some £3 billion of capital expenditure to help fight the effects of the recession. I understand that the Departments for Transport and for Communities and Local Government have received an inspector’s report on the bridge, and I will continue to press my colleagues for an early decision.

If last year’s Budget decisions were right, why did the Chief Secretary rule out a VAT increase last week only to rule it in again this morning? Will he clear up the confusion, and tell the British public categorically whether or not an increase in VAT is being considered?

The hon. Gentleman has been in the House long enough to know that tax decisions are matters for the Chancellor, who presents them to the House in both the pre-Budget report and the Budget.

We will not cut support for the economy this year, unlike the Conservative party. Once growth is locked in, we will take action to halve the deficit over the next four years. What we will not do is make the commitment made this morning by the shadow Business Secretary, the right hon. and learned Member for Rushcliffe (Mr. Clarke), to bring down the deficit to 3 per cent. by 2014-15—a step that would take another £20 billion out of public spending over the medium term.

Does my right hon. Friend share my concern about the impact of continuing low interest rates on people who rely on savings income, especially pensioners? What measures to support that group were taken in the last Budget?

Over the past year, steps have been taken not only to increase the basic state pension, but to increase the support available through pension credit. We have increased the disregard in the pensions system to put more money into pensioners’ pockets, and they will also have benefited from VAT cuts over the past year which have put about £1 billion into the pockets of consumers throughout the country.

At a time when economic confidence is crucial to Britain’s recovery, the assessment of the policies in the 2009 Budget that matters is not the Chief Secretary’s assessment or mine, but that of the international investors who have to buy our debt and the business men who will invest in that recovery. Their verdict is clear, and it is getting louder. It is summarised very neatly by the European Commission’s view that the Government’s plans are “not sufficiently ambitious” and that “additional fiscal tightening” is necessary. Is not the simple fact that the Government’s deficit reduction plan is not designed to restore confidence in markets, not designed to kick-start business investment and not designed in the long-term interests in the British economy, but designed to postpone the tough decisions until the other side of a general election?

The argument that the shadow Chief Secretary seeks to advance is one that he has rehearsed over the past year. In his opinion, it would be right to start to cut public spending now, before the recovery is locked in. If he is so interested in the views of business leaders and others, let me quote a couple. Richard Lambert has said:

“I think the Government is right to say that it would be a bad idea to slam on the brakes right now because the economy’s still… fragile.”

The Institute for Fiscal Studies has said:

“it doesn’t make sense to announce more tax increases or spending cuts that would take effect over the course of the coming year.”

That argument has been reinforced by the International Monetary Fund. If the hon. Gentleman does not wish to listen to those organisations, however, perhaps he will listen to his own economic adviser, Alan Budd, who has said:

“If you go too quickly, then there is a risk that the recovery will be snuffed out and we will go back into a recession. I mean, what do the Americans say? ‘Remember 1937.’”

I hope that the shadow Chief Secretary will heed that advice.

Order. May I say to both the Chief Secretary and the shadow Chief Secretary that what I do not want is for Back Benchers to be “snuffed out” by excessively prolonged exchanges between the Front Benches. Mr. Hammond, I know that your second question will be shorter than your first.

Yes, Mr. Speaker, and we hope it will elicit a shorter reply, too.

The fact is that the Chief Secretary is not listening. In particular, he is not listening to the people whose assessments really matter, such as Sir Martin Sorrell, who says:

“If Labour win we may well have a sterling crisis.”

I might also mention Fitch, which says that

“halving the deficit over four years is frankly too slow”,

and the CBI, which says that

“the Government has no credible plan.”

The truth is that whereas the Conservative party is willing to roll up its sleeves and take the tough decisions that are necessary for Britain’s future, Labour still has its head buried in the sand and is merely hoping that the problem will go away. When will the Chief Secretary start telling the British people the truth about the challenges that lie ahead?

We could carry on trading quotes from business leaders, but the International Monetary Fund, the Bank of England and respected economists such as the chief economist of UBS have all made it clear that this year would be the wrong year to start making cuts. The hon. Gentleman is, I think, reaffirming the argument made this morning by the shadow Business Secretary, which is that another £20 billion should be cut from public spending. Will the hon. Gentleman deny that today? [Interruption.] Will he issue a statement denying that today? It appears that the shadow Chancellor and the shadow Business Secretary are now auditioning for the same job, but the problem is that they are using a different script.

Small Manufacturing Business

3. Whether he plans to amend the fiscal environment for small manufacturing businesses to facilitate their growth. (322187)

The annual investment allowance of £50,000 is particularly helpful for small manufacturing businesses. The business payment support service allows firms with cash-flow difficulties to spread tax payments over a period. My right hon. Friend the Chancellor will set out our plans in his Budget statement next week.

Is my right hon. Friend aware that many businesses, such as manufacturing businesses in Yorkshire and especially Huddersfield, very much value the range of incentives that they have, particularly the research and development tax credits? Does he also understand that they are very worried? One business man said that he could not sleep at night because of thoughts of a naive new Chancellor sweeping all this away.

My hon. Friend is absolutely right. There is a great deal of concern among manufacturers about the Conservative party’s proposals. I agree with the Engineering Employers Federation, which has described the proposals as a disaster for manufacturers. The Institute for Fiscal Studies said that the proposals

“would help companies that make large profits with little investment, at the expense of businesses that are investing heavily in the UK”.

What we should be doing is supporting investment.

The Financial Secretary told the hon. Member for Huddersfield (Mr. Sheerman) that he would have to wait for further announcements in the Budget, but why does he have to wait until then when the Chief Secretary is merrily going around ahead of the Budget telling the world there will be no tax increases? Is the purdah rule now selectively applied, or is the Chief Secretary just gaffe-prone?

As my right hon. Friend the Chief Secretary has made clear, tax announcements are made at the time of the Budget. Like my right hon. Friend, however, I am very interested in what the shadow Business Secretary has been saying this morning, apparently committing the Conservative party to a 3 per cent. deficit by 2014.

Order. The Minister is being very cheeky—anybody would think an election is on the way. The Minister does not need to preoccupy himself with the policies of the Opposition, and I know that in a moment he will want to return to the policies of the Government.

In recent evidence to the Treasury Committee, Lord Turner told us that

“the tax deductibility of interest is creating a bias in the tax system”.

That bias is towards debt, rather than equity. For the sake of all manufacturing industry, is it not time that we had a real debate on this issue, so that we correct the tax system in favour of people who are involved in manufacturing and creating jobs in the country?

My right hon. Friend is right. We will need to reflect on this, but I think that he will agree that it would be a mistake to make changes now that undermine the incentive to invest in manufacturing. That is what the Conservative party is proposing, however.

Budget Deficit

4. What recent estimate he has made of the current and future level of the Budget deficit; and if he will make a statement. (322188)

With your permission, Mr. Speaker, I will answer Questions 4 and 23 together. The Chancellor will provide an update on the Government’s—

Order. Far be it from me to rain on the Chief Secretary’s parade, but I have received no such request, and I regard both the request and its timing as deeply irregular. I think we will treat the questions separately.

I am very grateful for your judgment, Mr. Speaker; I shall answer Question 4 directly.

The Chancellor will provide an update on the Government’s fiscal position, including forecasts for public finance, at the Budget. The Fiscal Responsibility Act 2010 puts a legal obligation on the Government to more than halve the deficit over four years and have debt falling by 2015-16.

The Government’s fiscal plans have been criticised by the Governor of the Bank of England and the European Commission in the past week. A few moments ago, in response to my hon. Friend the Member for Sevenoaks (Mr. Fallon), the Chief Secretary said that this was the wrong year to make cuts. Last week, the Chief Secretary told us that there was no need for tax rises, but this week he has changed his mind. Following the Chancellor’s reprimand of him, is he now going to tell us that this is the right year and that this Government will be increasing taxes this year?

We were clear in the pre-Budget report about our belief that £19 billion-worth of tax increases need to be secured over the next few years. We have not caveated our language with the kind of dissembling that we have seen in some quarters about whether proposals on national insurance contributions will be reversed or implemented. Alongside those proposals, we have said that £38 billion-worth of cuts and efficiency savings also need to be secured. We have been clear about our plans to halve the deficit—I hope that the Conservative party will match that clarity.

At a time when we need to make savings, is my right hon. Friend aware that Gloucestershire has seven local authorities? There are too many councillors and too many local authorities, so in the run-up to the Budget will he consider allowing us to bring in unitary authorities in places such as Gloucestershire? We could save £16 million a year by reducing the number of authorities from seven to two, by cutting the number of councillors and by reducing the amount of duplication. If we took a similar approach across the country, we could save half a billion pounds a year.

Is the Minister not mildly embarrassed that the Government claimed to be leading the international debate on recovery from the financial crisis but have now been chastised by the European Commission for a lack of clarity in their plans for tackling the fiscal deficit? Although the Government have been clear about when to make cuts and how rapidly to do so, they have been massively unclear about what they propose to cut—when are we going to hear that?

I think that the European Commission made the wrong decision by saying to the United Kingdom that we should reduce the deficit to 3 per cent. of GDP by 2014-15. That would entail a cut of well above £20 billion in public spending or commensurate tax increases. In the pre-Budget report we set out deliberately how we would save £20 billion of current spending over the next four years: £4.8 billion of that would come through savings on pay and pensions; there would be £5 billion of cuts to departmental expenditure limits; and £11 billion of it would come through the reorganisation of Whitehall and doing things more efficiently in the future. We set that out clearly in chapter 6 of the pre-Budget report.

Does this European report not also relate to a deeper argument within Europe about whether recovery should be led by countries such as Germany widening their deficit—that is the French argument—or by the weaker countries, such as Greece, Ireland, Italy, Spain and probably Britain, taking action on their deficits? Where do the Government stand on that debate?

We are very clear that what is in the interests of the United Kingdom economy—I believe that the hon. Gentleman has made this argument before—is rebalancing our economy in the years to come and having an investment and export-led recovery. No one country can secure that policy acting on its own, which is why international trade reform is part and parcel of our approach to the agenda for the G20 over the year to come. The truth is that if American savers carry on saving at today’s rates we will not be able to rely on them to drive growth in the global economy in the way that they have done in the past.

Will my right hon. Friend confirm that there could not be a more bizarre sight than the Tory Front-Bench team joining unelected European Commissioners to call on the British Government to carry out a policy of creating mass unemployment by postponing the attempt to halve the deficit in four years? And the Member for the Liberal party ought to know better than to join these unelected people who want to throw workers on the scrap heap.

My hon. Friend is absolutely right. Over the past year, 22 million people have benefited from tax cuts because of measures we have introduced. Up to 500,000 jobs have been protected, more than 160,000 businesses have been helped with their cash flow and 120,000 jobs have been provided through the future jobs fund. That has all been possible because of the measures that we took over the course of the past year. It would have been impossible to sustain those steps had we followed the advice of the Opposition.

Given that the Chief Secretary’s pronouncements on tax policy last Thursday were overruled by the Chancellor on Sunday, will the Chief Secretary tell the House whether he speaks on these matters with the authority of the Chancellor, or is the relationship between the Chief Secretary and the Chancellor as dysfunctional as the relationship between the Chancellor and the Prime Minister?

What a non-question. What I did last week was set out very clearly proposals for how, over the next four years, we will increase taxes by about £19 billion. They are difficult decisions that no Chancellor wants to implement, but none the less they are decisions that we have faced up to. Alongside that, we have said that we will reduce spending on day-to-day public services, but we will not take precipitate action as proposed by the Opposition. We will lock in the recovery, not put it at risk, as proposed by the Opposition.

If John Maynard Keynes were alive today, he would agree absolutely with my hon. Friend the Member for Bolsover (Mr. Skinner) and would have contempt for the views of the Opposition. May I suggest to my right hon. Friend that cutting now would be about as intelligent as burning witches in the middle ages?

Not just my hon. Friends agree with our approach. My hon. Friend and others may convey it in different language, but that approach is supported not only by the International Monetary Fund but by the Institute for Fiscal Studies, UBS, the CBI, two Nobel economists, the hon. Member for Twickenham (Dr. Cable) —on occasion—and the independent fiscal forecaster for the Conservative party, Sir Alan Budd.

Crown Estate Commissioners

5. What recent assessment he has made of the performance of the Crown Estate commissioners; and if he will make a statement. (322189)

The Crown Estate has delivered good financial returns over the past 10 years, with capital up 66 per cent. and revenue paid to the Exchequer up 70 per cent., reaching £226 million in the last full financial year. Over the past 10 years, the value of the portfolio has increased by £2.3 billion and the Crown Estate has paid a total of £1.8 billion to the Exchequer.

The Minister is—I hope—aware of the announcement made this morning by the Crown Estate on licensing sea bed areas around Orkney and the north of Scotland for the development of marine renewables. May I tell her, however, that many in the renewables industry, although they welcome the announcement, have serious concerns about the process that the Crown Estate has used in getting to this point? Will she use the powers that are given to her in the Crown Estate Act 1961 to have a look at what has been done to ensure that the Crown Estate becomes a facilitator rather than a hindrance in the development of green renewables?

I have to disagree with the hon. Gentleman; I do not think that the Crown Estate is a hindrance. I have had it from the Crown Estate that it wishes to be involved in that process and recognises the importance of the sea bed around Scotland. I am having a meeting with the Crown Estate commissioners in the next couple of weeks and I intend to take various issues to that meeting, including the marine issues to do with renewable energy in Scotland and other matters that have been raised by hon. Members.

This question reminds me of how, soon after I was elected, I had to do battle with the Crown Estate commissioners on the foreshore of the Thames for putting in jeopardy the 1,000-year-old ferry route between Tilbury and Gravesend. It is rather sad that, as I come to the end of my life in the House of Commons, that ferry is again in jeopardy. I do not know to what extent the Crown Estate commissioners are involved, but I ask my hon. Friend to look into that in her discussions. The real problem is that work, employment and school opportunities for my folk are being put in jeopardy by the Conservative borough council, which wants to cut the subsidy. That was not mentioned to the hon. Member for—

Order. We have got the thrust of the question, but councils are not the responsibility of the Minister.

I certainly agree with my hon. Friend that there are frustrating Conservative councils. If the Crown Estate is involved in that decision, I will be more than happy to raise it at my meeting.

Value of Sterling

As stated in the previous pre-Budget report, the depreciation of sterling is expected to help contribute to recovery in the UK economy. It should give a competitive edge to UK exporters, and encourage UK consumers to switch to domestically produced goods and services.

I thank the Minister for that reply. However, given the faith that Ministers have placed in a weak sterling supporting export growth, does the drop in the previous quarter’s export figures not demonstrate again both the complacency of Ministers about the recovery, and the extent of the damage that has been done to the UK’s manufacturing and export base under this Government?

We are certainly not complacent about the recovery. That is why we have taken the fiscal judgments that we have taken, and why we have said explicitly that we need to make sure that we lock in the recovery. We have taken actions to help exporters through UK Trade and Investment, which helps some 20,000 exporters every year. I happen to believe that there is more to be done: perhaps it is because I come from one of the UK’s manufacturing heartlands that I believe that we will not have a successful economic future unless we export goods and services. So, yes, I think that there is more to be done, but this Government have a good record in supporting UK exporters.

Is not the implication of the fact that a more competitive exchange rate has not produced greater exports that we may need to do more to reflate the world economy?

Pretty much any economist will say that there is a time lag between depreciation occurring in an economy and its visible effects in both exports and import substitution. I am confident that the normal laws of economics still apply to the UK and the global economy. Because of the financial crisis that has hit the world economy, I have concerns about the effectiveness of banks as a transmission mechanism for supporting growth in our exporters and businesses. However, I have every reason to believe that the exchange rate as it is will help UK firms.

Order. We really must have sharper questions and answers. Progress today is lamentably slow and it needs to get better.

Every time that this discredited Government make any kind of recovery, sterling falls sharply. That is due to their lack of credibility when it comes to the deficit. Does the Minister think that it helps the Government’s credibility with the markets and sterling for the Chief Secretary to make promises on tax that he has to retract five days later?

The hon. Gentleman must have been reading one of the reports in The Times today, which said that sterling was on the slide as a result of recent announcements. That might have been true between 6 am and 11.40, but then it changed round, and apart from a blip at about 7.40 to 8 o’clock this morning, the pound has gone up again. It has been within a trading range for a considerable period of time.

Capital Allowances

We receive representations from a number of public and private sector organisations as part of our policy development and delivery. More than 500,000 businesses that invest are able to claim tax relief on their qualifying investment expenditure under the capital allowances regime. In 2010-11, it is estimated that £62 billion of capital expenditure investment will be made and supported by these allowances.

Does my hon. Friend recall that the polices of the Conservative Government of the 1980s and 1990s meant that it was far more tax-efficient to distribute what should have been retained profits for investment than to retool and re-kit our industry? That was especially true in the west midlands, where we lost a great deal in terms of modernisation. Will she tell us this afternoon that the policy of this Labour Government, which encourages investment, will continue?

I assure my hon. Friend that we believe that investment is crucial for the UK economy’s long-term success. That is why we acted to support business investment during the recession by temporarily doubling the main rate of capital allowance. We support capital allowances—unlike the Opposition, who wish to cut allowances for investment.

Listed Places of Worship (Grants)

8. What plans he has for the future of the listed places of worship grants scheme; and if he will make a statement. (322192)

The Government’s plans for the listed places of worship scheme beyond 31 March next year will be announced in the spending review later in the year.

I hope that it will be good news. The Minister will know that the scheme involves money given to help defray the cost of value added tax on repairing listed buildings. Many communities up and down the country are trying to keep their churches in good repair, and either the scheme has to be extended or the Government must restore heritage as part of national lottery funding. Does he agree that we cannot expect this important element of our built heritage to be done on thin air?

The hon. Gentleman raises an important point. This scheme has now generated some £100 million for 10,000 buildings since it was introduced in 2001. We have recognised that listed churches are a special case. Our long-term aim is that a lower rate of VAT should be agreed at European level for instances of that kind, but in the meantime the joint English Heritage/Heritage Lottery Fund scheme is providing £25 million a year. We will look at that particular scheme again in the spending review.

Tax Credits

Tax credits have supported the economy in the downturn, responding quickly when household income falls. Last October, 400,000 households whose income had fallen since the start of the year were receiving, on average, £37 a week more in tax credits.

Tax credits have helped more than 9,000 families in my constituency by supporting them through difficult times and helping to reduce child poverty. Will the Minister reaffirm his commitment to that policy, in contrast to the two main Opposition parties, which are looking to cut tax credits for those on very modest incomes?

My hon. Friend is absolutely right. I can reaffirm our commitment to the policy. Under the last Government, child poverty more than doubled, to the highest rate in Europe. We have been able to reverse that rise, and indeed reduce the number of children below the poverty line by 500,000 on the most recent data. I can confirm to my hon. Friend that we will maintain that policy.

My right hon. Friend makes an important point about the impact of tax credits on family poverty. Can he give any guarantees that if there were to be a change in political fortunes, those tax credits would still go into the pockets of families in need?

Yes. Our view is that the tax credit system has played a very important role in supporting the economy, particularly in the past year, when a lot of people have seen their income fall—for example, because their hours have been reduced—and it has been possible for their tax credits to increase very quickly in response. I noticed that in my hon. Friend’s constituency more than 500 families have benefited, by an average of just over £41.

I wonder whether the Minister can tell the House how many people have been in his constituency surgery in tears because of the way in which the tax credit system operates.

I do not think that I have had people in tears over that in my constituency surgery. The hon. Gentleman might be pleased to note that in April to December 2009 the number of complaints about the operation of the tax credit system was 40 per cent. down on the year before, so we are making good progress.

Youth Employment

10. If he will bring forward proposals for fiscal measures to encourage businesses to employ young people. (322194)

The Government have introduced a significant package of support to help young people into work quickly. This includes the £1.3 billion young person’s guarantee of a job, and up to £1,000 for businesses that recruit unemployed young people.

In Stockport, more than 4,000 young people are not in education, employment or training and many employers are ready to help them. Is it not time for the Chancellor to increase his support for employers, so that they can give the young people in my constituency the break and the start that they need?

I will take that as another Budget submission, but just to be clear with the hon. Gentleman, the young person’s guarantee is already providing jobs and work experience and training for those aged 16 to 24 who have been out of work for six months. From April this year, if a young person has been out of work for 10 months, they need actually to take that job or that training opportunity, or the community service on offer. We have already provided access to 120,000 jobs for young people through the future jobs fund, paid at the national minimum wage, together with 120,000 pre-employment training places.

Will my right hon. Friend ensure that special help is given to those young people recovering from either mental health problems or addiction difficulties, given that there seems to be a disproportionately high number of such people among the young unemployed?

We can, and partly because of the extra resources that have been put in place in jobcentres, many thousands more people have been added to the strength of that particular front line. That obviously increases the personalisation of the service that jobcentres can offer, and it is part of the reason that 3.5 million people have been helped off jobseeker’s allowance and into jobs over the past year.

Last week, before he was forced to make his humiliating climbdown on tax increases, the Chief Secretary was boasting about the difficult decision to increase national insurance. Will he tell the House what the impact of that difficult decision would be on unemployment?

Experience suggests that general national insurance cuts and wage support have very limited impact on employment. Of course, taking those national insurance contributions out of the forward programme for tax would leave a £7 billion hole in the tax base. The Conservative party has yet to come clean with the public about how it intends to fill that gap.

Credit Rating

13. What recent representations he has received from credit rating agencies on the UK’s triple A rating. (322197)

I thank the Minister for his conclusive answer. With a Budget deficit higher than that of the Greeks, is it not a matter of some embarrassment to the Government that after 13 years of their being responsible for the economy, serious figures—from the CBI, to the Bank of England, to credit rating agencies—are raising questions about this country’s credit rating in the manner of some disreputable pyramid scheme salesman who has finally been caught out?

I do not think that the hon. Gentleman’s words are representative of how a vast majority of informed commentators look at these issues. They certainly are not representative of the credit rating agencies, all of which recognise the UK’s strong funding flexibility. They continue to judge the UK as having the highest possible sovereign credit rating. I point out to him that average debt maturity in the UK is 13.5 years, which is twice that in France, Germany and Italy, and is more than three times that in the United States.

Is it not the case that the credit rating agencies take account of the real economy, that Britain is the world’s sixth largest exporter of manufactured goods and the world’s second largest exporter of services, and that there is no possibility of the credit rating agencies downgrading our rating?

My hon. Friend is absolutely right to point to the strength of the UK as a manufacturing nation and our strength in exporting services. Rather than speculate about credit ratings when it is very clear from all that the credit rating agencies have said that there is currently no risk to the UK’s credit rating, we should focus on a strategy for growth and jobs for the future. We will hear more about that next week.

Government Holdings (RBS)

14. What recent discussions he has had with UK Financial Investments Ltd on its management of the Government holding in the Royal Bank of Scotland. (322198)

The Treasury holds frequent discussions with UK Financial Investments on a range of topics related to the Government’s holdings in RBS, in line with the investment framework and investment mandate.

Does my hon. Friend accept that it is very difficult for me to convey the absolute anger of a number of my constituents, especially small businesses, many of which have been forced to the wall because of the lending policies of those institutions? Does he accept that that is all the more repugnant given that RBS found £1 million to pay 100 executive bonuses last year? Clearly, something has to be done.

My right hon. Friend will be aware of my comments on bonuses and what RBS has said on the matter. It is certainly the case that some businesses have, sadly, gone to the wall as a result of the global recession. The Government have always been consistent in pressing to make sure that lending continues in the UK economy. He might be aware that RBS recently announced a £1 billion manufacturing fund for providing flexible long-term loans to businesses. I am sure that that will be welcomed by businesses in Scotland and throughout the UK given RBS’s role right through the UK economy.

Does the Minister accept that the question of the RBS debt is central to the question of public sector debt generally? Does he disagree with the Office for National Statistics that the total amount of debt is between £2.65 trillion and £3.15 trillion, or between 185 and 215 per cent. of gross domestic product when financial sector interventions are included?

I do not have the figures from the ONS to hand, but I have no reason to doubt the hon. Gentleman. It is established practice when reporting on Government accounts to exclude financial interventions in RBS and Lloyds Banking Group. In the same way, the German Federal Government tend to exclude KfW and their investments in banks. I do not think that anything we are doing is particularly unusual and, as we have discussed before, there are different methods of accounting, which are at issue. I do not think, however, that party politics should be part of that. We are clear and transparent about the overall financial situation.

Economic Growth Forecasts

I am on a roll. The Chancellor and the Prime Minister have regular discussions on a range of issues, including the prospects for the UK economy.

It would be good if the country was on a roll, too. Exports are absolutely vital for our future economic growth, so why during the Government’s stewardship has the UK’s share of world trade fallen by 31 per cent., when Germany’s has gone up by 5 per cent.?

My right hon. Friend the Chief Secretary says that the hon. Gentleman might have noticed the rise of India and China over the past 10 to 15 years, which probably explains why the UK has slipped down to being the sixth largest manufacturing nation in the world. However, we are still the second largest exporter of services, and our manufacturing performance is strong. I believe that it will become stronger over the next 12 months to two years, and a competitive exchange rate will help a great deal.

Topical Questions

I appreciate that the Chief Secretary is pretty embarrassed about his U-turn this morning. Last week, he ruled out VAT increases, presumably to curry favour with the Prime Minister and undermine the Chancellor, so can he simply explain to the House when and why he changed his mind?

I have merely set out the statement made by my right hon. Friend the Chancellor at the pre-Budget report about how we plan to halve the deficit over the next four years by raising taxes by £19 billion. We will do so in a fair way, unlike the Opposition, if they ever get into power, by ensuring that half the taxes that we raise fall on the shoulders of the top 5 per cent. of earners. Alongside that, we will cut capital and current spending by £38 billion. In that way, we will halve the deficit over four years, as set out by the Fiscal Responsibility Act 2010. What we will not do is pursue the Opposition’s approach, which is to introduce cuts now and put the economy into a double-dip recession. We will not follow the approach set out by the shadow Business Secretary this morning by reducing our deficit to 3 per cent. of GDP in 2014-15, because that would require taking out something like an extra £20 billion to £30 billion of public spending—a strategy that has not been renounced by the Opposition Front Bench this afternoon.

As right hon. and hon. Members know, topical questions and answers are supposed to be shorter— a fine example, I know, will now be provided by Mrs. Madeleine Moon.

T3. Low interest rates on savings in the UK can encourage people who receive what appear to be high-interest offers by telephone, e-mail or letter to invest in US share scams—so-called boiler scams. How can we alert the public to those scams so that they avoid those scam savers who are stealing our investors’ money? (322212)

Boiler room scams are completely unacceptable. It is the responsibility of the Financial Services Authority to take action in this area, and it has increased its surveillance capacity quite substantially. My hon. Friend is right to make the point about the importance of savers. People need to have confidence in the savings products in which they invest, and it is the responsibility of the regulatory authorities to ensure that that confidence is not misplaced.

T2. Will Ministers promise to revise the business rate valuation model for rural filling stations, many of which are seeing increases in rates of more than 300 per cent. this year, putting many of them out of business as a result? (322211)

The Valuation Office Agency is directly responsible for the matter. For the past two and a half years it has been involved in discussions with representatives from the industry and their agents. There must come a time when negotiations stop. There are three aspects of the model. They are not exceptional, but I agree that some of the rating valuations appear to be very high. The VOA continues to work on the matter.

T5. If Ministers accepted the advice of the shadow Business Secretary and cut a further £20 billion to £30 billion from the economy, what would be the cost in lost output, employment and services, and who would pay that cost? (322214)

Order. I know the Chief Secretary will be well aware, because he is a clever fellow, that the responsibility of the Government does not extend at Question Time to the costing of the policies of other parties, so I know he will not comment on that.

If I were asked to take £25 billion out of public spending, I would merely point out that that would involve halving the education budget or increasing VAT to 23 per cent.

T4. Does the Chief Secretary accept the reproach from the European Commission that the plans for deficit cutting in this country are unambitious? Which of his various views on VAT were designed to address it? (322213)

I said this morning that we think the European Commission is wrong to say that we should be trying to reduce our deficit to 3 per cent. of GDP by 2014-15, which is the timetable proposed by the Commission. I look forward to members of the shadow Front-Bench team confirming that that is their position, too.

What progress is being made with the G20 in making the international banking industry more responsible by introducing such measures as a Tobin tax?

I welcome the campaign for the Robin Hood tax, as it has been described, for the energy that it has generated and the interest in this important area. Any changes in that direction would need to be made on a global basis, not just on a UK basis, and the IMF will look at that option with others to see how the balance of risk and reward between the banks and taxpayers can be changed for the future.

T6. A few moments ago the Economic Secretary recognised that the laws of economics apply to the Government. As one of the final actions here of a decent and likeable Minister, would he dare take that knowledge to his Prime Minister, who some years ago claimed to have abolished boom and bust and therefore have the laws of economics apply to a higher power? (322215)

I thank the hon. Gentleman for his kind words, which are typically generous of him. I do not think the Prime Minister needs any lectures in economics. He was an outstanding Chancellor of the Exchequer and is a very effective Prime Minister, as I am sure the Opposition will recognise in the course of the upcoming election campaign. I will happily watch it from the sidelines.

Why, in the current economic climate, do we allow the salaries of senior managers in the public sector, such as vice-chancellors of universities, chief executives of local authorities and chief executives of housing associations, to rise way above the rate of inflation, while those same managers are encouraged to keep the salaries of the public sector workers whom they manage at a very low level?

We have repaired the salaries of public service workers in this country. Over the past decade, public sector wages have risen by about 25 per cent., but at a time like this we think it is important that senior leaders in the public sector show an example, which is why, in our evidence to the Senior Salaries Review Body, we recommended a pay rise of 0 per cent. That was the rise that we implemented across the board last week.

T7. Do the Government accept that the staggering rise of 35 per cent. in tax and duty on wine and spirits has had any connection with the loss of 25,500 jobs, and 2,000 jobs in that sector? What plans do the Government have to help that important sector of the economy? (322216)

I do not want to pre-empt any announcements that will be made by my right hon. Friend the Chancellor in the Budget next week. We recognise that alcohol duties play an important part in fiscal consolidation, but we also recognise that the alcohol industry creates many jobs. We will get that balance right.

When the time comes for the Government to sell off their shareholdings in the banks that they rescued last year, what steps will they take to ensure that the taxpayer gets best value for money?

My hon. Friend is absolutely right to raise that as an issue. The Government have made substantial investments in institutions such as Royal Bank of Scotland, Lloyds Banking Group, Bradford & Bingley and Northern Rock, and we need to ensure that we get best value for the taxpayer. We will not be giving these away, and it is the responsibility of UK Financial Investments to manage the Government’s interests in these matters. We do not want to own these for the long term. We do want to make sure that they go back into the private sector. But it has to be done at a price that works for the taxpayer.

T8. For the purpose of furnished holiday letting rules, will the Minister please explain why it is that if a holiday letting provider is providing a static boat, they are deemed to be trading, if they are providing a static caravan, they may or may not be trading, but if they are providing a chalet, they are deemed definitely not to be trading, very much to the detriment of their future business? (322217)

These matters are the result of lengthy application of the law. We have said that the current concession, which applies only to freehold holiday lets in the UK, may not be consistent with European law and therefore we will withdraw the concession from 2011. But the definitions are very well established and familiar in tax law.

The announcement recently by the Treasury to extend the offshore new field allowance to developments west of Shetland, will, I hope, allow the Laggan-Tormore development to go ahead. Has my hon. Friend worked out how much the development of the west of Shetland province could be worth to the British economy in the years that follow?

We certainly wish to assist in the development of fields where it is more difficult to get out the natural resources, not only for the security of supply for the UK but for the benefit of the whole economy. I do not have the exact figure to hand, but I will be more than happy to write to my hon. Friend.

T9. When the Chief Secretary said last week: “We don’t see a need to raise VAT”,what exactly did he mean by that? (322218)

At the risk of repeating myself, we said that over the next four years we will halve the deficit—we have not seen a plan as clear as that from the Conservative party—and we said that we would do that in a fair way. We said that in part we would need to raise taxes, and we set out very clearly how £19 billion of taxes needs to be secured, alongside spending cuts. I hope that during the next week or two we will see a plan of equal clarity from the Conservatives, and I hope that as part of that plan they will renounce the proposal that the shadow Business Secretary set out this morning to take another £29 billion out of public spending by 2014.

I put it to my right hon. Friends that cuts in public spending are not the only way to reduce the deficit. We could, for example, raise the basic rate of income tax, not to as much as it was under Mrs. Thatcher, but by a penny or two.

Our view is that those with the highest incomes should bear the largest share of the burden of consolidation. That is the reason we have announced the introduction of the 50p rate of income tax on the highest incomes, and the restriction of personal allowances also for people with high incomes. We think that that is the right place for the consolidation to start.

T10. Does the Chancellor agree that we now need a dangerous banks Act, with owners who cannot control them refused permission to maintain them? (322219)

That just shows what would happen if the Liberals held the balance of power in a future Parliament.

The Chief Secretary to the Treasury referred to the budget deficit. Is the UK’s budget deficit as a proportion of GDP higher or lower than that of Greece?

We have the highest budget deficit, pretty much, in the G7, but the reason why we have a high budget deficit is that we chose to act to protect jobs, to protect homes and to protect businesses over the course of the past year. As the International Monetary Fund has recognised, the reason why we had that flexibility to act was that we went into the recession with the lowest debt of any country in the G7 apart from Canada.

The Minister prays in aid EU legislation to change the basis of furnished lettings. Will it apply to French gîtes as well?

The proposal that we have announced is to withdraw the concession, so it would not apply to furnished holiday lets outside or inside the UK.

Last week Sutton council granted planning permission for a new patient wing to be built at St. Helier hospital, removing the last obstacle to Treasury approval for the necessary investment. Will the Minister today give my constituents and NHS workers the good news that Treasury approval is coming and coming very soon?

I thank the hon. Gentleman and my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) for the consistent way in which they have championed the need for a new hospital in their area. The hon. Gentleman knows that I am in close discussion with the Secretary of State for Health, and we hope to make an announcement on that matter shortly.

British Airways Strike

Before I call Theresa Villiers to ask the urgent question, I should inform the House that an appeal has been lodged in the court case related to the British Airways strike action. This matter therefore falls within our sub judice resolution. I have exercised my discretion to allow this matter of public importance to be discussed, because I do not consider that there is a substantial risk of prejudicing the court proceedings.

(Urgent Question): To ask the Minister of State for Transport if he will make a statement on the current situation relating to the BA strike.

Passengers will be seriously inconvenienced if a strike goes ahead. The Prime Minister and my right hon. and noble Friend the Secretary of State for Transport have both urged the union to call off the strike and both sides to seek to reach an agreement. However, British Airways is a private company, and the resolution of the dispute is a matter for the company and its staff. The Government have no powers to impose a settlement.

Since before Christmas the Conservatives have been urging Unite to cancel the strike, which will inflict huge misery on passengers and serious damage on BA. Why did it take the Prime Minister so long to condemn the strike? Has the Prime Minister spoken directly to Unite officials to urge them to call off the strike? Will the Minister admit that Labour accepted £300,000 from Unite on the very same day that the Christmas strike dates were announced; and that the party was able to get its accounts signed off in 2008 only after the union gave a written guarantee of future funding? How can the Government stand up for the interests of passengers when one quarter of Labour’s funding comes from the—

Order. I am genuinely sorry to interrupt the hon. Lady, but there is for parliamentary purposes a distinction between the Labour party on the one hand and the Government on the other, and it is in relation to the responsibilities of the Government that she must focus her remarks and questions. I know that that is what she will now do.

Yes, Mr. Speaker. Will the Minister join me in urging cabin crew to work despite the call for strike action? Will he ensure that the Government are going to stand up to the unions? How can Labour propose to do that when one quarter of its funding is provided by the very same union that is holding passengers to ransom and threatening to wreck their holidays?

You always, Mr. Speaker, impress on people who speak in the Chamber the need to think about how the public will view them, so I ask the public to ask the question about how a party that seeks to form a Government tries to politicise what is an industrial dispute. Some serious allegations have been made about the motives of the trade union and the Government, and, rather than trying to encourage both sides to reach a resolution in a calm and less emotive manner, one party is seeking to politicise an industrial dispute. I urge both sides of the dispute to start talking again to try to reach a settlement, so that the thousands of passengers who would otherwise be inconvenienced will not be. I would have hoped that there would have been agreement around the Chamber on that wish; given that an election is imminent, I am afraid that that has not been the case.

I am disappointed that British Airways and the Unite union are acting like two badly behaved children and seem to be paying little attention to the needs of their passengers; macho management from BA and intransigence from the union help nobody.

May I ask the Minister what steps in particular he has been taking since November, when the dispute first appeared imminent, to try to stop it occurring? Clearly, the strike has had a long period of notice. We could legitimately expect the Government to have taken action to try to prevent our reaching the stage that we have got to now. The Minister will understand why without any clear indication of what action has been taken, some feel that there has been some influence from the trade unions.

May I ask the Minister about compensation for passengers who are not able to get their flights but will nevertheless be significantly out of pocket—through holiday tours that they have booked, for example? Will there be any compensation for them, from the airline or elsewhere?

Does the Minister believe that when they voted for industrial action, the union’s members understood that they were voting for seven days or more of such action, or did they think, as many appear to have done, that it was a one-day strike?

Lastly, what further steps does the Minister intend to take now to knock heads together? Would it not be sensible for the BA offer to be retabled now—if necessary, at the same time as Unite withdraws its strike action, as it ought to do immediately?

As ever, I thank the hon. Gentleman for his questions. Ministers have been in close contact with all parties from the outset and continue to be so. It would be unhelpful to give a running commentary on the steps taken to try to resolve the matter. What is important is that there is willingness in some parts of the Chamber for there to be a resolution; clearly, however, it is in some parties’ interests for the dispute to carry on.

It is important that BA should provide as much information as possible to the thousands of passengers who would otherwise be inconvenienced. I checked its website before I came to the Chamber; it does provide lots of advice to passengers who may be inconvenienced, and it has a phone number that can be rung by people who do not have access to a website.

The hon. Gentleman’s final point was about balloting. It is not for me to look into whether the balloting was fair. He will know from history that when BA thinks that there has been unfair balloting, it seeks to challenge the trade union in the courts. It has not sought to do so in relation to this ballot.

Order. Some 14 Members are seeking to catch my eye, and as always I should like to be able to accommodate everybody. However, I require brevity, a legendary example of which will now be provided by the right hon. and learned Member for Folkestone and Hythe (Mr. Howard).

Is there not a very simple way in which the Government can demonstrate that they are sincere when they say that they disapprove of this strike? Why does the governing party not refuse to take any more money from Unite until the dispute is resolved?

There is one party that has been clear and transparent in how it receives donations—[Interruption.] It is an insult to the 6 million hard-working trade unionists, all of whom pay taxes, who have chosen to give money to a political party. I remind the right hon. and learned Gentleman that parties have stayed within laws made by Tory legislation. One big donor to the Conservative party, I am afraid, has breached both the spirit and the word of the law.

Does my right hon. Friend agree that the trade unions have stuck within the law during the whole of this dispute and the one thing that we do not want is politicians interfering? This is an industrial dispute, not the political dispute that the Opposition are trying to orchestrate to make the situation worse, not better, for the passengers.

It is noteworthy that while a Member of Parliament is trying to urge both sides to get together and resolve the issue, other Members are hectoring him. The public will not be fooled by the politicisation of an industrial dispute.

Will the Minister now answer the question about why the Prime Minister took four days to condemn the strike? Does it have anything to do with the fact that Charlie Whelan, the political director of Unite, is now back at the heart of Downing street?

If evidence were required of some people’s desperation to try to politicise a dispute, it has been provided by the tone and substance of the questions that have been asked. This is a private dispute between BA and Unite, the trade union. It is important that both sides should get around the table and resolve the issue. I am disappointed that there is not agreement in the House that the dispute should be resolved sooner rather than later.

May I declare, as a member of T & G and Unite for some 36 years, that I genuinely feel that stuck in the middle of all this, as my right hon. Friend the Minister has indicated, are the customers of BA, the work force, and the company itself and where its future lies? Does he agree that cheap political point-scoring plays no part in where this company and its work force should be going?

It is worth comparing and contrasting the questions by the Liberal Democrat spokesman, who was concerned about customers and the work force, and the questions from Conservative Front Benchers and Back Benchers—evidence, if ever it were needed, that they believe that this is a political dispute, and that rather then trying to resolve this in an amicable, calm and temperate manner, they are trying to use emotive language to raise the temperature.

The Prime Minister said yesterday on “Woman’s Hour” that the strike was

“worthy of effort to try and prevent it.”

Given, however, that we have been made aware by the Unite union since 14 December last year that a strike would happen, exactly what has the Prime Minister been doing for the past three months?

I have already answered that question. One of the problems when someone is given a question to ask by their Whips is that they often do not hear the answers that are given before they ask it. To put the answers that the Prime Minister gave on “Woman’s Hour” in context, he said:

“It’s the wrong time. It’s unjustified. It’s deplorable. We should not have a strike. It’s not in the company’s interest, it’s not in the workers’ interest, and it’s certainly not in the national interest, so I hope that this strike will be called off”.

Do the Conservatives agree with that?

Is my right hon. Friend aware that of the approximately 40 per cent. of BA flights that will not go ahead during the dispute, the overwhelming majority are on the domestic routes, primarily to Glasgow, Edinburgh and Aberdeen, which means that travellers to and from Scotland, and businesses in Scotland, will be disproportionately affected by this industrial action? Does not that underscore the need for a grown-up attitude towards this and for all sides to get back around the negotiating table to solve what is primarily an industrial dispute, which is not being helped by partisan point-scoring?

I thank my hon. Friend for his comments. He is absolutely right. Cool, calm heads are required now, not dossiers about perceived links between a trade union and a Government being unfurled at press conferences. I really hope that British Airways and the trade union will listen to some of the debate in the Chamber today and get round the table to resolve this so that my hon. Friend’s constituents, big businesses, small businesses and ordinary residents of this country are not suffering unnecessarily.

Following the previous question, with Aberdeen airport in my constituency and as a regular user of BA, I welcome the fact that BA has protected some of the services at Aberdeen because it recognises how important it is, but the situation is still inadequate.

May I follow up the point made by my hon. Friend the Member for Lewes (Norman Baker) about compensation? I am told that people who have discounted tickets are being told that no refunds will be provided following industrial action. Will the Government intervene to ensure that that issue is addressed, and will the Minister do everything he can to ensure that this strike does not destroy British Airways, because the union does not seem to understand that?

It is a private dispute; BA is not a nationalised company. BA has said on its website, and made it clear in all its press announcements, that it will allow passengers who are inconvenienced to rebook or to cancel and be refunded. If there are particular issues that the right hon. Gentleman wants to raise with me, I will be happy to raise them with BA.

Will my right hon. Friend rise above the smokescreen of party funding and use all his energies, and those of his ministerial colleagues, to get a satisfactory conclusion to this bitter dispute? Does he agree that any inflammatory statements are counter-productive? Will he find out where Mr. Walsh is, because we have not heard from him, or from any of BA’s senior management, for quite a long time?

My hon. Friend is absolutely right. What is required at this time are cool, calm heads, and for British Airways to meet the trade union to try to resolve this dispute. I am afraid that sending out press releases, doing press conferences and using emotive language is not the way to reach a resolution, and nor are sending one’s pit bull to press conferences and using dossiers to try to muddy the waters.

The Minister spoke of clarity and transparency, so he will not mind being reminded that Messrs. Whelan, Dromey and Woodley all have passes to the House of Commons provided by members of the Labour party. Does he agree that this is a question of the Labour Government being bankrolled by Unite while Unite bankrupts British Airways in Britain?

Let us be clear. The Labour party has been fully transparent about how it is funded by 6 million hard-working trade unionists, all of whom pay taxes, and by many other individuals. One political party relies on a small number of individual donors, and only because of the Freedom of Information Act did it reveal how it was funded. At least those who contribute to the Labour party pay their taxes.

Will my right hon. Friend confirm that it is not in the interests of British Airways or the travelling public for this matter to be turned into a party political football? Does he agree that what would help is if Willie Walsh put the offer that was made previously back on to the table as a basis for both sides getting into serious renegotiations?

My hon. Friend raises a really important point. What is required is not for British Airways, the huge work force or the thousands and thousands of passengers to be used as political footballs in the lead-up to a general election. What is required is for British Airways and the trade union to sit around a table and resolve any differences that still exist. My understanding is that they were close to agreement last week as a consequence of the terms to which my hon. Friend referred, and I am disappointed that they were unable to reach a resolution. I am optimistic still that cooler heads will prevail, but what is important is that we must not allow what is an industrial dispute to be politicised. The question that must be asked is this: why do some people wish to do that?

The reality, though, is that this is a political dispute, because Unite gives Labour money, and it is one of the key stakeholders pushing for the expansion of Heathrow, which is the policy of this Government. Will the Minister therefore condemn Unite in going ahead with this strike? It puts not only passenger services at risk, but Heathrow jobs and local communities.

The history is that a Conservative Government passed legislation on how political parties should be funded. Unite, like other trade unions and individuals, gives money to political parties, and does so in an open and transparent manner. Some individuals decide not to abide by the rules, and only because of a freedom of information request are funding sources revealed. I am disappointed that undertakings are not respected and that deputy leaders are hoodwinked. I am keen to see whether the deputy leader of the Conservative party and its deputy chairman will come to give evidence on Thursday to the Select Committee.

Order. I have operated a very considerable latitude in these brief exchanges, and there have already been several—frankly, too many—references to the issue of party funding. The matter upon which we need exclusively to focus is that of the BA strike. I feel sure that a fine example of that focus will now be provided by Mr. Dennis Skinner.

In any industrial dispute, it takes two sides to cause a row. Will my right hon. Friend draw the distinction between the clean money that is given by the trade union movement to the Labour party, as opposed to a man who refuses to pay tax on £127 million and bankrolls the Tory party?

Order. The hon. Gentleman has placed his point firmly on the record, but the Minister requires only the—[Interruption.] Order. The Minister requires only the briefest of replies.

Order. [Interruption.] Order. The House needs to let me address this. I must say in fairness to the hon. Member for Bolsover (Mr. Skinner) that I did not stop him. He made his point, and I have no objection to his doing so. To be fair, I did not interrupt him. He had his say.

Over the years, trade unionists have understandably campaigned for bank holidays and public holidays. Does the Minister not agree that there comes a time when there should be an understanding or convention so that we do not always have disruptive strikes over bank holidays? They destroy the holidays for many working families, people who want to go and see relations, and kids who want to get back from university. I understand that there is also a suggestion that the National Union of Rail, Maritime and Transport Workers is going to go on strike over Easter. It is very unfair—not to employers, but to working families—when other trade unionists strike, so disrupting their lives.

Clearly, any industrial dispute causes a huge inconvenience, but when families have planned holidays or to visit loved ones, and saved money to do so, a strike looming over them and their plans is a huge source of discomfort. That is one reason why I hope BA and the trade union will sit around the table, and why they should not allow emotive language to affect the possibility of reaching a resolution to what is an industrial dispute.

Does the Minister believe that the union leaders behind the BA strike should set an example and forgo some of their £150,000 a year pay packets? Is not that another example of the arch hypocrisy at the very top of the Unite union?

Order. I am sorry—[Interruption.] Order. Leave me to deal with this. I have to say to the hon. Gentleman that his question does not remotely relate to the issue that we are considering, and that is why—[Interruption.] Order. I do not require any comment or signalling from the hon. Gentleman. I am giving a ruling: the hon. Gentleman can listen to it and he can like it or lump it. I intervene—[Interruption.] Order. I require no gesticulation from the hon. Gentleman—[Interruption.] Order. His question was out of order. That is the beginning and the end of the matter.

Clearly, the holidaying public and business need to see this strike called off and an end to the dispute. May I specifically ask the Minister to reinforce to British Airways the point that Aberdeen is a long way from London? It may be a domestic route, but there is no viable alternative for getting business done. Therefore, can he reinforce to BA the need to maintain as many vital services to Aberdeen as possible despite any disruption to services?

Points of Order

On a point of order, Mr. Speaker. Is the expression “verbal diarrhoea” parliamentary language? I have not heard it used in this House before, and certainly never about yourself or another occupant of the Chair, as it was just now.

I did not hear the offending expression to which the hon. and gallant Gentleman refers. There is a certain amount of gesticulation now from a sedentary position both from him and from the hon. Member for Gainsborough (Mr. Leigh). The written record will tell us all, and I am happy to await it. The hon. Gentleman, who came into the House in 1992, knows—not least from his smile—that what he has just said does not amount to a point of order.

On a point of order, Mr. Speaker. May I seek your guidance? As I understand it, there are 112 Members who are also members of the Unite union. When we are discussing matters that relate directly to the conduct of that trade union and hon. Members who are members of it seek to take part in that discussion, should they declare their membership of that union at the time of their participation in the debate?

The straight answer is that that is not a point of order because the declaration of interests is a matter for individual Members: it is not a matter for the Chair.

On a point of order, Mr. Speaker. On Thursday 11 March, the Secretary of State for Children, Schools and Families visited my constituency without notifying me. He visited a local primary school where he made comments of a highly political nature to the local press. He then went canvassing for his party and, as a school visit is within the subject matter of his portfolio, I am given to understand that that may be in contravention of section 10.9 of the ministerial code. I seek your guidance on this matter.

Certainly, if it was an official visit, the Minister in question should have given notice of the intention to visit the constituency. This is the first I have heard of this particular case. However, at this relatively febrile time, perhaps I may simply reiterate the overriding point that there is a long-established courtesy in this place that when one Member visits another Member’s constituency on public business—as opposed to a private visit—the Member visiting has a duty to notify, suitably far in advance, the Member whose constituency he or she is visiting. I hope that that courtesy will be observed across the House. On the whole it is a respected and valued courtesy and we should uphold it.

On a point of order, Mr. Speaker. I have raised a lot of points of order over the past 20 years, and I do not think that any of them have been in order, but I hope that I will be successful this time. Last Thursday a statement was made in the House of Lords by the Secretary of State for Transport. It was 40 minutes before that statement was made here. I went to the Table Office to get a copy of that statement after the Secretary of State had sat down, but I was told that it would not be available until it had been made in this place. I then went to the House of Lords and got a copy of the statement. Surely that cannot be right, and surely it cannot happen again in future.

It would give me great pleasure if I were able to satisfy the hon. Member for Carlisle (Mr. Martlew), but I fear that I cannot. I entirely understand why he and others might have been frustrated by this; however, it results from the simple fact that the Secretary of State—[Interruption.] Order. The hon. Member for Peterborough (Mr. Jackson) should be quiet when I am ruling on the point of order that has been raised. What happened arises from the fact that the Secretary of State for Transport is a Member of the other place, and although there are arguments about accountability to this place and so on, that is the situation.

Further to that point of order, Mr. Speaker. I do not have any disagreement with that; in fact, I have advocated that the Secretary of State should come to this Chamber. However, statements should be made available to Members of this House after the Secretary of State has sat down, because they are available to noble Lords and the general public.

Those Members are in another House. I entirely understand what the hon. Gentleman is saying, but it is not clear to me that an immediate resolution of the issue is available. However, I will reflect, as I always reflect on what he has to say, and if I have anything further to report, either to him or to the House, he and the House will be the first to learn of it.

On a point of order, Mr. Speaker. Some moments ago you rebuked me—I think unfairly, but I stand by your ruling. However, after my question there was a pause, whereupon I saw the Minister of State—he appeared to prompt you, Mr. Speaker. I am sure that was not the case, because of course you can rebuke me in your own right—

Order. Let me deal with this point of order very clearly and conclusively. [Interruption.] Order. The hon. Gentleman will sit and listen to the response and not gesticulate while I am offering that response. I saw no sign whatsoever, from any Member on the Treasury Bench, and for the hon. Gentleman to suggest that I would be prompted—in this House, from the Chair—by another Member to make a comment or response is quite wrong, and it is also an unacceptable observation on his part. Let me very politely suggest to the hon. Gentleman, whose behaviour was untoward, that it would be sensible and rational of him simply to accept the rebuke, to call it a day and to move on. That is the end of the matter.

On a point of order, Mr. Speaker. Last week I raised a point of order about two unanswered questions to the Department for Work and Pensions. Since your kind intervention on my behalf, one of those two questions has been answered. The other is now five weeks overdue, and it concerns the administration of jobseeker’s allowance up and down the country, an important matter for a great many of our constituents. The question number is 316962, and I repeat: it is five weeks late. Could I please ask you, Sir, for your kind intervention a second time to get the Department to do what it should have originally done within five days?

I am grateful to the hon. Gentleman for his point of order, of which, as he knows, I had no advance notice whatever. He has taken the opportunity to air—and very properly to air—his concern about the excessive tardiness of ministerial replies. I feel sure that his point of order will have been heard by those on the Treasury Bench, and I hope that, as a result, a reply will come to him extremely quickly. I hope that it will not be necessary for him to raise his point of order again. I simply say to Members on the Treasury Bench, including the Deputy Leader of the House, that these matters must be taken seriously by Ministers. Indeed, it looks to me as though the Deputy Leader of the House would like to say something, and I think that the House would welcome that.

Just to be clear, I have said on a number of occasions, as has my right hon. and learned Friend the Leader of the House, that we will take representations from Members and put them to Departments, and I think I said that last Thursday at business questions. I am happy to do that for any Member who has similar issues, and will do so now if the hon. Member for South-West Bedfordshire (Andrew Selous) wants to give me the details.

On a point of order, Mr. Speaker. The Debt Relief (Developing Countries) Bill, which was tabled as Government business yesterday, is not on the Order Paper at all today. Can you assure me, Mr. Speaker, that it will be tabled again tomorrow? We want Government time in which to debate the remaining stages of the Bill, and to vote on it.

Unfortunately I cannot reassure the hon. Lady, for the simple reason that—although I understand the background to, and concern about, this matter—the tabling of Bills is not a matter for the Chair. I think that she will have to have discussions with people other than me. She indicates from a sedentary position that she has already done so, but I know of her dedication and persistence, and I think that they may be required in this case.

Bill Presented

Council Tax Benefit (Change of Name) Bill

Presentation and First Reading (Standing Order No. 57)

Mr. Paul Burstow, supported by Mr. David Heath, presented a Bill to change the name of Council Tax Benefit to Council Tax Rebate; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 26 March, and to be printed (Bill 88).

Illegally Logged Timber (Prohibition of Retail, Wholesale and Distribution)

Motion for leave to bring in a Bill (Standing Order No. 23)

I beg to move,

That leave be given to bring in a Bill to prohibit the retail, wholesale and distribution in the United Kingdom of timber and wood products that were obtained or produced illegally in their country of origin; and for connected purposes.

The earth’s rain forests are not only one of the greatest wonders of the natural world; they are the green lungs of the planet. They are also the source of the forest resources that help to support the livelihoods of nearly 1 billion of the world’s poorest people. Moreover, the carbon dioxide emissions that arise from the annual burning and destruction of rain forests account for about 17.5 per cent. of global greenhouse gas emissions, more than the whole global aviation and transport sector put together. Without urgent action to halt deforestation, we shall have no chance of beating global climate change. Even if there were no threat from man-made climate change, we could not stand by and see the forests destroyed, because of the vast and unique ecosystems that they support and the livelihoods that depend on them.

Saving the rain forests is something that we can achieve if we can find and summon the necessary political will, and it is certainly something that fires the imagination and support of my constituents. Like all good climate policy, however, urgent action to save the world’s forests is a good thing in itself. Ultimately, we need to continue to find ways in which to create an economic value for tropical forests in particular, so that they are worth more standing than as timber.

There is no magic solution to saving the rain forests, and good progress was made at Copenhagen on support mechanisms for forestry, but one measure that we can take now is to choke off demand for illegal timber here in the UK market. In a speech before the Copenhagen summit, my right hon. Friend the Member for Richmond, Yorks (Mr. Hague), the shadow Foreign Secretary, made plain the strength of the Conservatives’ commitment to halting deforestation, and in particular to addressing illegal logging. He gave the clear commitment that a Conservative Government would make it a criminal offence under UK law to import and possess illegal timber.

Three weeks later, during Prime Minister's Question Time—and during the Copenhagen summit—my right hon. Friend asked the Government to support that proposal, and in January, during the first Energy and Climate Change questions after the summit, I repeated his call for the Government to match our commitment to action. The Government’s own Back Benchers have mounted concerted and considerable efforts and campaigns to secure a measure to criminalise illegal timber activity, yet, despite encouraging rhetoric, the Government themselves have refused to legislate, choosing instead to hide behind the slow and indecisive process taking place in the European Union.

Conservative Members have supported, and remain committed to, a strengthening of the draft EU regulation

“laying down the obligations of operators who place timber and timber products on the market”.

I pay tribute to my colleagues, and indeed members of all political parties, in the European Parliament who have also pressed for a more ambitious regulation. However, it is clear that action at European level will not go far enough.

On 1 March, the EU Council adopted a common position on the regulation, which lays down only the minimum requirement that companies trading in timber and timber products should exercise due diligence to minimise the risk of placing illegally harvested timber and timber products on the internal market. It lacks an explicit overarching prohibition on illegal timber in the EU market. With no explicit prohibition, there is no incentive to exclude illegal timber from entering the market; there is only an incentive to prove that the company concerned has tried to prevent it. Furthermore, the regulation applies only to those companies that place timber and timber products on the market for the first time, rather than all operators involved in the distribution chain. Loopholes are therefore created whereby all downstream companies—the majority of EU traders—are exempt from even the bare minimum of due diligence requirements. A prohibition on illegal timber needs to apply to all companies that make timber available to the market, whatever their position in the supply chain.

Unlike the EU, the USA has shown real leadership on this issue. In 2008, the United States amended the Lacey Act and made it illegal for a person or company to import, export, transport, sell, receive, acquire or purchase illegal timber or illegal timber products. The Lacey Act amendments are widely seen as a historic breakthrough and are already leading to changes in practices among US retailers and importers, and manufacturers and logging companies. There is no reason why that legislative change cannot be replicated here in the UK with the creation of an offence of selling or distributing imported wood illegally harvested in its country of origin, or, indeed, of importing such wood into the UK. The Environment Secretary himself has said

“illegal timber should be just that—illegal”

but to date his Department has stubbornly refused to legislate to that effect with the introduction of simple and specific domestic legislation to make the sale of timber produced illegally an offence in the UK.

The effectiveness of the Lacey Act lies in its simplicity. It defines in law what companies must not handle, but gives companies the freedom to find ways to meet that obligation. My Bill is intended to replicate the Lacey-style approach in the UK. It would apply equally to all operators in the UK supply chain and prohibit illegal timber in the UK market. Agreement at the European level and tough action by individual member states is now no longer a matter of either/or, given that there is not an agreement at Council to go any further than a due diligence system. The clarity of this Bill would complement the due diligence approach in the EU and, given that the UK is the third largest importer of illegal timber in the EU, measures taken in the UK would have more than merely a token status: they would have a significant impact on illegal logging and on the EU market.

This Bill is endorsed by not only environmental groups such as the WWF and the Environmental Investigation Agency, but by the certification bodies the Forest Stewardship Council and the Programme for the Endorsement of Forest Certification schemes, and also by major retailers such as B&Q and Timbmet, the UK’s largest hardwoods importer, which already proves that it is possible to be both kind to the environment and deliver real value and choice to customers. It is also endorsed by the Coalition for Rainforest Nations, an umbrella organisation that accounts for the majority of the world’s rain forest nations. This Bill is also directly consistent with the “legislative principles on forestry” adopted by 120 legislators from the world’s major economies at the GLOBE Copenhagen legislators forum last October.

In conclusion, without urgent action to halt deforestation we do not have a chance of beating man-made climate change. In January, I gave a commitment that if this Government do not act to make the sale of illegal timber a criminal offence, a new Conservative Government will, and, moreover, a Conservative Government will work with other EU states to do the same. However, I hope that after the election, if it falls to the Conservatives to form the Government, we will have the opportunity to bring forward this measure on the back of a new consensus that recognises the part that Members from across the House have played in the campaign. I should like to note that this Bill is co-sponsored by colleagues not only from the shadow Cabinet, but by distinguished Labour Back Benchers and former Labour Ministers. I particularly want to pay tribute to the huge body of work on this issue by the hon. Member for Brent, North (Barry Gardiner)—the Prime Minister’s former special envoy on forestry—and the efforts of the hon. Member for Hendon (Mr. Dismore), but it seems that it will require a new Conservative Government to take this vital step forward on to the statute book and send a message to the rest of Europe that the UK is ready to change and to take the lead on the campaign against illegally harvested timber.

Question put and agreed to.


That Gregory Barker, Mr. William Hague, Greg Clark, Nick Herbert, Mr. Oliver Letwin, Charles Hendry, Barry Gardiner, Alun Michael, Mr. Peter Ainsworth, Bill Wiggin, Mr. Hugo Swire and Mr. Nick Hurd present the Bill.

Gregory Barker accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 7 May, and to be printed (Bill 87).

Opposition Day

[6th Allotted Day]

Equitable Life

[Relevant documents: The Second Report from the Public Administration Select Committee, Session 2008-09, on Justice Delayed: The Ombudsman’s report on Equitable Life, HC 41, and the Government response, HC 953, and the Sixth Report from the Public Administration Select Committee, Session 2008-09, on Justice denied? The Government’s response to the Ombudsman’s report on Equitable Life, HC 219, and the Government response, HC 569.]

I beg to move,

That this House notes that the Ombudsman published her report on Equitable Life in July 2008, that the Government did not make its response until January 2009, and that its rejection of some of her findings was successfully challenged in the High Court; believes that the delays caused by the Government since the publication of the Ombudsman’s report have led to further and unnecessary hardship for Equitable Life’s policyholders and have done further damage to the UK’s savings culture; and calls on the Government to set a clear timetable for implementing the Ombudsman’s recommendations and remedying the injustice suffered by policyholders.

It is hard to believe that nine years after Equitable Life’s policyholders saw the value of their policies slashed, six years after Lord Penrose identified regulatory failures, 18 months after the ombudsman’s damning report on the regulation of Equitable Life and more than a year since the Government’s response, policyholders are still no nearer to knowing what the outcome of their fight for justice will be. They have been given no timetable for payments and no certainty as to how much they will receive. That is the tragedy of Equitable Life for its policyholders, many of whom will not live to see justice done.

The truth is that it did not need to be this way. The Government deliberately chose, at each turning point on the road to justice, to take the longer and more difficult route— there were no short cuts for the Government, because the delays suited them—and from the outset they sought to block the campaign. The pattern of the Government’s behaviour is clear. They wanted to block, frustrate and then delay the fight for justice. They could have chosen a better, quicker route to justice, but they dogmatically chose a different path: one that has delayed justice. Who has paid the price for that? The answer is Equitable’s policyholders, the people who have faced an uncertain future, the people who are struggling to make ends meet because their pension is not as much as they expected, not because of the market, but because of actions taken by the management of Equitable that were not picked up by regulators over the course of a decade. Every Member in this House will know from their postbag the personal cost of this to their constituents, but whatever the outcome for policyholders we know that more than 30,000 will not see justice. We also know that as every day goes by, more and more policyholders see the prospect of justice disappear.

May I cite the case of a constituent of mine, Mr. David McKeever, who has been particularly critical and believes that the Government are doing all they can to delay payment to the victims of the Equitable Life collapse? He told me that, since 2002, 10,000 of the 54,000 annuitants have died. Does my hon. Friend believe that the Government want to wait until all of these people die?

My hon. Friend makes an important point, because there have been huge delays during this process—I shall detail some of those that the Government have engineered—and, as a consequence, many of the policyholders have died and will not see justice delivered.

The fight for justice has united Members from all parts of the House, and I commend the creation of the all-party group on Equitable Life policy holders, which is chaired by my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski) and the hon. Member for Leeds, North-East (Mr. Hamilton), a Labour Back Bencher. I pay tribute to the work that they have done within this House to ensure that Equitable remains on its agenda. Tribute must also be paid to the Equitable Members Action Group—EMAG—which has galvanised policyholders into an effective campaigning body. EMAG’s members have not been slow in making their views known to Members of Parliament and their lobbying has been effective in maintaining the profile of this issue for many years.

I am following the hon. Gentleman’s remarks closely. Does he agree that as a gesture of compassion, given that 10,000 pensioners have already died unpaid and waiting, the Government should instruct Sir John Chadwick to make an interim tax-free payment—as advocated by EMAG—equivalent to two years on account to alleviate some of the hardship and stress that pensioners are facing now?

The hon. Lady raises the plight of a very important group of Equitable Life’s policyholders. It was noticeable that in the third interim report that Sir John published last week he highlighted that one group to have suffered a disproportionate impact from the failures at Equitable Life and from the failure of regulation was the so-called trapped annuitants. We are all mindful of the suffering that they face and of the fact that they have faced a loss of income. However, the challenge is this: if we make an interim payment now to the trapped annuitants, how much will that leave for the other policyholders? Surely the best thing to do is to move as quickly as possible to resolve the entire problem and then to consider how we prioritise payments, perhaps, once that settlement has been reached, so that the with-profits annuitants receive a fair deal then.