House of Commons
Monday 29 March 2010
The House met at half-past Two o’clock
[Mr. Speaker in the Chair]
Oral Answers to Questions
The Secretary of State was asked—
The work at Shoeburyness is directly linked to saving the lives of service personnel on operations in Afghanistan, providing, among other things, essential pre-deployment training in the safe and controlled disposal of improvised explosive devices and similar ordnance. In 2009, I received three representations, with a further two so far this year, from people claiming that their properties had been damaged by noise and vibrations caused by activities at MOD Shoeburyness.
Everyone accepts that our armed forces need to train at Shoeburyness. However, many of the explosions are caused not by our armed forces’ training, but by commercial waste disposal from which big corporate interests profit. Will the Minister give an undertaking for full transparency, so that local people are made aware of which explosions are being caused in the interests of our armed forces and which in the interests of crony capitalists?
I know that the hon. Gentleman is not a great supporter of our defence industries in this country, but let me tell him that the amount of ordnance exploded at Shoeburyness that is not related to training—this is, the disposal of ordnance that is out of date or that the MOD needs to get rid of in a controlled way—comes to 5 per cent. That is done in partnership with QinetiQ, a world-beating company that we should be proud of. As for trying to hamper us and put more in the way of our training, I am sorry, but that would be a misuse of the MOD’s time.
My apologies: I think the problem is deafness rather than sleep.
As General McChrystal has said, the situation in Afghanistan is serious, but it is no longer deteriorating, and the international effort will make real progress this year. Already Afghan forces and ISAF—the international security assistance force—have successfully delivered improved security to the population of central Helmand through Operation Moshtarak. Working closely with our Afghan allies, the international community’s next step will be to strengthen governance and security in Kandahar city.
Security in Helmand province has for years been the responsibility of British forces, many of whom have lost their lives in the process. What effect does the Secretary of State think it would have on our forces in Helmand if they were to be told, as has been suggested in The Sunday Telegraph, that they are shortly to be replaced by United States marines?
There has been a substantial increase in forces going into Helmand. Some of those have been ours—we have increased our forces in Afghanistan by about 1,200 in a year—but the biggest single inflow has been from the United States of America. We have been very happy to work alongside US forces, and they now operate in the south of Helmand province—we very recently handed over Musa Qala to them. What we are involved in is a coalition effort: we have to work alongside our coalition partners, and that does not mean just the United States of America. In Helmand we have Danes and Estonians working in our area of operation alongside our forces, as well as those of the Afghans of course, so I do not think that there is a problem among our armed forces in recognising the need to work with others.
Concern has been expressed about the impact of Taliban and al-Qaeda training camps in the North West Frontier province of Pakistan. Can my right hon. Friend say what assessment has been made of those camps, how effective they are, and to what extent the Americans now have a controlling impact on them, so that they cannot undermine the work being done by NATO and UK troops in Afghanistan?
The overwhelming improvement that we have seen on the Pakistan side of the border over the past year or so has come about as a result of the efforts of the Pakistani Government and the Pakistani armed forces. Those forces have suffered great losses in some of the operations that they have conducted against insurgents in the FATA—the federally administered tribal area—and Waziristan. Those forces are bearing down on the insurgency on their side of the border, and we should recognise that and congratulate them. Of course we work with the Pakistani Government, as do the American Government and American forces.
Look, let me say to the right hon. and learned Gentleman that, as a result of the huge inflow of forces into the south of Afghanistan, there are a number of proposals as to how we approach the issue of command and control, and how we divide up our forces in order to ensure that all can be successful and that there is no gap in the security that we are providing. Those discussions are ongoing—
There may be people within the coalition, as the right hon. and learned Gentleman has read in The Sunday Telegraph, who believe that it would be a good thing for us to remove ourselves from Helmand to Kandahar. I would have to be persuaded—and I would take some persuading—that that was a good thing. We have developed a level of understanding of the situation in Helmand province over a period of time which should not be thrown away lightly. We have invested a great deal in terms of money and infrastructure, as well as of losses. This is something that we would have to be very concerned about before we would agree to doing it. However, we should not set our face against things as some kind of knee-jerk reaction; we should be prepared to discuss these issues with our coalition partners.
On 19 April, during the likely general election campaign, the Government are likely to face a court case relating to the ability of UK forces to hand prisoners over to Afghan authorities. The case, brought by peace campaigners, could have major implications for our commanders in Afghanistan as a result of international and European human rights law. It is bad enough that our troops have to deal with warfare; now they have to worry about “lawfare” as well. Will the Government place before the House, before the Dissolution of Parliament, consolidated Ministry of Defence guidelines on the detention of personnel in Afghanistan, so that Parliament and the British people can make a judgment about the Government’s position ahead of the court case, which many will regard with outrage?
We do detain people in Afghanistan. Detention is an important part of the operations that we undertake there. Our forces are threatened by people in that country, and detention is therefore necessary. We also hand people over to the Afghans, and we have a clear memorandum of understanding about when and how we do that and about the safeguards that we seek to put in place. I will do as the hon. Gentleman asks and place in the Library a copy of our policy on detention—I had intended to do that anyway. I will do it as soon as possible; if not today, then tomorrow.
Defence-Related Employment (Tyneside)
There are many companies on Tyneside and in the related travel-to-work area doing important work for defence, and we are extremely grateful to them for the skills and dedication of their employees. Good examples include A & P, which is building sections for our two carriers on the Tyne. I have visited it twice, and on the last occasion was privileged to cut the first steel. I also visited Astrum in County Durham the other day; it is producing tracks for our armoured vehicles. I have visited BAE Land Systems, which has produced the Challenger, the Warrior and the Panther and is now working on the Terrier. BAE Systems is also opening a new ammunition factory in Washington, Sunderland.
The workers at BAE Systems’ armoured fighting vehicle factory on Newcastle’s Scotswood road have loyally backed up the efforts of our armed forces in Iraq and Afghanistan, but they now face job losses, and the run-down and possible closure of the plant, because of the loss of the specialist vehicle order. Was this because Tyneside was politically outgunned by Wales and Scotland, or because the management at the plant were incompetent? Will the Minister come to Tyneside to explain how this decision was made, and what the way forward for the workers will be?
It was neither of those two things. The contract award was made on value for money, which was a function of performance, reliability and cost. I understand my hon. Friend’s disappointment about the decision, but we have to make such decisions on the basis of value for money. I would certainly be happy to accept his invitation to come to Newcastle and to meet the management and the work force again.
Improvised Explosive Devices
All our deployed personnel in Afghanistan are equipped for the tasks that they are asked to undertake. This includes a range of protected vehicles, including the Mastiff and the Ridgback, which offer world-leading protection against improvised explosive devices. Comprehensive training is provided prior to deployment and on arrival, and a very large part of that training concentrates on IED avoidance and recognition.
In pausing to remember the bravest of the brave who have made the ultimate sacrifice in dealing with IEDs, will the Minister tell us how many people on active deployment in Afghanistan are trained to find IEDs, whether there is a shortage of such personnel, and how many have left the service prematurely on return from duty?
No, I cannot and will not give that detailed information because if I do that publicly, I give it not only to the hon. Lady and our media, but to our enemies in the form of the Taliban. What I can say is that nothing has been given a higher priority in our efforts in Afghanistan than countering improvised explosive devices. That is why we established a 200-strong force last April and why, as recently as December, we committed and reprioritised £150 million towards tackling the lethal threat we face from the Taliban in respect of IEDs.
Service Veterans (Mental Health)
Initial results from the six NHS mental health pilot schemes are encouraging, with evidence that veterans feel able to access and use the services with confidence. The evaluation of these pilots will be complete later this year, with a view to all NHS mental health services rolling out special provision for veterans during 2011-12. Additionally, the medical assessment programme at St. Thomas’ hospital in London continues to prove an important resource to veterans with mental health problems.
We have completed studies on those three groups. On homelessness, we conducted a study with York university on the figures in London that showed 4 per cent. homelessness among the veteran population. As for the prison population, we have just completed a review of our data along with those of the Ministry of Justice, which showed that the prison population of veterans is about 4 per cent. We are subjecting those findings to more scrutiny to find out exactly what more can be done in mainstream services in prisons to support veterans.
A year ago, the Minister was good enough to meet Piers Bishop of Resolution, which has done groundbreaking work on mental health issues among our armed forces. Does Resolution still have a part to play on this issue, to which I know the Minister has given a great deal of personal attention?
We are always looking to work not only with the NHS but with third sector providers. Two or three weeks ago, together with the Department of Health, I was pleased to sign a partnership agreement with Combat Stress, which is now going to embed its mental health professionals in NHS trusts to act as champions for the mental health of veterans. We will consider any proposals on their merits.
The mental health pilots to which the Minister referred—I have visited one of them—are most welcome, but even if they were rolled out in a definitive programme, it would still mean that the majority of cases of combat stress would be undiscovered and untreated. The Minister is probably not aware that the medical examinations people are given when they leave the armed forces have not been updated for many years and they certainly do not reflect the level of service-related mental illness generated since 2003. Why has he allowed this obvious missed opportunity to endure, and will he partially redeem himself by offering to support our proposal to screen veterans for service-related mental illness both at the point of discharge and at intervals thereafter?
I am sad that the hon. Gentleman does not pay more close attention to what I am doing in my portfolio. A few weeks ago, I announced a new initiative whereby the medical records of those discharged will be transferred more seamlessly to the NHS. We also now have an agreement with the NHS whereby older veterans can have the fact that they served in the armed forces flagged up on their GPs’ records. We continue to support the work and research of the defence study conducted at King’s College, which is about to produce a report that will show the true effects of service not just on those who are serving now but on those who served many years ago.
Defence Spending (Commitments)
In our planning rounds, we ensure that our plans deliver defence capability, that they are sound and that resources are allocated in line with defence priorities. I announced the main elements of the 2010 planning round on 15 December 2009. This included a package to spend £900 million more over three years on enhancements to support operations of the kind that we conduct in Afghanistan, on top of operational costs paid for by the reserve. In taking this decision, however, we had to prioritise rigorously and recognise that tough choices were required better to match the defence programme to the available resources.
Given that the Treasury claims to scrutinise every capital project and reserves the right to intervene in such projects, may I ask who was responsible for the £1.4 billion cut in the helicopter programme? Was it the former Secretary of State for Defence, or was it the former Chancellor of the Exchequer?
I think the hon. Gentleman is referring to decisions made in 2002-03 or 2003-04. He must accept that those decisions were made by the Ministry of Defence, not by the Treasury, and also that the position then was very different from the position now. We had 400 troops in Afghanistan at that time, and they were in the relatively benign area of the north, not in Helmand province.
When my right hon. Friend speaks of defence procurement, is he bearing in mind our defence industrial strategy? Can he promise the House that, as far as possible, we will always secure supply in this country in order to maintain our skills base and the sovereignty that we require?
I cannot go as far as that. The aim of our defence industrial strategy is to ensure that elements of defence supply are secured in this country when we consider that to be important to the maintaining of our sovereign capability, and to ensure that we are able to continue to produce those elements. What I will not do is sacrifice, on a wider basis, capability and value for money when to do so is not appropriate, and is not justified by a clear need for that sovereignty.
On 17 March, the Prime Minister said that UK defence spending had fallen in real terms on one or two occasions. I think that “once or twice” was the term that he used. According to everyone else, it has certainly fallen twice, and has possibly fallen three or four times. Was what the Prime Minister said about its having fallen “once” true?
Defence spending has risen substantially during the present Government’s time in office. It has risen in real terms by 10 per cent.—just short of £1 billion a year, on average—which contrasts markedly with the massive reductions that took place during the last two years of Conservative government.
In the light of the agreement between Russia and the United States last weekend as part of the strategic arms reduction treaty, would this not be an appropriate time at which to reconsider the strategy of replacing the Trident nuclear missile system, which would both contribute to nuclear disarmament and save us all a great deal of money?
My hon. Friend and I disagree in one fundamental respect. I believe in multilateral nuclear disarmament: I think that we should make every possible effort to bring about the reduction and, hopefully, the eventual elimination of nuclear arsenals throughout the world. I do not, however, believe in unilateral nuclear disarmament, and I do not believe that if we did as my hon. Friend suggests, we would add greatly to efforts to reduce nuclear armaments at this time.
Last week the Chancellor committed more than £4 billion from the Treasury reserve for operations in Afghanistan. Given the increasing number of urgent operational requirements driving equipment spending to its highest level yet, what discussions has the Ministry had with the Treasury about eventual recovery of UOR funding, and what effect will that have on the longer-term defence budget?
We have not had to repay moneys granted to us for urgent operational requirements. [Interruption.] We have not had to do that in any year. The full costs of operations—not just urgent operational requirements—are paid from Treasury reserves which are in addition to our budget.
Does the Secretary of State agree that there is a contradiction between the arguments of those who say that not enough money is being spent on defence while also saying that the break clauses in the contract for the aircraft carriers must be examined? [Hon. Members: “Ah!”] I note that my view is supported by Opposition Members.
May I also ask whether the Secretary of State has received any communications from either of the main Opposition parties stating whether they will support the Government’s proposal to proceed with the next stage of the Type 26 shipping order, and whether he thinks that the placing of that order was excellent, very excellent, or simply magnificent?
It is clear that there are dilemmas in the Conservative ranks, and that they run wider than just the carriers and naval capability. Conservative Members say on the one hand that we are behaving in a profligate manner and signing contracts unreasonably, and, on the other, say that we are underfunding defence. They cannot have their cake and eat it; they must come clean about their policies and proposals.
On 15 March the Secretary of State told the House that £5 billion was earmarked for Afghanistan next year, but on Budget day the Chancellor said that there was £4 billion from next year’s reserve to fund operations in Afghanistan. Why the difference?
Service Personnel (Welfare)
The Ministry of Defence has robust welfare provision that is kept under continual review to ensure that it remains fit for purpose. We have a responsibility to our service personnel, their families and veterans, and we take it very seriously. Recent improvements include the provision of extra facilities in Afghanistan to help service personnel keep in touch with their families, the creation of the Army recovery capability, and the review of the armed forces compensation scheme. We also published the service Command Paper on the nation’s commitment to the armed forces, their families and veterans.
At a recent surgery I held at RAF Benson there was a stream of criticisms of the MOD and MODern Housing Solutions, ranging from a family with a small child being left without hot water, serious gas leaks to walls running with mould. Given that in a written answer to me on 25 March the Minister admitted that there is not even a breakdown of complaints by location to better manage such problems, is this not symptomatic of the shameful disdain with which the Government treat the issue of service housing?
I am sorry, but I am not going to take any lessons from the Conservatives about investment in armed forces housing. At RAF Benson, 99 per cent. of the accommodation is either in grade 1 or grade 2 standard condition, which means that it either exceeds or meets the Government’s decent homes standard. In respect of MHS, I have put in place people who act as equivalents to estate managers, who do a very good job of dealing with individual problems. If the hon. Gentleman has a particular problem relating to the work of Defence Estates at Benson, or that of MHS, he should get in touch with me.
The Public Accounts Committee report, “Treating Injury and Illness Arising on Military Operations”, concluded that although the MOD’s care of the seriously injured had to date been highly effective, there were concerns about whether it could cope with a significant increase in the number of casualties. What steps will the Minister take to formalise the current voluntary arrangements with the NHS to handle overflow military patients, and how might he ensure that there is a suitable environment for military personnel in civilian hospitals?
As the hon. Gentleman rightly says, the care our servicemen and women are getting at Selly Oak and Headley Court is second to none, and may I put on record our thanks to the dedicated staff that do that job? The NHS and Defence Medical Services put in place robust handling arrangements to deal with our surge of last summer, and we also put in place similar arrangements this year, although, thankfully, they were not needed. In April, health services will move to the new hospital at Selly Oak in April, which will have a state-of-the-art, military-dedicated ward for our servicemen and women who are injured on operations.
(Woodspring): On leave back home during their deployment in Afghanistan, a growing number of service personnel have been refused entry to pubs and clubs because some local authorities refuse to accept military identity cards, which have date-of-birth details, as proof as age. It is scandalous that our troops can die in Helmand but be refused a pint in their local. The Government have known about this problem for some time, so why has nothing been done? Will they now, in their last days, do something about it?
That is an issue for local authorities, but may I say that a number of public houses and businesses not only welcome our servicemen and women, but give them discounts and support the production of the military ID card? I would like the hon. Gentleman to let me know of any specific examples that he may have of where people have been turned away, because I agree that this is not an acceptable way to treat these brave servicemen and women.
We keep the security threat posed by Iran under continual review. Iran possesses conventional military capability that is both defensive and offensive in nature. We also remain concerned about Iran’s intentions with regard to its nuclear programme. Iran should be under no illusion that without progress in addressing the international community’s concerns tougher sanctions will be imposed.
A substantive offer of engagement has been made by the international community, which has been led, in particular, by the President of the United States. I regret that Iran has failed yet to embrace that offer of engagement. Iran needs to be in doubt that this is a matter of serious and real concern for the international community and that if there is not movement and engagement on the part of Iran, there will be—we will argue for and achieve this—much tougher sanctions.
Do the Government agree with the statement made at the weekend by the NATO Secretary-General, Mr. Anders Fogh Rasmussen, that Europe now needs to develop a missile shield system to protect against a future Iranian missile—one with or without nuclear warheads?
With Iran undertaking a major submarine-building programme, which military experts say could cause havoc in the Gulf, and Russia continuing its incursions into United Kingdom waters, why have the Government decided this week to scrap the Nimrod long-range maritime patrol aircraft? Who will provide the long-range search and rescue capability so lost from this week and who will protect our ships—at home and in the Gulf—now rendered vulnerable by Labour’s cavalier approach to the defence of these islands?
On long-range search and rescue, the introduction of the MRA4 means that there will be substantially more capable aircraft than the MR2 in the RAF’s fleet. In the period of transition until the MRA4 enters service we intend to use other assets, as available, in a long-range search and rescue role. The reason we take the decisions that we do is because we are responsible for these budgets and for prioritising Afghanistan as our main effort. As we have repeatedly made clear, the Conservative party is not committed to spending one penny more on defence than this Government are—in fact, the reverse is true because the Conservatives are not even prepared to commit to next year’s spending. Until they do so, their words are simply hollow.
Afghanistan (Poppy Cultivation)
The UK is supporting alternative livelihoods programmes in Afghanistan, which provide practical advice and support to farmers, to enable them to move away from poppy cultivation. In Helmand, we are supporting Governor Mangal’s counter-narcotics plan, which distributes wheat seed, fertiliser, saplings and seeds for summer crops, and the establishment of an agricultural school. Pomegranates are one option available to Afghan farmers.
I thank the Minister for that response. I think there is agreement across the House that the solution will not just be a military one; it must be political and economic. On that basis, will his Department try to support the British charity POM354, which believes that the growing of pomegranates is more profitable for Afghan farmers than the growing of either wheat or opium poppies?
I know that the hon. Gentleman has taken a real interest in this issue and I agree with him that there cannot be an exclusively military solution in Afghanistan—there has to be a political one, too.
In respect of the particular proposal to which he is referring, James Brett, the founder of the charity POM354, met my hon. Friend the Under-Secretary of State for International Development. At that meeting, it was recommended that Mr. Brett should produce a detailed business plan that will not only help to maximise the programme’s chances of success but help conversations with potential donors. I reiterate that advice and DFID officials are willing to provide advice on such a plan.
I welcome the proposals to support the growing of pomegranates, wheat, raisins and alternative crops that have been proposed by Afghan farmers over many years, but does the Minister understand that for them the key issue is not what they will be encouraged to grow but who will be a secure buyer of what they grow? Has the Minister any plans to step in and at least recognise that the starting point for what they grow at the moment is the poppy crop and that we ought to be looking at ways in which that can legitimately be used for the production of diamorphine?
I genuinely disagree with my hon. Friend. I think that if we followed the path that he is advocating, in circumstances in which it is not possible to provide security across the board, we would simply be creating a second market for poppy cultivation. That is why—across government, with our international partners and supporting the Afghan Government—we must create an environment in which it is possible for alternative crops to be produced. I genuinely do not believe that the course set out by my hon. Friend would help us to achieve that.
I would be delighted to visit Kyle of Lochalsh and the Raasay ranges. As the right hon. Gentleman will know, the proposals put forward by QinetiQ to rationalise those ranges have now been withdrawn. If in the future those proposals are resubmitted or if other proposals are made, I shall certainly visit the ranges before taking any decisions—as I did, as the right hon. Gentleman will recall, in the case of the Hebrides ranges last year.
I thank the Minister for that characteristically courteous reply and for his earlier letter to me on the matter, which will cause a good deal of reassurance locally. I hope that when a new report comes forward, if any does—it is rumoured that that might happen in the autumn, and perhaps he could give us an indication on that point—any such visit would involve all relevant community groups and Highlands and Islands Enterprise.
I cannot give the right hon. Gentleman any indication of any timing or, indeed, predict any particular proposals that might come forward in the next few months, but I repeat my offer.
Defence Spending (Commitments)
For some reason that I do not fully understand, the hon. Gentleman has asked exactly the same question as the hon. Member for Lichfield (Michael Fabricant) and I refer him to the answer to that question.
It is an important question. The Secretary of State will know that in 1998, 1999, 2002 and 2007 the defence budget fell in real terms. As for the following years, in Kosovo, our boys had to go out and buy mobile phones because the radios did not work; in Iraq, the boots melted and their equipment and clothing were not right for those conditions, so they had to go and buy their own clothing; and in Afghanistan, there have not been enough helicopters, there have not been the right personnel vehicles and there have not been enough spares, so they have had to cannibalise equipment all over the world, causing chaos. Does not the Secretary of State accept that it is time, first, to admit that this system of logistics and procurement has been hopeless and secondly, to apologise for putting lives at risk?
It is a travesty that the hon. Gentleman should so describe the situation that is faced by this country’s very capable armed forces—one of the most capable armed forces in the world. I would say to him that we spend above average on defence, that there has been a substantial continuing increase in spending on defence and that we, in marked contrast to the party that he supports, guarantee that there will be an increase next year. I do not know what he intends to do about that, if he holds the views that he does.
Two contenders for the light protected patrol vehicle requirement are being assessed as part of the concept vehicle evaluation trial. It is expected that the trial will be completed in April.
In evaluating the two contenders for the new light protected patrol vehicle that will replace the Snatch Land Rover and, I hope, the Pinzgauer Vector, will the Minister ensure that, as well as having in-built blast deflection, it will retain the most valued attribute of the Snatch—enabling soldiers to exit quickly from the rear of the vehicle to defend and counter-attack with maximum cover?
I assure the hon. Lady that the tests to which the two contenders are being subjected are very thorough. They certainly involve blast protection and blast deflection and, indeed, rapid exit from and entry to the vehicle. She has put her finger on two absolutely vital points in the characteristic way that she does when she talks about military equipment.
UK forces continue to work hand in hand with Afghan national security forces to build and maintain security in Helmand province. Progress on Operation Moshtarak grows, with insurgents being displaced from key district centres. Stabilisation activity continues apace, and increasing freedom of movement on key routes is aiding economic development. As I announced on 11 March, security responsibility for Musa Qala is transferring to US forces. This enables the redeployment of UK troops to the heavily populated areas of central Helmand, where the majority of UK troops are operating.
It is one that President Karzai and his Ministers are seeking to address. Training has been stepped up quite considerably in terms of numbers, but he has to do everything, both in the police service and in the army, to get a representation of the whole country.
Resource Accounting System
The total Ministry of Defence near cash budget was £26.8 billion in 2002-03 and £27.9 billion in 2003-04—an increase of more than £1 billion. Those are the only directly comparable figures, because the MOD did not have a non-cash Treasury departmental expenditure limit in 2002-03.
Does the Secretary of State agree that it is always a case of lies, damn lies and statistics, and that it is a matter of great regret that, since the Prime Minister lost his way on defence statistics, it has done nobody any good that we cannot trust the Government on their defence statistics? Does the Secretary of State agree that we really have to stop that, and that we have to have a perfectly straightforward, simple way, on which everyone can agree, of deciding exactly how much a Department is spending?
I do agree, but I do not believe that it helps when issues are blown out of all proportion, sometimes deliberately, to disguise the overall situation. I do not believe that the hon. Gentleman, knowing him as I do, would sit there and deny that there has been a substantial increase in the defence budget throughout the life of the Labour Government. He knows that to be true, and I do not think that he should try to suggest that the case is otherwise.
BAE Systems (Samlesbury)
I have no plans to visit BAE Systems in Samlesbury; the Minister with responsibility for defence equipment and support, the Under-Secretary of State for Defence, my hon. Friend the Member for Grantham and Stamford (Mr. Davies), did so on 24 February 2010.
I am glad to hear that. I am sure that while the Minister was there, he would have seen more than 5,000 people working in one of the top-class work forces of the world. Given that BAE Systems in Samlesbury works as a magnet for more than 6,500 other jobs in small and medium-sized enterprises, does the Secretary of State agree that when we are procuring, we ought to procure from the very best, which happens to be in the United Kingdom?
Often that is so, and the north-west region, never mind the hon. Gentleman’s constituency, plays an important part in our defence capability. We need to ensure that we maintain such capability in vital areas. If we are going to provide capability for our armed forces in the long term, we cannot afford to take short-term and short-sighted decisions. Sometimes we need to ensure that industrial capability remains in place, and that is what the defence industrial strategy is designed to do—I hope that the hon. Gentleman supports it.
Defence Spending (Commitments)
Aha! Another hon. Member appears to have asked exactly the same question as the hon. Member for Lichfield (Michael Fabricant).
The Secretary of State might be aware that Lord Guthrie has recently observed that, because of the Prime Minister’s attitude when he was Chancellor of the Exchequer, the military wanted to do many things but was unable properly to fund the 1998 strategic defence review, which the Cabinet had approved. Does the Secretary of State think that Lord Guthrie’s comments are fair criticism?
No, I do not, and I refer to the substance of the answer by my right hon. Friend the Prime Minister at the Chilcot inquiry—no one has been able to say otherwise. Every request that was made in regard to urgent operational requirements was met, and in every spending round while my right hon. Friend was Chancellor of the Exchequer, there was a real-terms increase in the defence budget. When those things are taken together, they add up to almost £1 billion a year.
If our troops had as much armour on their vehicles as the Secretary of State has in his defence of indefensible statistics, they would be very safe indeed. However, even if we include the money from the Treasury reserve, is it not a fact that, as a proportion of gross domestic product, defence expenditure has declined over the lifetime of this Government?
This is the last question that Opposition Front Benchers will be asking of Defence Ministers, so may I point out that, during this sitting, there have been twice as many Conservative Members present as Government Members, with a solitary three Lib Dems? Does not that show how the different parties rate the importance of defence?
I say to the hon. Gentleman quite genuinely that I am not dead certain about whether, after taking the urgent operational requirements into account, the fact that he cites is correct. The only thing that I would say to him is that, because of a Labour Government, the time that he mentions has been a period of unprecedented growth in GDP. [Interruption.]
My Department’s responsibilities are to ensure that our country is properly defended now and in the future, and that our service personnel have the right equipment and training to allow them to succeed in the military tasks in which they are engaged, either at home or abroad.
Pursuant to the question asked by my hon. Friend the Member for Clwyd, West (Mr. Jones), what will the arrangements be to report changes in deployments in Helmand, now that the Secretary of State has confirmed that such deployments are in flux and under discussion?
I want to keep the House as informed as I can about any developments but, fundamentally, these are military decisions. We have to try to ensure that we have the appropriate force density in the British area of operations, as we should in the American area, so that our troops and theirs have a good chance of success. I think that we now have the troop levels in Helmand province with which we can make real progress, and we have seen real progress under Operation Moshtarak. General Carter, who is in charge of not only Helmand province but the whole of the south, is of course always looking at how he deploys the forces available to him.
Yes, I do; my right hon. Friend puts it extremely well.
I have asked the chief executive of the DSDA, in conjunction and in consultation with his work force and the trade unions, to produce a five-year plan. I originally expected that at the end of March; I have been assured that it is coming by the middle of April. I will take decisions in the light of that.
May I welcome the signing of the terms of business agreement with Babcock Marine last week, which confirms Devonport as the lead dockyard for warship maintenance? Given that role, will my hon. Friend the Minister confirm that the sooner the carriers start to be assembled the better, not just for Devonport, so that it can receive further streams of warship maintenance work, but for the royal naval capability that it represents?
I can assure my hon. Friend that under a Labour Government, the carrier programme is going full steam ahead. We are already working in five yards; work will start soon in the sixth and final yard in Birkenhead. We have made something like £1.2 billion-worth of subcontracts. The only thing that would endanger the carrier programme is the Tories, with the Notting Hill set at their head, who do not care at all about defence or anything about it, taking over the government of this country after the election.
I just remind the hon. Gentleman that the mark 3 programme Chinooks were ordered under a Conservative Government. That was a disastrous procurement, and it took an awfully long time to sort it out. We are trying to make absolutely certain that we do not repeat the appalling mistakes of what is probably the worst ever defence procurement.
I agree totally with what my hon. Friend says about Thales, and that goes for all our major defence suppliers, on which we depend as a nation for our defence capability; we are extremely grateful for their efforts. As a matter of fact, I am visiting Thales on Wednesday.
I agree with that assessment. We are in regular discussion with partners in the Gulf states, and I think that there is a strong degree of consensus. We need fundamentally to understand that if Iran were able to go ahead and develop nuclear capability, it would inevitably invite a response from other countries in the region, and the last thing we need in the middle east is a nuclear arms race.
We have had an ongoing campaign to ensure that people register for service votes, and the figure is now at 67 per cent. We have also put in arrangements to ensure that, where possible, postal voters’ ballots are returned as speedily as possible. But overall, and for the longer term, I have had discussions with the Electoral Commission about possibly trialling e-voting.
I already have, and any such comments were unintended. On the vote that took place last May, the Government have now put in place very robust procedures in Kathmandu to ensure that those Gurkhas who wish to settle here can do so free of charge—without being charged in any way. However, I would like to put on the record my wholehearted condemnation of those middlemen and unscrupulous operators who are charging Gurkhas. If the hon. Gentleman, like me, had visited Aldershot last week, as I know the hon. Member for Aldershot (Mr. Howarth) did, in order to see Gurkhas—many of them more than 60 years old—who have come here with expectations that, frankly, will never be realised, he would be rightly angry. I certainly am on that point.
May I ask the Secretary of State about an Unprinted Paper deposited in the Library by Group 4 Securicor, which calls it a “concept paper”? The firm invites the Government to outsource comprehensively the
“Training Support and Regular Army Assistance Table”
and the function that armed forces carry out in lieu of fire services when there is a pandemic—a term that is used in the paper—or industrial action. Will he repudiate that paper, say that it is a non-runner and confirm that this Labour Government will simply not entertain what it outlines? It would be a bridge too far.
That is part of a review within the Ministry of Defence to ensure that, in terms of our travel, we get best value for money. For example, last week I travelled second class on two occasions. Clearly, there are reasons, such as security, why others have to travel first class, but we are looking throughout the Department at how we can get the best value for money not only out of rail travel—[Interruption.] Hon. Members say “Ministers”, but I have travelled with easyJet on a number of occasions to ensure cost-effectiveness. The important point is that we ensure that we get value for money out of every defence pound that we put forward. I am sure that the hon. Gentleman would not object to that.
Will the Secretary of State tell us when his Department plans to come to the House to seek spending authority for the replacement of the nuclear missiles in the Trident missile fleet, and how much has already been spent on preparatory work for the creation of a new missile system?
Last Friday at RAF Kinloss, the Nimrod MR2 fleet was retired, and we pay tribute to all the personnel and families associated with the mighty hunter. But, given the importance of search and rescue top cover, will the Ministry of Defence provide some detailed assurances, stating that there will be no capability gap until the introduction of the MRA4?
I reiterate to the hon. Gentleman what I said earlier: the MRA4 will bring a substantial enhancement of capability, and in the transition period until the MRA4 enters service we intend to, and will, use other assets, as available, in the long-range search and rescue effort.
Army, air and sea cadets deliver an excellent service within many of our communities in the UK. Is it not time that the House acknowledged this and that the team from the MOD initiated a debate so that we can all celebrate everything that they deliver to our communities?
I congratulate the cadet force on its 150th year. I thank my hon. Friend for her involvement in her local cadet force. Cadet forces are a force for good in local communities. I also put on record our thanks to the thousands of adult volunteers who make the cadet experience possible. If she suggested a debate in the House, I would be very pleased to celebrate the fantastic job that cadet forces do.
As the hon. Gentleman will know, I have announced a review into the health needs of nuclear test veterans. There is ongoing litigation. We have had talks between the two sides to see whether a settlement can be reached. Unfortunately, that has not been possible. However, I am determined to ensure that I continue to work with nuclear test veterans’ groups to ensure that the support that we can give to nuclear test veterans for their health needs, and generally, continues.
When I asked the Library about defence spending from 1997 to 2003, I was told that it had gone up by 17 per cent. in real terms—an extra £7 billion. Is not the responsibility for how that money is allocated really with our commanding officers and senior MOD bureaucrats rather than being something to be blamed on the Chancellor of the Exchequer at the time, whoever he was?
As I have said, and as we have repeated a number of times over the past hour but received no effective response, the defence budget has gone up by almost £1 billion on average per year—a substantial real-terms increase under the Labour Government, in marked contrast to what happened in the last couple of years of the Conservative Government who preceded us.
I thank the hon. Gentleman for his support for Defence Medical Services and the move to his constituency. Plans are ongoing. The budget as regards accommodation is in place for this year, and the plans should come to fruition at the end of this year to ensure that we have not only support for our injured servicemen and women but world-class defence medical services.
With permission, Mr. Speaker, I would like to make a statement on the European Council held in Brussels last Thursday and Friday.
First, I am sure that the whole House will join me in paying tribute to Lance Corporal of Horse Jonathan Woodgate from the Household Cavalry Regiment and Rifleman Daniel Holkham from 3rd Battalion the Rifles. They lost their lives fighting in Afghanistan. We owe them the greatest debt of gratitude for their courage and their service.
Their sacrifice reminds us that terrorism is an ever-present danger which requires vigilance and the willingness to take tough action in all areas where terrorist groups operate. So I know also that the thoughts of the House—and indeed our country—are with the Russian people today after this morning’s terrorist attack on the Moscow transport network. I have written to President Medvedev this morning to send our condolences to the victims and their families. I pay tribute to the Russian emergency services and the people of Moscow as they have responded to this appalling attack.
The focus of the European Council last Thursday and Friday was on actions needed to secure growth for the future and on Europe’s determination to bring new impetus and momentum to the international negotiations on climate change. Last week’s Budget set out our proposals for the next stage of economic recovery. It made it clear that the risks to recovery remain real and that we must avoid a premature withdrawal of stimulus measures, instead seeing through our commitment to halving the deficit over four years without choking off the recovery itself. The European Council agreed that
“The economic situation is improving, but the recovery is still fragile”.
It concluded that while deficit reduction plans must go ahead, measures to reduce the stimulus should be taken only once recovery is secured. That is the position that we, like our European partners, will continue to follow.
In our Budget, we also set out the actions that we must now take to secure jobs and growth by investing in the key growth sectors for the future. The Council’s conclusions agreed that Europe needs
“to deliver more growth and jobs”
to boost European competitiveness and productivity. Before the financial crisis, the imbalances within Europe were at an all-time high. The Council agreed that
“The EU needs to focus on the pressing challenges of competitiveness and balance of payments developments”.
It also agreed to develop a new strategy to deliver higher levels of long-term growth and recognised that the key elements of increasing productivity and growth include action on employment, on research and development, on reducing greenhouse gases to boost low-carbon industries and on education and social inclusion. The European Council will now, once a year through a leaders’ annual economic summit, assess the progress achieved at both national and European level in delivering those objectives.
The Council also discussed the economic situation in Greece. Agreement has now been reached by the euro area member states on a set of guidelines for Greece, and I am encouraged by the statement from the eurozone leaders that the eurozone will meet its responsibilities. There was no request for the United Kingdom to make any contribution to that programme, and none of the arrangements agreed by the European Council will see any powers being ceded from Britain to the European Union.
One year on from the G20 summit in London, we also discussed Europe’s plans for the next G20 summit, which is to be held in Toronto. The Council agreed that “rapid progress” is now required on strengthening financial regulation and supervision within both the EU and the G20, while we also need to ensure a level playing field for financial centres worldwide. In particular, we agreed that progress is needed on the issues of capital requirements, systemic institutions, financial instruments for crisis management, transparency on derivative markets and the implementation of internationally agreed principles for bonuses in the financial services sector. The Council agreed to make rapid progress on those issues, concluding work on the new European supervisory framework in time for the European systemic risk board and the three European supervisory authorities to begin work in early 2011.
We must also agree in Toronto a co-ordinated approach to levies on the banks to deliver a fairer balance of risk and reward in the financial system. That is something that I have been advocating for some months, and the Council agreed that as part of the G20’s work:
“The Commission will shortly present a report on possible innovative sources of financing such as a global levy on financial transactions…The Council and the Commission will report back on these issues to the June 2010 European Council, ahead of the Toronto summit.”
The Council also discussed climate change, ahead of the first meeting of the advisory group on climate change financing, established by the United Nations Secretary-General, which I am co-chairing with Prime Minister Meles of Ethiopia. Our pledge on climate change finance is a vital first test of the commitment of the developed countries to meeting the promises made in Copenhagen. The Council concluded that Europe would rapidly and unconditionally implement its commitment to providing €2.4 billion annually for fast-track financing for developing countries, and to that end the EU
“will initiate consultations on practical ways”
to implement that in specific areas. There will be a presentation on those commitments at the Bonn summit. The Council confirmed that Europe’s objective remains a
“global and comprehensive legal agreement”
and that Europe will “strengthen its outreach” to other countries to galvanise negotiations in the coming months.
The euro area’s economic growth is predicted to be just 0.7 per cent. this year and next, recovering to 1.5 per cent. in later years. By contrast, world growth is projected to be 3.5 per cent, so we need stronger European growth to help deliver stronger growth and new jobs here in Britain. Europe is the world’s largest trading bloc and also the world’s largest internal market. It offers 500 million consumers for British companies. With 3 million UK jobs linked to the EU, and still more than half our exports going to the EU, Britain’s livelihood is inextricably linked to the success of the European economy. Distancing ourselves from Europe makes no sense and would hold back our economy, our companies and people in work. It is by working with, not against, our European partners to deliver jobs and growth for Europe that we will help to deliver jobs and growth for Britain. I commend this statement to the House.
I join the Prime Minister in paying tribute to Rifleman Daniel Holkham and Lance Corporal of Horse Jonathan Woodgate, who have been killed in Afghanistan in the past few days. When one thinks of what Jonathan Woodgate had already been through, it is a reminder of what an exceptionally brave young man he was. It also reminds us that what we ask of our servicemen and women today is exceptional; we need to refresh and renew the military covenant in every way that we can.
I also agree with the Prime Minister that we should send a clear message of sympathy and solidarity to the Russian people after the appalling outrage on the Russian metro. We are tragically familiar with such an event in this country, too.
I want to ask about three issues that were discussed at the summit—the EU economy, financial regulation and climate change. First, on climate change, the summit rightly said that we must redouble our efforts to achieve the global deal that we all want and push ahead with practical action to cut emissions. The UK has the lowest contribution from renewable energy of any major EU country—just 6.8 per cent. of our electricity and, in total, 2.5 per cent. of our energy comes from renewable sources. Why has so little progress been made?
Secondly, on financial regulation, President Obama spoke about a tax on wholesale funding, but, as the Prime Minister has said, the summit conclusions referred to a transaction tax. Would not a tax on wholesale funding rather than a transaction tax be more likely to help keep business here in Britain?
The summit conclusions mention the need for greater economic co-ordination. There was some controversy about whether we will end up with any new treaty changes. Should not the Prime Minister make three things clear today? First, any talk of “economic government” in Europe is wrong. If he agrees, can he explain why the phrase remains in the French version of the eurozone statement? Secondly, should we not rule out any new treaty change that increases EU control over our economic policies? Thirdly, should we not change the law in the UK so that any treaty that proposed handing over new areas of power from Britain to Brussels would automatically be subject to a referendum, as is the case in Ireland?
It is good to see the Prime Minister smiling so nicely, as he does on all our posters—it is good to see him in that sort of positive mood. There are plenty more where they came from. [Interruption.] If he will not put himself on posters, we have just got to do it for him.
On economic policy, does the Prime Minister agree with the Europe 2020 strategy document, which says that
“sound public finances are critical for restoring the conditions for sustainable growth and jobs”?
Given that, will he comment on the serious news today that Standard & Poor’s has stated yet again that the outlook for Britain’s triple-A credit rating remains “negative” and that
“additional spending measures will likely be required”
to tackle the debt burden?
Europe’s leaders talked about a bail-out for Greece, and Portugal’s credit rating is being downgraded. However, is not Britain borrowing more this year as a share of our economy than either Greece or Portugal? Did not the same agency that downgraded Portugal’s credit rating say last week that Britain’s finances are “vulnerable”?
The European Commission says that “a number of countries” may have to start tackling their deficits this year. Given that Britain and Ireland have the worst budget deficits in the OECD, to which countries does the Prime Minister think it was referring?
On unemployment, business closures and the decline of manufacturing, the UK clearly has some real problems. Why, therefore, does he propose to raise taxes on small businesses and hike national insurance on everyone earning more than £20,000 and on every single new job in this country?
The Chancellor admitted in the Budget that there was £11 billion of waste in Government spending, but he proposes to do nothing about it until 2011. Why is not he tackling the waste this year rather than putting up national insurance for hard-working people next year? Have not the Prime Minister and his Chancellor created one of those great dividing lines that they like so much? Labour stands for waste and taxes, and the Conservative party stands for efficiency and aspiration. As the Prime Minister contemplates his national insurance increase on employees and employers, what on earth makes him think that the way to rescue an economy from the longest and deepest recession on record is a tax on jobs that hits every single business in the country? [Interruption.] He says that he wants to talk about Europe—I am talking about our economy in Europe and our failure in Europe.
The Prime Minister used to go to European meetings to lecture others about their economic policies; now the reverse happens. He thought boom and bust had been abolished and that he could borrow with impunity; he never prepared for a rainy day. Were not those catastrophic misjudgments? Will not the British people be paying for those misjudgments for another generation? Is not his latest misjudgement to sit back and let the waste, the taxes and the debt pile up even more? Is it not the case that we need a Government who will get on with tackling the waste, stopping the tax rises and securing growth for the future?
First, let me share with the right hon. Gentleman our sympathies, as I mentioned earlier, for those families whose loved ones have died in Afghanistan, and our sympathies for the Russian people as they face a terrorist incident of very substantial proportions today.
Let me also agree with the right hon. Gentleman that climate change is an important issue that Europe and the rest of the world must continue to address, that we must move forward on the Copenhagen summit, and that we must get a worldwide framework for a climate change agreement. He asks that renewables should be at a higher level in this country, and I agree with him that we should have higher investment in renewables. That is why we are making plans for public investment in renewables at the same time as the Conservatives oppose them. If I may say so, that is why we are asking councils to approve wind farms, while just about every Conservative council is trying to hold back that policy.
The right hon. Gentleman mentioned the issue of a levy on financial transactions, which is something that we have been proposing for some time. Originally, the Conservatives opposed it; then they said they would support if it was at a multilateral level; then they said they would support it even if it was not done multilaterally; and then they retreated into saying that they would support it if it was multilateral. That is about a policy a day, but it is the same policy that is being reinterpreted every day. That is the reason that people have very little trust in Conservative economic policy.
I come now to the European Council discussions on the economy. I just have to say this: why does the Conservative party want to attack the European Union all the time? Three million jobs depend on our European membership, more than 50 per cent. of our trade depends on Europe, and 750,000 companies depend on Europe, so why does the right hon. Gentleman want to go to the European Council—if ever he were elected—to say that he wants to renegotiate our treaties in respect of membership of the European Union? Why does he want to repatriate the social chapter and employment legislation to Britain? Why does he threaten that he is going to have a sovereignty Act for this Parliament to suggest that the law affecting the European Union could somehow be modified and amended by doing so? Why does he resist the European advice that we should work together so that we do not put the recovery at risk?
The announcement by the Conservative party today was first to withdraw £7.5 billion from the economy this year—[Interruption.] The right hon. Gentleman says that it is good to hear that, but he also wants to withdraw the support that is necessary for the economy to have a sustained recovery. The first thing that the Conservatives have done today is make it more difficult for us to retain the jobs, businesses and industrial infrastructure that are necessary, despite the fact that every bit of advice that we are getting—and that he is getting—is that we must maintain the investment necessary for recovery.
The Conservatives must explain why, at a time when people are worried about the recovery, they wish to withdraw support for the recovery. The second thing that they have got to explain is their panic measure today on national insurance—[Interruption.]
Order. I gently say to the Prime Minister that I know he will want to focus his reply very specifically on the European Council—[Interruption.] Order. The shadow deputy Chief Whip has got something wrong with his head and I am worried about him. He does not have to keep shaking it. The Prime Minister will talk about the Council and, of course, the policies of the Government.
The policy of the Government is to make sure that we have a sustained economic recovery; the Conservative party policy, I am afraid, would put that recovery at risk. Then the Conservatives are going to spend nearly £30 billion on tax cuts in the next five years, which puts front-line public services at risk. People will understand that these panic measures by the Conservatives will not help a recovery, that they will mean public spending cuts and that they will put sustained investment in our economy at risk.
We are the party that believes in Europe: it is the party opposed to Europe. We can see that if the Conservative party had ever been willing to change, it would have changed on Europe. It has not changed on Europe, and it has not changed on anything else.
I wish to add my own expressions of sympathy and condolence to the family and friends of Rifleman Daniel Holkham, from 3rd Battalion the Rifles, and Lance Corporal of Horse Jonathan Woodgate, from the Household Cavalry Regiment, both of whom tragically lost their lives in Afghanistan this week.
I also wish to join the Prime Minister in expressing our condolences to the families and friends of the dozens of victims injured and killed in Moscow. Londoners especially, given the horrors of 7/7, will feel a strong bond of sympathy for the families of commuters affected in Moscow.
I thank the Prime Minister for his report from the European Council. It will most probably be his last European Union summit. I imagine that he will be feeling some relief about that, given that in a few short years he has gone from lecturing his colleagues in Europe on how not to run an economy to teaching them how not to run an economy by example. At last week’s summit, the Prime Minister called in some of the few favours he has left from his colleagues in Europe to delay a decision on the alternative investment fund managers directive. Instead of defensively trying to stave off damage to the City, why did he not take the chance to show real leadership on the reform of our banking system? Real leadership is breaking up the banks. Real leadership is imposing an additional levy on their profits until that is done. Real leadership is getting banks lending to small, viable companies that are going to the wall.
Will the Prime Minister report on any conversations that he had with President Barroso, the President of the European Commission, as this summit was after all their first meeting since the Commission issued its damning verdict on the Prime Minister’s handling of Britain’s huge budget deficit? No doubt the European Commission will today be equally dismayed by the shiny promises of tax cuts from the shadow Chancellor, who is not in his place—he must be preparing for the mauling that he will get on television tonight. He has no idea how he will pay for those tax cuts. Labour and the Conservatives seem to be competing to come up with the most ludicrous fantasy announcement paid for with bags of gold found through efficiency savings. I am not sure who is winning, but I am certain that no one is falling for it.
On the bail-out for the Greek Government, as the Prime Minister knows, instability in the eurozone can and will rapidly turn to instability across the European Union, which will affect us too. Given that, I found the lack of details about the potential Greek bail-out a little concerning. Yes, Greece has not yet formally asked for help, but we have a deal on the table that is meant to calm the markets’ nerves but gives us very little in the way of detail. The Prime Minister is frowning, but can he tell me what will be the exact role of the IMF in this deal? How will the burden be broken up between the other eurozone countries? What is the maximum level of support likely to be given to Greece in the event that it asks for help and, crucially, what conditions will be put on Greece in return for this support?
I will tell the right hon. Gentleman the facts. There is a limit on the amount of support that the IMF can give. It is limited by its constitution and how it has always done things. That is a matter that we will discuss with both the IMF and the eurozone at the right time. It is limited by the regulations that it has.
On the right hon. Gentleman’s other points, in the Budget last week we reached agreement with the banks about £92 billion of additional lending in the next year. We also reached an agreement—and said in the Budget—that proper supervision of that would be needed, so that the public and small businesses could be assured that the money was being paid to them. So we are setting up a small business mediator who will act on behalf of small businesses to try to resolve the issues that have left them without the funds that they need—[Interruption.] An Opposition Member says that that is ridiculous, but we have to protect small businesses to ensure that they can grow. As far as the banks are concerned, we are taking the necessary action.
As far as directives are concerned, we did not accept the compromise proposed by the European Finance Ministers. We will therefore renegotiate that over the next period of time, because we are determined both to have proper regulation of those industries and, at the same, to allow companies to have access to the full range of countries in the internal market, and that is what we are doing.
As for ludicrous policies, the right hon. Gentleman would win the race any day.
I prefer the Prime Minister’s posters with a smile to the Leader of the Opposition’s airbrushed images. There were reports in the press over the weekend that Angela Merkel is calling for economic government, which would require treaty changes. If that were to be the case, can I press the Prime Minister to make a commitment that that would also involve a referendum in this country?
We made it clear a few months ago—this was a decision that we asked the European Union to make—that there would be no further constitutional or institutional change of that sort over the next 10 years. We made it absolutely clear that the European Union should not be contemplating further constitutional or institutional change in the way that is suggested. As for improving the way the European Union works, there is a case for that improvement to be made, and we will join those forces at work in this taskforce to ensure better and improved governing of the European Union.
Does the Prime Minister agree with the French Finance Minister Christine Lagarde that the eurozone has no hope of achieving sustainable recovery while the huge problem persists of a massive German trade surplus and persistently low consumer demand in Germany, and will he express those sentiments to the German Chancellor when he meets her?
I am grateful to the right hon. Gentleman for his comments, which are, in essence, supportive of our economic policy. I am grateful for that, first, because in the European Council conclusions we say that we have to look at the issues that have arisen from the severe imbalances in the European Union. Secondly, it is clear from what he says that he supports the maintenance of a stimulus and the public support necessary for the economy to have sustained recovery. In that, he is at odds with those on the Conservative Front Bench, who want to take £7.5 billion out of the economy, which would mean lost jobs, lost businesses and lost economic progress.
Did the Prime Minister have the opportunity, either in the meeting or at the margins of the meeting, to have any discussion with his colleagues about the issues of international terrorism to which he has referred? In particular, was there any discussion about the prospects for European Union involvement to try to reactivate the negotiations in the middle east or about the situation in Iran?
I have talked about this on a bilateral basis with President Sarkozy and with Chancellor Merkel, and, outside the European Union, with President Obama. As far as the middle east peace process is concerned, we want the proximity discussions to move forward, and we want George Mitchell, the American mediator, to have all the necessary power to move them forward. As for the discussions in relation to Iran, Iran has not been prepared to accept the offer made by the major countries to help it get civil nuclear power without having nuclear weapons, which are a danger to the region and the world. We are contemplating what we must do next, and I believe that there will be pressure for a United Nations resolution.
Will the Prime Minister bear in mind that following the ratification of the Lisbon treaty, despite his breaking of the pledge that there would first be a referendum on the subject, he assured us, as a sop, that there would not be another European treaty for at least 10 years, a pledge that he has repeated this afternoon? So how does it come about that we are now asked to contemplate the establishment of a super finance ministry for Europe, which would certainly require another treaty and would certainly lead to Berlin being able to dictate British tax policies?
Does the Prime Minister recall any conversation at all by the other countries in respect of joining the euro? Because I have a good idea for a poster, which the Tories will never produce: “Gordon Brown kept us out of the euro. Five conditions. Superb leadership.” I think it would be a good idea for us to do that.
The Prime Minister’s opening remarks on the casualties in Afghanistan and on the terrorist attack in Moscow will receive widespread support. At the European Council, did he raise the issue of the terrorist threat to Europe and the poor performance in Afghanistan by most of our European allies?
This was a meeting to discuss two specific things: the economy and climate change. Of course, in the bilateral meetings that I had with President Sarkozy, Chancellor Merkel and others—and with the President of the European Council, Mr. Van Rompuy, and with the presidency, in the form of the Spanish Prime Minister—the issue of terrorism was uppermost in our minds. We have to persuade some of our allies that we need to increase the police presence in Afghanistan, and that we have to increase the number of police trainers to raise the number of effective, trained police there. I believe that President Sarkozy has been meeting President Obama to talk about exactly these issues. We have increased the number of trainers that we have made available for policing in Afghanistan, and we are looking forward to other countries doing the same.
Does my right hon. Friend agree that any reasonable person—and any reasonable political party that is interested in more than just appeasing its anti-European factions—would recognise that a serious response to the recession requires common effective action at European level? Will he tell me whether the continuing problem of the higher unemployment among young people than among the population at large was discussed at the Council, and whether specific measures for tackling it were considered by our various European partners?
There are more than 20 million people unemployed in Europe, and the attention of the European Council was on what we can do to raise growth in Europe so that we can get unemployment down. The way to do that at the moment is to ensure that we maintain the support for our economy, and that support is maintained for the European, American and other economies, until the recovery is fully secured. I am working with 27 countries in total—26 and us—and they all agree that we should maintain the support that is necessary for the economy. I can think of only one party competing for government in the whole of Europe that is against that, and that is the Conservative party.
We associate ourselves with the Prime Minister’s comments about the loss of service personnel and the deaths in Moscow. We should also like to mark the funeral today of Billy Wolfe. Billy led the Scottish National party with distinction through the 1970s, and we pay tribute to his efforts to banish weapons of mass destruction from Scotland.
The Prime Minister must have discussed economic best practice among EU and non-EU member states at the European Council over the weekend. Will he explain how it has been possible for Norway to have a sovereign wealth fund that is significantly larger than the UK deficit?
I join the hon. Gentleman is his tribute to William Wolfe. I have to say to him, however, that when people talk about non-EU countries, they often refer to what was sometimes called the arc of prosperity, and the SNP often talks about the parallels between Ireland, Iceland and Scotland. That arc of prosperity collapsed a few months ago.
May I disagree with the Prime Minister when he says:
“Distancing ourselves from Europe makes no sense”?
Surely it does make sense to distance ourselves from politicians who support the Waffen SS, who are climate change deniers or who have odd views on what happened to the Jews in world war two. Surely it makes sense to distance ourselves in particular from homophobic Members of the European Parliament. Listening to the Leader of the Opposition reduced to absolute speechlessness while trying to defend them last week was a collector’s item.
I think that the British people would be shocked if they heard what Conservative Members of the European Parliament were doing in that Parliament. Only a few days ago, a number of Conservative MEPs voted against proposals to support the automatic exchange of information needed to crack down on those seeking to hide their money from the tax authorities. So here in Westminster they are saying that they want openness and transparency, but in Europe they are voting for the very tax havens that we know Lord Ashcroft has been very much a part of.
In the context of future changes to the governance of the European Union, of which the Prime Minister has just spoken, will he tell us whether he told his colleagues at the Euro Council that any proposal to transfer significant power from the United Kingdom to the European Union would have to be the subject of a referendum in the United Kingdom? If he did not tell his Euro colleagues that in the Council, will he please tell the House that now?
I have already mentioned the agreement made a few months ago that there would be no further institutional or constitutional change in the European Union for the next 10 years. Any colleagues in the EU know precisely what the British position is. Unlike the Conservative party, however, I am prepared for Britain to be part of a taskforce to look at how we can improve the management of the EU; only people who are blinded by Euroscepticism would oppose any form of co-operation in Europe.
Those people who said that the national health service was a 60-year-old nightmare were completely wrong. The NHS has been for many millions of people a 60-year-long liberation from ill health and disease. I think the Conservative leader should be ashamed of some of the people he supports in the European Parliament.
Does the Prime Minister accept that the Greek and the Portuguese crisis demonstrates that the European Union is in systemic failure? Does he also accept that by collaborating with the proposals for economic government, which he has done under the surface and directly in agreeing to the statement, he is in fact betraying the British people? As President Barroso said, it is time for Europe to talk the truth.
Every time the hon. Gentleman speaks on Europe, we hear that he wishes to see the European Union fail, and every time he talks about Europe, it is as if he has a visceral hatred of everything European. I am sorry that his views are shared so widely within the Conservative party.
“Pink and smooth like a baby’s bottom” or “A bit rough and grumpy”. Which poster would the other European leaders prefer?
Since this Government came to power, the burden on British businesses from EU regulation has risen from £6 billion to almost £6.5 billion a year. Is the Prime Minister proud of that record? Is it something he took the trouble to discuss with his European colleagues at a time when many British businesses are struggling and suffocating due to over-regulation?
Of course we want to cut down on unnecessary regulation. We have made proposals in the EU, as we have in Britain, to do so. I would have thought that the hon. Gentleman would start his question by acknowledging that there are 750,000 companies trading with the rest of the European Union, that 3 million jobs depend on our membership of it and that we should support our exporters by co-operating in the EU. It is only the Conservative party that seems to think that having a permanent conflict with the EU is in Britain’s interests. That is not in Britain’s interest; co-operation is.
The Prime Minister mentioned his pledge on climate change. Why, then, has the UK so abjectly failed to meet its obligations under the landfill directive and failed to follow the lead of many other EU countries in developing energy from waste projects?
The landfill levy has been strengthened over these last few years. It is our desire to make sure that we do everything in our power to use our waste effectively. Unfortunately, the hon. Gentleman, again, is so blinded against the European Union that he cannot acknowledge that the way to move forward is through greater co-operation with the EU on climate change issues, that we should be pressing to reopen negotiations that failed in some respects at Copenhagen, that the Bonn summit is the way to do so and that we should support Chancellor Merkel in doing that. We need co-operation on the environment if we are going to move forward in Britain, Europe or the rest of the world. It is global and European co-operation that we need, rather than conflict between us in Europe.
Last year, the British taxpayer paid £3 billion to the European Union. Next year, the British taxpayer will pay £6.6 billion to the EU. Is it not strange, at a time when the Government are planning public expenditure cuts, that an additional £3.6 billion is paid to the EU? Does the Prime Minister agree that we cannot go on like this and that it is time for change?
It is very interesting that every single question from the Conservative Back Benches has repeated the anti-European position of the Conservative leader. Is it not amazing that not one person has stood up and said, “I support the European Union”? Although the Conservatives have a Back Bencher who did so, he is not even bothering to stand again at the next election. The Conservative party is fundamentally Eurosceptic and anti-European Union.
Did the Prime Minister discuss referendums at the summit so that British people could vote on the Lisbon treaty, which all three main parties promised them they would be able to do? Or does he think that the British people have simply got it wrong?
We secured all our negotiating objectives, and made sure that the constitutional treaty—as it was talked about—did not become a constitutional treaty in the end. As for the Conservative party, I accept that it gave an iron-cast guarantee that there would be a referendum on the European Union, but, like the Conservatives’ iron-cast guarantees on so many other things, it fell away.
Lance Corporal of Horse Jonathan Woodgate served in the Household Cavalry in Windsor. I add my condolences in respect of Lance Corporal of Horse Woodgate and those who have gone before. We must never underestimate their contribution to our security.
It seems to me that—whether in a European Union or in a world context—the Prime Minister has certainly led our country, but has led us into being the first into recession and the last out of it. Does he accept any responsibility whatever for the decisions that he made?
We have talked about this many, many times in the House of Commons. We had a global banking crisis, and we had to deal with it. If we had taken the advice of the Leader of the Opposition, we would still be in recession. On every big decision, he and his shadow Chancellor got it wrong, wrong and wrong again.
Points of Order
On a point of order, Mr. Speaker. Nearly two weeks ago, at Prime Minister’s Question Time, the Prime Minister assured me that he would look into whether a No. 10 staffer had taken part in a conference call discussing the suitability of Stephen Purcell in July 2008. Asked about that yesterday on the BBC’s “Politics Show”, the Prime Minister said that he would investigate the matter, which seems to suggest that he had not looked into it at all.
Given your recent ruling on the reasonable length of time that Ministers have in which to reply to Members, Mr. Speaker, could you guide me on how the Prime Minister can be encouraged to do what he says he is going to do?
On a point of order, Mr. Speaker. All directory enquiry services, including 118118, are giving my office number instead of the House of Commons switchboard number to people who ask for the telephone number of the House of Commons. Since 18 January this year, we have been fielding your calls and everyone else’s calls. The various directory enquiry services will not change that number unless PICT—the Parliamentary Information and Communications Technology department—tells them to do so. PICT has been on the case for several months, and has still not done that. Can you help, Mr. Speaker? It may be funny—I admit that it is amusing—but it is not good for the public image of this place if members of the public are passed from pillar to post, notwithstanding the charm and efficiency of my office staff.
I am very grateful to the hon. Gentleman, who is obviously extremely perturbed about this important matter. It is, however, something that he should follow up with the director of PICT, and I have a feeling—just a hunch—that she will be hearing from him very soon.
Second Home Ownership (Regulation)
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 give planning authorities the power to require change of use planning permission before existing or new homes can become second homes; to require the Secretary of State to examine the options for using this power to limit the change of use of full-time homes to part-time occupation; to allow local councils to levy business rates on second homes; to provide for small business rate relief not to apply to second home owners; and for connected purposes.
It has been my honour to represent the people of North Cornwall, and I have consistently raised the proliferation of second-home ownership and its effect on rural communities. The problem is not limited to my constituents, of course; it affects many rural areas throughout the country. My hon. Friend the Member for Westmorland and Lonsdale (Tim Farron) has referred to it, and Members on both sides of the House are aware of it.
As my constituency includes the long stretch of coastline running from Crantock up to Morwenstow, it has a huge tourist industry, and we welcome the many visitors who come every year to enjoy the coastal scenery, as well as those who travel inland to see our wonderful towns and village communities across Bodmin moor. That large influx of visitors supports the local economy and brings many new perspectives, but increasing numbers of them want to grab a piece of the area that they can keep, and keep returning to, by buying a second home.
In 2008, a parliamentary answer to my hon. Friend the Member for Westmorland and Lonsdale included figures for second-home ownership broken down by local authority area. At that time, about one in 10 homes in the area covered by the former North Cornwall district council was a second home, but the real figure, arrived at if properties that have incorrectly been registered as holiday lets are taken into account, is probably much higher. In some areas, however, second homes meet other demands. That is particularly the case in urban settings, so I am especially concerned about the situation in rural areas, where homes that were previously residential are taken into holiday use and are ultimately left empty for much of the year.
To find out why that is a problem, I encourage Members of all parties to come and talk to my constituents. They might want to stay in a hotel or at a campsite and enjoy the Cornish countryside, and thereby support the local tourist economy, but while they do so they might also discuss with local residents how this issue affects them. In many communities, it has inflated house prices, and the consequent decrease in the local population has led to declining school rolls and, ultimately, to the closure of small schools. It has also led to the closure of post offices because of declining business. It can pose challenges in the recruitment of retained firefighters, too, as those who protect their area by providing such crucial services are forced to move away from the communities where their families have historically lived—to move further inland, perhaps, or into the towns.
High house prices force local people out. Sometimes they are forced out of Cornwall entirely, or at least to areas further from the coast. They are often forced to travel further to work, therefore, and they are also forced on to the affordable housing waiting list—but, in common with other parts of the country, we already have a long waiting list.
The Government have often sought to turn this issue into one that is purely about the need to build new affordable housing. That is a crucial issue, and I support the aim. My party has long supported community land trusts, and we now have them functioning in Cornwall. We have also supported many other ways of adding to the supply of affordable housing. The second home problem is a separate issue, however, and it is getting worse.
Some have said to me that fewer people are investing in second homes in the current economic climate. Unfortunately, however, that is not the case. In an article recently posted on the propertycommunity.com website, Mr. Liam Bailey, head of residential research at Knight Frank, said that complaints from locals in second-home hot spots had been a long-standing issue and that the “uplift” in local pricing “can be dramatic.” He gave examples, saying that prices in one community in Cornwall were 131 per cent. higher than the local average. He also highlighted communities such as Rock and Trebetherick in my constituency and Bamburgh in Northumberland, where, he said, there were
“second home price uplifts of between 90 per cent. and 100 per cent.”
The article also states:
“The number of second homes in England rose by 2.6 per cent. in 2009”.
It added that that followed a small
“fall of 0.4 per cent. in 2008”
and that this
“rise, which equated to 6,212 additional second homes, pushed the total to an all time record of 245,384”.
Mr. Bailey further believes that that growth in demand will continue:
“Early indications this year suggest that supply in the main second home hotspots is still 20 per cent. below the long term average.”
So the pressure on prices will remain. It was reported this month in the Western Morning News that another estate agent, Savills, has said that the revival of big City bonuses and poor returns from other investments were continuing to drive the trend, that 43 per cent. of prime stock bought in Cornwall over the past four years was for use as a second home and that prices in Cornwall were just 8.5 per cent. off their highest watermark in 2007.
We face a particular problem in North Cornwall, where the increase in house prices from 1999 to 2009 was 230 per cent., which compares with an average increase in rural Great Britain of 118 per cent. over that period, so the problem is continuing to get worse. Some people have said that that means that a lot of those properties will always be out of the reach of local people. Although that may be true, those properties fall within a housing a market and any influence at the top of a local area’s housing market has a knock-on effect all the way down the chain, hauling up prices and making properties more unaffordable.
What can we do about this problem? The use of taxation is an option that has been suggested, but I am concerned about the basis on which some sort of punitive tax regime could be introduced. Use classes orders, such as those proposed in the Bill, have been proposed consistently by my party over a number of years as a means to tackle this problem. We are not the only ones to have done so; the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) has proposed a similar change.
I referred to this matter in my maiden speech in 2005. I was thus delighted to give evidence to Elinor Goodman’s Affordable Rural Housing Commission and to read its report when it was issued in May 2006. The report recommended using the planning system to deal with second home proliferation. The Government picked up on a number of the report’s conclusions and although they moved to action those, they ran away from tackling the issue of second homes.
In 2008, I served on the Public Bill Committee considering what became the Planning Act 2008 and tabled an amendment that would have allowed local authorities to suggest that the Secretary of State employ use classes orders, which were needed to tackle local problems. That may have had relevance in other areas, because the Department has picked up on the issue of studentification and has come back with possible change of use requirements in respect of houses in multiple occupation. The Department has looked at that approach, but just not in respect of second homes.
More recently, my hon. Friend the Member for Truro and St. Austell (Matthew Taylor) was invited by the Prime Minister to undertake an inquiry on the state of the rural economy. My hon. Friend took evidence from a wide cross-section of people and organisations, and produced an excellent and well-evidenced report, “Living Working Countryside”, which was published in July 2008. Yet again, the Government agreed to act on a number of key recommendations but, lo and behold, they refused to tackle the second home issue. My hon. Friend’s report had again proposed that the planning system ought to be used as a means of tackling it, and he suggested piloting such an approach in the national parks. The Government response was cruelly dismissive towards people in local communities, stating that the Government were
“not persuaded that the ‘problem’, such as it is, could be tackled effectively through the planning system.”
In other words, the Government were not persuaded that the planning system was a route by which the problem could be tackled, despite having said that it was possibly a route by which other issues, such as studentification, could be addressed.
I and other hon. Members have repeatedly raised this issue, which is crucial to local communities such as those in North Cornwall. We need action to be taken to resolve the problem, and it seems to me, as it has seemed to those who have undertaken detailed study of it, that the planning system is the way that the problem could be solved. The Government could at least take that on board and explore ways in which such an approach could be applied. I hope that the Bill, if it progresses, will make a contribution towards tackling this problem, which is crucial to rural communities around the country.
Question put and agreed to.
That Dan Rogerson, Julia Goldsworthy, Andrew George, Mr. David Heath, Mr. Elfyn Llwyd and Mr. David Drew present the Bill.
Dan Rogerson accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 23 April, and to be printed (Bill 98).
Ways and Means
Budget Resolutions and Economic Situation
amendment of The Law
Debate resumed (Order, 24 March).
Question again proposed,
(1) It is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance.
(2) This Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—
(a) for zero-rating or exempting a supply, acquisition or importation,
(b) for refunding an amount of tax,
(c) for any relief, other than a relief that—
(i) so far as it is applicable to goods, applies to goods of every description, and
(ii) so far as it is applicable to services, applies to services of every description.
This country has faced the deepest recession in living memory and the Budget outlines how we will secure the recovery and the future in a way that is sustainable and fair. The Budget is a new growth plan for the future. At its heart is a £2.5 billion one-off growth package to help small business, promote innovation and invest in national infrastructure and key skills. It is a Budget to secure the recovery, tackle borrowing and invest in our industrial future. It continues targeted support for businesses and families where and when it is needed and it sets out how we will stick to our plan to halve the deficit within four years.
When the global recession hit, we faced a choice as a Government: to stand aside and leave the economy to the markets or to step in and protect people from the worst effects. The Opposition could have joined us, but they did not. They turned their backs on people up and down the country. Their do-nothing approach would have left communities to fend for themselves. They were wrong then and they are wrong today, and they would put the recovery at risk.
There are signs of desperation from the Opposition. Two months ago, they said that not doing more on the deficit was “moral cowardliness.” We then heard from them about spending promises on the married man’s allowance, tax give-aways for the richest estates, selling off the banks at a discount rate rather than getting taxpayers’ money back, and last week they implied that there would be billons extra to increase personal allowances. Today, it is national insurance contributions. They are promising the impossible: tax cuts, deficit cuts and spending commitments all at the same time. It is an incompetent economic plan that would put the recovery at risk.
My right hon. Friend the Chancellor made the tough decision to put an extra penny on national insurance, but that will come into effect only in April 2011, after the recovery is secured, and 60 per cent. of the revenue from our fair tax increases comes from the wealthiest 5 per cent.
We took action during the recession. We stepped in because we believe that it is Government’s responsibility to help people during difficult times. That is why we have helped businesses, allowing them to spread more than £5 billion of tax over a more affordable period through the time-to-pay service. It is why extra job advisers and other measures are in place, so that unemployment is running at 500,000 less than that expected by independent forecasters last year. It is why we put in place help for people struggling with their mortgages, through which 330,000 families received help or advice over the past year.
Government action has helped people get through the recession, and businesses and families have been prepared to tighten their belts and take tough decisions. A strong competitive global economy for the future cannot rely on only one area or business model, but should rely on a diverse economy where everyone can play their part and has the opportunities they want. The Budget outlines how the Government will build that new recovery.
The Opposition do not have a growth strategy. We know that the shadow Business Secretary said a few days ago that the words “industrial strategy” send a shiver down his spine. Renewing our infrastructure is a vital part of the recovery. A strong country and a strong economy need a strong and modern infrastructure. Our transport, water, waste, communications and energy infrastructure needs to be built for recovery and to pave the way for a low-carbon economy. We need to invest in that modern infrastructure.
We can renew regional economies, renew and reinvent the manufacturing base, and build new competitive strengths in technologies, services and creative industries by investing in the skills, research and technologies that support them. The Government have already invested heavily in infrastructure, with more than £150 billion invested in transport networks over the past decade, and we have now set out plans for a new high-speed rail network. The “Strategy for national infrastructure”, which was published last week, gives an overview of the current state of the UK’s infrastructure. It identifies the challenges and opportunities, and sets out the areas for action. We will create a green investment bank to invest in low-carbon infrastructure, particularly in transport and energy, and we will invest an additional £250 million in making further progress on the managed motorways programme and other transport projects.
The Government have always sought to ensure that all parts of the country benefit from economic growth. Their action and investment have helped to narrow the gap between the most deprived neighbourhoods and the national average on health, crime, education and worklessness. Ten years of public investment and the creation of the regional development agencies have paid huge dividends—restoring our universities and science base to world status and closing a lot of the backlog in investment in Britain’s transport system and infrastructure. There has been huge investment in apprenticeships and skills, and we are a far stronger country because of that, as we work to secure the recovery.
Supporting strong regions and regional recovery is not the policy of the Opposition, however, who are committed to scrapping the RDAs. That would threaten regional economic recovery, put at risk the strategic investment in jobs that the RDAs are helping to create, and bring uncertainty when every business group says that we need to build confidence. Every area of the country should share in the increased prosperity that will come with recovery, so Regional Ministers will have a bigger role in promoting growth to make sure that their areas benefit. They will be supported by a regional growth fund that is to be established by the RDAs to promote investment and support growth. Strong city regions will have more autonomy and freedom to promote growth, and accelerated development zones will be piloted to support projects that deliver key infrastructure and commercial development in our cities.
The Budget will ensure that there are opportunities for all as we recover from recession, and no one will be left behind. We will support low-income households by increasing the national minimum wage to £5.93, and we will increase support for families. We will extend the young person’s guarantee beyond March 2011 to ensure that young people continue to be guaranteed training, work experience or a future jobs fund job if they cannot find work within six months. Everyone should have the opportunity to work and to thrive in their job, and no one should be left to a life on benefits. Today, my right hon. Friend the Secretary of State for Work and Pensions has published a Command Paper that sets out how we will guarantee help for people who do not find employment after two years and how we will introduce more individual and personalised help to people who are looking for a job.
In the recession of the 1990s, repossessions soared and the building industry took years to recover. Last year, we committed more than £2 billion to building an additional 20,000 new affordable homes for rent and low-cost sale and 20,000 homes on privately developed sites. The Opposition opposed the measures that will create and protect 45,000 jobs and 3,000 apprenticeships. When we made it a condition that apprenticeships should be created when public money is used to build new housing, the shadow Minister for Housing said it was “ridiculous” and “counter-productive”. Housing investment of £7.5 billion, over two years, will fund the building of up to 112,000 affordable homes to rent and buy and about 15,000 private sector homes. It will also support an estimated 160,000 jobs directly in the construction and related industries and will create 3,000 apprenticeships, as I have said.
My right hon. Friend will be aware that when the Select Committee on Communities and Local Government had a one-off sitting on housing and the credit crunch, all the witnesses from the house building and housing association sectors clearly welcomed what the Government were doing and said that it was not enough. Can he think of anyone from the house building sector who thinks that the Government should cut back their support for construction?
My hon. Friend, who chairs that Select Committee, makes an important point. I am not aware of a single voice in the housing industry who believes that investment in housing should have been cut last year. It is fair, however, to point out that, in January 2009, the right hon. Member for Witney (Mr. Cameron), the Leader of the Opposition, called for a cut of more than £1 billion in my Department’s budget, nearly all of which—about £800 million—would have fallen on the housing programme. If the official Opposition’s policies had been followed, far from building more houses, as we have done, there would have been fewer houses.
It would be interesting to find out whether any hon. Member believes that the country would be stronger today if those thousands of homes had not been started and if the thousands of people employed to build them had been out of work. I cannot see a single Member in the Chamber who thinks that the country would have been better off if we had not invested in those houses, yet the Conservative party’s policy was that those houses should not have been built, that people should not have been employed and that apprenticeships should not have been created. All the rolling of eyes in the world cannot get away from the fact that that was, and remains, Conservative party policy. I am pleased that we have created jobs and that we are building homes for families in the future, and that has helped this country to get through the recession.
Looking to the future, the need for new affordable housing has only been intensified by the recession, so we will need to ensure—we set out how we will do this in the Budget—that local authorities allocate the land needed to support recovery in house building. That is in stark contrast to the approach of the hon. Member for Meriden (Mrs. Spelman), who wrote to local authorities to urge them to resist plans to allocate land for housing, although that has been widely condemned by everyone associated with housing and the construction industry. Withdrawing the fiscal stimulus early, as the Conservatives propose, would cut house building by perhaps half, because 40 to 45 per cent. of all recent new-starts have depended on public investment.
We need to take further measures to boost the housing market. We are introducing a two-year stamp duty holiday for first-time buyers for homes costing up to £250,000, which will help nine out of 10 first-time buyers. However, to pay for that, we will introduce an additional 5 per cent. stamp duty rate for homes costing more than £1 million—that is a fair approach. By reforming the council house finance system, we will let councils fund and run their own local housing stock. Some 10 per cent. extra will be released for maintenance so that homes do not fall below the decent homes standard again, and capacity will be provided to build 10,000 new council homes a year by 2014-15.
The Government believe that cutting the deficit does not mean damaging the front-line services on which people rely. The Budget continued our commitment to making £11 billion of savings a year by 2012-13 through greater efficiency and streamlining government, which includes £8 billion of savings set out in the operational efficiency programme. Local government can deliver savings of £2.1 billion towards that total in areas including greater collaborative procurement, increased back-office efficiency and the greater use of shared services. Up to £100 million can be saved by reducing energy usage in local authorities. My Department will identify savings of £200 million to be delivered in 2012-13, including through operational efficiency, work to reform our arm’s length bodies, and a new approach to the regional tier of government.
Our public services must be as efficient, responsive and citizen-focused as possible. Through Total Place we are establishing the most radical changes in the delivery of public services for many years. We have high expectations of our public services. We want higher quality services that are more tailored to individual needs but more cost-effective, but not the bleak vision of the Conservative party’s proposals for Ryanair councils under which people pay once in council tax and again in top-up charges for a decent service.
The right hon. Gentleman spoke about efficiency savings. I quite see that savings can be made through greater efficiency, but why do we have to wait two years to start making those savings?
The answer, of course, is that action to produce efficiency savings is already well under way. In the current spending review—we are about to enter its third year—there is £35 billion-worth of efficiency savings. More than £5 billion of that will come from the local government sector, for which I am responsible. The programme of making efficiency savings is well established and will continue to develop; next year, we will continue to increase the savings that we make. Clearly, some savings take more time than that to be put in place. The development of greater shared services cannot be done on day one; these things have to be planned. That is why the Government have in place a credible programme of efficiency savings that we are delivering now, in this spending review, and we have set out further operational efficiency savings in the Budget. I think that the right hon. and learned Gentleman will give the Government credit for the consistency with which we have approached the drive for efficiency savings across local government and other public services.
Total Place has demonstrated the great value that can be gained for citizens and taxpayers by putting the customer at the heart of service design, and by working together to improve the outcomes of services and eliminate waste and duplication. In the Budget report, we set out a reduction in targets and in ring-fencing, and further reforms to the inspection system. That will be for all local government, but we have also set out two ways forward for local areas, local government and other public services. First, there is the single offer, where we encourage local authorities and other public services to have a pooled budget and to look at the redesign of services right across their local areas. Secondly, there are areas where local government and other partners may want to take a different approach to, for example, the provision of services for children, offenders or elderly people; again, they will have greater freedom to deliver and design services locally. Those approaches will produce radical changes in service delivery. They will produce better services for people, and they will offer greater possibilities for efficiency savings.
As we grow through recovery, the Budget sets out the Government’s support for business. For expenditure incurred from April 2010, we will double the threshold for the annual investment allowance to £100,000 a year from £50,000. On capital gains tax, we will extend the entrepreneur’s relief from the first £1 million to the first £2 million of gains made over a lifetime. We will work with industry on modifications to the enterprise investment scheme and venture capital trusts.
The Opposition are intent on scrapping capital allowances, but that would cripple the chances of advanced manufacturing developing here in Britain. It is no wonder that the Engineering Employers Federation has said that the move would be “a disaster”, and today warned that it would mean businesses having
“to think twice about investing in the UK.”
We have supported small and medium-sized enterprises throughout the downturn, and will do more to support them in recovery. UK Finance for Growth will oversee more than £4 billion of SME finance products created by the Government to support small and medium enterprises. That includes the growth capital fund, for which £200 million of cornerstone investment has been raised so far from the private sector and Government. There will be a generous temporary increase to the level of small business rate relief. We expect more than 500,000 businesses in England to benefit, many by well over £1,000, and approximately 345,000 businesses will pay no rates. The Opposition have proposed postponing the business rates revaluation, which would increase business rates for 60 per cent. of businesses in this country from April.
The Budget pledged to reduce the barriers to public procurement for SMEs. If the whole public sector increased the amount of procurement that went to smaller businesses through the supply chain by 15 per cent., it would mean up to an extra £15 billion of business.
Of course, Britain is home to strong businesses and investment, and is a leading centre for research and innovation. The Government will support innovation in the UK even when finances are tight. The pre-Budget report announced that we would reduce the rate of corporation tax on income from patents to ensure that the UK remains an attractive place for innovative industries. We will invest up to £25 million in the university enterprise capital fund to provide crucial early-stage funding for promoting university innovations. The Budget confirmed £30 million of investment for an institute of web science, a joint venture that is to be based at Southampton and Oxford universities, ensuring that the UK remains at the forefront of internet development.
The future economy depends on the students of today, and we are taking a long-term view of growth by investing in skills in the Budget. A £270 million modernisation fund will enable universities to identify and deliver efficiencies over the next four years and fund 20,000 extra undergraduate places on courses starting in 2010-11. The Budget also provides updates on wide-ranging improvements to enterprise education, including £15 million to extend it to further education colleges and primary schools.
The future economy must be a low-carbon economy. Taking action on climate change will generate new business opportunities and highly skilled jobs in the sectors of the future, and modernising the UK’s energy infrastructure will be the key to laying the foundations for sustainable growth. The green investment bank will support new energy projects, with an initial focus on offshore wind electricity generation, and we will help millions of people save money and energy by developing pay-as-you-save financing arrangements.
That is a positive programme for our country, but the Opposition—with their opposition to industrial activism, regional development agencies and regional investment, and their plans to abolish allowances, reduce reliefs and penalise firms that want to make serious investment in the low-carbon industries currently developing here in the UK—do not share it.
The Budget that my right hon. Friend the Chancellor introduced last week is realistic and optimistic. It is realistic about the challenges ahead, which is why it sets out a clear plan to more than halve the deficit over four years; and it is optimistic about Britain’s strengths, which have seen us through recession and will build a better economy through infrastructure and growth in recovery. That is why we will not heed the calls from the Opposition to cut now and risk recovery; to cut now and risk a double-dip recession; or to cut public spending, just as they did in the 1980s and ’90s, when the recession was still under way, so that unemployment kept rising for months and years after the recession finished. We will not heed their calls to undermine business confidence and threaten jobs. That is the Conservative way, which failed the country before and would do so again.
I have outlined the Government’s plans for growth, and for supporting new jobs, businesses, families and the economy. We must secure the recovery, not put it at risk; we must support new industries and future jobs; we must protect front-line services, not cut them; and we must stand up for the many, not the few. I commend this Budget to the House.
I am delighted to have this opportunity to debate the Budget. It is just a shame that the Secretary of State did not start with a moment of contrition and regret, noting that this country is more deeply in recession than its competitors, and that his Government have only themselves to blame for that. It would have been nice if he had opened with a slight reflex to all those who have suffered as a consequence.
The important thing—absolutely—is growth, so the extent to which we successfully deliver growth throughout the country will define our ability to compete with other countries, which emerged from the recession stronger and earlier than we did. In turn, that success or otherwise will define the job opportunities for our children and the public services for our families. With almost half of all jobless people aged 18 to 25, my goodness we have a responsibility to provide that growth for the new generation.
The Budget should have been the blueprint for securing growth and getting our country moving again; it should have been the chance to demonstrate that our country was open for business again, but it was neither: it ducked national debt and sidestepped stimulating growth. It was a missed opportunity, and one for which the country will not thank Ministers.
Let us start with the business community.
In due course. If the hon. Gentleman does not mind, I shall develop the argument about the business community.
The Secretary of State, as I am sure the hon. Gentleman heard, said that he had helped business, but all the Chancellor had to offer struggling business was a temporary increase in the small business rate relief. That year-long measure will be a tiny grain of comfort to small businesses, which have seen business rates soar as a result of the botched revaluation. The fact is that the burden of business rates is rising, not falling. It has driven many businesses to the wall, and when the new bills are issued, it will sound the death knell for many more.
Since Labour came to power the average business rate bill has risen, from £6,500 to more than £12,000. Even when that figure is adjusted to real-terms increases, it is still the case that the increase has by far and away outstripped retail prices index inflation. Measures such as ending empty property rate relief and forcing through questionable revaluations have all tightened the ratchet on struggling businesses. Is it not telling that, according to the Budget, business rate revenues are forecast to rise by £1 billion—an increase of 4.2 per cent? How can that possibly be described as helping business? The cost of the temporary increase in rate relief is a fraction of that, coming in at £210 million.
On that basis—let us be very clear—this Budget was proof positive, were it needed, that this Government’s priority is increasing tax on businesses. Just as the increase in national insurance is a tax on jobs, which we have pledged to reverse, so the business rate revaluation is a tax on growth. In just a few days’ time, the latest business rate revaluation will come into effect. It will send bills soaring through the roof because it is based on the peak of the commercial property market. It will make many businesses no longer eligible for small business rate relief.
The hon. Lady mentioned national insurance increases. As far as I understood it, the Conservatives’ policy was to concentrate on, and say they were giving greater priority to, cutting the national debt. How does that square with the fact that since the Budget the shadow Chancellor has made one major commitment, which is that if the Conservatives get into power they will not go ahead with the national insurance increase, adding £7 billion to the cost of the debt?
The hon. Gentleman will have heard the Secretary of State explain that he too, and his Government, would fund some of their priorities from efficiency savings. We recognise the damage that the increase in national insurance will do to our economy at a fragile time, and we have fully costed this proposal.
Many businesses will no longer be eligible for small business rate relief, which, incidentally, we have proposed should be made automatic. The impact on businesses, particularly small businesses such as pubs, which in the rural economy may be the only business in a village, or petrol stations, the cause of which my hon. Friend the Member for Ludlow (Mr. Dunne) has championed, will be disastrously affected, with, no doubt, many being sent to the wall.
In Northern Ireland, the revaluation was postponed because it was accepted that it would be very damaging to economic growth, so why inflict it on England? Do Ministers believe that it will not harm growth prospects in England? They certainly cannot base that belief on any impact assessment, because they have not bothered to do one.
I am sure the hon. Lady will be able to clarify this point. Sixty per cent. of businesses will see their bills fall as a result of the revaluation that she wishes to postpone. How does she propose to assist those businesses—the majority—whose rates would rise as a result of the policy that she has put forward?
The rating revaluation was based on commercial property prices in April 2008—pre-credit crunch. How can the Secretary of State possibly claim that its basis is fair or realistic in the difficult environment that we face today? Revaluations are designed to be tax-neutral, but our experience of the Government’s implementing a rating revaluation in Wales was that it was not tax-neutral. I therefore stand by the reasons why we would oppose such a flawed revaluation.
No; I have replied to the Secretary of State’s intervention.
By retrospectively charging five years of backdated business rates for struggling port businesses, Ministers are jeopardising firms, jobs, livelihoods and the very viability of many coastal towns. Labour Members will know that to be true if they have port businesses in their area. It is a disgrace. Ministers should stop squabbling among themselves about who is to blame for the mess, and get back to the drawing board and start again. A Conservative Government will call for an immediate halt to the process and consult industry about what steps can be taken to address the matter.
I have to say that taxing jobs and businesses so that they are unable to compete is a very odd way of trying to stimulate economic growth, but is that not the logical consequence of a Government who have long favoured taxing enterprise rather than tackling waste? In few cases has the tax grab been felt more painfully than with the council tax. It was telling that the first announcement on Budget day was yet another increase in council tax, taking the average band D property up to just short of £1,500 a year.
Let us be clear about the background to the latest rise in council tax. When Labour came to power, it inherited a local tax system that worked. As the then Department of the Environment, Transport and the Regions put it in 1998,
“it is working well, has been widely accepted and is generally well understood.”
At that time, people paid £751 a year on a band D home. Now they are paying more than twice that, and it is one of the most unpopular taxes they have to pay. Since 1997 council tax has doubled, while front-line services such as bin collections have halved. Does it not stand to reason that people are furious about the extent to which Ministers have abused the council tax? All the eye-catching announcements in Whitehall have too often left council tax payers to foot the bill, one of the most recent and notorious examples being the unfunded and ostensibly uncosted personal care policy announced by the Prime Minister. It is small wonder that this year’s council tax increase went down so badly, although someone living in Scotland will benefit from yet another council tax freeze. That will mean that the average bill for a band D property in Scotland is nearly £300 less than for a similar property in England. I do not have a problem with Scotland having a council tax freeze, but what confounds me and people up and down the country is why Labour Ministers will not let people in England have the same deal.
We have pledged to provide funding so that people in England can have the same council tax freeze as people in Scotland, yet time and time again the Government rule that out. Why? The reason is set out clearly on page 193 of the Red Book. Council tax receipts are forecast to rise by £1 billion this year. That is an additional £1 billion being taken out of the pockets of hard-working families and poured into the gaping black hole of the Government’s finances.
What is even more frightening is that the £1 billion figure is just the tip of the iceberg. We know, Ministers know, and most importantly the public know, that Ministers are preparing for an intrusive council tax revaluation and rebanding exercise, which will punish people for making improvements to their homes or just enjoying a room with a view. It has already happened in Wales, where four times as many homes moved up a band as moved down one. Now, thanks to parliamentary answers that prove the point I am making, we know that the same is planned for England unless we have a change of Government. I say that with certainty as we have made clear our pledge to scrap the revaluation. The combination of our council tax freeze and aborting the revaluation could save up to £500 a year in tax on a typical family home.
I was looking forward to a zero council tax increase in Harrogate this year from the Conservative council. In fact, the increase came out above the national average. Can the hon. Lady explain to me and the rest of the House how she will pay for a zero increase in council tax across the country? I am really quite intrigued about the figures behind that.
As stated very clearly in our localism green paper, one of our three policy green papers, which I invite the hon. Gentleman to read so that he fully understands the matter, the council tax freeze is an important pledge that we have made. If a local authority pegs its council tax increase to 2.5 per cent. in the financial years April 2011 to April 2012, and April 2012 to April 2013, council grant will be increased from the centre by 2.5 per cent. so that the local authority can bring the council tax increase to zero. That is a fully funded policy.
The hon. Gentleman obviously did not follow the significant exchanges in January, when the Government got egg all over their face for accusing the Conservatives of not being able to fund that pledge. We will fund the policy by cutting Government administration, including, but not solely, Government advertising and consultants. In January, the Treasury sheepishly admitted that its initial costings did not properly take into account the saving to the public purse from lower council tax benefit payment. As the Institute for Fiscal Studies pointed out, the attack on the Conservatives was spurious.
I will not give way; I want to make some progress.
Let us consider stamp duty. Two and a half years ago, we set out a policy to remove the obligation to pay stamp duty from nine out of 10 first-time buyers by raising the threshold to £250,000. Yet in last week’s Budget, a pale imitation of our policy was announced: it is limited to only two years. We can debate the merits of its being temporary, but how telling that the sister policy used to fund it—an increase in stamp duty at the upper end—is permanent. Once it is laid bare, the Budget gives struggling first-time buyers a guaranteed tax rise in two years, and some home owners, particularly those in London, will suffer an immediate, painful and permanent tax increase.
The continuing increases in stamp duty as a result of fiscal drag overlay the increases on page 71 of the Red Book. Combined, the policies mean that the tax burden on home owners grows heavier every day. Is that the way to stimulate growth in our economy? Is a punitive fiscal regime, which serves uncontrolled public spending, really the way to get our economy moving? Our sharp decline in the global league of competitiveness suggests not. The monolithic, state-heavy approach is denying us the dynamism and flexibility we need to compete with other economies. It is holding our country back—some parts even more than others as the gap between south and north has widened. That has happened despite £17 billion being spent on regional development agencies.
That prompts the question whether RDAs, as currently constituted, are the best, most effective and most efficient way of supporting local economies. Could we do better? We can and we must. We therefore believe that RDAs should be replaced with local enterprise partnerships through a series of important changes. Local enterprise partnerships will focus exclusively on delivering business growth and job creation. They will be accountable and take the form of genuine partnerships between local businesses, large and small, and local councils.
Let us consider the geography of local enterprise partnerships. In many parts of the country, the geography of regions is arbitrary and makes no economic sense. We need a more grown-up, flexible approach so that local economic partnerships reflect natural economic boundaries and shared interests.
I have got evidence by asking the business community, of course. The hon. Lady comes from the south-west. If she turns around and speaks to the hon. Member for Stroud (Mr. Drew), I think she will find he would be prepared to point out that Gloucester is nearer the Scottish border than it is to Penzance, and the scale of the south-west region is almost unmanageable. Indeed, it might interest the hon. Lady to know that when I went on a fact-finding mission to the north-east, where, I have always been led to believe, there is the strongest appetite for a regional development agency, I discovered a distinct difference of view in the business community. People in Newcastle are quite fond of their RDA, because it is located in Newcastle, but the business communities in Sunderland and the Tees valley were quick to tell me that they do not see much activity to help them.
Geography is important, and I reiterate that economic partnerships that reflect natural economic boundaries and shared interests will serve the community best. Those changes would offer an exciting opportunity to improve how we develop local growth. We have an opportunity to sharpen the tools at our disposal by giving the best support through focused,