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Commons Chamber

Volume 527: debated on Wednesday 4 May 2011

Clause 4

Main rate for financial year 2011

Question proposed, That the clause stand part of the Bill.

It is a great pleasure to be in the Chamber this evening, Mr Hoyle, for what I hope will be a fruitful discussion on clause 4, on corporation tax. As hon. Members will know, the clause reduces the rate of corporation tax with the aim of reducing it still further over the next few years. That has been done by Ministers because they recognise that there is a need for growth in the private sector, and that is an aim that we would support.

We need to consider growth in the private sector, which is a key issue that we must examine in some detail. If time permits, which I am sure it will, I intend to outline the case for discussing the issues related to the need for growth in the private sector. We must examine how we use corporation tax to deal with unemployment, something that affects the regions quite considerably, and how we compensate with private sector jobs for the Government’s massive cuts in public spending.

Let us look in some detail at the question of the economy and unemployment in general. There is real concern about the level of unemployment in the country at large. The economic indicators show that there are currently ranges of unemployment across the United Kingdom that cause concern in relation to unemployment levels generally. One reason why the corporation tax cut has been brought forward is that the Government recognise that they need to look closely at how they can generate private sector employment by ensuring that we expand the private sector as a whole.

If we look closely at the level of unemployment, we see great disparities across the country. In the north-east region—my hon. Friend the Member for Tynemouth (Mr Campbell), who is present, is a representative of that region—the unemployment rate is 10.2% and in the west midlands it is about 9.9%. Those high figures show that we need to develop the private sector. In London, the unemployment rate is currently about 9.4%. Looking around the Chamber, I see many hon. Members—

The hon. and learned Gentleman may say that, but this is an argument about corporation tax and if Members wish to participate in the debate I am very happy to stay here for as long as they wish to, because we can discuss this matter in some detail. It is very important that we discuss the circumstances in which we need to ensure that the growth in the private sector is undertaken by the Government—[Interruption.] I mean that the growth is encouraged. [Interruption.] Government Members know that there is a very important debate to be had about whether corporation tax plays a role in helping to grow the private sector. There is some synergy between what the Opposition and the Government believe on this matter, but we need to explore this in detail and I intend to do that. Hon. Members who have supported me in Committees in the past know that I will happily discuss these matters in detail for some considerable time if required. We need to consider what the current situation is, what the levels of unemployment are, what the need for private sector growth is when we are faced with massive public spending cuts and how to deal with those issues.

If one looks in detail, as I intend to, at the statistics for jobseeker’s allowance, one sees that they currently show that the unemployment count increased by 700 in March 2011 and now stands at 1.45 million people aged 18 or over. The unemployment rate for International Labour Organisation-based measures of unemployment was 2.48 million in the period from December to February 2011. We need to look at how corporation tax and the proposed cut in it will ensure that we can raise the level of employment in the regions that have been particularly hard hit.

As I have said, unemployment is 10.2% in the north-east, 9.9% in the west midlands and 9.4% in London. In the Yorkshire and Humber region—I can see Members from that region in the Chamber—the unemployment rate is around 9.3%, whereas in my region in Wales it is 8.7%. That rate is of considerable importance to my constituents and others across north-east Wales.

My right hon. Friend mentions that the unemployment rate in the north-east is in excess of 10%, but does he recognise that that is before the impact of the budget cuts in local authorities and the cuts in public expenditure that have been announced? In a region such as the north-east, which is heavily reliant on the public sector, that 10.2% will rise greatly over the next few months.

I am grateful to my hon. Friend for raising that. One of the themes that I shall develop in our discussions today is the cut in the rate of corporation tax to stimulate private sector growth. That private sector growth is extremely important, particularly at a time when we face massive cuts in public spending across the board. There is a debate to be had, which I am happy to engage in, about why and how those public spending cuts are being made, but my hon. Friend the Member for North Durham (Mr Jones) will recognise that in the Budget proposals to date for the period to 2014-15 there are major areas of public spending cuts where the corporation tax cut proposal is being put in place to ensure that we generate private sector jobs to meet the loss of those public sector jobs across the board.

For example, as hon. Members know, we face a 27% reduction in local government spending between now and 2015. We face a 25% cut in Business, Innovation and Skills departmental expenditure between now and 2014-15.

The average cut in local authority grant in the 12 authorities in the north-east of England is 24%, whereas the average cut in local authority grant in the south-east of England comes to no more than 4%. Why is that?

There is a range of reasons for those proposals. As part of the Government’s proposals to cut public spending across the board, there are major cuts which are unfairly hitting the north-east and other regions. I mention these issues because in the Minister’s justification for the reduction in corporation tax in the Budget proposals, he said that the Government were doing that in order to raise the level of private sector investment to attract businesses to the United Kingdom and keep them here through the corporation tax regime. Clause 4 provides the framework for generating growth in the private sector at a time when we face the loss of a possible 500,000 jobs in the public sector and great pressure on private sector industry.

One of the mistakes that the Government make is to think, “Public sector bad, private sector good.” Is my right hon. Friend aware of a study undertaken by Durham university which suggests that as a direct result of the cuts in public expenditure in the north-east of England, there will be between 45,000 and 50,000 job losses, and 20,000 of those will be in the private sector?

I am acutely aware that in my constituency the public sector and the private sector remain intertwined. They are interdependent. The fact that we have public spending cuts does not mean that only jobs in the public sector work force will be lost. The cuts will also have a strong impact on the private sector as a whole, because contracts are won in housing, local government, transport and capital projects, all of which are put at risk by major cuts in public spending across the board. This is an important part of the debate, because in his arguments for the corporation tax cut, the Minister maintains that one of the ways in which we can regenerate the economy to compensate for those public sector cuts is by cutting corporation tax.

In the previous debate it was clear that the Government had embarked on a series of measures arising from arrogance and ignorance. When, for example, £80 million of Building Schools for the Future money is taken away from Gateshead council, that clearly has an impact not just on the public sector but on the private sector. That is the mistake that the Government make.

My hon. Friend’s region, the north-east, faces the highest unemployment in the whole United Kingdom, as I have mentioned, at 10.2%—[Interruption.] The hon. Member for North East Hertfordshire (Oliver Heald) says that that is our fault, so I presume that he has missed the fact that there has been a world banking crisis and that unemployment has risen in countries across the board. There are no arguments.

As hon. Members on the Treasury Bench know, the Labour Government and my right hon. Friend the Member for Edinburgh South West (Mr Darling) had a plan to ensure that we reduced public spending to help tackle the deficit, but the current Government’s cuts in public spending are going too far, too fast and too deep. Their only alternative is to grow the private sector, which is good and positive and we accept that it needs to be done. The corporation tax cut before the Committee is one of the tools for doing that, and clause 4 is key to that strategy. We need to explore in detail what income will be forfeited as a result of the corporation tax cut, how it will attract businesses to the United Kingdom and encourage them to stay, and what the targets are for the creation of jobs on the basis of that cut for the future as a whole.

Government Members say that it is all our fault, but at the same time they say that we are all in this together. The fact that unemployment in the north-east went up by 11,000 at the same time as national unemployment went down by 17,000 seems to escape them. How does that illustrate the idea that we are all in this together?

Clearly we are not all in this together, because even now there are differences in the rate of unemployment across the board in the United Kingdom. As has just been said, in the north-east it is 10.2%. In the region that the Minister represents, and in the region represented in the Chamber today by Members from Cornwall and other parts of the south-east, such as the hon. Member for Truro and Falmouth (Sarah Newton), unemployment is 6%. There is a discrepancy between the unemployment rate in the north-east, which is 10.2%, and the unemployment rate in regions such as the south-east and the south-west, which is 6%. The question I want to put to the Minister, and the discussion we want to have around this, is about how the corporation tax cut proposed in the Bill is intended to bring jobs to my hon. Friends’ region and other regions with lower levels of unemployment generally across the board. We need to look at the impact of the corporation tax cut generally across the board.

If the hon. Gentleman looks at the Order Paper, he will see that the business may continue until any hour. I can make any argument I wish on these matters, in any order I wish, until such time as he wishes to pursue the matter further. If he wishes to intervene I will happily give way. If he does not, he can sit and heckle from a sedentary position.

I am happy to intervene on the right hon. Gentleman, who has repeated one phrase five times already in his ruthlessly repetitious speech. He rightly links the level of corporation tax to unemployment. Of course the previous Government, like every Labour Government, put unemployment up. Every time it is in power the Labour party leaves the working man on the dole, not in a job, and we are having to put it right. A little bit of recognition from him and the rest of his colleagues, even at this late hour, would be welcome.

If the hon. Gentleman reflects on the unemployment figures for May 2010 and May 2011 he will find that unemployment has risen in the past year. It has risen because of the policies of the Conservative and Liberal Democrat coalition, which has ruthlessly cut public expenditure over the past year. The strategy on corporation tax before the Committee is one of a range of tools that we need to explore with reference to how the economy is to grow.

It is important that we use this Finance Bill debate to examine the question of growth in the economy. The issue before the Committee is simply a corporation tax cut, which in itself is worthy of discussion, but we need to raise and consider other matters, too.

The hon. Member for Beverley and Holderness (Mr Stuart) is getting a little tired and tetchy—the hour is late—but one should avoid using crude headline statistics. As another Yorkshire MP, I can tell him that when Labour was in power, my city—the city of York—saw the number of people in employment go up from 40,000 to 57,000. One reason why we had that increase in growth was the reductions in business taxation, so this is an important measure and the Committee needs to treat it seriously, rather than just dismissing it with crude and misleading statistics.

Order. May I suggest that we try to stick to the clause? On both sides, we do need to try to stick to the clause before us.

The clause is about a corporation tax cut, and my argument is that because of the Government’s massive public spending cuts, which are designed to tackle the deficit and which we would indeed have made in part, the corporation tax cut is designed to help grow the private sector. We need to look at the impact of that particular cut.

Well, we need to look at the impact of that particular cut, and I will say it eight times for the hon. Gentleman: we need to look at the impact of that cut.

Let me, for example, look at the issue in relation to how the corporation tax cut will affect the private sector. [Interruption.]

The hon. Gentleman might like to take the issue more seriously than he is doing, because it is important. [Interruption.] My hon. Friends the Members for Gateshead (Ian Mearns), for North Durham and for Blaydon (Mr Anderson) represent constituencies with the highest unemployment in this country, at 10.2%, and they have a right to argue about how the corporation tax cut proposed in the Bill will impact on their constituencies in creating employment at a time of massive public spending cuts. We want to hear from the Minister in due course, when we have finished our arguments—because I am sure that my hon. Friends will contribute to the debate as well, about how the corporation tax cut will impact on job creation in those areas.

I am sorry, but I will take no lectures from the Conservative party on unemployment, which at its lowest point during the Labour Government’s term in office went down to 4% in the north-east. Until we had the crazy austerity Budget—the quick Budget—of this coalition Government, and because of the measures that the Labour Chancellor brought in, unemployment was going down in the north-east. It has gone up only since the ludicrous cuts that the present Government introduced in their emergency Budget, and if the incoming spending cuts then have an impact it will go higher than 10.2%. I know that the Conservative party does not care about the north-east of England, but I do.

My hon. Friend will be aware that in his constituency, as of this month, 2,443 people are unemployed. The question that we want to ask—I will say it again, for the benefit of the hon. Member for Beverley and Holderness (Mr Stuart)—is how does the corporation tax cut impact on that level of unemployment? That is the key issue that we need to explore in detail.

To clarify the point that Opposition Members have made about unemployment being higher in the north-east and north, in my constituency in the south-east unemployment among 18 to 24-year-olds in 2005, 2006 and 2007 was 30%, 30% and 30%. That was under a Labour Administration, but in the past year it has been reduced to 28%, so this Government’s actions have led to a decrease in unemployment down in the south. Will the right hon. Gentleman now apologise to my constituents for increasing unemployment—

Order. The debate is not about unemployment figures under this Government or the previous Government. Can we please try to stick to the clause now? It is very late and the debate is getting tetchy, but if we do stick to, speak to and address the clause, we will make much more progress.

I am grateful to the hon. Gentleman, who will remember that whatever the unemployment figures were in his constituency in 2005, he contested Horsham for Labour in that election and supported the manifesto of the Government of the time. He may have a little egg on his face at this point.

The key issue is the corporation tax cut. An article of 23 March from a national newspaper—it happens to be The Guardian, before hon. Members fall about with laughter—assessed how the corporation tax cut would help with maintaining employment in and attracting employment to the United Kingdom. It quoted several senior business people. Mr Roberto Troster, a financial consultant from Brazil, said that the biggest drawback with investment in Britain was not corporation tax but financial regulation and whether we were in or out of the euro. That view might not be shared across the Committee. The managing director of a regional trade body in the German state of Baden-Württemburg, whose capital is Stuttgart, one of the major employment sectors of the European Community, said:

“It remains to be seen how Germany will respond with a rate of 29.4%. The decision”

to cut corporation tax

“will please companies that already have a presence in the UK and will help those considering entering the UK market.”

However, his key point was that it remains to be seen whether it will lead to more firms setting up business in Britain. The head of German packaging company Optima, which is based in south-west Germany, has an office in the United Kingdom and is considering setting up a factory here, said:

“Taxes should never be the decisive factor when it comes to deciding where a business should be based.”

I simply put on the table the fact that we need to discuss what attracts business to come to the United Kingdom, to remain here, and to invest. The level of corporation tax undoubtedly plays a part in that, but we need to look at other factors, including major issues to do with skills development, public spending and employment opportunities.

I am glad that my right hon. Friend has raised international comparisons of corporation tax. One of the countries that was lauded until the financial crash was Ireland, which prided itself on very low corporation tax in attracting inward investment. The voices on the Conservative Benches who were lauding Ireland five years ago are now very silent.

Exactly. One of the key issues that we need to consider is the relationship between the north of Ireland and the Republic of Ireland, because that involves important issues to do with the rate of corporation tax.

The hon. Member for South Thanet (Laura Sandys) is in the Chamber. I would welcome, as an example, a discussion about whether the 2,400 jobs lost at Pfizer in her constituency would have been retained by a lower level of corporation tax now and in future. I have great concern about the fact that those jobs have been lost, as the article in front of me dated 2 February indicates. I pay tribute to the hon. Lady for her decision in taking that issue to the heart of Government and to the Prime Minister. I pay tribute to the Prime Minister for arguing with the company about maintaining its presence in Kent. My key point is that the Government have proposed a lower corporation tax rate over the next four years, but Pfizer has still chosen to leave the United Kingdom.

I would like to make it clear that Pfizer has made the specific point to the Government, to me and to its employees that there was absolutely nothing that the British Government could have done, under the last Administration or this Administration, that would have had any impact on its closure decision. I would say, however, that this Government have moved into action extremely quickly to address the situation, to put the right measures in place so that we are, hopefully, at the forefront of achieving enterprise zone status, and to ensure that everybody in my constituency has the support that Government can deliver. The situation was nothing, but nothing to do with corporation tax.

I recognise what the hon. Lady says. My point is not related to that issue. My point is that the change in the corporation tax rate has not impacted on companies such as Pfizer that are investing in this country. I want to know from the Minister how we will replace those private sector jobs, and whether the corporation tax cut, which we support, will achieve those objectives.

We will achieve new jobs in the area by encouraging small businesses to set up, and they are highly sensitive to corporation tax. We can achieve that by ensuring that the private sector feels that Britain is open for business. There is a big challenge in my area and in many other parts of the country. We have to ensure that the corporation tax level is an incentive for new businesses that delivers new jobs in my constituency.

I would not disagree with that. In fact, we believe that the clause is very valuable. The simple point I am putting to the Committee is that when we have a trajectory for corporate tax cuts now and for each of the next three years, which will cost considerable lost income, I want to ensure that it is effective, and that it attracts new businesses to Kent and elsewhere. Importantly, whereas the unemployment rate in Kent is 6%, in the constituency of my hon. Friend the Member for Gateshead, it is more than 10%. I need to know how the Minister envisages that corporation tax cut being effective in ensuring that we increase employment in the private sector in the regions where it is needed.

Will the right hon. Gentleman explain to the Committee what role he thinks corporation tax played in the deindustrialisation of this country, given that 1.5 million manufacturing jobs were lost under the Labour Government, whereas the previous Conservative Government added 400,000 in the last few years before they left office? Why is it that Labour destroyed so many jobs in manufacturing and stopped us from making things?

I pray in aid my constituency, which contains the firm Airbus, which makes world-class planes, employs 6,500 to 7,000 people, and has 50% of the world market. It was supported by investment from the Labour Government through research grants, loan aid and support to develop jobs. I will not take lessons from the hon. Gentleman about the active participation of Government in the private sector to create jobs.

I sympathise with the constituency of the hon. Member for South Thanet (Laura Sandys). When such jobs are lost, it is important that Government, local government and others come together to rally behind jobs. In the north-east, there were numerous examples in the 1980s of the Tory Government doing nothing at all to replace jobs. In contrast, does my right hon. Friend agree that Nissan decided to produce the new Leaf generation of vehicles in the north-east at Sunderland not only because of its efficient and good work force, but because of the regional development agency, which the coalition has abolished?

Whatever mistakes the previous Labour Government sometimes made—every Government will make mistakes—they believed in partnership between the public and private sector to create employment. The point is that the extra cut announced in this year’s Budget will cost the Treasury about £425 million in 2011-12 and nearly £1.1 billion by 2015-16. As I have said, we support that general approach to the corporation tax cut, but if we are forgoing income of about £1 billion by 2015-16 through lost corporation tax, we need assurances from the Minister that he believes there will be a trajectory of job creation. We need to know how many jobs will be created by the cut, where those jobs will be, which regions will benefit, how we will develop the public-private partnership through those jobs and how we will develop the private sector for the future.

The Minister has to tell the Committee exactly how the corporation tax cut will benefit the private sector through job creation. If it does not develop and benefit the private sector through direct job creation, we will be giving businesses a tax cut for no subsequent increase in employment.

We heard earlier that the cut would basically give banks a cash hand-out of nearly £100 million, but it will not help the small building companies that are already laying people off in my constituency because local government contracts are being lost and because of the housing market. Those businesses will not be there to benefit from any tax cuts that any Government bring in, because of the local spending cuts that have been made.

My hon. Friend makes the point strongly. The funding for regional development agencies and for training grants, which are being lost, and the £1 billion of public expenditure lost to the Welsh Assembly Government, was money that filtered its way into the private sector. We are now faced with a discussion about the £1.1 billion cut in corporation tax revenues in 2015-16, which is lost income to the Treasury. Ministers say that that will generate private sector employment across the board, with jobs being created and extra investment being brought to the United Kingdom. We need to know from the Minister what the trajectory of that job creation will be, where and how he expects jobs to be created, what his assessment is of the number of new businesses in the regions and whether he expects the corporation tax cut to be crucial in maintaining businesses in the UK.

Does my right hon. Friend recognise that to pay for the corporation tax cut, the Government are having to slash investment allowances by £2.6 billion? That money is needed for the manufacturing industry to create the private sector jobs that this country so desperately needs.

When we originally wished to discuss these matters, we looked into that point, because the corporation tax cut is clearly linked to clause 10, which is about the proposed cuts to plant and machinery writing-down allowances. We will come on to that at a later stage, possibly this evening or possibly tomorrow—who knows? Those matters are inextricably linked.

We wish to explore the impact of the corporation tax cut because we want to hear clearly from the Minister how, where, in what sectors and when he expects it to have the impact that he wants. If we are forgoing a considerable amount of tax revenue, we are presumably doing so because we believe it will help to grow the private sector. I need to know from the Minister this evening, or whenever we hear from him, which sectors he believes are under threat; which ones he believes will particularly benefit from the corporation tax cut; which ones would have left the UK had the corporation tax cut not been introduced; which ones will be attracted to the UK because of the lower corporation tax; and how the change fits into the wider growth strategy of training, investment, university education, public sector investment, skill development, innovation and the development of products for us to manufacture and sell to the world at large.

The abolition of RDAs will be compensated for by the reduction in corporation tax, but how will the Government calculate that? In my constituency of Gateshead, the economy is much diversified compared with the 1980s—there are many fewer large engineering companies and many more technical engineering ones. However, there is no sign that this gift, in comparison with the RDA offer, will bring the regeneration that the area greatly needs.

RDAs are a very important factor in our discussion. The Minister indicated why the corporation tax cut should progress. Simply, he believes that the measure will help to compensate for the loss of public spending across the board. We need to look at that in great detail, and I want the Minister to respond on three particular issues. First, which businesses that would have left the UK will be maintained here by the corporation tax cut? If we forgo that £1.1 billion, which companies would leave if the cut is not undertaken? Secondly, which businesses and sectors can the Minister most attract to the UK from France, Germany and other places abroad because of the corporation tax cut? Thirdly, does he believe that some businesses will not grow in the UK if we do not make that cut?

Those are legitimate questions and legitimate points that we needed to make. The official Opposition support the principle behind clause 4 and we will not oppose it. The clause is the direction of travel that we need to take, but it is incumbent on the Minister to outline to us in clear and detailed terms how those objectives will be met. At a time of massive public spending cuts and growing unemployment in the country at large, and when 500,000 are being made unemployed, we need to know how this corporation tax cut fits into a wider growth strategy in the UK as a whole.

I am grateful to my right hon. Friend for giving way, but I am sure that I could speak for a lot longer if Government Members want me to.

Does my right hon. Friend agree that the Minister also needs to explain, on a regional basis, for example in the north-east, how this corporation tax cut will, in the next 12 months, grow the jobs that will be lost because of the effects of the public spending cuts that the Government have already announced?

That is the key issue. This is why the discussion has strayed into public spending. The Exchequer Secretary has said:

“I make four arguments for prioritising this move to reduce corporation tax. First, corporation tax rates are important in themselves in selling the UK. They are an advert for the economy and for the UK as a good place to do business. By reducing our rate we are sending the strongest possible message that Britain is open for business. Secondly, this cut is a necessary step to help to rebalance the economy”,

which was the very point made just now by my hon. Friend the Member for North Durham. The Exchequer Secretary added:

“As we take tough measures to scale back the public sector, we must provide the necessary boost to the private sector. Thirdly, the OECD’s estimates suggest that corporation tax is an inefficient and growth-damaging tax. Lower corporation tax rates encourage investment, which this country needs to support the recovery. Finally”—

in the Exchequer Secretary’s own words—

“far from merely being a tax cut for profitable companies, they will provide the boost to investment that is vital for Britain”.—[Official Report, 12 July 2010; Vol. 513, c. 750.]

We support those four general points. We have no quibble with what the Minister said on those four points.

Well, it is possible to speak until any hour and on any point, and we are trying to do that and explore these issues in detail.

The Minister has an opportunity to flesh out those points in order to give comfort to and reassure my hon. Friends from hard-hit regions that the benefit of the corporation tax cut will impact on their regions as well as those regions in the prosperous south. It is important that we get answers from him on those points. With those few comments, I ask him to respond in due course.

To report progress and ask leave to sit again.—(Bill Wiggin.)

The Deputy Speaker resumed the Chair.

Progress reported; Committee to sit again tomorrow.


NHS Reforms

This is the moment I have been waiting for. An unprecedented number of representations have been made to me by letter, telephone, email and at my surgery from constituents of mine deeply concerned about the Government’s proposed NHS reforms. Those representations include a petition supported by almost 2,000 doctors, nurses, NHS patients and members of the public in my constituency, including Dr James Chan, one of the doctors at York district hospital.

The petition states:

The Petition of residents of York, and others,

Declares that the Petitioners believe that the Government’s health reforms will break up NHS services and that these reforms will result in business motives cutting deeply into the fairness, quality and value of the service at the expense of patient care; that the Petitioners believe the reforms will lead to a postcode lottery, with patients’ age, medical condition and home address affecting the quality of care they receive; that cuts to frontline jobs and services will lead to longer waiting times; that money will be wasted on the NHS market bureaucracy, draining it from patient care; and that there will be a big increase in private companies running the health service for profit.

The Petitioners therefore request that the House of Commons urges the Government to reconsider the reforms so that patients remain at the heart of the NHS.

And the Petitioners remain, etc.


Special Representative for International Trade and Investment

Motion made, and Question proposed, That this House do now adjourn.—(Bill Wiggin.)

I speak under negative privilege. Privilege is given to us as MPs to expand our opportunities to make comments and talk about personalities while enjoying protection from libel laws. The situation that I am speaking under is one that does not expand our opportunities, however, because on this subject I am denied the opportunity of saying what I am entirely free to say in broadcasts or on blogs outside this House. In this House my mouth is bandaged by archaic rules that deny me the chance to be critical of certain individuals. I can be sycophantically, emetically in praise of those individuals—that is not limited in any way—but I am not allowed to criticise them. I therefore make the point that I am speaking under constraints that I hope we will remove at a later date. This debate is, I believe, a step on the way towards tabling a motion that will liberate us as MPs to talk freely about subjects that are discussed throughout the country.

The role of the special trade representative has been a matter of great controversy, discussion and debate. It is a hot topic everywhere, in the newspapers, in the pubs and on blogs, but the only place that we cannot discuss it fully is in this House—the place where we should be allowed to do so, because we can do something to reform the role if necessary. The role is a very strange one. There is no wage paid, but it is claimed that our present trade envoy has cost the taxpayer about £4 million in the last 10 years, not including the costs to protection officers. What is the job? It is impossible to find a job description, but one might say that skills in diplomacy, expertise in trade and industry, and sensitivity about our ethical standing would be needed in such a job.

The present envoy was appointed to his role by Her Majesty the Queen after consultation with the Cabinet Office, UK Trade & Investment, and the Foreign and Commonwealth Office, and he was given the title of UK’s special representative for international trade and investment. Is there a problem with the position at the moment? There certainly appears to be a problem with the lack of competition for the job. There is no open competition; there is no pre-appointment hearing or anything of that kind; and there seems to be only one qualification—namely, membership of a certain family, as the job was inherited from another member of that family.

Are there any matters that deserve our concern? Many groups have suggested that there are. A coalition of human rights groups is calling for a review into how the Government do business with non-democratic regimes around the world. Those groups say that the Government’s stated position on human rights, corporate responsibility and the rule of law is at odds with their apparent position of trading with autocratic or corrupt politicians. Human Rights Watch, Index on Censorship, the Corner House, Global Witness and Campaign Against Arms Trade say that recent publicity has underlined fundamental failings in this country’s supposedly ethical foreign policy. Tom Porteous, the UK director of Human Rights Watch and a Foreign Office adviser, said that recent publicity was making the UK “look stupid”.

Those calls for action follow concern about delays in implementing the Bribery Act 2010—delays that have left the Government open to claims that they are not really committed to fighting corruption. Campaigners allege that they have yet to receive a response from the coalition’s international anti-corruption champion, the Justice Secretary, after requesting details of the Government’s strategy on tackling dishonest business practices.

Tom Porteous, a member of the Government’s advisory group, which was created by the Foreign Secretary, and someone whose job is to examine the ethical dimension of British foreign policy, said that Ministers needed to rethink their way of doing business. Nicholas Hildyard of the Corner House has said:

“There is an absolute necessity to have an ethical foreign policy with very strict screening into what goes where, proper screening of all government-supported exports in the context of human rights.”

Robert Palmer of Global Witness makes a similar point. Richard Alderman, the director of the Serious Fraud Office and a key figure in cracking down on business bribes to win contracts, told the Home Secretary of growing concerns over the delays in implementing the Bribery Act. He reported warning that the Organisation for Economic Co-operation and Development and the US Justice Department had been unhappy with the coalition’s decision to push back the legislation’s introduction.

Those are bodies of great seriousness, and they are expressing concern about the present situation. Rather more telling, however, is the evidence from Stephen Day, a former ambassador. He writes:

“The suggestion that an envoy is needed to ‘open doors’ is insulting to our ambassadors. Has that not been their primary job, as representatives of the Queen to foreign Heads of State? And are they not fully competent to support serious business proposals, as welcome to the host country as they will be to Britain? Trade promotion is a serious, long-term commitment, in which the embassy can give the best informed guidance and work effectively in partnership with the British enterprise and in step with Whitehall and other agencies to consolidate reputations and build long-term success. The message being spread around the world at the moment is that Britain is so desperate for business, and so incapable of competing openly, that it needs a back-door approach and is content to work closely with dodgy fixers and politicians—i.e. that British business is incapable of winning contracts through professional, legal means .”

I hear what the hon. Gentleman is saying about the message that is being given out at the moment, but he has given us no details of how it is being given out. In the absence of any evidence as to how it is being given out, I have to say that the House is very surprised not only at the message that he suggests is being given out but at the fact that it is being given out at all. Will he give us further details?

I am not in a position to give further details, because if I did so, I would transgress the rules of the House, as I did in a previous debate. That debate was interrupted. The Speaker would quite rightly abide by the rules of the House and tell me that I was not allowed to make any derogatory statements that might affect the envoy, his personality or his name. It is an illustration of how demeaned we are as politicians and Members of Parliament that I am allowed to make any points about the damage that is done only in an oblique way, by discussing the effects of the holder of the office, his role and the comments that are being made.

I am not entirely clear, listening to the hon. Gentleman’s line of reasoning, whether he has called this debate obliquely to criticise Prince Andrew in his role as special envoy, or whether he has called it to query whether we need a special envoy at all. In my experience, having done the shadow trade job, Prince Andrew goes round the world, opens a lot of doors and does a lot of trade for the UK, and I would have thought that the hon. Gentleman’s constituency needed the jobs that are created by businesses that export round the world.

That is a wonderful example of how the hon. and learned Gentleman is free to praise the person involved, while I am denied the opportunity to attach any blame to him. It is entirely irrational and anti-intellectual, and contrary to the debating freedoms of this House that I am not allowed to answer his question or repeat the criticism that has appeared in almost all our national newspapers and media of the way in which that role is performed. I cannot do that, and that is the weakness that I wish to attack in this debate. I can, however, talk about the role and the opinion of certain serious people.

May I suggest that the hon. Gentleman pushes the point? The Chair will no doubt rule on that. If he seeks to make the criticism that he suggests he is prevented from making and the Chair prevents him from making it, his point will be made good. If the Chair does not do so, his point will have been wholly undermined.

I am making the points as far as I can within the limits imposed on us in this Chamber. I first debated this subject on 17 March and hope to contribute to a debate tonight that will be within the rules of the House and will lead to a notice of a motion, which I hope I can get carried.

For the final time, the hon. Gentleman has an opportunity either to press his points and make the criticism he seeks to make or to evade that criticism by not making the point at all. He has that opportunity and if he steps beyond the bounds of what is permitted and what is in order in this Chamber, the Chair will rule on it. As yet, he has not sought to make that criticism. As and when he does so, the Chair will make a ruling. Is he prepared to stand by the mettle of the argument he is making or—

Order. The hon. Gentleman will resume his seat. Interventions are getting longer; they need to get shorter.

This is the second part of the debate; the first part on 17 March was interrupted when I could not take the line that the hon. Gentleman urges me to take without transgressing the rules of the House. Those rules need to be changed.

Stephen Day, a former ambassador, talked about the ambassador in Doha as an example. His letter said:

“We have an excellent ambassador in Doha and Sheik Hamad is the most accessible of rulers, in person and on the telephone. To use such an intermediary strikes me as crassly inappropriate… Of course the Amirs and Sheikhs engage with trade and finance, but this is generally done privately through agents and associates, not by principals directly. To use”

an envoy

“for such a purpose is seen by Arabs as crude and unworthy of our historic connections. It is quite the wrong way to promote our interests in this important region of the world and the sooner we are seen to have re-learned how to engage with Arabs the better.”

That is what a greatly experienced ambassador says.

There is an argument for saying that the role is of great importance and has great potential to promote our industries and that many thousands of jobs depend on the relationships we have with other countries. Are we doing this the right way? There is powerful evidence from human rights organisations and from the former ambassador that we are not and that we are losing ground because of it.

Natasha Schmidt, assistant editor of the Index on Censorship, said people were angered by links between our trade envoy and President Aliyev of Azerbaijan, whose country is one of the most corrupt in the world. It routinely oppresses its own people and there are allegations involving torture of political opponents and rigged elections by Aliyev’s regime. There are also allegations by some of the employees of the agency of a close relationship with President Aliyev. Natascha Schmidt said:

“It is absolutely appalling that the envoy would have such close links with Aliyev, an authoritarian ruler who has shown himself to be completely intolerant to criticism and is an enemy of free speech”.

We live in an era of openness, transparency and scrutiny of appointments. A major advance is the system of pre-appointment hearings in the House, when someone going for a major job appears before a Select Committee to justify the appointment. That is wholly healthy and beneficial.

I am listening carefully to what the hon. Gentleman has to say, but I must say that I am not entirely clear—perhaps he will enlighten the House—whether the purpose is to debate the role of our individual special envoy, to raise the question of whether we need a special envoy or to debate British trade policy and which countries we should or should not trade with. Will the hon. Gentleman enlighten us?

It is all those things: the question of whether we need a special envoy and whether it is beneficial or not. Within the limits I have set out, I am able only to point obliquely to my view that it is perhaps not always beneficial to have one. If we have one, that person should not be chosen merely on the basis of what advantages he or she has inherited, and the choice should not be limited to a single family. There should be open competition, so that we can acquire someone who can do the job in the manner that is required. It should not involve work that can be done far more effectively by ambassadors who know their countries and know what the opportunities are.

The need for this position, and the manner in which it serves or does not serve the country, should be examined by the House of Commons fully and fairly, and not under the restrictions by which I am governed tonight. The antique rules of the House frustrated my earlier attempts to debate this issue in a meaningful way. In a grown-up, modern Parliament, no issue should be beyond our surveillance and, if necessary, our criticism. It is our duty to remove this gag, and to speak freely as citizens rather than being silenced as subjects.

The hon. Member for Newport West (Paul Flynn) has made a number of points that I do not think I can answer tonight, because they are not the responsibility of my Department. I consider that the question of whether he is gagged by the orders of the House is a matter for other House authorities, and I am sure that it will be dealt with in the usual way. I assume that he does not expect me to deal with those points. However, he managed to raise other important issues about the role of the special representative for international trade and investment, although I should say at the outset that I could not disagree more with his conclusions about that job.

The hon. Gentleman talked a great deal about what he considered to be the problem of a lack of competition in the job, as if membership of the Royal Family were open to competition. I think most people will find that a rather odd position for him to take. However, I am pleased to note that he is now in favour of competition, as he does not often take that line.

I, for one, believe that the Duke of York does an excellent job as the UK’s special representative for international trade and investment. He promotes UK business interests around the world, and helps to attract inward investment. He has been the UK’s special representative since 1 October 2001, and it is interesting that there has been no debate of this kind during the period of nearly 10 years since his appointment. During that time he has been a long-standing success in the role, representing a continued interest on the part of the Royal Family in supporting British business and international trade and investment.

Since taking on his role, the Duke of York has built a substantial network of contacts at high level in both Government and business overseas. Those links help the duke to make a major impact in a range of markets around the world. He has made a valuable contribution in developing significant opportunities for British business through the role, and continues to do so.

The hon. Gentleman could have talked about how he would assess that, and what evidence we could provide. Of course, it is often difficult to prove that a particular intervention by a particular person at a particular time results in a particular success. However, if we listen to the voice of British business, it is absolutely clear that it endorses the role of the Duke of York. Many who have worked with the duke have found that he is a real asset for our country in supporting UK business. A letter from a group of prominent business people published recently by The Sunday Times underlines the duke’s commitment to helping the country to respond to the current very difficult period for our economy through the work that he does in support of a trade-led recovery.

Does the Minister realise that that list, which was published a very short time ago, was four years old, and that many firms on it declined to refresh their support for the expression of sentiments of support for the envoy?

I am surprised that the hon. Gentleman makes that point because, as I shall go on to set out, a lot of people have contemporaneously spoken out in favour of the Duke of York’s work. That letter did say that

“the efforts made by him need to be encouraged—for he does it well.”

I am surprised that the hon. Gentleman did not mention that, and I am sure that the vast majority of those who have seen the duke’s work at first hand would echo that sentiment.

Does the Minister agree that one reason why the Duke of York has considerable credibility is his distinguished record as a former member of the Fleet Air Arm who gave valuable service in the Falklands war? That shows a degree of commitment over and above any inherited responsibilities that he might be considered to have.

Order. We must take great care, and care has not been taken sufficiently on this front, to avoid straying into matters of conduct that render someone suitable or not suitable for a particular role. I believe I am right in saying that “Erskine May” is clear that matters may be raised only on a substantive motion and such matters include the conduct of the sovereign, which we shall therefore strive to avoid discussing.

The duke is not paid for the work that he does in this role. UK Trade & Investment pays for the costs of UK-based and overseas visits undertaken by the duke and his supporting staff, and these visits are undertaken in agreement with UKTI and are in support of UKTI objectives. Let me give an indication of the cost of these visits. In 2008-09, the costs amounted to just over £149,000 and just over £154,000 in 2009-10, and the flights are paid for by the royal travel budget. I believe that these activities represent excellent value for money.

Does the Minister, a fair-minded person, recognise that what he is saying illustrates how out of balance our debating system is? He is free to praise the envoy, but I am not free to say anything derogatory about the envoy and so our debate is completely out of balance. Is the Minister not illustrating the need for our Standing Orders to be changed?

As I recall it, the hon. Gentleman said that he was objecting to the cost of this post, so I am rebutting his argument, which he was free to make within our Standing Orders, by arguing that the duke’s work provides value for money. I am rebutting that point of substance.

Let me now deal with the duke’s appointment to this position. We are sometimes asked: what are the terms of the duke’s employment as special representative for international trade and investment? Does he have a contract? The hon. Gentleman wanted to have a job description and competition for the role. We are also asked who invited the duke to take on this job. In response, I wish to make a number of key points. First, the role is not an appointment within the remit of the civil service commissioners or the Commissioner for Public Appointments. It is a special role and it represents a continued interest by the royal family in supporting British business and international trade. Prior to the Duke of York’s appointment, the Duke of Kent was vice-chair of the British Overseas Trade Board from 1976 and latterly vice-chair of British Trade International until April 2001—the Duke of York was appointed in October 2001. So the royal family, in different roles and in different personages, have been fulfilling this type of role for many years. This is not a new thing and successive Governments of different persuasions have found this work to be valuable. Diplomats and business people in our country have valued the contribution made by the royal family in this regard.

My hon. Friend makes the legitimate point that many organisations and British business have found this role to be valuable for how they conduct business overseas. This year, many British businesses have recorded in the printed media that they have found in the recent past that the role of the Duke of York—they made no reference to his specific conduct—to be useful to the way in which they have conducted their business and their exports overseas. I am sure that the Minister would agree with that.

My hon. and learned Friend is absolutely right and I can certainly agree with that. It is also worth pointing out that the Duke of York not only helps UKTI and its related activities but assists in the objectives of other Departments, such as the Foreign and Commonwealth Office and the Department of Energy and Climate Change, when he is asked to do so.

The duke’s programme of visits is agreed by the Royal Visits Committee. A great deal of discussion and planning go into deciding where His Royal Highness should visit and UKTI works with the duke’s private office to develop a programme of visits that complement the work and support the objectives of UKTI and make best use of the duke’s time to support the strategic aims and goals of Her Majesty’s Government. It is not a question of the special representative freelancing: he plans his programmes to operate within a strict framework. The programme is reviewed regularly and is confirmed alongside other overseas visits undertaken by other members of the royal family and by senior politicians such as the Prime Minister, Foreign Secretary and Business Secretary.

The duke’s visits focus primarily on those priority markets for the UK where the duke is well placed to make a positive impact. His visit programmes generally include visits to priority markets in the middle east, south-east Asia, China, India, Russia, central Asia and South America, as well as to the US and other developed markets. The visits relate to sectors that are or will be key to the UK’s future export growth. They include financial services, energy, advanced engineering, information and communication technology, life sciences and creative industries.

The duke has been visiting many of those priority global markets since 2001 and has developed strong relationships with key opinion formers and decision makers. For example, in 2008-09, His Royal Highness undertook nine overseas visits, visiting 16 countries. These involved 117 business engagements and openings, 27 political engagements and 28 with Heads of State. In 2009-10, His Royal Highness undertook 12 overseas visits, visiting 18 countries. This involved 163 business engagements and openings, 39 of which were political and 18 with Heads of State. This is a record of engagement that this House should recognise.

I hesitate to interrupt the Minister reading from the websites of the person and the Department involved, but he has made no attempt to answer my questions or to respond either to the serious criticism by the human rights organisations I cited or to what the former ambassador said about there being a far better way of doing the job, which is to allow ambassadors to do the job for which they are paid and skilled. Is that not a fair criticism?

I disagree. I have provided evidence rather than innuendo to show that the Duke of York is undertaking a very valuable role. Let us remember why the Duke of York does this role: because it is in Britain’s interests. It is in the interests of firms, their employees and our economy. The previous Government recognised that and so do we. We have inherited a sick economy where the prospects of growth funded by the public sector or by consumers are very limited, to say the least, after the poor management of the economy by Labour over 13 years. If we are to grow, there are only two sources of growth: trade and investment. Having someone with experience and clout as the UK’s special representative for international trade and investment is something that we throw away at our peril.

I do not know what has motivated the hon. Gentleman. His timing is particularly inappropriate, coming as it does four days after the royal wedding, when I believe the whole country showed the support that they give to the royal family and all its members. I am proud to be here to support the role of His Royal Highness.

Question put and agreed to.

House adjourned.

House of Commons

Wednesday 4 May 2011

The House met at half-past Eleven o’clock


[Mr Speaker in the Chair]

Oral Answers to Questions


The Secretary of State was asked—

Work Programme

1. What discussions he has had with the Secretary of State for Work and Pensions on the awarding of contracts for the Work programme in Scotland; and if he will make a statement. (53554)

9. What weighting was given to the involvement of voluntary sector organisations in the assessment process of tenders of prime contractors for the Work programme in Scotland. (53564)

Over the past year I have had numerous discussions with ministerial colleagues on the development of the Work programme. The Government are encouraging prime contractors to engage voluntary and private sector organisations in the delivery of the programme.

Does the Secretary of State share my concern that the Minister of State, Department for Work and Pensions, the right hon. Member for Epsom and Ewell (Chris Grayling), may have broken the ministerial code of conduct in awarding the contracts to some companies? Will the Secretary of State make a statement on the matter, and what is he going to do to protect the companies that missed out on the awards that were given out?

The hon. Gentleman is making a very serious allegation, which my right hon. Friend absolutely refutes. As with any other instance in which people think something inappropriate is happening, there are appropriate channels through which it can be pursued. If there is some evidence on that or any other matter, those channels should be followed.

I declare an interest as a non-remunerated director of the charity Turning Point Scotland.

There has been great unease in Scotland about the tendering process for the Work programme contracts. The tender document clearly outlined the expectation that at least 30% of a prime contractor’s subcontracts should be delivered by voluntary sector providers, and it stated:

“This will be a key factor in the tender assessment process.”

Yet the successful bids commit to a mere 8% and 6% voluntary sector delivery respectively. I hope that the Secretary of State shares my concern, and my question to him is simple: what went wrong?

I acknowledge the hon. Lady’s work in the voluntary sector, and I believe that it has a very important role to play not just in getting people back to work but in many aspects of Scottish life. Let us remember that the Work programme is a step change in the provision of support for people to get back into work. We are determined to ensure that we tackle all the problems that have afflicted different parts of Scotland and the rest of the United Kingdom.

The invitation to tender document was absolutely explicit about the criteria, and they were the ones against which bids were measured. As far as the future involvement of the voluntary sector is concerned, the two preferred bidders have indicated that they fully intend to engage with the sector.

I call Sheila Gilmore, whose question has been grouped with Questions 1 and 9. She is not here.

Does the Secretary of State agree that to secure economic recovery, it is important to listen to the views of the job creators so that we minimise the number of people needing support from the Department for Work and Pensions in the first place?

Of course it is important that as we recover from the terrible economic situation that we inherited, we focus on creating new jobs. That is why we set out in the Budget continued plans to ensure that we keep interest rates low, reduce corporation tax and reduce the burden of national insurance, compared with the previous Government’s plans. We will continue with those measures, to ensure that we rebalance the economy and create more private sector jobs in Scotland and elsewhere.

But does the Secretary of State acknowledge the significance of the fact that 200 leading Scottish job creators have today signed a public statement saying that the best approach for the future is to re-elect the Scottish National party Scottish Government, and Alex Salmond as First Minister?

Funnily enough, I do not agree with the hon. Gentleman on that point. The best approach to the next Scottish Government is to ensure that we have Liberal Democrats at the heart of it, so that we can reinforce the central part that this Government are playing in rebalancing the economy of the UK as a whole. Our agenda for growth is absolutely essential to our recovery from the situation that we inherited.

I note that the Secretary of State, in his answer to my written question yesterday, stated that at his recent meeting with Scottish voluntary sector organisations, to which he dragged along the Minister of State, Department for Work and Pensions, the right hon. Member for Epsom and Ewell (Chris Grayling), he had encouraged the successful bidders to

“engage effectively with the voluntary sector”.—[Official Report, 3 May 2011; Vol. 527, c. 662W.]

Will he confirm what he expects that will actually achieve? Can he guarantee that voluntary sector involvement will be more in line with the UK average for the contracts tendered in the Work programme, or is the voluntary sector in Scotland only going to get the crumbs from the table?

May I first say that I was very pleased to invite my right hon. Friend the Minister of State to the employment gathering in Edinburgh, which was very well attended by representatives of the different stakeholders and by a representative of the Scottish Government? As we made clear at the time, it is our intention to ensure that the voluntary sector is as involved as possible. The two preferred bidders, Ingeus and Working Links, have made it clear that they are going to discuss the role of the voluntary sector in their supply chains. That discussion is ongoing and not yet resolved. Beyond that, there are other streams of work coming out of the Department for Work and Pensions for which the voluntary sector and others will be able to bid.

I note that the Secretary of State is still unable to provide us with a figure. Doubt will remain in the voluntary sector, which has suffered a massive drop in income as a result of the Work programme, which offers fewer places than were offered under previous Government-operated schemes. Does he agree that the experience and knowledge of the voluntary sector of the future jobs fund is testament to its strength? Does he agree that Scotland needs a new future jobs fund, so that we can offer places for the thousands of people who are coming out of school and college with nowhere to go?

I am happy to acknowledge that under the previous Government, of whom the hon. Lady was a member, youth unemployment rose consistently through periods of growth as well as during the recession. I accept that we have a major challenge, which is why I will bring together different employment sector representatives in Irvine in a couple of weeks’ time.

It is important for all of us that we get the voluntary sector engaged. The future jobs fund was a very costly scheme, and its results do not bear out the hon. Lady’s assertions. It is not the case that it led to sustainable jobs—but the new Work programme will do exactly that.

Universal Credit

2. What discussions he has had with the Secretary of State for Work and Pensions on the implementation in Scotland of the Government’s proposals for universal credit. (53555)

The Secretary of State for Scotland and I are in regular contact with the Secretary of State for Work and Pensions on a range of issues concerning implementation of universal credit in Scotland.

In Scotland, the public sector accounts for about 50% of gross domestic product. If we are to succeed in making the country less dependent on the public sector, we need to ensure that the private sector has access to the personnel that it needs to grow. Does the Minister agree that universal credit will help to make work pay, and that it will contribute to the rebalancing of the economy of Scotland and the UK?

I do indeed agree with my hon. Friend, who will be pleased to note that already during the incapacity benefit reassessment trial taking place in Aberdeen, a large number of people who not only want to work, but also want the support to help them to work, have been identified and have found opportunities to work in the private sector.

Will the proposed universal credit in Scotland be affected by the Chancellor’s proposed changes in tax and national insurance, particularly in relation to the tax proposals in the Scotland Bill?

The hon. Gentleman has followed the progress of the Scotland Bill in detail, but he will know that in relation to the core aspects of universal credit and benefits, the Government have given an undertaking that no one will be worse off in cash terms when universal credit is introduced.

Does my hon. Friend agree that the current complexity of the benefits system means that too many Scottish claimants do not receive the benefits to which they are entitled, and that universal credit will help to target the right support on the right people?

I certainly agree with my hon. Friend. The amount of benefit that goes unclaimed in Scotland is a national disgrace. The system of universal credit will simplify the benefits system, as well as making work pay and combating worklessness and poverty. That is something that hon. Members on both sides of the House should welcome; it is a marked change from the 13 years of inaction from the previous Government.

“The Plan for Growth”

3. What assessment he has made of the likely effect on the Scottish economy of the implementation of “The Plan for Growth”. (53556)

Returning the United Kingdom to sustainable economic growth is the Government’s overriding priority. We are doing everything to create the conditions that enable all businesses in Scotland to be successful and create more jobs. Our plan for growth is a plan for the whole of the UK.

What views and reactions is my hon. Friend aware of among our colleagues in the Scottish Parliament and the business community in relation to the Government’s proposals to support small and medium-sized businesses?

The Government’s proposals for reducing corporation tax and for making changes to national insurance have been widely welcomed by businesses across Scotland. Of course, as my hon. Friend will know, small businesses in Scotland have particularly benefited from small business relief, which was delivered by Conservative MSPs.

Inflation is at double the Government’s target, growth has been downgraded for the next two years, retail figures are down and consumer confidence is at rock bottom. Will the Minister for once stand up for Scotland and concede that while the cuts may be hurting, they are not working, and that it is time for the Government to have a plan B for growth?

This Government do have a plan for growth—unlike our predecessor. We have set out ambitious objectives to create the most competitive tax system in the G20, to make the UK the best place in Europe to do business, to encourage investment and exports, and to create the most flexible and educated work force in Britain.

I am sure the hon. Lady is good at figures. She will know that her party started the Scottish elections with a 10-point lead, and that today it has an 18-point deficit. That is good work with figures.

Can the Minister tell us what part of the plan for growth is behind the bright idea of his colleague the Chief Secretary to the Treasury to impose a massive increase in taxation on the oil and gas industry, jeopardising investment and up to 50,000 jobs?

The hon. Gentleman would have some credibility in asking that question had he not repeatedly raised in the Chamber the issue of the costs of petrol and fuel oil in his constituency. It is clear that the Chancellor and the Chief Secretary got the balance right in the Budget between the taxation of the oil industry and the taxation of the motorist. If the hon. Gentleman wants to tell his constituents that they should be paying 6p a litre more on their fuel, he is welcome to do so.


8. What steps the Government is taking to reduce the level of unemployment in Scotland; and if he will make a statement. (53563)

Unemployment has fallen steadily since August 2010 and employment has increased in the same period. This is a welcome sign. Supporting companies to create and sustain jobs and helping people into work are key priorities for the Government. On 19 May I am hosting a seminar in north Ayrshire, in the constituency of the hon. Member for Central Ayrshire (Mr Donohoe), on youth unemployment, and my right hon. Friend the Secretary of State for Work and Pensions will join me at this important event.

I look forward to our meeting on 19 May. On a another matter concerning unemployment, does the Secretary of State think that the separation of Scotland from the rest of the UK would help or hinder employment prospects for people in Scotland?

It would be an absolute disaster for Scotland to separate from the rest of the United Kingdom. It is interesting that even the Scottish National party appears to recognise that, because it is not campaigning very hard on the subject.

In the Secretary of State’s answer to my hon. Friend the Member for Glasgow North (Ann McKechin), our Front-Bench spokesperson, he recognised that youth unemployment continues to rise in Scotland. When does he believe that his actions will begin to bring it down to an acceptable level?

In response to the question from the hon. Member for Glasgow North (Ann McKechin), I said that youth unemployment had been a problem for a good long period across the United Kingdom, including under the previous Government during periods of growth. The Prime Minister, the Work and Pensions Secretary, I and everybody else recognise the need to bring it down, which is why we are meeting to discuss the core issues behind the problem, and why, through the Get Britain Working programme and the Work programme, which we have discussed already, we are introducing measures to get young and old alike off the unemployment register and back into productive work.

When will the penny eventually drop for the coalition Government? Last week in response to the Scottish Affairs Committee report on the computer games industry, the Government said that there is no case for tax incentives for the computer games industry, which is very important to this country. That was rather callous coming a week after another computer games company in my constituency went bust. Will the Government accept the blatantly obvious fact that if we want companies to set up in this country, we have to offer incentives at least comparable to those offered by our competitors overseas?

First, may I again recognise the hon. Gentleman’s consistent efforts on behalf of the computer games industry? I recognise the importance of the industry not just to Dundee and Scotland, but to the UK as a whole. As he knows—and as I hope the response to the Select Committee’s report reinforces—we have considered very carefully the incentives we need to offer not just to the computer games industry, but to a whole range of sectors in Scotland and across the country. It is our judgment that to get ourselves away from the danger zone we were in last May, it is important to tackle the deficit and to get ourselves on the path to growth. We have done that in successive Budgets setting out plans to reduce corporation tax, to keep interest levels low, to reduce the national insurance burden and to set out important new targets for banks and their lending to small businesses. That applies to the computer industry sector as much as to any others. Once again I will be happy to meet him to discuss the matter, if he would like.

Unemployment in Kintyre will be greatly reduced if the community group’s bid to buy the former air base at Machrihanish goes ahead. I thank the Secretary of State for meeting the community group recently. I have written to him with a list of outstanding issues that are still to be resolved. I ask that Scotland Office Ministers continue to work with Defence Ministers and the community group to resolve those outstanding issues as quickly as possible, so that the buy-out can go ahead, with exciting prospects for the Kintyre economy.

Again, I pay tribute to my hon. Friend’s sterling efforts on this issue. I also welcomed the opportunity to meet representatives from the Machrihanish group a few months ago. I recognise that there are still issues that the group wishes to see resolved, and that these involve ongoing discussion with the Ministry of Defence. I will ensure that my right hon. and hon. Friends in the Ministry of Defence are aware of the details of my hon. Friend’s concerns, and that he receives a response to them.

Banking Failure

7. Whether his Department and the Treasury have assessed the potential effect of banking failure on the economy of an independent Scotland. (53562)

Banks and other financial institutions are vital to the functioning of the economy. Although no specific work has been commissioned on the banking bail-out in Scotland, a 2010 National Audit Office report states that the total amount at stake is currently £512 billion. As of December 2010, £124 billion in cash had been invested in Government financial interventions. Based on NAO data, the Scottish Parliament Information Centre, SPICe, has estimated that the Royal Bank of Scotland and the Lloyds Banking Group were provided with £470 billion. SPICe also calculated that this figure was three times the annual Scottish GDP, and that the total UK Government intervention of £751 billion was equivalent to just over half of UK GDP.

Do those figures not show that, like Iceland and Ireland, a separate Scotland would simply not have been able to survive the international banking crisis on its own? Is it not the case that Scotland’s economy will always be better off inside, rather than outside, the United Kingdom?

I could not agree more with my hon. Friend. It is interesting that as we enter the Scottish Parliament election period, the Scottish National party appears to have forgotten its proclamation about the arc of prosperity and Scotland’s wish to join the economies of Ireland and Iceland. The First Minister, Alex Salmond, also appears to have forgotten saying in the 2007 campaign:

“We are pledging a light-touch regulation suitable to a Scottish financial sector with its outstanding reputation for probity, as opposed to one like that in the UK, which absorbs huge amounts of management time in ‘gold-plated’ regulation.”

That response shows that what has characterised the Scottish election campaign is that positivity wins over negativity. Will the right hon. Gentleman at least acknowledge and recognise that the failure of those so-called Scottish banks was down to UK regulation?

I do not think that the hon. Gentleman was listening to my last response. His leader, Alex Salmond, previously described the UK regulation as “gold-plated” and, at the previous Scottish elections, offered the voters “light-touch regulation”. This is the same Alex Salmond who said that the banking crisis was down to “spivs and speculators”.

One of the most pernicious effects of the banking failure in Scotland at the moment is the withdrawal by nationalised banks at short notice of funding for small businesses, such as TDI Ltd in my constituency. What will the Minister do to hold the moneylenders’ feet to the fire and get Project Merlin properly adhered to?

The Secretary of State and I are in regular contact with the banks operating in Scotland to ensure that Merlin goes forward as envisaged. We are also willing to take up individual cases such as the one that my hon. Friend mentions, which, if he refers it to us, we will refer directly to the banks in question. [Interruption.]

Order. There are far too many private conversations taking place in the Chamber. It is very discourteous, and I am sure that the House wishes to hear Mr Greg Hands.

Thank you, Mr Speaker. Will the Minister join me in welcoming the report by the Independent Commission on Banking, under Sir John Vickers, and will he remind the House who, in the last Parliament, awarded Sir Fred Goodwin a knighthood for services to banking?

My hon. Friend’s interventions at Scottish questions are always welcome. He is quite right to suggest that it was the Labour Government who not only awarded Sir Fred Goodwin his knighthood but involved him in virtually every other initiative that they pursued in Scotland. The Vickers report is to be welcomed in Scotland, as it is elsewhere in the United Kingdom.

Election Timing

11. What progress he has made on measures to prevent the coincidence of elections to the House of Commons and to the Scottish Parliament in May 2015. (53566)

Government amendments to the Fixed-term Parliaments Bill deferring the 2015 Scottish Parliament elections until 5 May 2016 were agreed by the other place on 29 March.

In addition to outlining those measures, will my right hon. Friend update the House on progress towards the establishment of the commission to examine the West Lothian question, on its membership and on when we might expect to see its conclusions and recommendations?

As my hon. Friend knows, the coalition’s programme for government promised to establish a commission to consider the West Lothian question. A commission will be established this year to consider it, and the Government are committed to addressing the issue. We are continuing to give careful consideration to the timing, composition, scope and remit of the commission. It will need to take into account our proposals for reform of the House of Lords to create a wholly or mainly elected second Chamber, the changes in how this House does its business, and amendments to the devolution regimes such as those in the Scotland Bill, which is now before the House.

Renewable Energy

12. What discussions he has had with ministerial colleagues on the potential for renewable energy generation in Scotland. (53567)

I have regular discussions with ministerial colleagues on a wide range of energy-related issues. Scotland has a growing reputation as a world leader in renewable energy, and we will continue to work with industry and the Scottish Government to develop these opportunities.

I thank the Secretary of State for that reply. Last month, six Scottish wind farms were paid a total of £900,000 to stop producing energy because the grid could not absorb it. What will the Government do to strengthen grid capacity and improve energy storage so that that kind of waste does not happen, and so that Scotland can properly harness its vast resources of marine, hydro and wind energy?

First, may I highlight the fact that, under the complex energy management arrangements for the grid, arrangements have to be made from time to time to ensure that we can stop or increase energy production? Through those arrangements, payments are made for stopping and increasing production; that is understood. The Government have set out an ambitious programme for energy reform through our energy market reform proposals. The consultation on that programme was recently concluded, and my right hon. Friend the Secretary of State for Energy and Climate Change intends to publish a White Paper on the subject in the near future. Through that, and through other measures such as the transmission grid charges review, we will seek to ensure that we have the capacity and capability to exploit the renewable energy potential not only of Scotland but of the whole United Kingdom. Our other initiatives relating to the green investment bank and the offer to the Scottish Government to release the fossil fuel surplus are indicative of our intention to play a full part in the renewables revolution.

What meaningful discussions has the Secretary of State had with the Scottish Government on this vital issue? [Interruption.]

I am afraid that I did not hear the hon. Gentleman’s question. I wonder whether he could repeat it.

I was asking the Secretary of State what meaningful discussions he had had with the Scottish Government on this vital issue.

There have been regular and ongoing discussions with the previous Scottish Government on these issues. I have to record great disappointment that despite our offer to release the fossil fuel surplus—something that eluded the previous Government—they were not keen to take it up. I hope that the new Government elected tomorrow, with Liberal Democrats at the core of it, will take up that very positive measure.

The Secretary of State may know that the Energy and Climate Change Committee has had meetings with investors in the renewables sector in which concerns have been raised that long-term capital investments are involved, and that if the price of carbon were to change in investors’ favour, future Governments might introduce a windfall tax to compensate electricity consumers. Will my right hon. Friend reinforce the point made in the debate on Treasury matters last night that the Government want to engage with the oil and gas industry to ensure that any concerns about the stability of the tax regime can be dealt with, so that we can have a constructive engagement with the aim of maximising investment in all energy futures for this country?

My hon. Friend makes an important point. I followed his contribution and that of my right hon. Friend the Member for Gordon (Malcolm Bruce) last night with great interest. As my hon. Friend the Economic Secretary to the Treasury pointed out, their thoughtful and constructive contribution to the debate was very worth while. We are properly engaged with the oil and gas sector, as we will be with the renewables sector, to ensure that we can put in place long-term sustainable tax regimes and other arrangements that will help to boost those important parts of the British economy.

Prime Minister

The Prime Minister was asked—


This morning, I had meetings with ministerial colleagues and others, and in addition to my duties in this House I shall have further such meetings later today.

The abolition of council tax, the scrapping of student debt, the £2,000 endowment for first-time home buyers and, of course, the referendum on separatism were all promises made by the Scottish National party prior to the last Scottish elections, all of which were never kept. Will the Prime Minister inform me, the House and the country whether certain political commentators are correct when they say that he would prefer to see the separatists returned in Edinburgh for one reason only—to avoid a Labour victory?

I am happy to confirm that what I would like to see in Scotland is the greatest possible showing for Annabel Goldie, who has led the Conservatives with such distinction. I do not think I want to intrude on the private grief between Labour and the SNP, but one thing I will say: whatever the outcome of that election, I, for one, will always stand four-square behind the United Kingdom.

Is the Prime Minister aware of the significant fires raging in Swinley forest in my Bracknell constituency? I am sure he would like to join me in congratulating the fire and police services on the sterling work that is being done, and hope he will guarantee that the Government will be there if any requests are made by those services.

I certainly join my hon. Friend in praising the fire and other services taking part in this difficult endeavour. As he knows, there are well tried and tested procedures to make sure that central Government stand behind local government when there are excessive costs. I will happily write to my hon. Friend about that issue.

Will the Prime Minister tell us how many experienced police officers are being forcibly retired as a result of his 20% cuts to police budgets?

The decisions about police officer numbers will depend on the decisions made by chief constables in individual parts of the country. The point is that we can see in case after case that there are far too many police officers in back-office jobs, doing paperwork and carrying out corporate development work who should be on the front line. Responsible chief constables are getting those officers out on the front line to fight crime—and crime is falling under this Government.

I do not know whether the Prime Minister does not know the answer to the question or whether he chooses not to answer it. Let me tell him the answer: 2,100 experienced police officers with more than 30 years’ experience are being forcibly retired. Let us take the case of former beat officer, Martin Heard, who was forced to retire from Wolverhampton police. He is now being asked to come back to the force as a volunteer special constable—unpaid—to fill the gaps left by the cuts. What does the Prime Minister have to say to Martin Heard?

What is absolutely clear is that what we are getting from the Labour party is complete and utter hypocrisy. We know at the time of the last election that Labour was specifically asked, and I quote the interview:

“Can you guarantee if you form the next government that police numbers won’t fall?”

The Home Affairs spokesman at the time, the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson), said “No”, he could not guarantee that. The question is not whether the budget should be reduced—of course it has to be—but who is going to cut the paperwork, who is going to get rid of the bureaucracy, who is going to trust the local managers to make sure we get police on the front line. Those are steps we are taking; those are steps his Government never took.

He is the guy who came along and said that cuts not of 12% but of 20% were necessary for efficiency savings in the police budget. It is his choice; why does he not defend it? Perhaps one reason people are so angry is that a year ago the Prime Minister said on the eve of the election:

“Any cabinet minister who comes to me…and says ‘Here are my plans’ and they involve frontline reductions, they’ll be sent”

packing. What does he say to the Home Secretary about cases such as that of Martin Heard—or has he just broken another promise?

What the Home Secretary is doing is what police leaders up and down the country are doing: trying to get more police on the beat. In my own force in the Thames valley, that is exactly what is happening.

When it comes to defending front-line services, is it not time that the right hon. Gentleman talked to Labour local authorities such as Manchester city council, which, although the average cut in local government spending power is just 4.5%, is cutting services by 25%? Are not Labour local authorities playing politics with people’s jobs?

The Prime Minister knows that he cannot defend his broken promises on policing. Let us talk about the other broken promises led by the Deputy Prime Minister. We know that the majority of universities are proposing to charge tuition fees of £9,000 a year. Can the Prime Minister tell us how many of them he expects to have their proposed fees cut by the Office for Fair Access?

That decision will depend on the Office for Fair Access.

The right hon. Gentleman talks about broken promises. The fact is that it was the last Government who introduced tuition fees and top-up fees—but we have a new doctrine on the leader of the Labour party’s attitude to the last Government, which he announced in an interview with The Sun. He said:

“I am not going to defend what happened in the past just because I happen to have been in the last Government.”

Presumably we should not listen to him now just because he happens to be the Leader of the Opposition.

Once again, the Prime Minister has not answered the question. We know from the Office for Fair Access that it is not going to cut the fees of the universities. The assistant director said at the weekend:

“We are not a free pricing regulator: that is not our role...we wouldn’t say to an institution we would only allow a fee of ‘X’ or ‘Y’.”

Will not the Prime Minister admit that on top of a broken promise not to raise tuition fees and a broken promise that £9,000 would be the exception, he is now breaking another promise on the capping of excessive fees?

The fact is that we will have to wait until July, when the access regulator—[Interruption.] Let me make this point to the right hon. Gentleman. Degrees have not suddenly started to cost £7,000, £8,000 or £9,000. Degrees have always cost that much. The question is, who will pay for them? We say that successful graduates earning more than £21,000 a year should pay for them rather than taxpayers, many of whom do not go to university.

I have to say this to the right hon. Gentleman. He made a promise: a promise that he would have a fully costed alternative to our fees programme by the end of the last year. Where is it? Another broken promise!

That is what we have come to expect from this Prime Minister. He is hazy on the facts, and unable to give a straight answer to a straight question. I know how the Energy Secretary must have felt in Cabinet yesterday. Remember what was said a year ago about two parties working

“Together in the national interest”?

Now what do we have? We have two parties threatening to sue each other in their own interests. That is what has changed in the last year.

What the public are saying, in relation to police cuts, tuition fees and the NHS, is “This is not what we voted for.” Given that the Government have broken so many of the promises that they made a year ago, how can the public believe anything that they say at the elections tomorrow?

Even the jokes have been bad this week. The fact is that what this coalition Government have done over the past year is freeze council tax, cap immigration, lift a million people out of income tax, introduce a pupil premium, link the pension back to earnings, cut corporation tax, and set up more academies in 10 months than the last Government set up in 10 years. At the council elections tomorrow, people should remember the mess that Labour left us in, and resolve not to let Labour do to their councils what it did to our country. [Interruption.]

Order. The Minister for Children is under no obligation to behave like a child. It is not required.

Q2. Does the Prime Minister agree with the comment of Lord Glasman, special adviser to the Leader of the Opposition, that the last Government lied to the British people about the extent of immigration? (53893)

My hon. Friend raises an important point, which is that the last Government did not tell it straight to people about what was happening on immigration and that it has fallen to this Government to take the steps to get the numbers under control. Indeed, Lord Glasman said something that I have said many times, which is that under the last Government there was

“very hard rhetoric combined with a very loose policy”

and that was the worst approach of all.

Does the Prime Minister share my profound anxiety about the recommendation of the advocate-general to the European Court of Justice for a European-wide ban on the patenting of stem cell research based on human embryos? Does he agree that were such a ban to be confirmed by the ECJ, it would have profoundly damaging effects on our science base and our pharmaceutical industries? Is he able to say what contingency plans the Government are putting in place to minimise the effect of any such ban?

The right hon. Gentleman makes an important point, and I thank him for giving me some notice of this issue. The point I would make is that this House and the House of Lords have had extensive debates to arrive at the policy that we have. I believe that it is right to try to maintain the UK as a world leader in stem cell research. Under European law, uses of human embryos for industrial or commercial purposes are exempted from patent protection. As I understand it, the legal opinion of the advocate-general at the ECJ on the scope of this exemption is advisory and does not bind the Court. As such, the opinion currently has no impact on British researchers, but we should keep this position under review.

Q4. Several manufacturing businesses in Staffordshire, including Alstom in my constituency, have recently committed to significant investments and are increasing their work force. What measures does my right hon. Friend believe are necessary to ensure that the welcome growth in manufacturing in the UK continues for the long term? (53895)

My hon. Friend makes an important point, which is that we do want growth in manufacturing, which is very strong at the moment and has been over the past year, to be maintained. I well remember visiting the Alstom plant, although I was slightly less successful in winning Stafford than he was at the last election. Such plants will benefit from our policies of cutting taxes, boosting apprenticeships, investing in capital projects and doing everything we can as a Government and as a country to support our export industries and sell Britain around the world.

On 25 June last year, speaking on the Ark Royal, the Prime Minister told our armed forces that he would enshrine the military covenant in law. Why is he watering down that commitment to a useless referencing?

I do not believe for a minute that that is what is being done. What is going to happen is that we are going to clearly reference the covenant in law and then the covenant will be published and debated in this House every year. It is vital that we are able to update and improve it every year, because our military personnel face so many changing circumstances. We are looking across government at all the things we can do, for example, on health care, on education, and on things such as council tax for soldiers serving overseas—these are many of the things that the last Government failed to do—to look after our armed service personnel.

Q5. Later this month, Edward Lister, the Conservative leader of Wandsworth council for nearly 20 years, moves on to be the chief of staff to the Mayor of London. Will the Prime Minister join me in paying tribute to him for his leadership in consistently delivering the UK’s lowest average council tax along with top-rated front-line services? Will the Prime Minister urge more councils to follow suit? (53896)

I thank my hon. Friend for her question. It gives me the opportunity not only to praise Edward Lister, who has done a fantastic job over many years, but to pay tribute to Sir Simon Milton, who occupied that position and is admired on all sides of the House for the work he did at Westminster and then at the Mayor’s office. What Wandsworth has shown over many years is that it is possible to combine low taxes with good services if all the time you are trying to improve efficiencies. That is what councils up and down our country should be focused on, particularly in a year when we have to make spending reductions.

One of Scottish Labour’s key manifesto commitments is the First Foot initiative, which will help thousands of first-time buyers to get a foot on the property ladder. What is this Prime Minister doing to help this generation of home buyers, who are crippled by unemployment, student debt and rising living costs, and therefore cannot save a deposit for a House?

The proposal in Scotland sounds quite like our proposal in the Budget for Firstbuy, which will help tens of thousands of young people to get on the property ladder by helping them with the deposit that many families find it extremely difficult to raise. There is a real worry in our country that the age of the first-time buyer is getting older and older, and that many families are finding that unless they have family help behind them they simply cannot get on the housing ladder. We must ensure that that is not the case and Firstbuy is a very good proposal that we are introducing in England. I will be interested to see what happens in Scotland.

Q6. Conservative-run Cheshire West and Chester council is saving millions by cutting waste, boosting efficiency and selling surplus property to help protect front-line services. Meanwhile, in next-door Labour-run Halton, the council is cutting back on bin collections and road maintenance instead. What does my right hon. Friend think can be done to help councils reach fair and sensible decisions? (53897)

I would encourage all councils to look at costs that can be cut that are not on the front line. Many Conservative councils are sharing chief executives with their neighbouring councils and cutting councillors’ allowances and chief executive pay. There are too many examples, particularly in Labour councils, of chief executives being paid far too much and of not nearly enough attention being paid to cut the back-office costs so we can keep the services going.

The Government are cutting the police and Birmingham city council is cutting care to the elderly and disabled. There is dismay in my constituency that high-need, high-unemployment Birmingham is being hit far harder than the leafy shires such as Surrey. Will the Prime Minister therefore answer the question put to me by my constituents—why have the Tories got it in for Birmingham?

A coalition between Conservatives and Liberal Democrats has been doing a great job for Birmingham, ensuring that council tax is kept down, investing in housing and ensuring that there are good public services. Many of the things we have done, such as the regional growth fund, are targeted at areas such as Birmingham. The hon. Gentleman should go back to his constituents, and after he has apologised to them for the fact he was the winner of an all-woman shortlist he should tell them that coalition government between Conservatives and Liberal Democrats is working at Westminster and working well in Birmingham.

Q7. In 2005, the previous Labour Government agreed to hand back part of the UK’s EU rebate at a cost to UK taxpayers of £9.4 billion over the lifetime of this Parliament. Has my right hon. Friend seen any evidence of what precisely was obtained in return for that remarkable generosity? (53898)

My hon. Friend makes an important point. Part of the rebate was given up and it was not given up for any proper promise in return. We were told that there would be a promise of real reform of the common agricultural policy and that did not appear. That shows me that we have to be incredibly tough in the budget negotiations this year and next so that when we go into the financial framework for the next seven or eight years we ensure that we keep the costs of this organisation under control.

Q9. The Government’s savage cuts are set to destroy some half a million jobs in the public sector and, according to PricewaterhouseCoopers, a similar number in the private sector. With thousands more on the dole, paying no taxes and dependent on benefits, the deficit will increase rather than reduce. As sure as night follows day, we will see a collapse in the housing market, a collapse in support for the Tories and a return to Labour government. Will the Prime Minister enjoy saying goodbye to most of his colleagues and sitting on this side of the House? (53900)

I thought the hon. Gentleman was from Luton, but he sounds like he is from fairy dairy land. Let me remind him that compared with this time last year 400,000 more people are in jobs in the private sector. That is what has happened through our getting the deficit under control, getting the economy growing and ensuring that we deal with the mess we were left by the Opposition.

Q10. Is my right hon. Friend aware that Conservative-run Central Bedfordshire council has been rated as the highest performing council of all its statistical neighbours by PricewaterhouseCoopers for value for money, effectiveness and service delivery? Is this not the type of example that we should encourage more councils to follow? (53901)

My hon. Friend is absolutely right. Well-run councils that ensure they are cutting back-office costs can provide good services. When one looks at the figures, one can see that those Conservative councils are not just costing less for a band D property but doing better on measures such as recycling and other service delivery. It is simply not true to say that by cutting costs councils harm services. They have to be effective at keeping their costs down to provide good services.

Q11. Next Wednesday, the Hardest Hit campaign will be lobbying MPs in Parliament through constituents of ours with severe disabilities and chronic illnesses who are bearing the brunt of this Government’s attack on welfare benefits and public services. Will the Prime Minister have the courage to meet some of those campaigners face to face next week so that he can hear from them at first hand about the devastating impact that this callous and uncaring Government are having on their lives? (53902)

I make two points to the hon. Lady. First, the most important line of defence to help people with severe disabilities and severe need is the national health service and it is this Government who are putting more money into the national health service—£11.5 billion extra. That money would not have been available if we had a Labour Government; we know that because we can see Labour cutting £1 billion off the NHS in Wales. In terms of reforming benefits, I thought we had the support of the Labour party to reform benefits to make sure they are helping those who need the help most.

Q12. Last week, I joined 170 other Huddersfield Town fans in cycling from Huddersfield to Brighton to raise £200,000 for the Yorkshire air ambulance. Will the Prime Minister join me in praising Huddersfield Town for raising that money and will he also look into why the air ambulance has to pay VAT on its fuel although the Royal National Lifeboat Institution—another emergency charity service—does not? (53903)

First, I would like to congratulate my hon. Friend on his bicycling feat, as well as all those who took part from Huddersfield Town. I also pay tribute to our air ambulance crews across the country, who do an amazing and brilliant job. I have looked specifically at this issue. As he probably knows, the EU VAT directive does make an exemption for lifeboats, but there is no equivalent provision for supplies used by other charities and we are not able to change that. However, we are able to do more for charities, as we did in the Budget, including with the inheritance tax exemption, which I think is going to make a huge difference for charities up and down our country. I hope that he will do everything he can to encourage them to make use of that.

Q13. Child poverty is a cancer that means that children in our society go to bed hungry in homes that their parents cannot afford to heat. The Prime Minister will be aware of the recent Organisation for Economic Co-operation and Development report that says that the great progress that was made has now stalled and that the numbers are once again due to go up. If the Prime Minister agrees with me, as I think he will, that this is a moral imperative for any Government, will he tell the House what he will do now to change policy and make sure that our innocent children will not be the victims of Government cuts? (53904)

I do believe it is a moral imperative and I have looked at the OECD report carefully, which does show that things stalled under the previous Government in recent years. What I would say is that despite having had to take difficult decisions in the Budget we did make sure that there has been no increase in child poverty as a result of the Budget. I think it is time, frankly, for a more mature, cross-party debate on how we can make sure that we get people out of poverty rather than just looking at the transfer of money between rich and poor. That is why we are looking at things such as the pupil premium, free nursery education for deprived two-year-olds and making sure that Sure Start is working properly, because it is all those things that will help children out of poverty in a more sustainable way.

Q14. This week, the three top-rated councils of Hammersmith and Fulham, Kensington and Chelsea and Westminster are discussing extending their combined services to save £35 million a year while still improving front-line services. What can the Prime Minister do to encourage this approach rather than that of Labour-run Hounslow, which is closing day care centres, squeezing parks maintenance and cutting mental health services in a slash-and-burn approach? (53905)

I think this is a very important point and I hope that councils up and down the country will look at it. Three large councils are coming together and saving £35 million because they are sharing back-office services, executive teams and so on. Frankly, if they can do it, as large councils that have big responsibilities, many other councils should be doing it in London and elsewhere. Until we see that happening, I do not think it is realistic to say that it is necessary for councils to cut front-line services.

More than 100 years ago, Parliament legislated to make sure that local authorities provided allotments. Healthy local food is a very good part of good British values. Why therefore are the Prime Minister’s Government scrapping the obligation on local authorities to provide allotments?

I was as concerned as the hon. Gentleman when I read that report. I immediately checked, and found that that is not the case. It is extremely important that allotments are made available. Many Members will find that when they ask about that in their constituencies there are massive queues for allotments, as many people want to grow their own vegetables and food and understand more about where food comes from. It is a great movement, and it has my full support.

Q15. The chief executive of Conservative-run Fylde borough council has taken a 5% pay cut, whereas Labour-run Blackburn has cut services to young and vulnerable people while increasing its reserve to £12.7 million. What can the Prime Minister do to encourage councils to behave more responsibly like Conservative-run Fylde? (53906)

One of the most important things that we can do is make all that information available. This Government have massively increased transparency. Every council in the country has to declare its spending on any item over £500, and people have found that useful in seeing how much council executives are paid, how much councillors are paid, and making sure that they bear down on those costs. I commend what is happening in Fylde, and it is a matter of great regret that there is still one council—Labour-controlled Nottingham—that will not make that information available.

Given that private borrowing was falling at the last election why, according to the Office for Budget Responsibility, do the Government plan to ramp it up by half a trillion pounds to a total of more than £2 trillion by 2015?

What the Government are doing is getting control of Government borrowing—that was the real crisis at the last election. It is an important point to make, particularly on a day when we read about Portugal going for an enormous bail-out. It is worth reminding ourselves that today we have a bigger budget deficit than Portugal. The reason we are not in Portugal’s position is that we took action in two brave Budgets and a spending round to clear up the mess left by the right hon. Gentleman’s hon. Friends.

I am sure, Mr Speaker, that you and the Prime Minister have enjoyed the good weather, especially last Friday, the day of the royal wedding, and perhaps visited tourist hot spots such as Southwold and Aldeburgh. Just down the road from those hot spots, farmers might be about to suffer a drought, and are genuinely concerned about the lack of rain, as their ability to abstract water may be limited. Will the Prime Minister meet me to discuss those genuine concerns about restricting water for our farmers?

I am happy to meet my hon. Friend. Everyone has been enjoying the recent weather, and it was fantastic that the weather was so good for the royal wedding. However, farmers face real issues because, at a time of year when they expect a lot of rain, they have had virtually none.

With the strong likelihood that the Lib Dems will come off worst in tomorrow’s local elections, and hopefully the rejection of the alternative vote in the referendum, what political words of comfort will the Prime Minister have for his by then beleaguered deputy on Friday?

Of course, we do not agree about the future of our electoral system. We are having a referendum and a debate about it, but the reason for having a coalition Government coming together and sorting out this country’s problems in the national interest is as good an argument today as it was a year ago, when we came into government to clear up the mess made by the Opposition.

In the light of the success of the royal wedding for public diplomacy, does the Prime Minister believe that it reinforces the importance of a different narrative for the diamond jubilee from the Olympics, in terms of what it can do for Britain’s international reputation?

We have a fantastic opportunity next year to show all faces of Britain, both modern and traditional. We are going to celebrate the jubilee, and I think that people will want to celebrate the incredible public service that Her Majesty the Queen has given over many years as an absolutely amazing model public servant. People will also want to celebrate the Olympics as a celebration of sport and all that is best about Britain. The royal wedding, as the Major of London said, was in many ways a dry run for how we handle some of those events, and everyone in the country has a lot to look forward to next year.

Many of my constituents in Wirral worry about the quality of care that older people, especially those with dementia, receive in hospital. How does the Prime Minister think that his now paused, top-down reorganisation of the NHS will help to make sure that older people are looked after with real dignity?

One of the aims of the changes that we are making to the NHS must be better to link the national health service, social service provision, local authorities and how we look after the elderly. All of us have seen too many cases in hospital where people who should be in residential or nursing care or being looked after at home are stuck in a large district general hospital or in a community hospital, when they should be getting alternative pathways of care. That is what the whole change should be about. What I am finding as I go round the country listening to doctors, nurses and clinicians is that we must make sure we take the opportunity to get this absolutely right. That is what the reforms should be all about.

In last year’s general election in Essex 49% of the votes cast went to the Conservatives, but 95% of the seats went to Conservative MPs. It was an outcome that would embarrass Robert Mugabe. Apart from the fact that Essex is now a Labour-free zone, does the Prime Minister think that that result was fair?

My hon. Friend tempts me into debate. In Colchester everyone had one vote, it was counted once and he won. I congratulate him. In other parts of Essex everyone had one vote, they were all counted once and many of my hon. Friends won. But for all that he brings to the House, what the Liberal Democrats lack in number, he makes up in stature as a Member of Parliament for Essex.

Speaker’s Statement

I have to inform the House that I have received the following letter from the Clerk of the House:

Dear Mr Speaker,

As you know I have decided to retire at the end of September when I will have completed forty four years of service to the House, over a decade of which has been at the Table.

It has been an immense privilege to serve what I unashamedly regard as a Parliament second to none. Over this long period—which began during the Speakership of Horace Maybray King—there have been great challenges and many changes. There have been crises that have rocked the institution. Throughout these times it has remained my firm belief that only by having confidence in itself, in its ability to adapt to the new while keeping to the tried and tested, can the House retain its pre-eminent position as the sovereign body at the centre of our national, democratic life. Unwarranted and unfounded criticism from whatever quarter should not deflect Members from their duties which will necessarily ruffle and disturb the peace of consensus.

I would like to put on record my great debt to members of the staff of the House, at all levels, who have given me unstinting support. They make up a loyal and very effective workforce. I would like to thank my colleagues on the Management Board and in my own office for their invaluable help without which many of the changes that have happened in recent times could not have been made effective.

Friendships with Members and colleagues in the scattered Commonwealth parliaments, which together form an important parliamentary community, have given me much pleasure. Here at home fellow Clerks have kept me on my procedural toes and I have enjoyed working, across party divides, with Members of the House, past and present and with Members and colleagues in the other place.

Finally Mr Speaker may I thank you and your Deputies, with whom I have worked closely, for your trust and for the camaraderie we have enjoyed together which has greatly lightened what can be serious and sometimes difficult moments.

Yours sincerely,

Malcolm Jack

Members will wish to know that I have put in place a competition for the appointment of the Clerk’s successor.

There will be an opportunity to pay the traditional tribute to the Clerk at a later date. [Applause.] That spontaneous reaction demonstrates the respect and affection in which the Clerk of the House is held.

Points of Order

On a point of order, Mr Speaker. As Many Members were inexplicably absent at 4.30 this morning, they will have missed an important debate that drew attention to a great weakness in our role: we are able to heap praise on certain individuals, but we are forbidden the privilege of everyone outside the House to be critical of those individuals. Can you suggest a way in which we can ensure that that rule, which demeans the office of MP, is changed and we can enjoy the freedom of everyone outside the House to be critical of anyone when necessary?