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Commons Chamber

Volume 530: debated on Monday 20 June 2011

House of Commons

Monday 20 June 2011

The House met at half-past Two o’clock


[Mr Speaker in the Chair]

Oral Answers to Questions

Communities and Local Government

The Secretary of State was asked—

Weekly Refuse Collections

1. What steps his Department is taking to encourage local authorities to provide weekly refuse collections. (60273)

The public have a reasonable expectation that their household waste, in all its various forms, will be collected weekly. That is why we have already ditched the last Government’s policy of imposing fortnightly collections, and we are now going to work with local councils to increase the frequency and quality of rubbish collections. We want to make it easier to recycle.

Does my right hon. Friend agree that by stopping Labour’s planned bin taxes, we are saving hard-working pensioners and families a lot of money?

My hon. Friend is absolutely correct about abolishing Labour’s plans for bin taxes, which would have hammered hard-working families. They were also ridiculous because they would have led to an increase in fly-tipping. The Keep Britain Tidy group has remarked that people would simply have dumped their garbage illegally in a bid to avoid the taxes. It seemed to me to be utterly unreasonable to pit neighbour against neighbour.

Wirral council’s ability to manage refuse collection is severely hampered by the financial settlement it has received. Will the Secretary of State or Ministers meet a Wirral delegation to discuss funding for local services, including refuse collections, in Wirral?

It is always a delight to meet people from Wirral, and if the council there—or, indeed, the hon. Lady—would like to meet me or some of my hon. Friends, we would mark it eagerly in our calendars.

What incentives and support—financial or otherwise—will the Secretary of State’s Department give to small councils such as Purbeck district council, which has moved to fortnightly waste collections but would be interested, if funds permitted, in moving to a weekly food collection?

My hon. Friend makes my point very well. As the Under-Secretary of State with responsibility for local government and planning announced, we are considering financial assessments. Often the kind of authority to which my hon. Friend referred could do with some help with procurement—we have seen a number of smaller districts get together—and we would certainly hope to deal with weekly collections in all their various forms.

Order. If the Secretary of State could face the Chamber, we will all benefit from hearing the full flow of his eloquence.

This money has been recycled many times over. At the Conservative party conference in October 2008, the Secretary of State promised:

“Under a Conservative Government, the weekly bin collection will be back.”

Since the election, eight Tory councils, including in the Prime Minister’s own constituency, have abandoned weekly bin collections, and the Secretary of State has been forced into a humiliating U-turn. Why can he not deliver on his promises?

My hon. Friend suggests, from a sedentary position, that that was rubbish, and I cannot disagree with him. We are looking at delivering weekly collections and a financial incentive for providing them, but we had to start from the basis of dealing with the legacy—we had first to remove the Audit Commission and the instructions in the waste and resources action programme suggesting that it was best to close these things down after local elections, and we had to ensure that the fortnightly collections, which the right hon. Lady advocated so strongly when she was Minister for Housing, were also stopped.

Of course, under Labour, recycling went up, and last week we heard that across our islands, Northern Ireland, Scotland and Wales have higher targets for recycling than England. I think that the record will show that most of the local authorities with fortnightly bin collections are Conservative-controlled. Is not the truth that this chaotic climbdown is a personal humiliation for the Secretary of State? He is making promises he cannot deliver, his own councils are not listening to him and he has been dumped on by his Cabinet colleagues.

I understand now why Polly Toynbee is so disappointed with the right hon. Lady’s opposition across the Dispatch Box. I apologise, Mr Speaker, for not directing my earlier remarks to you. She is concerned about the number of Conservative authorities, but their number is due to the fact that the majority of councils in this country are Conservative—she had a big chance in May to rectify that and failed singularly. However, we are removing the incentives for fortnightly collections, and looking at incentives for weekly collections.

Housing (Armed Forces Personnel)

2. What plans he has to provide support through his Department’s housing policy to serving and former members of the armed forces. [Official Report, 13 July 2011, Vol. 531, c. 3-4MC.] (60274)

10. What plans he has to provide support through his Department’s housing policy to serving and former members of the armed forces. (60282)

I am absolutely determined to ensure that serving and former serving personnel from the armed forces are treated properly when it comes to housing on their return.

Serving men and women form a disproportionately large part of those who are homeless or rough sleepers. I therefore very much welcome the Government’s notification that they are a priority group under the Firstbuy scheme. However, many of them cannot afford to buy a house at all. Will the Minister now consider whether he can bring pressure to bear on local authorities, so that serving men and women are also designated as a priority for local authority housing?

I do not just want to remove the housing disadvantage for those who have served in the military; I want to put them at a positive advantage. That is why we have announced today that they will receive that priority in the Firstbuy scheme. I can also tell my hon. Friend that they will be a priority in the social housing allocation list. Also, if I may correct one point, the new figures for rough sleepers out today from CHAIN—the Combined Homeless and Information Network—show that just 2% of those who have served previously in the military are on the streets.

I am grateful to my right hon. Friend for his answer. Will he join me in congratulating Tamworth borough council on the steps that it proposes to take in prioritising service people on its housing list? Professional organisations such as the Residential Landlords Association have also been encouraging their members to support service people with housing needs. Does that not demonstrate that the private sector can work with the public sector to deliver the housing element of our armed forces covenant?

I have no hesitation in congratulating Tamworth on its approach to the armed forces, or the Residential Landlords Association, which has done much to push this issue. I congratulate them, and I will go further when we draw up the social housing regulations after the Localism Bill has passed.

Service Provision

4. What recent assessment he has made of the effects of reductions in central Government funding for local authorities on levels of local authority service provision. (60276)

13. What recent assessment he has made of the effects of reductions in central Government funding for local authorities on levels of charges for local authority services. (60286)

I can tell the House that I have made a new assessment of the consequences for local authorities of paying down the deficit. Currently, the average reduction in spending power for councils this year is 4.4%. However, if VAT were reduced, as per a recent suggestion, the £13 billion a year needed to pay for it would require the average cut in council spending to be 29.1%. In my view, that would be to go too far and too fast.

That is all very interesting, but from next month, nine Sure Start centres in Hammersmith and Fulham will lose more than 90% of their funding, and therefore will close. Parents at one of them—Cathnor Park—have got a judicial review going, but they are having to expedite it, because the council is going ahead with 50 redundancies and closing services, despite the fact that the courts have not yet considered these matters. Will the Minister at least go as far as advising that rogue council not to proceed with those closures until the courts and the parents have had their fair say?

That is a superb council, and it certainly does not need any advice from me. In fact, I am astonished that the hon. Gentleman has not taken the opportunity to congratulate his council on saving every library in the borough, by merging the service with neighbouring boroughs, and on saving £1 million. When he was leader of the council, he doubled the council tax and his Labour administration was booted out at the election. The current, Conservative administration was returned with a healthy majority at the last council election.

As a result of the Government’s decision to impose huge, front-loaded cuts on local authorities, many councils are increasing charges for social care, hitting the elderly and the vulnerable. Will the Minister join me in condemning Tory councils such as North Tyneside council, which has increased its home care charges by more than 50%, from £99 to a maximum of £150 a week?

We still have not had an answer—perhaps we will shortly—to the question of how the extra black hole that has opened up will be funded, and whether that will come from local government, but I will answer the hon. Lady’s question. Three years ago, one of the predecessors of the right hon. Member for Don Valley (Caroline Flint) as Minister for local government, the right hon. Member for Wentworth and Dearne (John Healey), complained that only one in five councils was using charging to its full potential. Indeed, the last Government issued statutory guidance to force councils to charge more for parking, for example. Council charging doubled under Labour. Unlike the last Government, we will not force councils to increase their charging.

Does my right hon. Friend agree that there is great cost variation in like-for-like authority provision? Therefore, it is inappropriate to judge the quality of services by the amount of other people’s money—that is, taxpayers’ money—spent on them.

My hon. Friend is absolutely right. His record in leading Wandsworth, which was transformed under his leadership—I am pleased to say that that transformation has continued under the leadership of Sir Edward Lister, whom I am sure the House will congratulate on his knighthood—shows what can be done when there is a Conservative council that takes the economies seriously.

Does my right hon. Friend agree that, now that the Government have introduced greater transparency in relation to any amounts over £500 that local authorities spend, our constituents will be far better informed about the politics involved in the reduced budgets for local authorities?

My hon. Friend is another distinguished former leader of a local authority, and he is absolutely right. We still have not heard whether those on the Opposition Front Bench think that it is a good idea for councils to have full transparency. I think that Nottingham city council is still holding out, but perhaps we shall be enlightened on that matter soon.

Today’s report from the Equality and Human Rights Commission demonstrates that Britain’s pensioners are not receiving the care that they deserve. In Birmingham, the coalition council’s cutting of care to 4,100 of the most vulnerable has been branded unlawful by the High Court. Having imposed the biggest cuts in local government history, does the Secretary of State take any responsibility? Will he intervene in this matter, or does he share the view of the Prime Minister that the actions of Birmingham city council were “excellent”?

The problem with Birmingham is that it has a legacy of mismanagement and waste from the days of Labour control, which lasted quite a long time. If the hon. Gentleman is interested in the economies, as I am, will he tell us his position and that of the right hon. Member for Don Valley (Caroline Flint)? He is the Rasputin of the Labour party, the power behind the throne of Edward Miliband. I have to warn the Leader of the Opposition, however, that the hon. Member for Derby North (Chris Williamson) is an acolyte of the shadow Chancellor. In Wimbledon fortnight, it would perhaps be appropriate to say that he is one of Balls’ boys. Is it the shadow Secretary of State’s policy to add an extra £13 billion of cuts? Yes or no? And would that come from borrowing, or would it yet again come from local government? Will she tell us what her policy is? In the week that—

Order. I am grateful to the Minister, but he must now resume his seat. In the name of utilising our time properly—I use the word “properly” advisedly—we must focus questions and answers on the policies of the Government.

New Homes Bonus

5. How much funding his Department has allocated from the new homes bonus scheme (a) to Lancaster and Fleetwood constituency and (b) in total since the scheme’s inception. (60277)

The first new homes bonus allocations were made in April. Over six years, Lancaster will receive some £1.4 million and Wyre some £1.6 million. Across England, the allocations will total almost £1 billion during the spending review period. The next allocations will take place next April.

I thank my right hon. Friend for that reply on behalf of the two district councils. How long will it be before this policy and others of the new Government begin to address the failure over the past 13 years to get the right number of new houses that we need?

The policies are already having some impact. In the first year of this new Government, house building starts were up 22%. That compares rather favourably with the period during which the right hon. Member for Don Valley (Caroline Flint), who is now the shadow Secretary of State, was Housing Minister, when house building starts were a third lower than they are today.

The Minister will be aware that some Labour Members are rather sceptical about whether the new homes bonus will deliver more homes than were being built before the recession. Given that no research is being done into the effectiveness of the scheme, and that there is no evidence about such schemes in other countries, does he agree that it would be appropriate to have an independent review of the scheme’s effectiveness? If so, what period of time should the review cover?

The Chairman of the Select Committee is wrong to say that no research has been done into the scheme. Indeed, the impact assessment stated that it would increase house building starts and, as I have just said, there has been a 22% increase in house building starts in the first year of the policy. Let us compare that with the year before the policy was put in place, when house building under Labour was at its lowest level since the 1920s. There is therefore growing evidence that the new homes bonus is working rather well.

I make my usual declaration of an indirect interest.

The new homes bonus is paying out taxpayers’ money but it is not delivering. Planning permissions fell by 17% on year for the first quarter. Let us not confuse that with starts, which took place as a result of investment by the previous Labour Government. The Town and Country Planning Association, the Campaign to Protect Rural England and the Royal Town Planning Institute are clear that the changes in the Localism Bill will enable developers to buy planning permissions. Are those professionals wrong?

The idea that one quarter can be judged against an entire year’s evidence is, of course, nonsense. The evidence for the entire year is that house starts are up by 22%. I would rather take a year’s figures than one quarter’s. We know that councils right across the country, including Labour councils, are welcoming the new homes bonus money, which is now starting to make a real difference. Yes, it is right for local authorities and local people to take fully into account the economic benefits of building more homes in their areas.

Fraudulent Claims (Local Authority Funding)

6. What steps he is taking to reduce the level of fraudulent claims for funding awarded by local authorities. (60278)

Last month, in conjunction with the National Fraud Authority, I published a 10-point plan outlining how councils can save £2 billion a year from tackling fraud. Whether it be through dealing with tenancy cheats or organised crimes, this is a key way to save taxpayers’ money and protect front-line services.

I thank the Secretary of State for that answer. Will he join me in recognising the lead taken by Elmbridge borough council, which over the last year alone recovered £72,000 of overpaid benefit and is using data checks to crack down on the abuse of the single person council tax discount, cutting out waste and fraud and saving taxpayers’ money?

I will indeed join my hon. Friend in congratulating his council. As I said in my original answer, this is quite a big deal, amounting to £2 billion a year. I think it was Cheshire East council that managed to save £500,000 a year on the single person discount. We are not talking about trivial amounts here; we are talking about something that will make a big difference.

Home Ownership

I can announce today that, subject to contracts, more than 100 developers will offer the equity loan product Firstbuy and I can also say that this will build more than 10,000-odd homes as we initially anticipated—something like 10,500 in England—and bring up to £500 million-worth of investment across the UK.

Is my hon. Friend aware that, under the last Government, the waiting list in Harlow quadrupled? Does he accept that one of the best ways to break the poverty trap is to help families into shared equity schemes to give them a foot on the property ladder?

My hon. Friend is absolutely right. The waiting list doubled across the country, but in Harlow it quadrupled during the period of the previous Government. That is not good enough; we must build more homes to get ourselves out of that trouble. In addition, we need innovative products that share equity. I know that my hon. Friend is a keen supporter of that and I am sure it will help in his area as indeed it will in the areas of all Members across the country.

Many residents in Mid Bedfordshire who are living in social and council housing would love to have the opportunity to buy the home they live in. We know that such policies introduce aspiration and narrow the gap between rich and poor, enabling people to get on to that property ladder. Does the Minister have any plans to introduce schemes like right-to-buy again so that residents in Mid Bedfordshire can have some hope?

My hon. Friend is absolutely right to talk about right-to-buy, which helped millions of people achieve the aspiration of owning their own homes. This Government fully support that objective. I think it is right, however, to recycle that money into building more homes. Under the affordable rent scheme that I have recently introduced, that is precisely what will happen: if people end up buying their home, more homes will be built, which will help to lessen that record social housing waiting list that we were disgracefully left with after 13 years of Labour Government.

Does not the Minister recognise that, far from promoting home ownership, his Government’s policies have led to a stagnant market in which housing starts are collapsing and public confidence has been shattered by a combination of the Minister’s incompetence and the Government’s economic management. Does he not recognise that the latest figures from the National House-Building Council—the most authoritative source—show that housing starts in April 2011, the latest for which figures are available, are 18% down on last year?

I am deeply shocked that the right hon. Gentleman, who is an acknowledged expert on housing, has chosen to judge what is going on in the housing market on the basis of a single month’s figure, rather than an entire year’s worth of data which shows a 22% increase in housing starts. Housing starts mean that homes get built, which is turn means that we are on the road to recovery in terms of starts and builds.

It has been reported recently that millions of people will never be able to afford to own their homes, and that only those who inherit equity from their families will be able to do so. However, equity will increasingly be used to pay for long-term care, and owner-occupation will diminish. Is that not the reality?

The hon. Gentleman is right to draw attention to a serious problem involving both long-term care and a reduction in people’s ability to buy homes. That has happened because house prices tripled over the 10 years following 1997. Eight out of 10 first-time buyers are buying their homes through the bank of mum and dad, but today those without that ability will be pleased to hear about our Firstbuy scheme, which will help more than 10,000 people in England to get a foot on the housing ladder for the first time.

Fire and Rescue Services

8. What recent discussions he has had with representatives of fire and rescue services on the effects of reductions in their budgets; and if he will make a statement. (60280)

I regularly meet representatives of fire and rescue authorities. My door is always open to their members if they wish to discuss their concerns. I have specified seven areas in which fire and rescue authorities might make efficiency savings, but the setting of fire authority budgets and service delivery are a local matter which is determined by individual fire and rescue authorities and not by central Government.

Shropshire fire and rescue service

“has been hit by unprecedented cuts to its grant from Central Government, with a 12.6% reduction for years 2011-12 and 2012-13”.

Those are not my words, but the words of the chief fire officer in a letter sent to me the other day. Services and engine cover in Telford are to be reorganised. If response times fall away, will the Minister look again at the grant allocation for the Shropshire fire service?

The local government grant accounts for only about 38% of the Shropshire fire and rescue authority’s total budget. Its spending power has therefore been reduced by only 2.1%, while its capital grant has been increased by 32%. The disposition of appliances and staff is, of course, a matter for the authority.

As my hon. Friend knows, following the floods of 2007 and the tragedy in Hull the Pitt report placed an obligation on fire services to provide the right equipment in the event of future floods. Will he ensure not just that that obligation exists but that money will be provided, and will he insist that local authorities make that happen?

Some of the most important equipment made available for such purposes is the “new dimension” equipment that is provided through a central Government grant. The Government have continued to fund the equipment directly, and I am glad to say that, with the exception of one item, all of it is duly being rolled out.

In February, the Under-Secretary of State accused me of scaremongering about the impact of his cuts on the fire service. However, freedom of information requests have confirmed that he has already presided over more than 1,000 firefighter job losses, although the Prime Minister pledged to supply funds to the fire service front line. Can he tell us whether he expects further firefighter cuts in the next 12 months, and if so, how many?

The disposition of firefighters is entirely a matter for local authorities, whose job is to ensure that they fulfil their statutory obligations and meet their integrated resource management plan. Provided that they do those two things, it is not for central Government to micro-manage them. I know that it is difficult for the hon. Gentleman to understand that.

Unauthorised Development

The Government take the problem of unauthorised development very seriously. There are already strong powers to enable local planning authorities to take action, and the Localism Bill, which begins its Committee stage in the House of Lords today, includes provisions in clauses 108 to 111 to strengthen authorities’ powers to tackle unauthorised developments, particularly when people have deliberately tried to conceal them.

I thank my right hon. Friend for his response and the work he and his Department are doing in this field. Does he believe the policies in the Localism Bill to which he has just referred will speed up the planning and enforcement process to help tackle the problems caused by unauthorised developments and business operations?

I do. A particular problem has been unscrupulous developers rather playing the game by both appealing against enforcement in respect of unauthorised developments and putting in fresh applications. In future, the applicant will have a choice of either appealing the enforcement or making a fresh application.

I thank my right hon. Friend for his answer. The 2006 planning enforcement review recommended that planning fees should not include a charge for enforcement. Will the Secretary of State confirm what the current position is, and is he considering changing it?

We will lay out changes with regard to enforcement and issue guidelines. For instance, we will increase the fine for enforcement from £1,000 to £2,500. It is important to send out the message that unscrupulous developers will no longer be able to play the system and get those vital months of freedom in which to continue with a development no one wants.

One of the planning enforcement steps that the Secretary of State has made it harder for Slough local authority to take is dealing with what we call Slough sheds, which is people erecting garden sheds in their back gardens and letting them out for others to occupy. The Secretary of State has taken away the funds we had to be able to enforce against that abuse of garden sheds. What is he doing to ensure that local authorities have sufficient powers and resources to deal with the letting out of inappropriate buildings to needy people?

I regret to have to inform the House that, in all our deliberations, Slough sheds have not been at the forefront of the Department’s mind. If it is an important abuse, I frankly do not believe that the local authority cannot find the necessary resources to prioritise tackling it. However, we are looking at ways in which we can encourage small business and private enterprise to set up in private homes, and I hope the point the hon. Lady raises would not stand in the way of that.

Empty Homes

We have put in place powerful tools and incentives to support local communities to tackle empty homes. Through the new homes bonus, communities will receive a direct financial reward for bringing an empty home back into use, and we are investing £100 million to tackle empty homes directly.

Under the previous Government, together with local residents I fought to prevent thousands of homes from being built on the Kingswood green belt, particularly since there are 2,260 empty homes in south Gloucestershire, an increase of more than 660 empty homes since 2004. What encouragement can the Minister give my constituents that we will do all we can to get these homes back into use?

The new homes bonus will give local councils every incentive to bring empty homes back into use. They will get matching council tax receipts for six years for each home brought back into use, and that extra funding can be spent on things that benefit the local community, such as council tax discounts, boosting local services, renovating more empty properties or improving local facilities. The £100 million of investment is part of our affordable homes programme. Applications for that will be opened in the autumn, but I can tell my hon. Friend that 100 organisations have already expressed keen interest in it.

Will the hon. Gentleman take a look at the issue of empty offices that might be appropriate for housing? I walk past 200 Aldersgate, a massive office complex in the centre of our city that has been empty for years. That is a disgrace. Why cannot we use that for people who have nowhere to live?

I am happy to tell the hon. Gentleman that he is just in time. There is a consultation on precisely the issue he has raised. It closes on 30 June, and I look forward to receiving his submission.

Senior Pay (Local Government)

We have been clear that we expect councils to demonstrate much more restraint in the local decisions they make on senior pay. In addition, we have introduced measures in the Localism Bill and we are improving transparency arrangements to ensure greater local democratic accountability in determining senior pay.

Many senior business men and their staff in my constituency have taken pay cuts as a result of part-time working through the downturn. Is local government sharing that pain?

I am delighted to tell my hon. Friend that a survey by one of the trade papers showed that chief executives’ salaries have dropped by 14%. In my view, that is certainly a very good start. We have asked chief executives who are earning more than £150,000 to take a 5% cut, and those earning more than £200,000 to take a cut too. They need to do that so they can look their front-line staff in the eye when taking these difficult decisions.

Does the Secretary of State agree that the level of transparency being applied to the public sector should also apply to the private sector, and how can that be achieved?

That is a matter for companies and their shareholders. However, I am sure that somebody who has been a champion of the low-paid, such as the hon. Gentleman, will be very pleased that we are extending that transparency. It will apply not only to highly paid people but to low-paid people in the public sector, so that we can clearly see the level of remuneration that local authority workers receive.


15. What steps he is taking to enhance the role of neighbourhoods and town and parish councils in local planning. (60288)

The Localism Bill gives every community the right to have a neighbourhood plan, and town and parish councils will have a leading role in bringing the plans together. The National Association of Local Councils, which is the umbrella body for town and parish councils, is one of five organisations funded to provide assistance to neighbourhoods in drawing up their plans.

I thank the Minister for that answer, and on behalf of the 110 villages and four towns in Mid Norfolk I thank him for giving them the opportunity to take control of their own housing policy after a decade in which housing policy was something done to them by unelected Labour quangos. Can he reassure the town councils in my constituency that where a district council, for good reason, is seeking to complete a local development framework in an area with very high speculative pressure from developers, there will be some scope for town councils to put in place their own plan for their town, such that housing that has been provided for can be delivered in a way that will boost the identity of that town and its sense of itself?

My hon. Friend is absolutely right. As he will know, the parish council in Attleborough, in his constituency, is already drawing up a neighbourhood plan, so that plan can have statutory force as soon as the provisions of the Localism Bill come into effect. I encourage other councils throughout the country to join the more than 90 parishes and neighbourhoods that are drawing up neighbourhood plans, even in advance of the Bill’s provisions coming into law.

The Minister will know that I do not share his optimism about the effectiveness of his planning process proposals in engaging people. How will relaxing the planning rules on converting offices into homes give more powers to neighbourhoods and communities?

Having debated these matters with the hon. Lady in the Localism Bill Committee, I would have thought she would be the first to recognise the need to turn derelict buildings that are not being used into housing that can be used for people in city centres. I am surprised at her attitude. However, I can update her. I know that she expressed some scepticism about the idea that people would be enthusiastic about this, but I have to tell her that since the Bill Committee, we have been vastly oversubscribed by enthusiastic councils in all areas of the country that are eager to get on with neighbourhood planning. That has surpassed our expectations and bodes pretty well for the take-up of the rights.

The Government’s natural environment White Paper proposes a new designation of green areas to be identified in neighbourhood plans. However, those plans must remain in line with the local authority’s strategic vision for its area. How does the Minister propose that neighbourhood plans could safeguard green areas of land identified for development in existing local development frameworks?

I am grateful to my hon. Friend for his question. Our hon. Friend the Member for Cheltenham (Martin Horwood) proposed the designation in the first place. Hon. Members will see in the national planning policy framework that we will capture a definition that will allow the people who know green spaces best—those who live with them—to provide them with the protection for which they have been looking for some time.

Transparency (Local Government Spending)

17. What steps he is taking to improve the transparency of spending in local government; and if he will make a statement. (60290)

All local authorities in England now publish details of their £500 spend online and our Department routinely publishes a wide range of statistics on local authority spend. I say all local authorities but there is one exception to that rule—Labour Nottingham.

Ministers have already referred to the sound stewardship of Wandsworth council, which not only publishes everything over £500 spending wise but publishes the salary and expenses of all its staff who earn over £58,200. Will the Minister urge all public bodies to follow that lead?

My hon. Friend is absolutely right about this. It is incredibly important that public bodies follow that lead. Transparency is at the very heart of allowing citizens to take part in local democracy and hold public bodies to account, and I cannot imagine for one moment why any public body would want to hold out against that. It is extraordinary that some do and even more extraordinary that one of them is a major city authority such as Nottingham.

Will the Minister be fully transparent about how much the people of Birmingham will have to pay for the establishment of the imposed office of a shadow executive mayor and what they will have to pay in reconversion costs if they happen to reject that back-to-front proposal when he finally consults them in a referendum?

I think we might be finally making progress. The good news for the hon. Gentleman is that when that kind of transparency is combined, everyone can hold local authorities to account—that is the whole point. When people try to cover things up and when huge amounts of expenditure go completely unchecked by armchair auditors, that cannot happen, but this way it can and will.

Business Rates

18. What assessment he has made of the likely effects of retention of business rates on local authorities in areas with high levels of deprivation. (60291)

The local government resource review is considering options to allow authorities to receive the repatriation of business rates. We will publish our proposals in July for consultation. We have been clear all along that the review will continue to support people where needed, to consider how to fund authorities where locally raised funding would be insufficient to meet budget requirements and to control council tax levels.

I am very grateful to the Secretary of State for his answer. I am sure he will agree that local authorities have a key role to play in promoting growth. There are very strong arguments in favour of allowing local authorities to keep their business rates, but given the great disparity that exists between local authorities across the country, can he give us a bit more detail about how he will make sure that local authorities in disadvantaged areas that do not have a strong business base will still be able to fund essential services?

I am grateful for the right hon. Gentleman’s question, because it allows me to make it absolutely clear that there is absolutely no intention whatever for councils to receive anything less than they currently receive with regard to the amount of grant. Manchester receives £714 per head and Trafford receives £325 per head. That kind of bridging is not easy to do, but I want him to understand that the system we are proposing will fully meet the aspirations of places such as Manchester, which has a very dynamic economy. We want to ensure that we no longer take from areas where growth exists, as happens under the existing provisions.

Hastings recently fell to 19th from the bottom on the index of multiple deprivation. Can the Secretary of State reassure me that in the new assessment, with business rates as a right incentive for councils, areas of deprivation will still get the support they need from central Government while growth comes back?

The short answer is yes. My hon. Friend is a doughty defender of her constituents, but there is irony in the fact that the worse an authority can present itself, the more grant it gets. When I was council leader I often wanted to state what the good reasons for coming to the area were, and I think we have found a system under which councils will be able to do that. Hon. Members should not be under any illusions—the existing system is bust; it is broken. It simply does not deliver and we want a system that will deliver for the richest and the poorest.

But while the Stockport part of my constituency would broadly break even from localising business rates by raising almost the same amount as it gets in formula grant under the current arrangements, the Tameside part of my constituency would see a massive 35.7% drop—a shortfall of some £30 million funding. Does the Secretary of State understand that coming on top of his front-loaded cuts, such a massive reduction in funding for one of England’s poorest local authorities would be an unacceptable outcome?

My advice to the hon. Gentleman is to cancel the leaflet. If it has already gone, pull it back. There is no intention whatsoever, under any circumstances, that he should lose 34%—not in one lump, not in a series of lumps. He is going to have to trust me. We are producing a scheme that he will like. We are producing a scheme such that he might even consider crossing the Floor.

Fiscal Autonomy (Local Authorities)

The local resource review will enable local authorities to keep at least a proportion of the business rates that they raise. This will enable a number of local authorities to break free from dependency on central Government. The review will also bring forward proposals to free local authorities to raise tax increment financing to support infrastructure and related projects.

Does the Minister believe that we can achieve real localism without devolving revenue-raising powers from Whitehall to the town halls?

The Government are anxious to ensure that local businesses are not subject to local increases in taxation which they cannot control, but on the other hand a real and powerful incentive is being created for local authorities to grow their tax base by attracting business to their area.

Topical Questions

Since the last oral questions we have announced plans to build 100,000 homes and create 25,000 jobs by selling off surplus public sector land. We have unveiled a new planning protection to help communities to protect valuable green open spaces. We have opened up the books on the lavish spending of the previous Government via the Government procurement card—Whitehall’s flexible friend.

On a more sombre note, we are making a £2 million contribution to the Auschwitz-Birkenau Foundation to ensure the long-term preservation and restoration of its memorial site. It is our collective responsibility to educate future generations about the horrors of the holocaust and never to forget why we need to challenge and combat the forces of hate.

The need for more new homes is accepted across the House. In addition to Firstbuy and the new homes bonus, one way of increasing the supply of new homes will be to relax the planning rules, including allowing the conversion of empty commercial space. The Government’s current consultation on that proposal will be welcomed by first-time buyers as well as the Opposition. Will the Minister tell the House when the legislation might be introduced and estimate the number of new homes that might be created in this way?

I think the proposal will be welcome in all parts of the House. We heard opposing views from the hon. Members for Huddersfield (Mr Sheerman) and for Lewisham East (Heidi Alexander), but my hon. Friend has until 30 June, when we will be closing the consultation. The proposal could produce 70,000 new homes over 10 years. I share his commitment to that aim.

We have already heard today about the concerns over the level of charges being raised on the old and vulnerable in our communities as a result of the cuts, but it is not only those people who are facing increases in charges. Tory-run Wandsworth and Bexley councils are planning to charge children to play on their swings. Will the Secretary of State join me in condemning this fun tax, or is pay to play now official Government policy?

Let us be clear: under the Labour Administration councils were harangued about not charging. Councils were instructed to charge more. We will look at the level of charging in the context of the reform of local government finance, but it ill becomes the Labour party to suggest what the right hon. Lady is now suggesting when under Labour charges went up and the council tax doubled.

T4. I would like to bring to the attention of my right hon. Friend the Housing Minister the good work being done by Erewash borough council and the private landlord sector across the borough to encourage landlords to consider housing benefit recipients on an equal footing with tenant on private lets, which has strengthened the process of moving families into appropriate accommodation more quickly. Will he welcome this cross-sector work? (60301)

My hon. Friend is absolutely right that the relationship between local authorities and private landlords is critically important. We have seen how the total stock of social housing declined under the previous Administration. We are going to do something about that by ensuring that we build an additional 150,000 affordable homes, but the relationship with the private sector is absolutely key, and I encourage and wholeheartedly welcome it.

T3. Following that answer, we were told that the Government’s changes to local housing allowance will bring down private sector rents. If that turns out not to be the case, what plans have the Government to ensure that private sector rents are affordable for the large section of my constituents who earn too much to qualify for social housing or local housing allowance, but not enough to buy a home of their own and, as a consequence, spend a huge proportion of their income on rent every month? (60300)

The hon. Gentleman is absolutely right, and this is a huge problem for a large number of his constituents and those of many Members across the House. The answer, of course, is that I hope he will give his full backing to the Localism Bill in the Division Lobby when it comes back to the House, as it contains provisions on affordable rent that are designed to get people out of the private-rented sector and into lower-cost rents of perhaps 50%, 60%, 70% or 80%. That will help his constituents and many of ours to afford that rental.

T7. Does the Minister agree that the Government’s recent statement of 13 April on Traveller sites provides excellent advice to Wiltshire council when it comes to consider contentious planning issues in Alderbury and Salisbury? (60305)

It is quite reasonable to see this as an emerging policy. We have put out a consultation document on Traveller sites, and there are a few more days before the consultation closes. It should be clear in the council’s mind that this is a policy that is changing and emerging.

T5. The Housing Minister is familiar with the blight caused by private landlords in old terraced houses in Manchester and Salford. The area-based registration of private landlords has had some success in dealing with the problem, but those schemes under the Housing Act 2004 are coming to an end. If local authorities can show that there has been some success, will he agree to the extension of those schemes? (60302)

The simple answer is yes. I have visited the hon. Gentleman’s constituency and seen some of the problems for myself. I am very much in favour of the discretionary local licensing schemes, which can play an important part. I pledge that when I come back to see his Collyhurst estate, which is about to have its decent homes funding get under way and have work done on that, I will be very happy to visit one of those licensing schemes.

Will my right hon. Friend visit my constituency so that I can show him at first hand the greenfield land that is being developed, while thousands of units neighbouring my constituency, which have been approved by Leeds city council for building on, are being completely ignored by housing developers, thereby totally undermining any regeneration the city would like to achieve?

I would be delighted to go to Yorkshire to visit my hon. Friend’s constituency and advise the council that the best way it can control its destiny is by adopting a local plan forthwith.

T6. Despite receiving £20 million of cuts—£5 million more than Wandsworth borough council, and £15 million more than Bexley—Bolton’s labour-run council will not be charging children to play. Will the Secretary of State join me in congratulating Bolton council on protecting children from the Government’s huge cuts? (60304)

T9. In the week of the anniversary of the emergency Budget, what additional steps is my right hon. Friend’s Department taking to help the Government to achieve their fiscal mandate? (60307)

We have delivered a good settlement for local government; we are looking to reduce our own Department, including reducing at the top and reducing numbers; and we are looking to extend that by offering help on growth, on enterprise zones and on local partnerships for growth. This Department has changed enormously over the past year by becoming pro-growth and helpful to local communities, offering power to local government and ensuring that ordinary people do not face a big increase in council tax.

In the Westminster city council area, 3,000 elderly and disabled people are losing social care, children’s centres are being cut, street cleansing is being cut and the youth service is being cut. In the light of that, does the Secretary of State think it is a good use of public money to run a summer roadshow

“to counter the messages that people are hearing about council services being reduced or withdrawn”?

We have been most careful to ensure that priority has been given to the most vulnerable. That is why we made sure that £6.5 billion went into the Supporting People programme, and £400 million into homeless programmes. We expect that to be reflected by local authorities prioritising the most vulnerable.

It is a national scandal that wanted and profitable pubs are being closed against the wishes of the communities they serve and simply to serve the interests of greedy developers and pub companies. I was delighted to welcome the Minister with responsibility for community pubs to the launch of the all-party save the pub group’s new planning charter. Will he welcome that charter and work with the group to ensure that the Government do all they can to protect pubs?

I am delighted to work with the hon. Gentleman and to discuss his charter—I should be delighted to join him in a pub, if need be. The Government are determined, through our planning reforms and the Localism Bill, to give communities an opportunity to acquire those assets that genuinely can be viable.

Conservative-run Lancashire county council has increased day-care charges from £5 to £30 starting from this month. Does the Minister think that the residents and elderly of Lancashire will see a 600% improvement from that Conservative council?

I dare say that, if Labour had been in control, we would have seen even bigger increases. After all, this is the year that Labour was going to impose pretty big front-loaded cuts on local authorities, and it was urging local authorities to increase their charges. A Labour MP should therefore not castigate a local authority that increases charges after listening to a Labour Government; he should be encouraging it.

I have a council that is keen to transfer assets to community groups, and community groups are, encouragingly, interested in taking them on. However, there seem to be some barriers in terms of not only VAT and the complexity of the VAT system but community insurance policies, so will the Department put in place a working group to look at the barriers that are stopping people transferring assets to community groups?

My hon. Friend makes some very important points, but such matters are way above my pay grade. With regard to charitable trusts and the like, however, it would be sensible for her to talk to members of my Department, and we will do our best to help her.

I draw attention to my entry in the Register of Members’ Financial Interests.

On waste, will the Secretary of State confirm that his Department spent £1.3 million in the first four months of this year on legal advice and consultancy? How much of that was attributable to the consequences of his unlawful decision to try to abolish regional spatial strategies?

I am delighted to tell the right hon. Gentleman that the bill has come down from what it was under Labour, and that quite a lot of that money was actually expended on decisions taken by my Labour predecessor. We have been using that money to unravel the mess that he and his friends left behind.

The village of Braybrooke in my constituency is gradually being surrounded by unauthorised developments in open countryside as a result of applications from the Gypsy and Traveller community. What additional powers and guidance will the Secretary of State give to the local planning authority to ensure that the village is not completely encircled?

The current consultation on the planning guidelines is open for a few more days, and we will be interested to hear my hon. Friend’s views if he has not already submitted them. We are determined to tackle this problem, and the Localism Bill and the changes to the guidelines are designed to achieve just that.

The 1% increase in mortgage activity over the past 12 months is largely focused on remortgages. Why is that?

Because there was an enormous bank crash due to the fact that the debt in the British economy got out of all possible control, with Labour spending money that this country simply did not have. We are in the process of unravelling that mess. I am pleased to report to the hon. Gentleman that for the first time for a very long time average lending to first-time buyers has dropped below 6%.

Further to Question 2, do Ministers accept that in towns where there is a major garrison there is a significant impact on the rented housing sector, both public and private? That being the case, will the coalition Government provide additional resources over and above what they would provide for a town without a garrison so that our current and former service personnel can be housed?

My hon. Friend is absolutely right about the additional pressures that arise when there is a garrison in a town. As I announced at the Dispatch Box an hour ago, this Government are determined not only to honour returning service personnel but to put them at an advantage by putting them right at the top of the list and for top consideration for such things as the Firstbuy scheme. We will send Firstbuy agents into the garrisons to ensure that they can help to get the right people into these new homes.

Eurozone (Contingency Plans)

(Urgent Question): To ask the Minister what are Her Majesty’s Treasury’s contingency plans in case of a Greek default.

Hon. Members will be aware of the recent developments in Greece. There has been considerable media speculation about what this means for the Greek adjustment programme and potential market reactions. I am not going to engage in speculation on what might or might not happen but give the House an account of the facts as they currently stand.

Let me begin with some background on Greece and the financial assistance package. The international financial assistance package for Greece was agreed in May 2010. The package is composed of two elements: a loan of €30 billion from the International Monetary Fund and €80 billion of bilateral loans from euro area member states to the Greek Government. Although they were created at a similar time, neither the European financial stabilisation mechanism, which is backed by the EU budget, nor the euro area-only European financial stability facility contributed to the package for Greece.

The adjustment package requires Greece to undertake significant actions. There are some very difficult questions that Greece has to address now, because the package assumed that it would be able to access market funding again in 2012, but this now looks unlikely in current market conditions. The House will also be aware of political developments in Greece; a new cabinet has been appointed and the Government will soon be subject to a vote of confidence in the Greek Parliament. Later this month, the Greek Parliament will also be voting on a medium-term fiscal strategy, which is a key element of the conditions attached to the current adjustment programme.

Against this backdrop, the euro area member states have been discussing the next steps. The Eurogroup, which comprises euro area member states, today released a statement calling on

“all political parties in Greece to support the programme’s main objectives and key policy measures to ensure a rigorous and expeditious implementation”.

The statement also said that Ministers will

“define by early July the main parameters of a clear new financing strategy”.

This is a statement from the euro area member states only. Let me be clear: the UK has not been involved in these discussions. We did not participate directly in the May 2010 package of support for Greece, and there has been no formal suggestion of UK bilateral loans or use of the EFSM, which is backed by the EU budget. The UK participated in the May 2010 package for Greece only through its membership of the IMF. So the burden of providing finance to Greece is shared between the IMF and euro area member states, and we fully expect this to continue. Our position on that is well understood across the euro area.

The UK believes that the international community needs a strong IMF as an anchor of global economic stability and prosperity. Over the past few years, we have seen how important that role can be in times of crisis, as the IMF has taken swift and decisive action to support the global economy.

There is, of course, no room for complacency. The Treasury, the Bank of England and the Financial Services Authority are monitoring the financial system, including in the euro area, on an ongoing basis. Many scenarios are considered as part of the normal policy development process. Hon. Members will agree that it would not be appropriate for me to discuss the detail of those scenarios. I also remind hon. Members that UK banks have little direct exposure to Greece.

The continuing uncertainty in the euro area is a reminder of the benefits of taking early action to stabilise and recapitalise the banks, as the UK has done. The UK banking system has developed a strong capital position, which has made it more resilient and will insure it against future risks. UK banks have made good progress in sourcing funding, despite the difficult market conditions.

The difficulties faced by eurozone countries such as Greece and Portugal reinforce why it is right to pursue the course that we set last year to tackle the deficit. The House should reflect that our deficit is larger than that of Portugal, but that our market rates are similar to those of Germany. The action we have taken to strengthen the country’s finances stands us in good stead during this period of instability in the eurozone. No one on either side of this House should lose sight of the importance of these decisions in protecting the UK economy.

It is absolutely true that there is no room for complacency, but there is also no room for selective blindness and deafness, which there clearly is on the Front Benches. We have yet another question on a bail-out to which Ministers say, “Of course, we cannot be specific and we will not indulge in speculation on events that may or may not happen.”

The United Kingdom will not be isolated if Greece defaults. Economists across the world are increasingly saying that it is a question not of if, but of when and are arguing that, for all intents and purposes, it has already happened. Another bail-out package will not solve Greece’s problems because it is not regaining competitiveness and cannot do so while it is in the eurozone. Therefore, is it not time that Her Majesty’s Government woke up and prepared for the possibility and almost inevitability of Greece defaulting? The situation will lead either to a Greek default or to the break-up of the eurozone. Whichever way it goes, we will not be isolated.

I will therefore ask the Minister some questions that go to the heart of the resilience that needs to be built up. The first is about institutional resilience. If he is really telling the House that people at the Treasury and the Bank of England have not started to get together to make practical provisions about who will meet, hold discussions and take action in the case of a default that would be comparable to Lehman Brothers, he is guilty of not stepping up to the responsibilities of his office.

Secondly, the Minister’s economic plans are completely predicated on the rest of Europe and the world being economically successful. If Greece defaults, other economies will not grow and ours will be affected. Therefore, should he not reconsider his VAT increase, because that would give us greater resilience?

The Minister shakes his head; I ask him to take me seriously.

Thirdly, I ask the Minister to consider article 66 of the treaty on the functioning of the European Union, which states:

“Where, in exceptional circumstances, movements of capital to or from third countries cause, or threaten to cause, serious difficulties for the operation of economic and monetary union, the Council”,

after consultation, can impose

“for a period not exceeding six months”

measures to restrict capital flows between the EU and the rest of the world. The UK would be affected by such restrictions of capital flows. Has he discussed that with the Commission? Has he made provision for how the UK economy would deal with that if it was imposed?

The hon. Lady poses a series of very good questions, to which I will respond.

The hon. Lady asked whether the authorities are working together. I said in response to her initial question that the Treasury, the Bank of England and the FSA are working closely on this matter and monitoring the situation. We are keen to ensure that the UK banking system is resilient. The additional capital that the banks hold now, compared with at the start of the crisis, will help with that. As I said, UK banks have not had difficulty in sourcing funding in the market. There is a concern about liquidity risk, but UK banks are continuing to source funding.

I mentioned in my statement the exposure of UK banks to the Greek Government. It is $4 billion, which is less than our exposure to, for example, the Irish banks. The hon. Lady should bear it in mind that French banks’ exposure is about four times that amount and that German banks’ exposure is about five times that amount. We are taking the matter seriously and considering it carefully, and the Chancellor is currently at the ECOFIN meeting in Luxembourg, where I am sure it will be discussed.

The hon. Lady talked about reversing the VAT increase. The shadow Chancellor proposed last week a cut in VAT that would cost £51 billion, which would put at risk our credibility in international markets. We have taken the difficult decisions to ensure that UK market rates are in line with those of Germany. The proposal that she put forward, and which her right hon. Friend put forward last week, would mean interest rates rising for families and businesses across this country, putting the recovery at risk. I do not think that is a gamble that we can afford to take.

Will the Minister concede that it is crystal clear that the Greek situation, like those of Ireland and Portugal, does affect us? Does he also accept that the idea that is being put forward in the European Union Bill of not having a referendum on treaties that relate to the eurozone would mean that, although we are affected by the situation, we would not be allowed to have a referendum on it? Will he ensure that when the Bill returns to the House of Commons, there are amendments to ensure that there is a referendum on this matter, which affects us, so that the British people can vote on it?

My hon. Friend makes a couple of points about our exposure to Greece and the Bill that is currently going through the House of Lords. As I said, the UK’s exposure to Greece is relatively small, with bank exposure at $4 billion. He will recognise that we have a big interest in ensuring the continued stability of the eurozone. That is why the treaty changes are being made—to put the European support mechanism for eurozone countries on a permanent footing and replace the EFSM, to which we have to contribute thanks to a decision taken by the previous Government, with a mechanism that is funded entirely by the euro area. We do not believe that there is a transfer of sovereignty from this Parliament to Brussels, so there is no need for a referendum on those treaty changes.

Will the Minister first check his figures? Figures in the Financial Times, citing Moody’s and Reuters, suggest that the exposure of British public and private sector banks to Greek debt is €13 billion, and that of Germany and France €34 billion and €53 billion. Those figures are much bigger than the ones that he gave.

Secondly, will the Minister not recognise that there is now a mood change in Europe? Der Spiegel, the German magazine, has had a cover story contemplating the end of the euro as we now know it, and Mr Charles Grant, the well known europhile, has done the same in The Times today. Instead of sheltering behind complacent language and weasel words that we should not speculate, the Government should recognise that this eurozone cannot last. It is the responsibility of the British Government to be open with the British people now about the alternative prospects. Since the euro in its current form is going to collapse, is it not better that that happens quickly rather than it dying a slow death?

May I just deal with the right hon. Gentleman’s factual questions? The figures about UK banks’ exposure to Greek sovereign debt were provided by the Bank of England, based on results at the end of quarter one this year.

On the right hon. Gentleman’s second question, I seem to remember that he was a member of a Government who seemed committed to taking this country into the euro. I do not know whether we have seen a damascene or deathbed conversion from the Labour party. I think it was right for this country to stay out of the euro, and that is the policy of this Government. We have a strong interest, though, in the continued stability of the eurozone, as it is our major trading partner. Continued instability in the eurozone could be a factor in holding back the recovery of the British economy.

Given that Greece needs a work-out rather than another bail-out, will the British Government go to the International Monetary Fund and the EU and say the following? First, a second bail-out would mean sending good money after bad and should not be done; secondly, we need an urgent conference of all the interested parties to reschedule and re-profile Greek debt in an orderly way to avoid huge systemic damage, while accepting that the problem has already occurred. Greece went bankrupt more than a year ago, but the Ministers of certain countries cannot believe it and are wasting taxpayers’ money on trying to pretend that it has not happened.

My right hon. Friend highlights the need for private sector involvement, and he will know that Chancellor Merkel and President Sarkozy agreed this weekend that there should be voluntary and private sector involvement in resolving the Greek debt. Some very strong accountability is attached to any future financial support for the Greek economy: a tough programme of privatisation, and structural reforms to improve its competitiveness. I emphasise to my right hon. Friend that although it is right that there should be private sector involvement, it is not in our interests for there to be huge turmoil in our largest trading partner, the European Union.

Clearly, it is vital and in all our interests that sustainable resolutions are agreed for Greek debt financing, but surely the Government must recognise that there needs to be a smarter approach than simply piling more and more austerity on Greece. What is the Financial Secretary’s response to those, including Boris Johnson, who said yesterday that

“austerity measures are making the economy worse”

in Greece?

Why does the Financial Secretary allow the EU to procrastinate continually and to kick a solution on the bail-out mechanism into the distance repeatedly? He says that the EFSM has not yet been used. The European Council meets at the end of this week. Will the Government ensure that they grasp the nettle this time, and make sure that a permanent eurozone-only bail-out mechanism comes into force as soon as possible rather than pushing it back again? Will he give assurances that the UK will attend any future meetings, which could involve the use of EFSM, even if they are eurozone Finance Minister meetings, because the UK’s empty-chair policy clearly is not working?

Given that the Financial Secretary tabled a little-noticed Commons motion last week to double the UK’s subscription to the IMF from £10.5 billion to £19.7 billion, was not the Foreign Secretary being disingenuous when he said on “Sky News” earlier that

“any such support for Greece is for the eurozone and for the IMF, not for the UK”?

Britain will end up paying more for the Greek bail-out via the IMF, so will the Financial Secretary come clean and say what he estimates our share of IMF bail-out costs will be for our taxpayers? Surely Ministers should pull their fingers out and ensure that the EU makes some final decisions on all that. Is not it about time that the Government showed some leadership?

The hon. Gentleman continues to amaze me with his remarks. He seems to forget the role that his Government played in setting up the EFSM. The Conservative party has delivered a commitment to ensure that it is replaced with a permanent mechanism—one matter that will be discussed at the European Council later this week.

It is clear that we do not want to be part of a bail-out of the Greek economy and that we do not want the EFSM to be used. The fact that we are outside the Eurogroup sends a clear signal that it does not expect us to participate in that bail-out. Of course, Madame Lagarde, the French Finance Minister, made it clear last month when she appeared on “Newsnight” that she thought that the resolution for Greece was a matter for the eurozone only.

The hon. Gentleman mentioned the increase in the IMF commitment. Of course, the former Prime Minister, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), committed to doubling the resources available for the IMF at the April 2009 G20 summit in this country. I am surprised that hon. Members have such short memories of those matters.

As several EU members have said that the only long-term solution to the crisis in the eurozone is establishing a fiscal union, has the Chancellor made it clear to them that there is no possibility of Britain joining that? As a member of the IMF, we are already playing a role in trying to bail out the European Union from its folly with its single currency.

As ever, my hon. Friend, whom I congratulate on becoming a member of the Privy Council in the birthday honours list, speaks wise words. The Chancellor has been very clear that we do not wish to be part of a fiscal government for the European Union. That is why we have fought for the right package for economic governance, which safeguards the independence and sovereignty of this House when it comes to making fiscal decisions. My hon. Friend rightly reminds us why it was right never to join the euro.

Whatever happens in Greece this afternoon, and even if there is a fire sale of public assets to buy time, the fact is that the euro is moving inexorably towards its death throes. The realistic choice is between a controlled deconstruction of the euro and the restoration of national currencies, or a crash that would be catastrophic for everyone.

The hon. Gentleman once again reminds us how important stability in the eurozone is—the situation could have a significant impact on the UK economy, which is why it is important that the Greeks resolve their problems in conjunction with eurozone member states. However, let me make this quite clear again: we do not want to be part of that bail-out.

How does the Government’s disposition on these matters differ between the case of Greece and that of other strained but larger or more closely integrated economies, such as, say, Spain?

My hon. Friend will of course recollect that one reason why we made a bilateral loan to Ireland was the particularly close relationship between the UK and Irish economies. That relationship did not exist with Portugal, and it does not exist with Greece, so there is a different approach. It is important to remember that Greece was bailed out by eurozone countries, and that the bail-out of Greece should continue to be done by them.

Is not the danger of the Government’s deliberate attempts to steer as far away from any involvement whatever that the indirect, knock-on effect for British businesses and banks, and in the end for British taxpayers, will be far more significant than he is letting on? That is why many Opposition Members feel that he is being deeply complacent.

I do not think anyone is in a position to accuse this Government of being complacent. We are the Government who have taken action to tackle the fiscal deficit that we inherited from the Labour party. That has enabled the spreads between UK gilts and German bunds to narrow, reflecting market confidence in the measures that we are taking to sort out the problems in the British economy. The Labour party is failing to take its responsibilities seriously or to acknowledge the mistakes that it made when it was in government. It also fails to recognise the strength of support for the actions that this Government have taken to resolve the economic crisis in this country. Had we not taken that action, we might well have been in the firing line with Greece.

The eurozone was never an optimal currency zone. It is predicated on a treaty arrangement that calls it irrevocable and irreversible. We should never have accepted the hubris contained in those phrases, which brought about the passage of the Maastricht Bill and the current situation. This Government and this country should not be involved, and it would be helpful if we said what everyone in the press now says: this arrangement cannot survive in its current form. The hubris of those politicians who led the poor Greeks and all those who believed in this arrangement should be exposed as such.

My hon. Friend is absolutely right that we have seen during this crisis the strains within the eurozone mechanism. The actions that needed to be taken to resolve the consequences of those strains include the bail-outs of the Greek, Irish and Portuguese economies. It is absolutely right that we secured that opt-out to the Maastricht treaty, to ensure that this country did not have to be a member of the euro, a position that the previous Government seemed not to support.

The Minister, the Government and the House want stability, but quite frankly, Greece is bankrupt, and cannot restore its economy while it remains in the euro. Is not the answer to introducing stability an orderly return to the drachma? Should not that be the burden of the Government’s policy?

The hon. Gentleman is absolutely right that we need stability in the eurozone, but I do not think that speculation here will help to deliver that stability to the Greek economy or the wider eurozone.

Most previous IMF rescue packages that I can think off have generally involved first a currency devaluation and secondly a debt default—or, should one prefer the term, a restructuring. Does the Minister agree that the IMF should be consistent with that approach in regard to Greece, and should not the IMF oversee a decoupling from the euro and a default on the debts, which would be consistent with its approach in other instances and rescue packages?

The IMF is the body best placed to decide the conditions to be attached to any rescue package that it puts forward. Strict conditionality is attached to the rescue package for Greece, including significant privatisations, tax collection reform and wider structural reforms. However, I think that this is a judgment for the IMF to make.

Does the Minister recall that when the Tories and Liberals were in opposition and sat over here on the Opposition Benches, the Tories wanted to see the collapse of the eurozone, but the Liberal Democrats thought the opposite and wanted to prop it up? Here we are today with a great opportunity to see the back-end of the euro, and I can only reach the conclusion, based upon his complacent answers, that the Lib Dems are running the coalition.

That was a flight of fancy by the hon. Gentleman. I would say to him and his hon. Friends that it was this Government who scrapped the euro preparation unit, which the previous Chancellor of the Exchequer set up in the Treasury.

It is only six weeks since £26 billion of European financial stabilisation mechanism funding was nodded through for Portugal. May I congratulate the Minister on the change we have seen in those six weeks, on his statement now that there is no question of any further EFSM funding, and in particular on what we read in the weekend press—that this is a red-line issue for the Treasury and that any further use of the EFSM is unacceptable? Long may it continue.

My right hon. Friend the Chancellor has made it very clear in his discussions with the Finance Ministers of EU member states that we do not want the EFSM to be used in this bail-out—a statement that Madame Lagarde confirmed on British television only a few weeks ago. I welcome my hon. Friend’s congratulations.

The Minister is prudent not to join in the glee of the euro’s gravediggers, because if Greece defaults, it will not stop on the Acropolis—Portugal and Ireland will be next—and the nine out of 10 banks in the City that are European and foreign-owned will pay a terrible price. Rather than waiting for the eurozone to disintegrate into a set of competing currencies hiding behind capital-controlled walls—the notion that an open-trade Europe can exist in those conditions is nonsense—we should be very careful about where we are going. Boris Johnson said today that Greece was bankrupt. That is a signal to every Greek to get on his bike and seek work elsewhere. Is that really what we want—a new flood of economic migrants into Britain?

The right hon. Gentleman raises a series of points in his speech, but he makes a strong argument for why it is important that the eurozone is strong and stable. That has broad economic and social benefits. Clearly, if that is to happen, it is important for the Greek bail-out to work and be effective.

I am very concerned. The next debate is about trying to cut back on pensions and save taxpayers’ money, yet we are still planning to put through the IMF—a third party—taxpayers’ money that we are having to scrimp and save at home. My constituents will not stand for it. I am disappointed to hear the language of the Government at the moment, which seems to imply that Greece is an economy that is too big to fail. That is the same thing we had with the banks. We should put Greece out of its misery—it is flatlining—and no more of our public money should be sent abroad to Greece, even through the IMF. There are riots on its streets. Its people do not like the medicine being offered to it, and we cannot expect it to take any more. Let it depart peacefully from the euro. It cannot be sustained as it is; it is just good money after bad.

My hon. Friend will be aware that these are matters for the Greek Government, but I would say this. When money has been lent to the IMF, that does not reduce the amount of money available for public spending. We get interest on the balances that we lend to the IMF, and it has never defaulted on a programme yet. We need to recognise the importance of support provided through the IMF, although I do not really think that my hon. Friend is suggesting that we should withdraw from it. On fiscal consolidation, let me reiterate to my hon. Friends and to the Opposition, who have ignored this crucial fact, that if we had not taken the tough action that we took a year ago in our emergency Budget, it would be the UK, not Greece, in the firing line.

Nobody wants to see Greece default, but that is most certainly possible. Were it to happen, there would be an immediate shock to the eurozone and, more widely, to the EU, our largest trading partner. That would have an impact on the UK. I am glad that the Minister said that the situation was being monitored, but the House and the public deserve more detailed information. If he has not already done so, will he ensure that the Treasury asks the Office for Budget Responsibility to assess the impact on UK growth of a potential Greek default, and publish that assessment quickly, so that we can understand precisely what the consequences might be?

The OBR will take into account the state of the eurozone economy in its normal forecasting. However, let me be clear to the House that the Treasury, the Bank of England and the Financial Services Authority work closely to monitor the strength of the financial system, and the exposure of UK banks to the Greek Government and the wider eurozone economy. The actions taken to date have ensured that our banks are well capitalised, have strong balance sheets and are less exposed to the Greek economy than, say, French or German banks. British banks can still access funding in international markets, which is a sign of the UK banking system’s strength.

May I urge my hon. Friend to bear it in mind that the nearer we get to the inevitable break-up of the euro, the faster the denials will be made that it is not going to happen? Will he urge the European Union to design a policy that creates a legal framework for an orderly departure of Greece from the euro? Can he name a single reputable economist who believes that the Greek economy can recover without a devaluation?

We all recognise the challenges that the Greek economy faces as a consequence of high levels of debt. That is one reason why it has been proposed that the banks take part in a voluntary initiative to roll over their debt, to reduce some of the burden on the Greek economy.

In answer to one of his Back Benchers, the Minister said that if we put money into the IMF or the EU, that does not affect the rest of public spending. However, the rest of the world would recognise that if we spend money on one thing, that gives us less to spend on other things. Is that right or is it wrong?

If that is the hon. Gentleman’s view, he should talk to those on his Front Bench, who seem happy to propose £51 billion of unfunded tax cuts. Money that we lend to the IMF is money that is sitting on the Government’s balance sheet; it does not affect the spending decisions that we make. We are paid interest on the amounts lent to the IMF, which do not affect the amount of money that we can spend on pensions, schools or health, and I made the same point about how the EU funds the European financial stabilisation mechanism.

Like Greece, we, too, have an enormous national debt, which more than doubled over the last 13 years, to more than £1 trillion, with an interest bill of more than £40 billion this year. Does the Minister agree that had we not had a change in Government 13 months ago, we, too, could have been facing the same sad fate?

My hon. Friend is absolutely spot on. We can see from the reaction of the Labour party in opposition that it has not learnt at all from its mistakes in government. If we had not taken tough action, we would have seen high market rates of interest, which would have increased costs for families and businesses across the country. We are now seeing the benefits of the tough decisions that we took in last year’s emergency Budget.

Given that the tough, sado-monetarist programme imposed on the Greeks a year ago has not worked, how many more sado-monetarist programmes will work?

When the Greek Government agreed last year’s debt bail-out package, it was assumed that they would be able to re-enter the markets in the spring of next year. That is clearly not the case, given current market pressures, which is why the Greek Government had to seek a second round of refinancing. However, they still need to take action to improve Greece’s competitiveness, reduce the size of the state sector through further privatisation and improve taxation, to get the economy back on track.

I congratulate the hon. Member for Birmingham, Edgbaston (Ms Stuart) on securing this urgent question, and I say gently to the Minister that it is a shame that he did not volunteer to make a statement on this matter first. What is Her Majesty’s view on whether the euro can survive in its current format?

I cannot speak for Her Majesty on this occasion, but I would say to my hon. Friend that we did not come forward with a statement today because no decisions have been taken. A statement was put out by the Eurogroup last night which recognised that work was in progress, and my right hon. Friend the Chancellor has continually sought to keep the House informed of the outcome of such discussions. Once ECOFIN has met today, there will be an opportunity for him to lay a statement on the outcome of that meeting.

Despite the European lenders having cut their exposure to risk in Greece by 30% in the past year, the risk of contagion in the eurozone has become the paramount concern. Will the Minister acknowledge that, with about $2 trillion exposure to Portugal, Ireland, Italy and Spain by lenders in the eurozone, any Greek default would have the potential to devastate the European banking system and jeopardise the economic recovery in the eurozone?

The hon. Gentleman makes an important point. In the event of a default, there would be consequences for the strength of bank balance sheets across Europe. That is why we are going through a stress-testing process across Europe at the moment to determine the consequences of various scenarios on the strength of bank balance sheets. UK banks have strengthened their balance sheets significantly and they hold high levels of capital. That will give them some insulation against the impact of a default.

I welcome my hon. Friend’s commitments on the non-IMF involvement of British funds in another bail-out for Greece. Does he accept that a country running a large balance of payments deficit can pay off foreign debts only if it is able to reverse that balance, and that to do that, it has to devalue? The man from Brussels cannot make water run uphill.

My hon. Friend has pointed to one way in which a country can regain competitiveness—through devaluation. There are other ways, including reducing labour costs and increasing productivity, and all those actions should be taken to ensure that the Greek economy and those elsewhere in the eurozone reach a much stronger position.

The impact on the British economy of events in the eurozone, and in Greece in particular, is potentially very significant. May I press the Minister further on what contingency plans the Treasury is putting in place to protect the UK’s financial and economic interests in the event of a Greek default or, worse still, a domino effect across the eurozone?

I will say this again, so that no one leaves the Chamber unaware of what is happening: as ever, discussions are taking place between the Bank of England, the Treasury and the FSA, and we are considering a number of scenarios and potential market events. I can say to the hon. Gentleman that British banks are better capitalised than they were at the start of the crisis, and because of the strength of their balance sheets, they are able to access funding in what can be quite difficult market conditions. That is a good sign of market confidence in the strength of the UK banking sector.

Madame Christine Lagarde is clearly an outstanding candidate to be head of the IMF, but is the Minister slightly concerned that she is French and, given that the French banks have a very large exposure to the Greek problems, that she might therefore be conflicted in her approach to the problem?

Madame Lagarde is a strong candidate for the role of director-general of the IMF. My hon. Friend is absolutely right to point out that she is French; that fact has not escaped us in ECOFIN meetings. Madame Lagarde said on “Newsnight” a couple of weeks ago that she recognised that the bail-out of Greece involved a series of agreements between eurozone countries, and that that should remain the case.

The Minister has an extraordinary level of confidence—well, I think it is confidence—in the Greeks’ ability to repay the loans they are currently receiving. I just want to check with him: how much of the £19.7 billion UK contribution to the IMF forms part of the Greek bail-out and how long he is prepared to see us continue to make our contributions through the IMF?

I do not think the hon. Gentleman is suggesting that we should withdraw our membership of the IMF—[Interruption.] It is not clear from the question he is asking. Part of the condition of any bail-out of an economy by the IMF—whether it is a eurozone economy or another economy—is a debt sustainability plan, which is a rigorous part of the assessment process. As was clear in the Eurogroup statement last night, the IMF and the Eurogroup have signed off on Greece’s debt sustainability plan, so they expect that money to be paid back.

The hon. Member for Birmingham, Edgbaston (Ms Stuart) questions the UK’s resilience in the event of a wave of eurozone defaults. Does the Minister agree that in the eyes of the markets, the UK has already become something of a safe haven, with UK 10-year borrowing rates and credit default swap rates falling last week while the comparable rates in other countries soared, precisely because the UK Government have a good deficit reduction plan, and a good plan for settling our banks and making them stronger—and they are sticking to it?

My hon. Friend is absolutely spot on in his analysis. I believe that the 10-year gilt rates fell to 3.2% at the end of last week, which reflects the markets’ vote of confidence in the UK economy and particularly the fact that we took the difficult decisions that the Labour party shied away from when they were in government. We took those decisions, which is why the market rates are similar to those in Germany, yet our deficit is more in line with that of Portugal.

Can the Minister give an assessment of what effect a Greek default will have on the German and French economies, which are more exposed to such a default, and in turn on UK manufacturing?

The hon. Gentleman is right to say that German and French banks have a greater exposure to the Greek sovereign debt than the UK banks do. The French exposure is, I think, four times that of the UK, while the German banking sector’s exposure is about five times ours. That is why it is important that, as we go through the process of stress testing European banks, we look very carefully at the level of capital that our banks hold to ensure that they are in a position to withstand shocks and thus to support and sustain the economy.

The hon. Member for Birmingham, Edgbaston (Ms Stuart) attacks this Government’s VAT policy and, by implication, the deficit reduction policy. Does not what is happening in the eurozone absolutely serve as a timely reminder that we have to attack the deficit because that is how this country will maintain low interest rates?

My hon. Friend is absolutely right. It was clear in the reaction to last week’s statement by the shadow Chancellor that everyone thought his plan lacked sense and would have undermined the recovery in this country by putting interest rates at risk and forcing up the interest costs of businesses and families. We have taken the tough decisions to get the economy right; the markets have demonstrated through the rates at which firms and businesses can borrow that they have confidence in our plans.

Order. May I remind remaining contributors that this is not a general debate on the British Government’s domestic economic policy?

I am not going to comment on whether the eurozone will remain intact. Clearly, this crisis demonstrates the huge strain that the eurozone is under. That is why it was right for us to stay out of the eurozone.

Does the Minister agree that one of Greece’s biggest problems is that its people, backed up by the unions, have not accepted the austerity measures going through? Is that not a timely warning to unions in this country, which are complaining about how we are trying to get the deficit under control, of the consequences unless proper and sensible action is taken?

My hon. Friend has made an important point. It is clear that difficult decisions must be made if our economy is to be put back on the right track, and the Government are demonstrating their commitment to making them. Interest rates are lower than they would have been if we had not made those tough decisions, which is good for families and good for businesses.

Points of Order

On a point of order, Mr Speaker. The House is only too well aware of the mess that the Government have made of the handling of the Health and Social Care Bill, but today’s Order Paper reveals that they are now outrageously and desperately trying to deny the House the right to decide whether it wishes to recommit the whole Bill to a Committee. Can you confirm, Mr Speaker, that not only would the business motion tabled by the Leader of the House specifically prevent the tabling of any amendment on the form of recommittal to the motion tabled by the Secretary of State for Health, which will appear on tomorrow’s Order Paper—for example, an amendment proposing the recommittal of the whole Bill—but if tonight’s motion were objected to, there would be no debate on recommittal tomorrow?

Is it possible, Mr Speaker, for you to prevent that from happening, and protect the rights of Members, by establishing, under Standing Order 83B, a programming committee that could meet and pass a motion today which might enable us to have a proper debate tomorrow, with amendments, by invoking one of the exceptions in Standing Order 83A to the rule that programme motions should be taken forthwith?

Can you also tell us, Mr Speaker, whether, if the motion tabled by the Leader of the House is passed tonight, it will be in order for Members to argue in tomorrow’s debate that the whole Bill should be recommitted, especially as a motion in the name of the Leader of the Opposition calling for precisely that has been on the Order Paper since 24 May?