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Commons Chamber

Volume 534: debated on Tuesday 1 November 2011

House of Commons

Tuesday 1 November 2011

The House met at half-past Two o’clock


[Mr Speaker in the Chair]

Business before Questions

London Local Authorities and Transport for London (No. 2) Bill [Lords] (By Order)

Transport for London (Supplemental Toll Provisions) Bill [Lords] (By Order)

Second Readings opposed and deferred until Tuesday 8 November (Standing Order No. 20)

Oral Answers to Questions


The Chancellor of the Exchequer was asked—


1. What assessment he has made of the potential effects on UK interests of the creation of an economic government of the Eurozone. (77440)

We have had positive gross domestic product numbers this morning, but the biggest single boost to the British economy this autumn would be a lasting resolution of the euro crisis. Such a resolution requires, among many other things, greater fiscal integration within the eurozone as it follows the remorseless logic of monetary union. We have made it clear that Britain will not be part of that fiscal integration, and that issues affecting Britain, such as the single market and financial services regulation, must continue to be decided at EU level.

If the Liberal Democrats had had their way, we would have joined the euro with disastrous consequences. Now, the liberal Conservatives are advising us to support fiscal union in the eurozone, which will lead to economic union and a single government. How does my right hon. Friend really feel about a policy undermining the system of democratic states in Europe that gave the continent peace for more than half a century?

Those who were against Britain joining the euro, including my hon. Friend and me, were against it partly because we felt that it would lead to greater fiscal integration. That was one of the arguments for keeping Britain out. There is a remorseless logic driving monetary union towards greater fiscal integration, but it is in Britain’s overwhelming economic national interest to have stability in the eurozone, so I think that that fiscal integration is part of what is required. Of course, we have to ensure that Britain’s interests are protected, that we are not part of that fiscal integration, and that issues such as the single market and financial regulation are conducted at the level of the 27.

The Chancellor talks a great deal about fiscal integration in the eurozone, but will he tell us precisely what he means by fiscal integration?

We shall see the 17 members of the euro attempting to co-ordinate their budget policies better, and more mutual surveillance, with sanctions, for those who do not do what has been agreed. I have to say that the confusion, if there is any, is in Labour’s policy, because it is now holding open the prospect of membership of the euro, which would be the ultimate fiscal and monetary integration.

Does the Chancellor agree that it is wholly unacceptable that the rest of Europe should be held to ransom by Greece? What would be the consequences for the UK and the eurozone of a no vote in a Greek referendum?

There is no doubt that the decision by the Greek Prime Minister has added to the instability and uncertainty in the eurozone. We can see that today. We are trying to create stability and certainty in the eurozone. Ultimately, it is up to the Greek people and the Greek political system to decide how they make their decisions, but I believe that it is extremely important for the eurozone to implement the package that it agreed last week. I said at the time that that was crucial, as did everyone else involved. We need to get on with it, sooner rather than later.

Is not the truth that the Chancellor cannot urge any real action in the eurozone because he is stuck with a failed plan that has resulted in our economy bumping along the bottom? It will take more than him wearing a high-visibility jacket on the rolling news to put that right.

As I was saying, this morning we had the news that our GDP is growing by 0.5%—[Hon. Members: “Ooh!”] Well, GDP fell by about 6% when Labour was in office and when the right hon. Member for Morley and Outwood (Ed Balls) was advising the last Prime Minister. If we look at growth in France or Germany, the most recent figures show that it was either negative or growing at about 0.1%. The instability in the eurozone and the uncertainty in the world are having an effect on all western economies at the moment, and we have to sort that out, but that is not an excuse for Britain not to deal with its problems, which were created by that lot sitting over there.

Will my right hon. Friend ensure, if he is not using our veto against more fiscal integration, that Britain gets something out of the deal? Do we not need the right to opt out of any past or future EU measure that could damage jobs and prosperity at home?

We have already extracted a price for the European Stability Mechanism treaty that the eurozone wants to put forward by getting ourselves out of the EU bail-out mechanism to which the last Government had committed us. We are working to keep the increase in the EU budget to a real freeze. In other words, we have, I think, proved in office that we can extract important concessions and in the case of the EU bail-out fund we have actually taken a power back to Britain. That will be the approach we take to future discussions and negotiations—putting Britain’s national interest first.

Why did the Chancellor’s statement last Thursday about economic governance in the eurozone fail to mention the most important missing ingredient—a strategy for jobs and growth? Was it an accident or was it deliberate? He has been telling us all summer that Britain is a safe haven, yet growth is weak, unemployment is rising and construction and manufacturing are both contracting. What kind of safe haven is that?

First, may I congratulate the hon. Gentleman on keeping his job in the clear-out of the Labour Treasury Front-Bench team—although on the basis of that question, I am not sure why he did? The whole purpose of our negotiations in Europe and the whole purpose of what we are doing at home is to stabilise the British economy and set it on a path of growth and jobs. We inherited a situation where unemployment had rocketed under the Labour Government and we had the deepest recession of any country in the world, apart from Japan. We are rescuing that situation, and it is reflected in the very low interest rates paid in this country in comparison with all those other countries.

Long-term Unemployment

12. What assessment he has made of the effects on unemployment of the outcome of the comprehensive spending review. (77453)

The independent Office for Budget Responsibility published its forecast for unemployment in March. Unemployment is a serious problem for the UK, with about 1 million people continuously on out-of-work benefits for more than a decade. This Government have introduced a number of reforms to the welfare system, including the Work programme—the biggest single payment-by-results employment programme this country has ever seen, which is expected to help 2.4 million claimants over the next seven years.

The Chief Secretary should stop being so complacent about long-term unemployment. The truth is that this Government are spending more to keep people on the dole and they are losing income from tax revenues that would otherwise be paid on income tax and VAT. Is it not time that the Government adopted a plan for jobs and growth to get the economy moving again? The right hon. Gentleman could do worse than adopt Labour’s five-point plan for economic growth and avoid the spectre of stagflation for years to come.

I am not sure that Labour’s five-point plan would help the British economy, given that it involves spending an extra £20-odd billion, putting at risk the fiscal credibility that is so important to maintaining employment in this country. Nor do I think the hon. Gentleman should be so critical of the Work programme, which after all is designed to tackle the legacy of 1 million people who have been out of work for more than 10 years—a legacy for which his party is responsible.

Is it not true that the increase in unemployment caused by the comprehensive spending review is a heavy burden both for the individuals and the families concerned and for the economy? What does the Minister say to the fact that the Government have had to borrow £46 billion more this year than they were planning to borrow?

The right hon. Gentleman is absolutely right that unemployment is a heavy burden for any individual or any family. We inherited from Labour the largest budget deficit this country has ever seen. It was incumbent on this coalition Government when we came into office to take the action necessary, otherwise we would have found ourselves in a position that many other European countries face, which would have been a great deal worse for the very people the right hon. Gentleman claims to be concerned about.

One of the key weapons in tackling youth unemployment is the use of apprenticeships, so will my right hon. Friend join me in welcoming the news that in Staffordshire Moorlands the number of apprentices has gone up from 480 in 2009-10 to 760 last year—an increase of 60%?

I certainly join the hon. Lady in welcoming that. It will provide significant new opportunities for young people in her constituency. Of course it is part of the increase of 250,000 apprenticeships that this Government have put in place.

After this morning’s encouraging news, does my right hon. Friend accept that one way of maximising employment is to give people the right to have flexible employment if that is what they wish? Given that the coalition agreement pledged to give people the right to request flexible employment, can he report on progress in implementing that commitment?

My right hon. Friend is correct, and it is a great shame that Labour Members sneer at the economic growth that has been reported today. As my right hon. Friend says, flexible employment is an important part of that growth. We set out plans in our coalition agreement, and we have announced proposals to implement them by the end of the current Parliament.

I must say that I find the Chief Secretary’s answers incredibly complacent. Given that unemployment is at a 17-year high and long-term youth unemployment has risen by more than 60% since the start of the year, we all know what impact the Chancellor’s policies have had on unemployment. Instead of being complacent, will the Government support calls for them to repeat the bankers’ bonus tax in order to create 100,000 extra youth jobs and to introduce a national insurance holiday for small businesses taking on new workers? That is what Labour has proposed in its five-point plan. We need policies that will get the economy moving again and reduce unemployment, thus reducing the deficit. When will the Government act?

The hon. Lady’s position would have more credibility if she recognised the fact that youth unemployment rose during Labour’s time in office, as did long-term unemployment. As for her proposal for a bonus tax, that was written off by the last Chancellor of the Exchequer, who said that it could not work. She should listen to her own colleagues first.

Tax Avoidance and Evasion

We have made it clear that tax evasion is both illegal and immoral, and that this Government will not tolerate it. We are increasing the number of staff at Her Majesty’s Revenue and Customs who are dedicated to tackling tax evasion and tax avoidance to 2,500. We also aim to increase the amount of tax collected by £7 billion, and, unlike the last Government, we have concluded a treaty with Switzerland to get back the money that individuals should have paid here in the United Kingdom.

I have been contacted by a fair number of constituents who have expressed concern about tax avoidance. I welcome many of the measures that the Government have introduced to tackle this unfairness. Is the scope of the recent tax avoidance agreement between our Government and the Swiss likely to include cases in which tax is not paid by individuals who are tax-exiled in Switzerland, such as the widely reported case of Mr Andrew Rosenfeld?

Actually, you just have. You made him your general election strategist. However, I will not comment on the tax affairs of individuals, although I suspect that many will over the coming years.

The Chancellor will remember, in his first Budget, fixing a target for debt

“to place our fiscal credibility beyond doubt”. —[Official Report, 22 June 2010; Vol. 512, c. 167.]

That target was for debt to be reduced by the end of the Parliament, but, according to figures from the Office for Budget Responsibility, it depends on economic growth of 2.8%. How far below 2.8% must growth fall for the Chancellor’s fiscal mandate and his fiscal credibility to be shot to pieces?

Tackling tax evasion and avoidance—to which the question refers—will help us to reduce both the deficit and the debt. We have the fiscal mandate and the debt target. That has been independently verified by the Office for Budget Responsibility—which is in marked contrast to the situation when the right hon. Gentleman was in the Cabinet—and on 29 November it will provide its update.

Although we are all in favour of dealing with tax avoidance and evasion, are not some of the heavy-handed tactics used by HMRC to collect tax, including the imposition of late-payment penalties under the Labour Government, helping to stifle some growth in small and medium-sized businesses? Will the Chancellor examine the position to ensure that HMRC is being fair?

Of course we always want HMRC to approach things in a proportionate manner, and it certainly handles large companies and their tax bills better than it did several years ago. However, we must collect the tax that is owed. That is a very important principle at any time, and it is particularly important at a time when we are all having to make difficult decisions in our attempts to reduce the budget deficit. We will not tolerate tax evasion, and we do apply penalties to people who do not pay their tax on time.

The Chancellor is talking a good game, and yesterday the Exchequer Secretary announced the establishment of an “affluent unit” to tackle tax avoidance. For the sake of clarity, I should add that that is not a pet name for the Tory Front Bench, but a department in HMRC. However, the £900 million is not new money. It is not additional, and nor are the 200 staff. Is not the reality that the Government are more interested in offering tax breaks to the wealthiest than in tackling tax avoidance?

This is the Government who have introduced additional charges for long-staying non-doms; Labour had 13 years in which to do that, but they did not. This is the Government who have concluded a tax treaty with Switzerland; the previous Government had an opportunity to do that—[Interruption.] Well, this is what a Europe Minister in the last Government said:

“Swiss…deal offered to HMG…more than decade ago but GB turned it down thus losing billions in revenue”.

They had 13 years to deal with tax avoidance and evasion. We are dealing with it now, while they must account for their new general election strategist.

Unemployment (Women)

The Office for Budget Responsibility published its unemployment forecasts in March 2011, taking full account of announcements at Budget 2011, but it does not publish forecasts by gender. The Government are committed to tackling unemployment and helping support women into work. The hon. Lady will be aware that female employment has remained broadly steady since the start of 2008. Employment among women aged 25 to 64 is up more than 100,000 since the start of 2008, and has risen by 15,000 in the last three months.

But with both women’s unemployment and the retail prices index at a higher level than at any time since the Chancellor left university—which was probably when the hon. Lady left primary school— [Interruption.] I do not—[Interruption.]

I was welcoming a young woman to the Front Bench, and I am glad to see young people representing people in this Parliament, but I do think it is shocking that we currently have the highest level of unemployment in more than 20 years—

Is it not time that this Government delivered for women on employment, and may I suggest that support for women entrepreneurs and delivering promises that they made before the election for 3,000 more midwives and 4,000 extra—

I have a number of things to say to the hon. Lady, none of which would include any personal questions, of course.

I can assure the hon. Lady that the Government are reducing the deficit fairly, and I would point out in particular that we are taking 1.1 million of the lowest-paid workers out of tax entirely, and the majority of them are women. She will welcome that as much as I do. Furthermore, she should know that unemployment rose to its level of 30% under her party’s Government.[Official Report, 3 November 2011, Vol. 534, c. 6MC.]

Does my hon. Friend also agree that one of the most important steps this Government have taken is to exempt from the pay freeze the lowest-paid workers in the public sector, 80% of whom are women?

I certainly do welcome that, and it is important to combine that with taking women out of income tax, as I have already mentioned.

May I genuinely welcome the hon. Lady to her new post? I have no doubt that we will have many exchanges across the Chamber, and I hope we will focus on policy.

Back in May, the Minister claimed that the Government’s approach to the economy was working because there were 14 fewer unemployed claimants in her constituency. What is she saying now that women’s unemployment in the UK has risen to its highest rate since 1988, and, more importantly, what is she going to do about it?

I will tell the hon. Lady what I am certainly going to do about it, which is join the rest of this Government in working on welfare reform, tax reform, child care reform and many other measures that will take women’s unemployment down from its record level, where her Government left it.

Structural Deficit

The estimate is that the structural deficit for this year will be 5.3% of GDP, which is down from the record 8.9% in the last year of the previous Government, with it having been the highest in the G7 before the crisis. Of course, these estimates are now provided independently by the Office for Budget Responsibility, rather than being fiddled by the close advisers of the Chancellor and the Prime Minister, as used to happen.

Other countries face fierce criticism for their tardiness in addressing not only their immediate deficit, but their growing medium and long-term liabilities. How is progress in that regard for the British Government?

We are bringing the deficit down from the record levels that we inherited, which has in part provided stability in the financial markets for sterling and our interest rates. That has been absolutely crucial, as we can see in the very high interest rates faced by not just Greece and Portugal, but now even by countries such as Italy and France, which face significantly higher interest rates than we do. That is of course a huge boost to the British economy.

Does the Chancellor think that rising unemployment and growth of just 0.5% in 12 months will make it easier or harder to get the deficit down?

This morning’s GDP numbers are a positive step, but of course the British economy has a difficult road to travel from the very high debts—the record debts—that we inherited. That is made more difficult by the international situation, as people can plainly see today, but we are determined to make that journey to the growth and prosperity that this country was so lacking under the previous Government.

Social Impact Bonds

Important work is going on within both the social investment sector and government to develop and test social impact bond models, and we meet regularly with colleagues to discuss the progress that the Government are making in growing the social investment market, including through social impact bonds.

My right hon. Friend will be well aware of the exciting potential that social impact bonds have, not only in offering financial support for the third sector, but in securing genuine savings for the Government. Will he or one of his Ministers meet me and representatives from the Social Finance investment bank to explore ways in which the Treasury can help to maximise the potential of this nascent financial instrument?

The hon. Gentleman is absolutely right about the enormous potential of this sector, and I congratulate him on his work and the close interest he has taken in this subject. The Exchequer Secretary to the Treasury would be very happy to meet both him and representatives of the Social Finance investment bank.

Government Debt

The Office for National Statistics publishes central Government debt figures monthly. The latest figures released on 21 October gave central Government gross debt as £1.2 trillion or 77.6% of GDP in September. The Government use public sector net debt for their fiscal targets. That figure is also published by the ONS, and it was £966 billion or 62.6% of GDP last month.

I thank my hon. Friend for that response. This country continues to bear a huge burden of private finance initiative debt. The Government have made important progress in improving the cost and operation of PFI over the past 18 months. Does he share my view, and that of many of my colleagues, that more can be done to secure a fair deal on PFI, while securing investment in our infrastructure?

My hon. Friend has campaigned tirelessly on this matter. As he knows, the Government have improved the assurance and approval arrangements for PFI, and the transparency. We are seeking to obtain £1.5 billion of savings on existing stock of PFI contracts, and we will of course continue to work hard to improve the situation.

With gilt yields at their lowest for 60 years, does this situation not show that the international markets have huge faith in the UK’s debt reduction strategy?

My hon. Friend is absolutely right and that point was confirmed yesterday by the OECD. We would be a very foolish Government indeed to throw away that credibility by pursuing a policy of spend and borrow as the Labour party advocates.

In 1945, Britain had higher Government debt than now and the Government of that time did not impose cuts but ran a full-employment economy and there was rapid growth. Is it not time that the Government took a leaf out of Labour’s book in relation to running the economy?

May I just make the point about the 1945 Government that they were running surpluses from 1948 onwards? If memory serves, the debt in 1945 was 232% of GDP and by 1951 it was 178% of GDP, so they brought debt down. That is not a bad thing to do and this Government want to do it, whereas the Labour party wants to put debt up.

Given the increase in debt caused by the lower growth rates and the impact that that is likely to have on the Government’s deficit reduction plan, what impact does the Minister believe that will have on the United Kingdom’s credit rating? Does he believe that steps need to be taken to inject growth into the economy?

It is worth pointing out what Standard & Poor said recently when it confirmed our triple A credit rating. It said that if we abandoned our fiscal plans—if we borrowed more—that credit rating would be at risk. The best way of keeping our triple A rating is by sticking to the plan.

Green Growth

The Government are committed to supporting green growth, as is demonstrated by the green investment bank, which was allocated £3 billion in the spending review, by the carbon price floor, which is designed to drive investment in low-carbon power generation, and by the green deal, which supports households and businesses in increasing their energy efficiency at no up-front cost.

May I, too, extend a very warm welcome to my hon. Friend the Economic Secretary?

In the Budget, the Chancellor pledged to consider incentives to encourage take-up of the green deal. One idea is to have a stamp duty particularly for the least energy-efficient homes. How does my hon. Friend intend to advance those incentives and is she prepared to meet me and industry representatives to find a way forward with the Chancellor’s incentives?

May I take this opportunity to thank my hon. Friend and others for their kind words regarding my role?

As I have mentioned, the green deal is a key part of supporting such green growth and the Government are taking a range of actions to help people to gain control of their household energy bills. I certainly note my hon. Friend’s suggestion and I am happy to meet him to discuss options within public finance constraints.

May I also welcome the new Minister to her post? She will be aware of the importance to the UK economy of energy-intensive industries such as the steel, chemicals and ceramics industries. German competitors in such industries are benefiting from rebates worth more than €5 billion a year; will she consult the Chancellor and make sure that the pre-Budget report includes a special package of measures for those industries so that rising energy costs do not simply result in jobs being exported abroad?

I know that my right hon. Friend the Chancellor is looking into exactly this and we shall be reporting back on it.

National Insurance Holiday

As of 25 October 2011, Her Majesty’s Revenue and Customs had received 8,761 successful applications for the national insurance contributions holiday. A breakdown of information by constituency on the amounts claimed and jobs supported for the first year of the scheme will be published shortly in a factsheet in the House of Commons Library.

Could the Minister tell the House how much of the £1 billion allocated for the national insurance holiday has actually been given to businesses?

As I say, we will be updating the House with all those details shortly, but there are 1,600 or so businesses in the north-west region that are benefiting from it. I visited one of them not far from her constituency a few weeks ago which was very appreciative of the scheme. Where the scheme is available, I encourage hon. Members to highlight it to their constituents.

May I urge the Minister to reconsider auto-enrolling new businesses on to the scheme, so that rather than their having to apply for it they are placed on it automatically?

We looked at auto-enrolment but one of the difficulties was the fact that it would have been years before we could have put it fully in place and we wanted to move quickly to have the scheme in operation. It is important that we highlight the scheme and make sure that publicity is available and that businesses are aware of it. The businesses that I have met that have taken up the scheme are very appreciative of it and it helps them in those difficult first few months.

Economic Growth

10. What assessment he has made of the level of economic growth in (a) the UK and (b) other EU members states in the last 12 months. (77451)

Eurostat publishes GDP growth data on all EU member states. These data show the UK economy growing in the most recent three quarters. The IMF’s latest forecast shows the UK economy growing this year, and growing faster than the economies of France, Germany and Italy next year.

The Times says today that the Government’s plans for growth are “piecemeal” and their implementation “patchy”. Given that long-term youth unemployment is up by 60%, do we not need a proper programme for jobs?

The hon. Gentleman will realise that the biggest increase in youth unemployment in recent years took place when his party was in government. This Government have put in place the long-term foundations to tackle unemployment and raise growth across the UK.

May I welcome today’s excellent economic growth figures, which are well ahead of forecasts at 0.5%? Our growth is just as high as US growth this year, without the massive fiscal stimulus. Is that not right?

My hon. Friend makes an important point. It would have been better if the Labour party had welcomed today’s growth figures rather than talking our economy down.

When we embarked on the economic course that the Government have set, Ministers told us that because they were tackling the deficit aggressively, there would be a surge of private sector confidence—and, therefore, investment and jobs. Many people agreed with them. Now that we know that expectation was mistaken, surely there must be a change of course.

Every reputable international organisation that talks about what is happening in the UK economy now recognises that the Government need to stick to the course, rather than throwing away the valuable credibility that we have gained as a consequence of tackling the mess left behind by the previous Government.

Does my hon. Friend agree that having our own currency is one of the keys to turning round our economy? Does he share my astonishment that the Labour party does not rule out joining the single currency?

It is remarkable, is it not, that when the Leader of the Opposition was asked whether a Labour Government would join the euro, his answer was:

“It depends how long I’m prime minister for.”

This Government have closed down the euro preparations that the Labour party set up, and that is why I think that we have taken the right decision to stay out of the euro and tackle our debt and deficit problems. That is why we have low interest rates, which help strengthen the recovery in this country.

Youth Unemployment

The 2011 Budget announced a £200 million package of support, including 100,000 work experience opportunities for young people, skills training, guaranteed interviews and progression into apprenticeships. This is in addition to the £7.6 billion that we are investing in education and training for 16 to 19-year-olds this year and the £1.4 billion that we are investing in apprenticeships. Young people will also benefit from priority access to the Work programme, which started in June.

What my constituents want is action rather than words, especially on youth unemployment, which stands at nearly 10% in Halifax. When will the Government take real measures to get young people into work and contributing to the economy and society in a positive way?

As I said in my answer, we are introducing more apprenticeships, and young people will have priority in the Work programme. The hon. Lady highlights youth unemployment in Halifax. The last estimate showed that it increased by 0.6% from June 2010 to March 2011—but I also have to point out that from 2004 to 2010, youth unemployment increased by 8.5% in Halifax.

Does the Minister share my concern that even during the boom years youth unemployment rose? Will he join me in commending the work placement scheme in Haverhill in my constituency? The work programme and the new flexibility at the jobcentre means that young people can be put into work placements, and more than half of those put in placements end up getting a permanent job.

Clearly the news from Haverhill is very encouraging, and I am delighted to hear it. I agree with my hon. Friend’s comment; it is striking that youth unemployment started increasing in 2004, at a time when the economy appeared to be in good shape.

Economic Policy

14. What recent representations he has received from the IMF and the OECD on UK economic policy. (77455)

The International Monetary Fund and the OECD regularly hold frank bilateral discussions with each member country. When Christine Lagarde, the managing director of the IMF, visited London in September, she stated:

“In the United Kingdom strong fiscal consolidation is essential to restore debt sustainability, given the UK’s very high structural budget deficit and large financial sector relative to GDP.”

Angel Gurria, secretary-general of the OECD, said yesterday of the UK:

“You were successful. You cleared the markets. The package was credible…The markets never discuss the quality of the rating of the UK.”

That is a consequence of the actions this Government have taken to tackle the mess left behind by the previous Government.

I thank the Minister for that reply, but what advice has he been given on the consequences of our failing to pay our IMF subscription?

My hon. Friend asks a very good question. It is a sad indictment of the state of today’s Labour party that it voted against the increase in the IMF subscription negotiated by the—

Order. The Minister has said enough, and he has said it about another party’s policy. We need to move on.

Is it not accepted now by the international community that the announcement by the Chancellor a year ago that he would cut half a million public sector jobs led directly to a reduction in consumer demand, and that it has reduced private sector investment and growth and led to an increase in deficit predictions?

The hon. Gentleman should recognise that the action that this Government have taken has earned the endorsement of the IMF and the OECD. That is why we have the low interest rates the economy needs. The Opposition talk about a plan B, but that would actually increase the budget deficit and the interest rates that this country would have to pay.

Job Creation (Private Sector)

In Budget 2011 the Government put in place a wide range of measures to support job creation, including supporting business growth by aiming to create the most competitive tax system in the G20, and helping to ensure that it always pays to work, by increasing the personal allowance.

I would like to add my welcome to my hon. Friend at the Dispatch Box.

Having run two small businesses, I understand the pressures that small businesses in South Thanet face. How much less will we tax small businesses in the coming years as a result of our tax cuts and the national insurance freeze?

My understanding is that, compared with the plans of the previous Government, businesses will pay £3 billion less in employer national insurance contributions and more than £1 billion less in corporation tax, as a result of changes announced in Budget 2010.

Small businesses have been frequent attenders at my regular Friday surgeries, and they tell me that business is hard. Now that the hon. Lady’s party’s Chancellor has presided over the slowest economic recovery since the first world war, will she explain to small businesses in Wirral how they are supposed to get out of this mess?

This has been one of the deepest recessions on record, and it is no wonder that times are very hard for people. The hon. Lady must take note of the fact that overall, more than two jobs have been created in the private sector for every one lost in the public sector, which is very clear progress on what her Government left behind.

I know that VAT is a somewhat sensitive subject in this place, but has the Minister made an analysis of the costs and benefits and the jobs that would be created by reducing VAT on building refurbishment materials?

It is indeed a very good question. I am, sadly, aware that many costs are associated with such a policy, but I would be very happy to discuss such things with the hon. Lady.

Regional Growth Fund

16. What recent discussions he has had with the Secretary of State for Business, Innovation and Skills on funding for the regional growth fund. (77457)

I regularly discuss the regional growth fund with the Secretary of State for Business, Innovation and Skills. Yesterday we announced the outcome of round two of the fund. In total we expect the regional growth fund to support more than 325,000 jobs in the private sector over the next three years.

Teesside has not yet received any of its promised RGF funding. The Minister of State, Department for Business, Innovation and Skills, the hon. Member for Hertford and Stortford (Mr Prisk) says that is down to due diligence, which takes an average of between four and six weeks. No one doubts the need for due diligence, but how much is the Chancellor charging businesses that receive RGF funding for seven months of due diligence limbo?

The hon. Gentleman will be aware that well over half the projects that were given funding in round 1 are under way, mostly with the private sector funding to start with; the public sector funding will come in later. But I should have thought he would want to welcome the fact that two specific round 2 bids were successful in Middlesbrough in the round that we announced yesterday.

Interest Rates

17. What recent assessment he has made of the potential effect on household spending of an increase in interest rates. (77458)

The Bank of England is responsible for monetary policy, as my hon. Friend knows, and setting the bank rate to meet its inflation target. Action by this Government in the comprehensive spending review and the Budget put the public finances on a sustainable footing and has supported low and stable interest rates. The higher interest rates seen in other countries highlight the risks when financial markets lose confidence in a Government.

Home owners clearly benefit from having low interest rates, but inflation damages savers and consumers. Will my hon. Friend explain how the Government’s inflation target is set, and the criteria used to review it?

I shall, by reference to correspondence, that my hon. Friend will be well able to delve into, between the Chancellor and the Governor of the Bank of England, but I note at this point that the Government believe that low and stable medium-term inflation is a prerequisite for economic growth, and that is what drives our policy.

Topical Questions

The core purpose of the Treasury is to ensure the stability of the economy, promote growth and employment, reform banking and manage the public finances so that Britain lives within her means.

Will one of the Treasury Ministers confirm that public sector workers who work part-time earning less than £15,000 will still pay the 3% income tax? Is this fair, and should not the Government negotiate in good faith, and not simply try to ram this through?

The Chief Secretary will shortly set out the full details of our pension offer to the public sector. When people see it, they will see that it is fair to the public sector—people in the public sector will get a much more generous pension than is available in almost any part of the private sector—but it is also fair to the taxpayers. It is, of course, based on the work of John Hutton, a former Labour Pensions Secretary.

T3. Labour-controlled Blackburn with Darwen council has abandoned pensioners and schoolchildren in my constituency because of a £10,000 bus cut, but it can still find £94,500 to fund trade union officials. Does my right hon. Friend think it is right that the taxpayer picks up the tab for trade union officials? (77467)

In central Government we have announced that we are reducing the facility time, as it is called, in the civil service because we do not think it is fair that taxpayers should be paying for so many full-time trade union officials. Obviously, it is up to Blackburn with Darwen council to decide how it spends its council tax payers’ money, but from what my hon. Friend is telling me, it does not look as if the council is spending it particularly well.

Today’s figures have shown that the British economy has grown over the past 12 months, since the Chancellor’s spending review, by just 0.5%, and Treasury officials have apparently admitted to the BBC this afternoon that the economy is now set to worsen. The IMF says that if the British economy continues to undershoot, the Chancellor should change course to boost growth and jobs. How much longer does the country have to wait before the Chancellor will finally listen?

I welcome the right hon. Gentleman back from America. We missed him in our debates last week—even though, by some coincidence, the tone of the debate markedly improved. We have been keeping an eye on what he was saying while he was in America. This is what he told American television: “What the world needs are balanced plans on deficit reduction, and you can’t duck that.” In America he has to say that so that he is not laughed out of the TV studio. Here he not only ducks deficit reduction; he runs away from it. We are clearing up the mess that he left when he was running Britain’s economic policy for 13 years.

I am afraid people watching this will think that was a deeply complacent answer. Today’s figures mean that the Chancellor’s figures for growth will be downgraded. They will undershoot the OECD and the IMF growth forecast as well. He tried to blame the eurozone, but the fact is that our recovery was choked off a year ago. Families watching this programme and struggling with their bills, businesses on the edge and young people losing their jobs will all think the Chancellor is completely out of touch. Why does he not understand that if we are to get the deficit down, the country needs a plan for growth and jobs, and it needs it now? How much longer will we have to put up with this prevarication before it is too late, and the Chancellor finally acts?

The GDP numbers showed this morning that the British economy is growing, and that is positive news. But of course we have a difficult journey to take, from the deepest recession of our lifetimes and the biggest banking crisis in British history, which the right hon. Gentleman presided over when the Labour party was in government—and it is made more difficult by what is happening elsewhere in the world. [Interruption.] Of course that is the case, which is why the growth figures in the British economy are similar to the growth figures in the American economy, or the French economy, or the German economy.

The right hon. Gentleman shakes his head, but in 2011 the British economy has grown at exactly the same rate as the United States economy. It has taken a completely different course from the one that he suggested as shadow Chancellor and yet it has the same growth, which shows that what we are doing is bringing stability to the British economy. Frankly, for him to get up every week and say that we need a deficit reduction plan, but not to give us any details, shows how hopelessly out of touch he is.

What the Greek Prime Minister has apparently offered the Greek people is a referendum on difficult decisions required to get the budget deficit down. That is what he is talking about. We talked about these things in advance of a general election. Two parties here talked about those difficult decisions. We got elected, we are in government and we are now doing it, and we are recovering from the deep mess that the Labour party left us in.

T2. Will the Chancellor intervene to prevent directors’ pay from increasing by another 49% this year? Or if he is not willing to intervene, will he at least explain to those suffering cuts in pay and the loss of their jobs, just how we are all in this together? (77466)

I have made it very clear, and the Prime Minister has made it very clear, that at all levels of society people have to be mindful of the current economic situation, and that includes highly paid directors and people working for the financial services. Bonuses are significantly lower than they were under the Government whom the hon. Gentleman supported, and we are also introducing measures to encourage transparency in pay, and to give shareholders greater control over executive pay as well.

T5. Is my right hon. Friend aware of the TaxPayers Alliance’s excellent report published last week on abolishing national insurance and merging national insurance with income tax? Does he believe that the merger of national insurance and income tax would be a good way to simplify tax in the way that he promised, and will he make it happen? (77469)

My hon. Friend will be aware that the Government are looking into merging the operation of national insurance contributions and income tax. We are actively looking at ways in which we can make the tax system more transparent and simpler to understand, and we will be saying more on that subject shortly.

T8. What does the Chancellor say to the Federation of Small Businesses, which describes his policies as too timid, and out of touch with the sluggishness of the UK’s economy? (77472)

The FSB, like many other business organisations, has supported what we have done to try to get the deficit down—and of course it also welcomes the fact that not only did we reverse the increase that the Labour Government planned in the small companies rate, but we have also been able to reduce the small companies rate and freeze business rates for another year.

T6. Does the Minister agree that new plans for the Government to lend directly to small businesses and start-ups through credit easing will be beneficial to the economy and will create more jobs? Will the Minister also give me examples of how that will be put into practice? (77470)

I do agree with my hon. Friend. We will set out more details of our credit easing plan in the autumn statement later this month, but it is a mark of the Government that we are prepared to think differently and intelligently about how we can use such mechanisms precisely to get small businesses going in this country.

T9. Youth unemployment now stands at a shocking 34% in Tameside and 23% in Stockport. Is not the right thing to do to listen to Labour’s five-point jobs plan, get the bank bonus tax reinstated and invest in 100,000 jobs for young people? (77473)

In his pitch for a job, the hon. Gentleman failed to mention that youth unemployment rose by more than 40% under the Labour Government. There is complete amnesia about the fact that 16 months ago they left this country with high unemployment, a high budget deficit, the deepest recession this country has seen in the last 100 years, and the biggest banking crisis in our history.

T7. Some of the most needy children in the Vale of Glamorgan and across the UK will benefit from today onwards from the Government’s junior ISA. That presents an opportunity to return to a culture of savings among families. What plans have the Government to develop that further? (77471)

We have indeed announced today the launch of the junior ISA, which will enable many millions of parents to save for their children up to £3,600 a year tax free. It should help more than 6 million children who will be eligible for it immediately and many more as they are born and grow up. It is all about trying to foster a savings culture after the age of irresponsibility and the culture of debt that we saw over the past decade.

T10. I can assure the Chancellor of the Exchequer that I am not looking for a job—unlike many of my constituents. He talked earlier about fiscal integration. Does he agree that the possibility of a differential rate of corporation tax within the United Kingdom contains severe dangers? (77474)

As the hon. Gentleman well knows, we are consulting on the possibility of introducing a different corporation tax rate in Northern Ireland, reflecting the fact that the Irish Republic has a much lower corporation tax rate. The consultation is ongoing, and we are of course in discussions with the Northern Ireland Executive. We are clear that Northern Ireland would have to bear the cost of that in forgone revenues, and an important part of the discussions will be working out what exactly those forgone revenues would be.

I am concerned by reports that the Government are considering breaking with the 20-year convention of uprating pensions and benefits by the September inflation figure, now that the CPI has come in at 5.2%. Does the Chancellor recognise that it would be unfair to change the rules of the game suddenly, hurting vulnerable pensioners and disabled people in the process?

We are absolutely committed to the triple lock that we introduced on pensions so that they rise by CPI, earnings or 2.5%, whichever is greater. That is one of the really significant achievements of this Government, which two parties came together to create, and I think that it is something we can be very proud of.

May I tell the Chancellor that what is happening in the economy reminds me very much of the havoc and destruction caused by the Thatcher Government in the 1980s, with mass unemployment and poverty? Is it not perfectly understandable why many people are protesting against the sheer injustice, including those who are protesting, and rightly so, outside St Paul’s?

Again, there is absolutely no recognition that the Government the hon. Gentleman supported presided over the second deepest recession in the entire world. What is the Opposition’s explanation for that? Why was Britain so badly affected? Why was the British economy so unbalanced? Why had the gap between the rich and the poor grown? Why had manufacturing halved as a share of GDP? They have absolutely no answers on Labour’s record in office.

Will the Chancellor, or the Economic Secretary to the Treasury, expand on the advantages that the Warton local enterprise zone in my constituency will bring to businesses, particularly from tax breaks and improved planning rules?

I am very pleased that we were able to announce that additional enterprise zone for my hon. Friend’s constituents, which reflects the fact that the cut in the US defence budget had an impact on BAE Systems. I am glad that we were able to move quickly to create an enterprise zone, not only in the north-west but in east Yorkshire, to take into account the impact of that decision.

If the Government’s overriding priority is to eliminate the deficit by the end of this Parliament, why is the Chancellor having to borrow an additional £46 billion during that period?

We inherited the highest—[Interruption.] The Opposition do not want to hear this. We inherited the highest budget deficit in Britain’s peacetime history. That budget deficit is now coming down, and that has contributed to financial stability in this country, in marked contrast with what we see on our television screens around Europe.

Will my right hon. Friend pass on the message to the Deputy Prime Minister, with his accusations that Conservatives who advocate repatriation and renegotiation are committing economic suicide, that we are facing not only a disastrous two-tier Europe, but now also a two-tier Government?

Of course I do not agree with my hon. Friend on this occasion. The coalition Government have been able to get Britain out of the European Union bail-out that we found ourselves in when we came to office. We have been able to keep the budget increases down—again, in marked contrast with what we found on coming into office. We must now have some serious negotiations to make sure that Britain’s interests are protected in Europe, as the remorseless logic of monetary union—I am sure that he accepts this—leads to greater fiscal integration among eurozone countries. That is the reality of the situation facing us, and I think Britain under this Government will be able to negotiate well in our national interest.

If the Chancellor cannot bring himself to extend the national insurance holiday to small and micro-businesses because the shadow Chancellor suggested it, will that be easier now that the CBI is also recommending it?

The CBI has been absolutely staunch in its defence of our deficit reduction plan, and says that it is crucial for business confidence. If the shadow Chancellor wants to make proposals to increase spending and borrowing, which he is perfectly entitled to do, why does he not also make proposals to cut Government spending and to get the budget deficit down? He talks about providing a medium-term deficit reduction plan, but we have not heard one single line item of it.

Whatever one thinks of the tactics of those who are camping outside St Paul’s and in the middle of my constituency, one issue that they are raising that resonates with the British public is the feeling that people are not paying their fair share of tax. Will my right hon. Friend update us on what progress we are making across the House, particularly on lifetime loans—disguised remuneration?

My hon. Friend raises a good point. At a time like this, people want to make sure that everyone pays their fair share of tax. We have taken action on the situation in Switzerland and on long-stay non-doms, but he raises a third point about disguised remuneration. That is a way in which people, often in financial services, get away with a much lower rate of tax. Guess who in the House voted against that action? The Labour party.

Order. As usual, this event is heavily oversubscribed. I am sorry to disappoint colleagues, but we must now move on.

Gangs and Youth Violence

With permission, Mr Speaker, I would like to make a statement on the cross-Government report into ending gang and youth violence. Following the shocking scenes of disorder over the summer, the Prime Minister asked me to lead a review, alongside my right hon. Friend the Secretary of State for Work and Pensions, of gangs and youth violence. Today’s report is not the end of that process. It is merely the start of a comprehensive, long-term programme of work to tackle the violence that blights too many of our towns and cities.

We have visited front-line projects; we have analysed youth violence and street gangs; we have met local authority chief executives, senior police officers, voluntary organisations and former gang members; and we have hosted an international conference of experts. Using this research, we have identified what can be done by Government and other agencies to stop the violence and to turn around the lives of those involved. Today’s report is an important first analysis of the problem, and of the interventions that work. It provides a platform for the intensive support we will provide to the most affected areas.

If we are honest with ourselves, we need to accept that not enough was done over the years to deal with a problem we all knew existed and we knew was not being addressed. But the riots brought home to the whole country how serious a problem gang and youth violence has become. The statistics show that one in five of those arrested in connection with the riots in London were known gang members. Similar figures were recorded by West Yorkshire police, and Nottinghamshire had only a slightly lower proportion. Most other police forces identified fewer than 10% of all those arrested as known gang members, so gangs were not the sole cause of the riots, but they were a factor. The fact that so many young people who are not involved in gangs were still willing to carry out such serious acts of criminality merely reinforces the urgent need for action.

Gang members and young people engaged in violence do not appear out of the blue. Analysis of their life stories shows certain common factors: parental neglect early in life, often linked to drug addiction or alcohol abuse and violence in the home; a history of poor discipline at school, truancy and exclusion; early brushes with the law for more minor offences; and exposure to older gang members, often based around their local estate. Those factors come up time and again, and during the review we heard powerful real-life examples. Our analysis also showed that gang membership itself can be an important driver of criminality and violence. In London, for example, almost 50% of shootings and 22% of serious violence are committed by known gang members.

Our considered and evidence-based approach is designed to deal with each and every aspect of gang culture and youth violence. It will be based on five areas: prevention, pathways out, punishment, partnership working and providing support.

Preventing young people from becoming involved in gangs and youth violence means starting at the beginning. Research shows that early intervention is the most cost-effective way of reducing violence later in life, so we are recruiting 4,200 extra health visitors and doubling the capacity of family nurse partnership schemes, to help 13,000 young mothers. We are providing £18 million to identify and support domestic violence victims and their children, who are at particular risk of turning to violence in adulthood.

In schools, the pathway for young people into crime is all too clear: from low-level absence, to persistent absence and truancy, to low literacy and poor attainment. That is why our education reforms are focused on: early intervention in the foundation years; taking a rigorous approach to eliminating illiteracy; improving behaviour and discipline; and ensuring that every young person is taught in a way that inspires them and prepares them for the world of work.

If prevention fails and young people are drawn into gangs and youth violence, we need to ensure that we provide viable pathways out. Moments of crisis in a young person’s life, such as arrest, exclusion from school or attending an accident and emergency department offer vital opportunities to intervene, so we will work with A and E departments and children’s social care providers to help young people who may be affected by gang violence.

For those who are arrested, we will expand schemes to help young offenders with mental health and substance misuse problems, and we will look to provide ways out of gangs for those who have been convicted and served their time. We will therefore improve education provision in young offenders institutions and ensure that all young people who leave prison and claim jobseeker’s allowance are referred immediately to the Work programme.

We will also establish a new ending gangs and youth violence team of community activists, NHS experts and police officers. It will offer intensive support to gang-affected areas to help them understand their problem and develop their own solutions, which could include rolling out schemes to re-house gang members who want to exit the gang lifestyle and mediation schemes to prevent retaliatory violence.

Our review found some excellent police work to identify and manage the highest-risk gang members through a combination of targeted surveillance, enforcement and arrest for any offence, however minor, and positive offers of training, employment and drugs treatment for those who want a different life. However, those not prepared to break away from violence will face harsher and tougher punishments. That is why we will consult on making a new offence of possession of an illegal firearm with intent to supply, and on whether the penalty for illegal firearm importation should be increased. We are also consulting on whether the police need additional curfew powers. It is why we are extending the new gang injunctions to 14 to 17-year-olds, for example, to stop gang members entering rival territory, prevent them from being in public with dangerous dogs and require them to undertake positive activities; and it is why we are strengthening our laws on weapons possession so that anyone, including offenders aged 16 or 17, convicted of using a knife to threaten and endanger others will now face a mandatory custodial sentence. Any adult who commits a second very serious violent or sexual crime will now face a mandatory life sentence.

This is not, however, solely a police and criminal justice programme. All the agencies that young people deal with, from teachers to health service workers and social services, need to develop better systems for identifying high-risk individuals, sharing information and working together. Simply throwing more money at the problem is not the answer. We need a more intelligent approach.

We know, for example, that there are families on whom multiple Government agencies spend hundreds of thousands of pounds each year, yet their problems persist. That is why Louise Casey is today starting her work as the head of a new troubled families team to drive forward our commitment to turn around the lives of 120,000 troubled families. We will also deliver our commitment that all hospital A and E departments should share anonymised data on violent assaults with the police and other agencies. Sharing information and taking a multi-agency approach might not sound very exciting, but they work.

Finally, to support local areas, we will target Home Office funds on those places where the most serious gang and youth violence problems exist. We will therefore provide £10 million in funding next year to support up to 30 local areas and invest at least £1.2 million of new resources over the next three years to improve services for young victims of sexual violence in our major urban areas, with a new focus on the girls and young women caught up in gang-related rape and abuse.

For too long, communities have lived in fear of gangs. Many young lives have been ruined; many young lives have been lost. The summer showed that it is time for society to take a stand. It is time for a long-term programme, with intervention at each stage of vulnerable people’s lives; it is time for a locally led approach, with agencies working together and sharing information; and it is time for tough enforcement to be backed up by work to address the root causes of gang and youth violence. That is what our programme will deliver and I commend this statement to the House.

I thank the Home Secretary for early sight of her statement and the Government report.

The Opposition agree with the Government’s aim of tackling gang culture. The Home Secretary is right to point to the devastating impact on the victims of gang violence and intimidation and to be concerned about the damage that gangs do to those who get sucked into them, sometimes even in the search for protection. The violence is horrifying; the long-term scars for young people and society are severe. She is right that gangs played a part in the riots, but also that they have played a part in problems such as knife crime that affect some of our major cities.

The Home Secretary also recognises that the overwhelming majority of young people do not get involved in gangs. Indeed, youth crime fell over the course of the previous Parliament as fewer young people were drawn into criminal activity, but we want youth crime to fall further, not to go back up. That is why action on the pernicious effect of gang culture is so important.

I therefore agree strongly with the Home Secretary that effective action requires prevention, early intervention, working in partnerships, tough action and crackdowns on persistent gang activity, and punishment. Effective action needs to involve the NHS, schools and councils as well as the police. We also need action on domestic violence and to consider the impact on women and girls. She should also consider increasing the focus on housing and on the victims of gangs.

I welcome the Home Secretary’s work to build on Labour’s approach in government, including the family intervention projects and implementing the extension of gang injunctions to 14-year-olds, for which the previous Labour Government legislated before the last election.

I agree with the Home Secretary that we need to go further. I, too, am impressed by some of the work that police and local councils are doing in some areas to target gang members by offering them a way out, but rightly getting tough on them if they will not take it, but I am deeply concerned that the reality of the Government’s policy does not live up to the rhetoric. For a start, there is still complete confusion about sentencing policies. Last week, the Home Office told the papers that there would be longer sentences for gang members; yesterday, the Home Secretary told them that there would not be. Her plans on powers are also confused. She will know that many police forces and councils find that ASBOs are one of the most useful tools in disrupting gang activity, yet her policy still is to abolish them and replace them with weaker injunctions, so she is making it harder and not easier for the police to crack down.

We welcome the emphasis on early intervention in the report, but that sits badly with the 20% cuts to Sure Start and well over 20% cuts to the youth service. We welcome the learning of lessons from successful work in places such as Strathclyde, but here is the real problem: the work in Strathclyde alone required an additional £5 million, but she has announced only £10 million for the country as a whole, and the Home Office has already said that that funding is not new. At the same time, she is halving the local community safety budgets, which councils and the police use for gang prevention work right now—£44 million of cuts over the next two years alone, on top of the cuts to community safety funding in the emergency Budget.

Before the election, Haringey, where the riots started, received £2.2 million for community safety, including the action it was taking, with the police, to target gangs. By next year, that figure will be £200,000—a 90% cut in one borough alone. In Liverpool, the youth offending service, which works with gangs and young offenders, is facing more than £2 million of cuts—an overall reduction in its budget of 34%. All that comes on top of 16,000 police officer cuts, nearly 6,000 of which are in the forces that face the biggest problems with gangs.

The Government are cutting too far, too fast, hitting not only the criminal justice system, but our economy, which risks costing us more. Higher unemployment and higher crime will cost us more. Ministers are right to be concerned about gangs and youth crime and to want action, but what does this really add up to on the streets of Lambeth or Liverpool or for the young people of Birmingham or Brent? Given that the Government are pushing up youth unemployment to nearly 1 million, cutting 16,000 police officers, ending ASBOs, slashing youth services and cutting crime prevention, can the Home Secretary put her hand on her heart and tell the House that during this Parliament the youth crime rate will fall, as it did in previous Parliaments?

We agree with much of what the Home Secretary said today, but when we look at the reality behind the rhetoric—the reality behind her words—we see the truth, which is that the Government are still making it harder, not easier, for the police and communities to tackle gang violence and cut crime.

We have heard a typical response from the right hon. Lady. I shall start with the statements where she agreed with what we were doing, with the need to do more to draw young people out of gangs and reduce youth violence and with the point that this is not just about the police, but about how the NHS, schools and a variety of other agencies need to be involved. As I said in my statement, that is the basis of this first truly cross-Government report. She mentioned good projects by the police. There are a number of very good projects out there in parts of the Metropolitan police, Greater Manchester, the west midlands, Merseyside and, of course, Strathclyde. Those projects are already starting to make a difference.

Sadly, however, having said that she agreed with a lot of what I said, the right hon. Lady then, as she did in August when we were talking about the riots, chose to be party political. I am sorry that she chose to do that, but I shall address her various points. She said that we should not scrap ASBOs, but what good have ASBOs done, given that, as she said, gang culture has been getting worse? We are getting rid of ASBOs and replacing them with measures that will actually deliver for local communities, deter antisocial behaviour and put communities back in charge. She mentioned funding for Sure Start. That funding is provided through the early intervention grant, but, crucially, we are ensuring that Sure Start is focused on the very families it was set up to help in the first place—the very families that most need our help and support.

The right hon. Lady talked about police cuts. She never misses a chance to demonstrate her fiscal irresponsibility, and I knew that today would not be any different. She attacked cuts in police spending, but she did not say that it was the stated policy of her party to cut police spending. On her comments about police numbers, let me tell the House what she said about gangs and police numbers in August:

“Boots on the streets are not enough to sustain safe communities”.—[Official Report, 11 August 2011; Vol. 531, c. 1151.]

I wonder why she has changed her mind.

The right hon. Lady also talked about other spending cuts. Let me tell her what Jacqui Smith, the former Labour Home Secretary, said just this morning:

“You need to be much better at measuring the impact of the money we spend as well as simply spending it.”

I suggest that the right hon. Lady take a lesson from her. The shadow Home Secretary seems to think that gang problems have been caused by this Government and did not exist under the previous Government, but let me remind her what she said in August:

“I agree that more needs to be done about gang culture, which has been getting worse.”—[Official Report, 11 August 2011; Vol. 531, c. 1151.]

Yes: getting worse under the Labour Government. Just this morning, Jacqui Smith said that Labour “hadn’t done well enough” in tackling gang violence”. She has been straight about her record; it is a shame that the shadow Home Secretary cannot bring herself to be straight too.

I very much welcome my right hon. Friend’s statement. Does she agree that the best way of getting young people off the conveyor belt to crime is to target early years and ensure that young people have access to education and community projects such as the Prince’s Trust and the college in my constituency, and organisations such as Catch22? Given that the previous Home Secretary has said that in the past money was not always spent as it should have been, does my right hon. Friend agree that spending money on projects such as those that I have described is the right way forward?

My hon. Friend is absolutely right that early years intervention is key, and it is part of the work to prevent young people from getting involved in gangs in the first place. Early intervention might be needed at a very early age indeed, with toddlers, to ensure that they do not go down that road. That is why it is so important to ensure that money is spent in the right way, on projects that will make a difference and really work.

I welcome the Home Secretary’s proposals and the appointment of Louise Casey to head the new unit. The right hon. Lady will have noted the evidence of Bill Bratton, one of the guests at her international conference and round table, who said:

“You can’t arrest your way out”

of gang problems. Early intervention has been a theme of the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith) and my hon. Friend the Member for Nottingham North (Mr Allen) for a number of years. What worries me is who will co-ordinate the various initiatives. A number of Departments are involved and monitoring will be crucial, so will it be her, as Home Secretary, or another Department?

I thank the right hon. Gentleman. I pay tribute to Louise Casey for the work that I know she will do and to my right hon. Friend the Secretary of State for Communities and Local Government, who has appointed her to the troubled families unit, as part of his Department’s work. Let me also record our thanks to Bill Bratton, whom the right hon. Gentleman mentioned. He came over and visited a number of projects in the UK, participating in our round table and international forum on gang and youth violence. Crucially, he also gave hope from the projects that he had seen that it is possible for the UK to turn the problem around. The right hon. Gentleman is right to focus on monitoring, and, as I said, this is the start of the process. The inter-ministerial group that I chaired alongside my right hon. Friend the Secretary of State for Work and Pensions will continue and will oversee the work currently being undertaken.

The Home Secretary will be aware of the problems with gangs and knife crime that my constituency faces. My constituents will warmly welcome her announcement, but does she envisage a role for volunteer organisations, which already do a lot of work, in delivering the strategy on the front line?

Yes, I can absolutely reassure my hon. Friend that I see a significant role for voluntary organisations. The Secretary of State for Work and Pensions and I attended a round table set up by the Centre for Social Justice, at which we met people from a number of voluntary groups, including some ex-gang members who are doing excellent work. Indeed, it is often voluntary groups that can make a difference to young people involved in gang membership, or to those about to get involved, and that can turn them around.

The Home Secretary might be interested to know that at 5 o’clock this morning 24 people across Salford and Manchester were arrested in connection with incidents during the disturbances in the summer. Much of the evidence was gathered using CCTV and DNA, a message that I am sure the right hon. Lady will take away. The family intervention projects will be essential to ensuring that our young people do not follow that path. Will she assure me that some funds from the Home Office and the family intervention projects will be targeted on Salford, to ensure that we keep our young people away from these problems in future?

I was aware of the work being done by Greater Manchester police, who have been doing excellent work following the riots, as have a number of other forces across the country. It is absolutely the case that, among the variety of amounts of money that are going to be made available for various aspects of this scheme, some will be focused on the Greater Manchester area. We will identify 30 areas for which £10 million from the Home Office will be available next year, and we are working with the Association of Chief Police Officers, which is mapping the gangs at the moment, to identify those areas. We have already identified Greater Manchester as one of the three areas—alongside the west midlands and London—into which specific Home Office funding is going in for the guns, gangs and knives project.

I welcome the analysis that underlines the fact that parental neglect, violence at home, truancy and exclusion are factors that can lead to gang membership. I also welcome the five areas on which the Government are focusing, especially pathways out. On that point, what support can the Government provide for suitable role models and mentors who can steer young people away from gangs and towards a more positive future?

My right hon. Friend makes an interesting point. One aspect of the way in which we intend to operate involves ensuring that people are able to identify at local level what will work in their area. In looking at various projects, I have seen that the people who are the most effective in persuading others to leave gangs are often former gang members. They have been through it, they know that a different life is possible, and they can give others the benefit of their personal experience. I have seen that happening in a number of areas, and I believe that a number of local areas will want to follow up on that aspect.

My constituency is served by two boroughs: Brent and Camden. In both, the funding for the safer communities and youth offending teams has been slashed. In Brent, it has been slashed by almost 18%, and in Camden by more than 27%. I agree with the Home Secretary that we can tackle gangs only through a multi-agency approach, but every other agency to which she referred in her statement is suffering from similar cuts, so how can that intensive support to which she referred be delivered?

One of the points that the hon. Lady is missing is that, sadly, over the years, significant sums have been spent on projects that are not as effective as they should be. There are families out there on whom hundreds of thousands of pounds are being spent by various Government agencies, often not working together, and this is not effective. The problems still persist. The work that has been done in Waltham Forest, however, shows that if we bring together agencies such as the police, the local authority and others to tackle gang violence, yes, we spend money on those individuals, but we end up saving money by turning their lives around. Often, the effective intervention is not the expensive intervention.

I welcome the Home Secretary’s statement, but a short prison sentence of two months for youths convicted of knife crime does not offer the opportunity for complete rehabilitation. Does she agree, however, that it might offer a vital opportunity to diagnose previously hidden conditions such as communication delay, which could be a key factor in people entering pathways to crime?

I commend my hon. Friend’s work on this issue. I know that he takes it very seriously, and that he has looked into the impact of communication delay on young people. In relation to sentencing, it is important to send a clear message about the importance that we attach to doing something to reduce and stop knife crime. We also need to look at the interventions that take place when young people are undertaking custodial sentences, to ensure that we can rehabilitate them and take the opportunity to turn their lives around.

Youth unemployment in my constituency is higher than it has ever been, and this is directly caused by Government cuts—[Interruption.] It is directly caused by Government cuts. Educational opportunities have been blighted by the abolition of education maintenance allowance, and a youth club in my constituency is in jeopardy because of Government cuts. What option is the Home Secretary going to provide for young people in my constituency apart from the streets? Will she provide direct funding for organisations such as Reclaim and Trinity House in my constituency, which combat the effects that this Government have created?

As I have said, specific funding will be available, which will be targeted at projects in those areas of the highest violence and those areas with the most significant problems. We are working with the Association of Chief Police Officers to identify those areas. I also say to the right hon. Gentleman that he really should not try to rewrite history: youth unemployment was going up for six years under the last Labour Government.

To view this issue from a purely financial perspective is prosaic. From my experience, one reason why many young people join gangs is that they are seeking a surrogate or substitute family. This is particularly the case among young men who are often looking for a positive male role model. I welcome my right hon. Friend’s initial response on role models. Will she elaborate on how positive male role models could play a role in this issue?

My hon. Friend has identified a very important issue. As I said earlier, it is absolutely the case that, sadly, all the Opposition only ever want to talk about is the amount of money being spent rather than about how it is being spent and how we can act intelligently to make a real difference. Ensuring that there are positive role models—particularly male role models—available to young people in these gangs is an important part of that. My hon. Friend is also right that, sadly, for too many young people involved in these gangs, the gang effectively substitutes for a family. When I met a former gang member, I was struck when he told me that when he was out in the streets with the gang, his mother was lying at home dead-drunk.

The Home Secretary states that agencies must work together to focus on the early intervention in the foundation years. What responsibility does she feel the family has in that area of intervention and how do we harness family and parental responsibility?

The hon. Gentleman has made an important point. In helping a young person either to come out of gang membership or to prevent him from getting involved in the first place, it is often important to look not just at that individual but at the whole family. As I indicated in my answer to my hon. Friend the Member for Wolverhampton South West (Paul Uppal), the problems sometimes lie in the family, and it is that family background that is a significant cause of what is happening to the young person. Work that is being done—for example, early intervention work by health visitors, family nurse partnerships and so forth—is important in providing essential support within a family.

I wonder whether the Home Secretary would recognise that there is a significant role for local authorities and housing associations in taking firm action against families that commit criminal activity or antisocial behaviour. Moving those families on by evicting them not only gives the community around them a respite but gives the family a chance for a fresh start somewhere else.

That is absolutely right. In fact, moving families on can help in two ways. One is where the family are creating particular problems on an estate or in an area, and the housing association or local council can take action that can relieve the rest of the community. Another is in circumstances where in order to get a potential gang member away from the area in which the gang is involved it is necessary to move that gang member and the family. There can be a positive move as well as a negative one, so to speak.

Everybody abhors gang violence and the cultures that go with it, but does the Home Secretary recognise that some young people are attracted by a perverse sense of glamour towards gangs as an escape from overcrowded housing or as an escape from the lack of job opportunities or youth facilities? Because they cannot develop themselves in those ways, they see a gang as something worth looking at. Should we not instead invest in jobs, housing and communities as much as in all the other palliative measures that the Home Secretary has suggested?

A great many young people live in difficult circumstances but do not turn to gangs. Of course it is important for us to look at gang membership and youth violence in the round rather than arresting our way out of the problem, because it is not possible for us to arrest our way out of it. As I said earlier, young people coming out of prison who claim jobseeker’s allowance will go straight on to the Work programme. We must make a real effort to deal with problems such as unemployment, and to help those young people to find a different route through life.

I am sure that the Home Secretary was as impressed as I was by the work of Nottinghamshire constabulary, many of whose central Nottingham stations came under sustained and potentially lethal attack by petrol bombers during August. I accept that prevention is better than cure, and I note the Home Secretary’s strictures about knives and firearms, but what is being done, and what will she do, about the carrying and preparation of petrol bombs?

My hon. Friend has raised an important issue. We have not addressed it in the review, but I shall be happy to consider it. I pay tribute to the work done by Nottinghamshire police in defending both people and premises. As he says, they came under significant and sustained attack during what was a very difficult time.

It is the judgment of Slough’s local police commander, Richard Humphrey, that the reason there was not more serious violence in the town that I represent, despite the risks posed by such factors as gang membership, was the contribution of Aik Saath and other youth organisations. What help is the Home Secretary offering youth organisations that can prevent problems of this kind?

As I have said, specific help will be provided in some parts of the country. Funds will be made available for projects that help young people to turn their lives around, and we will concentrate on the areas where the most significant problems exist.

I welcomed the statement, although I am not sure whether it was necessary for all five of the areas that my right hon. Friend mentioned to begin with a P. As she knows, many gangs carry knives. What preventive measures are being taken to prevent young people from carrying knives in the first place?

The Home Office was very pleased when Brooke Kinsella did an important piece of work for us last year, which resulted in a report that was published earlier this year. It concerned projects around the country that involve working with young people to deter them from carrying knives. The Ben Kinsella fund, which is being administered through the Prince’s Trust, has received funds from the Home Office to support such projects. Meanwhile, the Department for Education will be considering what materials can be made available to schools to help them get the message across to young people about the problems and dangers of knives.

Has the Home Secretary taken a good, close look at the efforts of Strathclyde police to tackle gang violence? Does she believe that they have been successful? Unlike her Government, the Government of the Scottish National party have increased the number of police on the streets of Scotland by 1,000. Will she also take a look at today’s proposal by the Scottish Government to introduce minimum alcohol prices, which will deal with the alcohol problems that fuel so much youth violence?

I am aware of the alcohol-related problems in Scotland that have led the Scottish Government to introduce their minimum pricing policy. I have spoken to Strathclyde police, and my right hon. Friend the Secretary of State for Work and Pensions has also done so on a number of occasions. When representatives including Karyn McCluskey made a presentation to our inter-ministerial group, they made it very clear that although effective policing was necessary, it was not just a question of policing, but also a question of working with others. When I was in the area I was able to talk to some former gang members, and also to a gang member who is trying to leave the gang. They too made it clear that while policing is part of the process, it is not the only element. Working with other agencies is what really makes the difference.

Does the Home Secretary agree that tackling gang behaviour in prisons is vital if we are to tackle such behaviour, including violence, when those people are eventually released on to the streets?

Yes, and one of the things we will be doing is looking at the support that is available for young people in young offenders institutions. The Metropolitan police are already doing work at Feltham to ensure both that there is no gang violence in the institution and that gang members are helped and given the support they need to leave the gangs.

I was pleased to hear the Home Secretary mention the London borough of Waltham Forest. It has a pioneering anti-gang strategy that has used resources properly, as I am sure will be confirmed by the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith). However—the right hon. Lady can probably guess what’s coming next—many of the budgets that feed into that strategy are facing the squeeze. The Home Secretary talks about resources that she hopes will be available in the future, but we must have access to them fairly quickly. How might that be done in the near future?

Sources of funding are available, such as the innovation fund, for which authorities can bid, and which will have a specific role in making funding available for gang-related projects. The chief executive of Waltham Forest and local Metropolitan police representatives came to speak to the inter-ministerial group, and they made the point that the amount of money they were spending effectively on families was often lower than the amount that Government collectively might have been spending on them in the past. There is therefore a significant reduction in the amount of money that needs to be spent to deal with this issue.

The Home Secretary is right to highlight the benefits of partnership-working. Last week, I visited the newly formed Quedgeley youth centre, which replaces the local authority’s former Echoes youth club. It has been created by an innovative partnership led by local Conservative councillors and financed by Prospect Training Services, other businesses and the Quedgeley Community Trust. Early indications are that the new youth centre is proving even more popular with the young, and that it will be very successful. Will my right hon. Friend join me in congratulating all those involved in this local initiative, which shows the benefit of partnership-working, at zero cost to the taxpayer?

I am very happy to welcome the opening of the Quedgeley centre, and I am sure from what my hon. Friend has said that it will do excellent work locally in helping young people and providing the support they need. He also makes the valid and interesting point that dealing with these issues is not all about Government spending money—sadly, a message that Opposition Members seem to have failed to understand.

The Government have cut 60% from community safety budgets, including £10 million from London alone. Will the right hon. Lady clarify the position in respect of the £10 million she has announced today? Is it the same £10 million she announced back in February for early intervention? If it is, will she undertake to write to Members to explain what has been cut today as a result of her announcement?

I can confirm that we were making a further £10 million available next year for the early intervention fund. We will be ensuring that that money is specifically spent on projects related to gang and youth violence projects. [Hon. Members: “Ah.”] Well, Opposition Members say “Ah,” but—[Interruption.] I have never been able to imitate the hon. Member for Rhondda (Chris Bryant), so I shall not attempt to do so. I simply make the point I made earlier to my hon. Friend the Member for Bedford (Richard Fuller): we are talking about a new approach, and about working across the whole of government—[Interruption.] Opposition Members are making the mistake of thinking that the only thing that matters is the amount of money that is available to spend, when what matters is how we spend it—a lesson that, sadly, the Opposition failed to learn during 13 years in Government. That is why they wasted so much taxpayers’ money and we are now paying the price.

When I watched the police videos of what happened in Beckenham and Bromley, I was aghast to see families arriving in cars and then getting out and going on organised looting trips, and those family members were not the usual suspects. Is there anything we can do to stop this opportunist thievery?

My hon. Friend makes the point that we did see some opportunist criminal activity during the riots, but I remind him that just under three quarters of the people involved in the riots who have been identified so far had a previous criminal record of some sort and that 25% had 10 or more criminal offences on their record. So what we saw was sheer criminality on our streets.

Crime in my borough of Hackney is at its lowest for 12 years and Hackney’s integrated gangs intervention unit has seen a drop in gang violence of 59% in the 18 months that it has existed. I hope that the Home Secretary will place in the Library the details of where the £10 million will be allocated and that she will seriously examine the issue of gang injunctions. My local police and the integrated gangs intervention unit say that there are real challenges in getting gang injunctions to stick. They and I plead with the Home Secretary to re-examine antisocial behaviour orders and keep them until she is sure that gang injunctions work. Will she tell the House how many gang injunctions have been issued to date?

The hon. Lady raised a number of issues. The amount of money made available to Hackney from the early intervention grant allocation in the current financial year was, of course, about £20 million. We will be identifying the areas that the Home Office funding will be going to. As I said in response to the right hon. Member for Salford and Eccles (Hazel Blears), we have also already put money into Greater Manchester, the west midlands and London—the three areas where most knife crimes are committed—in looking to work with projects to tackle those knife crimes. So that funding has been available.

Only a small number of adult gang injunctions have been introduced so far. As the hon. Lady will know, the injunctions were introduced only earlier this year, but their use is increasing. I am aware that there were some issues in the early days in relation to their implementation, but we are getting through those teething problems and the gang injunctions have been used in areas where they have been effective.

I welcome the Home Secretary’s statement. Yesterday, two gang members from my constituency were found guilty and sentenced, one to an indefinite term for firing a double-barrelled shotgun in a drive-by shooting. Does she agree that violent criminals must be given the most serious sentences to stop them bringing fear and destruction to our towns, and that this Government will relentlessly pursue these individuals?

We will absolutely do that. I assure my hon. Friend that we are ensuring that tough sentences for the worst of our criminals are indeed available, and I commend his local police on having made those arrests.

Order. In seeking to accommodate more colleagues, notwithstanding the pressures of time, I do appeal now for extreme brevity in questions and answers alike.