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Westminster Hall

Volume 548: debated on Tuesday 10 July 2012

Westminster Hall

Tuesday 10 July 2012

[Sir Roger Gale in the Chair]


Motion made, and Question proposed, That the sitting be now adjourned.—(Mr Vaizey.)

It is a pleasure to introduce the debate under your chairmanship, Sir Roger. The reason why I sought the debate was a strong interest in how the BBC is scrutinised and what is happening in this organisation. My first recollection of the BBC is from the time when I used to go back to Poland, in communist times, and see my grandfather. At the end of the day, we would draw the curtains and quietly listen to the BBC World Service. Of course, in those times, it was illegal to listen to outside broadcasters. If people were caught, they were punished. My grandfather and many other Poles behind the iron curtain were very relieved and grateful to be able to listen to the BBC World Service because it brought them the truth, which, regrettably, they were not able to get from communist propaganda and the media there.

The experience that I have described was very positive, but I want now to read out a quote from The Economist in July 2010 that encapsulates my thinking and that of many other Conservative MPs. It says:

“Here is a curious paradox about British conservatives. Challenge them to defend grand British institutions, from the Royal Family to the House of Lords or the lack of a written constitution, and they argue passionately about the dangers of tampering and meddling with things that evolved organically over time. They will talk about the British genius of leaving well alone. Perhaps you would not start from here, they may concede, and parts of our system may look a bit odd to outsiders, even extravagantly so. But these fragile accretions work rather well, they say, and would not survive piecemeal attempts to reform and tweak them. If it ain’t broke, in other words, don’t fix it.

And yet, get the same British conservatives onto the subject of the BBC, and they turn into wild-eyed Jacobins, yearning to punish and slash and burn and stick the heads of senior BBC staff on spikes.”

I have to say that that rather encapsulates my thinking about the BBC. I do not understand what it is about this organisation that gets my blood pressure rising and gets me so upset and irritated. I hope to be able to raise some of the issues that certainly frustrate me as a parliamentarian and a representative of taxpayers.

The BBC was set up in 1929, and of course I understand that in the late 1920s it needed to have state funding. However, the 1920s were a very different era from today. We have to think—I give this very important challenge to my hon. Friend the Minister—about how appropriate it is in 2012 for this broadcaster to receive such huge amounts of taxpayers’ money. The BBC is insulated from reality with that comfort blanket of taxpayers’ money. It knows that, no matter what it does, billions of pounds of taxpayers’ money will be poured into its organisation. I feel passionately that there is a lack of urgency, a lack, if I may say so, of innovation and a lack of determination to compete due to the secure nature of its state funding. I would like to know from the Minister what plans he has to ensure that more commercialism is brought to the BBC and that it is forced to pay for itself, rather than relying on taxpayers’ money.

I personally object to having to pay £145.50 every year to have a television licence. The public affairs department at the BBC keeps telling me how wonderfully cost-effective that is—much cheaper than any other broadcaster—but I personally object to having to pay £145.50 for the privilege of having a television licence. In 2012, it is somewhat out of date that citizens have to pay for the privilege of owning a television set. One should automatically be able to have a television and watch it without the need for a licence.

I congratulate my hon. Friend on succeeding in securing so important a debate. I recognise his doubts in relation to the licence fee and the guaranteed income that the BBC receives. Would his doubts be satisfied if there were greater transparency over how that money was spent? Every local authority in England publishes every invoice for amounts in excess of £500. Does he think that that would be an admirable model for the BBC to follow?

I completely concur. The BBC has been guilty in the past in the sense that trying to extract information from it has been like pulling teeth without anaesthetic. I do not understand why it has to have this cloak-and-dagger mystery surrounding how it spends taxpayers’ money, because at the end of the day—we must remember this—it is taxpayers’ money. I want to ram that point home over and over again. We are scrutinised here in the House of Commons because we are funded by taxpayers. The BBC is also funded by taxpayers and it has to be as transparent as Parliament is trying to be.

Does my hon. Friend therefore join me in welcoming the coalition Government’s very early decision to introduce the requirement that the BBC opens up its accounts to the National Audit Office?

Yes, I concur with my right hon. Friend. I am a great supporter of the coalition Government, and what he refers to is one of their early success stories.

I reiterate to the Minister the need for commercial activity and, dare I say it—this will be anathema to the BBC—some form of privatisation. I see people in the Public Gallery shaking their heads, but we have to think the unthinkable and challenge the BBC, because it does not understand the meaning of reform and adapting to the modern era. I would like also to talk about the salaries of senior executives.

I apologise for interrupting again so soon, but on the issue of the commercial sector, is my hon. Friend aware that a day’s viewing on Sky costs roughly £1.50, whereas a day’s viewing on the BBC costs 40p? The private sector is not doing very well by comparison, particularly when we bear in mind the fact that 26% of Sky viewing is of BBC programmes anyway and has already been paid for.

Order. Before the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) replies and continues his speech, I remind all hon. Members that, for the purposes of debate, the Public Gallery is invisible—it does not exist. It does not matter how much members of the public are gesticulating, Members should not recognise them.

Yes, I apologise for that, Sir Roger, but the particular gesticulating was rather irritating and I wanted to highlight it. [Laughter.] May I carry on by saying that I do have a concern about the salaries of senior BBC executives? The outgoing director-general had a salary of more than £800,000. Of course, the BBC says that that remuneration is commensurate with other levels of remuneration in the industry and that in fact it is less than that for comparable positions in other organisations. Again, I find it very difficult to comprehend how someone working in the public sector, with taxpayers’ money, can have such a large salary.

To answer the point raised by my right hon. Friend the Member for Bath (Mr Foster), which I had forgotten to do, Sky may cost more, but at least I have the option of paying or not paying for a Sky subscription. I do not have the option of not paying the BBC its licence fee—I have no option—so there is an important distinction there.

I am told that the new director-general will take a pay cut—to a mere £450,000 per annum. I do not believe that I am the only person in the country who is concerned that the director-general of the BBC will receive such an enormous salary. We must ask ourselves what is so special about running the BBC that means that the director-general receives twice the remuneration of the Prime Minister of the United Kingdom. We all, particularly those of us who have come from the private sector, acknowledge that we need to take pay cuts to do this job. We believe in what we do and understand that we are working in the public sector and paid with taxpayers’ money, so we cannot receive the same salaries that we received in the private sector. People in very senior positions in the BBC must also try to understand that, particularly in the very difficult economic circumstances the UK faces. It is essential for them to take a lead on this. I look forward to hearing what the Minister has to say about increased transparency in the salaries of senior executives and what steps are being taken to cut those salaries further.

One must not forget that there are many extremely hard-working, good BBC employees in regional radio who are paid rather small salaries. I would like to highlight the great differences in remuneration between those at the very top and other people working in the BBC.

I was very upset about the BBC’s coverage of the jubilee celebrations. I watched it; I thought it was scandalous, shabby and rather unprofessional. It is part and parcel of what I call the “dumbing down” of the BBC—not treating the audience in a sophisticated way, but being what it must perceive to be modern and trendy. It did not understand its importance. [Interruption.] The hon. Member for Bishop Auckland (Helen Goodman) may laugh, but this is part and parcel of debating and putting forward different and contrasting views.

I am surprised that the hon. Gentleman was not at street parties and had time to watch the BBC coverage of the jubilee.

Even I am allowed to watch a very important celebration like the special 60th anniversary of Her Majesty coming to power. I quickly tuned away from the BBC and switched to—

I understand the passionate case that my hon. Friend makes. It is a free market; people can switch to other channels. He must recognise that the biggest viewing figures for all such national events are still with the BBC, but that is choice as opposed to compulsion. In terms of the BBC’s future and accountability, does he agree that, with technology, licence fee payers could be more involved in the appointment of, and indeed could vote for, non-executive directors to represent them on the board of the BBC Trust?

Yes, that is a reasonable and sensible point, but I am trying to get my hon. Friend the Minister to understand and take on board the wishes of those citizens, like myself, who do not want to watch the BBC or pay a licence fee of £145.50. At the moment, I do not believe that the BBC is as good as other channels on television. He may say that it is impossible—“You cannot detach yourself from this additional tax. You have to pay it and you have no alternative.”—but in this era we should think differently. I cannot believe that I am the only British citizen who does not want to watch the BBC and does not want to pay the licence fee.

My hon. Friend puts his case forcefully; his reputation precedes him. Perhaps he could move on to more positive elements of the BBC, such as BBC Radio Shropshire, of which I know he is an enormous fan. That is paid for by the licence fee.

My hon. Friend the Minister knows that I would not miss an opportunity to refer to BBC Radio Shropshire. It is a gem—the one glimmer of light in the whole organisation. I will come on to BBC Radio Shropshire shortly.

I have a serious point about the lack of foreign news on the domestic BBC. I am always amazed at how much trivial information is given out by the BBC in its news bulletins. There is very little about what is happening in parts of the world such as Latin America. For example, an extraordinary coup took place in Paraguay just the other week, and, of course, there was no coverage of it on the BBC. I could mention all sorts of interesting political developments in Africa, Latin America, the far east and eastern Europe that the BBC simply does not cover. It is difficult for people to understand what is happening across the world if the BBC constantly focuses on celebrity gossip and the UK to the exclusion of important and detailed constitutional changes taking place around the world.

I heavily criticise the fact that the BBC does not show foreign films. The reason why people speak such eloquent English in other European countries is that they are constantly watching English films with subtitles. It is a wonderful way for people, particularly the young, to learn another language. They watch a foreign programme and, particularly if it is a series that they like and watch weekly, listen to the audio, but read the subtitles in their own language. I challenge anybody in the room to say how often they see foreign films shown on the BBC with subtitles. It is a very rare occurrence and I would like it to happen more often.

I would also like to challenge the interview style of certain interviewers. I refer particularly to Mr Paxman. I do not know what problem this man has got; perhaps he is not getting enough exercise or something. There is something wrong with this man—something fundamentally, emotionally wrong with the way in which he interviews people. Most politicians who are interviewed by him immediately clam up and seize up, and the interview is not very conducive to finding out what they think. They are guarded and do not want to interact fully, engage or explain what they are pursuing, due to the sheer aggression and patronising tone that this man always brings to interviews. When the Economic Secretary to the Treasury was interviewed recently, I was appalled at the way he treated her: the derisory contempt and the patronising tone—highly aggressive and highly rude.

I suppose that some people might get some form of titillation from watching such a combative interview style, but they must ask themselves, where does it get the audience? Are they any closer to understanding what the Minister seeks to say or the policy of the person being interviewed? I rather suspect that the answers are a mystery to the person watching, because the focus has been on the aggression. I have asked the BBC how much money it spends on anger management courses, but I have yet to receive an answer. It should put some of these people on anger management courses, because they really need to get a grip.

I am not asking for interviews in the style of communist Romania, with sycophants interviewing communist apparatchiks in easy interviews. Interviewers should not accommodate politicians, but there are countries where the relationship between the interviewer and the politician is much healthier and focused on the questions, rather than the conduct of the interviewer.

Of course, I also have complaints about John Humphrys, by whom I have been interviewed on the “Today” programme. He is extremely patronising and arrogant, and does not let one answer any questions. That is in huge contrast to when I was interviewed on the BBC by Mr Andrew Marr. I wrote a biography of Colonel Gaddafi and was invited in not as a politician but as an author. It was fascinating that the tone of the interview was completely different. Mr Marr was interested in what I had to say and asked probing questions in a manner conducive to starting a communication. I felt that the listener was interested in the interaction we were having. Being interviewed at the BBC as an author is, in my experience, different from being interviewed as a politician.

Of course, I am coming to the one ray of light in the BBC world, which is, as my hon. Friend the Minister pointed out, Radio Shropshire, a wonderful organisation run by Mr Tim Beech. It is important to me because it is meaningful; it is where the BBC works. Because it is focused on Shropshire and has local presenters, who talk about local issues affecting my constituents and the community where I live, it is, for me and my constituents, a meaningful body. I admire it greatly. However, again, the BBC focuses just on inner-city areas and neglects rural parts of the country. For example, there is no television camera at BBC Radio Shropshire, in Shrewsbury. Someone who happens to live in Shropshire, the largest land-locked county in England, cannot be interviewed by the BBC. On Saturday, the BBC telephoned me for an interview about the elections in Libya, and bombarded me with telephone calls. I said, “Look, I’m sorry, I can’t do it, because there is no television camera here in Shrewsbury.” The BBC said, “We’ll have to take you to the nearest station, which is Birmingham.” I am not going to do a 90-mile round trip on a Saturday afternoon, when I am with my family, to do a five-minute interview about elections in Libya. The point I am making is not just that politicians in Shropshire must travel 90 miles to do television interviews. There are many charities and important voluntary sector organisations in Shropshire that would like to take such opportunities, but it is impossible for them because the nearest television camera is in Birmingham, which is a 92-mile round trip from Shrewsbury.

It so happens I was on BBC Suffolk this morning, discussing lively political issues. In Ipswich we have a camera, so my hon. Friend may want to suggest to the editor that he get one. Would my hon. Friend at least give recognition to the fact that after a vigorous campaign by Members of Parliament, the BBC has put local radio firmly back into the future of the BBC and should be congratulated on rethinking its proposed regional strategy?

Yes, I agree with that. It is an important point and I want the Minister to take cognisance of the fact that Conservative Members of Parliament are interested in the regionalisation of the BBC and in making it more meaningful for local residents. I am delighted for my hon. Friend the Member for Suffolk Coastal (Dr Coffey) that there is a camera in Ipswich. I have written to the director-general of the BBC about the lack of one in Shrewsbury and lobbied senior BBC executives for the past seven years, to no effect. I hope that, as I have raised it again with the Minister today, some action may be forthcoming to ensure that the important county of Shropshire will have a television camera.

It costs £124.6 million to collect the licence fee, and I want hon. Members to remember that figure. I have been in touch with the BBC public affairs department, which says that that is extremely good value for money, and that those involved are doing a great job. However, let us remember what £124 million is. Sometimes we refer to these figures without trying to understand their gravity. In 2012, when we must make cuts because of the state of the public finances, is it right and appropriate to have two licensing centres, one of which, I believe, is in Preston and the other in Darlington? Is that the optimum way to handle matters? I have asked the BBC to tell me how many people work in those centres, and the response from the public affairs department is, “We don’t know, and that is not a relevant question.” It has a contractor to do such things. I am worried about that, because we should know how many people work at the TV licensing centres.

I want to know why the operation costs £124 million. Think for a moment, Sir Roger, what we could do with that money. Is the present method the only way to collect the licence fee, or are there other innovative ways in which it could be done? I shall say something which will shock hon. Members: I do not want to pay the licence fee, but is it possible for some sort of direct taxation to be used? I do not know; I am only throwing that idea into the air, because I would like the Minister to explain what work he has done on assessing how the licence fee can be collected better, and how the cost of doing it can be reduced from £124.6 million.

I feel passionately about foreign affairs. I am the chairman of the all-party groups on Saudi Arabia and Libya and have a strong interest in Mauritania. Not many people talk about Mauritania, but it is where the Arab spring and democratisation started. I am always amazed: I argue frequently with BBC people who criticise certain countries—Mauritania in particular; I say to them, “Have you actually been?” “No.” There is a liberal élite—as I keep referring to it—at the BBC, which is always judgmental, high-handed and opinionated, without doing research on the ground about what is really happening in Saudi Arabia, Mauritania and other Arab countries. I suggest that before those people cast aspersions on or express opinions about those countries, they must spend time doing research. If they give the wrong impression about countries such as Mauritania, it may preclude or hinder some British companies from interacting with or investing in them.

One of the most important aspects of the debate comes from a friend of mine, with whom I was at university, who works for the BBC in the north of England. He has given me a document to read out, but he has asked to remain anonymous. Such is the culture of fear in the BBC: people who work there fear they will be reprimanded if they say anything negative. My friend writes:

“Over the past 12 months…the BBC has been insisting that freelancers earning over…a certain amount per year (in the region of £10,000 p.a) shall set up service companies, and invoice the BBC through the company rather than individually.

The BBC are running scared of the HMRC. IR35 rule. They were afraid that if the revenue were to closely examine the working arrangements of many freelance professionals, with reference to their work for the corporation, then HMRC would possibly rule that the freelancers were in fact in full time employment with the BBC. This would render the BBC liable for employers’ national insurance contributions totalling many hundreds of thousands of pounds. To escape this possible liability, the corporation has insisted on the service company arrangement, otherwise new contracts would not be issued to the individuals concerned.”

Let me pause there for a moment. Those employees, some of whom have worked for the organisation for many years, are being told that if they do not set up their own companies and invoice the BBC through those companies, their contracts will be terminated. I find that behaviour staggering and highly deplorable. My friend goes on to say:

“That was the stark ultimatum issued by the BBC. Many freelancers are extremely unhappy with this arrangement which brings with it extra costs in setting up the company and extra accountancy fees. And of course this immediately puts the individual in the spotlight as far as NI contributions are concerned. It is they (the freelancers) not the BBC who could now be liable for National Insurance contributions as the individual is now employed by their own service company - but it gets the BBC off the hook!! It should be noted that individual freelancers have never been paid for time off for sickness or holidays. At the same time the BBC continues to impose strict contract conditions on such freelancers (even through the service company) as far as work outside the BBC is concerned. However there are exceptions to this rule, with a number of high profile (and extremely well paid) personalities still allowed to expand their portfolio of work outside the corporation, with, in many cases, high profile television advertising commissions or newspaper features. Whether or not this is allowed seems to boil down to the amount of ‘clout’ the individual has—in other words would the BBC not wish to lose their services? If the answer is that it would not, then they (the freelancers) seem to be able to do what they wish and for whom they like. The BBC is acting like a bully and getting away with it whenever it can, riding roughshod over loyal freelancers who have served them without the protection of staff contracts, in some cases for many years.”

I have given a copy of this letter to the Chairman of the Public Accounts Committee, who has taken a great interest in it and has promised an investigation. The behaviour of the BBC in this regard is scandalous and I urge the Minister to give it his very close attention.

I thank you, Sir Roger, for giving me the opportunity to speak, and I look forward to hearing the Minister’s contribution.

Order. There are, I think, nine hon. Members present. No doubt all of them wish to rise to extol the virtues of their local BBC radio stations, all of which are on a par of excellence with BBC Radio Kent. The fact of the matter is that we are short of time. I propose to call those on the Front Bench at 10.40. To be as helpful as I can to hon. Members, I do not propose to impose a time limit, but you can do the maths for yourselves. I will call first those who have written in to Mr Speaker to indicate a desire to speak. The batting order is: Mr McDonnell, Mr Foster, Andy Slaughter, Sheryll Murray and Glyn Davies. I have noted that Mr Mulholland, Thérèse Coffey, Alun Cairns and Jim Shannon are all in the Chamber and wish to speak, and your names are a matter of record. If you do not wish to participate in the debate, or feel that you might not get called, you are free to intervene if any hon. Member wishes to give way.

The point of order is noted, but the letter is not on file. We will do the best we can. If all hon. Members exercise self-restraint, we should be able to get everybody in.

On my calculations, we have about four minutes each, so I will be as brief as I can. I congratulate the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) on the way in which he introduced the debate. The affection in which he is held in certain parts of the House is clear.

The last issue the hon. Gentleman raised is something we are all concerned about and we will certainly take it up. May I gently suggest to him that he should tell his friend that joining the trade union might help because it, too, is raising such issues? He also mentioned the scandal of Shrewsbury not having a TV camera. Of course we will raise that matter that as well, and we may even have a “whip round” at some stage to assist him. I am pleased that he has secured this debate, and I look forward to hearing the coalition parties’ response to his proposals for the full privatisation of the BBC or its funding directly through taxation. We are looking for a creative approach from the Front Benchers.

I can confirm that there are no plans to privatise the BBC or to fund it through direct taxation.

I think the hon. Gentleman was simply suggesting ideas for the coalition manifesto at the next election. Such ideas seem to be coming daily from a wide range of Back Benchers at the moment.

Later today in Parliament, a group of trade unions will launch the report, “BBC Cuts: There is an alternative”. They include the Broadcasting Entertainment Cinematograph and Theatre Union, the Musicians’ Union, the National Union of Journalists, Unite the Union, and the Writers’ Guild. I urge all Members to come along to that launch. The report outlines the concerns of the unions, which are representing their staff, about the threat to the BBC itself. It might well fit in with what the hon. Gentleman has said. The unions believe that the freeze in the licence fee for the coming period and the loading on of additional responsibilities mean that some of the BBC’s core activities are being cut, and that the BBC is under threat. Although I do not want to go into the murky past of how that licence fee settlementcame about, I have to say that undue influence was exerted by Rupert Murdoch and Murdoch junior. Their statements at the Mactaggart lecture in 2009 were translated a fortnight later by the Secretary of State in an article in The Sun, but let us not go into that in any depth, because the Leveson inquiry may well demonstrate the undue influence that the Murdoch empire exerted on the eventual settlement of the licence fee.

The implications of that licence fee settlement are that 2,000 jobs will go at the BBC; and that there will be £340 million of extra funding responsibilities for the World Service, S4C, the roll-out of super-fast broadband, local TV and BBC monitoring. In news, 140 jobs are already going. Something that might cheer up the hon. Gentleman is that three “Newsnight” reporters are going as well, but I am not sure which ones; he might wish to suggest a few names. Three Radio 4 news reporters are going, as are 17 posts across Radio 1, and one extra in news services. Twenty-eight posts are going in the newsroom, including nine studio staff. The News Channel is losing a presenter, the radio newsroom is losing two senior broadcast journalists, and six posts are to go in other areas.

Members—including the hon. Member for Suffolk Coastal (Dr Coffey), who has now left her seat—have mentioned the effective lobby that we all undertook on a cross-party basis to try to save as much as we could of local radio, but that only stopped cuts worth some £15 million; others are going ahead. There are plans, too, to axe 31 posts in national TV current affairs. Editions are being cut from Radio 4’s “Law in Action” and “The Report”, while “Beyond Westminster” and “Taking a Stand” are coming to an end. The BBC plans to halve its spending on party conferences and reduce programme presentation from them; six jobs are going at Millbank, along with four posts in live political programmes.

The Asian Network is still under threat. International news coverage will be affected, with a number of sponsored reporters’ posts around the world being closed. Whatever the criticisms of the World Service, many people rely on it as the only accurate journalism accessible to them on a whole range of fronts. Those are the concerns that many people have about the future of the BBC. They add to the other concerns we have about major sports events being lost to paid TV and the threat to the BBC as a major sponsor of creativity, arts and entertainment.

I share the hon. Gentleman’s concern about some of the BBC’s priorities, especially regarding the high pay of some of the staff. I agree that, as has been suggested, the remuneration committee should be populated by representatives of the staff as well as the listening public. In that way, we may well control some of the high salaries.

I congratulate the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) on bringing this matter to the House, and it is good to know that a Member can ask the Backbench Business Committee for a debate one week and have it the next week; that is good news.

Does the hon. Member for Hayes and Harlington (John McDonnell) share the concern of many people inside and outside this House that although BBC executives are, as he said, highly paid, regional programmes—including those on BBC Radio Ulster and on BBC TV in the Province—are being affected detrimentally? One of the downfalls of the current system is that there are fewer people on the ground and less community involvement.

The hon. Gentleman is absolutely spot-on. The hon. Member for Shrewsbury and Atcham said that there are high salaries at the top of the BBC, and low salaries at the bottom and on the front line. That issue must be addressed, and can be through the remuneration committee, which should include staff and listener representatives. That way, pay could be controlled.

The hon. Gentleman said that three members of staff were being made redundant on “Newsnight”. Our understanding is that Mr Paxman earns about £800,000 per annum. If he were prepared to receive a measly £200,000 per annum, we could save those other three jobs.

I look forward to the hon. Gentleman putting that to Mr Paxman in his next interview. Having said that, he makes a valid point about high salaries overall; we all agree on that issue.

However, we are not just talking about BBC salaries internally. What I find amazing is how much is being spent on consultants. The unions have produced their own figures on that subject, and they say that £3 million went to Deloitte’s alone in 2010-11. In fact, £8 million was spent on consultants that year, despite the 20% cuts overall within the BBC. There is a profligacy that must be addressed by management, and it would be best addressed if they take their staff with them in examining these issues.

Some bizarre and wasteful projects have gone ahead. The new Broadcasting House building in central London cost more than £1 billion, and the Public Accounts Committee has criticised the BBC’s flawed digital media initiative, which wasted £26 million. There are real issues that the BBC must address.

At the end of the day, however, the reality is that for every £1 spent on the BBC, another £2 is generated in income right the way across the economy. That is not the case with Sky. For every £1 spent on Sky, only 90p comes back to the rest of the economy; the rest goes out of the country. So, we must recognise the asset that the BBC is and, therefore, the need for continuing investment.

That is why I support the continuation of the licence fee, but the licence fee debate does need to be reopened. There was a fix at the height of the Murdoch influence, during that weekend in October 2010, and there was a lack of transparency, as has been demonstrated by the Culture, Media and Sport Committee’s criticism of that process. If we do not reopen the licence fee debate, my fear is that we will see a gradual erosion of BBC services and that it will lose some of its core functions. In the long term, that could undermine that generation of creativity—particularly in entertainment—that is helping us to rebalance our economy away from an over-reliance on finance and back towards manufacturing, thereby protecting the long-term future of the creative industries.

That is why I would welcome the Secretary of State reopening the dialogue and discussion about the future of the BBC in a creative way, and his engaging today with the unions, whose report is an incredibly constructive contribution to this debate.

Sir Roger, BBC Radio Bristol is excellent.

As chairman of the all-party group on the BBC, I have to say that we are critical friends of the BBC. We believe that it is the best public service broadcaster in the world, and that that is helped by competition from some other excellent broadcasters in the UK. We accept that, as the hon. Member for Hayes and Harlington (John McDonnell) has rightly pointed out, there are a number of areas where the BBC does not get things right. He gave some examples, and others could include the Jonathan Ross affair or, more recently, the dire coverage of the jubilee celebrations, which my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski)—I, too, congratulate him on securing this debate—mentioned.

Generally, however, the BBC is an excellent organisation. It is now enjoying the highest level of customer satisfaction since records began; it is more trusted than ever before; its news service is the most trusted of all news services within the UK; and as the hon. Member for Hayes and Harlington said, it gives very good value for money to the economy of the UK. Not only does the BBC invest £1 billion directly into the creative economy—helping freelancers and small companies, including independent production companies—overall, it brings more than £8 billion into our economy. That means that for every £1 of licence fee, we are getting £2 into the economy. So the BBC is brilliant for the economy, and it is great for cultural activities and sporting activities. Also, let us just think of what is about to happen: the Olympics are about to start and the BBC, as the main broadcaster, will be providing 2,500 hours of coverage. For the first time ever, it will cover every single sport in the games on a variety of different platforms.

My right hon. Friend is right to highlight sport. However, does he recognise the very real concerns that still exist about the coverage of sport below the national level—below competitions such as the premier league, the Guinness premiership and rugby league’s super league? Such coverage will suffer under current proposals.

My hon. Friend is absolutely right. We know that television coverage of any sport can massively increase participation and involvement in it, and far too many of the so-called “minority sports” are not receiving the level of coverage I would like them to receive.

Given that there is very limited time, I want to pick up on a few of the points raised by my hon. Friend the Member for Shrewsbury and Atcham. First, he says that there should be more transparency in terms of executive pay. Frankly, I do not know what he means by that. If he goes to the BBC website, he will be able to find the precise salaries of all the senior executives. Indeed, he will be able to see not only that information but all the expenses of senior executives, produced on a quarterly basis. I am sure he will be very pleased to see that those expenses are down 35% year on year over the last couple of years.

However, if my hon. Friend is not satisfied with that information and wants more than just senior BBC executives’ salaries to be revealed, he can look further down the BBC website, where he will see the salaries of a further 462 senior and not-so-senior BBC managers; I checked the website myself a few seconds ago and saw that information for myself. Again, he will doubtless be pleased to see that the pay bill of those managers has gone down by 13.6% and their number has gone down by 8.5%. Also, as has been referred to by the hon. Member for Hayes and Harlington, further work is ongoing to reduce costs, with a 25% pay bill cut and a 20% cut in headcount. So, the call for more transparency is unnecessary; there already is transparency.

The right hon. Gentleman says that BBC wages are revealed and accessible every year, but in Northern Ireland some are not. Can he say whether there is one rule in one part of the country and one rule elsewhere?

I suggest that the hon. Gentleman go directly to the National Audit Office, which can now look at that information following the coalition agreement to that effect. I am sure that he will be able to check that information with the NAO and the BBC.

Time is very short, so let me turn to the issue of foreign coverage. I am not sure whether my hon. Friend the Member for Shrewsbury and Atcham has had time to pick up a copy of today’s Metro. If he has, he will have seen comments by the man who is, in my view, the greatest writer of TV programmes, Aaron Sorkin, who produced the fabulous “The West Wing”. He said in today’s Metro:

“I was in London during Hurricane Katrina and watched the BBC news coverage. That was the first time I ever…watched news about America at length while away in a foreign country. I could not believe the difference in the coverage compared with US news – it was night and day. The BBC is fantastic”.

Of course, if Mr Sorkin has sleepless nights, as I do, he can always turn on the excellent world news coverage of the brilliant BBC World Service.

My hon. Friend the Member for Shrewsbury and Atcham also raised the issue of the cost of licence fee collection. Of course, we would all like to see it reduced, but during the last 20 years it has been significantly reduced as a cost of income, going down from more than 6% to the current figure of 3.4%. Of course, work is being done to reduce it still further.

My hon. Friend suggested that we should collect the licence fee through the tax system. I understand that the Institute of Economic Affairs has said that it costs £20 billion to collect tax at the moment. If we collected the licence fee through the tax system, presumably he would be standing here in Parliament saying, “Why are we spending extra money on collecting tax? Think what you could do with that money.” Of course, that is an interesting question. However, 3.4% of income is not a bad rate for the collection cost of the licence fee.

Finally, I say to my hon. Friend that the problem with privatisation is that it would end up providing far fewer services and far fewer opportunities to meet minority interests, because commercial organisations will not spend their time on those interests, and the minority sports, for example, would totally lose out. The great benefit of having the BBC is that it can cover those things that other broadcasters will not cover. And with that, I will end.

If that was the right hon. Member for Bath (Mr Foster) being a critical friend, I would hate to see him being sycophantic. I am afraid that the BBC’s uncritical friends do it as much damage as those, such as the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski), who would like to see it privatised and sold off to Mr Murdoch. However, I praise the hon. Member for Shrewsbury and Atcham for having secured the debate.

My vision is very different. I support the licence fee, and I want the BBC to succeed and thrive, because the alternatives do not bear thinking about. I am afraid, however, that the opportunity is given to extreme alternatives because the BBC constantly lets itself down. I only have a few moments to speak, and as the MP who represents White City and Shepherd’s Bush, I am going to be a little parochial and talk about my own experiences, which are somewhat emblematic of how the BBC has lost its way.

A May 2004 press release stated:

“The BBC’s new Media Village at White City in London will be officially opened tomorrow evening…by Jonathan Ross”—

no less. It went on:

“The Media Village development will play a central role in the regeneration of the wider urban area”.

It also stated that there would be five new buildings by distinguished architects, on a 17-acre site, providing 6,000 jobs for 6,000 people.

Three and a half years later, The Daily Telegraph reported:

“The BBC is to sell Television Centre, its headquarters in West London, to help plug the hole in its finances… Property experts say the site, which houses many of the BBC’s senior executives, could sell for more than £300 million.”

The BBC described the decision to sell as

“another milestone in the BBC’s property strategy”,

while Danny Baker called executives behind the decision “soulless crumbs” and “half-wits”. Of the two, my view is slightly closer to Mr Baker’s.

The situation is now much worse. By 2020-21, the entire media village site will also have been vacated, and 7,000 jobs will have gone from my constituency. Why? Because the BBC has failed to see the possibility of retrenchment and the need to cut back on costs. I was told by a prominent insider that the BBC had three gears for growth: fast, faster and tardis. It has built Salford—a soulless project—and the vanity project of Broadcasting House; consequently, the only site it can dispose of is White City, and 60 years of history there will go, through sheer poor planning.

The BBC was at the centre of a vision for the White City area as the media centre for not just this country, but probably Europe. Instead, we will have faceless developments of multi-storey luxury flats for foreign investors. In fact, the future of the first major BBC site, at Wood lane, would have gone before a planning committee tonight were it not for legal challenges by residents that have forced the report to be withdrawn.

The only silver lining might have been if the BBC was making a lot of money out of the disposals, to subsidise programme making and to avoid the sort of staff cuts that my hon. Friend the Member for Hayes and Harlington (John McDonnell) spoke about. The BBC manages such things so badly; it has sold the sites at an undervalue. The proposal for the Wood lane site is what we call the poor man’s Shard—a 35-storey block of luxury flats. I am told that the BBC sold the site at an undervalue, and no doubt—it is in the press—it is also selling its TV centre site at an undervalue, getting a poor deal for licence payers.

I hope that the new director-general will change the BBC’s culture and management. The BBC’s history, certainly during the time that I have represented the area as an MP, has been tragic, in its service to licence fee payers and to my constituents. I wish that I had more time to talk about what I believe to be editorial and managerial mistakes made by the BBC. Three years ago, the BBC thought it was a good idea to bring Britain’s leading fascist to the centre of one of the most multicultural areas of the country, to appear on “Question Time”, and after the invasion of Gaza, it declined to broadcast the Disasters Emergency Committee appeal, despite the thousands of deaths and the destruction of infrastructure.

Those examples reveal deep problems at the heart of how the BBC is run, and the last thing that it wants is for us to say, “Carry on; you’re doing a wonderful job.” I genuinely want the BBC to continue as a leading world broadcaster, but that will not happen without major reform right at the top of the organisation.

This debate is exceptionally important, and I congratulate my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski) on securing it. The BBC is such a prominent news outlet for the public that, if there are issues concerning its performance and quality of reporting, it is appropriate that we discuss them.

There is a great distinction between local TV and radio and national coverage. The local presenters in Cornwall are very efficient, and TV programmes such as the local “Politics Show” and “Spotlight” are always informative, as is Radio Cornwall, which has a large number of listeners throughout the county and beyond, through the iPlayer. Recently, I have had some concerns about the cuts affecting those valuable shows and programmes such as Laurence Reed’s phone-in, which has a big social benefit for many housebound people in Cornwall. I am really pleased that we do not seem to have lost the phone-in. I was disappointed, however, when I heard about an alleged incident involving one of my local BBC radio interviewers and a local councillor last week. The councillor informed me that the interviewer refused an opportunity to interview another councillor with a different view from his preferred story, using the words, “That’s not the angle I want.” I will raise the matter with the local BBC controller, because I understood that BBC reporting, both nationally and locally, was supposed to be unbiased. The fact that the story was angled against the local council causes me concern.

Nationally, there have been some clear instances of exceptionally poor coverage. I have received a lot of letters from constituents about the Thames jubilee flotilla—an issue mentioned by other Members today. The coverage was described as “inane” and “mind-numbingly tedious” by Stephen Fry on Twitter, and an hon. Friend described it as “low-grade celebrity-driven drivel.” My constituents would have preferred presenters with comprehensive maritime knowledge, focusing on the participant vessels, most of which were interesting and had a lot of history attached to them, rather than on the crowds and the celebrities, and I agree with them. Some of my constituents were not able to go to London to see the flotilla for themselves, so they relied on the BBC and ended up frustrated and upset that the coverage was ruined by celebrities who did not understand what they were talking about. A pilot gig from Cornwall, the Ginette, owned by the Tamar and Tavy Gig Club, made the long journey to take part in the flotilla, and the crew deserved recognition for their efforts, as did so many of the other participants.

The BBC licence fee is basically a tax, so why should people pay for such unsatisfactory coverage? The licence fee has not kept up with technology. Shows can now be watched on computers, tablets and phones, and if we plug them in to charge them we could be breaking the law. I believe that the licence fee needs reform. It is an out-of-date tax that gives the BBC an unfair advantage in an incredibly competitive market. I do not believe that a licence fee is wrong, so long as coverage is worth paying for. The BBC needs to improve its coverage of important events. The BBC also needs to be accountable. Will the Minister confirm that we need to consider this out-of-date system and address these issues of great concern to the public?

I congratulate my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski), my immediate neighbour. Our constituencies are close together and we often share campaigns because many services available in my constituency are also available in his. This is another day when we are working together, although not completely in terms of our contributions.

I love the BBC. I love it as I might love an opinionated, aged aunt or an opinionated teenage daughter. I criticise the BBC; watching it, I often share the frustration and anger that hon. Members have discussed. It raises my blood pressure. I have never reached the stage of wanting to see leading BBC staff members’ heads on spikes, but it certainly makes me angry.

However, I never forget how hugely important the BBC is in Wales. My interest in politics is Wales and Welsh issues. The BBC has a huge part to play in Wales, probably bigger than anywhere else in the United Kingdom. It has a special role in the promotion and development of the Welsh language. Since S4C was established in 1982, the BBC has played an incredibly important part in working with S4C. That relationship has changed as a result of recent legislation, and is much closer. S4C has a massive role in the development of the language, and it has been hugely successful. Since its beginning, the BBC has provided 10 hours a week of programming for S4C. It produces “Newyddion” and “Pobol y Cwm”, and they are a fundamental part of what makes Wales.

The BBC also underpins the musical tradition in Wales. It has its own national orchestra of Wales, which gives 50 concerts a year, produces educational projects in which 15,000 people participated last year and broadcasts concerts on Radio 3. It takes Wales out into the world as nothing else does. Wales is a small nation, and the BBC enables us to reach beyond. I know that Welsh Members of Parliament have a reputation for making perhaps more noise than might be justified, bearing in mind our numbers, but the BBC takes us out to the world. It produces “Gavin and Stacey”, “Merlin” and “Sherlock”, all created in Wales, as are “Doctor Who” and “Torchwood”. That is Wales in the world, and it is fantastically important for us.

BBC production underpins the creative sector in Wales. Privatisation has been mentioned, but the BBC underpins a huge part of the private sector creative industry in Wales by commissioning programmes. It is massively important to the sector. We have our own producers who have become world-renowned. Jeremy Paxman has been mentioned in this debate. Hon. Members might try being interviewed by Mr Vaughan Roderick, who knows every bit of information it is possible to acquire for the past 50 years. Anybody as feisty as Felicity Evans will match Jeremy Paxman any day. The BBC in Wales is a hugely important institution.

Of course the BBC makes me angry, as it makes all of us angry. It has inherent biases. I am angry about its bias towards European integration, which I often think underpins a lot of what it does. It has a ridiculous obsession with supporting onshore wind, which makes me so angry sometimes that my television has been in danger of my doing it damage. However, we must remember that even if it has a bias, we know about it. If we buy The Guardian, we know that it will lean to the left. If we buy the Daily Mail, we know that it will lean to the right. I feel comfortable that I know about the prejudices in the BBC.

The message of today’s debate is this. Let us hold the BBC to account, and let us criticise it when we think it should be criticised, but let us never forget that the BBC is a fantastic institution that takes Britain out to the world in a way that nothing else does. It certainly takes Wales out to the rest of the United Kingdom, and to the world as well.

I congratulate my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski) on securing this debate, and I thank right hon. and hon. Members for being brief in order to allow us all to speak. It is much appreciated.

I rise to give an update on the campaign, led by the all-party parliamentary rugby league group and supported by all the other sporting groups in Parliament, to save BBC local radio’s hugely important role in promoting all our sports. The issue goes back to the decision to freeze the licence fee until 2017, and the difficult choices that we all acknowledge the BBC has had to make. The BBC published its proposals for changes in “Delivering quality first”, but it also published proposals for BBC local radio at the same time, which got little coverage and achieved virtually no real understanding even among the major sporting associations. The proposals will mean a loss of local programmes on BBC local radio on weekday afternoons and of all local programming between 7 and 10, which of course means the loss of any sports magazine shows, discussions or programmes about sport, as well as the significant loss of live commentary and a reduction in the number of games covered in all sorts of sports.

If I may be so bold as to correct something said by my right hon. Friend the Member for Bath (Mr Foster), this is absolutely not about minority sports; it is about all sports. BBC local radio does a wonderful job of supporting smaller sports that are not covered anywhere else, but I am talking about this country’s four main team sports: football, cricket, rugby league and rugby union. They would be affected by the proposals. We—those of us who are English, at least—have all bemoaned our disappointing performance in Euro 2012. How can our team not perform better when we have the best league in the world? We must recognise that in order to compete, we need to encourage people at grass-roots level to take up sport in the first place, and that is what is being threatened.

We were delighted to host a meeting on 13 December of all-party sports groups. We got the BBC in front of us and launched a campaign to get members of the public—fans of all the sports—to write to the BBC. I am delighted to say that that campaign received a record response from the public, who then responded to the consultation on local radio. A significant proportion were rugby league fans, but other sports were also represented.

We were delighted when, on 25 January this year, Lord Patten announced that he had indeed listened and instructed the BBC to review his proposals for local radio. He was clear and specific to those making the decision that his instruction arose from the undue effect on sport and local sport. In particular, the BBC Trust asked the BBC to review three key areas: scaling back plans for local radio to share programmes in the afternoon; ensuring that local radio stations have adequately staffed newsrooms; protecting specialist content outside peak times.

The changes were announced on 16 May. We were absolutely delighted that the savings would be £8 million rather than the original £15 million, that the impact on stations’ content had decreased to £2.1 million from £8.5 million and that the majority of staff would retain their own afternoon programmes. However, it remains a key concern that there will be common national output between 7 and 10 o’clock. We ask the BBC to reconsider that proposal, which will continue to damage local sports. We are delighted that the BBC Trust has listened so far, but it must go further. We want to keep working with it. The rugby league group and other groups in Parliament will continue to press the BBC Trust and work with it to face local challenges without creating a detrimental effect on local and grass-roots sport throughout the country.

It is a pleasure to serve under your chairmanship, Sir Roger. I congratulate the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) on securing this important debate at an excellent moment in the history of the BBC, given that it has a new director-general. I hope that the director-general will read this debate and take to heart many of the things that hon. Members have said.

All hon. Members present agree with some of the things that the hon. Gentleman has said. I think we all agree that there is too much pay inequality in the BBC. It is good that the new director-general has agreed to a reduced salary—he will be paid less than his predecessor—but I fear that the issue reflects pay inequalities in the sector in general, which seem to be, if not at banker standards, extremely high. The hon. Gentleman also has a point about aggressive and biased interviewing. I remember reading the transcript of a “Today” programme interview with Jacqui Smith when she was Home Secretary, in which she was not able to complete one single sentence. As the hon. Gentleman has said, that is not illuminating for the listener.

The hon. Gentleman mentioned the possibility of privatisation and further reforms to the licence fee, but I do not believe that that is where the BBC should go. The fact is that most of the television news that people watch in this country—70% of it—is on various BBC channels, and that is because they trust the BBC news. That is a good thing, and the BBC has a good reputation. I will deal with whether it could improve its editorial quality, but its reputation is a positive. I do not think that the Panglossian view expressed by the right hon. Member for Bath (Mr Foster) is totally right. Those are the facts. We do not want the BBC to be less trusted than it is at present.

Although the hon. Member for Shrewsbury and Atcham talked about privatisation, he did not mention what was at one point the Murdoch agenda of breaking up the BBC. There have also been some discussions about whether the BBC should be treated on all fours with the commercial broadcasters when Ofcom reviews the competition rules. The Secretary of State has asked that question and, while it is worth asking it, I want to explain why the answer is that the BBC is different from the commercial broadcasters and should be treated as such.

First, there is the issue of public accountability, a point that the BBC itself made in its submission. It is a valid argument, but perhaps the BBC is not as open as it thinks it is, which has led to some of the frustrations voiced by hon. Members. Secondly, the licence fee gives the BBC a privileged position, so we can expect high standards from it.

What we are really trying to achieve in news and in television coverage in general is greater diversity. One route taken by the BBC—this should be taken into account—is to put out 25% of all production to independent producers, which means that there is internal plurality within the BBC’s programme making.

The really powerful people in television in this country, however, are the commissioning editors, a small number of whom have a huge amount of power over what we watch. They presume to know what the public want, and they measure their success according to ratings, but that is only half the story. I want the views of the public to be taken into account more directly when commissioning. In a recent experiment, Channel 4 asked the public what repeats they wanted to see, but it would be far more interesting if we asked audiences what programmes they would like to be made about subjects that they have not seen any coverage of. I am sure that if we put the same question to listeners of Radio 1 and of Radio 4, they would come up with different ideas, but we should involve the public far more in public commissioning. The hon. Member for Shrewsbury and Atcham might then get the programmes on Mauritania that he would like to see, but perhaps not.

The hon. Lady mentioned the important word “diversity”. Does she agree that the BBC needs to do more to ensure that senior executives are more diverse and that more of them come from more diverse backgrounds and from ethnic minorities? Senior executives are far too white, far too privileged and come from a very small section of society.

Diversity is the exact issue that I want to address. There are various dimensions to diversity. A big survey on how women are used in programming focused on the number of women employed by the BBC and the number of women experts whom it interviews. It found that the number of women used is way below that of men, which is not acceptable, because women also pay the licence fee. We cannot tolerate it.

Does having more men in management result in a better picture on the screen? The new director-general is, of course, a man—as Jack Lemmon was told at the end of “Some Like It Hot”, “Well, nobody’s perfect.”—but I hope that he will continue the process of enabling us to see more women on screen.

My final point on diversity relates to the regions, which many hon. Members have mentioned. With apologies to my hon. Friend the Member for Hammersmith (Mr Slaughter), who made a devastating critique of the BBC’s property portfolio management—he seems to have renamed himself the hon. Member for White City—the BBC is, and is perceived to be, very London-centric. A major effort was made to address that by moving to Salford. The fact is that Salford and London are two places and there are many more places across the entire nation. We want to see programmes that reflect life in many other areas.

For example, it is the Durham miners ‘gala this Saturday. Eighty thousand people will be in Durham listening to speeches at this huge cultural festival, which has been going on for 125 years. I have never seen any national coverage of the miners’ gala. We will get it this year, because the leader of the Opposition, my right hon. Friend the Member for Doncaster North (Edward Miliband), will make a speech, but we should receive the coverage anyway. It should not require that speech for people to see such a major event. The regions and the issue of diversity are extremely important.

I do not disagree with my hon. Friend. Had the BBC not gone to where it did in Salford, it could have gone into Moss Side or into a deprived area, which White City is, of course, although the BBC never engages with the community there. The development in Salford is utterly soulless and completely cut off from the rest of the world. Moreover, what does my hon. Friend think of the Broadcasting House development on one of the most expensive real estate sites in the world?

I have not yet visited the new building. There is more to say about dumbing down and received wisdom, but I am sure that the whole Chamber would like to hear from the Minister, so I will draw my remarks to a close.

It is a great pleasure to serve under your chairmanship, Sir Roger. Given your previous life as a journalist, I am sure that you were itching to participate in the debate, but you have carried out your duties with suitable neutrality and aplomb.

I congratulate my hon. Friend—I mean that—the Member for Shrewsbury and Atcham (Daniel Kawczynski), for whom I have spoken in the past and to whom I am utterly devoted for securing this important debate. Regardless of whether or not I agree with parts of his speech, if it does not win The Spectator speech of the year award at the parliamentarian of the year awards, I will want to know the reason why. I also congratulate the hon. Member for Hayes and Harlington (John McDonnell), my right hon. Friend the Member for Bath (Mr Foster), who spoke with his usual verve, the hon. Member for Hammersmith (Mr Slaughter), my hon. Friends the Members for South East Cornwall (Sheryll Murray), for Montgomeryshire (Glyn Davies), and for Leeds North West (Greg Mulholland), and the Opposition spokesman, the hon. Member for Bishop Auckland (Helen Goodman), on their important contributions. If I may say so, drawing myself up to my full patronising height, very few political points were scored and all hon. Members made their contributions as, I think, critical friends of the BBC.

May I use this opportunity to offer my congratulations to George Entwistle, the new director-general of the BBC, who was appointed last week? I am sure that he will prove to be a fine director-general. I have met him only once, but he seems to have received, from those who live and work in that world, a uniformly good press on his talent and ability to work with people.

May I join my hon. Friend the Minister on congratulating George Entwistle on his appointment as director-general of the BBC? Does he give the same praise to the person who wrote the caption that spelled his name incorrectly on the BBC news?

I gather that that was an inauspicious debut for the new director-general. I join my right hon. Friend in saying that I, too, am a fan of the BBC. I thank my hon. Friend the Member for Montgomeryshire for highlighting additional work the BBC does under the radar. For example, in Wales, the BBC supports the orchestra—an important reminder of its wide-ranging work. When we focus on aspects that we do not like or that merit criticism, we should remember the many wonderful things the BBC does.

I was unfortunate not to see the BBC’s jubilee coverage—I watched the event live—so I cannot comment on its quality, but perhaps I can use this moment to congratulate Lord Sterling, the chairman of the National Maritime Museum, on commissioning Gloriana, the wonderful barge that sailed down the Thames as a tribute to Her Majesty’s diamond jubilee. I recently visited the BBC headquarters in Scotland. It was a useful reminder of the BBC’s important presence in the regions—not just in Scotland or Wales, but in Salford and other cities in England. Of course, I bow to no one in my praise of the excellent quality of the output of BBC Radio Oxford.

I just want to put on record that, although the hon. Member for Hammersmith (Mr Slaughter) has every right to defend, and bemoan the loss of, services in White City, his comment about the media city in Salford was utterly ignorant and nonsensical. I have visited that wonderful complex, and it is linked by a matter of minutes to Manchester city centre and from there to other cities in the north of England.

Forgive me for the use of the vernacular, Sir Roger, but it appears that things are really kicking off now, and we have only seven minutes of the debate left. If the hon. Member for Hammersmith would like to come back on that point, I will of course give way.

Let me deal with some of the issues that were raised, particularly by my hon. Friend the Member for Shrewsbury and Atcham who secured the debate. I do not think that the BBC lacks innovation—one only has to look at iPlayer or the Space. The BBC innovates as much as any other public broadcaster. I do not believe that it pulls back from competing. In fact, most criticism from other media companies about the BBC is that it is too competitive. Nor do I think that the BBC is uncommercial. BBC Worldwide, headed by an excellent chief executive, John Smith, now commands sales of more than £1 billion a year and returns almost £200 million in profit.

The salaries issue is vexed and constantly exercises hon. Members. We should recognise that the new director-general of the BBC will be paid approximately a third less than his predecessor, with the salary reducing from £671,000 to £450,000. That is still a lot of money by anybody’s standards, but we should recognise that he will be running an organisation that employs 22,000 people and has an income of £3.5 billion a year.

Will my hon. Friend the Minister not acknowledge that someone being paid so much in excess of the Prime Minister seems, to the general public, very unrealistic?

I certainly agree with my hon. Friend that some executive salaries cause concern. There is no doubt that they will continue to be debated, but we should also recognise that from a high of approximately £800,000, the salary of the director-general of the BBC has been reduced considerably. As my right hon. Friend the Member for Bath pointed out, details of executive salaries are now available on the BBC website. My personal view is that I would like greater transparency. Talent salaries could be more transparent, and outside interests could be considered for some of the more prominent broadcasters. Viewers have a right to know the additional earnings of people who work for the BBC and whether there is a potential conflict of interest.

The subtext of another perennial issue raised in the debate is that we would all like to run the BBC, so that we could fashion it to our own interests. My hon. Friend the Member for Shrewsbury and Atcham has an interest in foreign news and is concerned that not enough coverage is being given to the impeachment of President Fernando Lugo in Paraguay. That is a view. I would say that the BBC has covered the conflict in Syria and the Arab spring very effectively. I am a devoted fan of “From Our Own Correspondent” on Radio 4 and the web. The hon. Member for Bishop Auckland would like the Durham miners’ gala to be covered; I would like the Olivier theatre awards to be covered. My hon. Friend the Member for Shrewsbury and Atcham would like to see more foreign films. The BBC recently broadcast the film “City of Life and Death”, and we are now devoted fans of Danish and Scandinavian television thanks to broadcasts on the BBC.

The future of the licence fee will no doubt be debated when the renewal of the charter comes up in the next few years. The licence fee is the most effective way to support the BBC and enshrine its independence. The cost of collections has halved, and the income from the licence fee has increased by more than 25%. We have frozen the licence fee, recognising the pressure on hard-working families, and that is, frankly, making the BBC live within its means.

The hon. Member for Hammersmith pointed out some of the concerning decisions the BBC has made in managing its estate. That is an example of the BBC suffering through bad management, not a lack of revenue. Furthermore, we have succeeded, as part of the coalition agreement, in ensuring that the National Audit Office has fairly unfettered access to the BBC’s books. When an issue arises, such as whether the BBC has spent money wisely in managing its estate, it will be possible to have an independent view from the NAO. That is a very important part of the transparency and accountability of the BBC.

My hon. Friend the Member for Shrewsbury and Atcham mentioned IR35 and contractors. I will go back and look at that issue, which comes up time and again. I am particularly concerned about some well-remunerated employees of the BBC being paid through a company. The issue is normally raised with regard to the possibility that appropriate tax is not being paid, rather than the BBC shirking its responsibilities in paying national insurance, but I will consider that in more detail and engage with my hon. Friend if he wishes to pursue the matter further.

I stress the important principle, which I think unites us all in the Chamber, that the BBC is independent, and independent of the Government. It is one of the finest, if not the finest, public service broadcaster in the world, so when we criticise the BBC, it is worth remembering that it is a jewel in this nation’s crown.

Scottish Separation

It is a pleasure to serve under your chairmanship, Sir Roger. I am delighted that I have been able to secure this Westminster Hall debate on a vital issue to the future of Scotland and its people, in view of the pending referendum.

Before I move to the substantive part of my contribution, I should like to say a few words about the referendum campaign so far. I congratulate those responsible on the recent launch of the cross-party Better Together campaign, which will lead the debate on the positive economic and social case for Scotland’s remaining an integral part of the United Kingdom. In stark contrast to the vacuous and celebrity-driven launch a few weeks earlier of the campaign by those who advocate separation, the Better Together launch, ably fronted by my right hon. Friend the Member for Edinburgh South West (Mr Darling), drew on the experiences of real Scots the length and breadth of the country who spoke passionately about why they believe we are stronger within the UK. This grounded campaign is based on hard facts and figures, exploring the many positive benefits of being part of the UK and exposing the deficiencies in the separatist plan to end this highly successful political, social and economic union.

On the other side of the debate, the Scottish National party and the Trotskyist fringe parties had, somewhat predictably, fallen out among themselves even before Alan Cumming had had time to board the plane to return to his New York home. The splits quickly became even wider when the recently appointed head of the so-called yes campaign ruled out a second referendum question on devo-max, an option Alex Salmond and the SNP are desperately clinging to as they face up to the fact that they cannot win the first question. Even the well-respected senior Scottish nationalist, Margo Macdonald, called at the weekend for a single, simple question on separation and criticised the yes campaign for refusing to spell out the details of what independence would mean.

It is a pleasure to serve under your chairmanship, Sir Roger. I congratulate my hon. Friend the Member for Livingston (Graeme Morrice) on securing this vital debate. Can he explain why he believes that a referendum should be based around a single question? What are the problems with multi-option referendums?

I am grateful to my hon. Friend for his intervention. As I continue with my contribution, I will come to that point and develop an argument accordingly.

According to reports yesterday, it now looks like the Greens could soon follow Margo Macdonald’s lead, potentially leaving the SNP in the ludicrous position of being the only party supporting a multi-question referendum on the issue that it has spent its entire existence campaigning for.

The hon. Gentleman is talking nonsense. The SNP position is and always has been that it is in favour of independence. As the First Minister has made clear, if there were a demand from civic Scotland for a second question, it would be considered. To go on about this is nonsensical. Perhaps the hon. Gentleman would like to get to the meat of this debate.

I note the hon. Gentleman’s intervention. I am surprised that, although for its entire existence the raison d’être of the Scottish National party has been independence, it wants to get sidelined on the issue of devo-max or devo-plus, without the questions being defined.

Does the hon. Gentleman agree that, if the SNP truly wanted to get to the meat of the debate on separation, it would press ahead, agree the process—the referendum, the single question—and get on with it? Alex Salmond and the SNP are prevaricating over process.

I could not agree more. I will certainly develop that theme as I progress in my contribution.

Sadly, the other predictable aspect of the campaign so far is the level of vitriol already displayed by the so-called cyber-nats—small-minded people who seem to glory in spewing forth hatred about their opponents on every available website and online forum. The contributions of these people, who often hide behind online anonymity, only serves to harm the debate on Scotland’s future, not to mention our nation’s reputation as a welcoming and tolerant place. Although I am willing to accept that some of these extreme nationalists have nothing officially to do with the SNP or the yes campaign, it would be refreshing if more senior SNP figures condemned and disowned their extremist bile. Any interventions?

Yes, some horrible things are said on Twitter, but there are also, if people want to use such terms, cyber-Brits, who make equally vicious attacks on nationalists. It is terrible that the hon. Gentleman is being so one-sided. This is supposed to be a debate about the economic arguments, but we have heard nothing about that, which is typical of the no campaign so far.

I am coming on to the meat of the debate. The hon. Gentleman doth protest too much.

I shall now move on to the meat of this morning’s debate—the economic consequences of Scottish separation. Some Scots regard the potential economic consequences of breaking away from the UK as neither here nor there. So important to them is the dogma of Scotland going its own way that even if every shred of available evidence demonstrated beyond any doubt whatever that Scotland would be worse off outside the UK, they would still not hesitate to break up Britain. To most Scots, that stance—call it the “Braveheart” factor, or whatever—is simply not credible. Although the debate is and should be about more than economics, there is little doubt that at its crux are the economic consequences of separation. The vast majority of our fellow citizens are interested in what will improve their lives and those of their families and the communities in which they live.

It is hard to deny that, in these turbulent economic times, the size, strength and stability of the UK economy gives Scotland’s businesses a huge advantage over their competitors on the continent and elsewhere. Scotland’s biggest market is the rest of the UK and it has undoubtedly benefited from being an integral part of the world’s oldest and most successful single market. I believe that most people in Scotland already recognise and embrace this. A survey conducted by the Scottish social attitudes survey at the end of last year showed that fewer than one in three Scots back separation, which was roughly the same figure as in 2005. Hon. Members will also have noted the results of the latest opinion poll on separation, conducted by TNS BMRB after both campaign launches, which puts those opposed to separation on 50% and those in favour on just 30%. The latter figure is the lowest received in favour of separation in five years of surveys by the Edinburgh-based pollster and means that in just six months a deficit of nine points for those backing separation has more than doubled. Judging by these figures, even the most ardent nationalist would struggle to argue that the yes campaign had got off to a good start.

Putting opinion polls aside and accepting the premise that, to coin the well-known phrase from American politics, “it’s the economy, stupid” that will determine the outcome of the referendum, let us turn to the available evidence on the key economic questions. Some of the most interesting expert contributions to the debate so far have come from Professor John Kay, a former economic adviser to Alex Salmond. Writing for The Scotsman shortly after the Scottish Parliament elections in May last year, Professor Kay said:

“Independence, if achieved, would bring complications—both political and economic. The reality is that Scotland would gain little by full independence. In the modern world, economic sovereignty for small nations is inescapably limited, and political sovereignty is largely symbolic.”

More recently, while speaking at The Scotsman’s “Economics of Independence” conference, Professor Kay spoke of his belief that Scotland faces five years of economic uncertainty if it opts to separate from the UK.

The potential economic damage ensuing from a long period of transition to a separate Scotland was highlighted at the same conference by oil expert Professor Alex Kemp of Aberdeen university. Professor Kemp said that the complex process of transferring responsibilities from UK Departments to a separatist Scottish Government would involve

“negotiations extending over a considerable time”.

Such fears about the potential impact of a vote for separation, and the instability and uncertainty inflicted on Scotland’s economy, have been voiced by many other academic and business leaders over the past few months. Even one of the SNP’s highest-profile supporters and financial backers, the highly successful businessman Sir Tom Farmer, does not support its separation plans. He stated in a recent BBC interview:

“I’ve never seen or heard anything yet that’s convinced me independence is the right way forward for Scotland. It’s not just about money, but, if it ended up that the country was going to be in dire poverty because of independence, I don’t think anybody wants that.”

For my part, I have drawn on the best available evidence for the likeliest economic impact on Scotland of separating from the UK. I want to focus on three aspects of the economic debate: oil and gas revenues; the share of the UK’s public debt that Scotland would assume if it were to separate from the UK; and a separate currency in Scotland.

Those three vital economic and financial questions were among several highlighted in the excellent Select Committee on Scottish Affairs report on “The Referendum on Separation for Scotland: Unanswered Questions”, published in February this year. I take the opportunity to pay tribute to the Committee’s excellent work. Under the skilled chairmanship of my hon. Friend the Member for Glasgow South West (Mr Davidson), it has embarked on a forensic investigation of the many unanswered questions that hang over the separation debate. My hon. Friend and his colleagues—I see one present today—deserve the thanks of all Members of this House for the detailed and meticulous way in which they are examining so many important points worthy of further detailed consideration, not least the economic matters on which I will now focus.

Of the many unanswered questions, which one gives my hon. Friend the greatest cause for concern?

That question begs the question: many questions give me concern—not least, defence.

I now move on to North sea oil, which has long been regarded by the supporters of separation as the jewel in the crown of a Scotland outwith the UK. The Library standard note on “Scotland’s economy: current situation and issues related to independence”, published in April this year, highlights three key issues when considering this critical question—the division of the UK continental shelf and, therefore, of the oil reserves; future production levels; and the price of oil.

The argument has always been that a separate Scotland should be due the lion’s share of the North sea’s oil, and that the tax revenue from the fields would therefore accrue to Scotland. The suggestion that a separate Scotland would be due most of the North sea’s oilfields, however, is very much open to debate, and most experts agree that nothing concrete could be concluded before the negotiations on separation. Furthermore, the boundary issue aside, the reality is that oil and gas can simply no longer be relied upon in the way that the SNP has always suggested, because of the production and price questions.

Fossil fuels are a declining resource, and the trend of reduced production is now clear. Oil and gas production is falling rapidly; in 2011 it was down by 19% on the previous year, and recent Department of Energy and Climate Change figures show that oil production fell by 13% in the first quarter of this year and gas production by 14%. Future projections suggest that many North sea fields will have ceased production by the 2020s, while the cost of extraction is increasing year on year.

Oil also has a history of price volatility. The Library note shows that it has varied in recent years from a low of nearly $9 a barrel in November 1998 to a peak of almost $150 a barrel in July 2008. The price of oil is closely linked to production, with a low oil price making it less economical to invest in hydrocarbon extraction. In terms of tax revenues from oil, the 2008 Kemp and Stephen paper referenced in the Library note stated:

“It should be stressed that the projections of tax revenues are subject to much uncertainty. Thus oil prices have been very volatile and this should remain the case over the next few years.”

Oil and gas of course remain an important part of the Scottish and UK economies, and will do so for many years, but to bet Scotland’s economic future on the sector is naive at best and foolhardy at worst. Those latest figures highlight the importance of a balanced economy that is not over-reliant on one industry. They also demonstrate one of the many benefits of Scotland being part of the UK economy: we are able to work together in partnership to share the risks and rewards involved in harnessing our energy resources.

My hon. Friend is making an important point on energy. Does he agree that the current support regime for renewable energy is levied on consumers throughout the whole of Britain and, because Scotland is where the resource is, that support goes disproportionately to Scottish generators? Does he realise that about 10% of consumers are in Scotland, but that about 30% of the support goes to generators in Scotland? Is that not another example of us working well together and getting the most benefit from a renewables future?

Why is Scotland, of all countries, incapable of having a regime to support renewable energy? Countries such as Norway, Lithuania and Ireland can all do it. Also, if we are talking about the cost of energy, why does a generator in the north of Scotland have to pay £21.96 to feed into the grid, while a generator in London receives a payment of £13.35? The existing system is hardly fair.

I certainly agree that Scotland is capable of sustaining a renewable energy industry, but we will do better together within the United Kingdom.

I now want to move on to the share of the UK public debt burden that should be assumed by a separate Scotland. That a breakaway Scotland would have to shoulder some of the UK’s public debt is beyond question. What is certainly open to debate, however, is how the debt to be assumed should be calculated and what factors would contribute to those calculations, including the share of the debt accrued through the bank bail-out. Members are aware of a number of recent studies to have explored this critical question.

February’s National Institute of Economic and Social Research report on the economy of a separate Scotland explored the difference between apportioning debt per capita or pro rata, concluding that there is only marginal difference between the two. The report stated:

“With a pro rata transfer of existing UK public debt, Scotland would enter independence heavily indebted with no insurance from fiscal risk sharing or fiscal transfer mechanism with the rest of the UK.”

The Institute of Economic Affairs report published just last month suggested that a separate Scotland could be saddled with an eye-watering £110 billion national debt. The report highlighted that, with the UK’s debt having recently topped £1 trillion and the expectation that it will rise even further by 2015, Scotland’s share could be even greater than £110 billion. The report’s author, Dr Richard Wellings, suggested that that high debt, which would be comparable to Portugal’s at present, coupled with decreasing oil revenues, as already referenced, would almost certainly require urgent cuts to public spending. Even calculating the public debt on the basis of population size, a proposal described as reasonable by a spokesperson for the First Minister, the report made Scotland’s share of the debt around £93 billion—still a significant burden for a small nation—and around three times greater that the Scottish Government’s current budget.

My hon. Friend is making a compelling argument for Scotland staying part of the United Kingdom. Does he think that it is unbelievable arrogance by those who want Scotland to leave the United Kingdom that they have not yet devised a debt target for a separate state? How on earth can the public be informed in a referendum if they deny people that information?

My hon. Friend makes a valid point. The SNP’s argument seems to be predicated on contesting the robust figures provided by the experts in support of Scotland remaining part of the UK. Despite the differences in some of the figures that have been suggested, there is absolutely no doubt that, as the David Hume Institute report that was published in March indicated, the figures reached

“will be determined as much, if not more, by politics as by statistics”.

The undeniable point is that a separate Scotland would have to take on considerable and currently unknown public debt. Regardless of what the exact figure might be in the hypothetical scenario of a yes vote—clearly, we would not know that until negotiations on Scotland’s secession from the UK were complete—that debt, coupled with a relatively volatile tax revenue base, is likely to have a significant effect on future public expenditure, so why take the risk in the first place? Furthermore, a whole raft of additional costs that a separate Scotland would incur in setting up embassies, collecting taxes, creating new institutions to replace those broken up by separation and establishing a welfare system and armed forces, and so on, would add further to that uncertainly.

The currency to be adopted by a separate Scotland is arguably the question on which the SNP and those who advocate separation have undergone most contortions in recent times, and that is saying something. Until recently, most nationalists were strongly in favour of joining the euro, and lukewarm, at best, about the pound. As the influential SNP MEP Alyn Smith said at the party’s 2009 conference:

“We are a Nordic, European country, currently part of a debt-laden sub-prime toxic assent currency…we don’t want to be part of and which is not serving our interests well.”

At the same conference, the Scottish Government Finance Minister, John Swinney, declared that he was in favour of joining the euro, but that the final decision to join should be determined by a referendum. In January 2009, Alex Salmond said:

“I think there is a strong argument for the euro, and I think as sterling declines even further that argument is being made very strongly.”

Now, even they have realised that that is not such a sensible idea, and they have become converts to retaining sterling, although without bothering to have any discussion whatever with the UK Government. That is an astonishingly cavalier approach to such a vital question.

Between the SNP’s enthusiasm for the euro and its recent conversion to keeping the pound, it has debated options for introducing an entirely separate Scots currency. Veteran nationalist, Jim Sillars—a former key ally of Alex Salmond—even proposed last year that a separate Scotland should adopt a Scottish dollar, although I understand that no one from the Scottish Government has written to Barack Obama about it yet.

It is widely accepted that a separate Scottish currency would be a serious disadvantage to business. Although the commitment to a separate Scotland retaining sterling may sound more credible, as the recent article on the high price of separation in The Economist highlighted, it would be a monetary union without fiscal union, which has proved disastrous for the eurozone. It would, of course, be fraught with well documented problems, especially on fiscal responsibility and the lender of last resort, which were highlighted in the Library’s standard note on Scotland’s economy, which I referred to earlier.

Under formal monetary union with the UK, as has been widely highlighted, the Bank of England would continue to form monetary policy for both the remaining UK and the separate Scotland, so removing a key aspect of economic independence from the tools available to a Scotland operating outside the UK. Even if no formal monetary policy was agreed, the Library note states that

“in such a scenario, Scotland’s monetary policy would be determined by the Bank of England which would only be considering the interests of the rest of the UK.”

My hon. Friend is being generous in giving way. Is the situation not even worse? The economic madness of separating fiscal and monetary policy would be detrimental to Scotland’s economy, and a democratic deficit would be created. As Members of Parliament, we can scrutinise what the Chancellor does on defining financial stability and regulating the banking sector. Which of Scotland’s parliamentarians would have democratic accountability in the proposals that Alex Salmond has come up with?

My understanding is that when Gordon Brown—perhaps I should still call him the right hon. Member for Kirkcaldy and Cowdenbeath—was Chancellor, his greatest boast was that he had made the Bank of England independent. How does Scotland have any influence on it at the moment?

In terms of setting interest rates and so on. The Chancellor still has a role in that regard —a role that a separate Scottish Government in an independent Scotland would not have. There would be no accountability, no influence and no say in that, and the UK Government have confirmed that officially.

Whichever way one looks at the matter, the SNP’s policy of retaining the pound sterling as a separate currency for Scotland is a proposal engulfed by uncertainty. At the same time, the SNP insists that a separate Scotland would be entitled to automatic membership of the European Union—a position that is in serious doubt, as highlighted by last year’s well documented Library standard note on “Scotland, independence and the EU”, which states:

“There is no precedent for a devolved part of an EU member state becoming independent and having to determine its membership of the EU as a separate entity, and the question has given rise to widely different views.”

Even assuming good will on both sides of the argument for an independent Scotland trying to renegotiate terms with the EU—I do not believe that there is any reason to assume hostility from other EU member states—the fact is that the EU is not, to put it kindly, the swiftest-moving institution. Is it not likely that even with the best will in the world the new arrangements would take a long time—years—to finalise, yet again leading to the continued uncertainty about which we heard earlier?

I certainly agree with that proposition. Going back to the 1992 general election campaign, I recall that the SNP talked about independence within Europe. I note that it is not banging on about that now.

For the sake of argument, let us assume, although it is unlikely, that a separate Scotland would be permitted to join the EU immediately. We know with some certainty that such a position would require Scotland to commit to joining the euro at some point in the future, taking the nationalists back to the same risky and unpopular position that they have tried desperately to abandon. Again, it seems to be beyond doubt that the unknown risks posed by breaking up Britain are significant and that the uncertainty about which currency the country would use could not possibly be good for business or families in a separate Scotland.

I have tried to focus on a few of the numerous essential economic consequences of separation. I could have looked at many others, including whether the tax base of a separate Scotland could sustain a separate Scottish economy and what personal and business taxation rates would have to be levied, whether the Scottish Government could meet existing UK Government state and public sector pensions commitments, what the impact would be of turning our biggest trading partner into our biggest competitor, what the cost would be to our economy of losing UK Government shipbuilding contracts and what a separate Scottish Government could borrow. I am sure that other Members will want to address those and other questions in the time that remains.

I would like to go back to where I started and the wider debate on this subject. It has been fascinating to watch the twists and turns of the SNP over the past few months. It has demonstrably failed to answer a series of critical questions about the consequences of its plans to separate Scotland from the UK, despite that having been its raison d’être for more than 75 years. Those in the SNP leadership must wonder where they can go next, as they face up to the prospect of support for separation flatlining, no matter how far into the future they push the referendum.

Many in nationalist circles must also be asking themselves how their leaders have managed to squander the considerable political capital that they enjoyed just over one year ago. What remains clear is that the economic dimension to the separation debate is crucial, and there is an absolute responsibility on the UK and Scottish Governments to publish the best available information and projections of the potential economic consequences of breaking up the UK, as debate on that crucial question continues and intensifies. Ultimately, as long as economic evidence continues to show that Scottish families will be better off remaining in the UK, coupled with the wider social, cultural and political strength derived from our interdependence with the rest of the UK, Scotland’s place as an essential part of a strong United Kingdom will be secure for many years to come.

Order. I do not propose to impose a formal time limit on speeches, but I imagine that John Robertson, who will follow me in the Chair, will wish to call the Front-Bench speakers at about five past 12. Five Members have written in advance to express a desire to speak, and I shall call them in this order: Dr Whiteford, Mark Lazarowicz, Mike Weir, Anas Sarwar and Jim Shannon. Other Members may wish to intervene in the knowledge that they are unlikely to get called in the time that we have available.

I am happy to have the opportunity to speak in today’s debate, and I congratulate the hon. Member for Livingston (Graeme Morrice) on bringing such an important issue before the House of Commons.

Before we embark on what the future of Scotland might look like, it is important to reflect on the past. If we do not understand our history, including economic history, we are in danger of becoming victims of it, and there is no way round the fact that over the past 30 years, successive Westminster Governments have let the Scottish economy languish. Our economic growth has lagged well behind that of our neighbours and competitors in the UK, Europe and further afield.

In the three decades before the current financial crisis, growth in Scotland averaged only 2.1%, against 2.7% in other comparable small EU countries, and across the G7 countries. That chronic underperformance has had adverse consequences for generations of people in Scotland, and we must ask ourselves why it has happened. Unless we think that there is something inherently inferior about Scotland or Scottish people, or some inherent weakness in the Scottish economy, we must conclude that such underperformance is a direct consequence of poor political and economic policy decision making, and a systematic failure to address the weaknesses and maximise the strengths of the Scottish economy.

I am interested to hear what the hon. Lady has to say about policy making and political judgments. Does she still support the Scottish Government’s previous position of joining the arc of prosperity with Iceland and Ireland?

The Minister makes an interesting point, and it is important to look at the performance of small nations in the vicinity of Scotland. My constituency in the north-east of Scotland is close to Norway, which I think has outperformed every country in Europe over the past three decades. We should also look at the impact of the recession and at how smaller countries such as Austria, Denmark and Sweden have been more resilient and managed to experience a less deep economic crisis. Even countries such as Iceland that went so far down during the economic crisis have bounced back with much greater dexterity than the UK economy—[Interruption.] The Minister is smiling, but he should be hanging his head in shame at the economic recession that this country is slowly trying to scramble out of. That is a shameful record for a country that has the potential to be prosperous.

I will not give way to the hon. Gentleman just now, but I will later in the debate.

The other key issue connected to the economic languishing of Scotland is the inequality that we have allowed to develop, and the impact that that has had on our society. We live in a United Kingdom in which the top 10% of earners receive about 27% of the income, while the bottom 10% receive just 3%. To my mind, that is not a United Kingdom but a deeply divided kingdom that puts the UK in the top quartile of most unequal countries in the OECD. According to the Institute for Fiscal Studies, inequality has increased by around a third in Great Britain since 1979. In Scotland today, 780,000 people are living in relative poverty—15% of the population. That is way too high; it is causing real hardship and the long-term cost is immense.

I agree with the hon. Lady about the scarring effect that poverty has on the people of Scotland. While on the issue of high pay, will she explain why last week in the Chamber her hon. Friend the Member for Dundee East (Stewart Hosie) was complaining about the potentially burdensome effect that proposals put forward by the Business Secretary could have on large companies in Scotland? It did not sound as if he was much of a friend to the workers.

The Scottish Government have introduced a living wage for all public sector jobs for which they are responsible, and I welcome everybody who supports decent pay for working people. I did not hear my hon. Friend’s speech last week, so I cannot explain its context. I think, however, that we have to tackle inequality, and particularly women’s inequality in the workplace, which has been a long-standing problem in Scotland.

I will not give way just at the moment, although I will in a bit. The problem of inequality is particularly frustrating because, in spite of a period of unprecedented growth in the global economy, the previous UK Government missed a genuine opportunity to deliver a more prosperous and fairer society. It is hard not to reach the conclusion that those opportunities for growth were squandered by an unsustainable boom that had too few beneficiaries.

I am listening intently to the economics of the hon. Lady’s argument. She will be aware that a lot of these things are currently within the gift of the SNP Administration of the Scottish Government. Is she also aware that before 2007, when the Labour-led Scottish Executive were in power for eight years, growth in Scotland was above the UK average? Since 2007, however, growth levels in Scotland have been below average for the UK.

I thank the hon. Gentleman for his intervention, but I am slightly confused. My understanding is that according to almost every indicator—whether unemployment, employment or foreign direct investment—the Scottish economy is outperforming the UK economy. It would behove the hon. Gentleman well not to make too much play of the previous Administration’s record. Even in recent weeks, we have seen the debts that have been stacked up through poor private finance initiative investments. The Labour party took on the mantle of its Tory predecessors, and stacked up £31 billion in PFI debt. The chickens have fairly come home to roost in the past few weeks, and we are seeing NHS trusts starting to go bankrupt. Those choices left us sharply exposed to the worst financial crisis for a generation, and now the present Government’s austerity measures are strangling recovery and pushing more of our citizens below the breadline.

The failure of successive Westminster Governments to make economic policy decisions for Scotland that help our economy grow and resonate with the values of the people of Scotland has convinced me that we need the opportunity to bring decision-making powers home to Scotland so that we can set better priorities and maximise our economic potential.

I welcome the opportunity to make a brief point about the living wage. The hon. Lady has suggested bringing decision making closer to home. Will she explain why the East Ayrshire council SNP administration has yet again refused to pay the living wage to council employees?

I am grateful to the hon. Lady for that intervention. However, across Scotland, the Scottish Government have shown their commitment to living standards through a range of measures including on pay, prescriptions and all kinds of things that Labour could have dealt with when it was in power and chose not to.

There are various myths about Scotland’s economic position, some of which we have already heard this morning. I am glad that we have not heard too much about the biggest myth of all: that Scotland cannot pay its way. That is simply because the evidence just does not stack up. The reality is that the official Government expenditure and revenue figures show that Scotland has a smaller fiscal deficit than the UK as a whole—not just this year or last year but over the past five years. Even when North sea oil revenues fell by 50% in 2009-10, Scotland’s fiscal position remained stronger than that of the UK as a whole. In the most recent figures for 2010-11, Scotland accounted for 9.3% of UK public spending but 9.6% of UK tax revenue. Our 9.6% of UK tax was generated with just 8.4% of the population, which adds up to £1,300 for every man, woman and child in Scotland.

However, despite the relative strength of the public finances, as a result of the financial crisis and the fiscal mismanagement of successive UK Governments, the UK has a legacy of debt—as, indeed, the hon. Member for Livingston pointed out. Scotland will have to deal with that debt, whether we are independent or not. I put it to the hon. Gentleman that if UK public debt was allocated on a per capita basis, for 2010-11—the last year for which figures are available—Scotland’s net debt would be 51% of GDP compared with 60% for the UK as a whole. Let us not pretend that that is good, but it is certainly not as bad as some people might think. We must consider the reality of the current situation without necessarily looking at Scotland in pure isolation.

Scotland’s fiscal position is stronger than that of the UK, and it will remain so if we remain committed to utilising Scotland’s strong economic foundations and asset base to ensure fiscal responsibility. Recent figures published by the Office for National Statistics showed that, in 2010, Scotland was the third richest part of the UK—behind London and the south-east—with a gross value added per head of 99% of the UK average. That is excluding oil and gas output. If Scotland’s geographical share of oil and gas is included—the internationally recognised way to distribute such a resource—the GVA adds up to 115% of the UK average. That makes us approximately the 6th highest in the OECD.

I will not, thanks. I will try to make some progress.

I represent a constituency that is very much at the heart of the energy sector, so the maturation of the oil and gas fields presents economic challenges and opportunities. That is why it is so important for us to continue to invest in renewable energy, carbon capture and energy supply chains. Yet renewable energy producers in Aberdeenshire are paying £21.49 per kilowatt to connect to the grid, while London-based generators are being subsidised by £13.35 per kilowatt. That is a classic example of Westminster policy making undermining our economic potential.

I am very grateful to the hon. Lady for giving way because I know that time is short. On that point, her party’s position is that there should be a postage stamp model in relation to transmission charging. I understand—I see her colleague the hon. Member for Angus (Mr Weir) nodding—that that is still the position. Is she aware of the cost of that to consumers? Ofgem has outlined that it will be £7 billion, which will be put on to consumers’ bills. Does she think that that is acceptable?

The geographical reality with which we are dealing is that much of our renewable energy potential is located on and off the coast of Scotland. We have 10% of wave energy potential, 25% of tidal energy potential and 25% of offshore wind resources. That is a huge legacy across Europe, and we have to make the most of it. At a time when climate change puts pressures on all our energy supplies and when we absolutely have to reduce carbon emissions, that kind of investment has to happen. We must not discriminate against people in the more outlying parts of these islands because that is where such energy can and must be produced.

We absolutely need to capitalise on that opportunity to create jobs and build on our existing research strengths in our world-class universities, which are consistently being assessed as among the top in the world. In the area of science, engineering and technology, relative to our GDP, Scotland is currently No. 1 in the world for research. We also have a worldwide reputation for excellence in medicine and life sciences. We are doing very well at attracting multinational businesses to Scotland, as well as in relation to a growing number of indigenous companies.

I would like to give way to the Minister, but I am not going to because I am conscious that other people want to contribute.

We also have real international competitive advantages and excellence in key sectors such as food and drink—another area that is very important to my constituency—and, despite difficult times for the banking sector, we have a strong and broadly-based financial services industry, where there has recently been some welcome diversification and investment. I see that as a solid foundation for Scotland economically and there is no reason why, with those opportunities, we cannot succeed. Scotland has the assets and the fiscal balances and, with the ability to make independent policy decisions, we would have the tools to grow our economy.

Another myth that has been touched on today is that we would want to abandon sterling. I want to make it absolutely clear that no one is proposing dispensing with sterling. Retaining the pound is in the interests of Scotland, the rest of the UK and the currency itself. A free flow of goods, services, labour and capital is in everyone’s interest, and a sterling zone will provide businesses both in Scotland and in the rest of the UK with the certainty and stability for trade, investment and growth.

There is no doubt that monetary policy underpins price and macro-economic stability, but it is a blunt tool for tackling Scotland’s other economic challenges. It will not address youth unemployment; it will not directly lead to investment in infrastructure or promote innovation; it will not boost skills, target overseas investment or promote investment in key sectors; and, to come back to the point I made at the start, it will not integrate our tax, health, education and benefit systems to maximise economic opportunity and tackle inequality. That is why I believe we need to be independent and to have real policy-making powers in Scotland.

I will not, thank you.

Frankly, the Scottish Parliament would do a better job of welfare reform than the UK Government, who seem intent on vilifying people who do not have a lot of money. Instead, we could develop a more workable system. The Scottish Parliament is already doing a better job on health, and we are not going down the road towards privatisation. In addition, we are doing a better job on education, and we are not charging students £9,000 a year to complete their studies in higher education. The current levers open to the Scottish Parliament do not go nearly far enough to realise our economic potential.

The hon. Lady is clearly very passionate about the case for independence. I just have a brief question. Did she make a submission to the Scottish Government’s consultation and, in her submission, did she ask for one question or for two?

I do not want to go down the road of discussing the referendum, but I have always been very clear that I want one question on the ballot paper. I am happy to have that debate, but I am also listening. It is very sad that politicians are not listening to what people who are not involved in political parties are saying about this. Many of them are contributing and we have seen some very interesting ideas and good proposals from a diverse range of sources. It would be good if all of us listened to what people in civil society are saying to us. I am very clear about where I stand on the issue: I want Scotland to have the powers of an independent country, and I will argue vociferously for that. I do not see what is complicated.

I would like Scotland to have the power to make better tax policies. I would like us to have capital borrowing powers, so that we can make the investments in our infrastructure that we so badly need. I would like us to be able to build the houses and the roads we so badly need. I would like us to have the ability to incentivise the development of new technologies in renewable energy and the low carbon, life science, small business and tourism sectors. Those are the places where our economic growth will come from. If we were putting the investment into those sectors, it would have a huge impact on our economy.

If we had influence over the Crown Estate, which manages our seabed out to 12 miles and almost half our foreshore, we would be in a much stronger position to co-ordinate the efforts of manufacturers, the energy sector and regulation and planning to deliver the full benefits of the marine renewables energy revolution for Scotland.

Being independent would also enable us to boost our international profile. It would help us to contribute to key decision making in Europe and beyond and it would give us powers to boost our connectivity and linkages with our key trading partners. At a time when the emerging economies are growing so fast, it is crucial that we have an opportunity to connect with them directly and more effectively than we are able to do at the moment.

All these things give us a chance to tackle inequality. I just point to the apprenticeship scheme—25,000 young Scots will get an apprenticeship this year alone. By creating training opportunities, bringing people into the work force and retaining their skills, frankly, we can save the welfare state millions of pounds in unpaid benefits. If we had a joined-up system, with co-ordination between economic, education and welfare policies, those savings could be reinvested better than they are at the moment and used to boost economic activity.

I envisage Scotland thriving and prospering, but right now I am watching an austerity agenda running out of control while the UK economy stagnates. I believe that Scotland can do better and has the opportunity to do better. That is why I want the Scottish Parliament to have the levers of independent governance at its disposal. That does not mean that there will not be hard decisions to make, but it does mean taking responsibility for improving life in Scotland and building a vibrant and resilient economy that supports our people and reflects our values.

Order. In view of the time, I am revising the schedule. I am sorry, Mr Lazarowicz, but Mr Shannon has been in the Chamber since 9.30 this morning, so I will call Mr Shannon next; you may find this strange. I will then call Mr Lazarowicz—Mr Robertson has arrived in the Chamber and will take the Chair—then Mr Sarwar and, if there is any time left, Mr Weir. I call Jim Shannon.

Thank you for bringing me forward in the schedule, Sir Roger. I hope that hon. Members understand the reason for that. I appreciate it very much.

First, I congratulate the hon. Member for Livingston (Graeme Morrice) on bringing this matter to the Chamber today. It is not often that I disagree with my Scottish National party colleagues. We agree on many issues, mostly bread-and-butter issues, on which we strive together to make life for all our constituents better. However, I cannot agree with them when it comes to Scottish independence and I certainly want to place that on the record.

We all know the film “Braveheart”. It is well known to everyone. It is a wonderful film, one that I have watched on numerous occasions and, if I am spared, I will certainly watch again. The star of the show is that well-known Scotsman, Mel Gibson. In that film, the English are killing the natives, abusing the womenfolk and stealing the land—there is total destruction.

[John Robertson in the Chair]

If that were really the case, Mr Robertson, I would be the first person to jump to the aid of my Scottish National party colleagues to support them, but it is not. It is only a film; it is only make-believe. The reality is very different. Today we are strengthened by the Union. We all bring our talent, our culture and our history to the UK. Scotland, Wales and my own Northern Ireland contribute to the United Kingdom. We make it stronger by being part of it because we bring to it all the talents that we have. We have extensive relations with all regions. Personally, I am descended from the Stewarts of the lowlands of Scotland. My history is intertwined with the Scottish nation and family. That is something I am tremendously proud of and that I state regularly at the many occasions I speak at.

I believe that, economically, Scotland will be poorer after independence. It may have to increase taxes. Although the hon. Member for Banff and Buchan (Dr Whiteford) said that the decision had already been made in relation to sterling, I think that many of us feel that if it has been made, it has been made only recently. It will have to increase taxes, slash spending or increase borrowing after independence. What will happen to the Ministry of Defence bases in Scotland? Other hon. Members have mentioned that. What about nuclear power? Many decisions will have to be made.

The CBI director general stated that, post independence, Scotland would immediately have to face a large budget deficit, potentially bigger proportionally than the UK’s. The stability of Scotland’s economy is uncertain because of potential or possible independence. Banks have not universally or wholeheartedly expressed support. There is uncertainty. A question mark hangs over the issue. There are problems in the Scottish economy. Everyone in the United Kingdom has problems in relation to the economy, but Scotland has its problems. Independence will not lift it out of that; indeed, everything points to just the opposite.

The hon. Lady mentioned the territorial waters, and I would like to draw the House’s attention an issue in this regard. I represent Portavogie, where the Northern Ireland fishing fleets are very strong. They work together with the Scottish fleets and fish together. Will independence strengthen that or will there inevitably be battles over fishing rights and territorial waters? I want to see the strength within the Union continue, and equality of opportunity for Northern Ireland fishing fleets and Scottish fishing fleets, and for Welsh and English ones as well. I believe that North sea oil, while it is off the coast of Scotland, is my North sea oil in the same way as it is everyone else’s within the United Kingdom. That is the fact of the matter. Many would be of that opinion.

I do not believe that there is a clamour for independence. I make it my business to speak to every Scottish person I meet. I am a member of the Orange Institution. I make it my business to talk to the people who are in the Orange Order, and they tell me that they want to stay within the United Kingdom. Those outside the Orange Institution whom I speak to tell me that they want to stay within the United Kingdom, as well. As a Northern Ireland MP and a Democratic Unionist, I am committed to the Union for all of the UK—for Wales, for Northern Ireland, for England and for Scotland together, because together we are strong. If we divide, we are weak. I say to my Scottish National party colleagues, whom I am very fond of, that I cannot support them and will never support them when it comes to independence for Scotland.

I will keep my remarks as brief as possible, given the number of hon. Members who want to speak. The hon. Member for Banff and Buchan (Dr Whiteford) gave a comprehensive presentation of the SNP case for independence, but what struck me about it was something we increasingly see in the SNP arguments for independence: that on the one hand, independence is needed because it would make Scotland a better place; but on the other, independence would not change much, either. That is an inherent contradiction that we increasingly see in the SNP policy, precisely because there is a realisation that separation—full independence—is not attracting popular support, so the SNP and those supporting independence are trying to move back from it.

It is not just on economic issues that we have seen that. There is the famous quote, which I think is from the First Minister:

“on independence day…the Queen will be our Head of State, the pound will be our currency and you will still be watching your favourite programmes on the BBC.”

That is an example of how the argument is made that nothing much would change. Of course, on economic policy, fiscal policy and monetary policy, we see that even more.

Does my hon. Friend agree that it is very strange that the First Minister came down to London about a month ago to address the Institute of Directors and intimated to it, but not to the Scottish Parliament, that he intended to align income tax rates, after separation, with those in the rest of the UK? We must ask—why bother?

Indeed. That takes us to a point that I intended to deal with later but will deal with now. We are referring, with respect, to the arguments advanced by the hon. Member for Banff and Buchan, who is from the SNP. She seemed to be arguing at one point that Scotland would have a different approach to taxation and redistribution policy, suggesting, presumably, that it would be a higher-tax, higher-spending type of country. On the other hand, the First Minister is saying, as my hon. Friend the Member for Glasgow North (Ann McKechin) pointed out, that income tax in an independent Scotland would be the same as in the rest of the UK. Of course, for the past six years, the SNP Government could have used the existing powers, if they had wanted to, to increase tax in Scotland and increase public spending, but they have not. The SNP is apparently in favour of a lower corporation tax rate in Scotland, yet it tells us that it would maintain the free movement of labour, services and capital throughout the UK. If that is the case, it is difficult to visualise Scotland having a separate corporation tax rate.

The issue of sterling has been—

With respect, I had better not, given the time.

The issue of sterling was raised. As we were reminded in an intervention, the Bank of England and monetary policy were of course made independent of politicians by the decision of a Labour Chancellor. However, the SNP Government have said that they want to see a seat for Scotland on the Monetary Policy Committee of the Bank of England. They are trying to have it every which way. There are many areas in which we see that type of contradiction. An important one is, of course, the suggestion that the Bank of England would continue to regulate the financial services industry, even in an independent Scotland. That is incredibly important. The financial services sector is important in Scotland, particularly in my constituency and the constituencies of many other hon. Members.

Decisions such as how banks can advertise financial products and the requirements to maintain stability in terms of their capital base would be regulated by an institution in another country, over which we would have no say if we were a separate, independent state. That leaves aside the question, raised by Scottish Financial Enterprise, of whether it would be legal under EU rules to leave the regulation of our financial services sector to a foreign—as it would then be—country.

We have heard those in the SNP say that they do not want regional pay rates for the civil service, but the biggest regional pay difference across the UK would be if we were a separate country and the rates were negotiated on, presumably, a Scottish basis only. We see contradictions in many areas. Because the SNP recognises that voters and the public do not want full separation, it wants what some describe as independence-lite, but I describe as separation with a major democratic deficit, as my hon. Friend the Member for Glasgow North East (Mr Bain) pointed out.

At best, the new Scottish Government could seek to negotiate with the Government of the remaining UK to have input on matters that affect Scotland’s interests, but they could not do that as a right, and would have to rely on the good will of a new UK Government. There is no reason why there would necessarily be ill will between the two successor states if Scotland separated; but obviously, a UK Government who no longer had Scotland as part of their state would have different interests and perspectives from one that still included Scotland. Scotland has MPs, Ministers and a voice in Parliament, where Ministers and the Chancellor can be held to account—for example, for actions in relation to the Bank of England. All of that will disappear after the separation of an independent Scotland.

It seems to be the worst of all possible worlds—a democratic deficit of no interest to Scotland, with no benefit to Scotland. Let us build on what we have with devolution, as expanded under the Scotland Act 2012 and current proposals, and improve it where we can. Let us get down to using the existing powers and not spend the next few years coming up with a new constitutional arrangement which, at the end of the day, will not even be independence in the full sense of the word, but, given the SNP arguments, will fall well short of it. It would be no good for Scotland or the UK.

I intend to call the Front Benchers at six minutes past 12. I have two names here, so, gentlemen, sort it out.

It is a pleasure to serve under your chairmanship, Mr Robertson. Having known you through Glasgow politics, I will be very strict with my time; I do not want to incur your wrath. I congratulate my hon. Friend the Member for Livingston (Graeme Morrice) on securing the debate. The discussion today shows the passion and energy in the debate. I will take this opportunity to get to the facts of what Scotland would look like if it was a separate country.

I want to make a few quick points at the outset. The referendum is not about whether we think Scotland can survive; of course Scotland can survive as an independent country. It insults the intelligence of the Scottish people to suggest that it could not survive as an independent country. The choice on the ballot paper is not one of survival; it is whether we believe that Scotland is a fairer, more prosperous place as part of the UK or as a separate country. I believe the second, which is why I will make a positive case for Scotland remaining within the UK.

Scotland has played a key role in the success that is the UK. We have 300 years of shared history, security and prosperity. A Scot was the founder of the Bank of England, a Welshman created our national health service and an Englishman created our welfare state. Those are things of which we should be collectively proud, and that is why, in the run-up to the referendum, we will make the emotional, political, social and economic case for Scotland remaining part of the UK.

I want to touch on one point about the positive-negative case. It is often said that those who support the UK are negative about Scotland and those who support separation are positive about it. I argue the opposite. The people of Scotland are talented enough, creative enough, ambitious enough and innovative enough to be successful in the UK. It is for the separatists to tell us why they think that Scots are not.

We heard from the hon. Member for Banff and Buchan (Dr Whiteford), the successor to Alex Salmond, that a single-question referendum is her preference, so let us stop the games and get on with the substantive arguments. Another SNP Member is here, the hon. Member for Angus (Mr Weir), and I am willing to take an intervention if he can tell us whether, if he put in a submission to the Scottish Government’s consultation, it was for one question or two. I am happy to take an intervention if he wishes.

I thank the hon. Gentleman, but if he had listened when I intervened on the hon. Member for Livingston (Graeme Morrice) he would have heard that my preference was for one question.

There we have it: two SNP MPs saying that they have put in submissions, both saying that they would prefer one question. Perhaps they could get on the phone to their leader and pass on the message that he should stop being so feart and just get on with the referendum and let Scots make the choice.

I have one minute on the substantives of the economic debate, so I will be very quick. I genuinely believe that Scotland’s influence is greater as a permanent member of the United Nations Security Council and NATO, not for prestige, but to fight tyranny and repression around the world. We benefit from membership of the G8, where a Scottish leader, as Prime Minister of the UK, tackled the global economic crisis to stop a recession becoming a depression.

Scotland’s compassion is better demonstrated by being a partner in the Department for International Development, which is headquartered in Scotland, employing 490 people, with a budget of £7 billion. What would happen to those jobs if we were a separate country? We benefit from shared infrastructure, defence and foreign affairs, as does shipbuilding on the Clyde and jobs. We would not be in that position if we were a separate country.

We benefit from sharing the risks and rewards. We saw the collective strength of the UK in bailing out Scotland’s banks. Would that have been possible if we were a separate country? We benefit from the fact that we are a larger single market—our current biggest business partner is England. If we became a separate country, it would become our biggest competitor. We also benefit from being part of the strongest monetary union in history. Leaving would mean that we would have to have our own currency, join a weaker euro or leave a foreign country to set our interest rates and our borrowing and spending limits.

I could go on and on, but I see you, Mr Robertson, nodding at me to finish. Let us end the games about what a referendum will look like and get on with the big choice and have the debate. After the referendum, let us get on with making Scotland a fairer and more prosperous place.

It is a pleasure to serve under your chairmanship once again, Mr Robertson. I congratulate my hon. Friend the Member for Livingston (Graeme Morrice) on securing this important and timely debate, coming as it does in the week when support for separating Scotland from the rest of the UK has fallen to as few as three in 10 people.

I will give way to the hon. Gentleman a little later; I want to make progress first.

I commend my hon. Friend the Member for Livingston and other hon. Members who have participated this morning in helping to ensure that the discussion on Scotland’s constitutional and economic future is informative and comprehensive, as we head towards what the Scottish people want—a clear, decisive, legal, single-question referendum on whether to stay within the United Kingdom or leave for good.

There are three points that the debate this morning has crystallised in the minds of hon. Members and those we represent. At a time of economic uncertainty in the eurozone, with economic demand predicted to fall this year and 16 million people out of work, it would be an act of folly to separate fiscal, monetary and financial policy in the way that Scottish National party members have proposed. Both the eurozone and our economies are faced with a classic liquidity trap. Keynes was very clear that fiscal, monetary and financial policy must not work against one another in such circumstances. We in the Opposition have huge concerns about how the Government are avoiding any flexibility on fiscal policy to stimulate demand and kick-start growth at home. It is a failure of policy, not a failure of the state of which we are an integral part.

The overwhelming evidence from respected economic commentators, such as Martin Wolf and John Kay in evidence to the Select Committee on Scottish Affairs, is clear and unambiguous: separation would lead to higher borrowing costs for a separate Scotland. Even under the SNP’s purported split of oil and gas revenues, with 90% being apportioned to a separate Scotland—not the universally accepted position under international law—the national debt inherited by a separate Scotland would be 70% of GDP.

On a per capita split of oil and gas revenues, debt would rise to 80% of GDP by 2014. On the deficit, even using the SNP’s preferred measure, including a geographical split of oil and gas revenues, the average deficit would have been 4% over the past five years. Three leading credit agencies have indicated that Scotland would not inherit the UK’s credit rating on separation, which would increase borrowing costs.

The First Minister says that, with the oil and gas revenues, Scotland would be the sixth richest country in the world, but to achieve that the great centraliser would have to become the great nationaliser, and there is no prospect of even the present First Minister expropriating the assets of overseas oil and gas companies to which he is in such thrall.

Is my hon. Friend aware of what was said at the meeting of the UK oil and gas industry group a few days ago—that it is likely that the gas price, because the US is about to go into surplus in gas and the price is falling, may be set in the North sea area at a much lower level than now, which would undermine the revenues coming from the North sea to any future Government of the UK or Scotland?

Indeed, that is a powerful point. This year’s report by the National Institute of Economic and Social Research concluded that Scotland would be a significantly indebted nation on separation, with a substantial trade deficit, no insurance from risk sharing and no further fiscal transfers, which would leave us over-dependent on those very fluctuating oil and gas revenues. The strain would have to be put on borrowing or tax hikes to fund current spending.

As the economist, Brian Ashcroft, pointed out recently, the only tools available to a separate Scotland to manage aggregate demand would be of the limited fiscal variety remaining under the terms of a currency union treaty with the United Kingdom; so if inflation took off, there would have to be tax rises, a fall in public spending, or a combination of the two—hardly a recipe for economic stability or social fairness.

Those campaigning for separation never tell us what the size or role of the state would be in a post-separation world. They are keen to promise voters everything from higher benefits and pensions to lower taxes, but never with any viable fiscal prospectus to underpin such aspirations. Their ambition is to have Irish levels of taxation, but Scandinavian-style public services. That is a cruel deception to sell to the electorate, and that fatal flaw in the argument has contributed to the fall in support for separation in recent months.

I will make this point and then give way to the hon. Gentleman.

Without a central bank to print money and control the money supply, a separate Scotland would find itself with higher long-term borrowing rates and higher interest payments on Government debt, whether with the Bank of England as lender of last resort or even with a less structured relationship with sterling. Those problems with rising costs of borrowing would manifestly worsen if oil and gas revenues continued to fluctuate as predicted. Martin Wolf wrote in the Financial Times on 19 January about the higher borrowing costs that a separate Scotland would face:

“It would need to lower its debts quite rapidly. This would require even greater austerity than in the UK as a whole. Given its close ties to the rest of the UK, Scotland could not get away with taxing corporations or skilled people more heavily than its neighbour. So the bulk of this extra austerity would surely fall on public spending.”

The First Minister came to London a few months ago and, as my hon. Friend the Member for Glasgow North (Ann McKechin) said, boasted to the Institute of Directors that he would always align income tax rates in a separate Scotland with those of the United Kingdom. He now says that his key fiscal policy would be to cut corporation tax to 20%. However, the Institute for Fiscal Studies said in its green budget report this year that increasing corporate tax competition between the nations of the UK would increase business compliance costs and lead to a race to the bottom on tax rates and revenues collected. The Scottish Government’s own figures reveal that lowering corporation tax by just 1% results in a loss of revenue for the Scottish taxpayer of between £67 million and £83 million a year. So the First Minister is prepared to throw away up to £166 million of taxpayers’ money a year on a punt that Laffer curve economics works, when the evidence from the United States is that it fails every test of economic fairness.

Whatever happened to that young radical who interrupted a Tory Budget in 1988 to protest against the reduction in the top rate of tax by Lord Lawson? Whatever happened to his dream of a land of bountiful plenty with freedom from London rule? He wants London to regulate Scotland’s banks, insurance, mortgages and pensions, and to set Scotland’s interest rates—with no reference to the needs of our economy—and income tax rates. We are told that Scotland would have equality in the world, but that is instead a manifesto for complete economic instability.

With business investment slumping, the construction sector on its knees, infrastructure crumbling and our green jobs sector without the capital that it needs, how on earth can the First Minister believe that Scotland’s future lies in lining the pockets of the banks and big business, by promoting a fiscal climate that would encourage short-term profit taking instead of long-term investment? If he cannot identify crony capitalism as being as much a part of the problem in Scotland’s economy as it has been in the rest of the UK, no wonder he can never be part of the solution.

As my hon. Friend the Member for Livingston has said, having to join the euro would also damage Scotland’s economy. The evidence from most credible experts is clear: if Scotland were to be admitted to the EU as a new state, having left the United Kingdom, it would have to make an in-principle commitment to membership of the euro. That would mean compliance with the Maastricht convergence criteria, with further spending reductions to follow. The destination would be clear, and it would be bad for job creation and growth in Scotland.

At a time of uncertain economic prospects in the UK, we need strong fiscal and monetary union to support job creation and diversification of the Scottish economy. Scotland Office figures from January 2010 show that net fiscal transfers from the UK to Scotland over the two decades to 2008 were of the order of £75.8 billion, and, even factoring in every penny from oil and gas revenues, there was a net transfer of £30 billion over the same period.

We need a central bank that can fully support the Scottish economy, without ifs or buts. The best means of securing that is by maintaining the fiscal and monetary union that has been successful within the United Kingdom for three centuries. Some nationalists claim co-ownership of the Bank of England, even in the event of separation, and the Finance Secretary laughably even claimed to have the right to appoint a member to the Monetary Policy Committee, but that is the politics of denial. In quitting the United Kingdom’s fiscal and monetary union, Scotland would also abandon the unconditional guarantees provided to it by that financial system, including the Bank of England’s role in ensuring macro-economic stability for Scotland.

Paying another state to set interest rates and prop up part of the banking system, without a collective institution that could be held democratically accountable by Scotland’s elected representatives, would be the worst of all worlds. Scotland’s parliamentarians would not be able directly to scrutinise or influence the Chancellor’s decision on the fiscal mandate or the definition of financial stability under the Financial Services Bill, which is vital in the precise remit that the Financial Conduct Authority will have in relation to our financial system. We would lose the potential to influence the Chancellor’s decisions on income tax, even though the First Minister has said that he would always follow them. There would be no influence over major macro-economic issues such as the Bank of England’s inflation target, set by the Chancellor in consultation with the Governor.

Labour Members consider it clear that Scotland benefits from fiscal, welfare, monetary and financial union with the rest of the UK. When other countries across Europe are bringing down obstacles to co-operation, it would be absurd for us to erect new barriers at home. We would survive as a separate state, but our ambitions should be higher than that for the people of Scotland. If we are to thrive and prosper, strong devolution within the United Kingdom, while meeting the current huge economic challenges together, is the best solution. I hope that the Minister will reflect the message that we have heard this morning and increasingly from the Scottish people about their future: we are far weaker as separate states, and far better together.

As always, it is a pleasure to serve under your chairmanship, Mr Robertson. I congratulate the hon. Member for Livingston (Graeme Morrice) on securing this debate on the economic consequences of Scottish separation, and on his detailed and positive case for why Scotland would be better off remaining part of the United Kingdom. I also want to thank all hon. Members who took part in the debate, including the hon. Member for Strangford (Jim Shannon) who set out the positive Unionist case and talked about the support for Scotland staying within the United Kingdom that comes from other parts of the United Kingdom.

The hon. Member for Edinburgh North and Leith (Mark Lazarowicz) identified the increasingly perplexing issue of the separatists arguing on the one hand that everything would be different in a new Scotland, and, on the other, that everything would be the same—if we are in any way worried about any particular aspect of separation.

The hon. Member for Glasgow Central (Anas Sarwar) gave his usual erudite exposition of the issues, and was commendably brief. The nub of the matter is that we must get on with the debate about whether or not Scotland should remain a part of the United Kingdom, and about what would be better for Scotland.

The hon. Member for Glasgow North East (Mr Bain) made a persuasive case for Scotland remaining part of the United Kingdom. I will not repeat his points; suffice it to say that—other than his criticism of the Government—I agreed with everything he said.

The contribution of the hon. Member for Banff and Buchan (Dr Whiteford) was brave because she mentioned independence—something that, as I understand it, is not encouraged nowadays in the Scottish National party. Then both she and the hon. Member for Angus (Mr Weir) went on to say that they supported a single-question referendum. I am glad that they said that here in this debate.

I cannot understand both Unionist parties’ obsession with that issue. The SNP has made it clear that it is in favour of a single question. It is for others to put forward an argument for a second question.

The hon. Gentleman must convey that message to Mr Salmond. If Mr Salmond is in agreement with members of the Scottish National party, he has the opportunity to proceed now with a single-question referendum. It is he who is prevaricating on the issue of the referendum, and not this Government, who have offered to facilitate the SNP manifesto commitment to a single-question independence referendum.

The Minister is missing the point completely. The referendum is for the Scottish people. There has been a consultation, of which we are awaiting the results, as to whether or not there is demand for a second question. It is about not the First Minister driving that demand but whether there is demand from the Scottish people.

I tend to agree with the editorial of the Daily Record, which often, in my experience, reflects the views of the Scottish people. It has described Mr Salmond’s current tactics as a

“desperate-looking ploy that has left Salmond isolated and open to public ridicule.”

That is the case. Although separation is the Scottish Government’s policy and not ours, we have made it clear that, as a Government, we are prepared to facilitate a legal, fair and decisive referendum to settle this issue.

I am sure that many people will make that analysis. The UK Government referendum consultation showed a strong majority in favour of a single question and robust reasons why that should be the case. Seventy-five per cent of respondents agreed with the UK Government that a single question would ensure a decisive outcome. The support for a single question is clear and growing, and today’s Scottish papers—if the SNP takes any notice of them—confirm that.

All three pro-UK parties have made it clear that they support a single-question referendum. Even the SNP officially support a single question. Both campaigns in Scotland are in favour of a single question. Margo MacDonald and the Greens have now joined the call for a single question on independence. The coalition Government are offering the Scottish Government the opportunity to deliver a legal referendum by giving them the legal power that they do not currently hold. We are offering to deliver the SNP’s manifesto commitment.

The SNP won a majority at the 2011 Scottish Parliament election on the basis of a manifesto commitment to an independence referendum, not to further devolution, and it is on that single question that it can claim to have a mandate. Independence is of course the founding principle of the SNP; this is its big chance to hold the referendum that it has pledged to hold in successive manifestos. If the SNP now does a U-turn and demands a second question on the ballot paper, it will be an up-front admission of defeat and an acknowledgement that the First Minister believes that he cannot win a single-question referendum on separation.

The hon. Member for Angus probably let the cat out of the bag when he talked about the Scottish Government’s and SNP’s consultation. When the results of that are analysed, does the Minister think it would be interesting and useful to see how many contributions asking for a second question came after the May local government elections, and how many came from SNP councillors and SNP members on a standard format?

That will indeed be an interesting analysis. It is quite clear that the SNP and the First Minister are prevaricating on the question of the referendum. We have been calling for talks with the First Minister to be resumed so that Scotland’s two Governments can work together to deliver a legal, fair and decisive referendum. We need to get the referendum process agreed as soon as possible, so that we can get on to the real debate about Scotland’s future and whether Scotland should remain part of the UK.

Did any SNP parliamentarians, or the SNP itself, put in a submission to the UK Government’s consultation, and if so, did they ask for one question or two?

The SNP did make a submission to the UK Government consultation and we welcomed it. As SNP members have stated, the SNP’s position is to have a single-question referendum. The Daily Record editorial today said:

“Salmond should stop playing games and start campaigning on the issues if he still believes he has a chance of realising his lifelong dream of independence. We need a proper decision as soon as possible. Then Scotland’s leaders can get back to more pressing matters”,

such as the economy, employment and education. That is the UK Government’s position.

In stark contrast with the Scottish Government, we are committed to getting the referendum process agreed and to getting on with the real debate. We have announced a programme of work that will set out in the period leading up to the referendum the benefits of remaining part of the United Kingdom. I am convinced, as are many Members here, that we will convince the people of Scotland that we are better together as part of the United Kingdom.

Community Banks

The case for local community banking and the break-up of the Royal Bank of Scotland to create a series of local banks has never been stronger. Since the global financial crash, the merits of a vibrant system of local banks have become apparent; it is the issue of our time. We need to look at finding new ways to unlock the finance that households and small businesses need. We need new local banks that will promote competition, reinvigorate community lending, improve the finances of small and medium-sized enterprises, and encourage local saving. They would work on the principle of using local credit to support manufacturing and start-ups, and they would not leave the disadvantaged at the mercy of loan sharks and money changers.

Local banking works. We should bear it in mind that 70% of German lending to SMEs is via local banks. And we wonder why the German economy is doing better than ours. The experience of other countries that have a thriving local banking sector—countries such as Germany, the US and Switzerland—has demonstrated that smaller, locally focused institutions are the ones that provide economic resilience. Studies of the humble German savings banks—or Sparkassen, as they are called—which form a network of 430 independent but mutually supporting local institutions, show that they have made modest but steady profits through both boom and recession. By comparison, the mighty Deutsche Bank has plunged from huge profits to calamitous losses.

In this country, we have a missing tier of banking. Let us consider the period between December 2007 and December 2011, which saw a sharp decrease in lending by the large commercial banks in Europe. In that period in Germany, large commercial bank lending fell by 18%; in Switzerland, it fell by 34%; and in the UK, it fell by 17%. During the same period, however, lending by local savings banks rose; the German savings banks saw lending rise by 18% and the Swiss cantonal banks saw lending rise by 22%. But in the same period the UK saw neither a rise nor a fall in lending.

I am grateful to my hon. Friend for giving way and indeed for securing this very important debate. Does he agree that what we need in the UK is a two-tier banking system? We need the large banks nationally, but we also need—as he is suggesting—smaller banks operating at a local level. Having a two-tier system would be beneficial to our economy overall.

I completely agree with my hon. Friend and I entirely applaud the Government’s approach—by way of the Vickers report—to addressing the problems with the larger banks. Everyone can see that there is a fundamental problem with large banks and their failure to lend. The fact is that they are almost operating as a monopoly; the largest six banks run the show completely.

The other end of the telescope and the other end of the problem is the lack of local banking. My hon. Friend talks about a two-tier banking system and I agree that, instead of having a single monolithic and almost monopolistic banking structure in which only the five or six big banks lend money, we need the larger banks—of course—but we also need the smaller banks operating at a local level.

Quite frankly, we have lacked that system in this country. Ever since the 1930s, approximately, the banks and building societies in the UK have become ever larger as some of them have been swallowed up by their neighbours and by their more predatory rivals. Consequently, we have gone from having a large variety of banks and building societies to having fewer and fewer banks and other organisations working in the banking community. Of course, that has the effect of reducing competition, reducing the ability for a new entrant to gain access to the market and reducing the ability of businesses to gain access to credit.

I must stress at the outset of my speech that the present crisis in banking and in bank lending is not in any way the fault of local branch staff. I assure the House that those staff are just as frustrated as I am at their inability to run accounts as they used to in the old days. I come to this particular debate with a background in business and with two years of experience as a constituency MP in Northumberland, where I have repeatedly seen decisions on lending being made by a Hexham bank manager, or another local Northumberland bank manager. Those decisions then become part of the responsibility of the credit risk team whenever there is any difficulty with the account.

If an individual SME has a problem with its account, such as a bad debt or a problem with cash flow, it is almost impossible for it to go back to the same manager and argue the case that it is a viable, proper business going forward. That is because the decision-making process has been taken away from the individual local bank manager in Hexham, Ponteland or wherever. What happens now is that the decision is not even taken in Newcastle or anywhere else in the north-east but by a credit risk team that is many miles away. I have attempted to go to those credit risk teams to make a case, but of course it is almost impossible to do so. That system must change. Again, I make it clear that what I am saying today is not a criticism of local bank staff who are working throughout the country. It is a criticism of the board members in London, who seem to have totally forgotten their fundamental role.

I was interested to see that the Leader of the Opposition has commented on banking in the last few days. Like the Church, we always welcome new converts, given the past record. However, the necessary reform of the banks is being left to this Government, as we bring the banks to heel with the Vickers report, clear up the LIBOR mess and implement a much stronger system than the light-touch regulation that we saw before.

Change will not happen without competition. Yesterday the Leader of the Opposition was extolling the need to create more competition for our banks. However, on 23 April in the Financial Services Bill Committee the Opposition voted to prevent competition in banking. I was present for that debate, which saw the Opposition introduce amendment 28, which would have deleted clause 5 of the Bill, thereby deleting the requirement for enhanced competition. So I must ask the question: how can one be in favour of local banks while stopping competition?

The Leader of the Opposition is also out of touch if he thinks that the answer to this banking crisis is to force banks to close some of their high street branches. That is hardly what the voters in my part of Northumberland are crying out for; that much is certain. Residents in Haydon Bridge and Haltwhistle who are losing their local bank branches will tell the Leader of the Opposition that the problem with the banking sector was casino banking and greed, and not—as we heard from Labour this week—having too many local branches. My constituents want to see local branches providing a local service.

I congratulate my hon. Friend on securing this debate. I would like to know his thoughts on how our local communities can hold these banks to account. Although having local community banks is an excellent idea, if we create smaller banks out of RBS how can we ensure that the local communities will have control over those banks’ priorities? In my constituency, industries such as the green energy industry and the video games industry have big potential for growth. How can local communities ensure that local banks are given the mandate to tailor themselves to local business needs?

The reality is that Hampshire, for example, has done what I am talking about and set up the Hampshire bank, or Hampshire Trust. It is backed by the local chamber of commerce and by local authorities. It is regulated, so it is possible to have a county bank that is regulated, but on a lighter-touch basis—I use that phrase again—than the larger banks such as Barclays or HSBC. Moreover, if we broke up RBS, which I will come on to discuss, the individual shareholders would have a say in a local county bank.

How do we create local banks? First, one must address the barriers to entry, which are considerable. Metro Bank has recently been established in London and the south-east, but only at huge cost and only after overcoming many hurdles. The example of the Hampshire bank shows that county banks can be created. I see no reason why we cannot do the same in Northumberland, or in the wider north-east region, and set up “The Bank of Northumberland” or “The Bank of the North-East”.

However, the truth is that a banking licence is notoriously difficult and costly to obtain. To try to remedy that situation, along with my hon. Friend the Member for Chichester (Mr Tyrie), who is the Chairman of the Treasury Committee, I met the chairman of the Financial Services Authority, Hector Sants, at the beginning of March. My hon. Friend and I sat down and tried to explain the problems to Mr Sants, and I am pleased to say that under this Government the FSA is considering trying to reduce the barriers to entry for smaller local banks.

On 12 March, the FSA’s chief executive wrote to me:

“We are conscious of the balance to be struck between ensuring high standards at the gateway, and the importance of allowing innovation and appropriate levels of access for new firms.”

He added:

“there has been public debate about the potential advantages of new entrants in the area of small, regional banks focused on servicing the SME sector. In such cases we will be proportionate in our approach and would invite all firms with a viable business model and appropriate levels of resources to a pre-application meeting to help guide them through the application process”.

In those circumstances, and with the background of a banking crisis, we need to look at the elephant in the room that is the Royal Bank of Scotland. The Government are understandably impatient to sell the 83%-nationalised bank, but the health of the public finances ultimately depends on the health of the economy, which itself rests on the stability and usefulness of the banks.

The taxpayer bail-out and the subsequent problems of RBS are well documented, and it now seems clear that the chances of the Government selling RBS as it is, and making a profit, or anything like one, are but a dim flicker at the end of a long tunnel. What the Government did with Northern Rock was undoubtedly the best option and the only real one, but RBS is different. I see RBS as an opportunity—as the Americans often say, “Don’t waste a good crisis.” We have a unique opportunity to seize the moment, and to ensure that RBS is managed for the benefit of the taxpayers, who own 83% of it, thereby transforming the banking sector. I suggest that we do not sell RBS as it is, but break it up, decentralise the branch management and use it to form the basis of devolved local community banks—imagine a local bank for every city or county—linked, where possible, with the local authorities and chambers of commerce.

I had not intended to speak—I just wanted to listen—but for clarity, will the hon. Gentleman say whether he is suggesting a form of mutualisation of RBS?

In real terms, the current RBS would go back to the people on a local basis, and if the hon. Lady listens I will explain how the shares could be devolved.

We would end up, I suggest, with dozens of little banks like 3i. The 3i Group plc is a large FTSE 100 company that started out as a Government business bank, as a support mechanism to get the country out of the 1930s depression. The new banks would be governed locally, with lending decisions made by managers who understood the local economy better than anyone at a London head office ever could. The managers would be embedded in their local economy, and could base their judgments on knowledge of people and businesses without being overruled by a credit risk computer or centralised targets. Their success would be intertwined with the success of the local economy.

I suggest that breaking up RBS is only half the solution. The next fundamental question is: what do we do with the Government shares? We could sell them, but I disagree with that proposal. We should give all 45 million people on the electoral roll the Government-owned RBS shares, making every voter a shareholder of a local bank created from the devolution of the RBS branches. Each local bank would coincide with a county or city council, and in my patch that would create a bank of Northumberland, with every adult in the county as a shareholder. Each bank’s lending powers would be limited to persons and businesses within its council boundary, and with residents as shareholders, the bank’s administration could be run by the existing council, to save costs and dovetail with existing infrastructure. If the plan went ahead, the 45 million shareholders would dwarf the 10 million that were created in the 1980s through the sell-off of BT and British Gas. It is crucial to remember that the Government did not bail out the banks—the public did. Their hard-earned money kept the banks afloat, and it is now time for them to share some of the rewards.

As well as giving taxpayers an effective rebate in the form of shares, the move would help to restore confidence in the banking industry, and boost the economy. The public is rightly fed up with a system that has become overwhelmed by small vested interests, a London-centric base and personal greed. What better way to repair that than by giving every voting member of the public a stake and a say in our state-owned bank? I accept that people could sell the bank, but the force of having 45 million British taxpayers holding banking shares could help transform the economy even if individual shares were sold. The alternative—there is one—is to give the shares and the branches to local authorities, which would be localism in its purest form, with state banking returned to a position of support for local communities, building on the German, Swiss and US models.

I am grateful to the Speaker for the opportunity to put my case today, and I thank the New Economics Foundation think-tank for its support. The endowment of local community banks, constrained not to lend beyond county borders and able to provide support for local businesses, is an important part of supporting local economies and communities across the country. With a mission to recycle savings locally and expand credit for productive loans that benefit the local area, but on a sound commercial footing, the strength of the case for reinstating a system of community banking is ever increasing. I suggest that we do not need to replace the commercial banking sector, because we can offset it and balance it out with a new system of banking. That would certainly introduce competition into a sector that is crying out for it, and transform banking in this country.

It is a great pleasure to serve under your chairmanship, Mr Robertson. I congratulate my hon. Friend the Member for Hexham (Guy Opperman) on securing this important debate. He raised some interesting and important points to which I hope to respond.

First, let me make it clear that the Government believe that it is important for consumers to be able to access an appropriate range of financial products and services, and that we are committed to fostering a strong, diverse and competitive banking sector. To achieve that, we must ensure that consumers can apply competitive pressure and hold their banks to account for the services they offer. In a competitive market, customers should be able to vote with their feet and switch their custom to banks that provide the best products and services for their needs. The Government are, therefore, committed to fostering diversity and promoting competition in the banking sector.

To help with the delivery of those aims, the banking industry has committed to introducing a fast, safe and hassle-free switching service, which will ensure that by September 2013 customers can switch accounts within seven days. That is further to transparency measures that are already being implemented more widely in the personal current account market, including making charges clearer on customers’ monthly statements, and providing an annual statement of charges for each customer.

As well as people having the freedom and information to switch banks according to their needs and wishes, it is important that new firms are free to enter the sector. I am pleased that we have seen a number of new entrants into the current account market in recent years, including Metro Bank, and it is essential that the regulatory regime facilitate that wherever possible. That is why the Chancellor announced in the banking reform White Paper that the Bank of England and the Financial Services Authority will conduct reviews of the prudential and conduct requirements for new entrants to the banking sector, to ensure that the requirements are proportionate and do not pose excessive barriers to entry or expansion for new, and prospective new, entrants. The conclusions of those reviews will be published in the autumn when the FSA and the Bank of England set out the detail of the new supervisory models for the Prudential Regulatory Authority and the Financial Conduct Authority, and the FSA and the Bank of England have committed to introducing the changes in advance of the new regulatory structure, where possible.

The Government are also committed to promoting mutuals and fostering diversity in financial services. By promoting financial mutuals, the Government are ensuring that consumers have an alternative model, which can provide competition to the shareholder-owned banks. Last Thursday, we set out the Government’s vision for the building society sector in “The future of building societies”. The document, which has been warmly welcomed by the sector, confirms the Government’s support for the distinctive alternative offering provided by building societies. It outlines the Government’s intention to remove unnecessary barriers to growth, and to help create a more level playing field with banks. In addition, in January the Prime Minister announced that the Government will introduce a co-ops consolidation Bill, which will raise the profile of the co-operative alternative and make it easier to adopt it as a corporate form. By ensuring there is an environment in which building societies can not only survive but thrive, the Government are facilitating a mutually owned source of competition for the big banks for many generations of home owners and savers, and supporting building societies with ambitions to expand their business models: for instance, into providing vital lending to small businesses.

Promoting diversity in financial services goes wider than banks and building societies. Credit unions can act as an excellent alternative, providing affordable financial services to people who would not otherwise be able to access them. This Government have taken action to help promote credit unions and their role of offering financial services to their communities. We have removed unnecessary burdens by bringing into force a legislative reform order giving a much wider group of people the ability to take advantage of the benefits of credit union membership. We have brought Northern Ireland’s credit unions under the regulatory oversight of the FSA so that from April, for the first time, the deposits of Northern Ireland credit union members will be protected by the Financial Services Compensation Scheme, enabling members to save with credit unions with confidence. We have also announced a credit union expansion project, which will invest £38 million to help credit unions modernise and grow in order to offer a real alternative to high-cost credit providers. Through all those actions, the Government are creating an environment where credit unions can offer an alternative and compete with banks to serve families and businesses that need to save and borrow for their future.

My hon. Friend discussed the Royal Bank of Scotland and advocated its playing a role in supporting the creation of local community banks. The Government’s shareholdings of RBS are managed on a commercial and arm’s-length basis by UK Financial Investments Ltd, a company wholly owned by the Government. UKFI’s overarching objective is to protect and create value for the taxpayer as shareholder, with due regard to financial stability and promoting competition. UKFI’s role is to manage the investments, not the banks. The banks retain their own independent boards and management teams to manage the banks commercially without interference from shareholders. Like all banking service providers, they must balance customer interests, market competition and other commercial factors when considering their strategy, so the Government do not tell RBS or any other bank where to operate branches.

On shares for the people—my hon. Friend explained his proposal in detail—UKFI will consider the full range of alternatives for investment and make its recommendations based on market conditions, an assessment of investor demand and value for money considerations. However, the ultimate decision to proceed with any transaction will rest with the Chancellor.

My hon. Friend also described the difficulties that local business can face in accessing finance from banks. I assure him that the Government recognise that small and medium-sized enterprises are fundamental to economic recovery. That is why the Chancellor launched two credit easing schemes in March 2012. The national loan guarantee scheme reduces the cost of borrowing for SMEs by 1%, and the business finance partnership will invest £1.2 billion through non-banking lending channels. Together, the schemes support SMEs in accessing cheaper finance while diversifying the range of finance resources available, stimulating the non-bank lending sector. At Budget 2012, the Government also extended the enterprise finance guarantee, which will enable over £2 billion of lending over the next four years to businesses with insufficient collateral or track record.

We continue to help UK businesses access the finance they need. That is why the Chancellor and the Governor of the Bank of England announced the new funding for lending scheme at Mansion House on 14 June. The scheme will support credit for the whole economy by making it easier for banks to lend to businesses and families. In return for additional new lending across the whole economy, the scheme will reduce bank funding pressures, which have been increasing due to instability in the international financial markets. We are working closely with the Bank of England on the design of the FLS and will release further details shortly.

As I mentioned in my opening remarks, the Government believe that it is important for consumers to be able to access an appropriate range of financial products and services and are committed to fostering a strong, diverse and competitive banking sector, a point raised by my hon. Friend. I hope that it is clear to him from the initiatives I have described that we are pursuing a substantial agenda in that area through both regulatory and non-regulatory means.

The regulatory landscape is changing, just as customers’ needs are, and the financial services sector will need to continue to evolve to take account of that. At the same time, it is important that it continues to meet the needs of ordinary customers, an issue that I know is close to my hon. Friend’s heart.

I thank my hon. Friend once again for raising these important issues and bringing them to my attention and that of the House, and I thank my hon. Friends the Members for Carlisle (John Stevenson) and for Warwick and Leamington (Chris White), and the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson), for their contributions.

Clearly, the disposal of RBS, in whatever shape or form, is ultimately for the Government and the Chancellor of the Exchequer, having considered a full range of alternatives, market conditions and value for money. If it is not commercially viable to return RBS to the private sector, will the option of returning it to a local banking organisation, as I have described, be considered?

My hon. Friend is absolutely right that that is a decision for the Chancellor of the Exchequer. All I will say at this point is that I am confident the Chancellor will want to consider all options, particularly in the circumstances my hon. Friend describes. Numerous factors would need to be taken into account in any decision, including value for money for the taxpayer.

The Government are clear that banks and building societies should serve the economy. I assure my hon. Friend that the issue will continue to receive the highest level of attention from Government. We are grateful to him for raising so many important issues in this debate.

NHS Services (Trafford)

I am pleased to be able to hold this debate. I am particularly pleased that my hon. Friend the Member for Stretford and Urmston (Kate Green) is with me. I hope she will have the opportunity to catch your eye later in the debate, Mr Robertson, and make a short contribution. I am also pleased to see the Minister of State, Department of Health, the right hon. Member for Chelmsford (Mr Burns) in his place, as I know that he takes a particular interest in the NHS in Greater Manchester. I look forward to hearing what he has to say in response to my comments and my hon. Friend’s.

This is a timely debate. It is expected that in the next few weeks, a major consultation will be launched in Trafford on proposed changes to the provision of hospital services in the borough. That is, rightly and understandably, attracting huge interest in the community in Trafford and elsewhere. Last week, 5 July, was the 64th birthday of the national health service. That has particular resonance in Trafford, as it was at Park hospital, now Trafford General hospital in the constituency of my hon. Friend the Member for Stretford and Urmston, where the story of the NHS began. That was the NHS’s birthplace. Aneurin Bevan went to that hospital on that day in July 1948 to launch the national health service, which remains the best health service anywhere in the world.

Last Saturday, my hon. Friend and I joined hundreds of local people in Trafford on a march and rally organised by the campaign to save Trafford general hospital. Many parts of the community were represented, including the two main political parties in Trafford—they were both represented in good numbers—and it was evident that the affection for and commitment to the national health service in Trafford remains, just like everywhere else in the country, as strong as ever.

I think that Aneurin Bevan would be truly shocked, 64 years on from that historic day when he launched the national health service at Park hospital, to learn that the life expectancy of a man who lives in the poorest part of the Trafford borough is 11 years shorter than that of a man who lives in the wealthiest part of the borough. The gap for a woman is six years. That is a gross inequality in health. Our main objective, irrespective of party, must be to reduce such massive and gross health inequalities in our communities.

The right hon. Gentleman makes an extremely valid point, in the light of which I have no doubt that he will welcome the fact that, for the first time—and, ironically, under a Conservative Government—there is enshrined in primary legislation a duty on the Secretary of State for Health to work to minimise health inequalities.

As I have said, Members of all parties should work together, although the legislation the Minister refers to contains many other elements about which I am a great deal more sceptical. In any event, tackling health inequalities should be at the forefront of our minds. If the national health services in Trafford are to be redesigned, that needs to happen in a way that helps us to tackle inequalities that blight lives and bring them to a premature end. We need a system of integrated care in Trafford that is capable of dealing with those issues and that can help us to tackle, in a meaningful way, the difficult problems of heart disease, diabetes, cancer and stroke that blight so many lives and bring them to a premature end. That has to happen. Frankly, the debate about integrated care in Trafford has gone on for long enough. We are signed up to it and it needs to come to fruition.

This time last year, there was great concern in Trafford about the future of Trafford general hospital. There had been serious financial problems at the trust and there was real fear in the community that those who run the NHS and who make decisions intended to privatise the hospital. I am pleased that, eventually, that did not happen and that Central Manchester University Hospital NHS Foundation Trust acquired the Trafford trust, so that Trafford general hospital, Stretford memorial hospital and Altrincham hospital are all still part of the NHS family. That has been widely welcomed throughout Trafford, but it is clear that further changes are on the way. It is vital that we have a full and frank consultation to inform the process of change that will, no doubt, ensue.

One particular issue—and the main focus of this debate—is the likely impact of changes to hospital services in Trafford on the nearby hospitals in the city of Manchester. If the consultation proposes to replace the accident and emergency department at Trafford general hospital with an urgent care centre, there is concern about the implications for Manchester hospitals, particularly Wythenshawe hospital, which is part of the University Hospital of South Manchester NHS Foundation Trust—UHSM—in my constituency.

Many Trafford residents already use hospitals outside the Trafford borough for their NHS treatment. Indeed, I estimate that about 130,000 of the 230,000 people who live in Trafford consider Manchester Royal infirmary in central Manchester and Wythenshawe hospital in south Manchester to be their local hospitals—the hospitals they have easiest access to. It is also true that, if someone suffers a major trauma, a stroke or a serious heart attack, they would not be taken to the A and E unit at Trafford hospital, even if they were a Trafford resident; they would go instead to one of the local teaching hospitals in either Manchester or, perhaps, Salford.

The end result of the geographical link between Trafford residents and hospitals in Manchester—and, indeed, of the requirements of the complex conditions from which people suffer—is that more than half of Trafford residents who need to attend an A and E unit go outside of Trafford in order to do so. That means 25,000 patients who live in Trafford going to Wythenshawe hospital for their A and E treatment. That is a third of all the Trafford residents who require A and E appointments in any one year.

UHSM estimates that if the A and E unit at Trafford general hospital closed, that would mean 7,600 additional patients at Wythenshawe hospital’s A and E unit in any one year. At present, Wythenshawe hospital treats 88,000 people at an A and E unit that was designed for 70,000 patients, so there is considerable concern at the prospect of patient numbers in excess of 95,000 if the changes are introduced. In addition, half of all unplanned admissions of Trafford residents to hospital are admissions to Wythenshawe hospital. It is estimated that, if the changes are introduced and if the A and E department at Trafford general hospital closes, 1,900 additional patients could be admitted, on an unplanned basis, to Wythenshawe hospital. In total, that means an extra 9,500 patients coming in for either A and E or an unplanned admission.

Even if the integrated care system that we all want is able to divert people from hospital and reduce the number of hospital admissions, there would still be significant additional pressure on Wythenshawe hospital. I have seen some estimates of the number of patients who may be diverted from hospital as a result of the changes. Some of the professionals involved in making the assessments predict that, even if the system is successful, a 20% diversion would be heroic. That means that Wythenshawe hospital’s A and E department would need more beds, more theatre time, more examination cubicles, more resuscitation bays and even a new fracture clinic. Although the tariff arrangements may pay for patients’ treatment, the capacity and the facilities will simply not be there, which brings me to the core of my argument: the facilities have to be there if we are to see the kind of major changes that may be proposed. If we do not have additional capacity at Wythenshawe, the consequence will be growing queues and cancelled operations. Nobody wants that to happen.

The case for additional facilities is being made by the UHSM management, but the silence of the response so far from the Greater Manchester cluster is deafening. We need engagement with those who run the cluster, so that we can start to get some proper answers to the problems. It is not as though this is a new issue. Elsewhere in the north-west in recent years, when Burnley’s A and E unit closed down, additional facilities were made available at Blackburn, and, when Rochdale’s A and E department was downgraded, there was investment in the Pennine acute trust. We are asking for the same process to be applied to Manchester hospitals if the A and E department at Trafford general hospital is replaced by an urgent care unit.

As I said, I hope that my hon. Friend the Member for Stretford and Urmston will catch your eye in a moment, Mr Robertson. My constituency next-door neighbour, the hon. Member for Altrincham and Sale West (Mr Brady), who, sadly, cannot be here today, has asked me to say that he fully supports my argument. He has also asked me to say specifically:

“Wythenshawe is the most important acute hospital for most of my constituents and I share the view that any additional demand at Wythenshawe arising from changes elsewhere will need to be properly resourced.”

We are looking today for a guarantee from the Minister that the necessary funding will be made available for the expansion of facilities at Wythenshawe hospital. UHSM should not be expected to take the financial risk to provide those facilities; the money has to come from elsewhere within the NHS.

The Central Manchester University Hospitals NHS Foundation Trust will face similar issues, although perhaps to a lesser extent, because the numbers are not as great. Of course, the relationship between central Manchester and Trafford general is different, because they are now part of the same organisational arrangement. However, the issue will still be there. If more patients are presenting at central Manchester for A and E and unplanned admission, there will be an additional burden that runs the same risk of longer queues, longer waiting times and cancelled operations. I am sure the Minister does not want to see that.

I look forward to hearing what the Minister has to say. I hope he is able to give a positive reassurance—indeed, a guarantee—that the facilities that will be required at Wythenshawe if the other changes go through will be made available. It would be wrong for my constituents who live in Manchester to discover that, because of changes in Trafford, they will face longer queues at A and E and operations being cancelled—that would be unfair. We have to see investment up front. We all want the integrated care model to work, but those patients will not disappear into thin air. Many more patients will be looking for their treatment outside Trafford if the A and E department becomes an urgent care centre. I hope the Minister will engage with that issue, and that we can have a positive assurance from him today.

I am grateful for the opportunity to contribute to this debate, Mr Robertson. I thank my right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins) and the Minister for allowing me to make a few remarks on behalf of my constituents.

The proposals for Trafford will clearly have a direct and significant impact on my constituents. As my right hon. Friend said, they are the cause of considerable local concern, exemplified by the substantial numbers of local people who joined the march and rally organised by the Save Trafford General campaign on Saturday. As my right hon. Friend said, they included politicians from across the political spectrum.

As we have always sought to say to the Minister, we understand that having fewer people go into hospital in the first place and, when they do have to be admitted to hospital, getting them back home as quickly as possible to recover is the outcome that we should all be striving for. We understand and welcome the integrated care approach as a means to bring that about, but that approach, which has been talked about for a number of years in Trafford without significant progress, cannot be delivered without the necessary and substantial investment in front-line community health provision and primary care. That will be even more true if, as we hope and expect, fewer patients will go to hospital in Trafford—or, indeed, in Manchester—and there is a concerted effort to undertake more preventive community health provision to achieve that result.

It is very important that the Minister gives assurances—not to me, but to my constituents—that the necessary investment in community and front-line health provision to produce an effective model of integrated health care and improve health outcomes is guaranteed. We need not only the up-front investment to enable that transition from hospital provision to more community provision, but an indication from the Minister that any savings from reduced hospital admissions and hospital stays in Trafford will be reinvested in front-line preventive care.

I understand that the proposed changes are not primarily financially motivated. We see them as motivated by a desire to achieve the very best health outcomes. None the less, it is a concern that the deficit at Trafford general has risen substantially in recent years. It would be helpful if the Minister explained how that deficit has come to grow significantly and how the proposed changes will have an impact on the ability to balance the books. The Minister will be aware that a two-stage transition is proposed for services at Trafford, with an initial reduction to below level 1 emergency care provision over more restricted hours, but ultimately perhaps moving right down to a minor injuries unit in a period of not less than two to three years. Will the Minister assure us that neither the move to option 2b, as it is called, nor the move to option 3, will be implemented unless and until the necessary community provision to make those respective models work effectively has been put in place?

I would like to raise one other matter with the Minister. Clearly, the proposed changes will lead to more patient journeys from Trafford to other nearby hospitals. I understand that the North West ambulance service expects to have additional resources in the light of those extra patient journeys. However, it would be welcome if the Minister offered guarantees that those resources will be put in place. That is a particular concern as the patient transport service, which in a sense backfills for some of the emergency ambulance cover, is out to tender. I would welcome an assurance from the Minister on that.

I endorse my right hon. Friend’s comments on waiting times and service standards at neighbouring hospitals. If the changes go ahead, we need guarantees that they will enhance, not diminish, the standards of health care at Trafford. We look forward to receiving those assurances from the Minister this afternoon.

It is a pleasure to serve under your chairmanship, Mr Robertson. I congratulate the right hon. Member for Wythenshawe and Sale East (Paul Goggins) on securing the debate and the hon. Member for Stretford and Urmston (Kate Green) on her contribution. Like the right hon. Gentleman, she shows a keen and continuing interest in the provision of health care in her constituency and in Greater Manchester. If I do not respond to all the points that they have made—I will seek to respond to as many as possible—I will definitely write to them as quickly as possible after the debate.

As ever with such issues, it is important to not only recognise, but pay tribute to the NHS staff in the constituencies of the right hon. Gentleman and the hon. Lady, as they do so much to improve the health and the well-being of their community day in, day out.

I would like to provide some context to the right hon. Gentleman’s concerns about health services in Trafford. I am sure that he will appreciate that the local NHS, working with commissioners, clinicians and local authorities, needs to determine for itself how best to meet the needs of local people. I am sure that he will accept that it is not for Ministers to intervene at that level. To ensure that all local NHS bodies can do so, we not only protected NHS funding, but actually increased it in real terms, albeit a modest real-terms increase, and that will continue throughout this Parliament. The extra money means better services for patients and, ultimately, healthier communities in the right hon. Gentleman’s constituency and beyond. In his constituency, Trafford primary care trust will receive more than £389 million in the current financial year, which is an increase of £10 million on last year. Manchester PCT will receive more than £1 billion, which is up by more than £29 million on the previous financial year.

Those increases come with a significant challenge, which was referred to by the right hon. Gentleman and the hon. Lady. The NHS as a whole needs to spend its money better. Nationally, it needs to find £20 billion of efficiency savings in the next few years to meet the rising demand for services. The right hon. Gentleman’s party made that commitment when they were in government, and we recognised it as the right thing to do and have adopted what has become known in some circles as the Nicholson challenge.

The hon. Lady asked whether the savings will be reinvested in front-line services. I can give her that commitment: all the quality, innovation, productivity and prevention Nicholson challenge savings will be reinvested in front-line services, not only in Manchester, but throughout the country.

It is to their immense credit that the NHS organisations, teams and individual members of staff are on track to meet that target. In 2011-12, the NHS made £5.8 billion in efficiency savings, which is testimony to the hard work that was put in by staff, managers and administrators throughout the NHS. However, let me be clear that by efficiency savings I do not mean savings that flow straight back to the Treasury, lost to the NHS. Instead, I am talking about efficiency savings where every penny will be reinvested to make care better. Of course, some parts of the NHS therefore face tough decisions, and that is true for the NHS in Trafford.

The right hon. Gentleman is concerned about how service changes in Trafford might affect the quality of services for his constituents. I am sure that he is aware that the NHS in Trafford and Greater Manchester has developed proposals for service changes affecting Trafford general, which are planned for public consultation later this summer. Following the consultation, a final decision about the changes will be made by the end of the year, with plans put into practice by April 2013.

The board of the Greater Manchester PCT cluster approved the proposals at its meeting in June 2012, and they will now be considered by the board of NHS North of England on 12 July 2012. I hope that the right hon. Gentleman understands that I do not want to—it would be wrong to—pre-empt or bias the local process before the consultation. However, I will try to address, as best I can, some of his concerns within that straitjacket.

The former Trafford Healthcare NHS Trust was acquired by Central Manchester University Hospitals NHS Foundation Trust in April 2012, so that the trust could move to foundation trust status, which it could not do independently. The acquisition also ensured that the trust was sustainable, so it could carry on providing health services to the people of Trafford.

Sustainability—the guarantee that the NHS will carry on providing high-quality safe services—is at the root of the right hon. Gentleman’s concerns. Trafford is the birthplace of the NHS, where Nye Bevan famously launched it just 64 years and four days ago. Unfortunately, history is not enough. Every corner of the NHS needs to be on sound financial footing, so that it is a viable service for years to come. That is what we all want, regardless of which side of the House we sit on.

Clinicians and general practitioners across Greater Manchester have developed proposals for a model of care that maintains high standards and improves value for money. Those proposals are called the new health deal for Trafford. Local people and local NHS organisations have been involved. The right hon. Gentleman might be aware that in 2008 the local NHS started work on a new integrated services model that aimed to deliver more care in the community and reduce admissions to hospitals.

The hon. Lady is concerned and wants the proposals for delivering more care in the community to be put in place properly, so that there is no fragmentation or disruption in the delivery of service. I share her concern and agree that such proposals must be part of driving the NHS to a more integrated programme and a policy of delivery and seamless provision of care. That is a challenge for the NHS, as it always is when moving on a part of the delivery of care, but Manchester is acutely aware of that and is working steadfastly to ensure seamless delivery of care and to meet the new challenges of the most appropriate care for patients in Greater Manchester. The right hon. Gentleman is interested in that model.

At the moment, Trafford provider services, which is part of Bridgewater Community Healthcare NHS Trust, delivers community services across Trafford. I understand that Trafford PCT launched a tender exercise for providing community services in Trafford, which should be completed by August 2012.

Clinical commissioners in Trafford are still keen for integrated care to go ahead. For that to happen, clinical services are being redesigned across Trafford, including the secondary care services provided by Trafford general. At the moment, Trafford general provides a full range of acute services, including A and E, as the right hon. Gentleman mentioned. The local NHS worked on several options for services that the hospital might offer in the future, spoke to clinicians, commissioners and public representatives to identify the right model of care and chose the following model. A and E services will be replaced with an urgent care centre, opening between 8 am and midnight, changing to a minor injuries and illness unit within two to three years; acute surgery will not happen there anymore; some parts of acute medicine provision will be removed but some will remain; and in-patient surgery will no longer be provided at Trafford general. The hospital will still provide elective orthopaedic surgery, including the development of an elective orthopaedic centre of excellence, day-case surgery, out-patient services, diagnostics and rehabilitation.

As I mentioned earlier, these proposals were approved by the Greater Manchester PCT cluster in June 2012. I understand that the PCT intends to submit them to the strategic health authority for approval and for a public consultation in which everyone will be able to have their say. I understand that the national clinical advisory team has reviewed the proposals and supports the clinical case for change. I also understand that a series of public events were included in the whole process, so that people could find out more and voice their concerns. There were regular meetings with local health overview and scrutiny committees, and local Members of Parliament have been briefed on what is and was going on.

I agree that full and frank public consultation is essential, but people need to have all the information. The Minister promised me earlier that he would write to me with further details that he is not able to cover in his speech. Will he undertake now to look in detail at the case made by UHSM for the additional facilities at the accident and emergency unit and elsewhere, at an estimated cost of £11.5 million, and will he comment on that?

I will try to do better for the right hon. Gentleman by commenting on that in the remaining three minutes. I have an answer.

The consultation process has to be carried on within the setting of my right hon. Friend the Secretary of State’s four tests. The right hon. Member for Wythenshawe and Sale East is concerned about the impact of the proposed changes at Trafford on other hospitals, particularly Wythenshawe hospital. Local commissioners have assessed the potential impact of the changes in developing their proposals. However, the proposals are still at an early stage and have yet to go to public consultation. I am informed that local commissioners will continue to look at this issue. Ultimately, when the consultation is over and the responses have been considered and a final decision is made locally, if the local authority overview and scrutiny committee does not share the analysis and agree with the decisions that have been taken, it is open to it to write to my right hon. Friend the Secretary of State to request that he refer the decisions to the independent reconfiguration panel.

The right hon. Gentleman mentioned the £11.5 million for expansion of A and E at Wythenshawe hospital. I can give no such guarantees on that, for the following reason. Local commissioners have assessed the impact of the proposed changes at Trafford on other hospitals, including Wythenshawe. However, the plans are still at an early stage and are yet to go fully to public consultation, which will happen shortly. I am informed that local commissioners will continue to review the impact of the changes on other hospitals, including Wythenshawe. In that respect, I can give a commitment, but I cannot go the whole hog, as the right hon. Gentleman would like me to, and commit £11.5 million, or whatever other figure might arise, because that is not in my gift. These are local decisions freed from ministerial interference, which I think the right hon. Gentleman would agree is the right way forward.

The right hon. Gentleman, the hon. Lady and other hon. Members met Trafford PCT on 6 July 2012 to discuss the proposals. I hope that they found the meeting useful and helpful, and I hope that the right hon. Gentleman and other hon. Members in the area affected by the consultation continue to speak to the local NHS. I urge the right hon. Gentleman and his colleagues, constituents and everyone else who is interested in strengthening and improving the local NHS provision of service in Trafford and Greater Manchester to contribute to the consultation process, so that all views and opinions can be considered and that the decision can flow as a result of direct involvement by those people.

Illegally Tethered Horses

It is a pleasure to serve under your chairmanship today, Mr Robertson. I am delighted to have secured a debate this afternoon on an issue of great concern to many of my constituents. The problem of illegally tethered horses, however, is not restricted to York or the wider Yorkshire region but is found throughout the country, predominantly although not exclusively in rural areas.

To some, the problem of illegally tethered horses might seem mundane, but try telling that to the farmer whose crops are being destroyed, to the innocent car driver whose life is endangered by an escaped horse or to the property owner whose land is taken over by tethered horses. At the core of the issue is a simple but profound point of principle: that no one should be above the law. Nor should people have their lives negatively affected by those who have little regard for such laws.

Unfortunately, the illegal tethering of horses is seen as an acceptable and traditional activity among much of the Traveller community. In the vast majority of cases, illegally tethered horses belong to Traveller families or communities who seem to have little respect for the safety or property of others when tethering their animals wherever they like. As the Member of Parliament for York Outer, I have witnessed an increased build-up of horses on the verges of dangerous roads, and I am sure that other Members present have their own examples, which they might bring to bear.

To touch on some examples from my constituency, back in 2009 a local resident in York was driving along the A64 when an illegally tethered horse broke free and collided with her car. The resident suffered a broken wrist and could not work for nine weeks. The horse, sadly, suffered fatal injuries in the accident. York’s The Press, my local paper, quoted the resident involved:

“Had my partner…and I not been in a 4x4 hire car, we would have died instantly...I was off work for nine weeks but the psychological effects lasted much longer and also, what pain must that horse have been in?...They should be removed”.

The wider context of animal welfare is also involved.

Another case highlights the real risk to life faced by innocent bystanders when horses escape from their illegally tethered locations. On 29 March this year, a 39-year-old man was driving on the A166 near York when a horse strayed on to the road and collided with his transit van. Again, the police suggested that, had the gentleman been driving a small car, he would have been killed. To give an idea of the frequency of such incidents, only one day earlier another collision took place, this time on Malton road. Injuries were incurred by the innocent motorist and, once again, the horse suffered fatal injuries. Today I was told that only this weekend, on Sunday, the police were called out to deal with loose horses on Fulford road.

While the case studies of horses tethered on the roadside might involve the most life-threatening incidents, it would be a mistake, as I mentioned, to limit today’s debate to horses on the roadside. Another local case from my postbag highlights the vast damage that illegally tethered horses can cause for farmers. My constituent Mr David Shaw owns land in Osbaldwick, within sight of a Traveller site there. Mr Shaw’s land has been taken over by illegally tethered horses, which have caused a great deal of damage to fences, crops and the land itself.

Likewise, another constituent, who wishes to remain anonymous, frequently encounters horses tethered on local private property, again causing damage and problems. To quote from a recent e-mail to me:

“We live on the outskirts of York and have encountered persistent problems with tethered horses for over 15 years”.

I congratulate my hon. Friend on securing this debate on an important issue. May I make him aware that this is not only a problem in rural areas? In the north-east, more and more horses are being tethered on our green spaces in urban areas. In many cases, the horses, too, are illegal. Only a couple of weeks ago, I attended a horse-chipping event organised by the British Horse Society, which was at least trying to bring such horses into legal ownership while still illegally tethered.

I entirely agree with my hon. Friend and, as I said at the beginning, although the problem might seem to be suffered predominantly by rural areas, they are not alone, because I know for certain that urban areas throughout the country suffer as well. He is absolutely right about the chipping of horses, which I will go on to discuss, because I want to direct a few questions at the Minister.

The hon. Gentleman has talked a lot about illegally tethered horses. Will he also discuss the problem of fly-grazing? In my constituency, and stretching the length of south Wales, we have had tremendous problems with vans appearing, often late at night, and being opened to dump horses in a farmer’s field. The horses are left there, sometimes for days, with many needing medical attention. The local authorities incur huge costs for vets’ bills, passporting and, ultimately, removing and selling the horses, and any sale does not bring in the money spent by the local authority on removing and looking after them.

The hon. Lady is absolutely right about fly-grazing. The problem in my patch is more to do with tethered horses, although I know of local farmers who have suffered from fly-grazing. Overnight, on crops of cereals, horses can suddenly appear and be there for a number of days; it is difficult for the farmers to round up the horses or disperse them. In my constituency, the problem tends to be on areas that are not properly fenced, but I know of other farmers in other areas who have had their fences cut in the middle of night and horses let in, so that the crops are grazed and irreparably damaged beyond the cost of replacing them. She is also right to mention animal welfare, because a lot of the animals that appear on fly-grazing sites suffer from welfare issues, which need to be picked up properly; but that cost does sometimes fall on the local authority.

The responsibility for the horse, once it is illegally placed on someone’s land, rests with the landowner unless the local authority helps and supports some of the cost. That financial cost—not to the perpetrator but to the poor victim—is an issue that really needs to be addressed.

I entirely agree with the hon. Lady, who makes a valid point. As I develop the argument, I will proceed to the problem of the landowners bearing the brunt of the cost.

To return to the example of the farmer in my constituency who suffered irreparable damage to hedges and crops, his e-mail continued: “Two elderly farmers” have been intimidated

“by the owners of the tethered horses. These farmers live in fear of those people responsible for the horses and feel they cannot approach them.”

I hope that all Members agree that, whether the illegal tethering of horses is on the roadside, the village green or someone’s private land, it not only causes practical problems and disturbances for local residents but also represents a complete and utter lack of respect for the law and the wider community. Frankly, how some people have the nerve to take over someone else’s land without permission is beyond me. On a simple point of principle, that is fundamentally wrong.

Thus far, of course, I have frequently referred to the law, which it might be helpful to clarify for the purposes of this afternoon’s debate. The law on illegally tethered horses is currently contained in the Animals Act 197l, which gives power to landowners to detain stray livestock, including horses, and to recover expenses incurred when doing so. Similarly, on the specific concern about horses tethered on roadside verges, I am grateful to the Department for Transport for confirming that under section 155—

“Penalties in connection with straying animals”—

the Highways Act 1980 states:

“If any horses, cattle, sheep, goats or swine are at any time found straying or lying on or at the side of a highway their keeper is guilty of an offence”

unless it is

“part of a highway passing over any common, waste or unenclosed ground.”

My reason for outlining the relevant legislation so clearly is to highlight that reasonably clear and robust national legislation exists. In essence, the law is easy to understand. It states unequivocally that the tethering of horses on the highway or private property is a crime, and therefore punishable. The question that lingers is why so little action is taken when such offences are committed. The law exists, but sadly the will to enforce it is lacking. That is particularly the case with the Horse Passport Regulations 2009, which make it an offence for horse owners not to apply for a passport within six months of an animal’s birth.

In response to a written question in November 2011, the Department for Environment, Food and Rural Affairs confirmed that a mere six owners had faced prosecution as a result of not complying with that law. Yet, unsurprisingly, many of the horses involved in collisions with cars seem to be unregistered with DEFRA, thus making it all the more difficult to trace and track their owners. I would be grateful if the Minister outlined how his Department seeks to ensure full compliance with the law, and whether there is a specific plan to deal with horses owned by the Traveller communities to ensure that they are registered under the passport scheme, to which my hon. Friend the Member for Redcar (Ian Swales) also referred.

I return to the problem of enforcement. In response to my parliamentary representations on the matter, the Under-Secretary of State for Transport, the hon. Member for Lewes (Norman Baker), made it clear in a letter that enforcement responsibility lies with local authorities, and stated:

“The local authority could, therefore, detain stray horses found on any local authority owned land”.

On private land, initial responsibility lies with the landowner to request that straying animals be removed, and if that approach fails, the police can be called. However, as we all know and as has been mentioned, the time and cost of the court battles and legal action that often follow falls on the landowner. Nevertheless, it is clear that enforcement responsibility lies with the local agencies of the police and the council.

Having clarified who is responsible, I must raise the issue of my own local authority, City of York council. The council has clearly failed to act decisively on tethered horses. I have long called for the council simply to confiscate any illegally tethered horses and to return them only when the owners have accepted responsibility, faced a fine, and registered the horse in accordance with law. The fines levied would cover the cost of looking after the animals, and the action could be carried out in conjunction with the RSPCA.

To my mind, that is a pretty fair-sounding and simple plan of action. If someone illegally parked their car, the same action would be taken. Yet, a response sent to me by City of York council in June informed me:

“The Council does not have the facilities to remove or stable horses and is therefore not able to remove horses from private land. However, the support workers who visit the”


“site each week continue to work to educate travellers about…caring for their horses. This includes working closely with travellers to try and prevent horses being grazed inappropriately on private land or in places where they can stray onto the road.”

My hon. Friend is touching on an important point about impounding facilities, and he mentioned cars. Local authorities usually have well-organised dog pounds. Does he believe that local authorities should be required to have facilities, or to buy facilities to be used to impound horses?

I thank my hon. Friend for his intervention, and I agree with him. That must be the way forward if we are to solve the problem logically and fairly for everyone, and at the same time keep the welfare of the animals in mind. I would like local authorities to look at the matter.

The hon. Gentleman may find it interesting to know that throughout the length of south Wales we have found that it pays the Traveller community to abandon their horses. When they have done so, the local authority takes the horses into care and pays for veterinary bills and passporting, and then tries to sell them because no owner can be found. The horses may be sold for £200, but the veterinary bills and impounding may have cost £15,000. The matter is much more complicated than simply impounding a horse for the owner to recover. The owner waits until a horse is sold, and then buys it back really cheaply.

I thank the hon. Lady for her intervention. I understand that there are complex arguments in the process, as I will explain. The problem also varies in different regions. In and around York and Yorkshire, the tethered horses seem to be valuable assets to the Traveller community. Whenever bailiffs have been used—there is a bailiff company operating around the country that gives 24-hour notice on a certain site where horses have been illegally put—they remove the horses and store them on a site at a cost to the private landowner, and almost always the fines have been paid and the horses have been returned because the Traveller community see those horses as a valuable asset and want them back. The situation may be different in other areas, and it will depend on different communities, so I understand that the position will vary from region to region.

Will my hon. Friend expand on where the market is for those horses? I am at a loss to know what they are used for. They do not look like horses that can be ridden. Does he have any evidence for what happens to them, where the trade is in them, and what the market is for them? That information would be useful.

Before the hon. Member for York Outer (Julian Sturdy) resumes his speech, I advise him that he needs to give the Minister time to answer his questions.

Thank you, Mr Robertson. I will take no more interventions.

If I am brutally honest, I do not know the answer to my hon. Friend’s questions. He made a good point, and we should investigate it. Again, the answer will vary from region to region, but it is a valid point that needs investigating.

Let me make it clear that I have nothing but the utmost respect for minority and diverse groups and nationalities in our country. Such diversity is what makes this country so great. I would never seek to diminish or insult the traditions of Travellers or their way of life. However, it is outrageous for any section of a society, regardless of the sensitivities involved, regularly to disobey and breach the general law.

As I have outlined in the case studies mentioned earlier, such callous disregard is not only unfair but dangerous. City of York council is simply not willing to enforce the current law in relation to illegally tethered horses. As I said a moment ago, it is merely willing to try to prevent such instances. I am afraid that this is another sorry example of the silent, law-abiding majority being ignored and disregarded while we pander to those who take advantage of politically correct nonsense.

Interestingly, in response to inquiries by a local councillor, Mark Walters, a City of York council solicitor admitted that lack of council action on the matter could lead to the authority being liable both for negligence and for a breach of statutory duty. Therefore, I have a number of questions for the Minister, which I hope he will be able to respond to. First, will he join me in demanding that local authorities apply the laws and rules of this land fairly and equally to all parts of society? Secondly, does he agree with my proposal that, wherever possible, illegally tethered horses should be confiscated by local agencies and returned only after action has been taken against the irresponsible owners?

Thirdly, will the Minister outline the work undertaken by DEFRA to monitor the issue of illegally tethered horses, and say how the Department is working with local authorities to tackle the matter effectively? Finally, does he have any words of encouragement for those farmers and landowners whose lives are being affected by long, drawn-out battles to evict Travellers’ horses, or indeed communities that may have set up illegal activities on their land?

In conclusion, the issue of illegally tethered horses affects a great number of people in a great number of ways. In every case, however, an innocent, law-abiding person is either endangered or taken advantage of. This issue is a cause of deep anger and frustration for many individuals up and down the country who want to see robust action taken. I hope that the Government will encourage such robust action, and that the law in this area will be implemented—as it should be—fairly and universally.

I congratulate my hon. Friend the Member for York Outer (Julian Sturdy) on securing this debate, and on the enormous amount of work that he has done in understanding the problem and its impact locally. He is right to raise the issue with the House today.

The practice of dumping horses on another person’s land, whether public verge or a farmer’s private property, is abhorrent. If horses are dumped—or fly grazed, as the hon. Member for Bridgend (Mrs Moon) said—or tethered in a way that fails to account for their needs, significant animal welfare issues arise. In the most serious cases, the owner can be prosecuted under the Animal Welfare Act 2006, and if convicted can be fined up to £20,000 and sent to prison for up to six months. That, of course, presupposes that we find and identify the owner of the horse, and I will come on to talk about that problem in response to points raised by my hon. Friend.

The Royal Society for the Prevention of Cruelty to Animals reports that the number of horses in its care has doubled over the past 12 months—it currently looks after more than 600 horses. I congratulate the work of all animal and horse welfare organisations such as the RSPCA, World Horse Welfare and Redwings horse sanctuary. They often find themselves in the front line, picking up the tab and dealing with the issues that arise when a horse is dumped.

Horses are often dumped in places that are clearly visible to the public. Welfare organisations often receive numerous phone calls, and they then have to visit the horse, assess the situation, contact the owner—if that is possible—and explain the legal position. On the Redwings website I found detailed and helpful guidance about what a landowner needs to do if a horse is dumped on their land, which includes the requirement to notify the police at an early stage.

The public assume that charities can simply take the horse, but that is not the case. Unfortunately, in reality the owner of a horse often has a legal right to its return, particularly if there are no significant welfare issues. In some cases it is difficult to identify the horse and its owner, which delays a landowner’s ability to move the horse off their land. Biosecurity can be threatened—that is a major issue in the farming community—and farmers risk losing payments where stewardship land is involved. I understand, however, that Natural England will look carefully at the circumstances of each case that has a stewardship agreement, and I have yet to hear reports of where a flexible approach has not been taken under such circumstances. I am fully aware of the problems caused to farmers, and it is unacceptable that they often need to use their own money to clear up the mess left by others who, as has been said, sometimes threaten and intimidate them.

My hon. Friend asked what DEFRA, and others, are doing about this issue, but there is no simple solution to the problem. On the rare occasions when the owner of a dumped horse can be identified, a relatively simple way forward can be found. In the main, however, that is not the case, which in part has been caused by a reduction in the value of a particular type of horse.

As my hon. Friend said, powers contained in the Animals Act 1971 can be used by any landowner—including local authorities—if animals, including horses, are allowed to stray on to their land. That includes the power to detain straying livestock on private land, and it provides powers for individual landowners to take ownership of the animals. The Highways Act 1980 also allows action to be taken, including the recovery of costs when livestock stray on to the highway. Once again, however, we have the problem of how to recover costs from the owner of an animal if they cannot be identified.

I record again my gratitude for the work of welfare groups in this area. The RSPCA and Redwings work together in troublesome areas to raise management and welfare standards, and they have done extraordinary work. Work undertaken by the National Equine Welfare Council to co-ordinate such initiatives at national and local level has made significant achievements. The work done by the RSPCA with Travellers at the Appleby horse fair is another example of the progress being made.

May I add the British Horse Society to the Minister’s list of organisations? It is doing fantastic work in north-east England on this issue.

Absolutely, and I was coming on to mention other organisations that are doing wonderful work. Rather than the Government creating a requirement on local authorities to have adequate stabling and consider matters of cost—we create many such requirements across the piece—problems of this nature tend to exist in particular localities. During my seven years in the House, I cannot recall receiving a letter on this issue from a single farmer or landowner. Quite a few Travelling communities live in or pass through my constituency, but there are other places—some represented by colleagues present in this debate—where this is a hot-spot issue. Under such circumstances, I wish to ensure that all Government agencies, including my Department but chiefly local authorities and organisations such as those I have listed, work together to focus on the issues involved.

Fly-grazing is a huge issue in my constituency, and I met one of the Minister’s colleagues to discuss it. It would be useful for the Minister’s Department to remind local authorities that they have obligations. One Traveller site in my constituency is controlled by the local authority. No animals are supposed to be on that site, but when it was visited a couple of weeks ago, horses were found tethered inside the camp. If local authorities have obligations, surely we should remind them to meet them.

I know that my hon. Friend speaks regularly with his local authority, and I suspect that it will have a Traveller liaison or welfare officer, or dedicated staff who should be conveying their concerns on issues of animal welfare to the people involved. I assure him that our Department takes animal welfare extremely seriously; we talk regularly with the Local Government Association and I will happily raise his point to ensure coherence across local authorities, and the development of best practice.

One point is that responsible owners will have their horses passported. We are talking mostly about irresponsible owners who do not passport their horses, and it is therefore difficult to track ownership. In the Republic of Ireland, there is a requirement not only to passport a horse but to say where it will be lodged, and that gives people the capacity to track it. We have several passporting schemes, none of which are connected, and therefore it is difficult to track those passports.

I understand the hon. Lady’s point, and I will take it back to my colleague, the Minister of State who has particular responsibility for these issues, to see whether we can amend the horse passporting regime in the way she suggests.

I welcome the work done by the National Farmers Union task and finish group to gauge the scale of the problem, ascertain the best remedies under existing law, and identify where amendments to the law would enable the problem to be dealt with more effectively. Many dumped horses, however, are traded by people who tend to operate outside the law, so finding effective remedies will not be easy.

I assure my hon. Friend the Member for York Outer that I will seek more information about initiatives from around the country, and consider whether there is a role for central Government to improve, facilitate and evaluate those schemes to ensure that we understand the benefits of best practice. The aim would be to enable councils and other landowners to take better control of the situation. I also assure my hon. Friend that DEFRA Ministers will, together with colleagues in the Department for Communities and Local Government and the Home Office, consider how we can secure a more joined-up approach to this matter across Whitehall.

Sitting adjourned without Question put (Standing Order No. 10(11)).