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Commons Chamber

Volume 552: debated on Wednesday 31 October 2012

House of Commons

Wednesday 31 October 2012

The House met at half-past Eleven o’clock


[Mr Speaker in the Chair]

Oral Answers to Questions

International Development

The Secretary of State was asked—

Democratic Republic of the Congo

1. What recent assessment her Department has made of the humanitarian implications of Rwanda’s support for militia activity in eastern Democratic Republic of the Congo. (125601)

The humanitarian situation in the Democratic Republic of the Congo has worsened; in fact, 2012 has seen about 2.3 million people displaced, which is the highest number in many years. That is in part linked to the activities of M23 and other militia. In answer to the hon. Gentleman’s point about Rwanda, the UN group of experts will report in November. I will critically assess the situation when I make the next decision on budget support in December.

I congratulate the Secretary of State on her appointment to her extremely important role.

Yesterday a Congolese citizen told me that she could not understand why the Government were supporting individuals whom the UN experts had said were attacking and creating mayhem in eastern Congo. Was the decision to reinstate aid supported by officials in the Secretary of State’s Department?

My predecessor set out in his written ministerial statement the basis on which the Government’s decision was taken. My understanding is that it was based on officials’ advice.

May I, too, welcome the Secretary of State to her position and say on behalf of the Select Committee on International Development that we look forward to engaging with her? She will be aware that we produced a report on conflict in the DRC, and we are undertaking one on the situation in Rwanda in the light of budget support being reinstated. Does she accept that the dilemma we face is that Rwanda is a country where development money delivers real results for poor people, but where issues such as freedom of speech and plurality are compromised? That is a dilemma we have to resolve.

The right hon. Gentleman is right. It is worth remembering that 5 million people are living in poverty in Rwanda. Our programme of support is aimed at helping those people in particular. When we came into government, we attached more conditionality to our general budget support, not least through the partnership principles. It is things such as the partnership principles that I will look at in reaching the decision we will take in December.

I, too, congratulate the Secretary of State on her new appointment. She told my hon. Friend the Member for Wrexham (Ian Lucas) that officials were consulted and that her predecessor sought their advice. Were other donors and allies who had suspended payments to Rwanda consulted about their views on the impact of the UK’s unilateral decision to reinstate aid?

I was not in my role when that decision was taken, so I cannot answer the hon. Gentleman’s question directly, but the International Development Committee is planning to look at this issue, and I am sure it will be able to ask and get answers to those questions for him.

Is it not worth putting on record the fact that Rwanda has made tremendous strides in the last 15 years since the troubles of the 1990s, in no small part thanks to substantial assistance from the United Kingdom Government? That is something we should absolutely be proud of.

I think we should be. In recent years I have spent time in Rwanda, which is a good example of where achieving things on the ground is often complex. Life is not black and white; we have to deal with real people and situations and navigate our way through them to the best of our ability. We know that there are still millions of people in Rwanda living in poverty. The aid programmes we have invested in there have been extremely successful, so there is absolutely a need to continue that work.

Economic Community of West African States

2. What steps she is taking to encourage private capital investment in the Economic Community of West African States. (125602)

Through DFID offices and international programmes, we are helping west African countries to build infrastructure, reform laws and institutions that govern business, strengthen financial services and develop sound projects, to make them more attractive to private investors and stronger trading partners for the United Kingdom.

I thank the Minister for that response. I am sure that, like me, she recognises the critical role that small and medium-sized enterprises can play in west African states in ensuring development. We welcome the global SME finance facility that the Government have put in place. Will the Minister keep an open mind about expanding that facility, particularly for west African states, and will she join me in welcoming the steps that Governor Fashola has taken in Lagos state to improve the ease of doing business in Nigeria?

I thank my hon. Friend and pay tribute to his work in Nigeria. I know of his interest in development in west Africa. Small and medium-sized enterprises—in fact, all businesses—are most important. Nigeria—and, as he mentions, Lagos in particular—is the growth hub of Africa, as the Prime Minister highlighted when he visited it last year. UK aid will continue to help to create an even better climate for business by supporting better regulation, better infrastructure and more efficient and productive markets.

Does the Minister agree that, should the United Nations Security Council agree to the deployment of troops in north Mali, it will be essential that we do our best to look after the civilian population there and to ensure that humanitarian aid can be delivered?

The right hon. Gentleman raises a really important point. Whatever the military action, our responsibility is to ensure that humanitarian aid is delivered as fast as possible.


The humanitarian situation in Syria is deteriorating rapidly: 2.5 million people are already in need and more than 350,000 have fled to neighbouring countries. The UK has already provided £39.5 million of funding for essential food, heating and shelter to help people to cope with the coming winter. I am assessing with other agencies how we can ensure that we are well prepared if the situation deteriorates further, as many people suspect it will.

I thank the Secretary of State for her answer. With access to large parts of Syria becoming increasingly difficult and challenging, what work is she doing with the international community to ensure that people in those areas can receive the aid that they need?

The hon. Lady is absolutely right. Approximately half the support that we provide has been for refugees, and half to help people inside Syria. I have had discussions with the International Committee of the Red Cross and the World Food Programme, the key providers of aid within Syria, and we are working with them to ensure that they can do their job efficiently. Clearly, they are neutral and dispassionate in regard to the politics, and it is vital that we use them.

The Christian community in Syria is one of the oldest in the world, and one of the largest in middle east. Indeed, was it not St Paul who was converted on the road to Damascus? If the wrong people come out on top in the Syrian civil war, there is every chance of a bloodbath in the Christian community on a biblical scale. Will my right hon. Friend do everything she can to ensure that the humanitarian provision addresses that very real fear?

I will. We want to ensure that the humanitarian support that we are providing is there for all parts of the Syrian people. My hon. Friend is absolutely right to say that the situation is particularly precarious at the moment, not least because the opposition forces are fragmented and it is therefore unclear what form an emergent Syria will take. However, I am working closely with the Foreign Secretary on this matter, and I can assure my hon. Friend that I will bear in mind the point that he has made.

Is the Secretary of State liaising closely with her colleagues in the Foreign Office to ensure that the maximum political pressure is placed on China and Russia to ensure that they adopt a more enlightened approach to the situation in Syria?

I can assure the hon. Gentleman of that. Clearly, if we are to make any progress through the United Nations, it will be critical to get buy-in from those two countries. So far, that has proved to be extremely challenging. There is clearly a diplomatic route to making progress, as well as a humanitarian one.

Save the Children’s recent report from the Zaatari camp in Jordan tells of Syrian children who have survived the most appalling atrocities, including arbitrary detention, torture and sexual violence, as well as others who have not survived. Will the Secretary of State tell us what is being done to support those children, and what steps are being taken to monitor the atrocities that they are reporting?

My hon. Friend is absolutely right. It is shocking to see how what is now the Syrian civil war has affected children in particular. Half of our support has gone to refugees, many of whom are children fleeing with their families. The fact that we have provided trauma support for 28,000 children will give the House a sense of the scale of the problem that we are tackling, and we have announced a further £3 million of support for UNICEF’s work. We are providing not only counselling but clinical care in places such as Jordan to Syrian refugees who have experienced sexual violence. That is an incredibly worrying aspect of the work that we are doing, but we are absolutely committed to doing what we, as a country, can do with our partners to help that situation.

Middle East

4. What estimate she has made of the number of people in (a) Israel, (b) Gaza and (c) the remainder of the Occupied Palestinian Territories who are in employment; and what assessment she has made of the factors preventing equalisation of employment levels in the region. (125604)

In the second quarter of this year, unemployment was 7% in Israel, 28% in Gaza and 17% in the west bank. We support the International Monetary Fund’s recent assessment that Israeli controls on external trade and access to Area C of the west bank are a serious constraint on Palestinian employment levels.

Does my right hon. Friend agree that more needs to be done to persuade Israel to remove the barriers that prevent Palestinians from crossing the border in order to find work, and, indeed, to seize more opportunities to create work in Gaza and the rest of Palestine?

Yes, we want people and goods to be able to cross borders freely with the minimum constraints necessary to ensure Israel’s security, and we want the Palestinian Authority to be able to exploit its own resources, such as the gas fields off the coast of Gaza, so that the PA can pay its own way and eventually require less support from the international community.

The crazy economic and employment situation in Gaza is exemplified by the position of its fishing industry. Fishermen are prevented by an Israeli blockade from fishing more than 3 km offshore while, at the same time, fish can be imported through illegal tunnels, yet the indigenous people of Gaza cannot, by and large, afford to buy those fish. Would it not be better to lift the blockade, open the crossings and close the tunnels?

We are deeply concerned that the situation in Gaza remains dire, with 38% of Gazans living in poverty and 66% depending on food aid. Their ability to fish and exploit their own resources properly within international law is something that we would of course encourage.

My right hon. Friend and the previous Secretary of State achieved an enviable record of support for the United Nations Relief and Works Agency and Britain’s reputation in addressing some of the economic issues. Will my right hon. Friend assure me that that support is going to continue?

Yes, I can give my hon. Friend the assurances he seeks. We work very closely with UNRWA, and I regularly meet Filippo Grande who runs it. I have visited the area with him on many occasions, and look forward to doing so again, while also expressing our support in terms of hard cash for the future.

The Minister will be aware that water security has huge implications for economic and social development in the region. What specific actions are the UK Government taking to ensure that water is no longer used as a weapon against some of the most vulnerable people in the region?

We are well aware of the access restrictions to safe drinking water in the west bank and Gaza. The UK Government regularly discuss these issues with Israel, and we continue to call for the full implementation of the relaxation of access restrictions for Gaza that Israel announced in June 2010.

Trade Alliances

5. What steps her Department is taking to use its aid budget to support strategic trading alliances between the UK and emerging nations. (125605)

The European Union leads on trade negotiations for its member states. DFID considers trade to be a key element to sustainable poverty reduction in developing countries. It helps to generate wealth, create jobs and raise incomes. We work with others to help to strengthen the multilateral trading system, and we provide practical support to enable poor countries to participate more effectively in international trade.

I thank the Minister for that answer. Given that the best form of aid is trade, and given the urgent need to rebalance our trade away from the sclerotic eurozone and the potential of our world-class biosciences to tackle food security, does the Minister agree that there is a huge opportunity, through strategic collaborations in agricultural science, to unlock relationships with emerging nations such as India to the benefit of us both?

The UK’s aid budget is, of course, untied, but technology transfer is an increasingly important part of DFID’s programme. For example, through our AgResults programme, we will harness technological innovation so that we can improve agricultural productivity and food security in some of the world’s poorest countries. Part of the Government’s strategy for life sciences is to export the benefits of our research to the developing world.

I thank the Minister for all the work he has done over the years to support the people of Yemen, but he will know that half the people of Yemen are still malnourished. How can we ensure that we give them the capacity to be able to use trade-related skills in order to help themselves?

We see trade as an important ingredient in all our development activities. I recognise the right hon. Gentleman’s own personal interest in Yemen and can assure him that the UK has been in the lead in garnering international support to raise pledged donor contributions reaching $8 billion. The key now is to ensure that those funds are disbursed honestly and effectively.

Value for Money

I am determined to ensure that our budget has the maximum possible impact, and that every pound we spend reaches the people and projects for which it was intended. With that in mind, since taking office I have already reduced the thresholds for ministerial approval. I have also instigated a review to improve the use of our consultants. I shall meet our top suppliers over the coming weeks to ensure that we have better value for money, and in the meantime I am starting to sign off all new supply contracts worth over £1 million.

I am incredibly proud—as are many of my constituents—that the Government are standing by some of the world’s poorest people at a time when things are so difficult at home, but a number of my constituents are understandably concerned when India, for instance, is reported as saying that it does not need or, indeed, want our money. How does the new Secretary of State intend to bridge that credibility gap when it comes to the way in which some—and I stress the word “some”—UK aid money is spent overseas?

My hon. Friend has raised an important matter which I, too, recognise. I have already engaged the Indian Government in discussions—at the World Bank meeting a few weekends ago—and I shall continue those discussions, as a matter of urgency, over the coming weeks. I think that as the aid budget enables countries to develop—and far fewer countries are classed as lower-income than 10 or 20 years ago—and as they move from aid-based to trade-based support, we must work with them carefully to establish what constitutes a responsible transition package, and that is what I am discussing with the Indians.

I, too, warmly welcome the new Secretary of State to her post. Of course we all want to see value for money, so in the spirit of openness and transparency, will she tell the House when she will publish her report on the Department’s use of private consultants?

I have already made it clear that we will take a number of actions in relation to the work that I arranged to be done, and I urge the hon. Gentleman to wait and see what steps we are able to take. The key to all this is ensuring that we understand when we should do things in-house and when we should opt for external support, and then working out how we can secure much better value for money. Many of the countries in which we operate are fragile and conflicted, and therefore need specialist skills. I think that it is right for us to use consultants; the question on which I have challenged the Department is how we can use them far, far better.

I welcome all the Ministers to their new responsibilities.

When Lord Ashdown conducted a review of the impact and value for money of DFID emergency aid, he emphasised the importance of resilience and preparedness in disaster-prone areas. Does the Secretary of State believe that the potentially tragic impact of Hurricane Sandy on, in particular, vulnerable Caribbean nations offers us an opportunity not only to provide immediate assistance, but to evaluate progress on that agenda of preparedness and resilience?

I am sure that it does. When I attended the UN General Assembly session in New York a few weeks ago, a meeting of so-called political champions was convened to discuss the important issue of resilience. If we can build resilience into our country development plans in the first place, that will be far more effective in terms of taxpayer money than having to pick up the pieces after a catastrophe.

West Bank

We estimate that between 2006 and 2010 the total value of European aid programmes on the west bank averaged $1 billion per year. Our funding aims to support the creation of an independent, viable Palestinian state with a flourishing economy. Our assessment is that, over time, such a state would become self-sufficient, and would no longer require aid.

Many of us consider high levels of aid for the west bank to be an essential investment in the peace process, but now that Israeli settlements are making a two-state solution impossible, how will the Government ensure that the Israeli Government rather than European taxpayers pay the costs of the illegal occupation?

I understand the concept that the right hon. Gentleman has presented, namely that our aid somehow subsidises the occupation. The solution to the problem that he has raised is an enduring peace process that will enable a secure Israel to live alongside a viable Palestinian state, so that aid, compensation or any other such financial support can be rendered less necessary.

Topical Questions

It has been a busy first few weeks in the Department. I have attended the United Nations General Assembly, where I was able to discuss the humanitarian situation in Syria. I have travelled to a World Bank meeting in Tokyo, where I met the Indian Finance Minister, as I have just said. I have taken the opportunity to meet my counterparts at the European Council of Ministers in Luxembourg. [Interruption.] I have introduced new financial controls and instigated a review of consultancy in the Department. I have also managed to visit country programmes in Kenya and Somalia. [Interruption.]

Order. The Secretary of State should also manage to be heard, and she would be helped in that if we could have a bit of order for Mark Pawsey.

In the crisis that is developing in the eastern Congo, there is evidence that women and children are being affected most. What steps is the Department taking to ensure that support gets to those most in need?

We are the third largest humanitarian donor to the Democratic Republic of the Congo, and we focus on working with organisations that specialise in meeting the needs of women and children, such as UNICEF, and with organisations that have a specific mandate to protect the most vulnerable, such as the International Committee of the Red Cross.

I welcome the Secretary of State and the Under-Secretary to their new posts.

The Secretary of State has said empowering women and girls is a central departmental goal, but as a recent International Development Committee report highlights, the Government’s actions have not lived up to their rhetoric on ensuring that women’s empowerment and rights are central to development. Given the specific support that is needed, how will the Secretary of State rectify that?

I take issue with the hon. Lady’s assertion that we have not focused on women and children. Doing so is absolutely crucial, and it has been at the heart of everything we have done, not least through the Prime Minister’s family planning summit, which he held with my predecessor earlier this year. As the hon. Lady will be aware, the millennium development goals focus on areas such as education, women and children, and we are determined to see that continue in the post-2015 goals.

T2. I congratulate my hon. Friend the Under-Secretary on being appointed not only to her new post, but as international champion against violence against women. Will she demand more action from Governments in areas where there is a high prevalence of female genital mutilation, and give support to the brave local campaigners doing amazing work on the ground to combat such human rights abuse? (125617)

I thank my hon. Friend, and pay tribute to her for taking such a passionate interest in this issue. Tackling female genital cutting is a priority for me, and there is now a rising desire in Africa to tackle it. Senegal, Burkina Faso, Uganda and the African Union have all indicated that they want to take this forward. We are currently designing an ambitious programme to help end FGC, and supporting civil society organisations working on the ground is likely to be a key component of our work.

This week in London the Prime Minister will co-chair the first meeting of the UN high-level panel on post-2015 development goals. In this important week, does the Secretary of State accept that we will end the grotesque inequality that continues to scar our planet only through new, responsible capitalism—where ethics and profit are no longer competing options, Governments are active in support of sustainable growth, there is zero tolerance of tax-dodging and corruption, and unfair trade barriers are removed? Does the Secretary of State accept that this radical aid-plus agenda, combining responsible capitalism with social justice, will require a major shift in her Government’s approach to international development?

In talking about the golden thread, our Prime Minister has been very clear about the importance of the key building blocks for all states and societies, such as access to legal rights and respect for human rights. I think having an inclusive society is another important building block, which is why female rights are equally important. We should also listen to the people who are playing a leading role in transforming their countries, such as President Ellen Johnson Sirleaf of Liberia. I draw the hon. Gentleman’s attention to an article she has written in The Times today entitled “Aid is not an alternative to self-sufficiency”. She starts off by quoting Margaret Thatcher, and the article gets better from then on.

T3. India has twice the number of billionaires as our country, yet is home to more than a third of those globally who subsist on less than 80p a day. Will my right hon. Friend set out for the House the steps the Government are taking to make sure that our aid goes to the most needy in India, and is not spent on projects that could and should be supported by the Indian Government? (125618)

I can give my hon. Friend that assurance. My predecessor had already overhauled our development programme in India so that it was more targeted on not only the poorest states, but the poorest communities in those states. However, as India continues to develop, it is right that we continue to examine that programme, which is what I am doing right now.

T4. Following the success in meeting millennium development goal 4 on clean drinking water, the then Secretary of State committed to doubling the number of people with access to safe drinking water and basic sanitation, but we have yet to see any new plans. Will the Secretary of State update the House on what progress has been made on that objective? (125619)

We have focused a lot of our development aid on making sure that there is access to clean water and sanitation, as some of the starkest statistics are in that area. Just one in 20 people in Afghanistan has access to a pit latrine, which tells us the scale of the problem we are seeking to address. The hon. Lady is absolutely right about this, and I assure her that my Department carefully focuses on clean water provision. I will write to her with more details.

Prime Minister

The Prime Minister was asked—


Before listing my engagements, I am sure that the whole House will wish to join me in paying tribute to Corporal David O’Connor of 40 Commando, the Royal Marines, and Corporal Channing Day of 3 Medical Regiment, the Royal Army Medical Corps. We owe them and all others who have lost their lives a deep debt of gratitude. Their courage, their dedication and their sheer professionalism will never be forgotten by our nation, and our sincere condolences are with their colleagues, their friends and their families.

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

I am sure that the whole House will want to associate itself with the Prime Minister’s remarks about our brave service personnel and to send our deepest condolences to their families.

Will the Prime Minister confirm that if he cannot get a good deal for Britain in the EU budget negotiations, he will use the veto and reject any advice on this matter from those who gave our rebate away?

I can absolutely give my hon. Friend that assurance. This Government are taking the toughest line in these budget negotiations of any Government since we joined the European Union. At best, we would like it cut, at worst, frozen, and I am quite prepared to use the veto if we do not get a deal that is good for Britain.

But let us be clear that it is in our interests to try to get a deal, because a seven-year freeze would keep our bills down compared with annual budgets. Labour’s position is one of complete opportunism. Labour Members gave away half the rebate, they sent the budget through the roof and now they want to posture rather than get a good deal for Britain—the nation will see right through it.

I start by joining the Prime Minister in paying tribute to Corporal David O’Connor of 40 Commando, the Royal Marines, and Corporal Channing Day of 3 Medical Regiment, the Royal Army Medical Corps. Their deaths are a reminder of the unremitting danger that our troops face on a daily basis on our behalf. They both showed the utmost courage and bravery, and our condolences go to their family and friends.

The Prime Minister has an opportunity today to get a mandate from this House for a real-terms reduction in the EU budget—which he says he wants—over the next seven years, which he could take to the negotiations in Europe. Why is he resisting that opportunity?

I think the whole country will see through what is rank opportunism. People have not forgotten the fact that Labour gave away half our rebate in one negotiation and agreed a massive increase to the EU budget when in government. Now, today, Labour has not even put down its own resolution on this issue. The nation will absolutely see straight through it. The right hon. Gentleman is playing politics; he is not serving the country.

When it comes to consistency, the Prime Minister seems to have forgotten what he said as Leader of the Opposition just four months before the last general election—[Interruption.] I would have thought that Government Members were interested in what the Prime Minister said when he was Leader of the Opposition. He said:

“At a time when budgets are being cut in the UK, does the Prime Minister agree that in reviewing the EU budget, the main purpose should be to push for a real-terms cut?”.—[Official Report, 14 December 2012; Vol. 502, c. 647.]

That is what he said when he was in opposition. So when it comes to opportunism, this Prime Minister is a gold medallist. At a time when he is cutting the education budget by 11%, the transport budget by 15% and the police budget by 20%, how can he be giving up on a cut in the EU budget before the negotiations have even begun?

We have to make cuts in the budget because we are dealing with the record debt and deficit that Labour left us. If the right hon. Gentleman wants to talk about consistency, perhaps he can explain why his own Members of the European Parliament voted against the budget freeze that we achieved last year. Perhaps he can explain why the Socialists group in the European Parliament, of which he is such a proud member, is calling not for an increase in the budget, not for a freeze in the budget but for a €200 billion increase in the budget—and while they are at it, they want to get rid of the rest of the British rebate. Is that his policy?

Order. Government Back Benchers, including Ministers, are apparently approaching maturity. They must tackle their behavioural problems before it is too late.

The Prime Minister is certainly getting very angry, Mr Speaker, but perhaps he is worried about losing the vote this afternoon. The reality is that our MEPs voted the same way as his on the motion before the European Parliament 10 days ago. He cannot convince anyone on Europe. Last year he flounced out of the December negotiations with a veto and the agreement went ahead anyway. He has thrown in the towel even before these negotiations have begun. He cannot convince European leaders; he cannot even convince his own Back Benchers. He is weak abroad, he is weak at home—it is John Major all over again.

The right hon. Gentleman’s position is completely incredible. He says he wants a cut in the EU budget but he does not sanction a veto. We have made it clear that we will use the veto, as I have used it before. So let me ask him: will you use the veto?

Order. I will not be using the veto. I ask the Prime Minister—this is about the 10th time I have done so—to respect parliamentary procedure in these matters.

The south-east region is often regarded as the engine driver of the British economy, but the Solent region faces many challenges, particularly with the announcement of job losses at Ford last week. Does my right hon. Friend agree that the case for a city deal for Southampton and Portsmouth is particularly compelling?

It is particularly compelling that we ensure that Southampton has a city deal. I understand that it is on the list. Obviously the news from Ford was very disappointing; it was a blackspot in an otherwise strong performance by the British automotive industry. I know that the Business Secretary will work very closely with Southampton city council to do everything we can to help people find jobs.

Q2. May I ask a straightforward question which should command a straightforward answer? In the forthcoming police and crime commissioner elections, it is predicted that the turnout will be as low as 20%. Does the Prime Minister think that that gives democratic legitimacy? (125627)

I want the turnout to be as high as possible, but I recognise that in new elections for a new post that is always a challenge. It is even a challenge when we have dedicated Labour MPs resigning from this House to stand as police and crime commissioners. One point that the police and crime commissioner will be able to make in the hon. Gentleman’s constituency is that we should celebrate the fact that since the election crime is down 20%.

Q3. In recent months, northern Lincolnshire has benefited from several positive announcements from the Government and the private sector that will boost the local economy. However, my right hon. Friend will be aware that Kimberly-Clark announced last week the closure of its factory at Barton-upon-Humber, in my constituency, with the loss of up to 500 jobs. Will he assure me that the Government will do everything possible to attract new business to the area? (125628)

I can certainly give my hon. Friend that assurance, and I know that that is sad news for the workers at Barton-upon-Humber. I understand that the local council is working closely with Jobcentre Plus and the company to establish a local taskforce to help employees to find alternative employment, and the Government will give that our support.

Q4. Following the press reporting of the Hillsborough disaster and the phone hacking scandal, self-regulation of the press, by the press, is simply no longer acceptable to the public. More than three quarters of respondents to two recent polls backed an end to media self-regulation. Prime Minister, your Ministers have been briefing against Leveson. Whose side are you on—the public or the press? (125629)

Order. I am not on anybody’s side in this. Members really must adhere to the proper procedures of this House, which they ought to know by now.

I think that we should wait for the Leveson report to come out. A lot of work has been done. I want a robust regulatory system, and what matters most of all, as I said in the House last week, I think, is to ensure that newspapers can be fined if they get things wrong, that journalists can be properly investigated, and that there are proper prominent apologies. We know what a proper regulatory system should look like. We do not have one now; we need one for the future.

First, I echo the Prime Minister’s tribute to our armed forces and fallen comrades. The country owes them, their families and their loved ones a huge debt of honour and gratitude.

Last week, we saw the sentencing of former staff of Winterbourne View hospital who were found guilty of ill treatment and neglect. I had hoped that those prosecutions would help to bring some closure, or at least a sense of justice served, to the victims and their families, but we learned this week that patients from Winterbourne View may have been subject to further abuse and neglect elsewhere. Does the Prime Minister agree with me and the right hon. Member for Sutton and Cheam (Paul Burstow), the former Minister for care services, that care providers such as Castlebeck, which ran Winterbourne View, should be subject to prosecution for wilful corporate negligence?

I pay tribute to what my hon. Friend says about our armed forces.

On Winterbourne View, anyone who saw the television pictures showing how very vulnerable people were being treated would have been absolutely shocked. They, like me and him, I am sure, would want to ensure that the law goes exactly where the evidence leads. If further prosecutions are needed, they should happen. We saw shocking pictures of the shocking things that happened. We should judge our society by how we deal with the most vulnerable and needy people, and what happened was completely unacceptable.

It is welcome that the British economy is out of the longest double-dip recession since the war, but Lord Heseltine says today:

“the message I keep hearing is that the UK does not have a strategy for growth and wealth creation”.

Whom does the Prime Minister blame for that?

What Michael Heseltine actually said was:

“The Coalition is fundamentally on the right track...I praise its work”

on the

“industrial strategy plans…pioneering city devolution”


“the revolution in education and tackling unemployment.”

Frankly, we can spend all afternoon trading quotes, but I think that Michael Heseltine is making a much bigger point. In this excellent report, he is saying that our economy became too centralised over decades, with regions and nations of our country falling behind. Manufacturing halved as a share of national income under the previous Government. During the boom years in the west midlands, for instance, there were no net new private sector jobs. He is dealing with the big issues; what a pity that all the right hon. Gentleman can do is stand up and try to read out a quote.

The Prime Minister says that Lord Heseltine’s report states that he is on the right track, but goodness knows what it would have said if it had stated that he was on the wrong track. Lord Heseltine says that there is no strategy for jobs and growth, that business has no confidence in the Prime Minister, and that deregulation—the Prime Minister’s chosen approach—is not the answer.

Let me turn to a specific aspect of Lord Heseltine’s report: recommendation 61, with which I am sure the Prime Minister is familiar. Lord Heseltine says:

“The Government needs to set out a definitive and unambiguous energy policy”.

This is obviously an appropriate day to consider that recommendation on energy. By the way, it is good to see the Business Secretary in the Chamber, and I am sorry that that growth committee he is on is so unmemorable that he cannot remember it.

This is an appropriate day to be considering this recommendation so his—[Interruption.] I am rather enjoying this. The Prime Minister’s Energy Minister says he is against wind farms and enough is enough, while his Energy Secretary—[Interruption.]

Order. Let me say to Government Back Benchers: it is very straightforward. Either they calm down or the session will be extended, at whoever’s inconvenience that may be. Let us be very clear. It is incredibly straightforward.

The Prime Minister’s Energy Minister says he is against wind farms and enough is enough, while his Energy Secretary says he is gung-ho for them. Who speaks for the Government—the Energy Secretary or the Energy Minister?

Today the jokes have been bad and the substance has been bad too. It is not a good day. I will tell you why it is a good day to talk about energy policy—because today Hitachi is investing £20 billion in our nuclear industry. Today is a good day to talk about energy because there is more investment in renewable energy under three years of this Government than under 13 years of the Labour Government. It is a good day to talk about energy policy because we have got a green investment bank up and running. That is what is happening under this Government. There has been no change towards renewable energy. Let me explain exactly. We have a big pipeline of onshore and offshore wind projects that are coming through. We are committed to those, but all parties will have to have a debate in the House and outside about what happens once those targets are met. The right hon. Gentleman ought to understand that, if he could be bothered to look at the substance.

That was a completely useless answer. There are investors all round this country who want certainty about energy policy. It is very simple for the Prime Minister. He has one Minister who says he is totally against wind energy—that is the Energy Minister whom he appointed, having sacked the previous guy—and there is the Energy Secretary who says he is gung-ho for wind farms. The Prime Minister just has to make a choice about where he stands. After all, he has a wind turbine on his house, so I thought he was in favour of wind turbines, but here is the reality. Lord Heseltine says in his report that there are people who are resistant to his ideas. We know who they are: the Chancellor and the Prime Minister. The evidence of the past two and a half years is that deregulation, sink or swim—their answer—is not the answer. Lord Heseltine is right and they are wrong.

I have one thing to say. Not you, Mr Speaker, but the right hon. Gentleman—he’s no Michael Heseltine. [Interruption.]

The Russians want to award the prestigious Ushakov medal to Arctic convoy veterans. The Governments of Australia, Canada, New Zealand and the USA have agreed. The UK Government have refused. Will the Prime Minister get this decision reversed quickly so that my constituent, John Ramsey, and the rest of the dwindling band of veterans get the recognition they so richly deserve?

I have every sympathy with my hon. Friend and his constituent. That is why we have asked Sir John Holmes to conduct the review not just of medals in general, but to look specifically at some of the most important cases, of which the Arctic convoys is probably the most pressing. As my hon. Friend asks, he is getting on with it.

Q5. The Foreign Secretary said yesterday that the rules of the House require that Ministers answer questions. So, there is a stash of embarrassing e-mails, isn’t there? Adam Smith had to publish every single one of his e-mails and ended up resigning. Why will the Prime Minister not publish all his e-mails? Can he really be a fit and proper person to judge on the future of press regulation if he will not come clean with the British public? (125630)

There is another rule of the House, which is that if you insult someone in the House, you make an apology. I am still waiting. It is this Government who set up the Leveson inquiry and I gave all the information that Leveson requested to that inquiry.

Q6. The Owl and the Pussycat is a coffee shop in Laugharne in my constituency. Its business rates have just been hiked by 700% and the council is coming after it for the money even though it has not yet heard the appeal, which means that the business might have to close and jobs will be lost. The situation is not unique to Wales, so will the Prime Minister come to the rescue? (125631)

I have every sympathy with the business my hon. Friend mentions. Of course, business rates are a devolved issue, so this is something that needs to be taken up with the Welsh Assembly Government. In England we have doubled small business rate relief to help half a million small firms, made it easier for small firms and shops to claim small business rate relief and given local councils new powers to levy local business rate discounts, for example to support the sorts of shops and pubs he refers to. I think that is the right approach for England and I am sure he will want to take that case to Wales.

Q14. In 2007 the Prime Minister identified Lewisham hospital as one of 29 hospitals he would be prepared to get into a “bare-knuckle fight” over, yet on Monday it emerged that Lewisham’s A and E and maternity services could end up paying the price for financial failures elsewhere in the NHS. Which side of this bare-knuckle fight is he now on? (125640)

We are on the side of the fight for increasing the resources going into the NHS—that is a decision we have taken—including extra money going into Lewisham, and the hon. Lady is on the side of cutting the money going into the NHS. What we have done, which the previous Government did not do, is to set out that there will be no changes to NHS configurations unless they have the support of local GPs, unless they have strong public and patient engagement, unless they are backed by sound clinical evidence and unless they provide support for patient choice. Those sorts of protections were never in place under the previous Government, but they are now.

Q7. In the light of last week’s positive growth figures, does the Prime Minister agree that policies requiring yet more spending, more borrowing and more debt are the precise opposite of what our country needs? (125632)

My hon. Friend is entirely right. Last week’s news was welcome. The economy is growing, unemployment is coming down, inflation is coming down, the rate of small business creation is going up and a million more people are employed in the private sector than there were two years ago. The one absolute certainty is that the worst approach—Michael Heseltine confirms this in his report—would be to see more spending, more borrowing and more debt, because that is what got us into the mess in the first place. The Labour party has only one growth plan: the plan to grow the deficit.

I thank the Prime Minister for his condolences on the death of my constituent, Corporal Channing Day. She was a courageous young lady. She always wanted to join the Army and for eight years served as a medic. Her job was to save lives—to run the line of fire in order to give aid. Imagine what it meant to a wounded soldier to see someone running to help them when all hell was bursting around them and to know that they were not alone. Corporal Channing Day is not alone today. She will soon return to the bosom of her family, to her mother, father, sisters, brothers, friends and family, who loved her dearly, and to the community, which is immensely proud of her achievements. This House and this great nation of the United Kingdom of Great Britain and Northern Ireland salute her courage, bravery and heroism.

Prime Minister, will you agree with me that Army medics are often the unsung heroes of conflict, and will you agree to meet me and my colleagues to discuss the implementation of the military covenant in Northern Ireland?

I would be very happy to meet the hon. Gentleman and his colleagues to talk about the implementation of the covenant in Northern Ireland. It is something I have spoken about with the First Minister and Deputy First Minister in Northern Ireland. I know that there are issues about its implementation, but I hope that it can be done, and I would be happy to have that meeting.

The hon. Gentleman spoke very strongly and movingly about Corporal Channing Day. I think he is absolutely right that those in the Royal Army Medical Corp do a fantastic job. It has been a huge honour and privilege for me to meet some of them, including in Afghanistan. When you see the service they provide, you really can put your hand on your heart and know that British military personnel in theatre are getting medical care that is as good as that which anyone in history ever got. What they do is truly remarkable.

Kettering General Hospital

Q8. If he will make it his policy that the accident and emergency and maternity departments at Kettering general hospital will not be downgraded or closed as part of the Healthier Together review of NHS acute services in the south-east midlands; and if he will ensure that patients and clinical staff at Kettering general hospital will be involved fully in that review. (125633)

Healthier Together has promised that Kettering hospital will retain its accident and emergency and maternity services. Any suggestion otherwise, including by the Opposition, is simply scaremongering of the worst kind.

Kettering has the sixth highest household growth rate in the whole country, and accident and emergency admissions are up 10% year on year. Given that Kettering general hospital has been at the very heart of the local community for well over 100 years, do not local people deserve a clear assurance that our much-loved and badly needed local hospital has a bright future ahead of it?

I gave my hon. Friend the strongest possible assurance. The point that I have made, and which I made to the hon. Member for Lewisham East (Heidi Alexander), is that there cannot be any changes unless there is full public consultation and unless there is the support of local GPs and strong public and patient engagement. In the case of Kettering, that is not on the agenda. As I said, any suggestion by the Opposition is simply scaremongering of the worst kind, and I can see that they are at it again.


Q9. The importance of skills in promoting economic growth has been emphasised again and again in all parts of the House, so why did the number of under-19 apprenticeship starts fall last year? (125634)

The number of apprenticeships under this Government is about 900,000; it is a record number and it has hugely increased.

Q10. The Government recently announced plans to extend the freeze on council tax for a third year. Unfortunately, Labour-run City of York council increased council tax by 2.9% this year and has moved with remarkable speed to confirm a 2% increase next year. Does my right hon. Friend agree that such a rise is apparently out of order and not in the interests of York constituents, and will he urge City of York council to look at this again? (125635)

I will certainly join my hon. Friend in doing that. The Government have made money available so that councils can freeze their council tax for a third year in a row. This is a very important way of demonstrating that we are on the side of people who want to work hard and get on and who struggle to pay the bills. Frankly, all councils should look at the money that is available and recognise that a council tax freeze is in the interests of all our citizens.

When did the Prime Minister become aware of the plans to close Ford plants at Southampton and Dagenham, and was he aware of those plans when the Government awarded a large sum of money from the regional growth fund to that company just a few days earlier?

Obviously these issues were discussed, and we work very closely with all the automotive industry companies in the United Kingdom. As I said earlier, the news from most of them—from Nissan, from Toyota and from Jaguar Land Rover—has been extremely positive. What happened at Ford in Southampton is clearly very regrettable, but we must do everything we can to help those people into work.

Q11. I am delighted that the economy is finally growing, and green growth is a key part of this. Is the Prime Minister still committed to this being the greenest Government ever, particularly when it comes to his policies on renewable energy? (125636)

Under this Government we have seen more investment in green energy in three years than we had from Labour in 13. The green investment bank that we promised is up and running. The carbon floor price that we spoke about is in place. This is indeed a very green Government and we are sticking to our promises.

Q12. The number of people waiting more than four hours in accident and emergency units has more than doubled in the past two years, and the Prime Minister will not intervene to stop the closures of A and E units at Central Middlesex hospital and Ealing hospital; and we now know about Lewisham—and I suspect, despite his weasel words, Kettering hospital too. What confidence can my constituents have that if they end up in casualty they will not have to wait longer for A and E services too? (125638)

I have to say to the hon. Gentleman that I could not have been any clearer about the future of Kettering hospital, and for him to say that is scaremongering of the worst kind. Let me tell him what is happening at the hospitals that serve his constituents. In May 2010, there were 52 patients waiting longer than 12 months. How many are there now? None, under this Government. That is what is actually happening, because we are putting the money into the NHS and Labour would take it out.

Further to the result of the vote on 18 October regarding the contentious decision to axe 2nd Battalion the Royal Regiment of Fusiliers, and given that we have very recently, only last night, met the Secretary of State for Defence, will the Prime Minister meet me and other interested Members from across the House to discuss this issue?

I am always happy to talk to colleagues about this issue, as are, I know, the Ministry of Defence and the Secretary of State. As my hon. Friend knows, we have had to make difficult decisions to put in place the future structure of the Army, with 82,000 regular soldiers and a larger reserve of 30,000 Territorial Army soldiers. I think that is the right approach. Clearly we have had to make some difficult decisions about regiments and about battalions, and in that we were guided by trying to save as many regiments and cap badges as possible. I think that the proposals have taken that into account and are right, but of course the Defence Secretary will go on listening to representations.

Q13. Will the Prime Minister confirm that the overall cost of the changes to child benefit, which are due to be introduced next January, will be more than £100 million? (125639)

The changes that we are making to child benefit, where we are taking child benefit away altogether from those people earning over £60,000, are going to save around £2 billion. It is necessary to take tough decisions in order to deal with the massive deficit—bigger than Greece’s, bigger than Spain’s—that the hon. Gentleman’s party left us. I have to say that I find it completely inexplicable that the Labour party, which says that it wants those with the broadest backs to share some of the burden, opposes the idea of taking child benefit away from people who earn over £60,000, £70,000, £80,000 and £90,000. I do not see why those on the Opposition Front Bench should go on collecting their child benefit when we are having to make so many other difficult decisions.

Will my right hon. Friend join me in congratulating Douglas Gill International in my constituency on its Queen’s award for enterprise for successfully exporting sports marine wear? Does he agree that this is a fine example of British business on the up, promoting the best of British and, indeed, the best of Erewash?

My hon. Friend makes a very important point. We need to have export-led growth in this country and a rebalancing of our economy. That is what the increase in exports, manufacturing and industrial production is all about, but we need to go further and faster, which, indeed, is what Michael Heseltine’s excellent report today is all about.

Points of Order

On a point of order, Mr Speaker. It has not escaped the notice of this member of the Procedure Committee—and I doubt that it has escaped yours—that during topical questions to the Secretary of State for International Development, two of the questions were put by Front-Bench spokesmen and neither of them was topical in its content. There is a grave danger, is there not, that the whole purpose of topical questions might be undermined if they are monopolised by Front-Bench spokesmen instead of Back Benchers?

What I would say to the hon. Gentleman is that I always keep a beady eye on these matters. I will reflect carefully on what he has said. It has been a practice of long standing for Opposition Front Benchers to come in to an extent, but there is a balance to be struck and I am very happy to consider whether that balance is right. I accept the point of order in the spirit in which it has been volunteered to the House by the hon. Gentleman, who is a member of the Procedure Committee and who is now, I think, the most senior member of the Panel of Chairs.

I am not sure that there is a further to that point of order, but we will take the hon. Gentleman’s point of order nevertheless.

Thank you, Mr Speaker. There are reports that film moguls are going to be allowed to use Big Ben. Could you ensure that Members of this House will be able to vote on that decision if it is made?

The hon. Gentleman is usually keenly attentive to his chances to contribute to debates in the Chamber. May I suggest to him that the debate on the Floor of the House on 8 November might be a suitable opportunity for him to seek to catch my eye or that of the occupant of the Chair at the time? He will then be able to develop his thoughts on this matter in full detail.

On a point of order, Mr Speaker. Might it be possible to place in The House magazine an article, perhaps written by the Clerk, on the importance of using the third person singular, rather than “you”, in this House? This is not just fussy parliamentarianism, but a very important point that allows us to exchange the most bitter views without making them personal. We should not “you” it, but make references in the third person. We should not throw away what is quite an important protection for us. We can be friends outside the House whatever anger we have in this Chamber, provided that we keep it to the third person.

I appreciate the support of the right hon. Gentleman and think that his point is valid. I will reflect on his particular suggestion. Certainly, if there is to be an author, it is scarcely conceivable that there could be a better author than the person whom he has just identified.

If there are no further points of order and the appetite for them is exhausted and the Clerk is suitably complimented, we can move to the 10-minute rule motion.

European Union Free Movement Directive 2004 (Disapplication)

Motion for leave to bring in a Bill (Standing Order No. 23)

I beg to move,

That leave be given to bring in a Bill to disapply the European Union Free Movement Directive 2004/38/EC; and for connected purposes.

I am pleased to introduce the Bill, which is intended to restate a basic tenet of national sovereignty—the control of our borders, and the principle that who comes to live and work in our country from foreign countries should be a matter largely for the British people and their elected representatives in this House, and not solely at the discretion and by leave of a foreign political entity. Free movement between sovereign countries should first and foremost be dictated by our own national interests. That basic truth seems to have been lost in a rush to be as communautaire as possible since 2004, to the detriment of many of the constituents in whose name we serve.

Few would deny that it was a major error of judgment for the Labour Government not to exercise their right to a moratorium on the free movement directive for seven years, as most other EU countries did. It could be argued that it retarded efforts to tackle welfare dependency, low educational attainment and problems with skills and social mobility among many indigenous British workers.

A recent YouGov poll found that 78% of voters who had deserted Labour since 1997 wanted net migration to be reduced to zero. Even 67% of voters who had remained loyal to the party believed the same thing. There is no evidence to suggest that they regard EU migration differently from non-EU migration.

I argue that the forthcoming free movement of potentially huge numbers of Romanian and Bulgarian citizens to the UK from early 2014 will render the Government’s welfare reforms null and void, such will be the likely distortion of the labour market. In addition, as things stand, it is very likely to put a huge strain on delivery in pinch points across the UK, an issue to which I will return later. The UK Statistics Authority estimated that in the second quarter of 2012, there were 1.4 million EU citizens in work in the UK, 107,000 unemployed and 436,000 economically inactive, and 388,000 children of EU citizens.

The Bill is not about ending immigration from the EU, although there is little empirical or academic evidence that mass EU migration since 2004 has been a definitive net benefit to the UK. Instead, it is intended to ensure that Her Majesty’s Government vary the free movement directive, not least as a response to significant public concerns about immigration. It is about not repealing but disapplying the current directive.

The Bill is about ensuring that the most talented and hard-working foreign workers and their families come to this country from the EU to help our economy grow and thrive in a fiercely competitive global marketplace. It also highlights an asymmetry in the Government’s stated policy on reducing net migration to the tens of thousands. We rightly focus on that policy, but we accept EU migration as a fait accompli.

Hon. Members will recall a television documentary shown in 2006 entitled “The Poles Are Coming!”, which presaged the impact of mass EU migration on my constituency. I make no apology for seeing the issue through the prism of my constituency and the impact that uncontrolled and unplanned mass migration has had on it. Peterborough is a regional hub for transport, logistics, food processing and packaging, agriculture and horticulture, but youth unemployment nevertheless stands at 11.5%, almost twice the regional average, and almost 12,000 people in my constituency are on out-of-work benefits. Some 34,480 national insurance numbers have been issued in Peterborough since 2004, in a local authority area whose population in 2001 was 156,000, and new arrivals make up one in five of the population, which is currently estimated at 184,000.

There is an acute shortage of primary school places. In nine of the 33 primary schools in my constituency, two thirds of the children do not speak English as their first language, and in two schools the figure is more than 96%. The problem is one of not just resources but churn—the in-term movement in and out of schools of hundreds of children of itinerant and other seasonal workers—which regrettably has an impact on educational attainment. Likewise, health services in the city are under considerable strain. The number of births in the city leapt from 3,395 in 2003 to 4,680 last year, and GP registrations of EU migrants have almost trebled over the past 10 years.

The free movement directive is primary legislation that governs the right of member state nationals, and their families, to move or reside freely in other member states for up to three months, without any conditions other than that they hold a valid passport and identity card. The directive specifically makes it clear, inter alia, that people should have “sufficient resources” for themselves and their family members so as not to become a “burden” on the “social assistance cover” in the host country, and that they should hold comprehensive sickness insurance.

The host member state is not obliged to provide social assistance during the first three months of residence, and UK law precludes EU citizens and family members from residing purely on the basis of that initial right to reside. Indeed, the UK has a habitual residence test. Perversely, however, some benefits such as jobseeker’s allowance are granted under UK law. That is an example of the UK gold plating as the directive’s exemption is clear.

Host member states are permitted to require EU citizens and their family members to register with the authorities and impose proportionate and non-discriminatory sanctions on those who fail to do so. The UK Government fail to do that, and—bizarrely—the Home Office told me in a parliamentary answer last week that such actions are “optional”.

Member states are also permitted to restrict rights of entry on grounds of

“public policy, public security or public health”.

However, the UK Government have failed ever to test those conditions or the specific issue of “proportionality” that is implicit in the directive in respect of the deportation of persistent and prolific criminals who are EU citizens. The Government have rarely invoked their ability to refuse or withdraw any right under the directive in cases of

“abuse of rights or fraud”.

Recently, the Spanish Government, which are facing calamitous levels of unemployment, have begun to interpret the free movement directive much more robustly. All EU citizens and family members have to register with the authorities if they wish to reside in Spain for more than three months, and through that process the Spanish authorities can check whether the requirements of the directive regarding residence after that period are fulfilled. The authorities also require notification of any change of address or marital status.

In summary, the free movement directive confers the right to reside on many people who do not work or who do not have enough resources to be self-sufficient. It allows ready access to the UK’s welfare system and throws up obstacles to the implementation of robust systems to check that nationals from other EU member states, and their families, are abiding by the rules and do not pose a drain on the health service or a criminal threat to society. It prevents automatic deportation of nationals of other EU member states when they have committed a crime.

The formula in the Bill for stopping objectionable aspects of EU law, such as the free movement directive, is straightforward. The legislation simply has to state that its provisions apply notwithstanding any provision of the European Communities Act 1972.

Under my Bill, EU nationals and their family members would have the right to reside in the UK for up to three months, on the basis of a valid passport or ID card. That would facilitate tourism, and give those willing the opportunity to find work. With the right to reside for three months, EU nationals would have to be in work or self-sufficient, and they would gain access to benefits only in exceptional circumstances. EU nationals and their family members would need to be registered, and they would have no access to public funds during the first 18 months of residence. After 18 months, British citizens would be given priority over EU nationals for local authority housing allocation, which is in particularly scarce supply. There would be no right to reside based solely on being in vocational training until the EU national in question had completed five years’ continuous employment.

The right of permanent residence would typically be granted only after a continuous 10-year period of legal residence, rather than five years as at present. EU nationals and family members would be deported after being convicted of a crime in the UK and sentenced to 12 months’ imprisonment, or more, in the same way as other foreign nationals.

Time does not permit me to elucidate further, but this Bill would be popular and promote fairness and equity, not least for the hard-pressed UK taxpayer. It would facilitate the migration of only the most talented EU citizens to our country, and seek to restore the almost forgotten principle of member state subsidiarity and UK national sovereignty. It is for us to decide about our borders and who we allow into our country, and for those reasons, I strongly commend this Bill to the House.

I rise to oppose this sad and bad Bill. The Bill is sad because I find it uncomfortable to hear in the House remarks about fellow Europeans that cast them in a uniformly negative light. There are more British citizens living and working in other EU member states as a share of our population than there are EU member states’ citizens living here. The Bill is a message to the 700,000 to 800,000 British citizens who are made to feel welcome in Spain despite complaints that they are taking advantage of Spanish health care, old-age care and social security services; it is gravely worrying to the many British citizens who are opening businesses all over the EU; and it is an insult to the many EU citizens who live and work in our country and contribute enormously to all levels of our economy.

This is a bad Bill, and I wonder whether the hon. Member for Peterborough (Mr Jackson) has discussed it with employers in Peterborough and the wider region, which is one of the great agricultural and food processing centres of our economy. The east Europeans are there, as they are in Hull, which is also a great food processing centre in the English national economy, because local employers cannot find local workers to do the work. That has been the pull of immigration throughout the ages. Enoch Powell had to allow many people from different Afro-Caribbean countries into the NHS, and the textile factories and foundries of west and south Yorkshire had to invite many people from Pakistan, because they could not get the legendary indigenous working class to do those jobs.

Mr Evan Davis of the BBC made a programme on that very subject. He went to King’s Lynn and the region and tried to find local workers who were willing to get up at 5 am to fill the sandwiches or to pick fruit and vegetables in uncomfortable conditions, but he could find none. The Bill would condemn to abolition the many firms in the hon. Gentleman’s region and elsewhere in the country that use that labour.

Let me turn to my more fundamental objection. The Bill is part of the growing attempt by the Conservative party to break apart our relationship with the EU. The four freedoms—the movement of goods, capital, people and ideas—are fundamental. We cannot sustain the other three freedoms and say that we cannot have the free movement of people. In the 1980s, we were grateful for the free movement of people, when the “Auf Wiedersehen, Pet” generation had to leave their own country because of the disastrous economic policies of the Prime Minister—I forget her name—and go and find jobs in Germany.

If the hon. Gentleman wants to destroy the four freedoms, he should come out and say so, but he should not think we can have sauce for the British goose, but not sauce for the German Gans or the French oie—I do not know what the Polish word for “goose” is. We cannot have a rule that says we will control every EU citizen who comes into our country and not have the 26 other EU member states saying exactly the same thing. The Minister for Immigration has made that point repeatedly in Home Office questions.

Specifically on the question of the 2004 enlargement, the hon. Member for Peterborough has confused—I do not mean this disrespectfully, but he may be confused—the free movement of citizens and the free movement of workers. The moment countries join the EU, their citizens have complete free movement as citizens. They must obey local laws—they must register with a police station in Germany, and register and have a residents permit if they want to live in France. I do not object to that part of the hon. Gentleman’s Bill. That is why I was in favour of national identity cards—I do not want to raise old issues, but they are how the rest of Europe has some idea of who comes to live within the different frontiers of EU member states.

The hon. Gentleman is right that the free movement of workers could have been delayed by seven years. To begin with, France and Germany applied those measures, but within two years they found they had become unworkable and lifted them. With the free movement of people, Poles, Slovakians and so on came into France and Germany. Different nationalities go to different areas of the world. People from south-east EU member states, including the incoming Romanians, tend to gravitate to Italy and Spain, while we get Poles—for historic reasons, we have a huge Polish community here, and have had since the end of the war. We have Ryanair and easyJet flying backwards and forwards with utterly full planes between all the main British and Polish cities.

I welcome that for one simple reason: Britain has always depended on a flow of European workers, particularly the citizens of the sovereign Republic of Ireland. The greatest number of non-British EU workers on the Olympic games site, which was finished magnificently and on time thanks to a huge input of EU workers, came from the Republic of Ireland. If the hon. Gentleman’s Bill was put into full force, we would be saying to every friend and family in Ireland, “You’re not welcome here, except on highly restrictive terms”. Coming partly from a Scottish-Irish family, I find that very depressing. The free flow of people between our two countries has been a positive thing.

The hon. Gentleman is right that after 2008, when we had the crash and the sudden spike in unemployment, employment conditions got extremely tight. As we speak, unemployment is rising in Leeds, Bradford and Rotherham, as again we create a two-nation Britain under this Government. The plain fact is that hundreds of thousands of firms as well as landlords, as well as our tax and national insurance system—everyone who works has to pay taxes and NI—have benefited from the contribution of non-British EU workers. Hundred of thousands of firms that might otherwise have relocated outside the UK in search of hard-working and, yes, low-wage workers—that is a problem—stayed in the UK.

The answer to that is to build more houses and schools, and to ensure that workers in all firms are treated properly. We should be applying the agency workers directive and the new living wage idea to ensure that employers cannot discriminate against local employees—because they would have to pay everybody fairly. That is my solution to the problem. The solution is not to put up barriers or destroy the free movement of people. If we do that, we kiss goodbye to the free movement of goods and capital. Let us not think that we can take away one pillar of what makes the EU work and assume that the other pillars will stay standing. They will not. Any discrimination that we choose to apply against any fellow EU citizen will be turned back and applied to us. We need visas to go to Australia and many Commonwealth countries, and many of the latter refuse to accept our agricultural products, but they are fully accepted in every EU member state.

I once asked Radek Sikorski, the Polish Foreign Minister, “What about the Poles coming to Britain?”, and he said, “Every time a Pole feels he has to leave Poland for Britain it is a disaster, a national tragedy, a loss to our nation.” He is right. We need to build the economies of these countries. Mrs Thatcher massively increased UK contributions to the EU in the 1980s in order, she said, to help grow Ireland, Portugal, Spain and Greece. At that time, those countries were growing, and Ireland became a country of immigration, not emigration.

For those reasons, I ask the House to reject the Bill. I do not propose to divide the House, but, without wishing to challenge the integrity or position of the hon. Gentleman, I hope that every decent Member of Parliament will think a bit more deeply and understand that a Britain open to the world is good for us. We cannot be open for business and closed to foreigners.

Question put and agreed to.


That Mr Stewart Jackson, Heather Wheeler, Mr Frank Field, Priti Patel, Mr Philip Hollobone, Gordon Henderson, Henry Smith, Mr Andrew Turner, Zac Goldsmith, Caroline Nokes, Kate Hoey and Mr James Clappison present the Bill.

Mr Stewart Jackson accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 14 December 2012, and to be printed (Bill 86).

Local government Finance Bill (Programme) (No. 3)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Local Government Finance Bill for the purpose of supplementing the Orders of 10 January 2012 in the last session (Local Government Finance Bill (Programme)) and 21 May 2012 (Local Government Finance Bill (Programme) (No. 2)):

Consideration of Lords Amendments

1. Proceedings on consideration of Lords Amendments shall (so far as not previously concluded) be brought to a conclusion three hours after their commencement at today’s sitting.

Subsequent stages

2. Any further Message from the Lords may be considered forthwith without any Question being put.

3. The Proceedings on any further Message from the Lords shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.—(Mark Lancaster.)

Question agreed to.

Local Government Finance Bill

Consideration of Lords amendments

I must draw the House’s attention to the fact that financial privilege is involved in Lords amendments 1, 2, 4, 5 10 and 19 to 85. If the House agrees them, I will cause an appropriate entry to be made in the Journal.

Clause 1

Local retention of non-domestic rates

This group contains all the amendments made in the other place to the provisions allowing for a business rates retention scheme. The scheme will, for the first time in a generation, allow local areas to share in the proceeds of growth. Continuing the precedent set when the Bill was considered in this House, each amendment was introduced by the Government to make the changes that we believed would improve the Bill. The majority of the amendments are highly technical and, in several cases, have been introduced in direct response to the discussions that we have continued to hold with local government on the operation of the scheme. Other recommendations give effect to local government’s preferred approach or, in one case, to a recommendation of the Delegated Powers and Regulatory Reform Committee.

Owing to their largely technical nature, I do not plan to explain each amendment in the group in detail—though I could be tempted—but I will outline what they do. They enable the Government to deliver on our commitment fully to fund the five-year discount on business rates up to the state aid de minimis level for businesses moving to an enterprise zone before April 2015. They provide for the scheme to operate on local government’s preferred administrative approach. That approach—the collection fund approach—is currently used for council tax, and so is familiar to it, and works well. They also provide for the appropriate assurance of calculation and information supplied under the business rates retention scheme.

The amendments will also clarify some points of detail for local government. In particular, they will remove any ambiguity about the basis on which local authorities can apply for a safety net payment on account—an important process. Authorities anticipate that they will need safety net support and will be able to access that support before the end of the financial year, and to simplify the arrangements for designing a pool without reducing the safeguards in place for pool authorities by removing the duty to undertake consultation with those likely to be affected by a pooling designation or revocation and in direct response to strongly held views of local government on this point.

Taken together, these technical amendments to the non-domestic rating provisions will give effect to smooth implementation of the rates retention scheme, and I urge hon. Members to agree to them.

As the Minister said, many of the amendments in this group are technical. I do not wish to take up too much time on them—[Interruption.] That is the Minister’s job, not mine. If his Whips want him to talk for longer, that is his problem. There are a number of issues I want to raise in relation to one or two amendments.

We do not have a problem with Lords amendment 1 or the subsequent amendments dealing with discretionary rate relief in enterprise zones, or with Lords amendment 2, which implements a recommendation by the Delegated Powers and Regulatory Reform Committee. We support that, as we did in the other place.

The group of amendments beginning with Lords amendment 19, however, which deals with administration of the rate-retention system, raises a couple of questions on which I would appreciate clarification from the Minister. Billing authorities are being required to estimate their income before the start of the financial year. That estimate will determine the amount to be paid to Government as a central share and the amount to be paid to precepting authorities, to be transferred to their own funds. There are a number of amendments consequent on that change. If amounts are different, I understand that they will appear as surpluses or deficits on the authority’s collection fund. However, will the Minister clarify what would happen where a firm paying a major proportion of the authority’s business rates closed down mid-year—an example we have raised throughout the Bill’s progress? Surely that would lead to a deficit in the collection fund, so what would the local authority’s position be? Can a collection fund be run at a deficit, or would the shortfall have to be made up from reserves? I should make it clear that I am talking about a really catastrophic event, such as a firm that pays maybe 20% or 30% of the business rates in an area closing down, as happened with Alcan in Northumberland, for example.

As the Minister said, Lords amendments 34 to 38 deal with the arrangements for assurance. It is rather typical of the muddled way in which the Government go about things that they are having to make arrangements to take effect subsequent to the abolition of the Audit Commission before they have actually abolished it—so far they have only a draft Bill. The amendments ensure that the Secretary of State will define the assurance requirements though directions and produce certification instructions—I am sure he will work on them personally over the Christmas holiday. The amendments show the mess that the Government have got themselves into. They have no legislation ready to abolish the Audit Commission, yet they are having to put in place provisions in this Bill. The Government have ended up giving yet more power to the Secretary of State, in what was supposed to be a Bill to give more power to local authorities.

I would be grateful if the Minister clarified those points before we move on to the next group of amendments.

I welcome the stance that my hon. Friend the Minister has taken with this Bill. It is sensible to adopt the Lords amendments that he has outlined, and I am glad to see them. When I was responsible for the Bill in my previous role, they seemed to me to offer useful clarification and to strengthen the Bill.

I am particularly pleased that my hon. Friend referred to pooling. It is important that we encourage local authorities to explore to the maximum the opportunities that pooling makes available. The reason for that—the reason I think the Lords amendments are helpful—is that as the economy picks up, as it will, development opportunities will in many cases enhance the interdependency of neighbouring authorities. My London borough of Bromley is a good example. Many people in Bromley work in central London, but they are effectively part of the same economic area. The borough council pays for the services it gives people as residents, who contribute to the London economy through their work in the west end, the City of London or elsewhere, including, in some cases, across London borough boundaries—they may work in Croydon or somewhere such as that.

There is therefore great merit in giving local authorities not only the maximum flexibility to pool, but the maximum encouragement to do so, because one would not want a council to approve a substantial development on its boundaries that might bring it all the financial benefits, but which needed planning support from neighbouring authorities under the duty to co-operate and their good will because of where the work force come from. Pooling is important, and the Lords amendments give us sensible flexibilities.

Importantly, pooling fits with some of the other parts of the Government’s localism agenda. One of the arguments made earlier—I noted it in their lordships’ discussion—was about enabling local authorities to have adequate critical mass with their retained business rates, which they can use for tax increment financing, for example. The Bill has been important in taking steps forward on that. A pool will have a greater critical mass of funding, which can be used to approach the markets and enables greater leverage.

My hon. Friend did a great deal of work on the Bill, for which I thank him. The Select Committee on Communities and Local Government visited Manchester some months ago, where we saw some fantastic examples of regeneration. Some had gone incredibly well, although admittedly one or two had not gone quite so well. Does he feel that pooling arrangements are likely to help such projects in future?

I believe they can. Manchester is an interesting example. Indeed, my hon. Friend must be intuitive, because I was about to say that pooling can often fit sensibly with the other development that we have seen—in which Manchester has been something of a pathfinder—which is the establishment of joint authorities. It is a classic means of dealing with co-operation by local authorities from the bottom up without the need for—dare I say it in the current climate?—unitary reorganisation. The ability to form a joint authority creates the ability to procure jointly, pool business rates jointly and, therefore, invest jointly, as well as a raft of other things, which are beyond the scope of this Bill.

I am with the hon. Gentleman on pooling and how economies such as those in Greater Manchester work, but he should not get too carried away with the Manchester example, because my understanding is that Tory Trafford and Liberal Democrat Stockport are not very keen on the idea of pooling resources.

All those authorities signed up to the concept of the joint authority. Any pooling will have to involve sensible negotiation between the various authorities about what is in their mutual interest. I would have thought that a degree of caution was perfectly understandable at this stage in the process. The important thing we are doing in this Bill is putting in place the legislative means to enable areas such as Manchester and other areas with pooling to take up more of the opportunities as, I hope, confidence grows. I hope that my hon. Friend the Minister will confirm that the ability to pool is yet another reason the Government have no intention of going down the route of imposing top-down unitary reorganisation—I am sure this is a timely moment at which to remind ourselves of that point. I hope that the opportunity to pool will also encourage other conurbations to develop a similar approach to that being taken in Greater Manchester. Pooling would provide a means of achieving many of the benefits of what were once described as city regions, without the need for the top-down imposition that went with those arrangements.

Does my hon. Friend envisage pooling working across county boundaries? My constituency lies in the east Lancashire economic area—within which co-operation would work well—but quite a lot of the economic activity spreads over into Yorkshire. For example, a lot of businesses have their headquarters in Lancashire and premises in Yorkshire.

I must confess that my view on that has shifted somewhat. I was initially sceptical about cross-county boundary pooling, because of the potential administrative complexities involved. For example, we would have to consider how to deal with the tier split where two-tier areas were involved. It might be easier to achieve where only adjoining unitaries were involved. We should not rule it out totally, however. It is important to recognise that the proposal that we are debating fits into the broader localism agenda, in that it recognises that economic geography might not follow the purely administrative geography of an area. I am in favour of maximum flexibility, and my hon. Friend has raised a good example. In my area, Bromley would probably fall within the area of Greater London, but there are some local authorities on the edge of London, such as Thurrock, Slough and Watford, whose economic geography would make them as much a part of the London economic area as of the shire county of which they are a part. I hope that the Government will consider this as an option, provided that the technical issues can be resolved. Perhaps the Minister will deal in detail with the important point that my hon. Friend has just raised.

It is particularly useful to explore that point in the context of the pool providing an opportunity to raise funding for infrastructure investment. Earlier this week, in our debate on the Public Service Pensions Bill, we discussed raising the cap on the amount of local authority pension funds that could be put into infrastructure investment. I favour raising the cap, as the Bill proposes. The proposal before us today would provide yet another means of raising revenue streams that could be put together to enhance the amount of a local authority’s investment leverage.

It is worth bearing it in mind that that happens elsewhere in Europe. We see a degree of it in the Federal Republic of Germany, but the area that I know best is in France. The French have developed quite sophisticated models of co-operation, known as communautés urbaines. They are generally similar to a Greater Manchester-style joint authority, stretching across a conurbation. An example that I know well is that of greater Toulouse, which, thanks to the pooling of resources, has been able to procure, invest and deliver infrastructure jointly. This has led to the development of a metro system in Toulouse, a tramway going out to the suburbs and improved road links to Blagnac airport. Toulouse is an historic city with a considerable learning pool in the centre, but it is also inextricably linked to Aérospatiale and the avionics industries around Blagnac, which are outside the municipal boundary. I am reminded that such co-operation was the logic behind local enterprise partnerships.

My hon. Friend knows my constituency well. I see parallels between his examples and the expansion of Southend airport, which is owned by Southend unitary authority but located in the district of Rochford. How would the proposals impact on my constituents? It sounds as though they could present an exciting opportunity.

I am quite well acquainted with my hon. Friend’s constituency, and I have visited Southend airport on a number of occasions. He has provided a classic example of how pooling could unlock significant opportunities. As he knows, Southend’s boundaries are tightly drawn around its urban area, but it is clearly part of a broader south Essex conurbation. Its development opportunities, of which the airport is an example, lie almost entirely outside its boundary, but people would think of them as being part of Southend because they form part of the economic area. It would cause all manner of upheaval if we were to resolve the problems through the top-down imposition of a unitary structure in south-east Essex, as we have seen happen elsewhere.

This kind of pooling, however, would give Southend and the neighbouring Rochford district an incentive to share the benefits that would come from the development of areas in Rochford that were on the periphery of Southend. The pooling of the retained rates would enhance Rochford’s council tax base. The measure would also make Southend a more attractive business destination, because it would be able to open up economic development and infrastructure opportunities that it would be unable to do entirely within its own boundary.

My hon. Friend’s constituency provides a good example of how pooling could work. I can envisage Southend, Rochford and, say, Castle Point forming a natural economic subset that would hold together very willingly. The south-east local enterprise partnership, comprising Essex, Kent and East Sussex, is the largest in the country. That would probably not be regarded as a logical area in which to pool, although it might be more appropriate in some of the smaller LEPs that fit more tightly the economic geography of their area.

Speaking as an Essex boy myself, I should point out that, in areas such as that of my hon. Friend the Member for Rochford and Southend East (James Duddridge), pooling would take place across boundaries, in a sense. Although all the places concerned are all in Essex, Southend is a unitary authority and the two areas surrounding it—its hinterland—are still districts in the two-tier county of Essex. The point about the ability to pool across boundaries is important, and I hope that my hon. Friend the Minister will address the technical issues involved. In this case, how would we resolve the question of Southend unitary authority not having to do a tier split of its benefit from the pool, even though the two surrounding districts would have to take into account the tier split? I do not think that the problem is beyond being reconciled, and such pooling would provide a powerful tool to encourage inward investment into Southend.

The same would apply to another part of the Thames Gateway with which I am familiar, on the other side of the river, in the Medway towns. It would be sensible to give them the opportunity to have a pooling arrangement with their adjoining districts in the two-tier county of Kent. It would therefore make sense to sort out any technical obstacles to that type of flexibility. As my hon. Friend the Member for Rossendale and Darwen (Jake Berry) suggested, even starker cases that cross long-established country boundaries could still make sense in economic terms. There is considerable merit in the proposals.

It has rightly been observed that this proposal is by no means the only element in what is a considerable stream of technical amendments in this group. It would probably be appropriate if I now dealt with the others as best I can—unless I stray off course, Mr Speaker, although I know that you will not let me do that.

We are all looking forward to the development of the hon. Gentleman’s further arguments with eager anticipation.

Before my hon. Friend rushes on to his next point, may I slow him down a little and draw him back to the pooling of funds? He has spoken eloquently about my constituency of Rochford and Southend East, but does he think that areas involved in such pooling arrangements need to be contiguous? For example, there are many synergies between Thurrock, a unitary, and Southend, another unitary. The two are close, but they do not actually touch. Similarly, along the Thames Gateway line, we see places such as Margate and other seaside towns that could work well together even though they are not neighbours. Would they still be able to pool?

That is taking the argument beyond what I was considering when I left office, which gave me more time to reflect on these matters. My hon. Friend and I both had a little time to reflect over the summer. Like me, he has been putting it to constructive use. I think there is merit in providing that option: why not? If the economic geography is such that the two areas hang together, why should we rule out such a possibility? In this day and age, investment decisions will be driven precisely by factors such as economic characteristics, infrastructure opportunities and the nature of the work force and the market, rather than by geographic contiguity alone.

I mentioned earlier, for example, that Slough has a great deal in common with the economy of west London, without being actually contiguous to the London borough of Hillingdon. As I recall, a little bit of the county of Berkshire is located between the two. If such arrangements were wanted, merit could be seen in allowing Slough to enter into a pool with Hillingdon, with some other west London authorities or with Watford. Equally, going in the other direction, Slough might want to involve Reading. There is an argument for saying that there is a natural economic geography that starts almost at the Hammersmith flyover and which goes out through Brentford and then through what is generally called silicon valley. Those opportunities are also important.

My hon. Friend is making an interesting argument. I wonder if I might plumb his expertise a little further. It occurs to me that some of the local enterprise partnerships that have been formed are natural economic areas that plainly do not run according to local authority boundaries. I am thinking particularly of what I think is called the Gatwick partnership, which runs from Croydon all the way down to Brighton. Indeed, in my own county of Hampshire, we have the M3 partnership, which runs up that artery towards the businesses and markets of London. I want to examine my hon. Friend’s knowledge of this subject. Is it possible for local authorities to pool partially, as it seems to me that in certain cases—with the Solent partnership, for example—there would be some logic in that? It seems right and proper that some of the moneys from Portsmouth and Southampton should be invested in that partnership or be centred on its work, but perhaps those two cities could look outside that area as well. Will he explain how that might work?

I suppose it comes back to the technical issues that I mentioned on coping with tier splits in two-tier areas. We should not rule out the ability to try to achieve that, particularly if it can be done by agreement. It would be interesting to see if partial pooling could be achieved. It might not be something that happens at the beginning, but the point to remember about the whole of this local government finance reform is that it is making a major change in providing the legal mechanisms and the tools necessary for local authorities to use in relation to retained business rates. That is very important in itself, as this is, after all, the first time in many of our political lifetimes that the Treasury has forgone an element of revenue.

At the moment, all the business rates are, in effect, nationalised, taken back to the Treasury and distributed on a formulaic basis, which does not provide the sort of incentive for economic development and investment that we all wish to see. The Bill puts that right. I hope it will be possible to make pooling more attractive over time. As the deficit is paid down and the economy grows, the local share available to go into the pool can perhaps increase from its current 50% level. That would make retention as a whole and pooling more attractive, because the pot produced from the pool will, of course, be greater, and therefore even more attractive as a potential investment vehicle. I think we should examine the case with some care.

As my hon. Friend develops his argument, I would be interested to hear how his views might relate to east Lancashire. When we formed the LEP, the borough council of Rossendale, which I represent, did not want to go into a wider Lancashire LEP. Eventually, it did so, however, and I think the then Housing Minister made absolutely the right decision on that occasion, as the arrangement has proved to be a great success. When it comes to the pooling of two-tier authorities, I could foresee a situation in which Rossendale council, which looks south towards Manchester for economic growth, would want to team up with the Associated Greater Manchester Authorities, but Lancashire county council could wish it to remain within Lancashire county for pooling purposes. In that exact situation, in my hon. Friend’s opinion, who would have sway and which argument would win?

If I were a lawyer, like my hon. Friend, I would be advising the parties to try to come to some negotiation rather than litigating, if I might put it that way, as it would not be in the authorities’ interest to get into a dispute. The general approach has been, of course, that in the two-tier areas the bulk of the incentive should rightly go to the planning authority, as its members have to take the decision to allow development that may sometimes be controversial. It is right for such an authority to say to its electors, or to the people who sometimes complain about what the planning authorities do, that there are benefits to come from looking at the bigger picture, some of which will be captured for the local communities. I can see why that would be a sensible development, but it does not mean that I have become an advocate of unitary restructuring. It might be simpler, but the fact remains that the two-tier option has been taken into account in respect of the structures put in place by the Bill.

If I may finish the point, I will happily give way to my old sparring partner. I think we should be prepared, as we develop the scheme, to provide maximum flexibility.

I apologise for not having been able to be present at the start of the hon. Gentleman’s contribution, but I have come in at a very interesting part of his speech. Does this not show up the exact problem with two-tier areas and two-tier authorities, in that fostering and supporting economic growth is so much more than simply the planning system, as it involves education, skills and transport? Many such responsibilities in two-tier areas are held at county level rather than at district level.

I do not see it as a problem; the issue can be grappled with and dealt with. The right hon. Gentleman and I have debated unitary restructuring on more than one occasion over the years, and we end up on different sides of the fence. My point is that through co-operation it is possible to ensure that the economic development levers, which generally sit with the county council, can be sensibly allied to the development levers, which sit with the district council. A good example can be found in Essex, as Chelmsford has a successful local planning authority in Chelmsford borough council—it might now be Chelmsford city council since the town has been given city status—and has not experienced the friction that is sometimes used as an argument to justify unitary authorities. Both the county and its county town have recognised that it is in both their economic interests to grow Chelmsford as a significant hub in that part of the world. In that case, unitary reorganisation was not necessary to achieve significant economic regeneration in Chelmsford.

I have to say that some of the downsides of unitary reorganisation that we saw under the previous Government, when it was enforced against the wishes of the local authorities, were a distraction from the serious job of getting on with economic development, promotion of the area and encouraging investment by sensible planning decisions. These issues can never be seen in isolation. The incentives in the Bill, linked with the duty to co-operate in planning terms, provide a further incentive for sensible arrangements not only between adjoining local planning authorities, but with the county authority as a highway authority, as highway considerations are often important in determining where development is acceptable and therefore where the investment might come from.

There is a bit of queue. I shall give way to my hon. Friend the Member for Bedford (Richard Fuller) first, as he rose first.

I am grateful for my hon. Friend’s generosity in giving way, first because I know that he is eager to deal with other matters in his speech and I do not wish to delay him unduly, and secondly because to describe myself as a novice when it comes to local government finance would be an insult to novices throughout the country. I have learned more about the subject as a result of listening to my hon. Friend, who exhibits the patience of Aristotle teaching one of his slower students.

My question relates partly to the issue of two-tier and one-tier local authorities and their decision-making processes, and partly to the interaction between the attitudes to pooling taken by local authorities and those taken by the local and broader business communities. May I briefly draw a parallel? Sometimes there is a clear understanding between teachers and people who wish to set up a free school, but the project is delayed by some intransigence or slowness of understanding on the part of the local authority. Similarly, different authorities have different ideas about how they wish to proceed. For example, my own county, which benefits from unitary structures, contains some rather small areas. Will my hon. Friend comment on that?

My hon. Friend has raised a couple of important points. I shall begin with the last, if I may—and I shall not forget the other Members who wish to intervene.

We should not make the error of thinking that unitary status is always a solution. Some unitary authorities that are on the small side do not follow their natural boundaries, and their critical mass is towards the lower end of the scale in terms of economic, financial and managerial capacity. It is clear to us now that the creation of a string of fairly small unitaries was not necessarily the best solution. We should not assume that unitary is always good and two-tier is always bad. Some unitaries work and some do not; some two-tier areas work, while in others there are tensions. We need to ensure that they work better in future, and I believe that the Bill and the Lords amendments will be one means of helping them to achieve that.

My hon. Friend’s point about perception is important too. I experienced some frustration when I was first elected as a councillor in the London borough of Havering in 1974—[Interruption.] I must tell the hon. Member for Hartlepool (Mr Wright) that it was a little after the Municipal Reform Act 1835, but it was a while ago nevertheless. In those days, not only was I one of the few members of our 60-odd-strong council who were interested in taking part in the pan-London bodies that we had to have, but I was regarded as very dangerous—dangerously outward-looking—because I had stood for the Greater London Council as well. In 1974, some members of the borough council still thought in terms of the two predecessor authorities. We did not have cabinets in those days, but there was concern about whether the committee chairmen were drawn sufficiently from the Romford end or the Hornchurch end, even if they were members of the same political party. That inward-looking tendency is one of the bigger challenges that we face in dealing with local government as a whole, but attitudes have improved massively since those days in 1974, which is to local government’s credit.

Order. I remind the hon. Gentleman that we are discussing an amendment. I know that he has been tempted away from it by the hon. Member for Bedford (Richard Fuller) and that he wishes to return to it, but I should like us to get past 1974, right up to date, and back to the amendment, on which I know that the hon. Gentleman was about to enlighten the House.

You are, as always, the guardian of rectitude in this place, Mr Deputy Speaker, and, as you know, I am always the willing servant of rectitude in these matters. The point that I was making was that we had indeed moved on a great deal since 1974, in terms of thinking as well as chronology. The situation is better than it was. However, we still have to deal with some entrenched thinking. I believe that, by promoting pooling, the amendment can break down some of that thinking, which, as was pointed out by my hon. Friend the Member for Bedford, can spill into other areas of policy decision-making as well as those relating to local government finance. I hope that, by encouraging economic investment, pooling will make it easier and more desirable to provide the educational opportunities cited by my hon. Friend in the context of free schools. His point was well made: all the various legislative measures interact as part of a broader localism agenda.

Now I must not forget the hon. Member for Hartlepool, who tried to intervene earlier.

I am grateful to the hon. Gentleman, who is being characteristically generous and engaging. I want to move on from 1862, when he was first elected, and away from 1974, when you were born, Mr Deputy Speaker—I hope to catch your eye again: that is why I am trying to be as helpful as possible—to today. Has the hon. Gentleman had a chance to look at Lord Heseltine’s review, which was published today, and which strikes me as very significant in relation to local economic development? In particular, has he had a chance to read recommendation 11? It states:

“All two-tier English local authorities outside London should pursue a path towards unitary status. The Government should encourage this and work with authorities to clarify the process and enable it to happen.”

Notwithstanding his earlier comments, does the hon. Gentleman agree with that?

I note that the hon. Gentleman has both read them and counted them. Anyway, I cannot pretend to have read all of Lord Heseltine’s tour de force of a report, but the cursory reading that time allowed me while I was preparing my brief notes for the debate—[Laughter]—did give me a flavour of that helpful and valuable document. I think that it contains much that we, as a Government, would wish to take on board. As for the specific point raised by the hon. Gentleman in relation to recommendation 11, I do not agree with it, for reasons that I have already given. I believe that an imposed form of unitary restructuring is unnecessary, and that the devices and tools given to local authorities by the amendment reinforce the reasons for not following the route proposed by Lord Heseltine.

My hon. Friend the Member for Bedford (Richard Fuller) described himself as a novice. I am less modest—I thought that I understood the amendment before I came into the Chamber—but, despite the eloquence of my hon. Friend the Member for Bromley and Chislehurst (Robert Neill), I have become somewhat confused. Perhaps you will allow me a slightly lengthy intervention, Mr Deputy Speaker, in order to avoid a lengthy speech from me later in the debate.

The “Commentary on Lords amendments” in the explanatory notes refers to “billing authorities” and “precepting authorities”. My hon. Friend has already referred to planning authorities and highways authorities. In fact, the commentary uses the phrase “major precepting authorities”, but does not explain what “major” means in this context. Perhaps I am slightly sensitive about such terms because I represent a slightly smaller precepting authority, but is a distinction being made between parish and district councils, or between major and minor precepting authorities? My hon. Friend knows a great deal more about these matters than I do, but I was equally confused by the reference to billing authorities, given that police and fire authorities are effectively billing authorities. What do those terms actually mean?

My hon. Friend makes a fair point. You will be familiar, Mr Deputy Speaker, with a joke that is well known in local government finance circles. It is said that the formula grant is like the Schleswig-Holstein question. Only three people have ever understood it; one is dead, one has gone mad, and the third has forgotten. The same is true of some of the complexities of local government finance. When I arrived at the Department for Communities and Local Government, I was not wholly convinced that that was a joke, but there were some very sound officials who put me right on all occasions.

The nomenclature to which my hon. Friend refers is slightly historic, but it is important. For practical purposes, the billing authority will be the unitary authority in the case of the Southend part of my his constituency, and the district council in the Rochford part. In most cases the major precepting authority is a county council. In Greater London, in my case, the London borough of Bromley is the billing authority, but the Mayor of London and the Greater London authority is the major preceptor. I think fire and police authorities also count as major precepting authorities. That is because of how they have developed and become separated from the county councils, although they were originally intended to be part of them.

Let me finish the point, and if I am not making it clear, perhaps I will need to repeat it.

The major preceptors have certain statutory rights in respect of consultation, and they do more or less what its says on the tin: they deliver a significant amount of services, especially in county councils, and in two-tier areas the county council precept will often be the largest part of the bill, rather than the district council element of the council tax, although they are, of course, itemised separately.

My hon. Friend is endeavouring to explain the situation, but I am now less convinced that I support the amendment. The explanatory notes refer to passing a proportion of the amount to the major precepting authorities. Will that be in only one direction, so Southend could pass to Essex county council, but Essex could not pass to Southend even if it was in the wider county’s interest?

That point is slightly different from the pooling point. I was talking about the provisions that deal with the tier splits. We are returning some of the moneys—the business rate—directly to local government. That was formerly taken by the Treasury and distributed by formula grant. Some of those moneys will be needed to fund district council functions in two-tier areas, and some will be needed to fund county council functions in two-tier areas.

That highlights why there has to be a passing of money. It is collected by the billing authority; that is the case at the moment. Southend borough council and Rochford district council collect all the business rates and then have to send the money to central Government as, I think, a monthly payment. It is then returned in the local government finance settlement each year, predominantly by way of the formula grant—although there are one or two other grants, as this is a slightly complex world. We are allowing authorities to keep some of that money at the beginning, but because it has to fund two types of authority—

Order. I am sure the hon. Gentleman will want to address his comments through the Chair, rather than personally across the Bench to his colleague, as he is currently doing. I am also sure that he is not filibustering; I can see that there is no organisation.

As you know, Mr Deputy Speaker, the last thing I would ever wish to do is filibuster. I have spent a large proportion of my life dealing with local government finance, and I wish we could explain things in one simple sentence, as that would make life a lot easier for many of us.

I have outlined the essence of the issue, and the reasons why we have references to billing authorities and major precepting authorities. There are other precepts; the parish council can levy a precept, but it is not a major precepting authority. Very occasionally, there will also be certain levies put on top, but for our current purposes we need not discuss that and add further confusion.

Usually the district council in a two-tier area is the planning authority, and it is also the billing authority. Importantly, however, for investment purposes—this is where this point links in with the question of business rates retention—the highway authority will tend to be the county council, which often has significant economic development resources that district councils do not have, and the education authority will be the most significant body for the skills agenda and in attracting the required work force. That is why pooling makes sense. It links the pooling of resources with pooling and collaboration on a raft of issues, which is essential in the modern world.

For many of us, Mr Deputy Speaker, my hon. Friend’s speech is not a filibuster; it is a master class in explaining some of the intricacies of non-domestic rates and pooling. Having listened to his account of the complex relationship between different authorities, I think I may be slipping from my novice ranking. I ask my hon. Friend to return to his response to the hon. Member for Hartlepool (Mr Wright), who referred to today’s report by Lord Heseltine. Does my hon. Friend agree that there are some valid arguments in Lord Heseltine’s suggestions on unitary authorities, as they will help to simplify the relationship between businesses and local authorities? This is an extremely important point. As this is a master class, I think all of us would like to hear a very full response from my hon. Friend.

My hon. Friend is very kind. He knows a great deal about this topic, as I know from having visited Bedford on a number of occasions when we were in opposition and he was the prospective parliamentary candidate.

Order. I say to the hon. Gentleman that we do not need to rehearse the CV of any Member. Furthermore, I am worried that Members may become more confused about the issues in hand after his detailed explanations. We must now address the amendment alone, and not embark on a tour of the country.

Order. Let me reiterate that we will now deal with Lords amendment 1 and we will not be distracted from that.

Lords amendment 1 is important because it enables pooling, and pooling is one reason why irrelevances such as unitary reorganisation need not trouble the Government in the future.

I represent a Birmingham constituency. The local government structure in the area arises from the fact that the West Midlands county council was abolished in 1985 and three functions were dealt with separately: the police and the fire service are now precepting authorities, while the integrated transport authority—it used to be the passenger transport authority—is not a precepting authority. In terms of encouraging economic development, therefore, there is a key question as to whether pooling serves to improve transport. Will the Minister comment on—

Order. The hon. Member for Bromley and Chislehurst (Robert Neill) is a former Minister; he is not still a Minister. Also, interventions need to be shorter. If Members wish to speak, they should put their name down, and I am sure we will be able to accommodate them.

My hon. Friend makes a fair point. When seeking clarity on these matters, we are sometimes bedevilled by history. A passenger transport authority would, I suspect, be a levying authority rather than a precepting authority for the purposes under discussion. At present, it would not necessarily fall within the scope of this pooling. It is important to raise such topics, however. There must be a means whereby the pooling of retained business rates includes incentives for transport authorities. In Greater Manchester, the solution has been the creation of a joint authority. There might be merit in considering a similar solution in Birmingham. I am sure the Minister will take that point on board, and I ask him to address it in his concluding remarks. It is also worth pointing out that if there is a large amount of money in the business rate pool, more money can, of course, be leveraged into investment, particularly for infrastructure purposes—and infrastructure investment is precisely what authorities want.

The key point is that public transport is an important driver of economic development, and it therefore needs to be encouraged through the pooling process.

I agree, and I am sure we will be able to find ways to address that. The amendment in question and the pooling of business rates is one of the tools, and it is an important one, but it is not the only tool the Government are putting into the local authority box.

Greater Manchester provides a good example for pooling resources, and not only in terms of business rates. The 10 district councils of Greater Manchester have already decided to pool their local transport fund allocations. That is a gamble for some of them, because they are not getting the direct benefits of the new Metrolink extensions, while other parts of the county are.

That was a helpful intervention, and I hope that it will go some way to helping my hon. Friend the Member for Birmingham, Yardley (John Hemming), because one important source of funding for passenger transport authorities is the allocations that come to the constituent local councils, which they can then use. This is about ensuring that there can be a sensible linkage. If they pool the allocations, it will be logical to find a mechanism whereby they can pool the product of the retained business rate, so that the two can be aligned. The hon. Gentleman makes a very important point.

Understanding, always, that this is exclusively about the pooling of business rates, it occurs to me that there might be the odd occasion when councils wish to pool some element of their council tax. Will my hon. Friend confirm whether that was considered as a possibility for the Bill or whether it was rejected at an early stage?

When I was in the Department, we did not get into the issue of pooling council tax, for the simple reason that we were dealing with the business rates element. As I saw it, the first step in the equation was to secure the return of a significant amount of business rates revenue to local authorities, rather than for it to be taken back through the nationalised system, as I might call it, whereby it goes to the Treasury and is then redistributed through the formula grant, the point being that over a period of time we would be able to make local authorities less dependent on formula grant as the principal source of their income.

Interestingly, we should perhaps explore, as a future step along the road, the means whereby local authorities might voluntarily—I stress that this must have a voluntary basis—examine ways of aligning their council tax receipts. After all, authorities can seek to pool the product of that in their investment decisions at the moment. I referred to the success of the communautés urbaines in France, which has come about because they have been able to set up joint investment funds and procure directly. In a sense, they have been putting together the product of their local taxes, and we might able to do that. We must remember that the billing authority sets the level of council tax in any given place, but there is no reason now why local authorities in an area could not deliberately align their council tax levels if they wished to do so to make sure that their area was not disadvantaged economically by having different rates within what might be almost the same built-up area. That is important. The level of the business rate is not changed by these proposals, because the multiplier continues to be set nationally, but the incentive is in retaining the product. The amendment provides us with the important tool of giving maximum flexibility in the pooling of the product to get the maximum benefit from investment for the area, particularly in economic development terms.

On the amendment and its effect on enterprise zones, I have been an advocate of the do-it-yourself enterprise zone, which I hope could be achieved in east Lancashire, along the M65 corridor, by using the localisation of business rates. Local authorities would be able to give rate holidays to people who set up new businesses within a DIY enterprise zone. This amendment allows a deduction for rates which should have been in the enterprise zone. Would that preclude the DIY enterprise zone or encourage such a zone?

It ought to be a means of encouraging that type of zone. That seems to be the logic of the proposal. Being able to offset and make the deduction is necessary in ensuring that there is an incentive. I am sure that the Minister will be able to confirm that position. My hon. Friend the Member for Rossendale and Darwen makes an important point about the interaction of pooling and enterprise zones: it is important not to create a disincentive to having an enterprise zone. Equally, we must not create a distortion in the local economy whereby investment is purely sucked into an enterprise zone because of the benefits, and other parts of the local authority area or the conurbation, which happen not to be in an enterprise zone but have real development opportunities, are set at a disadvantage. It is important to make sure that we get that interaction right.

We have heard today how Lord Heseltine has produced an excellent report, and we must remember that he was the first proponent of enterprise zones. Does my hon. Friend believe that if the amendment is agreed to there will be a peppering of mini enterprise zones, which could be run by local authorities or groups of local authorities by pooling business rates and enabling advantages locally? There could be, for example, a mini silicon valley in Rossendale. Does he think that is the likely outcome?