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Commons Chamber

Volume 552: debated on Tuesday 6 November 2012

House of Commons

Tuesday 6 November 2012

The House met at half-past Eleven o’clock


[Mr Speaker in the Chair]

Business before Questions

City of London (Various Powers) Bill [Lords] (By Order)

Second Reading opposed and deferred until Tuesday 13 November (Standing Order No. 20).

Oral Answers to Questions


The Chancellor of the Exchequer was asked—

Affordable Housing

1. What recent discussions he has had with the Secretary of State for Communities and Local Government on fiscal incentives to encourage the construction of affordable housing. (126517)

The Chancellor is at the G20 meeting in Mexico, so I have been asked to reply.

On 6 September, the Government announced an ambitious package to boost housing supply, including an additional 15,000 new homes for affordable rent and bringing 5,000 empty homes back into use. We will also help a further 16,500 first-time buyers get back on the housing ladder through Firstbuy. The package includes a £10 billion debt guarantee, which will enable housing associations to benefit from the Government’s hard-earned fiscal credibility.

I thank the Minister for that answer, but we have lost 120,000 construction jobs since 2010 and we are building 100,000 fewer affordable homes than even this Government tell us we need each year. When the Minister reflects on the choices he had before him, does he still believe that slashing the affordable housing grant by 60% at the same time as giving a massive tax cut to millionaires was the right thing to do?

In fact, the decision we made to move to a new affordable rent model to get more homes for the money available to us—the auction was over-subscribed, with 170,000 properties in the affordable sector being built under that model—was a good use of very limited resources, and a much more efficient use of them than the previous Government achieved.

Has the Chief Secretary had a chance to look at the report by the National Self Build Association, “Lessons from International Self Build Housing Practices”, and does he agree that if we were to do more to help self-builders, we could help solve many of our housing problems, as well as increase local council tax revenue and stamp duty for the Treasury?

I have not had a chance to study that report, but, in the light of my hon. Friend’s question, I certainly will. He will know that the new national planning policy framework specifically encourages self-build, and many of the planning system reforms the coalition Government have pushed through will help self-builders to achieve their aspirations.

The Chief Secretary spoke about the bidding for affordable housing, but the well has now run dry. Housing associations in my area have no more money to spend on affordable housing, and the birth rate in my area is increasing. What will the Chief Secretary do to ensure that in future people in Hackney and around the country have affordable homes to live in?

I want to see more affordable homes built. That is why this Government are the first Government to put in place Government guarantees for housing associations; that was never done by our predecessors. The Infrastructure (Financial Assistance) Act 2012, which received Royal Assent last week, will enable housing associations to benefit from £10 billion of Government guarantees, lowering their cost of finance and enabling them to build more homes. That has been widely welcomed in the housing association sector, including by the National Housing Federation. I think the hon. Lady should welcome it, too.

I greatly welcome the progress that has been made, but it is equally important to ensure that we have good construction standards for new housing. May I also impress upon Ministers the importance of supporting the zero-carbon homes target?

Let me start by paying tribute to my right hon. Friend for the work he did at the Department for Communities and Local Government, especially his leadership of the empty homes programme, which is making a major contribution to bringing homes back into use. I understand the importance of the zero-carbon homes programme. The building industry has argued for that, and I hope we will make progress on it soon.

Job Creation: Private Sector

Despite these tough economic times, under this Government private sector employment has increased by more than 1 million since 2010, as firms benefit from our stable and credible fiscal policy, but, of course, we are not complacent. We are helping private sector growth through a radical programme of reforms and investment, including the £2.5 billion regional growth fund, issuing up to £50 billion in guarantees for infrastructure and housing, and funding 250,000 more apprenticeships than the previous Government had planned.

Today marks the halfway point of the coalition Government. As the Minister said, there are 1 million more private sector jobs than there were in 2010 and more people in employment than ever before. Will he work even harder to build on his fantastic record in the second half of this Government’s term?

Yes, I certainly will. [Interruption.] I know the Opposition do not like to hear this, but my hon. Friend is right to highlight the good performance of the British labour market and the facts that the private sector has created more than 1 million new jobs in the last two and half years and that there are more people in employment in this country than ever before.

Under the Labour Government, we lost 65,000 private sector jobs in the west midlands. In stark contrast, since 2010 my constituency alone has already secured £400 million in investment. What more will my right hon. Friend do to secure private sector jobs in South Staffordshire and the west midlands?

My hon. Friend is right to say that the Labour party’s record on encouraging the private sector was at its most catastrophic in the west midlands, for which the figures he gave are absolutely correct. That is why another £124 million of funding for projects in the west midlands was announced in round three of the regional growth fund and why we are providing additional support for the automotive sector, which is so important in his constituency and region. Of course the improved climate for business, the removal of regulations and the funding for apprenticeships will benefit businesses in the west midlands, as well as in the rest of the country.

Yesterday, a report from the Welsh Government showed that scrapping tolls on the Severn bridge would increase the value of the Welsh economy by £107 million. Will the right hon. Gentleman commission a report to show how quickly the cost of reducing and getting rid of the tolls would be offset by the increase in income tax resulting from more jobs created in Wales?

The hon. Gentleman mentions finance in Wales, so I would have thought he might have started by welcoming the announcement I made two weeks ago on a new funding settlement for Wales and the commitment, in principle, for the first time ever—this was never made by the Labour party when it was in government—to borrowing powers for the Welsh Government. That is a major step forward. We will hear shortly from the Silk commission, which is examining revenue-raising powers. I will certainly consider the matter the hon. Gentleman raises in response to the Silk commission.

The Chief Secretary to the Treasury will be aware of ongoing ministerial discussions about setting the rate for corporation tax in Northern Ireland. Can he advise on the recommendation the Treasury will make to the Prime Minister, who will be setting that level and making a determination shortly?

I am not going to prejudge the work of the joint ministerial working group, which includes Ministers from the Northern Irish Government, my colleague the Exchequer Secretary, who is there on behalf of the Treasury, and the Northern Ireland Secretary. That group will soon produce a report, which will come to the Treasury and to the Prime Minister. We look forward to considering it and responding in due course.

Does the Chief Secretary agree that the seed enterprise investment scheme announced by the Government in the past year is the sort of highly attractive fiscal incentive that will both encourage angel investors to back entrepreneurs and, at the same time, stimulate the job growth in the private sector that we need?

I congratulate my hon. Friend on the work he has been doing to promote the seed enterprise investment scheme. His description of it is absolutely right, and I know it is being looked at widely by investors who wish to invest in small firms in this country. I hope it will help to transform the landscape for that sort of investment in newly formed companies in this country, and I hope that he will continue his hard work.

When the Government introduced their flagship policy on a national insurance holiday scheme they proclaimed that about 400,000 businesses would benefit. In answer to a parliamentary question in May, Ministers told me that about 16,000 applications had been received. Will the Chief Secretary tell the House how many businesses have now applied? Is it not time to listen to Labour and the Federation of Small Businesses, and extend this scheme across the country and ensure that all small businesses can benefit from it?

I think we have heard yet another unfunded spending commitment from the Labour party in that question. The hon. Lady is right to say that this scheme has not been taken up as widely as we had expected, which is why we are putting in place other measures to support small and growing businesses: the funding for lending scheme will get finance to small firms; tax incentives of the sort just mentioned by my hon. Friend the Member for Braintree (Mr Newmark) will help to get investment in small and medium-sized enterprises; and of course the Government have set a target of 25% of procurement from small firms, too. That is the right policy for small businesses in this country.

Labour Statistics

3. What recent assessment he has made of the level of employment in (a) Kettering constituency, (b) Northamptonshire and (c) England. (126519)

The number of people in employment in the year to June 2012 was 47,000 in Kettering, 347,000 in Northamptonshire and 24,497,000 in England. I am pleased to tell my hon. Friend that the number of people employed in each of those three areas is higher than when the Government took office.

The employment rate in Kettering is well above the national average. Of all the policy options before the Chancellor, which offered the best prospects of sustained, long-term and lasting employment growth for my constituents in the borough of Kettering?

The one policy that brought the coalition Government together was our determination to deal with the record budget deficit we inherited. When the Government came to power, the previous Government were borrowing £300,000 a minute. We have cut the deficit by 25%, which has brought confidence and jobs back to Britain.

As an English and a Yorkshire MP I have a great interest in how the Heseltine review, “No Stone Unturned”, will help my region. Some of us in Yorkshire are very pleased with the report, because there is a glimmer of hope for more jobs and more investment in Yorkshire. What will the Treasury do to follow up the report that it commissioned?

This Government rightly commissioned the report because we believe that Lord Heseltine has a lot of experience in that area. We will study it carefully and will respond in due course.

Does the Minister realise that unemployment in my constituency went down last month? Does he also realise that in the neighbouring constituency, Corby, the unemployment level fell by 5%? Does that not show that the Conservative-led Government is succeeding in Northamptonshire?

My hon. Friend is absolutely right. In the first two years of this Government, the private sector created 1 million new jobs whereas in the last 10 years of the previous Government the sector created about half of that figure.

One way to tackle youth unemployment in Kettering and Northamptonshire and across the UK would be for the Government to commit now to repeating Labour’s tax on bank bonuses on top of the bank levy to fund much-needed new jobs for young people. Is the Minister aware that in some parts of Northamptonshire, such as Corby, the number of under-24s on the dole for more than 12 months has gone up by a shocking 233% in just the last year?

I am not surprised that the hon. Lady is talking about youth unemployment, because in the last 10 years of her Government it rocketed by 72% from 534,000 to 921,000. The previous Government created the problem and this Government’s policies are bringing the number down.

Employee Ownership

4. What assessment he has made of the fiscal implications of the Government’s proposed employee-owner scheme. (126521)

6. What recent representations he has received from businesses on the fiscal implications of employee ownership. (126523)

The Government expect that the scheme will cost up to £100 million in 2017-18. The initial estimate will be refined following the Department for Business, Innovation and Skills consultation on the implementation of the new employee-owner status, which involves engagement with business and others and will close on 8 November. The annual breakdown of the estimated Exchequer cost of the policy will then be published at the autumn statement once it has been certified by the Office for Budget Responsibility.

Will the Minister update the House on the response he has had from businesses and business organisations about the new employee organisation ownership scheme?

I am pleased to tell the House that the likes of the Federation of Small Businesses, the British Chambers of Commerce and the Institute of Directors have warmly welcomed the proposal, which will help entrepreneurs and start-up businesses.

Studies have shown that employee-owned companies grow as fast as limited companies, are more resilient and better at creating and keeping jobs, and have higher levels of staff well-being and fairer pay, which means that they are proven to create social value. As well as removing current tax incentives, will the Government consider a new capital gains tax relief for businesses sold into employee ownership?

My hon. Friend will be aware of the Nuttall review, which reported last week. The Treasury is also considering its role in helping employee ownership to support growth as well as options to remove barriers, including tax barriers. That work is being considered in the run-up to the autumn statement.

Does the Minister agree with the chief executive of Sainsbury’s, who said that “trading employment rights” for company shares is

“not what we should be doing”?

What Sainsbury’s does is a matter for Sainsbury’s, but I also point out the comments made by the likes of the leaders of the Federation of Small Businesses, the British Chambers of Commerce and the Institute of Directors, who have said that this measure will help entrepreneurs, start-up businesses and the fast-growing companies that we need. Surely the whole House should welcome that.

Given that the Government have been keeping extremely mum about the tax avoidance implications of the scheme and that it looks like a wide-open tax loophole for the better off, what capital gains tax avoidance does he estimate it will create?

In the design of the scheme we will take steps to deal with tax avoidance opportunities to ensure that we do not create any loopholes, but this is a scheme that will encourage entrepreneurs and start-ups to provide businesses with an opportunity to expand rapidly, and it is exactly the sort of flexible approach that this country needs in the current economic climate.

Will the Minister clarify the status of the idea of trading employee rights for share ownership? It has been described as a voluntary scheme, but does the Minister accept that it will swiftly become a de facto compulsory scheme? What level of employee shareholding is anticipated? The media have speculated that it could range from 2,000 from 50,000. It might be acceptable at 50,000, but it would be very different at 2,000.

There will be a range of options—the minimum is 2,000, and the maximum is 50,000—but this is not going to be a matter that is compulsory. It will not be the right answer for every business, but there are some businesses that need flexibility to find employee status somewhere between a full employee and someone who is self-employed such as a partner, as many hundreds of thousands of people are. I think that it is a sensible, pragmatic response.

Public Sector Borrowing

5. What the level of public sector net borrowing was in the (a) first six months of 2012-13 and (b) equivalent period in 2011-12. (126522)

Public sector net borrowing totalled £37 billion in the first six months of 2012-13, compared with £62.4 billion in the equivalent period in 2011-12. However, income and expenditure vary throughout any year, and it is too early to draw firm conclusions about the year as a whole.

Between 2010 and 2015, debt will increase under the coalition by £465 billion in just five years in real terms. How much of that debt is due to an increase in borrowing for higher welfare benefit costs as a result of the Chancellor’s double-dip recession?

I am amazed that the hon. Gentleman has the temerity to talk about debt when the legacy of the previous Government has made it clear that it has been the worst in the G7. The Office for Budget Responsibility has said that the changes in Government spending have directly added to gross domestic product, and have helped matters, rather than subtract from it.

Government borrowing will be higher when multinational companies pay royalties, management charges and technical licence fees between group companies and across borders, which will depress taxable profits in the UK and shift them abroad. Ensuring such payments properly reflect the service or technical knowledge provided is a complex transfer pricing issue, so does the Minister share my view that tackling abuses in that area is not about the number of HMRC staff but about ensuring that they have the right expertise and experience?

My hon. Friend is absolutely right. It is crucial that the right skills are there, but we have taken a role internationally in leading this. In fact, in Mexico, the Chancellor is leading the way across the world in making sure that we have a co-ordinated regime.

I do not quite understand why the Minister is reluctant to be straight with the House on the facts, particularly given the question asked by my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop).

Order. I am sure that the hon. Gentleman is not suggesting that any Minister would be anything other than straight. He may want to deploy another word with reference to dealings with the House.

Absolutely. Perhaps it was inadvertent—I would not in any way wish to imply that the Minister was deliberately obfuscating on the facts. I wanted to pick up on a specific question. As I understand it, public sector borrowing in the first six-month period of the last financial year was £62.4 billion. It was £65.1 billion in the first six months of this financial year, so will he confirm that that is £2.6 billion higher, that borrowing has risen, and that the deficit has gone up?

No, the numbers vary from month to month. The hon. Gentleman needs to wait until the end of the financial year. January is the key month for these things, as he knows, but if he is interested in getting matters straight on the facts, will he clarify the shadow Chancellor’s suggestion that there was no structural deficit before the recession, because according to the IMF not only was there a structural deficit but it was the worst in the G7?

As I understand it, Mr Speaker, we ask the questions—the Minister is supposed to answer them. Why will he not confirm that borrowing figures are higher and that the deficit has risen? Will he stop being so complacent, get a grip of our economy and public expenditure, and confirm that the Government will keep their promise? The Chancellor said that the coalition Government will take responsibility for balancing Britain’s books within five years, so will they keep that promise?

The facts are as I set out, but if the hon. Gentleman is implying that in some way he is against a deficit, that he wants to pay down the deficit, can he explain why he can hold that position and simultaneously be in favour of increasing borrowing? The shadow Chancellor is on the record as saying that his plans mean a short-term increase in borrowing. Let him say by how much and when.

Order. I am chairing these proceedings. Let me just make it abundantly obvious to the Minister: the hon. Member for Nottingham East (Chris Leslie) gets two questions. He does not get a third and it is not the business of the Opposition to answer questions in this Chamber—that is the responsibility of the right hon. Gentleman in respect of Government policy. Let us be clear about that.

Notwithstanding what we have just heard, surely, given the still very high and worrying levels of public debt, is it not incumbent on all coalition Members, from whatever party, to continue to support the Chancellor in the very difficult decisions he may have to take in the coming months that may amount to further cuts to public spending?

It is in everyone’s interest to support the path we have embarked on to pay down the deficit. We know that the confidence in the UK economy, which has led to record low interest rates, depends on credibility—a credibility that the policies of the Opposition, by borrowing more, would jeopardise.

Long-term Unemployment

7. What recent assessment he has made of the effect of the Government’s fiscal policies on the level of long-term unemployment. (126524)

9. What recent assessment he has made of the effect of the Government’s fiscal policies on the level of long-term youth unemployment. (126526)

15. What recent assessment he has made of the effect of the Government’s fiscal policies on the level of long-term youth unemployment. (126533)

The UK labour market is showing some signs of recovery. There are more people in work now than ever before, and youth unemployment is at its lowest since 2011. The Youth Contract was launched in April to support up to 500,000 young people into employment, and the Work programme has been under way since 2011.

In my constituency, long-term youth unemployment is not up by 11% or 110%, but by 1,150%. Will the Government now apologise for their complacent decision to scrap the future jobs fund?

I think it is the hon. Gentleman who should be apologising. He is probably having a hard time explaining to his constituents why the number of young people on jobseeker’s allowance in the last five years of the previous Government went up by 45%. I have some good news for him, however. Under this Government, that number is down, and under this Government the number of vacancies in his local jobcentres is up by 30%.

All other Olympic boroughs received a much-needed economic boost from the Olympic games, but the Office for National Statistics figures show that youth unemployment increased in my constituency between June and October, not to mention the 141% increase in long-term youth unemployment in the past year. Does the Minister agree that tackling this problem requires action from the Government, with a bank bonus tax to fund 100,000 jobs for young people, and action locally by the council, to take this issue seriously?

I know the hon. Lady takes this issue very seriously, which is why I believe she took her right hon. Friend the shadow Chancellor to Queen Mary university recently to discuss it with young people. I hope that they told young people that under the previous Government youth unemployment was created as a problem—up 72% in 10 years. I hope she also told them that youth unemployment has fallen by 62,000 in the last quarter because of the Youth Contract, the Work programme, investment in apprenticeships and other Government policies.

Long-term youth unemployment in my constituency in the past two years has increased by 188%. Rather than flinging back his low-grade abuse, could the Minister explain to the House his objection, as we approach bank bonus season, to implementing a bank bonus tax to help fund jobs for those young people?

The hon. Gentleman will know that the Government have introduced a permanent tax on bank balance sheets, which will raise far more than a bank bonus tax. If he is interested in the fiscal action the Government are taking to create jobs, maybe he can tell his constituents about the brownfield allowance the Government introduced for North sea oilfields a couple of months ago. A few weeks later there was investment of £1.6 billion, creating up to 2,000 jobs in Scotland and beyond.

One of the fiscal measures that best increases the incentive to find work for those who have been out of work for a long time is the benefit cap. Is the Minister surprised to learn that this morning a measure that will save the taxpayer half a billion pounds over the next two years and greatly increase the incentives to work was voted against by the Labour party?

I thank my hon. Friend for bringing that to the House’s attention, and I am not surprised to learn it, given Labour’s opposition to the benefit cap. The Government are determined to make the welfare system work in order to help people find employment, and that includes the benefit cap as well as the introduction of universal credit.

Does my hon. Friend recognise that it was virtually impossible to be long-term unemployed under the last Government, because they used to take people off the register, put them on a short-term course, and then put them back again, and is he pleased that we are being more straightforward?

My hon. Friend makes a good point. A number of people have made those accusations. The important thing is that youth unemployment is falling—down by 62,000 in the last quarter.

Has my hon. Friend considered the submission that the Government have received from FairFuelUK showing that putting up fuel duty will hinder job creation, and will he give serious consideration to cancelling the planned January fuel duty increase inherited from the Labour party in order to boost job prospects?

We carefully consider all submissions from stakeholders, including the FairFuelUK campaign. The important thing is that had the Government continued with their inheritance on fuel duty, that duty would have been 10p higher, which would have made things a lot more difficult for ordinary people.

Affordable Housing

10. If he will use the revenue received by the Exchequer from the forthcoming auction of the 4G mobile telephone spectrum for the purpose of building affordable homes over the next two years. (126527)

11. If he will use the revenue received by the Exchequer from the forthcoming auction of the 4G mobile telephone spectrum for the purpose of building affordable homes over the next two years. (126528)

12. If he will use the revenue received by the Exchequer from the forthcoming auction of the 4G mobile telephone spectrum for the purpose of building affordable homes over the next two years. (126529)

No decision has been taken on how to use the full revenue from the 4G mobile spectrum auction, but the Department for Business, Innovation and Skills was allocated an entitlement of up to, but no more than, £600 million for science projects from the fund. As I said in answer to an earlier question, on 6 September the Government announced an ambitious housing package to boost housing supply, building on our £4.5 billion investment to deliver 170,000 affordable homes over the spending review period.

Perhaps the Chief Secretary is reluctant to commit because he does not trust his colleagues in the Department for Culture, Media and Sport to overcome their history of delay and dither when it comes to 4G. In Newcastle, thousands of families are on the council house waiting list and thousands of construction workers are unemployed. Does he not agree with the director general of the CBI, who said that this plan was exactly what the economy needed?

I recognise the concerns that the hon. Lady and other MPs have about the provision of housing in their own constituencies, and that is precisely why, on 6 September, we announced, among other things, the availability of up to £10 billion of Government guarantees for housing associations—precisely to enable them to build more affordable housing.

In the last quarter, there was a 2.5% contraction in the construction sector, and since the Government came to power 119,000 construction jobs have been lost. Why, therefore, do the Government not take their own advice, cut through the dither, sell off 4G, and use the money to construct 100,000 affordable homes and create 150,000 jobs?

The Department is getting on with the sale of 4G as quickly as possible, but the hon. Lady should be a bit wary about the policy she is promoting. For a start, it is based on assuming that we continue with the Government’s affordable rent policy, which her colleagues oppose, but without it the costs would be a great deal greater. Also, I think she is proposing to reverse the £600 million investment in science policy, which we have already committed to from this fund.

My question is very, very simple. Will the Chief Secretary use the revenue from this sale to create jobs?

I note that when the Labour party was in government and had receipts from the 3G auction, it used the resources to pay down debt, which was very prudent. Instead, we are bringing forward policies to support housing, such as the Government guarantees, which will be available to housing associations in Scotland, as well as in other parts of the country.

Alton in east Hampshire has just benefited from a much-needed £9.5 million affordable housing scheme. What more can be done, working with other Departments, to bring on more such schemes, partly using council land, especially in the overcrowded south-east?

My hon. Friend is right to highlight the importance of releasing public sector land for development for housing, including affordable housing. The Homes and Communities Agency is well ahead of its targets for releasing such land and for schools—

I am answering the question, which relates to the proceeds of the auction. We are using other policies, rather than the proceeds of the auction, to support this objective.

Rather than spending money we do not yet have, would it not be better for the Department to continue to work with the Department for Communities and Local Government and others in unlocking major housing schemes which have become stuck in recent years, such as the proposed new town of Sherford in my constituency? Is that not a better way of building affordable homes and boosting the economy?

Order. The hon. Gentleman is a very experienced Member. The question is about using the revenue from the auction —

Order. That is the term of—[Interruption.] Order. No assistance is required from the hon. Gentleman. He will accept my ruling and he can like it or lump it.

Rather than the proposal to use revenues from the auction, there are other policies that we can use to support the objective highlighted in the question, including those highlighted by the hon. Member for South West Devon (Mr Streeter)—planning reform, releasing public sector land and other fiscal steps that the Government can take which do not involve committing to this policy now.

Will the Minister confirm answers to my written questions—that the reserve for the auction is £1.4 billion and that half has been allocated to science and higher education investment? Is this a case of Labour spending money that we do not have, yet again?

It is exactly that. The reserve price is £1.4 billion, of which £600 million has been allocated to important science projects, such as the Graphene institute in Manchester. Were we to follow the advice of the Opposition, we would have to cancel significant science projects which are vital to growth in this country. That would be the wrong policy for the British economy.

Cost of Living

The Government have taken wide-ranging action to support households. We cut fuel duty last year and have kept it frozen since then. We have also helped those in work by raising the personal allowance by £1,100 in April 2013—the largest tax cut for the median earner in more than a decade. The Government recently announced another year of a council tax freeze and a reduction of the rail fare cap for two further years.

A major factor in the costs facing families across the United Kingdom is the rapidly increasing cost of energy. Does my hon. Friend agree that Governments have a responsibility to limit such increases as far as possible, including the costs to energy users of paying for the unsustainably large subsidies paid to onshore wind farm developers?

My hon. Friend is right to raise the issue of energy prices. The Government are doing what they can on that front. We are supporting Ofgem’s work in ensuring that there is competition in the energy markets, and of course we are determined to do what we can to get people on lower tariffs.

Does the Minister accept that the Government’s increase in VAT has led to 5p on a pint of beer and 3p on a litre of fuel?

We have to take action to try to deal with the deficit that we inherited, and let us not forget that. The hon. Gentleman mentions fuel. Because of the steps that we have taken on fuel duty, petrol pump prices could be as much as 10p lower per litre than they would have been had we stuck with the fuel duty escalator that we inherited.

Banking Reform

The draft Banking Reform Bill outlining fundamental reforms to the banking sector was published last month and is undergoing pre-legislative scrutiny. We have tabled amendments to the Financial Services Bill which provide for fine revenues net of enforcement costs to go to the public purse in future. The Bill is being debated today in the House of Lords. Some £35 million of those fines received so far this year will be used to support armed forces charities.

Does the Minister agree that one of the best ways to ensure good practice in future is through more transparency and competition in the banking sector? Does he further agree that full bank account portability could be a great way to achieve that?

I do agree that we need much more competition in the banking industry, and account portability can play a major role in advancing that. The Vickers commission looked at it, and my hon. Friend has been very vigorous in proposing ways in which she thinks it can be implemented. My hon. Friend the Economic Secretary and I will meet her to discuss how we can advance these proposals.

Small businesses are responsible for 40% of the jobs in my constituency, but with the banks not lending to small businesses, it is very hard for them to grow and create the extra jobs that are needed. What action will the Minister take to make sure that the banks do lend to small businesses so that they can play their part in the growth and jobs desperately needed in my constituency and elsewhere in the country?

The hon. Gentleman makes an important point. It is crucial that we get funds to small businesses to get them lending. In fact, lending to small and medium-sized enterprises is up 13% over the past year. He will know that the new funding for lending scheme, which is being conducted in co-operation with the Bank of England, is making £80 billion available to the banking system for the purpose of lending.

We need more competition in banking. Later today, I will chair a meeting with Mr David Fishwick, who has been trying to start a responsible and trustworthy local bank but has found that the barriers to entry are far too high. Will my right hon. Friend look at Mr Fishwick’s report on community banking and consider meeting him to discuss his experiences and see whether we can make it easier for communities to create the banks they need?

I certainly will. I think that there has been a concentration in the number of banks as a result of the financial crisis, and that is not a situation I want to see endure. If the suggestions in the report will help to reverse that, I am all ears.

Comparisons between banking fines for similar offences in this country and in the United States show that we are well behind the curve in that regard. Has the Minister had an opportunity to speak to the Financial Services Authority about a more robust form of regulation that will ensure that fines are appropriate to the issue at stake?

The hon. Gentleman, who is a distinguished member of the Treasury Committee, makes an important point. It is crucial that the change we need in the culture of banking is achieved through leadership and through a clear warning that abuse, mis-selling and all the other vices that banks can fall into will be punished rigorously. The FSA knows my views on that and I will reinforce them to the authority.

Tax Evasion and Avoidance

The Government are investing over £900 million in strengthening Her Majesty’s Revenue and Customs’ response to evasion and avoidance and are on course to bring in around £7 billion in additional tax each year by 2014-15. HMRC is increasing the number of staff working on compliance and using innovative approaches to improve how it identifies and tackles evasion. The Government will soon introduce the UK’s first general anti-abuse rule while also strengthening avoidance disclosure rules and publicity.

I am a strong supporter of lowering direct tax rates on individuals and companies, but hard-working families in my constituency want to know that companies and high-worth individuals are paying their fair share of tax. What is my hon. Friend doing to ensure that individuals and companies pay their fair share of tax rather than avoid it?

My hon. Friend is absolutely right. That is why we are taking action to strengthen HMRC’s compliance capability, why we are introducing a general anti-abuse rule, why we want to ensure that everyone pays their fair share of tax, and why the Chancellor made it clear yesterday in Mexico that we are working at an international level to ensure that the system that applies to multinational companies does just that.

The Minister talks—it might be wishful thinking—about bringing in an extra £7 billion a year, but the tax gap is at least £120 billion a year, and some people think it is more. Is it not time that the Government took chasing billionaire tax dodgers more seriously and stopped cutting public spending and squeezing the poor?

The hon. Gentleman will be aware that the figure of £120 billion does not have much support from anyone who knows much about statistics. The actual figure is £32 billion. That is the number we inherited from the previous Government and we are determined to bring it down.

The Minister will be well aware of the anger of many of our constituents about the activities of companies such as Starbucks and Amazon to minimise their tax rates through aggressive tax avoidance. Is not part of the answer more international co-operation, perhaps among OECD countries, to restrict the ability of those multinationals to siphon off profitable activities into low tax havens?

My hon. Friend is right to point out that we need to be vigilant about aggressive tax avoidance and the diversion of profits from where genuine economic activity occurs. That is why the Chancellor of the Exchequer is leading the way on that, working with the German Finance Minister, and why we had the announcement from Mexico yesterday that the G20 is focusing on that and encouraging the OECD to progress its work so that we can deal with this as soon as possible.

Economic Growth

18. What estimate he has made of the level of economic growth since the October 2010 spending review. (126537)

The economy grew by 1.8% in 2010 and 0.9% in 2011. The Office for Budget Responsibility is responsible for producing independent economic and fiscal forecasts.

The Minister will be aware that the Chancellor boasted that there would be growth of 2.6% in 2011 and 2.8% in 2012. Actually, growth has averaged 0.6% over the past two years. What went wrong?

The hon. Gentleman is a distinguished member of the Treasury Committee, and I think he knows better than that. The Government introduced an independent Office for Budget Responsibility to make forecasts, and the OBR report in October 2012 said that there were several reasons why the out-turn has been different from the forecasts, including

“deteriorating export markets…impaired credit conditions”

and “euro area anxiety”. Perhaps the hon. Gentleman can welcome yesterday’s report from the Centre for Economics and Business Research, which said that Britain would be the fastest-growing economy in Europe in 2013 and 2014. [Interruption.]

Order. The shadow Chancellor is perfectly free to decide not to speak when he is on his feet, but that does not mean that instead he can speak from his seat.

On behalf of my constituents, I welcome the news that the economy has returned to growth, and I draw the Minister’s attention to the success in the life sciences sector. Eli Lilly has announced a new early-stage neuroscience facility in the UK, Johnson and Johnson has made Britain the home of its new global innovation centre, and more than £1 billion has been raised this year in early stage funds. Is that not the only sustainable route to a really balanced recovery?

My hon. Friend is absolutely right. The only sustainable growth is long-term growth in private sector jobs.

Unearned Wealth

The Government are committed to a fair tax system in which those with the most contribute the most. The UK’s tax system is a progressive one, and wealthy individuals make a substantial contribution to the Exchequer. The Government have increased that contribution in a number of ways since the election.

Social mobility for younger people in Torbay is often curtailed by inequality not of income but of wealth, meaning that far too many will never be able to buy their own homes. Will he redress that imbalance by taxing unearned income as much as we tax the wages of the vast majority of my constituents?

The Government have increased stamp duty land tax on the most valuable properties. We have also increased the rate of capital gains tax. It is a question of balancing that with practicalities; we think that some of the proposals in this area may have a number of practical difficulties. But we have taken action on some of the taxes that have increased the burden on the wealthiest.

Bank Lending

21. What recent assessment he has made of the effect on economic growth of the level of bank lending to businesses. (126540)

As I said to the hon. Member for Sefton Central (Bill Esterson), the Government and the Bank of England are taking action to improve the flow of credit to business. The £80 billion funding for lending scheme is designed to incentivise banks to maintain and boost their lending to businesses and households.

According to the Bank of England, net lending by the banks to small and medium-sized businesses fell by a further £2.4 billion in the three months to this August. Does not the Government’s failure to address that decline show exactly why the IMF downgraded GDP estimates for Britain by 0.6% for this year, and a further 0.3% for next year?

The hon. Gentleman calls for action, but I would have thought that the funding for lending scheme was precisely the type of action that he wanted. The Bank of England has been clear that, in the absence of funding for lending, it was quite possible that rates and lending would have declined because of the turbulence and anxiety in the eurozone. Actually, it has been an important factor in getting money to businesses. I hope that the hon. Gentleman will welcome that.

Topical Questions

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

That is all very interesting, but Anne Marie Carrie, the excellent head of Barnardo’s, recently said that the proposal to remove housing benefit from all under-25s

“is reckless and unfair as it will leave some of this country’s most vulnerable people stranded.”

I am particularly concerned about the impact on care leavers, who do not have a family home or family to fall back on and for whom a safe and stable roof over their heads means they can keep off the streets, out of the NEET statistics and out of trouble. Will the Chief Secretary guarantee now that he will work with other Ministers to make sure that any changes to housing benefit for under-25s do nothing further to disadvantage that already disadvantaged group?

My hon. Friend makes a very important point about care leavers. These ideas have been floated as part of a discussion within Government on the next phase of welfare reform. I will certainly make sure that his point is brought to bear in any discussions on that proposal.

At a time when we are seeing cuts to the budgets for police, NHS and schools, it is right that last week this House gave the Government a mandate to negotiate a real-terms cut in the EU budget. However, instead of developing a strategy to deliver this, the Prime Minister has simply resorted to threatening a veto before negotiations have even begun. Of course, walking away is always an option for any EU Government, but can the Chief Secretary confirm that if Britain or any other country just turns up and uses the veto, the budget will rise in line with inflation anyway, costing British taxpayers an extra £310 million?

I start by congratulating the hon. Lady on the news that she is expecting a child, which was announced a few weeks ago. I am sure that the whole House would wish to join me in that.

Labour’s position becomes ever more extraordinary; its opportunism on Europe seems to know no bounds. That is why we have heard words of unease from several Labour Members who thought that Labour was a pro-European party. This Government have taken the toughest position of any European Government in these negotiations. We saw what happened with the previous Government’s negotiating tactics when they gave away half of Britain’s rebate. We are not going to do that all over again.

I am not sure whether I caught an answer there. Frankly, the Chief Secretary should know better. After all, he was not only the chief press officer for the Cairngorms national park but the chief officer for Britain in Europe, and he should know that the only way to deliver a real-terms cut is to argue for one and build alliances to deliver it. Perhaps he should listen to his Cabinet colleague who said last week that it is “absolutely ludicrous” to threaten the veto now, weeks before the summit. Is that not just the desperate ploy of a weak Prime Minister with no influence, no allies and no strategy? He should get a good deal for Britain—a cut in the budget.

The hon. Lady was a pro-European once; I still am. We seem to be seeing an outbreak of amnesia on the Labour Benches. Not only has the hon. Lady forgotten what Labour did in the last multiannual financial framework negotiation, when it gave away half of Britain’s rebate by not forming any alliances and instead giving up vast amounts—billions of pounds—of Britain’s money, but the shadow Chancellor seems to have forgotten that more recently his party was running the largest structural deficit in the world economy in the good times, leaving this country more exposed than ever to the financial crisis. This country does not want amnesia from Labour—it wants an apology.

T5. Manufacturing in this country halved during the Labour period, falling from 22% of GDP in 1997 to 11% in 2010, and during that period the sector employed half the number of people it did in 1997. With this in mind, what recent representations has my right hon. Friend received regarding investment in manufacturing industry in the north-west? (126546)

My hon. Friend is right to highlight the work that we are doing to increase manufacturing through, for example, the advanced manufacturing technology institute and investment from the regional growth fund. We have had a number of representations from the north-west, not least from my hon. Friend the Member for Burnley (Gordon Birtwistle), who has made representations on capital allowances for businesses.

T2. Nearly three in 10 workers in my constituency, including half of all part-time workers, earn less than the living wage of £7.45 an hour. Does the Chief Secretary, unlike the Prime Minister, back the living wage? Is he not wrong to boast about a recovery that is not being felt in the pay packets of millions of people on low and middle incomes? (126543)

Labour Members had 13 years to introduce a living wage; if they believed in it so much they could have done something about it when they were in office. This Government are increasing the income tax personal allowance towards the goal of £10,000 set in the Liberal Democrat election manifesto. As of next April, the amount of income tax paid by someone working full time on the minimum wage will have been halved under this Government. I would have thought that the hon. Gentleman would want to welcome that.

T7. The regional growth fund is a great help in sorting out the economic devastation left by the previous Government in areas such as Redcar and Middlesbrough. Does the Minister agree with Michael Heseltine that areas such as the Tees valley can become economic powerhouses again, and will he support a further round of the regional growth fund? (126548)

I welcome what my hon. Friend has said about the regional growth fund. With him, I have visited recipients of that fund in his constituency, and seen at first hand the benefits on Teesside. He will also welcome the fact that Teesside is a candidate in the next wave of city deals, which will provide an opportunity further to enhance the economy of that area. I hear his representation for a fourth round of the regional growth fund, and I will consider that alongside other policies in the normal way.

T3. Instead of insulting hard-working parents and calling them “fiscal nimbys”, will the Minister explain how it is fair that a couple earning up to £100,000 a year will keep all their child benefit, while a one-earner family on £50,000 will see theirs cut? (126544)

We looked at introducing this measure on the basis of household income, but it would mean bringing 8 million households into the tax credit system and impose a much greater administrative burden on many people. At least Labour Members are consistent: they have opposed every measure to try to reduce the welfare budget, whether it be the welfare cut or child benefit for higher earners. It is time for us all to look at public spending in that area and bring it under control, but the Labour party will simply not do that.

T10. In the light of a recent report by the Centre for Economics and Business Research, which suggests that UK growth will outstrip many of our European neighbours in 2013 and 2014, will my right hon. Friend assure the House that the Government will continue to deal with the UK’s structural deficit? That deficit started to emerge before 2008, despite repeated protestations to the contrary by the shadow Chancellor. (126551)

Yes, I can certainly give my hon. Friend the assurance he requires. The coalition Government have put Britain back on the path to fiscal credibility, and we have cut the deficit by a quarter in our first two and a half years in office. We intend to continue in that policy direction, which is endorsed not only by the CEBR but by many other organisations.

T4. What is the Minister going to do about all those multinational companies that are paying little or no tax? Her Majesty’s Revenue and Customs claims that it is powerless because those companies are gaming the system. Instead of pious statements issued from Mexico about what we might or might not do, may we have some action from the Minister? He could start by increasing from 65 the number of tax experts who actually deal with this problem. (126545)

Anyone would think that there was a completely different arrangement in 2010, but I am afraid that is not the case. The Government are working at an international level to ensure that multinationals pay the tax that is due, and that profits on their economic activity is paid where it occurs. We are also strengthening HMRC’s capacity in that area and giving it greater skills to tackle the issue. I would have thought the Labour party welcomed the progress we are making when compared with the lack of progress under the previous Government.

Does my right hon. Friend agree that one way to stimulate additional growth is through better use of the prompt payment code? Will he join me in calling on businesses and public sector organisations to adopt that code and adhere to it?

I very much agree with my hon. Friend, and we have already raised that issue with central Government Departments. We will certainly reinforce that message. I know that my right hon. Friend the Minister for the Cabinet Office and Paymaster General has been advancing that as part of the reforms to public procurement, and I will pass on my hon. Friend’s concerns to him.

T6. When universal credit is introduced next year it will cut the living standards of hundreds of thousands of working people—yes, working people. Will the Minister join the Archbishop of York, the Mayor of London and the Labour party and demand a living wage? (126547)

I think the hon. Gentleman’s criticism of universal credit is extraordinary. Universal credit will simplify the benefits system and ensure a single, clear process for all people in receipt of benefits. Having a clear single taper will ensure that everybody knows they will be better off in work—something they could not be sure of under the previous Government.

The Government have seen the benefits that transparency can bring. Would it be good to require large corporates to publish their tax returns so that we can all see how they achieve the low rates of tax they pay?

It is right that large corporates engage in this debate, and there is a lot of public interest in the matter. One must ask whether tax returns in themselves will provide the full information—my hon. Friend has great expertise in this area—and whether that is the right way to address the issue. We have a tradition of taxpayer confidentiality in this country, as does every major economy.

T8. Will those on the Treasury Bench tell us the expected cost to HMRC in, for example, extra staffing and IT support of dealing with the massive number of extra self-assessment returns—it is estimated at around 500,000—that will result from child benefit changes? (126549)

The cost of implementation of the child benefit policy will be £100 million over five years, but it will bring in £1.7 billion in the first year. I should also point out that the likelihood is that the number of people in self-assessment next year will be no higher than the number in self-assessment last year.

Will my hon. Friend tell the House what steps he is taking better to support small and medium-sized enterprises through the tax system?

We have taken a number of measures, including reducing the small profits rate from 22%, which it would have been, to 20%. We have also introduced measures such as seed enterprise investment schemes and small business rate relief. We have taken such measures because we recognise that small businesses will be an engine for growth for our economy and in employment.

T9. The Prime Minister has said that a family with children will lose an average of £511 under the Government’s changes this year alone. Is that fair when the Government are cutting taxes for the most wealthy? (126550)

The Government are increasing taxes on the wealthiest in society and using that money for a number of things, including to put in place a new free child care entitlement for disadvantaged two-year-olds; to extend the child care entitlement of three and four-year-olds to 15 hours a week; and to reduce the income tax personal allowance, which benefits families in work. The hon. Lady should welcome rather than criticise those policies.

Some pensioners with capped draw-down and self-invested pension plans have seen their retirement income halve as a result of decisions by the Government Actuary’s Department. How would the Minister suggest those pensioners cope in retirement with such a sharp fall in access to what is, after all, their own money?

My hon. Friend is right to point out that pensioners are facing pressure because of low interest rates and longevity. The Government Actuary’s Department makes recommendations to the Government and we must take them seriously—we keep the matter constantly under review.

The Government make a great deal of creating 1 million private sector jobs—[Hon. Members: “Hear, hear!”] Wait, wait. Half of those jobs, according to their statements, were in place after eight months of their coming to office, meaning that in the following 22 months only another half a million jobs were created. That suggests that the rate of growth has slowed substantially as a result of the Chancellor’s policies.

Once again, Labour Members are on the search for bad news, but the hon. Lady has picked the wrong subject. More than 1 million private sector jobs have been created since the election. The most recent figures show that tens of thousands more jobs have been created in the private sector and the largest ever number of people in employment in this country. That should be welcomed by everyone in the House, including her.

Will the Minister update the House on steps he is taking to ensure that the affordable housing programme remains on course to deliver the £19.5 billion of public and private investment in affordable housing over the course of this Parliament?

Yes, I will. The affordable rent programme was over-subscribed and will deliver more homes than originally expected. My colleagues in the Department for Communities and Local Government will ensure that they are delivered as quickly as possible. By putting in place the new guarantee programme for housing associations, we can further accelerate that programme, ensuring that we meet the targets my hon. Friend describes.

Child Abuse Allegations (North Wales)

With permission, Mr Speaker, I would like to make a statement on historic allegations of child abuse in the North Wales police force area.

In 1991, North Wales police conducted an investigation into allegations that, throughout the 1970s and 1980s, children in homes that were managed and supervised by Clwyd county council were sexually and physically abused. The result of the police investigation was eight prosecutions and seven convictions of former care workers.

Despite the investigation and convictions, it was widely believed that the abuse was in fact on a far greater scale, but a report produced by Clwyd council’s own inquiry was never published, because so much of its content was considered by lawyers to be defamatory.

In 1995, the then Secretary of State for Wales, my right hon. Friend the Member for Wokingham (Mr Redwood), appointed a QC to examine all the relevant documents and recommend whether there should be a public inquiry. The recommendation was that there should be not a public inquiry but an examination of the work of private care homes and the social services departments in Gwynedd and Clwyd councils. This work revealed not only shortcomings in the protection of vulnerable children, but that the shortcomings had persisted even after the police investigation and subsequent prosecutions.

In 1996, my right hon. Friend the Member for Richmond (Yorks) (Mr Hague), the then new Secretary of State for Wales, invited Sir Ronald Waterhouse to lead an inquiry into the abuse of children in care in the Gwynedd and Clwyd council areas. The Waterhouse inquiry sat for 203 days and heard evidence from more than 650 people. Statements made to the inquiry named more than 80 people as child abusers, many of whom were care workers or teachers. In 2000, the inquiry’s report “Lost in Care” made 72 recommendations for changes to the way in which children in care were protected by councils, social services and the police. Following the report’s publications, 140 compensation claims were settled on behalf of the victims

The report found no evidence of a paedophile ring beyond the care system, which was the basis of the rumours that followed the original police investigation and, indeed, one of the allegations made in the past week. Last Friday, a victim of sexual abuse at one of the homes named in the report—Mr Steve Messham—alleged that the inquiry did not look at abuse outside care homes, and he renewed allegations against the police and several individuals. The Government are treating those allegations with the utmost seriousness. Child abuse is a hateful, abhorrent and disgusting crime, and we must not allow these allegations to go unanswered. I therefore urge anybody who has information relating to the allegations to go to the police.

I can tell the House that Mark Polin, the chief constable of North Wales police, has invited Keith Bristow, the director general of the National Crime Agency, to assess the allegations recently received, review the historic police investigations and investigate any fresh allegations reported to the police into the alleged historic abuse in north Wales care homes. He will lead a team of officers from the Serious and Organised Crime Agency and other investigative assets as necessary, and the Child Exploitation and Online Protection Centre will act as the single point of contact for fresh referrals relating to historic abuse in north Wales care homes. He will produce an initial report reviewing the historic investigations and any fresh allegations by April 2013. I have made it clear to Mark Polin and Keith Bristow that the Home Office is ready to assist with the additional costs of that work.

In addition, as the Prime Minister said yesterday, the Government will ask a senior independent figure to lead an urgent investigation into whether the Waterhouse inquiry was properly constituted and did its job. Given the seriousness of the allegations, we will make sure that that work is completed urgently.

Given that there have also been serious allegations about other historic child sex offences, I should also inform the House of the work being conducted by Her Majesty’s inspectorate of constabulary. This will establish a full picture of all forces that have received allegations in relation to Jimmy Savile, examine whether these allegations were investigated properly, and identify wider lessons from the response of the police forces involved. I have been assured by HMIC that its work will also take into account any lessons that emerge from these latest allegations.

Before I conclude, I would like to warn hon. Members that if they plan to use parliamentary privilege to name any suspects, they risk jeopardising any future trial and, therefore, the possibility of justice for the victims, which I believe the whole House wants to see.

I believe that the whole House will also be united in sending this message to victims of child abuse: “If you have suffered and you go to the police about what you have been through, those of us in positions of authority and responsibility will not shirk our duty to support you. We must do everything in our power to do everything we can to help you, and everything we can to get to the bottom of these terrible allegations.”

I commend this statement to the House.

I thank the Home Secretary for her statement. She is right that these are deeply disturbing allegations. Child abuse and sexual abuse of children and young people are among the most despicable of crimes. When adults who should be trusted to care for children abuse their power and position of trust by committing violent crimes, it can haunt those young people for the rest of their lives. That is made worse if society and the institutions charged with protecting children, including in the criminal justice system, fail to step in to provide greater protection or hold the perpetrators to account. The Home Secretary is therefore right to act on the latest concerns.

There are three major issues, each of which needs to be addressed. First, where crimes have been committed or suspected, we need a proper criminal investigation, led by the police in the pursuit of justice. Secondly, we need to know whether there has been an institutional failure to deal with the issue before, be it turning a blind eye, covering things up or simply failing to get to the bottom of what happened. Thirdly, we need to know what further changes are needed to our current framework for safeguarding children and investigating abuse. However, we cannot look at the allegations around north Wales in isolation. The same three questions—about criminal allegations, potential institutional failure and the lessons for today—are just as significant when it comes to the abuse by Jimmy Savile, as well as more current problems, such as the events in Rochdale or the work that the Children’s Commissioner is doing on child sexual exploitation. I am concerned that the Home Secretary’s response will not be wide enough to cover all those issues. Let me take each in turn.

I welcome the points that the Home Secretary has made today about the new criminal investigation into the allegations in north Wales, and in particular the involvement of the Child Exploitation and Online Protection Centre, which has considerable expertise. Clearly the investigation must go more widely than north Wales if that is where the evidence takes it. I hope that she can provide that assurance to the House. On the historic reviews, I welcome her decision to look again at the Waterhouse inquiry, which I assume will involve looking at whether child abuse that might have taken place outside the care system was sufficiently considered.

However, we have a whole series of inquiries under way into similar problems, in addition to important police and criminal investigations. As I understand it, there are three BBC inquiries into what happened with Jimmy Savile, a Department of Health inquiry—as well as several separate hospital inquiries—a Crown Prosecution Service inquiry, a new north Wales inquiry and an inquiry by Her Majesty’s inspectorate of constabulary into other forces that may have received allegations about Jimmy Savile. The Home Secretary will know that we have already raised our concern that the Savile investigations should be brought under a single inquiry. We remain concerned that these multiple inquiries have no way to draw together the common themes, the problems or the lessons that need to be learned. Of course we need to get to the bottom of what is happening in each case, but at the moment the framework that the Government have set out risks being confused.

The reason this is important is that we have to have a proper way to learn the right lessons for the current framework for safeguarding children, because there are clearly current lessons to be learned. Obviously a series of child protection policies have been introduced since many of the events took place. Big changes include the Children’s Commissioners, strengthening the law repeatedly, new measures and policies on safeguarding in schools and social services, and the creation of CEOP. However, we all remain concerned that victims of sexual abuse, particularly children, are too often simply not believed or taken seriously enough—abuse that was ignored for too long against girls and young women in Rochdale very recently, as well as concerns that have been raised in Rotherham. We have also seen the forthcoming Children’s Commissioner’s report, which will raise concerns about wider child exploitation. We have raised concerns too about some of the policy changes that the Government have introduced, such as changes to vetting and barring arrangements and changes to the way in which CEOP will operate. Primary care trusts have also raised concerns about the way in which child safeguarding will be treated in the NHS as a result of the reforms.

There are wider concerns, and lessons for today that need to be learned alongside the detailed historic investigations that rightly must take place. I know that the Home Secretary is deeply concerned by these crimes, and that she takes them extremely seriously. I therefore urge her to look again at the framework for these inquiries and at the possibility of a single overarching inquiry or review that would draw all the evidence together and consider what needs to be done to protect children now.

It is extremely hard for the victims of child abuse and of sexual abuse against young people to speak out and to talk about crimes that are so intimate and so deeply disturbing, and they show great bravery when they do so. We need to show them that they will be listened to, that we will give them the support that they need and that everything possible will be done to protect children in the future as well.

I am grateful to the right hon. Lady for the approach that she has taken to these serious issues. It is right that we should work together across the House to find the best solution, not only to get to the bottom of anything that we have failed to uncover so far, but to support the victims—which, as she and I have said, is so important.

In looking at these issues, it is right that we should first look into the police investigations to see whether any avenues that should have been followed were not pursued, and whether any issues have been uncovered as a result of the allegations that are now coming forward that should be dealt with. We must also pursue any criminality that comes forward, so that the victims can see that justice is being done.

That is why I have put an emphasis on the police investigation, and on the NCA working with the North Wales police to look into the historic allegations and ensure that everything necessary was done. If there are any avenues to be pursued in any criminal investigations, I am absolutely clear that the police should take them wherever they go. It is important that the NCA’s director general should bring in various assets, including, crucially, the Serious Organised Crime Agency and CEOP. CEOP is renowned for dealing with these issues, and it is right that it should be the single point of contact for any fresh allegations that come forward.

If, at the end of the processes that we have set in train, it appears necessary to move forward to a wider investigation, of course we will look at that. At this stage, we need to get the police investigations into any criminality under way, and to ensure that the Waterhouse inquiry did as it was intended to do, and did it properly. As I have said, however, if there is a case to be made for a wider inquiry at some stage in the future, we will of course look at the issue.

I shall return to the point on which the right hon. Lady and I ended our statements today. She was right to say that other police investigations had taken place in which there were issues over whether the victims were believed. We need to be able to reassure victims that, when they come forward, they will be listened to and taken seriously. It is incumbent on all of us in the House, in the positions of authority and responsibility that we hold, to ensure that that is the case.

The Prime Minister is to be congratulated on the urgency with which he has responded to this matter, and the Home Secretary is to be congratulated on the speed with which she has come to the House today. Many weeks ago, when the Savile affair first reared its ugly head, I said that it was just the tip of the iceberg. We should not be surprised that child abuse has now raised its head in the political spectrum as well.

As the shadow Home Secretary has said, we now have a multiplicity of inquiries, and the Home Secretary has just announced an inquiry about an inquiry. Rather than waking up to find a new institution involved in this mire every week, is it not now time to have an overarching and robust public inquiry into all the failings in child protection in various institutions—the BBC, the health service, the police, the Church and so on—during the latter part of the 20th century? All institutions involved with children and young people should be made to have a robust child protection policy that is fit for purpose in the 21st century. All perpetrators should be exposed and brought to book, and all victims should be given credence and closure at last.

I commend my hon. Friend, who has championed the interests of children and child protection throughout his time in this House. He has a worthy record of bringing these issues before the House and the public.

My hon. Friend talked about bringing perpetrators to book, but as I said in my response to the shadow Home Secretary, what matters at this stage is that we are able to let the police do the job of identifying the allegations brought forward, pursuing the investigations and bringing perpetrators to book where possible. He has rightly said that this is not just an issue that has hit the care homes in north Wales, as the allegations of child abuse and actions of child abuse go wider in respect of the number of institutions involved in various ways over the years. As I said to the shadow Home Secretary, let us see the criminal investigation routes pursued, and if there is a case to go wider, of course the Government will look at that.

In February 2000, I was the Secretary of State for Wales and reported Sir Ronald Waterhouse’s report to this House of Commons. Does the Secretary of State agree that, although the report exposed monumental wickedness and came up with superb recommendations, including the creation of a Children’s Commissioner for Wales, and that however important it is to look at Sir Ronald’s inquiry, it is much more important to deal with the investigations into fresh allegations that are now before us? Secondly, will the Home Secretary assure the House that she is in close contact with Carwyn Jones, the First Minister of Wales, who is obviously also dealing with this issue, as social services are devolved?

I recognise that when the Waterhouse inquiry was set up and when it reported, it was generally welcomed in the House for the work it had done. Given the fresh allegations, however, I think it is important to ask somebody to look again at that work. Alongside it, what is of course important, as the right hon. Gentleman said, are the police investigations, looking into any fresh allegations that have been made and, as I say, looking at the historic allegations and investigations, too, to ensure that those were indeed conducted properly and went as widely as they needed to. As for the First Minister for Wales, my right hon. Friend the Secretary of State for Wales has spoken to him. As the right hon. Gentleman will know, policing is not a devolved matter, but there will be further discussions with the First Minister on a number of these matters, including the review of the Waterhouse review.

My right hon. Friend has just announced a number of inquiries, but I agree with the right hon. Members for Normanton, Pontefract and Castleford (Yvette Cooper)and for Torfaen (Paul Murphy) and with my hon. Friend the Member for East Worthing and Shoreham (Tim Loughton) in that there is a real imperative and priority for the police to get on with their job now, which is to investigate fresh allegations of criminality—and they must be left unhindered to do that, without being inhibited by other forms of inquiries into inquiries. I urge my right hon. Friend to allow the police to get on with that and, if necessary, to delay any inquiries into the inquiries so that the suspects can be prosecuted and, if necessary, found guilty, and the innocent can be relieved of the suspicion that is current in the media.

I thank my hon. and learned Friend for his comments. It is absolutely right that the police should be unhindered in their work of investigating any fresh allegations and, as I say, any historic allegations as well. If any charges are to be brought, the individuals need to be identified and criminal prosecutions pursued. The review into the Waterhouse inquiry will not, I think, get in the way of the police investigations, as it is a review into how that inquiry was conducted. It is right that the police are allowed and able to get on with the job. If people have committed horrendous crimes, we all want to see them brought to justice on the basis of the evidence and we want the criminality to be pursued.

I commend the Home Secretary for the speed with which she has acted on this issue. I remind her that when the Children’s commissioner gave evidence to the Home Affairs Select Committee in its inquiry into Rochdale, she said that child abuse was happening in every town and city in this country. At the end of the day, I think the right hon. Lady is going to have to have a public inquiry—an overarching inquiry that brings all the strands together. In the meantime, will she assure us that the National Crime Agency will have this co-ordinating function with all the other inquiries that are going on? Will she please involve the Director of Public Prosecutions at the earliest opportunity. In the end, the victims want to see people prosecuted.

I thank the right hon. Gentleman for his comments. He has reminded us of the remarks made by the Children’s Commissioner when she came before the Home Affairs Committee. The director general of the NCA, Keith Bristow, working with SOCA, CEOP and any other assets he feels necessary to bring to bear at the invitation of the chief constable of North Wales, will primarily be looking into those allegations. If it is the case that other allegations surface in another context, which it would be appropriate to wind into the investigation, the director general of the NCA would, of course, be able to do that.

These allegations are indeed very distressing. In the original Waterhouse inquiry, 28 people were named but their names were not publicly reported because the judge reasonably assumed that it would prejudice any future trial—a trial that never happened. Does the Home Secretary agree that whenever there is an inquiry into what happened historically, as opposed to the recent allegations, it must get to the bottom of why there was no follow-up police investigation after Waterhouse concluded?

My hon. Friend is right. One point of bringing extra resource in to support the North Wales police on this issue is to look at the historic allegations and to investigate whether everything was done that needed to be done in respect of following up criminal prosecutions as well as ensuring that all the evidence was taken.

I commend the Home Secretary for her statement today and the urgent action she has taken. I am very pleased that CEOP will be involved and that every extra resource will be there, if necessary. Some of these allegations, however, are not fresh; they were made during the proceedings of the Waterhouse inquiry. I believe that the right hon. Lady is right that a two-strand approach is vital and that the police should get on with it immediately. As to the inquiry itself, if the individual looking into it says, as others have said here today, that we need a further, overarching public inquiry, will the Home Secretary agree to it?

We will of course listen to any comments, remarks or proposals that come from the individual who looks into the Waterhouse inquiry, and we will treat them with the seriousness with which they should be treated.

I welcome the fact that, following these serious allegations, the Home Secretary has acted very quickly indeed to investigate the specific problems in north Wales. Will she reaffirm that if anybody is found to have been involved in this, they can expect absolutely no mercy and that the full force of the law will be pursued in the courts?

I am sure that what we all want, especially for the victims, is that justice is done and seen to be done. As I said, it is for the police to follow any avenue of inquiry that they believe they should follow and to follow it without fear or favour.

The lesson of Hillsborough and hacking is that a narrowed down investigation is the basic building-block of a cover-up. To limit this inquiry to north Wales and Savile would, in my view, be a dereliction of the Home Secretary’s duty. It would guarantee that many sickening crimes will remain uninvestigated, and some of the most despicable paedophiles will remain protected by the establishment that has shielded them for 30 years. Will the right hon. Lady please guarantee that the SOCA inquiry has licence to follow any lead it finds in what will be, after all, a serious criminal investigation. There should be no historic sexual abuse of children which is off limits to this investigation, and the police should be supported by a dedicated team of child protection specialists, many of whom have been raising their concerns for years. Whether someone was raped and tortured as a child in Wales or in Whitehall, they are entitled to be heard.

The media may be transfixed by the spectre of a paedophile Cabinet Minister abusing children, but what actually matters are the thousands and thousands of children whose lives have been ground into nothing, who prefer to kill themselves than carry on, who have nowhere to turn, to whom nobody listens and whom nobody helps. Does the right hon. Lady sincerely want to start making amends, or can she live with being what she has just announced—the next stage of a cover-up?

I am sorry that the hon. Gentleman has chosen to take that tone. I know that he is keen to see the large-scale inquiry to which a number of Members have referred. I have explained why I think it important for the criminal investigation to run its course, and to be pursued without fear or favour. I assure him that what I, and the Government, want to do is ensure that we establish investigations, and that, if there are people who should be pursued for the purpose of prosecution, such a process then takes place. I have made that absolutely clear.

It is entirely true that there have been a number of instances, over the years and across the country, of different forms of child sexual abuse. We now see the online and on-street grooming of children, and a number of other variations of child abuse. What is so horrific is the extent to which that abuse has been taking place in our country and throughout our communities over the years.

There are various ways in which the police are investigating these matters and inquiries are taking place. In relation to the issue in north Wales, it is important for the police to be able to pursue any criminal investigations without fear or favour, taking those investigations, absolutely clearly, where the evidence leads them. That is what they should be doing, that is what they will be doing, and that is I believe the best way to bring justice to the victims.

Today’s statement concerned some of the most shocking incidents that I can remember occurring during my political life in Wales. Like others, I greatly commend the Prime Minister for the speed with which he established the urgent investigation.

It may well be true that we must have the wide-ranging inquiry to which several Members have referred. However, we do not want to lose sight of the fact that there is an issue in north Wales that must be dealt with comprehensively. We must ensure that those responsible are brought to book quickly, and that we do not lose this particular shocking issue in a wider investigation that will take a long, long time.

I share my hon. Friend’s concern. As a number of other Members have pointed out, we need to ensure that the police are able to investigate, to do that speedily, and to ensure that anyone who should be brought to justice is indeed brought to justice.

Does the Home Secretary agree that one of the fundamental flaws in the Waterhouse inquiry lay in its terms of reference? That is why we need a far more widespread inquiry.

The review of the Waterhouse inquiry will examine, among other issues, the way in which that inquiry was constituted. However, I believe that at the time when the terms of reference were set, the entire House was comfortable with them.

I, too, welcome my right hon. Friend’s swift action, in relation to both the independently led review of the Waterhouse inquiry and the involvement of the National Crime Agency, which I think is very important. Does she agree that all the evidence collected by “Newsnight”, by the Bureau of Investigative Journalism and by others should be placed in the hands of the police immediately? That is absolutely essential if justice is to be delivered not only to the victims, but to those who have been unfairly libelled on the internet in recent days.

That is a very valid point. I would encourage all who have any evidence or any allegations of child abuse to put that evidence or those allegations before the police. It is for the police to investigate, and to take evidence where it leads.

There has clearly been institutional blindness to abuse, whether it has taken place in Rochdale council, at the BBC or even within political parties. We now need a Government framework that encourages all victims to come forward, whatever cases are involved. Does the Home Secretary not agree with that?

I am happy to repeat what I said in my statement, and also a minute or so ago. I think that anyone who has been a victim and who feels that there are allegations to be made should make those allegations, but I also think that such people should go to the police, who should be investigating the allegations and ensuring that we can, where possible, bring the perpetrators to justice.

Tomorrow, after a year-long inquiry, the Education Committee will produce its report on child protection in England. There has understandably been a great deal of focus on the perpetrators in recent weeks, but we focused unapologetically on the victims. May I ask the Home Secretary to look at the report carefully? What is most important—even more important than bringing people to justice—is ensuring that no child suffers as children suffered in past years when, overall, the system let them down.

I will, of course, look at the Committee’s report carefully. As my hon. Friend says, we often concentrate on the perpetrators. We hope that part of that involves giving the victims an opportunity for justice, but concern for the victims must also drive what we are doing.

I thank the Home Secretary for coming to the House so promptly, but the problem with what she has said today is that the victims have heard what she has said in the past. They gave evidence to the Waterhouse inquiry, but that evidence was not listened to and did not become public, and no prosecutions—or not enough prosecutions—followed. What can the Home Secretary do to assuage the feelings of those victims, and to make them understand that this inquiry will actually lead to the taking of some responsibility? Is it not about time that we had openness, after all these years, about the evidence that was given to the Waterhouse inquiry?

I would say to anyone who has been a victim and is concerned about what has happened in the past that the whole point of setting up a police investigation under the director general of the National Crime Agency is to enable a body of police to look into the investigations and inquiries that took place previously, and to establish whether they were properly conducted or whether avenues of inquiry or allegations that should have been pursued were not pursued, in order to identify instances in which it will be possible to bring perpetrators to justice. This is not just an inquiry into what has happened; it is a police investigation, and it will focus on precisely that issue.

On 26 October, the Government voted down proposals to make cover-ups harder and to protect children in care. What measures do they propose to ensure, in particular, that people have a right to complain to someone independent?

The hon. Gentleman has led me on to territory that is not fully within my remit, but I can say that one of the messages we hope will be conveyed by the action we are taking today is that people who make serious allegations will be listened to and taken seriously, because that issue has arisen in many areas. We want to ensure that people do not feel that they cannot come forward because they will not be taken seriously or because action will be taken against them, and that when child abuse has taken place, it is uncovered and dealt with properly.

Is the Home Secretary asking the security services to review and, where appropriate, share any intelligence that they have relating to cases and places of abuse and to the persons, networks and patterns involved, not just in north Wales but—as other Members have suggested—more widely, including, but not only, in respect of Kincora?

The National Crime Agency, whose investigation will take place at the request of the chief constable of North Wales police, will pursue whatever avenues they need to pursue to ensure that they can take an appropriate approach to bringing perpetrators to justice.

Does my right hon. Friend agree that many fresh allegations could come from individuals who have hidden the appalling attacks made on them so many years ago, and who will be reluctant to come forward because that would disturb the life that they have built since? Do such people not need the reassurance and protection that can be provided by CEOP, the police and others if they do come forward?

That is an important point. For many victims who wish to come forward, it will not be an easy process but a very painful process, which, as my hon. Friend says, could disrupt the lives that they have been able to build subsequently. However, I assure him that CEOP is well able to deal, and well used to dealing, with people who are in difficult circumstances and who may find it difficult to come forward. That is why I think it so important for CEOP’s ability and specialism to be brought to bear on the investigation.

Given what we now know about the powers of investigation and terms of reference used in the north Wales inquiry, will the Home Secretary have regard to other similar inquiries? I am thinking in particular of the Staffordshire “pindown” inquiry undertaken by Allan Levy. Can the Home Secretary assure the House that if similar questions arise in relation to any other inquiry, they will be encompassed within any further investigations?

If there are similar concerns about any other inquiries, we would look at them on a case-by-case basis and consider the appropriate way of dealing with them.

I was a Clwyd county councillor representing Wrexham at the time of the north Wales children homes inquiry, and I was on the panel that looked at the report that was never published. Let me tell the House that its contents were horrendous. Can the Secretary of State assure me and the House that no stone will be left unturned to make sure that the people who came forward can have closure and that those responsible for these dreadful crimes can be punished?

I am grateful to my hon. Friend for sharing her personal experience with the House, and I assure her that no stone will be left unturned. The entire House wants to see that justice is done.

Will the Home Secretary look into whether there was a systemic problem in north Wales whereby those accused of child abuse without conclusive evidence to prove it were redeployed within the wider world of social services? Although they no longer had direct access to children, they were still part of that system. If that is the case, we will need a much wider inquiry.

One issue that has been raised both in the past and more recently is the question of whether the inquiries went sufficiently far outside the care system. As the police look at the historical allegations, they will also consider how far the investigations should go.