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House of Commons Hansard
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Commons Chamber
15 May 2013
Volume 563

House of Commons

Wednesday 15 May 2013

The House met at half-past Eleven o’clock

Prayers

[Mr Speaker in the Chair]

Oral Answers to Questions

Wales

The Secretary of State was asked—

Aerospace Industry

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1. What recent discussions he has had with the First Minister on future investment in the aerospace industry in Wales. [153883]

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The aerospace industrial strategy published in March sets out a vision for the sector, including a joint industry and Government investment of £2 billion across the next seven years. I am pleased that the Welsh Government have endorsed that strategy.

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Aerospace and Airbus are great success stories in Wales, so why do the Secretary of State and his Government believe that now is the time to create uncertainty on the question of Europe, which could threaten future investment in the sector? Does he not want quality jobs in Wales?

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I agree entirely with the hon. Gentleman that Airbus is an important and innovative employer. I have visited it twice recently, including when the contract for the AirAsia order was signed. However, Europe is an important issue. The Prime Minister considers it right that we should debate it properly, and that, at the end of that debate, we should have a vote. After the dust has settled, the fact will remain that, of all the mainstream parties, only the Conservative party wants to give the people of this country a vote on Europe.

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St Athan enterprise zone in my constituency is focused on aerospace, and offers fantastic facilities, including hangars, runways and skills. What action is the Secretary of State taking to ensure that UK Trade & Investment is playing its full part to work with the community, those employed in St Athan and the Welsh Government to develop its status?

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My hon. Friend is entirely right that St Athan offers an enormously important resource in south Wales. The Aerospace Technology Institute will lead collaborative research and development projects across the UK, which will involve universities and industry. I suggest that that is a tremendous opportunity for St Athan.

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Airbus is a quintessentially European company. It employs 6,000 people in Wales and 10,000 in the UK, and 100,000 further jobs support it. Does the Secretary of State believe that those jobs will be more or less secure if Wales is not part of Europe?

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The hon. Gentleman is wrong because Airbus employs 6,600 people in Wales, but he is right that it is an extremely important employer. Nevertheless, the people of this country deserve to have their voice on Europe. The Prime Minister will carry out important negotiations in the next few years. At the end of that period, the issue of Europe will be put to the British people. It is right that it should be. I am astonished that the hon. Gentleman and the Labour party want to deny the people of Wales and the UK their voice on that important issue.

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Leaving the pedantry aside, we had no answer from the Secretary of State on whether he believes that those 6,600 jobs in Wales will be more or less secure if Wales is not part of the EU. For the record, could he clarify his position on whether the jobs will be more secure if Wales is in or out of the EU? What is our Secretary of State’s opinion?

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I am entirely happy to clarify the point. Membership of the EU will be subject to negotiation. To repeat, at the end of that negotiation, we will see whether the conditions are right for this country to remain in the EU. The interests of companies such as Airbus will, of course, be taken fully into account.

Housing Benefit

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2. What assessment he has made of the effects of changes to housing benefit rules in Wales. [153884]

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Information on the expected impact in Wales and Great Britain of the changes to housing benefit is provided in the impact assessments prepared by the Department for Work and Pensions.

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When the Minister gave support to that policy, what assessment did he make of the number of one-bedroom properties available in Wales for the 40,000 people hit by it? Does he agree with the Under-Secretary of State for Work and Pensions, his noble Friend Lord Freud, who suggested that those who are concerned should sleep on sofas?

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I followed closely yesterday the questioning of the Under-Secretary of State who has responsibility for welfare reform. His comments about sleeping on sofa beds were made in the context of families where the parents have split—he discussed whether there is a duty on the state to provide benefits sufficient for each separated parent to have family-sized accommodation for children during the same week. If the position of the Labour party is that they should have such provision, it should be stated clearly from the Opposition Front Bench, but picking up all the costs of relationship breakdown in that way would be an enormous burden on the taxpayer.

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Is it not the case that, despite the jeering and catcalls from Opposition Members, they will make no commitment to reverse those reforms, which have been introduced because of the financial mess the country is in? They know that better than most since they were the ones who caused it.

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As ever, my hon. Friend is correct. The Opposition’s position is characterised by two things: opportunism and hypocrisy. They know they will not reverse the changes if they ever form a Government again.

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Today, 10 brave families will be applying to the High Court to declare the immoral bedroom tax unlawful. They are parents of disabled children and, in many instances, are disabled themselves. Will the Minister update the House on what steps his Government are taking to exempt those families from this immoral, unjust and unworkable tax that, according to an all-party report in March, will not save a penny?

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I am not going to comment on the specifics of the legal case, but the right hon. Gentleman rightly asks what we are doing to protect the most vulnerable people—those with severe disabilities in housing with adaptations. [Hon. Members: “Nothing.”] Opposition Members are heckling from a sedentary position, but contrary to what they are saying, we have set aside an extra £25 million for people with severe disabilities living in adapted accommodation and who need additional support at this time.

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I hear what the Minister says, but I would like him to respond to recent research conducted by BBC Wales, which revealed that there are approximately 28,000 individuals in Wales living in social housing that is considered to be under-occupied, with 400 one-bedroom homes available for them to move to. What will happen about that disconnect, or does he not care?

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There is a mixture of housing stock throughout Wales. Decisions will be taken on a localised basis, which is why we have more than doubled the amount of discretionary housing payment to more than £6 million to help meet the issue that the right hon. Gentleman raises.

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My hon. Friend has just mentioned the £6 million increase in discretionary housing payments in Wales. In Conwy in my constituency, the increase to £300,000 doubles the amount available to the local authority. Is it not the case that many of the individual cases mentioned by Opposition parties will be dealt with at a local level as a result of this fantastic increase?

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We have more than doubled the amount available to local authorities for discretionary housing payment. In the local authorities of Wrexham and Caerphilly, it has been increased by more than 300%. We are determined to protect the most vulnerable people at a time when we have to restore budget discipline to housing benefit expenditure.

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Official housing allowance figures indicate that even if only a third of bedroom tax victims in Wales manage to move to smaller private accommodation, that will mean at least a £17 million increase in the annual housing benefit bill going straight into the pockets of landlords. How many jobs does the Minister reckon could be created with that £17 million?

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I am not sure that the hon. Lady will want to talk about jobs, because today’s figures show yet again that unemployment in Wales is falling, economic inactivity is falling, and employment is up. I do not really follow the logic of her question, but she should welcome today’s good news

Measles Outbreak

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3. What discussions he has had with Ministers in the Welsh Government on the measles outbreak in south Wales. [153885]

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My noble Friend Baroness Randerson, the Parliamentary Under-Secretary of State for Wales, will be meeting the Welsh Government Minister for Health to discuss the matter further, and we remain in very close contact with Welsh Government officials. While this is a devolved matter, I share the concerns of the local community and I encourage those not yet vaccinated to do so.

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Will the Minister join me in praising the response of NHS Wales to the measles outbreak? In addition, will he urge those who have not taken up the MMR vaccine to do so immediately, particularly given the reports from Public Health Wales this week about outbreaks further east in Wales? Will he urge them to do that, so we can stop the spread of this dangerous disease?

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The hon. Gentleman is exactly right. It was very worrying to see the figures announced yesterday that more than 4,000 children in the Swansea area still have not been vaccinated. In Gwent, more than 10,000 children have not yet been vaccinated, and we have particular concerns about a measles outbreak in Gwent. It is absolutely right that Welsh Government public health officials are doing everything they can by making clinics available at the weekend and so on. The onus is now on parents to go out and get their children vaccinated.

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Does the Minister agree that it is essential roundly to condemn the totally incorrect research done by Andrew Wakefield many years ago linking MMR with autism? It simply was not true, and now is the time to say he got it wrong and that everyone must have the MMR injection.

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My hon. Friend is also right. Dr Andrew Wakefield’s research has been discredited not just in this country, but by medical and scientific opinion throughout the world. There is no reason for parents to feel alarmed about the MMR vaccine, and there is plenty of dispassionate advice for them if they have concerns or questions. They should crack on now and get their children vaccinated.

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Will the Minister commend the work of local authorities such as Bridgend working hand in hand with the Abertawe Bro Morgannwg university health board and running drop-in clinics in every school in the constituency? Does he agree with me, a father of three teenage boys, that the very best protection against this disease is for everyone not to be afraid and to turn up to these clinics and get all their children vaccinated against this terrible disease?

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The hon. Gentleman is exactly right as well. The response from public officials in Wales at all levels—Welsh Government, local authorities and within Public Health Wales—has been exemplary. They have done everything right so far, but we need to get the message out to the communities affected that parents with children not yet vaccinated urgently need to get them vaccinated.

Government's Fiscal Policies

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4. What discussions he has had with the Welsh Government on the effects on the economy in Wales of the Government’s fiscal policies. [153887]

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I have regular discussions with the Welsh Government on economic issues. Action taken by the Government to deal with the deficit has helped keep interest rates at near record lows, helping families and businesses across Wales.

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How many people in Wales have seen their personal tax-free income tax allowances increase since May 2010, and how many small businesses in Wales are set to benefit from the new £2,000 national insurance employment allowance being introduced next April?

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The increase in the personal allowance announced by the Government will benefit 1.1 million taxpayers and remove 130 individuals from paying income tax altogether. More than 35,000 businesses in Wales will benefit from the national insurance employment allowance, with 20,000 of them being taken out of national insurance altogether.

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I welcome the drop in unemployment in Wales—that is in sharp contrast to unemployment in England—and credit must go to the jobs growth fund introduced by the Welsh Government. What practical steps are the Secretary of State and the Government taking to work with the Welsh Government to eradicate long-term unemployment, which is rising in north Wales and in his and my constituencies?

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The hon. Gentleman should also commend Welsh businesses, which are increasing the number of their employees, but certainly I am happy to commend initiatives by the Welsh Government. His point highlights the importance of the UK and Welsh Governments working closely together. That is something that we are prepared to do, and I expect to see reciprocation from the Welsh Government.

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The UK Government-sponsored Silk commission recommended empowering the Welsh Government and Welsh local authorities with fiscal responsibility to incentivise economic development. Why were these recommendations not included in the Finance Bill or the Queen’s Speech in a Government of Wales Bill?

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As the hon. Gentleman will know, the Silk proposals are still under consideration by the UK Government. We have always made it absolutely clear that we will announce our response to Silk this spring, so we will issue that response in the next few weeks.

Enterprise Zones

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6. What assessment he has made of the potential for co- operation between enterprise zones in England and Wales. [153889]

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I see great potential in a joined-up approach to enterprise zones in England and Wales. Co-operation will enhance the offer that each of the zones presents, and I will continue to engage with the Welsh Government to explore these opportunities.

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Today’s unemployment figures show that the Chester and north-east Wales economic sub-region is becoming a jobs powerhouse in the local area. By working together, the three enterprise zones in the area—Deeside, Wirral and Daresbury—can pack a stronger punch than if they act individually. Will the Secretary of State ensure that local authorities work together to pack that bigger punch?

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I visited the Deeside industrial park forum last Friday, and that was very much the message I got from employers in that enterprise zone. There is far more to be gained from the three enterprise zones working closely together. One of the catalysts for expansion of those zones would be electrification of the Wrexham to Bidston railway line, which is a matter that my office is working on.

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I am delighted to hear that the Wrexham to Bidston line project is under consideration by the Secretary of State’s office. Will he convene a meeting of MPs and Assembly Members from north-east Wales, and of MPs from Cheshire, to discuss the project and what steps can be taken, using enterprise zones, to take it forward?

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I am pleased to hear the hon. Gentleman welcome that initiative. His proposal is certainly worthy of consideration. I am having a number of meetings in the immediate future with representatives of other enterprise zones, and in due course I will write to him and perhaps invite him to such a meeting.

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It is indeed heartening to hear the Secretary of State speak supportively of the Wrexham to Bidston line upgrade project, which we want to see happen. Does he welcome Network Rail’s publication of its Long Term Planning Process, which sees connections between Wrexham and Liverpool being much improved, and can MPs from Merseyside also be invited to any such meeting he might convene?

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I am pleased to hear the hon. Lady’s comments. I think she would agree that electrification of the railway line between Liverpool and Wrexham would add greatly to the economies of north-east Wales, and Wirral and the north-west of England. It is important that we work with Merseyrail, and I hope to meet Merseyrail in the very near future. I am grateful to the hon. Lady for her support.

National Transport Infrastructure (M4)

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7. What discussions he has had with his ministerial colleagues and others on the contribution of the M4 to the UK’s national transport infrastructure. [153891]

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I have regular discussions with ministerial colleagues, Welsh Ministers and others on the strategic importance of the M4 to the UK road network.

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Does my right hon. Friend agree that it is excellent news that the talks between the Welsh Assembly Government and the UK Government have resumed after 10 years of inactivity on this subject? Is he aware of the recent remarks of the director general of the CBI, who indicated that progress on this issue, coupled with electrification of the line through to Swansea, would represent the biggest investment in the Welsh economy for a generation?

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I certainly agree with that. Furthermore, I would point out that the M4 is an extremely important UK national asset and it is a great pity that it was not upgraded long ago. Recently, I have had discussions with Welsh Assembly Ministers on this issue, and I hope that we will be able to make further progress.

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Will the Secretary of State press the Treasury to invest now in the M4 above Newport and Port Talbot, going westwards, and to reduce the Severn bridge tolls, to give a real stimulus to the south Wales economy?

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I am heavily engaged with the Treasury on that very issue. However, I must point out to the hon. Gentleman that the road network in Wales is a devolved competence, and it is a great shame that the Welsh Government have not attended to this problem sooner, before the situation declined to the extent that it has. We are certainly engaged with the Treasury, and I hope that we will be able to make announcements in the future.

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Does my right hon. Friend agree that the M4 in south Wales is in desperate need of improvement, to relieve congestion that is hampering economic development there?

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Yes, the congestion on the M4 is causing significant difficulty to Welsh commerce and, of course, to Welsh motorists. I repeat that it is a great pity that the Welsh Government did not carry out their statutory function by upgrading that road long ago. This is a matter on which I am engaged with the Welsh Government, and I hope we will be able to make further announcements in due course.

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Will the Government introduce road tolls on the new M4 relief road?

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I must point out that the Assembly Government already have the competence to introduce road tolls, under the Transport (Wales) Act 2006. That is, of course, a matter for the Assembly Government.

Overseas Students

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8. What discussions he has had with his ministerial colleagues and others on increasing the accessibility of educational institutions in Wales to students from overseas. [153892]

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10. What discussions he has had with his ministerial colleagues and others on increasing the accessibility of educational institutions in Wales to students from overseas. [153894]

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A thriving higher education sector is vital to our economy and I recognise the significant contribution that overseas students make to the sector. The reforms we have introduced have tackled abuse of the student migration system while protecting universities, to ensure that they can continue to attract the best and the brightest.

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I am sure that the Minister will want to join me in congratulating Swansea university, whose pro-vice chancellor I met last night, on the start of its new, second campus, which will house 5,000 students. Will my hon. Friend make every effort to publicise the fact that Welsh universities are open for business and open to applications from overseas students?

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My hon. Friend is absolutely right. Welsh higher education institutions attract a greater proportion of overseas students than similar institutions in England, Northern Ireland or Scotland; they are at the forefront of attracting overseas students. My right hon. Friend the Secretary of State visited the new campus at Swansea university recently; it illustrates the strong offer that the university now has.

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Notwithstanding the Government’s necessary direction of travel on immigration policy as set out in the Queen’s Speech, may I ask my hon. Friend to endorse the work of Aberystwyth university, which plans to treble the number of its overseas students by 2017? That will be essential for the local economy, and for building links with emerging economies throughout the world.

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Aberystwyth is another university with an extremely strong track record of attracting overseas students. In fact, in an international survey of students, it was voted the best overseas university for student satisfaction and the best place to live. It is front and centre of our efforts to attract more overseas students.

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What discussions has the Minister had with the Home Office about the impact on higher education institutions in Wales of 42,000 fewer students coming to the UK?

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There is a constant close dialogue between us, the Home Office and the Minister for Universities and Science about how we can attract more overseas students to the UK. I do not know what figures the hon. Member for Blaenau Gwent (Nick Smith) has seen, but if he looks at the figures for overseas students coming to Wales, he will see that there has been a 73% increase in the past five years, and those numbers are continuing to go up. [Interruption.]

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Order. There is a large number of extremely noisy private conversations taking place, including among those on the Opposition Benches, who I am sure will now wish to hear Jessica Morden.

Disabled People (Welfare Policies)

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9. What assessment he has made of the effects of the Government’s welfare policies on disabled people in Wales. [153893]

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The introduction of the personal independence payment will ensure that we provide more targeted support to those who need it most. Under our reforms, a greater proportion of disabled recipients will get the higher levels of support compared with disability living allowance.

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In Wales, 25,000 disabled people will be hit by the bedroom tax, more than 40,000 are set to lose their disability living allowance and more than 50,000 will see their benefits reduced. Does the Minister agree with Disability Wales that a cumulative impact assessment of the Government’s welfare changes is urgently needed?

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I suggest that the hon. Lady looks at the cumulative impact of the range of welfare reforms that we are bringing in. Under universal credit, 200,000 households in Wales will see their entitlement go up by about £140 a month, and a large proportion of the people currently receiving disability living allowance in Wales will also see their entitlement go up. She should not necessarily believe the scaremongering from Opposition Members.

National Assembly for Wales

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11. If he will consider proposing an alternative name for the National Assembly for Wales as part of the Government’s response to the Commission on Devolution in Wales; and if he will make a statement. [153895]

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The Government have no plans to change the name of the National Assembly for Wales.

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In the light of the Silk review, which is likely to give fundraising powers to the National Assembly, does the Secretary of State not agree with me—and, more importantly, with the leader of the Welsh Conservatives, Andrew R. T. Davies—that now is the time to consider calling it the Welsh Parliament?

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Well, have I got news for my hon. Friend! The Silk commission has not yet completed its work; it will report in the spring of next year. The title “National Assembly” is used by the primary legislatures of countries such as France and South Africa, and also by the regional legislature of Quebec. The issue is what the legislature does, rather than what it is called.

Corporation Tax

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12. What assessment he has made of the potential effects in Wales of the reduction in the rate of corporation tax to 20%. [153896]

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In total, the main rate of tax is set to fall by 8 percentage points under this Government. The United Kingdom will have the lowest rate in the G20, lower than most of our main competitors.

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As well as reducing corporation tax, what else can the Government do to help small businesses in Wales?

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The reduction in corporation tax will be of immense benefit to Welsh small businesses. The Budget did, of course, announce that the national insurance employment allowance will benefit 35,000 businesses in Wales, with 20,000 of them taken out of paying national insurance contributions altogether.

Living Standards

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13. What assessment he has made of the effects of the Government’s policies on the living standards of people in Wales. [153897]

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This Government are committed to supporting those on low and middle incomes and to assisting growth by putting more money in the pockets of ordinary taxpayers. For example, the cumulative effect of this Government’s announced increases to the income tax personal allowance will result in a cash gain of £705 per annum for a typical basic rate taxpayer.

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Some 400,000 individuals across Wales will face real-terms cuts in tax credits and benefits at a time when 13,000 millionaires across the UK will get a tax cut. Does the Secretary of State think this is right—yes or no?

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What I would say is that those on higher earnings will be paying more tax under this Government than they did during any year of the last Labour Government. We are supporting families with lower taxation and we are reducing the tax burden progressively; it would appear that the hon. Lady’s party has no interest at all in supporting the interests of hard-working families.

Prime Minister

The Prime Minister was asked—

Engagements

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Q1. If he will list his official engagements for Wednesday 15 May. [154913]

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I have been asked to reply. My right hon. Friend the Prime Minister—[Interruption.]

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Order. The Deputy Prime Minister must be heard—from the start of the session to the end of the session.

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I have been asked to reply. My right hon. Friend the Prime Minister is visiting the United States for meetings with President Obama, making the case for a transatlantic trade agreement between the United States and the European Union and chairing the high-level panel on development in New York today. This morning, I had meetings with ministerial colleagues and others. In addition to my duties in this House, I shall have further such meetings later today.

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I thank the Deputy Prime Minister for his answer. If Conservative Members of Parliament do not have to support the Government on Europe, why do Liberal Democrat MPs have to support the Government on tripling tuition fees, top-down reorganisation of the NHS, the bedroom tax and all the other wretched policies of this Government?

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Liberal Democrats, and indeed Conservatives, are working together to clear up the mess left by the hon. Gentleman’s party. It is this Government who are delivering more apprenticeships than ever before, delivering a cap on social care costs, delivering a decent state pension for everybody and clearing up the mess in the banking system left by that man there—the right hon. Member for Morley and Outwood (Ed Balls)—and so many other people on the Labour Benches.

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Will the Deputy Prime Minister confirm that the only party in this House offering an in/out referendum is the Conservative party?

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I know the hon. Gentleman hates to be reminded of things that he and I have actually done together when we have been on the same side of the argument, but we spent 100 days in the early part of this Parliament passing legislation, opposed by the Labour party, that for the first time ever gives a guarantee in law about when a referendum on Europe will take place—when the rules next change or new things are asked of the United Kingdom within the European Union. The hon. Gentleman and his colleagues in the Conservative party are perfectly free for their own reasons to move the goalposts, but this legislation is in place and the people of Britain have a guarantee about when a referendum will take place, and that is what I suggest we should all go out and promote.[Official Report, 16 May 2013, Vol. 563, c. 7-8MC.]

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I am sure that everyone is thrilled to see the Deputy Prime Minister and, of course, myself at the Dispatch Box today. This is meant to be Prime Minister’s questions, however, yet once again the Prime Minister is not here. Why is it that out of the last eight Wednesdays, the Prime Minister has answered questions in this House only once?

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I think that the Prime Minister is unusually assiduous in coming to the House to make statements. I think that the leader who should be relieved that there is no Prime Minister’s Question Time today is the leader of the right hon. and learned Lady’s party. I am still reeling with dismay over the fact that recently, on Radio 4, he denied 10 times that borrowing would increase under Labour’s plans. Who said that there is not enough comedy on Radio 4?

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We have all seen what the Prime Minister has been doing in America. He has been on a London bus in New York—something, incidentally, that we do not see him doing a great deal when he is here. He has also been busy explaining to President Obama the benefits of Britain’s membership of the European Union. Why is he able to do that in the White House, but not in this House?

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To be fair to the Prime Minister—notwithstanding our other differences on this subject—I think that he has always made it clear that he believes in continued membership of the European Union, if it is a reformed European Union.

There is a fundamental debate that we need to have in this country about whether we are an open or a closed nation, and about whether or not we stand tall in our European neighbourhood. That debate will continue, and the Prime Minister will continue to make his views known.

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It is indeed an important debate, and we have an important vote on an amendment to the Queen’s Speech tonight, but the Prime Minister is out of the country. Can the Deputy Prime Minister help the House? If the Prime Minister were here today, would he be voting for the Government or against the Government, or would he be showing true leadership and abstaining?

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The right hon. and learned Lady has used three questions to point out that the Prime Minister is not here. That is a striking observation—a penetrating insight into the affairs of state today.

Just two years ago, the right hon. and learned Lady’s party rejected an opportunity to vote on legislation that Government Members pushed through, giving the British people, for the first time, a copper-bottomed legal guarantee in relation to when a referendum would take place. Our position is perfectly clear; hers is not.

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This is an extraordinary situation. The Deputy Prime Minister has not told the House how the Prime Minister would have been voting if he were here. Is it that he does not know, is it because he does not want to tell the House, or is it because he thinks that the Prime Minister would probably have changed his mind by the time we would have been told?

While the Prime Minister is bogged down in confusion about Europe, people are suffering. Today’s figures show that unemployment is up. More people are out of work, and the number of people who have been out of work for more than two years is at its highest since 1997. So what is today’s excuse?

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The right hon. and learned Lady has commented on today’s figures. Of course when anyone is without work it is an individual tragedy, and we must always work to bring unemployment down, but I think that she is giving the House a somewhat partial snapshot. Full-time unemployment is actually up by 10,000 this quarter, more people are employed in the private sector than ever before, employment has risen by 866,000 since the election, and the number of women employed is the highest that it has ever been. Is that not something that the right hon. and learned Lady should celebrate rather than denigrate?

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We see complete complacency while things are getting worse. The fact is that even those who are in work are worse off. Wages are falling behind prices, and figures from the Institute for Fiscal Studies show that as a result of all the Deputy Prime Minister’s changes, families on lower and middle incomes are worse off. Will he own up to that? Will he admit it?

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Complacency? This from a party that crashed the British economy, went on a prawn cocktail charm offensive—sucking up to the banks—which led to the disaster in the banking system in the first place, and operated a tax system under which a cleaner would pay more tax on his or her wages than a hedge fund manager would on his or her shares?

Under this Government, the richest are paying more in taxes every year than they did under Labour. Under this Government, 24 million basic rate taxpayers will be £700 better off next year than they were under Labour. Under this Government, as of next April, nearly 3 million people on low pay will be taken out of income tax altogether. How about that for a record to be proud of?

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So the right hon. Gentleman votes for a tax cut for millionaires and then comes to the House and says the rich will be paying more. Three years into this coalition Government everyone knows that the country faces big problems, and what do we have? We have a Prime Minister who is not just indecisive, not just weak, but fast becoming a laughing stock.

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The right hon. and learned Lady mentions—as Labour party Members often do—the upper rate of income tax. Under us, it is 45p.

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It was 40p under Labour.

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Hang on; my hon. Friend is a great enthusiast. What was the rate under Labour? What was it for 13 years? Was it 50p? No. Was it 45p? No. The Labour rate was 40p, which is 5p lower. They let the richest in this country off the hook; we didn’t.

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Given the Liberal Democrats’ commitment to a European Union referendum, will my right hon. Friend see fit to help facilitate Government time for a private Member’s Bill on the subject, should that become available?

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As my hon. Friend knows, my party has always believed there should be a referendum on Europe when the rules change and when new things are being asked of the United Kingdom within the European Union. That is what we had in our last manifesto, and that is what we have now acted on in government by passing legislation, together in the coalition, just two years ago giving an absolute legal guarantee in legislation for the first time ever that when the rules change, there will be a referendum. By the way, I think it is a question of when, not if, because the rules are bound to change. I would just simply suggest that we should stick to what we have done as a Government in giving that guarantee to the British people, rather than constantly shift the goalposts.

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Q2. Perhaps the Deputy Prime Minister shares my dismay at allegations of price fixing in the oil market. If so, will he explain why he has consistently opposed Opposition amendments for proper regulation of oil and commodity prices by the Financial Conduct Authority? Will he now accept that he was wrong, accept the amendments from this side of the House, and get petrol and diesel prices at the pump reduced? [154914]

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That is yet another example of astonishing amnesia. What happened for 13 years? Did the hon. Gentleman or any Labour Front-Bench Members do anything? The investigation into alleged price rigging—and, by the way, it is very important that the oil companies concerned should of course co-operate with a European Union institution that is doing very good work on behalf of British consumers—stretches right back to the years when Labour was in power. What on earth did it do? Once again, it was asleep at the wheel.

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I am sure the Deputy Prime Minister shares the widespread revulsion at the perpetrators of the crimes against the young and vulnerable girls in Oxford. Does he agree that we now look to the courts to impose the severest possible penalties against these evil men, so that those poor girls can get the justice they were denied by the police and the local authority?

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I am sure my hon. Friend speaks on behalf of everybody in this House, not only about the sense of revulsion at these truly evil acts, but about the fact that we should pay tribute to the courage of these young women. The innocence of their childhoods was so horridly destroyed by this evil gang, and we must all pay tribute to the courage it must have taken for them to come forward and give evidence. I certainly agree with my hon. Friend that lessons should be learned particularly about how the police forces and social services work together, and that these people should be handed down the severest possible sentences in response to this reprehensible crime.

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Q3. The Deputy Prime Minister talks about the individual tragedy of unemployment, but a year ago this Government made thousands of Remploy disabled workers unemployed, and 69% of them are still unemployed. They wanted to work, but it is costing the Government more to keep them on the dole. Does that not show that the Government are not just heartless, but utterly incompetent? [154915]

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As I hope the hon. Gentleman knows, the approach we have taken to Remploy was in response to independent recommendations made by senior figures active in the area of disability and the rights of those with disabilities. The recommendation that came through was very clear: that it is simply not right to say to people with disabilities that somehow they should be hidden away and put in a separate silo, and we should do what we can to give them support to be part of the mainstream labour market along with everybody else. That is why we have not in any way cut the support for those workers in Remploy factories as they make the transition from those factories into the world of mainstream work.

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Q4. Does not the Deputy Prime Minister recall that at the election he promised to go for an in/out referendum? That has not taken place yet. Does he understand that residents of the Isle of Wight, and many from elsewhere, would feel betrayed if the Liberal Democrats did not now support an amendment regretting that a referendum is not included in the Gracious Speech? [154916]

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As my hon. Friend knows, our commitment was for a referendum when there is a fundamental change in the relationship—[Interruption.] Read our manifesto—I have. I helped to write it, and I can guarantee that that is what it says, and we have acted on that. I have an old-fashioned view—[Interruption.]

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Order. I do not think the Deputy Prime Minister particularly minds being shouted at, but I do not want him to be shouted at excessively. The House should hear his answer, and certainly the people of the Isle of Wight should hear his answer.

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That is very kind of you, Mr Speaker, thank you.

I have an old-fashioned view that when a Government put forward a Queen’s Speech that has a lot of good things in it—a cap on social care costs, a decent single-tier pension for everybody and a cut in national insurance contributions for employers to create jobs—we on this side of the House should go out and promote it and not spend days bemoaning what is not in it.

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The police in Northern Ireland have stated that if the National Crime Agency is unable to operate fully in Northern Ireland it will have a detrimental impact on their ability to keep the people of Northern Ireland safe and to combat serious and organised crime. Surely no political party in Northern Ireland has a right to gamble with the safety of the people of Northern Ireland, so what do the Government propose to do to ensure that no one is able to hold the people of Northern Ireland to ransom and make Northern Ireland an easy target for international crime?

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I am sure everyone shares my instinct that, as with all sensitive issues in Northern Ireland, the more we can talk across parties and across traditional divides and hostilities, the more we promote the prosperity and security of the people of Northern Ireland and of the people of the United Kingdom as a whole.

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Q5. This Government have helped motorists in my constituency by cutting fuel duty by 13p on the mainland and 18p on the island, compared with Labour’s disastrous plans. Now that the European authorities are investigating the oil companies, will the Government ensure that oil companies here obey the rules and end any price fixing that might be going on? It is important that the Government’s good policy on fuel duty means that the benefit ends up in the pockets of the motorists, not the oil companies. [154918]

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I am grateful to my hon. Friend for reminding the House that the price of fuel on the forecourt would be 13p higher under the plans embarked on by the Labour party—[Interruption.] Labour Members hate to hear this and to be reminded of it, but I am afraid it is true—the price would be 13p higher, which would be a crippling additional cost of living for millions of people in this country. I agree with him that the large oil companies now under investigation for these allegations should, of course, fully co-operate with the European Commission.

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May I put a question to the Deputy Prime Minister that might go against the grain for me? I have been vociferous in my support for the Remploy organisation. Unfortunately, the Remploy factory in my constituency is earmarked for closure, and members of the work force received letters in March advising them to seek alternative employment. Some of them have done so successfully, but on Monday they were given an interview and told that they would not be allowed to leave their employment with Remploy and, if they insisted on doing so, they would not receive the severance package offered to every other member of the work force. Will the Deputy Prime Minister look into this?

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Of course—I am sure that my right hon. Friend the Secretary of State for Work and Pensions will look into the specific issues that the hon. Gentleman raises. As I said in response to the earlier question, the thinking behind this is of course to ensure that those who work in Remploy factories find gainful employment in mainstream work. That is the recommendation that came not from the Government but from independent observers; they said this is the best way to ensure that we do not ghettoise those with disabilities in the labour market, and that is what we will continue to work towards.

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Q6. Millions of people are struggling with their electricity bills and our electricity infrastructure is creaking. We have a solution in Wigton, where we are developing a smart grid that will make our electricity more reliable and more affordable. Will the Deputy Prime Minister commit to visiting Wigton and make the bold investment to roll a true smart grid out across the country? [154919]

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I would like to convey my congratulations to the hon. Gentleman and to all those in Wigton who have launched this smart energy pilot project. I am delighted to hear that it has elicited so much enthusiasm from the local community. It is, as he says, the first step towards creating a smart energy community. I know that officials from the Department of Energy and Climate Change have met the pilot’s network provider to discuss its benefits, and if it works it is exactly the kind of thing that we should seek to extend to other parts of the country.

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Q7. Replying to earlier questions, the Deputy Prime Minister blamed everybody but himself and his Government for the fixing of fuel prices. I am old enough to remember the Prices Commission, which ensured that the price of petrol and other commodities was the same across the whole land. Asda is able to do that, but the oil companies are price fixing in my constituency and elsewhere. Also, this Government have introduced an increase in the VAT on fuel. What is he going to do about all that? [154920]

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As I said, we have scrapped the fuel price hikes that were planned and decided upon by the previous Government, but of course allegations of price manipulation are incredibly serious. I am pleased that the European Commission is taking the matter so seriously and it is very important for us and for our constituents, for whom petrol, diesel and fuel prices are an incredibly important part of the weekly and monthly household budget, that those companies now engage seriously in looking at the allegations put to them by the European Commission.

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I have here a leaflet issued by the Liberal Democrats at the time of the passage of the Lisbon treaty. On the front page is a man posing as one Nick Clegg, who says:

“It’s time for a real referendum on Europe”—

an in/out referendum, not a referendum on a treaty change. Was that man an impostor or just a hypocrite?

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That man, whom I believe to be me, was stating something then that my party has restated ever since: that we should have a referendum on Europe when the rules change. We said that— [Interruption.] We said that at the time—[Interruption] We said that at the time of the Lisbon treaty and we said it in our manifesto. We even legislated on it, and we will say it again. [Interruption.]

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Order. Mr Gray, I was thinking of calling you to ask a question, but if you continue to misbehave, I might not.

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Q8. Does the Deputy Prime Minister agree with me, the late Baroness Thatcher, senior Government members on the Business, Innovation and Skills Committee, the Liberal Democrat manifesto, the Minister in charge of the Royal Mail and his own Government, and does he still agree with himself, that the privatisation of the Royal Mail is a step too far? [154921]

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We should welcome the innovative way in which we are seeking to give workers in Royal Mail a stake in the company. The hon. Gentleman’s party used to believed in worker ownership, but as on so many other issues it is still a blank sheet of paper when it comes to public policy of any significance. The Government are moving forward; the Opposition are standing still.

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I have to tell my friend that I cannot support the decision of the Prime Minister to go to the Commonwealth Heads of Government conference in Sri Lanka because of the human rights record of the Sri Lankan Government. What can the Deputy Prime Minister tell us about how we can respond to that terrible regime’s record? What can we do to make sure that in future the Commonwealth does not just say it believes in human rights, but does something about it?

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We are all aware that the decision that the Prime Minister and the Foreign Secretary will attend the upcoming Commonwealth Heads of Government meeting in Sri Lanka is controversial, especially in the light of the despicable human rights violations during the recent civil war. But I assure my right hon. Friend that the Government condemn those violations, the way in which political trials, regular assaults on legal professionals and suppression of press freedom continue, and the fact that too many recommendations of the lessons learnt and reconciliation commission have not been implemented. If such violations continue, and if the Sri Lankan Government continue to ignore their international commitments in the lead up to the Commonwealth Heads of Government meeting, of course there will be consequences.

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Q9. When the Deputy Prime Minister spoke about youth unemployment in 2011, he said that “the coalition won’t sit on our hands and let a generation fall behind.” Now that we know that long-term youth unemployment has trebled under this Government, why is he sitting on his hands and refusing to match Labour’s jobs guarantee? Is it because he has no influence in government or because he does not care? [154922]

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On the day in which youth unemployment declined, in view of the fact that youth unemployment went up remorselessly year after year after year in the latter half of the Labour Administration, and given that this Government are introducing a £1 billion Youth Contract, which gives everyone between the ages of 18 and 24 who has been out of work for a certain period the opportunity to take up an apprenticeship, subsidised work or a place on work experience, it is pretty rich for the hon. Lady to lecture us about the problems of youth unemployment.

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Has the Deputy Prime Minister had time to reflect on this week’s analysis of Yorkshire’s top 150 companies by the accountancy firm BDO, which shows that in the last year businesses in Yorkshire have seen an increase in revenues of £5 billion, that investment is up 20%, that exports to emerging markets are up 50%, and that 10,000 new jobs have been created?

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As an MP for a great Yorkshire city, I of course want to join my hon. Friend in celebrating the great achievements of businesses in Yorkshire, particularly the rebirth of so many great manufacturing companies. I am immensely proud that this Government have been backing manufacturing, after years of neglect under Labour.

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Q10. The Government’s much trumpeted Mesothelioma Bill was introduced last week, but only those diagnosed after 25 July 2012 will be compensated. Does the Deputy Prime Minister agree that it is wrong and unfair that the leeches in the insurance industry who are bankrolling the Tory party are getting away with millions and millions, when working class people who have been negligently poisoned by their employers are getting away with nothing? [154923]

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What does the hon. Gentleman think happened for 13 years under Labour? I am hugely sympathetic, as I am sure everybody is, to the plight of people who are unable to trace a liable employer or insurer against whom they can bring a claim. We announced our intention to bring forward legislation to introduce the scheme on 25 July 2012, and it is from that date that people have a reasonable expectation that if they are diagnosed with asbestos-related cancer and they meet the eligibility criteria they will receive a payment. But because we have also decided to pay dependants of people who have died from that cancer, the scheme will not be able to pay dependants of every person who has died, and that is why we have taken the approach we have.

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The Deputy Prime Minister is a great democrat as well as a Liberal, and I salute him for that. Will he therefore stand by the precise wording in this very fetching Liberal Democrat leaflet that I happened to find on my desk this morning, which says:

“Only a real referendum on Britain’s membership of the EU will let the people decide our country’s future.”

Will he now stand by that solemn pledge to the people of Britain and join us in the Lobby tonight?

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I fully stand behind the position that I took then and my party has taken ever since, that when there is a change in the rules and new things are asked of the United Kingdom within the European Union, there should and there will be a referendum. Not only that, we have done better since we issued that leaflet in 2008: we legislated to guarantee that to the British people for the first time in primary legislation just two years ago. We spent 100 days debating that in this House at the time. If my hon. Friend wants to reinvent it all over again and keep picking away at the issue, what will he give up from a fairly crowded Queen’s Speech? Will he tell his constituents that we will not put a cap on social care costs; we will not deliver a single tier pension; we will not pass legislation to have a national insurance contribution cut for employers? I think that we should stick to the priorities of the British people, which are growth and jobs.[Official Report, 16 May 2013, Vol. 563, c. 8MC.]

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Q11. Three of my young constituents, Emma Carson, Emma Magowan and Sophie Ebbinghaus, recently presented me with posters they had made supporting the IF campaign. They asked me to tell the Prime Minister of their concerns for boys and girls growing up without enough food to survive. Unfortunately, he is not here, but what assurances can the Deputy Prime Minister give them that the forthcoming G8 summit in Northern Ireland will deliver real action to ensure that there really is enough food for everyone? [154924]

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Like the hon. Lady and many Members on both sides of the House, I am a huge supporter of the IF campaign, and I attended its launch here in Westminster, as did many hon. Members. Of course it is a total scandal that in 2013 nearly 1 billion people globally are hungry or malnourished. I am delighted about the co-operation between all the different campaign groups in the IF campaign and the Government in pushing forward a radical agenda, which has never really been tried before, in the G8, under our presidency, to ensure tax fairness and proper transparency in the way primary resources are exploited in the developing world and the way trade works for the poorest around the planet. That is why we will work hand in hand with the IF campaign during our G8 presidency.

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Q12. In 2008 the Independent Reconfiguration Panel made a series of recommendations in response to an attempt by my local NHS trust to downgrade maternity services at Eastbourne district general hospital. The IRP recommendations were, in my view and those of eminent local clinicians, never properly introduced, which has now led to safety issues that, perversely, have enabled the trust to implement the service changes that were originally rejected by the IRP. Will the Deputy Prime Minister look at addressing that anomaly and ensure that hospitals implement IRP recommendations robustly and that that is audited, including at Eastbourne district general hospital? [154925]

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Order. There is probably scope for an Adjournment debate on the back of that, so let us have a brief answer.

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I pay tribute to my hon. Friend for all his work on behalf of his local community in relation to his local hospital. My understanding is that the changes to maternity services at Hastings hospital are temporary and that, of course, no permanent changes will be made without full public consultation. He makes an important point about the role of the Independent Reconfiguration Panel and I will ask the Secretary of State for Health to discuss the matter further with him.

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In answer to the question the right hon. Member for Bermondsey and Old Southwark (Simon Hughes) asked on Sri Lanka, the Deputy Prime Minister gave a long list of atrocities committed by the Sri Lankan Government. Why, then, are his Government going to the Commonwealth Heads of Government summit in Sri Lanka, why are they announcing that six months ahead of time, and why do they want to see an alleged war criminal as Chair of the Commonwealth?

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I think that we all accept the controversy and unease about this matter, but by attending the Commonwealth Heads of Government meeting in Sri Lanka we will be using the opportunity to cast a spotlight on the unacceptable abuses there. As I said earlier, of course there will be consequences if the conduct of the Sri Lankan authorities does not change. The Commonwealth matters to us all, and it is based on a number of values. Where I accept the hon. Lady’s implicit criticism is in relation to this point: all Commonwealth Governments should do more to not only talk about those values, but ensure that they are properly monitored and enforced.

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Q13. The Special Olympics movement showcases the abilities and achievements of learning-disabled athletes around the world while delivering positive inclusion, education and health outcomes. The British Special Olympic games will take place this summer in Bath. Will the Deputy Prime Minister assure me that the Government are doing all they can to spread the legacy from last year’s Olympics across all disability sports, including the Special Olympic games? [154926]

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Yes, I can give my hon. Friend that assurance. As he knows, last summer my right hon. Friend the Prime Minister appointed Lord Coe to be his legacy ambassador. A Paralympics legacy advisory group has also been established. I know that Lord Coe’s team is meeting Special Olympics GB shortly to discuss potential links between the London 2012 legacy and the national games to be held in Bath later this summer.

Petrol Prices

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With permission, Mr Speaker, I would like to make a statement on petrol prices and the cost of living.

On 14 May, officials from the European Commission directorate-general for competition carried out unannounced inspections at the premises of several companies active in the crude oil, refined oil products and biofuels sectors, including Statoil, BP and Shell. The Commission has concerns that the companies may have colluded in reporting distorted prices to a price reporting agency to manipulate the published prices for a number of oil and biofuel products. Any such behaviour, if established, may amount to violations of European antitrust rules that prohibit cartels and restrictive business practices and abuses of a dominant market position.

This Government are deeply concerned by any allegation that prices for consumers could have been artificially or unnecessarily driven up. The UK Government and regulators will provide any assistance necessary to the European investigators, and we expect the companies concerned to fully comply with these investigations. However, these investigations are at an early stage and the Commission has made it clear that investigations do not imply guilt. Until the facts are clear, it would be inappropriate to comment further on this investigation. I should also be clear to the House that these investigations are not directly linked to the allegations of market manipulation in the gas markets, which Ofgem and the Financial Services Authority are continuing to review.

This Government believe strongly that it is in our mutual interest for motorists and businesses to be confident that they are being treated fairly, and that when wholesale costs come down, these reductions are passed on transparently and without unnecessary delay. That is why we welcomed the Office of Fair Trading’s decision to look into the market for road fuels in late 2012. At that time, the OFT did not receive evidence on the impact on pump prices of potential manipulation of derivatives markets and the accuracy of reported prices of crude and wholesale road fuel that built the case for such an investigation. However, it did set out that it believes such manipulation is possible and encouraged market participants to approach the OFT and FSA, as appropriate, if they had evidence of such practices.

In a case such as this, where there are potentially cross-border issues, it is more appropriate for the Commission to lead the investigation. The OFT has and will continue to co-operate fully with the Commission.

This Government have taken direct action to ease the burden on motorists. Due to action taken in this year’s Budget, fuel duty will have been frozen for nearly three and a half years, the longest duty freeze for over 20 years. That builds on previous action to cut fuel duty, abolish the previous Government’s fuel duty escalator, introduce a fair fuel stabiliser and scrap two increases planned by the previous Government. As a result of Government actions, average pump prices are 13p per litre lower than if the Government had implemented the fuel duty escalator, and they are forecast to be 18p per litre lower by the end of the Parliament. Furthermore, as reported by the OFT, the UK consistently has among the lowest pre-tax petrol and diesel prices in Europe.

In the OFT’s investigation it identified an absence of pricing information on motorways as a concern and did not rule out taking action in some local markets if there is persuasive evidence of anticompetitive behaviour. The Government are now acting on this recommendation and increasing transparency of motorway fuel prices.

More widely, this Government’s reform of the competition regime will improve the speed, robustness and independence of decision making in UK competition enforcement. Creating a single Competition and Markets Authority and modernising its competition toolkit will improve markets and help consumers and businesses by providing greater coherence in competition practice and a more streamlined approach to decision making. The Government are also publishing a draft consumer rights Bill to give consumers clearer rights in law and to ensure that consumer rights keep pace with technological advances. That will give consumers greater confidence to take up new products, switch suppliers and make online purchases.

Although we cannot control volatile world energy prices, we can still help people get their bills down. The easiest ways to get energy bills down quickly are to get consumers paying the lowest possible tariffs and to reduce the amount of energy that is wasted.

We are ensuring that all households get the best deal for their gas and electricity by using the Energy Bill to give statutory backing to Ofgem’s retail market review proposals. Those proposals require energy suppliers to move consumers on poor value dead tariffs to the cheapest standard variable rate tariff, so that no customers are left behind on a poor value, out-of-date tariff. They will also create a new tariffs framework to reduce the number of tariffs that suppliers can offer to four per payment method and simplify tariffs so that the market is much more manageable for consumers. Customers will have personalised information from their supplier on their bills about the cheapest tariff that the supplier offers and any savings that they could make by moving to it.

These proposals will put consumers in the driving seat, giving them clearer choices and incentivising companies to compete hard for their custom. We hope that Ofgem can keep to its projected timetable, which could see measures begin to be implemented from summer 2013, with full implementation expected by March 2014.

Through the green deal and the roll-out of smart meters, we are helping people to reduce the amount of energy that they use so that they can have warmer homes for less and lower bills than otherwise. We know that the poorest and the most vulnerable often struggle to pay their energy bills. Through direct payments, such as the winter fuel payment and the cold weather payment, we are helping them directly to manage their bills.

We are also determined to ensure that Ofgem has the necessary powers so that consumers do not lose out when energy companies break the rules. Although Ofgem can fine energy companies up to 10% of their annual turnover for breaking the rules, unless it can agree compensation for consumers with energy companies, such fines are currently paid into the Consolidated Fund. That is why we are legislating, through the Energy Bill, to give Ofgem consumer redress order powers. Those powers will fill the gap and give Ofgem a powerful weapon to ensure that consumers are treated fairly.

We take very seriously any allegations of price manipulation. The Government are determined to ensure that consumers and motorists get the best possible value for money. We will continue to take the necessary action to deliver value to the consumer.

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With the greatest respect, I say to the Secretary of State that no amount of tariff simplification or sorting out retail at the pump will deal with the problem that we face today, which is allegations about how energy and petrol are bought and sold, and the way in which the market works.

The allegations that have been made about the three oil companies, BP, Royal Dutch Shell and Statoil, as well as the price reporting agency, Platts, are extremely concerning. They suggest that those companies have both colluded in reporting distorted prices and prevented others from participating in the price assessment process, with a view to distorting the published price. If the allegations are true, there has been shocking behaviour in the oil market which should be dealt with strongly. I therefore have three questions for the Secretary of State.

First, the Secretary of State will know that the OFT inquiry concluded at the end of January that the UK fuel market was operating fairly, and that a Competition Commission inquiry was not needed. Given the amendment that has been tabled for debate later today, it will not be lost on hon. Members that it is the European Commission, not any British authority, that is investigating this situation. In light of today’s allegations, will the Secretary of State say whether any British authorities have plans to revisit their own investigations? If the EU investigation uncovers any wrongdoing, it will raise serious questions about the effectiveness of our authorities.

Secondly, last year we tabled amendments calling for commodities such as oil and gas to be part of the Financial Conduct Authority’s regulatory net, but Ministers refused to act. We argued that the regulatory perimeter needed to be explicitly set out in the Financial Services Act 2012, and that it was insufficient just to add references to LIBOR. Does the Secretary of State now accept that the Office of Fair Trading and the FCA should be explicitly equipped to tackle attempts at rigging commodities trading, whether spot trading, forward contracts, futures contracts hedging or benchmark pricing indices?

Thirdly, when the allegations of price fixing in the gas market were made last year, we warned that opaque over-the-counter deals and a reliance on price reporting agencies left the market vulnerable to abuse. The latest allegations of price fixing in the oil market raise similar questions. I tabled a parliamentary question in February asking for an update on the earlier investigations, but the Government were unable to provide any more information. Can the Secretary of State give us any assurance that progress is being made, and that we will not need another EU investigation to get to the bottom of what is happening in the gas market?

As we all know, LIBOR was a massive scandal, but global commodity markets include a vast range of products, including grains, fibre, other food, precious metals and energy, affecting every household. Consumers need to know that the prices they pay for their energy or petrol are fair, transparent and not being manipulated by traders. I hope that the Secretary of State will assure the House that no stone will be left unturned to establish the truth behind the allegations.

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I thank the right hon. Lady for her reply. May I make it absolutely clear to her and the House that we take the allegations extremely seriously? If it turns out that hard-pressed motorists and consumers have been hit in the pocket by the manipulation of markets, the full force of the law should come down upon those responsible. Let there be no doubt about that.

However, I am surprised that the right hon. Lady wishes the Government to interfere directly in competition investigations. It was her Government who rightly moved competition authorities on to an independent basis. We believe it is very important to have independent competition authorities, because that strengthens their ability to act. [Interruption.] She asks from a sedentary position what they are doing, but arguably we could ask what they were doing under the Labour Government. I hope that we can get cross-party consensus that competition authorities should be independent.

It is good news that the European Commission directorate-general for competition has acted, and I would have thought that the right hon. Lady would welcome that. When there are cross-border allegations, it is important that the European Union can act.

The right hon. Lady asked whether we would act on the effectiveness of competition authorities. We have. Indeed, I was the competition Minister who proposed the changes to the competition regime inherited from the previous Government, which are strengthening it. Bringing in the Competition and Markets Authority will make our competition bodies and regime far more robust, so we have a very good record on the issue.

The right hon. Lady asked whether there should be wider powers to deal with commodities trading. An issue to be considered—we have seen it with LIBOR and the gas market manipulation allegations and now we see it today—is how price reporting agencies operate. They are unregulated bodies, as they were under the previous Government. She will know that the International Organisation of Securities Commissions has been looking into both price reporting agencies in general and oil markets specifically. It reported to the G20 last November, stating that it had potential concerns about the operation of the global market. It did not refer to any particular allegations of manipulation, but there is an ongoing debate, globally as well as in this country, about how we deal with price reporting agencies given that there have been instances of market manipulation. We are taking action; the previous Government did not.

The right hon. Lady’s final question was what was the state of play with respect to the Ofgem review of gas market manipulation. She described it as an investigation, but I clarify that it is a review of the allegations. She will also know that Ofgem is independent. We do not expect an independent investigator or regulator to give the Government day-by-day reports as that would go against its independent nature and reduce its power. I would be surprised if the Labour party wanted to reduce the power of our independent regulators. These are serious allegations, and we stand behind our independent competition authorities and believe they will take action on behalf of the consumer, as they should.

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Despite the fact that the Government have cut and frozen fuel duty, prices at the pump have gone up by 60% since 2009. Last year a motion for a full OFT inquiry into price fixing by oil companies was passed unanimously in the House. We were approached by a whistleblower who suggested that the things we have seen over the past two days had been going on. Does my right hon. Friend agree that the OFT carried out a limp-wristed, lettuce-like inquiry, when it should have made a full 18-month inquiry into what has been going on? Does he also agree that if proved true, this is a national scandal for the oil companies concerned, and the Government should look at changing the law and put people in prison for fixing oil prices? This has caused misery for millions of motorists up and down the country. Finally, if the accusations are proved, will he impose harsh penalties on all oil companies involved and give the billions of pounds in penalties back to the motorist?

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I have been generous with the hon. Gentleman, which I hope the House will realise, but I cannot help but feel that his appetite would be satisfied only by a full day’s debate on the matter. He will have to make do with what he has had so far.

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I am grateful for my hon. Friend’s questions, and I pay tribute to the way he has campaigned on this issue. He has made a big impact in the House and we have reacted to his campaigns with respect to fuel duty—something the Labour party never did. The OFT is a strong, independent body. It has powers and carried out its investigation. It received a call for information and it is responding to that. It made some warnings. As my hon. Friend knows, it was concerned about a number of areas, not least the transparency of petrol and diesel prices at motorway service stations, which I referred to in my statement. I know that as a result of that, my hon. Friend—indeed, the whole House—will be concerned to ensure that any evidence is put before the European Commission and the UK competition authorities. If any Members of the House or members of the public have such information, I call on them to pass it to the competition authorities.

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My constituents in the Hebrides have felt ripped off by the highest fuel prices in the UK for years, and shockingly we now hear of raids associated with suspected price fixing on huge oil companies—household names. Will the Secretary of State ensure that if there are any fines, they are passed on to hard-pressed motorists who might have been ripped off, so that my constituents in Lewis, Harris, Uist and Barra, and everybody else’s constituents, can feel the benefits of any justice? Do these events not call for a review of the OFT’s methodology?

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It is important for the hon. Gentleman, and all right hon. and hon. Members, to realise that these are very early days in the investigation. These are allegations only and we should not jump the gun. As he knows, because the allegations are so serious, both UK and European law allows competition authorities to levy serious fines—dependent, obviously, on the particular transgression—should a company be found guilty. The hon. Gentleman will have to wait, but he can be reassured that there are powers to levy heavy fines.

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I welcome my right hon. Friend’s robustness regarding such manipulation—if, indeed, the raids produce evidence of such manipulation—but will he tell the House how long he thinks it will be before the European Commission is able to report on the issue? In line with those of my hon. Friend the Member for Harlow (Robert Halfon), and others, my constituents in South East Cambridgeshire cannot accept that the market is working fairly. In our area we pay a higher price for petrol and diesel than in most other parts of mainland England, yet only 20 miles away, the same retailers and supermarkets are selling road fuel for 1p, 2p, 3p, or in some cases 5p, a litre less. That cannot be a fair marketplace.

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I am grateful for my right hon. Friend’s question and his support for the robust action that we propose to take, supporting our competition authorities. He asked how long it will take, but I am afraid it is impossible to give a straight answer to that. We have seen with the Ofgem and FSA review into allegations of gas market inflation that such things can take some time, in order to ensure that the allegations are looked into seriously and robustly, as consumers and markets should expect. Equally, I cannot give a timetable for the conclusion of the European Commission’s investigations.

My right hon. Friend and other colleagues are concerned that the OFT did not find problems in the market, and I have heard that point. It is worth remembering, however, that not only did it mention the absence of price information on motorways, as I mentioned earlier, but it said that it did not rule out taking action in some local markets if there is persuasive evidence of anticompetitive behaviour. The OFT is ready to act, but we need the evidence.

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Obviously, it is extremely welcome that the European Commission has taken the steps it has, but when the Secretary of State heard it was doing that, did he speak to the OFT and ask why it did not find the same problems only three months ago?

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We heard about the raid of these companies’ offices late yesterday evening. We have seen the OFT’s statement and know that it was accompanying European Commission officials, and we will no doubt find out more as the day goes on. The hon. Lady must remember that these competition bodies are independent, and I hope she will reject the idea that we should get ourselves into these investigations. We will seek more information, but we will not be interfering in the investigations.

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This is an issue of parliamentary sovereignty as much as anything else. One thing people say, and one of the most pernicious opinions in the wider electorate, is that the Government only look after big business and not ordinary working families, and—most importantly—that quangos are non-accountable. When will the Secretary of State look hard at the efficacy and accountability of the Office of Fair Trading and, if necessary given its lamentable performance, ensure that heads will roll?

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Although I strongly support the sovereignty of this Parliament, for some matters the outcome for consumers can be improved when they are given to an independent or European body. We give authority to the independent central Bank—the Bank of England—because evidence and theory has shown that an independent body can set interest rates in a more effective way. The analysis, not just in this country and Europe but in America, is that an independent competition body is the most effective way. When I was Minister responsible for competition in the Department for Business, Innovation and Skills, I looked thoroughly across the whole competition regime and made proposals that have gone through the House to bring together the OFT and the Competition Commission into a more robust, speedy and effective regime. I hope that reassures my hon. Friend, Members of the House and the public that this Government are determined to have the most effective competition regime in the world.

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As the Secretary of State will be aware, there has been a long-term disconnect between the price of oil on the market and the price at the pump. He will also know that over the decades, numerous inquiries have been made by the OFT and other competition authorities into the oil and petrol market, but not one has uncovered what is now alleged to have happened. The other issue for the consumer is the LIBOR market, which my right hon. Friend the Member for Don Valley (Caroline Flint) mentioned. Fines were paid by shareholders and customers in extra charges, but the men responsible walked away free. We do not want the same thing to happen in the oil and gas industry, and the Secretary of State is in danger of being complacent in relying simply on the competition authorities.

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We are not complacent at all. We stand by the independent bodies. If it was not for them taking action, we would not have had this statement. They are acting, and we should support them. It is good that the European Commission competition DG has looked not only at the UK, but across Europe. Many of those markets are integrated, cross-border markets, so it is vital we take that view. People should not rush to judgment. We must wait for the outcome of the investigations, but the fact they are happening shows that the public authorities do not treat those matters with complacency.

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rose

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Order. I gently point out to the House that there is a lot of interest in this important statement, which I am keen to accommodate, but, in the final day of the debate on the Gracious Speech, there are literally dozens of colleagues wishing to contribute, so some self-discipline from Back and Front Benches alike is urgently required.

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The allegations are serious, and yet the EU energy portal told me this morning that the pre-tax and duty prices of diesel and petrol in the UK are among the cheapest in Europe—indeed, they are cheaper than in Germany, France and Holland. Given that, will the Secretary of State tell us whether the focus of the inquiry is the UK market or the cross-border European market, which, on the facts, would appear to have bigger problems?

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My hon. Friend is right that pre-tax petrol and diesel prices in the UK are among the lowest in the EU. Nevertheless, we cannot be complacent, and it is right that there are investigations—I am sure he was not suggesting that the competition authorities should not investigate. He will know that, as I said in my statement, one issue surrounding the investigation is the reports made by different companies to a price reporting agency. We must wait to find out whether that affects domestic or European markets, but it is the reporting agencies and the prices they report that concern our competition authorities.

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One aspect of the industry we need to consider is the massive number of refineries that have closed throughout Europe recently. Will the Secretary of State ensure he does all he can to work with companies who are investing in our refining capacity to ensure there is more competition in that part of the market?

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The hon. Gentleman is right to mention the impact of the refining industry on the wider market. My Department is working with the refining industry and various operators in the sector to ensure we have a healthy refining industry in this country. The margins for refineries have been seriously squeezed in recent times. It is critical that we ensure fuel security, which means we need a healthy refining industry.

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In supporting the comments of my hon. Friend the Member for Harlow (Robert Halfon), I commend the Secretary of State for making changes to the legislation he inherited from the Leader of the Opposition to ensure that fines levied in the UK are returned to consumers rather than to companies. However, I urge him to make urgent representations to the European Commission to ensure that, if the investigation leads to fines, the detriment to UK consumers, taxpayers and motorists is returned to those UK consumers, taxpayers and motorists.

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My hon. Friend makes an interesting point. He is right that the Government are legislating to ensure that, when Ofgem finds misdemeanours by companies, fines go to the consumer and not to the Consolidated Fund. That is an extra tooth for the independent regulator, and puts consumers’ rights ahead, where they should be. He asks me to make representations to the European Commission to see whether European law can be amended to mirror the change we have just made. Clearly, there is a case for that, but I may need to speak to my colleagues in the Department for Business, Innovation and Skills before I make unilateral representations.

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The general public will have two things in mind: open competition and cheaper prices at the pump. Beyond the European Commission ruling—the Secretary of State has said that we do not know the timing of it—what steps will the Government and the OFT take to ensure that prices come down, that people see openness and transparency, and that the Government reduce fuel duty rather than put increases on hold?

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Like every right hon. and hon. Member, the hon. Gentleman is concerned about the price of fuel and the impact that that has on household budgets. I know from speaking to right hon. and hon. Members who represent rural constituencies how the price of fuel impacts on them. That is one reason why my right hon. Friend the Chief Secretary to the Treasury has paid such attention to the matter since he entered Her Majesty’s Treasury. The Government’s record on bearing down on fuel duty, which is one thing we can directly influence, is exemplary. We have had the longest freeze in fuel duty for 20 years—that is us playing our part.

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The allegations of price rigging that are being investigated by the European Commission directorate-general for competition stretch over nearly a decade—they go back over years under the Secretary of State’s Government and over even more years under the previous one. At 8p a litre on the price of fuel, the scale of the price distortions is potentially vast. Given the scale of the impact on consumers’ expenditure and on our economies, how can fines compensate consumers in Britain and on the continent?

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My hon. Friend is right to ask that question, but I remind him and the House that we are talking about allegations, and that we are at the early stage of investigations. It is important that people remember that.

One benefit of the investigations by our independent competition authorities is that we can try to ensure that our markets work more effectively. If manipulation is proved, and if it is proved that the manipulation led to higher prices, we could see lower prices, which would be welcomed by many outside the House.

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In January, the OFT did not find no evidence; it found evidence of price fixing, albeit limited evidence. At that time, did the Secretary of State ask what the evidence was? If so, what consideration did he give it, and what actions did he recommend as result?

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I have not seen that specific evidence, but I know that it was very small and that the OFT felt that the evidence was unable to lead it to a further investigation. However, it was clear that the OFT announced a call for information—the Government supported that. The OFT wants people to bring forward information, which is exactly what they should do.

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Commuters from my constituency to Leeds, Manchester and beyond who have been suffering the nightmare of the M62 roadworks will welcome the fact that fuel duty is 13p per litre lower under this Government than it would have been under the previous one. However, I echo the suggestion that fines, if they are levied on oil companies found guilty of price fixing, should be passed on to consumers and hard-pressed commuters.

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I believe that the law does not currently allow fines levied by the European Commission to be passed on directly to consumers, but consumers will benefit from any lower prices that result from freer and fairer markets, which Government Members are determined to see.

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What is the Secretary of State doing to prevent another rip-off by Électricité de France, which has an atrocious record in cost overruns and delays, and which demands a 40-year guarantee of twice the current price for building Hinkley Point, at a time when abundant sources of energy are being discovered throughout the world? Will he guarantee that the House debates that before a deal is done with EDF?

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I congratulate the hon. Gentleman on getting the subject of nuclear power into this statement. Some of the tests in our negotiations with EDF on a contract for difference in relation to the proposed nuclear reactor at Hinkley Point C are to ensure that we get value for money and that the proposal is affordable.

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While the European Commission’s involvement is welcome, will my right hon. Friend outline what more UK authorities, such as the Competition Commission and the OFT, can do to ensure that fuel duty cuts made by the Government end up in the pockets of motorists rather than in the coffers of oil companies?

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My hon. Friend makes a good point. UK authorities are working extremely closely with European competition authorities. Indeed, they accompanied them on their raids of various companies’ offices. They are active in this investigation, and I hope he takes reassurance from that.

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The Minister constantly congratulates his Government on keeping the price of petrol down. Why then, when I travel to America, do I find that consumers there pay half the price for their fuel than we pay in the United Kingdom? Why is the price of fuel in the Irish Republic 10p less than it is over the border in Northern Ireland?

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The difference in the tax levied in the United States on petrol and diesel might be one of the main explanations. I have not made a study on the difference in price between Northern Ireland and the Republic of Ireland either, but that might also have something to do with duty differentials.

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My constituents will be very concerned about the price-fixing allegations and will want the oil company executives, if found guilty, to go to prison. Today’s findings have come about as a result of unannounced inspections by the European Commission. To what extent does the Secretary of State believe that the OFT, Ofgem and the Financial Services Authority are undertaking unannounced inspections in their inquiries? If they are not, should they not be encouraged to do so?

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It is interesting that my hon. Friend supports the use of these powers by the European Commission competition directorate-general. I am grateful that he recognises that it is important to have an independent, strong competition body at European level. I think people will have noticed his support for that, and I am grateful for it. He asked whether the OFT, Ofgem and other regulators involved in enforcing competition have those powers. I believe that they do. If I am wrong, I will write to them. He will recognise, as I hope everyone does, that it is not for the Government to tell an independent regulatory body to go and do dawn raids. It is up to them to decide to do that, based on the evidence. We strongly support them when they use those powers, and we strongly support them in the powers they need to gather the information ahead of such raids. If the OFT and Ofgem were to make such raids based on proper information, we would support them.

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When did the Secretary of State find out about the European Commission investigation? If the investigation had not been undertaken by the EU, would the Government have been any the wiser?

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I found out about it late last night. We do not know on what evidence the Commission decided to launch the raids. Apparently, there were suspicions that companies had been giving a price reporting agency false information about prices in the market. We need to know more about what information it had. The question is whether the UK competition authorities had similar information. To date, my understanding is that they did not.

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I remind the House of my entry in the Register of Members’ Financial Interests. The hard-pressed motorists of the north-east of Scotland—for whom a car is an essential, not a luxury—will want to be confident that they are paying the best price possible for their fuel at the pump. To that end, I welcome my right hon. Friend’s commitment to help the European Commission and to encourage the companies to co-operate fully with the inquiry. Will he take forward to the Commission the need to co-operate with the G20 if there is any evidence that the alleged price fixing extends beyond EU borders?

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My hon. Friend has been a doughty defender of motorists in north-east Scotland, making the point, with other hon. Members, that people in rural areas often depend on their car and therefore have no choice but to use it. The G20 received the report from the International Organisation of Securities Commissions in November and I believe it is being looked at carefully. The issue of price reporting agencies and price benchmarks is one that both UK and global regulators are paying much greater attention to. One might ask the question: why were they not being paid attention to before?

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My right hon. Friend the Member for Don Valley (Caroline Flint) made the point that if this is happening in energy, there is every reason to believe that it could well apply to other commodities. What are the Government going to do, with the EU if necessary, to be proactive and to ensure that there is no price fixing in other areas of international trade? We do not want to come back in a few years’ time and wonder how we are going to compensate consumers in other fields.

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I am afraid that the hon. Gentleman is behind the times. We are already acting at both a global and a European level to support work that looks into how benchmarks and price reporting agencies operate, and to check that there is no danger of price manipulation or of rigging the markets in another way. The Government are taking this very seriously. We are working with a number of bodies, including the International Organisation of Securities Commissions, and are operating at EU and G20 level. We are very proactive on this issue.

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My constituents are concerned about why they pay more for a gallon of petrol than those in other parts of the country, so they will welcome the investigation. What is the Secretary of State doing at a European level to ensure that the European Commission does not cut off this country’s access to Canadian oil sands, which has the potential to bring down prices at the pump for everybody?

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The Under-Secretary of State for Transport, my hon. Friend the Member for Lewes (Norman Baker) is actively engaged at the European Council on this. It is a rather more complicated question than my hon. Friend the Member for Brigg and Goole (Andrew Percy) implies. It is not so much about access to our markets, but how those tar oil sands and any fuel produced from them are rated in terms of their carbon content. The debate is complicated, but the UK and my hon. Friend in the Department for Transport are pushing hard to obtain a fair outcome.

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The Centre for Economics and Business Research reported in March 2013 that the average weekly spend on vehicle fuel is higher in Northern Ireland than in comparable regions in Britain, and takes up a significantly larger proportion of consumers’ net income. What further action will the Government take to lower fuel duty to provide equality for all consumers?

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As the hon. Lady will know, my right hon. Friend the Chancellor keeps these issues under constant review. He has an extremely strong record of delivering fuel duty freezes and not proceeding with rises proposed by the previous Government. I am sure that he will consider her question and early representation for next year’s Budget.

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If there has been market manipulation by big companies in the oil market, then as well as consumers suffering, small independent suppliers and retailers who were not part of the scam will also have suffered. Independents are important in rural areas, as they are often the only supplier. While the Secretary of State will not want to intervene directly with the regulatory bodies he mentioned, I hope he will give them the hurry-up, because we want to ensure that no more damage is done to independent suppliers in this country.

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I pay tribute to my hon. Friend for raising the issue of businesses, in particular small and medium-sized enterprises. If the allegations are proved to be correct, and petrol and diesel prices have been higher than they otherwise should have been in a fair market, then they will have been hit as well. He will know from previous debates on petrol and diesel prices the impact that fuel prices have on the wider haulage industry. It is vital that we get to the bottom of this not just for consumers, but for our whole economy.

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If anything untoward is discovered at the end of this process, it will not show the OFT in a good light. While price is important, the quality of fuel that people purchase is also an issue. I find that more and more of my constituents complain about poor mileage from cheaper fuel. I put to the Secretary of State a quick calculation: 2p a litre extra and two miles per gallon is far better than cheaper fuel. I have asked Which? to conduct a survey on fuel quality. Does the Secretary of State agree that we should be looking at that too, and will he support an investigation into the quality of the fuel that people are purchasing at the pumps?

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That is an extremely interesting point. I hope the hon. Gentleman is liaising with his local trading standards department, in case there are any serious problems, but I shall certainly ask my officials to look into it. It is not just the quality of the fuel, however, but fuel efficiency that matters: we need far more fuel efficient cars and we need standards that send a signal to the industry that we want it to make its cars more fuel efficient. The Government have a proud record of supporting the electric motor industry, and the UK is beginning to be a real producer of electric cars.

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Daventry residents will be unsurprised by the Commission’s raids on oil companies last night. In fact, they are fed up to the back teeth with paying way more than other consumers nearby. I was interested in what the Secretary of State said about anti-competitive actions and how the OFT might be looking at local markets in the future. Could it not look for evidence simply by going to a price comparison website, where straightaway it would be able to see prices and demonstrate such behaviour historically? Furthermore, does he recognise the concern about such European Commission investigations, which can limp on for decades?

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I hope that the hon. Gentleman supports the fact that the European Commission is investigating the market. It is important that it gets our full support. On the OFT and its finding of possible problems in local markets, I am sure that the OFT does exactly what he says, but it might well need more information to prove manipulation. Again, I call on hon. Members and members of the public to provide such information, if they have it, to the competition authorities.

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Last year, Labour called for commodities such as oil to come under the Financial Conduct Authority’s regulatory net, but Ministers refused to act. Not only are people in rural areas hit by high fuel prices, but many of them rely on oil for heating. What assurances can the Secretary of State give them that he will now strengthen the OFT and the FCA by giving them the power to deal with commodity price rigging?

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We certainly are strengthening the competition authorities in this country, as I explained earlier. We are looking at a range of issues that have come to light as a result of the LIBOR scandal, the allegations of gas market manipulation and so on. As I explained to the hon. Member for Edinburgh North and Leith (Mark Lazarowicz), we are working not just nationally, but at a European level and globally to ensure that these commodity markets are fair and not being manipulated. Our record on this stands in stark contrast to the inaction of the last Government.

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People in the north-east welcome the three-year fuel duty freeze, but we have concerns that the OFT, despite having had repeated evidence, particularly in rural Northumberland, of a lack of competition, has still failed to act. Does the Secretary of State agree that a way forward would be to summon the OFT to the House so that all MPs can make representations in his presence and get some action from it? No one has any faith in the OFT.

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I am sorry to hear that my hon. Friend does not have faith in the independent competition authorities. According to the empirical evidence of how they compare to other competition authorities around the world, they actually score extremely highly. Nevertheless, even though I saw those findings when I was competition Minister, I wanted to strengthen them still further, because there is no room for complacency. I hope he realises that the Government will ensure that the competition authorities have the powers they need.

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My constituents are now paying more for petrol and diesel at the pumps not least thanks to the VAT increase of 2.5p on every litre which the Secretary of State and his Government introduced. He boasted in his statement that he was going to give Ofgem extra powers and responsibilities. In light of these allegations, will he seriously consider giving the OFT similar powers and extending its remit, so that we can prevent this from happening again in this country, instead of relying on the European Commission?

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Some of the information and allegations of market manipulation are cross-border, so it might well turn out that these allegations required a European competition authority. It is important that we have a strong European competition regulator, and I hope the hon. Gentleman would accept that, but of course we keep under review the powers of the regulators and competition authorities in general. The Government have acted strongly to strengthen them.

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Businesses that we have long known to be profiteers now stand suspected of being racketeers. While the allegation of price manipulation and derivatives distortion might take some time to investigate, does the Secretary of State accept that the wider question of commodity price indices speculation needs to be addressed at the G8, particularly in order to limit the degree to which financial institutions can pass off such speculation as legitimate areas of investment?

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I agree with the hon. Gentleman’s main point: there are concerns that these price benchmarks have been manipulated, and some of the evidence suggests, if they prove true, that they have been manipulated for many years. I am proud that the Government are taking action. We cannot be complacent. Too many consumers and businesses could be hit if these sorts of allegations prove true. We have to wait for the investigations to be completed, but if any company is found to have breached the rules, the full force of the law will be used.

Speaker’s Statement

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I have received a report from the Tellers in the Aye Lobby for the Division at 6.59 pm yesterday, Tuesday 14 May. The hon. Members for Lewisham East (Heidi Alexander) and for Poole (Robert Syms) have informed me that the number of those voting Aye was erroneously reported as 254, instead of 244. I will direct the Clerk to correct the numbers in the Journal accordingly. The Ayes were 244 and the Noes were 316.

I have another matter I must draw to the attention of the House before we move on to the main business of the day. Owing to human error, a motion in the name of the Leader of the House to refer item 33 on today’s future business part B to a Delegated Legislation Committee was omitted from today’s Order Paper. A corrigendum paper has been issued and is available in the Vote Office. The motion may be moved today as the last item before the Adjournment debate.

Members might also wish to be reminded that the book for entering the private Members’ Bill ballot is open for Members to sign in the No Lobby. It will be open until the House rises today, except during Divisions.

I also remind Members that nominations for the Chair of the Backbench Business Committee must be submitted to the Table Office by 5 pm today.

Debate on the Address

[6th Day]

Debate resumed (Order, 14 May).

Question again proposed,

That an humble Address be presented to Her Majesty, as follows:

Most Gracious Sovereign,

We, Your Majesty’s most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.

Economic Growth

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I inform the House that I have selected amendment (g) in the name of the Leader of the Opposition. I have also selected amendment (b) in the name of Mr John Baron and amendment (e) in the name of Mr Elfyn Llwyd for separate Divisions at the end of the debate. Those amendments may therefore be debated together with the Leader of the Opposition’s amendment. The amendments will be put in the order: (g), (b) and (e).

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On a point of order, Mr Speaker. For the benefit of the House, may I ask you to set out your application of the terms of Standing Order No. 33, relating to the number of amendments to the Queen’s Speech motion that are selectable?

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Yes, I am very happy to do so, and I am grateful to the right hon. Gentleman for his point of order. I believe that there is a need to interpret the Standing Orders in a way that facilitates the business of the House in a developing parliamentary context. Conditions and expectations today are very different from those in October 1979, when that Standing Order was made. I must tell the House that I have studied the wording of Standing Order No. 33 very carefully. My interpretation is that the words “a further amendment” in the fifth line of the Standing Order may be read as applying to more than one amendment successively. In other words, only one amendment selected by me is being moved at any time. Once that amendment is disposed of, a further amendment may then be called. I am extremely grateful to the right hon. Gentleman—almost as grateful, I suspect, as he is to me.

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I beg to move amendment (g), at the end of the Question to add:

‘but regret that the Gracious Speech has no answer to a flatlining economy, the rising cost of living and a deficit reduction plan that has stalled, nor does it address the long-term economic challenges Britain faces; believe that the priority for the Government now should be growth and jobs and that we need reform of the European Union, not four years of economic uncertainty which legislating now for an in/out referendum in 2017 would create; call on your Government to take action now to kickstart the economy, help families with the rising cost of living, and make long-term economic reforms for the future; and call on your Government to implement the five point plan for jobs and growth, including bringing forward long-term infrastructure investment, building 100,000 affordable homes and introducing a compulsory jobs guarantee for the long-term unemployed in order to create jobs and help to get the benefits bill and deficit down, legislate now for a decarbonisation target for 2030 in order to give business the certainty it needs to invest, implement the recommendations of the Parliamentary Commission on Banking Standards and establish a proper British Investment Bank.’.

Thank you for your ruling, Mr Speaker. It is certainly in line with my understanding of the particular interpretation of that Standing Order, and I hope that it satisfies the Leader of the House as well.

It is an honour to open the final debate on the Queen’s Speech today, and to move the amendment, which you have selected on behalf of Her Majesty’s Opposition. It is a Labour amendment that calls for decisive action and a stimulus now to kick-start the recovery, boost living standards and get the deficit down, including 100,000 affordable homes, urgent action to accelerate infrastructure investment and reforms to get young people and the long-term unemployed back to work, with a compulsory jobs guarantee.

The amendment also proposes radical long-term reforms to promote economic growth and investment in manufacturing, services and our creative industries by implementing the recommendations of the Parliamentary Commission on Banking Standards, legislating now for a 2030 decarbonisation target to give businesses the certainty they need to invest here in Britain and setting up a proper British investment bank. It is a one nation Labour amendment, which stands in marked contrast to the complete and utter shambles we have seen from the Government over the past seven days since the Gracious Address—a divided coalition, out of ideas and running out of road, and a weak Prime Minister, out of touch and fast losing control of his party and his own Cabinet.

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How much more money would the shadow Chancellor need to borrow to deliver on his alternative Queen’s Speech?

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As I said in my opening remarks and as our amendment says, we need a stimulus now. We, the International Monetary Fund, the Business Secretary and The Economist all agree that taking action now to kick-start our recovery is the right thing to do. We should borrow now to get growth moving, so that we get our deficit down.

I have to say to the hon. Gentleman that that very question was asked of the Business Secretary on the “Today” programme just a few weeks ago. He was asked by John Humphries, “So, should you borrow more?” Guess what the Business Secretary said? He said:

“Well we are already borrowing more”.

That is the truth—£245 billion more. I will tell you what I want to do—[Interruption.] I will answer the hon. Gentleman’s question. I want to get the borrowing down. Under this Chancellor, the borrowing has flatlined—the same last year, this year and the year after. That is the reality.

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Will the right hon. Gentleman come clean with the House: how much more would he borrow?

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As I said, I want to see the borrowing coming down, and it is not coming down because this Chancellor has flatlined the economy. We have had almost no growth since 2010 and the result is that he is borrowing £245 billion more.

I have made speeches in the last two Queen’s Speech debates: I have said that there should be a temporary VAT cut, which would cost £12 billion. I have called for a national insurance cut, VAT at 5% and for infrastructure investment to be brought forward. If those things had been done, borrowing would be coming down now; under this Chancellor, it is not. The economy has flatlined and the deficit reduction plan has flatlined as well.

With the IMF here in town, what the Government should do is listen to the IMF chief economist, who says they are “playing with fire”. The IMF has said they should slow the pace of deficit reduction, stimulate the economy and get growth moving to get the deficit down. That is what the Government should do.

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Is that the “borrow, borrow, borrow” advice that the shadow Chancellor gave to the President of France, whose deficit is well above the EU average and whose economy has shrunk by 0.2%? Is that the kind of advice he is giving to his fraternal friend?

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The EU produced the latest growth figures today. The figures for France are disappointing. France has gone into recession. It is in the eurozone, trapped in austerity, and its economy is not growing. I looked at the figures today to see what French growth had been since the Chancellor’s spending review compared with the UK. Since the spending review in 2010, growth in France has been 1.1% and growth in the UK has been 1.1% as well, compared with Germany, which has had three times more growth, and America, which has had four times more growth. The eurozone is locked into austerity by virtue of those countries’ membership of the single currency. Our Chancellor imposed on our economy austerity that went too far, too fast, and what has happened? He has delivered the same growth performance over the last two years as that of the French economy, well behind that of Germany and America, where, as we now know, the deficit is coming down.

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With the IMF in town, will the shadow Chancellor confirm that the IMF has forecast that the UK will be growing faster than France over the next two years?

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The hon. Gentleman should be congratulating me and the Labour Government on not taking us into the single currency in 2003. That is what he should be doing, but if he wants to have a debate about the IMF, this is what the IMF said in September 2011:

“If activity were to undershoot current expectations, countries that face historically low yields”—

such as Germany and the United Kingdom—

“should also consider delaying some of their planned adjustment”.

In April—just a month ago—it said:

“In the UK, where recovery is weak owing to lacklustre demand, consideration should be given to greater near-term flexibility in the fiscal adjustment path.”

That is technical language that means the Chancellor should slow the pace of deficit reduction, provide a stimulus and get the economy moving to get the deficit down. What do we hear from the Treasury? Treasury advisers, who a year ago were saying the IMF was on their side, now say that the Chancellor will ignore the IMF and plough on regardless with a failing plan.

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I am glad to see that the shadow Chancellor is beginning to agree with our plans for regional banking reform with local banks. However, he would improve his banking credibility if he were to repay the £3 million owed by the Labour party to the Co-operative bank. Does he agree with that?

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I have to say—

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You have to answer it!

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Order. Mr Zahawi, you have already intervened with some gusto, but I would ask you to behave in a seemly manner, as the people of Stratford-on-Avon would expect and are themselves wont to do.

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The hon. Member for Hexham (Guy Opperman) has made some wise interventions in these debates. He said just last year that

“too often we are talking about the 50p tax, a tax which affects those on six times the average salary, rather than the taxes on the lowest paid.”

It is a pity his Front-Bench team did not listen to his views in this year’s Budget.

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rose

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I want to make some progress, then I will take some more interventions.

This is not simply the Queen’s Speech of a coalition Government who have ground to a halt; it is much worse than that. At a time when living standards are falling; when child poverty is rising; when more than 950,000 young people are out of work; when, as we learned today, unemployment is rising again and is now higher than at the general election; when, as we also learned today, prices are rising four times faster than wages in our economy; when our economy has flatlined for three years; when overall business investment has stalled and actually fallen in the past two years; when, as a result, our triple A credit rating has been downgraded; when the Office for Budget Responsibility says that the deficit reduction plan has completely stalled; and when the International Monetary Fund is now in town saying that the Chancellor is “playing with fire” by sticking to his failing plan, you would think that the priority for the Prime Minister, the Chancellor, the Cabinet and the Conservative party would be to see what they could do to boost economic growth and long-term investment in our country. But no, it seems that that is not their priority.

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We have already had a credit downgrade from one of the agencies, and the agency made it clear that that was a result of the problems that our economy has had in recovering. Is the right hon. Gentleman not concerned that if we were to abandon our plans, there could be a further downgrade? If we simply did as he suggests and opened the floodgates to more debt and borrowing, we would put our economy into severe crisis as a result of rising interest rates and a lack of credibility in international markets.

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I ask the hon. Lady to reflect for a moment on the logic of her position. For the past three years, she and the Chancellor have consistently said that they had to stick to the plan, even though growth was low, even though the deficit was not coming down and even though living standards were under pressure, because otherwise they would lose the triple A credit rating. Now they have lost the triple A rating, but they still maintain that they have to stick to the plan. That is completely illogical. The credit rating agency said in terms that it had downgraded us because there was no growth in the economy, and that that was choking off deficit reduction. Sticking with a failing plan that is not working and that has resulted in the deficit reduction being stalled is not the way to keep our credit rating—if that is the Government’s objective. The way to keep it is to get the economy moving, get people investing and get people back into long-term sustainable jobs. Until we do that, the Chancellor is going to continue to fail.

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rose

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If the hon. Lady would like to have another go, I am happy to give way to her.

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I am grateful to the right hon. Gentleman for letting me have another go. I put it to him that he really does not understand the point about the credit rating agency in this context. The whole point about confidence in the British economy is that people need confidence in Britain’s ability to get out of the economic mess that his Government left us in. This is not about the absolute level; it is about market confidence. He must surely understand that keeping a very good credit rating is essential in order to have an affordable cost of borrowing.

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I do not want to prolong this argument, but I must explain to the hon. Lady the term structure of interest rates. The 10-year bond yields are the accumulation of market expectations of three-month interest rates added up every three months over 10 years. Why are our long-term interest rates so low? It is because people think that short-term rates are going to stay low because the economy is flat on its back. People would have to be economically illiterate to think that our long-term interest rates were driven by market confidence at a time when we are being downgraded by the agencies. Our long-term interest rates are low because our economy is not growing.

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rose

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I was hoping to debate the Europe issue with the hon. Gentleman in a moment, but I am happy to give way to him on this one as well.

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I look forward to debating many issues with the right hon. Gentleman. The markets show confidence in this Government’s policy by keeping interest rates low. This is not purely to do with an expectation of where short-term rates will be; it is about confidence in the creditworthiness of the British Government under this Chancellor.

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I have to say that that is a deluded view of the way in which credit ratings work. Let us not forget that in 2007 these same credit rating agencies were saying, “Stick with Lehman Brothers” and giving America a triple A rating despite all the sub-prime lending. That is the reality. The fact is that the credit rating agencies are downgrading Britain because our economy is not growing. That is the fundamental problem.

I will give the hon. Gentleman a bit of ground, however. It is true that the Labour Government left a longer-term interest rate structure than other economies. We had far less foreign currency borrowing and more index-linked borrowing than other countries. That helped, but the fundamental thing was that we did not join the single currency. In Spain, Italy and elsewhere, we see a currency risk premium, which relates to the central bank’s ability and willingness to stand behind sovereign debt. That is not an issue here. Our interest rates are low, and they have fallen because our economy is not growing. The market is therefore reflecting expectations of continuing stagnation. I am afraid that that is the reality—aside from the political rhetoric of the Chancellor.

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In my previous intervention, I was careful to talk about the markets, not the credit rating agencies. It is the markets that count, because they reflect people investing their money. I agree with the right hon. Gentleman that the credit rating agencies got the whole of the pre-crash period wrong, but it is the markets we need to bank on.

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Unlike the Chancellor, the markets do not pay a huge amount of respect to the credit rating agencies. The hon. Gentleman agrees with me on that. That is why, two or three years ago, it was so ridiculous for the Chancellor to say, “Trust me. I’ll keep us as a safe haven because I’ll keep the triple A credit rating.” We told him, in 2011 and 2012, that the plan was not working, that the economy was not growing and that the deficit was not coming down, but when we told him to change course, he said, “I can’t do that because the credit rating agencies will downgrade us.” Well, they downgraded us anyway, because the economy was not growing.

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The shadow Chancellor believes in plain speaking, so I want to give him a third—and perhaps final—opportunity to tell us the amount of extra borrowing that his policies would require. Just a number—plain and simple.

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I am not going to write our Budget for 2015 two years ahead. That would be the wrong thing to do. Right now, if the Chancellor had done what I recommended a year ago, borrowing would be coming down. At the moment, however, it is absolutely flat.

What have we learnt in the last seven days? What have we learnt from today’s Tory amendment about the priority of the Conservative party? What are Conservative Members demanding in their amendment? What are they rebelling on? Accelerated bank reform? Energy market reform? Housing investment? Infrastructure investment? Tough welfare reform through a compulsory jobs guarantee? If they want all that, they can vote for our amendment today. But no, according to the Tory amendment, the No. 1 priority that is so vital that Conservative Members are planning to vote against their own Government’s Queen’s Speech involves enabling legislation to allow Eurosceptic Conservative MPs to try to take Britain out of the European Union.

The Tory amendment states that those Members

“regret that an EU referendum bill was not included in the Gracious Speech.”

Let me tell the House what they should be regretting. They should regret the fact that, after three years of pursuing a failing economic plan, the Chancellor is still ploughing on regardless, even when the IMF is telling him to change course. They should regret the fact that, when calculations based on Institute for Fiscal Studies figures show that families are, on average, £891 worse off this year, the Government have cut taxes for the highest earners, giving a £100,000 tax cut to 13,000 millionaires. They should regret the fact that the Government have refused to use the Queen’s Speech to put in place the long-term reforms necessary for our economic future—reforms that I fear will not be in the spending review, either. The Chancellor and the House should regret, too, the fact that the Conservative party seems to have been hijacked by those within its ranks, including within the Cabinet, who are determined to lead Britain out of the EU regardless of the impact on investment and jobs.

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Will the shadow Chancellor confirm that the number of Labour Members who have signed this Tory amendment on the EU referendum is now in double figures?

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I have not seen the figures, but I would be happy to study them—it is when it spreads to the Cabinet that there is a real problem. The hon. Gentleman should regret the 15% rise in long-term youth unemployment in his constituency, which was confirmed today. I have to say that this coalition was really not worth his support.

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The shadow Chancellor is generous in giving way. It is a shame he is not the leader of his party, because if he was he would make sure it was not the anti-referendum party—I think those were his very words. The message from today’s debate and tonight’s vote will be that Labour is against an EU referendum and the Conservatives are in favour of it. To put the facts straight, it is not just Conservative Members or just Labour and Democratic Unionist Members who signed the amendment—a Liberal Democrat Member signed it, too.

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I will read our amendment to the hon. Gentleman so that he knows exactly what we will vote for. We say

“that the priority for the Government now should be growth and jobs and that we need reform of the European Union, not four years of economic uncertainty which legislating now for an in/out referendum in 2017 would create”.

Let me quote to the hon. Gentleman the press release issued this morning by the Engineering Employers Federation, which knows about manufacturing investment in the long term. It says:

“EEF, the manufacturers’ organisation believes the current debate is ‘letting British business down’ with politicians making claims that the EU isn’t working for Britain rather than focussing on how to work to make it better”.

Let me set out further our position on this reform agenda, which has been set out in recent weeks and months by the Leader of the Opposition, the shadow Foreign Secretary, the shadow Home Secretary and me. Instead of four years of uncertainty, our Labour amendment says that the priority now should not be walking out of meetings or being entirely ignored but arguing with influence to get the reforms agreed. These include reform of the common agricultural policy, tough new budget discipline in the European budget with stronger independent audit—[Interruption.] Conservative Members should listen, as I would have thought they agreed with many of these things. The priorities include reform of family-related payments to EU migrants, greater national flexibility in transitional arrangements, a balanced growth plan and a new growth commissioner, an end to the wasteful Strasbourg Parliament and more powers for national Parliaments.

Let us reflect for a moment on what the president of the CBI said just a few weeks ago:

“UK membership of the EU encourages large company capital investments within the UK, creating jobs and wealth that trickle down to medium and small company suppliers”—

the kind of trickle down we quite like. He continued:

“Departure would be bad for employment and growth across a broad business spectrum.”

This is what Sir Richard Branson wrote in January:

“An exit would be very bad for British business and the economy as a whole...The EU is the UK’s biggest trading partner, its combined market dwarfs the US and China. For that reason alone the UK must stay in to help rebuild the EU.”

He was right.

Let this sink in: Conservative Back Benchers, with the blessing of many Conservative Front Benchers, are proposing today an amendment that aims to break our ties with our main trading partner, blight inward investment into the UK and put at risk upwards of 3 million jobs. Let it sink in, too, that the leader of the Conservative party, the Prime Minister of our country is not just too weak to do anything about it—he is caving in, day by day, to their demands.

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I agree with the shadow Chancellor almost entirely on Europe, but will he pledge today that he will not support an in/out referendum that might take the UK out of Europe?

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I want us to stay in the European Union; I am absolutely clear about that. Our amendment is absolutely clear, too, about the effect of an in/out referendum announced now. I am going to quote someone, which might go down well with the hon. Gentleman but perhaps not so well with some Conservative Members. Lord Heseltine said:

“To commit to a referendum about a negotiation that hasn’t begun, on a timescale you cannot predict, on an outcome that’s unknown, where Britain’s appeal as an inward investment market would be the centre of the debate, seems to me like an unnecessary gamble”.

My answer to the question of the hon. Member for Perth and North Perthshire (Pete Wishart) is that we will not take that unnecessary gamble now. It would be the wrong thing to do. This is exactly the same position as the one the Prime Minister and the Chancellor joined us in the Lobby to vote against in October 2011. How things change!

Let us remind ourselves of what the Prime Minister told the Conservative party conference in 2006; it is worth reading the whole quote so we can understand its full impact:

“For too long, we were having a different conversation. Instead of talking about the things that most people care about, we talked about what we cared about most. While parents worried about childcare, getting the kids to school, balancing work and family life—we were banging on about Europe.”

His party has certainly been banging on about Europe day after day over the last week—banging the nails in the coffin of Tory modernisation and in the coffin of this Prime Minister’s prime ministership, too.

We should not forget that this is the Prime Minister who last summer rejected calls for an in/out referendum. Then, just three months ago in his much-heralded Europe speech, the Prime Minister pulled his referendum stunt—a Europe speech to wrong-foot Labour and UKIP and unite the Conservative party. This is how The Independent reported Downing street’s gleeful boasting back in January.

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Will the right hon. Gentleman give way?

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Let me tell the hon. Gentleman what The Independent said about Downing street; then we can reflect on it together in a few moments. It said:

“They judged that, to calm the fractious Tory pack, they had to split off the hardliners who want to leave the EU from pragmatic Eurosceptics...They also needed to unite the Tories at the next election and reduce the threat from the UK Independence Party...The best way, they calculated, would be to promise an ‘in/out’ referendum after 2015. The trick seems to have worked”,

the article concluded,

“at least in the short term.”

Downing street claimed the speech took six months to formulate; it has taken just three months to unravel. We have seen Tory Back Benchers last week defying the Prime Minister to vote against the Queen’s Speech; former Tory Chancellors openly calling for Britain to leave the European Union; serving Cabinet Ministers joining the chorus at the weekend, saying they would vote for Britain to leave the EU now; and the embarrassing spectacle and truly ludicrous sight of a British Prime Minister in Washington negotiating an EU-US trade deal, while back home members of his own Cabinet say they would vote to exclude Britain from its benefits.

Then, on Monday night, we heard the Prime Minister’s panic announcement that he would, after all, publish a draft referendum Bill—not as Prime Minister, but as leader of the Tory party—only to be told by his own Back Benchers the next morning that it was not good enough because the public did not trust him, and they did not trust him either. This is really what it means for a Prime Minister to be “in office, but not in power”. It is not John Major all over again; it is much worse than that, because at least he tried to stand up to the Eurosceptics in his Cabinet.

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I am afraid that the right hon. Gentleman fundamentally misrepresents the amendment. Members in all parts of the House believe that the time has come to give the British people their say on our relationship with the European Union. May I put this question to the right hon. Gentleman? Why does he not trust the British people on the issue?

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I will take a second intervention from the hon. Gentleman if he will tell me how he would vote in the referendum.

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No, no, no—[Interruption.] All right, I will answer. [Interruption.]

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Order. Let us hear the hon. Gentleman.

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I will answer the right hon. Gentleman’s question most directly, provided he promises to answer my question most directly. My answer to his question is that if the referendum were held tomorrow, I would vote “out”, but I support the Prime Minister in his idea of holding a referendum in 2017. If he can successfully renegotiate and re-engineer an EU based on trade and not on politics, that will be a different kettle of fish, and we will judge it at the time.

May I now return to my question to the right hon. Gentleman? He has ducked it, and that is what gives politicians a bad name outside this place. Why will he not give the electorate their say on this issue?

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For precisely the reason that I gave in an earlier answer—and I have to say that I am not sure that the public like to hear us repeating ourselves.

Let me quote the words of another business organisation, London First. [Hon. Members: “Answer the question!”] I will answer the question. London First—[Interruption.] London First—

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Order. We have a long afternoon ahead of us. It would be good to hear everyone’s views on this subject, which means not shouting over speakers.

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No wonder the Prime Minister has gone to America, Madam Deputy Speaker, if that is what he has to put up with.

Let me quote the words of London First—[Interruption]—which is my answer.

“The announcement that a referendum on our membership of the EU may be held in a few years’ time, dependent on the result of the next General Election, risks condemning the UK economy to several years of further uncertainty.”

London First is completely right. We can see why the Prime Minister is so worried. If that is the kind of support he has, no wonder he is in trouble.

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We have just had an exchange in the Chamber, Madam Deputy Speaker, in which I directly answered a question in return for the Chancellor’s directly answering mine. [Hon. Members: “Shadow Chancellor.”] I mean the shadow Chancellor. He has refused to answer my question. Let me ask it one more time. Why is he denying the British public their say on Europe?

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I am the shadow Chancellor, not the Chancellor—at least for now.

I have answered the question, but I will answer it again. We do not believe that a referendum now is the right priority. The hon. Gentleman asked me why, and I have answered the question. I have answered the question because, actually, I agree with him. This is what he said last year:

“Austerity can only do so much. Longer term, the better solution is greater competitiveness and economic growth.”

I think that the priority now, in the Queen’s Speech, should be for the Government to act on economic growth, short-term and long-term. Hanging a sign above our door saying, “For the next four years, Britain is closed for business”, would be a very, very foolish thing to do.

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rose—

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I will give way again.

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I thank the shadow Chancellor for giving way. He is being gracious, if nothing else. However, he still has not answered the question. Why will he not support the concept of trusting the British people to make up their minds on this, say, in 2017? Does he support that position?

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I have answered the hon. Gentleman’s question. For us to join him, or the Prime Minister, in committing ourselves now to a referendum four years ahead would lead to lost investment and lost jobs, and would be the wrong priority for Britain. Our amendment makes it absolutely clear that we disagree with that strategy.

If there were a treaty change that altered the balance of powers, we would support a referendum. I think it important for us to listen to and understand people’s concerns about Europe, and show that we can reform. I must say to the hon. Gentleman, however, that we will not get the reform that we need by walking out of the room in a flounce, as our Prime Minister did in December 2011. That was one of the worst pieces of statesmanship we have seen for many years.

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In order to be a member of the European economic area outside the European Union, would we not still have to pay a membership fee and accept most of the rules and regulations coming from Brussels? Would we not also lose our seat on the Commission, lose our seats in the European Parliament, and lose our voice on the Council of Ministers?

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My hon. Friend is entirely right. The problem is that the Prime Minister no longer knows whether to agree, disagree, or sit on the fence on that question, which is why we are in such a mess.

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The right hon. Gentleman has seen the Prime Minister’s draft Bill. If it became an Act of Parliament requiring a future Government to move an order to set a date for a referendum before 2017, would he do so?

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I have just explained that we do not support the idea of legislating now for a referendum four years ahead, for precisely the reasons that the Engineering Employers Federation, London First and Lord Heseltine have set out and I have set out in our amendment, as have my colleagues. I think that it would destabilise investment and jobs.

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rose

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Normally there are plenty of interventions in debates on the economy, jobs and growth, but it seems to be Europe that really gets them going. I give way to the hon. Member for South West Bedfordshire (Andrew Selous).

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The shadow Chancellor is being very generous in giving way. Will he explain very briefly what he meant when he said hat he did not want his party to be caricatured as the anti-referendum party?

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We are not against the idea of referendums. We proposed the first referendum, in the 1970s. If there were a change in the balance of power in the treaties, we would support a referendum, but it would be wrong to do so now.

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Will my right hon. Friend give way?

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I will take one more intervention.

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As my right hon. Friend knows, today’s figures show that unemployment has risen again. He also knows that the EU provides 50% of our trade. In the event of our securing a free trade agreement between the EU and the United States, alongside bilateral trading agreements between the EU and other countries such as China, what does he think the impact of withdrawal from the EU would be on growth, jobs and trade?

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In 1983, our party supported the idea of withdrawal from the European Community, as it was at the time, but the Conservative party and the Confederation of British Industry agreed that it would cost 2.5 million jobs. Our trade share with Europe has deepened since then, and our labour market is bigger. I think that upwards of 3 million to 3.5 million jobs would be lost now, because we would be turning our face away from those big markets around the world.

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rose

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Many other Members want to make speeches, and I have taken rather a lot of interventions already.

Let me ask a political question that brings us back to the economy. Why have things gone so badly wrong for the Prime Minister and his strategy over the past three, four, five months? I think I can help. I have discovered a column that was written in January by the Chancellor’s cheerleader, the former Member of Parliament, and now Sun columnist, Louise Mensch. Straight after the Prime Minister’s Europe speech, she wrote that

“the sound we just heard was Cameron shooting Farage’s fox...This speech saw the George Osborne/Michael Gove wing of government triumphing over the Nick Clegg one...Canny Tories will take this and run with it...George Osborne is a tactical genius.”

There we have it, from a former MP whose one political achievement was to make Corby Labour again. There it is, completely exposed: the Prime Minister is the front man, but the tactical genius—the brains behind the Europe strategy—is the Chancellor of the Exchequer.

We all remember when the Prime Minister said that his Europe speech represented

“a tantric approach to policy-making.”

I have to say that from this side of the House it looks more like sado-masochism—and we all know that the Chancellor likes a bit of that. “'If it’s not hurting, it’s not working” has been his motto for a long time.

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Will my right hon. Friend give way?

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Not now.

I have checked this, and, sadly, it is true. A rather more serious Conservative commentator, Mr Paul Goodman of ConservativeHome, confirmed on his blog back in May of last year that the Chancellor was, indeed, the brains behind the Prime Minister’s referendum stunt. That casts further doubt on the judgment of the Prime Minister. Surely by now he has worked it out. After all, his Back Benchers and the country have worked it out. This is the Chancellor who claimed bringing back Andy Coulson would be a strategic triumph. He is the one who said taking child benefit away from middle-income families would be a masterstroke. He is the one who said that gambling his credibility on our triple A rating was sound economics, and that cutting tax credits and labelling as scroungers 3 million working families—an average of 6,000 in every Tory constituency—was somehow good politics, and that cutting taxes for millionaires would wrong-foot Labour. Surely even the Prime Minister has worked it out by now. This is the man who last year gave us “Omnishambles 1” and “The Budget debacle” and who has now given us “Queen’s Speech 2”, “Omnishambles 2” and the European debacle as well. The fact is the economic plan has failed, the deficit plan has failed and the European plan is failing as well, and when this Government finally collapse in chaos, it will be this Chancellor who gets the blame.

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That was certainly an odd speech from the shadow Chancellor. He called me a tactical genius, but those on his side are going around calling him a busted flush, and after the extraordinary 40 minutes of comments we have just heard from him, we can see why. The contrast is with a Government who are building an economy where those who want to work hard and get on are rewarded. The contrast is with a tax system that is being changed to support effort, with the largest ever increase in the personal allowance. The contrast is with a welfare system that is being changed so it always pays to work and benefit bills are being capped so no family gets more from being on benefits and out of work than the average family gets from being in work.

In this Queen’s Speech we have measures to help those who want to set up a small business and employ people through our employment allowance—which was not mentioned by the shadow Chancellor, but I assume the Labour party will not vote against it. We have measures to help families who dream of home ownership and to help them with their mortgage costs. We have measures for savers, with a Pensions Bill that will provide a generous single-tier pension, and we have measures to help those who want to stay in their homes and avoid the lottery of care costs, with our Care Bill. The only reason we can do all these things is because we are clearing up the mess and the things that went so badly wrong in our economy.

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On the issue of fairness, the 13,000 people who earn more than £1 million a year share a combined income of £27.4 billion, and they are going to share in a £1.2 billion payout. How can that be justified and fair?

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In every single year under this Government the rich will pay more in tax than in any single year of the Labour Government that the hon. Gentleman consistently supported, and the top rate of tax will be higher than in any single year of the Labour Government he supported. We put up capital gains tax so we avoided the scandal that they presided over—indeed, that the shadow Chancellor presided over—of cleaners paying higher rates of tax than the hedge fund managers they work for. That is what we have done to ensure fairness in our tax system, and that is what we are going to continue to do.

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The Chancellor said those who work hard will be rewarded. Can he explain why wages are falling, household budgets are falling and the cost of living is going up? How is that fair?

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Let us look at what the Governor of the Bank of England said in his press conference this morning:

“there is a welcome change in the economic outlook…But this is no time to be complacent—we must press on to ensure a recovery”.

Yes, there was also the disappointing news that unemployment had gone up, but we also saw that the claimant count and youth unemployment had come down, and the monthly unemployment data were a lot more encouraging than the three-month survey. That is the reality of the current data.

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Does the Chancellor agree that the key problem is that the debt:GDP ratio will rise from 55% in 2010 to 85% by 2015? The answer to that problem is not just to cut the debt, but to increase GDP. Under Labour, GDP went up by 40% between 1997 and 2008, and the Chancellor inherited a growing economy which is now flatlining because of his policies.

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We inherited an 11.5% budget deficit that was adding to our national debt every year, and what the hon. Gentleman and the shadow Chancellor want to do is add further to borrowing. The shadow Chancellor was asked time and again what the cost of the proposals in the amendment the Opposition are asking the House to vote on tonight would be. He would not give that figure, but I will give it for him: it is a £28 billion amendment that would add to borrowing. He comes up with the ludicrous argument that by borrowing more, we can borrow less. That is why he is making so little progress with his economic argument.

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Will the Chancellor at least acknowledge that when he came into office he inherited a growing economy, and his policies have led to it flatlining?

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This is what I have to say about the idea that this Government had some kind of golden economic inheritance from the Labour party: we inherited a situation in which Britain had had the deepest recession since the 1930s, the worst banking crisis in the entirety of British history and the highest budget deficit in the entire peacetime history of this nation. If that is a golden economic inheritance, I would hate to see what the hon. Gentleman thinks a hospital pass looks like.

The shadow Chancellor mentioned France in his remarks. Exactly a year ago the Labour leader could not contain his excitement about the economic programme being unveiled in France and about the red carpet being rolled out for him at the Elysée palace. “Chers camarades” is how he addressed the Socialist party gathering. He said, “What President Hollande is seeking to do in France, I want to do in Britain.” We do not hear much these days about Labour’s French connection. We still have liberté and egalité, but not much fraternité—although fraternity has never been a great topic for the Miliband family.

What we did not hear from the shadow Chancellor was his response to the fact that 1.2 million jobs have been created in the private sector, and that although, yes, our deficit is still too high, it has fallen by a third. He says we are borrowing more. We were borrowing £158 billion a year as a country in 2009-10, and this year it is forecast that we will be borrowing £114 billion. That is a £45 billion reduction in borrowing. None of that has been easy to achieve, and every single measure has been opposed by Labour. Not a single measure in its amendment today would help deal with that deficit, but our plan of monetary activism, fiscal responsibility and supply-side reform is delivering progress.

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On employment, is the Chancellor aware that the United Kingdom’s overall employment rate is growing at almost double that of the United States and is rising faster than that of any other G7 country?

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My hon. Friend is absolutely right. Last year, employment in the UK grew faster than in the US, France, Germany, Japan and the eurozone as a whole. Employment in the UK is now above its pre-recession level. Of course we must go on taking the difficult measures necessary to get our deficit under control, and make sure we support businesses that want to hire people to support the private sector recovery. The path being offered by the Opposition, however, would lead to complete disaster.

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When the Chancellor’s party was in opposition, the right hon. and learned Member for Rushcliffe (Mr Clarke) took the credit, before the banks collapsed, for the economic prosperity, claiming he had created it when he was Chancellor. How does the current Chancellor answer that point?

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The hon. Gentleman is saying that somehow we have a responsibility for the financial crash or for the problems in the banking industry, but he neatly skips the fact that not only was Labour in office for 13 years, but the shadow Chancellor was the City Minister. He did not have any old job in Government —he was the City Minister when Northern Rock was selling those 120% mortgages and the Royal Bank of Scotland was thinking of taking over ABN AMRO. He is the architect of the tripartite regulation, which failed so catastrophically. He is, literally, the last person to have any credibility on this subject.

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The shadow Chancellor also claimed victory in keeping this country out of the euro. Will the Chancellor remind the House of the cost of the euro preparation unit, and when that unit was closed down?

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The euro preparation unit was shut down by this Government in 2010, but the shadow Chancellor does not seem to know what Labour policy is. The Labour party is committed in principle to joining the euro. [Interruption.] The shadow Treasury team do not know what the monetary and currency policy of their own party is—that is absolutely ridiculous.

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The Government have set out a clear and costed economic policy, which they are pursuing. Does the Chancellor share my concern that the Opposition cannot set out their costings, cannot say how much they would borrow and cannot even say whether they would back a referendum? The shadow Chancellor has been completely unable to answer any questions put to him in any straight way whatever.

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The shadow Chancellor could not answer the simple question of how much the amendment he is asking us all to vote on this evening would cost. Surely he must reflect a little and realise that each year his appearance in these debates is a source of consolation and comfort to the Government. He must wonder why each year he makes the same arguments for borrowing but there is no improvement in Labour’s economic credibility. He does not seem to understand that the public think that Labour spent too much, wasted their hard-earned money and would do it all again. Does he not feel that he owes it to the British people to apologise for the mistakes he has made and the damage he has inflicted on their living standards? Should he not stand up and say, “I’m sorry, we got it wrong and we won’t do it again”?

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The Chancellor’s point, “You can’t borrow more to borrow less”, is a good soundbite, but he does himself a disservice, because some of the borrowing undertaken by this Government has been very effective in reducing the deficit. Only yesterday, we saw 850 new jobs in Allstate in Belfast as a result of investment in the broadband network—that is 850 new taxpayers. Does he not accept that we can borrow, and that by borrowing and putting the money into the right things we can bring the deficit down?

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I am all for spending money on vital economic infrastructure, including broadband, and all for trying to switch the budget more from current spending to capital spending. That is precisely what we are engaged in as part of this spending round, but we have to take the hard decisions on where we are going to get our revenue from or take the hard decisions on what we will cut instead. We are making a sensible switch towards capital spending.

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Can the Chancellor name a single occasion before the banking problems in 2008 when he and his party argued for tighter regulation of the City?

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My party voted against the tripartite arrangement. I do not have the quote with me today—I will send it to the right hon. Gentleman or ensure that my right hon. Friend the Chief Secretary has it for the wind-up—but the shadow Chancellor at the time, my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley), warned in this House that taking prudential regulation away from the Bank of England was a massive mistake and that the Bank of England would not be able to spot the growth of debt bubbles in the economy. Tragically, that is precisely what happened a decade later, and in part the responsibility lies with the people who set up the regulatory system. Is it not extraordinary that Labour Members get up and say that the Conservatives said this or that, yet we are looking at the City Minister at the time? We are looking at the person who, before that, was the chief economic adviser who devised the system and who used to take pleasure in telling everyone that he turned up in government and gave Eddie George a letter saying that he was no longer in charge of banking regulation—that used to be the shadow Chancellor’s story, but he never talks about it now.

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I think the country understands that we could not go on as we did, with a completely unregulated City, with bonuses out of control and with unjustifiable profits. The Government’s policy on taxation is fairer now than it ever was under the previous Government. May I ask the Chancellor, however, to address the matter of the housing market, to which he partly referred? In addition to the welcome measures in the Queen’s Speech, will he look into how we can increase the supply of social rented housing and deal with the fact that many non-domiciled people are buying property in this country, not to live in or to rent out, but to keep empty, forcing up prices for everyone, beyond what people can afford?

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We are putting in place, right now, new guarantees—the first time that the Treasury has done this—for social housing associations to enable them to build more social homes; in the Budget, we also confirmed support for an additional 30,000 social homes, so we are taking action to help on that front. With our Help to Buy scheme we are also helping those who want to buy their own home in the private market. My right hon. Friend is absolutely right that we should do both, which is precisely what we are doing.

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As we learned with great interest, there was much in the Queen’s Speech that will affect employment, skills and manufacturing in our country. This is an important part of our country’s future. Can the Chancellor assure me that there is a unit in the Treasury—or a plan for the Treasury—to carry out an independent evaluation of how skills, jobs and manufacturing would be affected if this country left the European Union?

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I will come on to talk briefly about reform in the European Union, but I am clear that an unreformed European Union is also doing damage to British competitiveness and British jobs.

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The estimated cost of the Labour party’s plans is £28 billion. Labour opposes every one of our spending cuts, so does that not imply that it would fund the whole lot by pushing this country’s borrowing back towards £150 billion? Is that why the shadow Chancellor is so reluctant to say what more borrowing he could commit to?

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My hon. Friend is right to say that that is the approach of the shadow Chancellor. The right hon. Member for Neath (Mr Hain), who is sadly not in his place, gave the shadow Chancellor some unsolicited advice last week—I think it was unsolicited. He said:

“Labour’s Treasury team need to get out on the stump now and work even harder. It shouldn’t just be left to Ed and Harriet”—

Miliband and Harman—

“to carry the heavy load”

on shows such as the “World at One”. We could not agree more, because it is fair to say that when the Labour leader appears on the radio—I am not sure how to put this delicately—there is a little confusion about what Labour’s economic policy might be. Ten times he was asked whether borrowing would go up or what his party’s policy was, and he did not reveal it. I will be fair to the shadow Chancellor and say that he is much more straightforward. He has a much clearer message than his leader: “Vote Labour and borrowing will go up. Vote Labour and welfare bills will rise.” Vote Labour and he will do it all again. It is not just the right hon. Member for Neath who wants to see the shadow Chancellor on the media more—we want to see him on the media much more.

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Yesterday, I met the chairman of Fujitsu, which has just put £800 million into the British economy. He told me that his company had done so only because this country is in the European Union. He was, however, rather disappointed not to have had a reply from the Prime Minister after writing to him with that news. Does the Chancellor of the Exchequer not understand that his Government should be more interested in providing stability for business than in pleasing their own Back Benchers?

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It is very good news that Fujitsu is choosing to employ in the United Kingdom. I do not see the hon. Lady’s intervention as a hostile one that has put me on the back foot; what am I supposed to do about the fact that international companies are choosing the United Kingdom as the place to invest and create jobs? That is a tough one!

I have to admit that the hon. Lady has a point, but let me come on to say something about the change that is required, including the change in the European Union, which of course is a subject of debate today.

It is true that for much of my political life and, I suspect, the political life of many in the House, the concerns about Europe have primarily been ones of sovereignty and constitutional power—not exclusively, but those have been the most dominant. Those concerns have not disappeared, but they have been complemented by economic concerns, and those economic concerns have grown. There is concern that the European prescription of high taxes, expensive social costs and unaffordable welfare is slowly strangling the European economy. There are concerns from business that directive after directive, regulation after regulation load costs on European companies, especially small firms, and cripple their ability to compete against new challengers around the world.

The crisis in the eurozone has created an immediate institutional challenge for the UK: as 17 member states attempt to take steps to save their monetary union, how can we change the EU to protect our interests and make it work for us? But the crisis has only accelerated an economic argument that was coming anyway: is Britain’s membership of the European Union right for Britain’s economic future? My answer, like the Prime Minister’s, is that if we can achieve real change in Europe and our relationship with the EU, then yes, it is. That is the renegotiation that my right hon. Friend the Prime Minister seeks—a Europe that is more globally competitive and more flexible, a Europe that creates jobs and offers its people prosperity and accountability.

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Is not the Chancellor exactly right? Is not his view shared by those on the Conservative Benches? I am sure the Chancellor is forced by coalition politics not to be able to vote for the amendment, but if he were free from that restraint, would he back the Prime Minister’s policy by voting for the amendment tabled by my hon. Friend the Member for Basildon and Billericay (Mr Baron)?

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This is a coalition Government with a coalition Queen’s Speech, which contains things such as the single-tier pension, the Care Bill and the help for small employers, which will make a real difference to people across the country. Our view is that the best route to achieving what I know my hon. Friend wants to achieve is by legislating in this House. As the Prime Minister said in his January speech, we now have draft legislation for an in/out referendum on the EU. We have done it in good time for this Session’s ballot for private Members’ Bills. It is now open to any hon. Members who do well in that ballot to adopt the draft Bill that we published yesterday and take it forward as the basis for legislation. As the Prime Minister said yesterday, we will do everything we can to make it law.

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A moment or two ago the Chancellor said that if the renegotiation that the Prime Minister has set out on produced fundamental change, he would vote to stay in the EU. What will his position be if the renegotiation does not produce much change? That is what happened the last time this was tried in the 1970s. Not much change is not exactly an unlikely prospect, given the attitude of other European member states so far to the Government’s stance.

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I do not think the Prime Minister will fail in his negotiating effort. I do not think the Conservative party will fail in its negotiating effort with the European Union. Do Members know why I do not think we will fail in that effort? The Prime Minister pulled us out of the eurozone bail-outs when everyone said that was impossible. The Prime Minister delivered a cut in the European budget when everyone said that was unachievable. The Prime Minister vetoed a bad treaty when people said that was unprecedented. I am confident we can achieve that new settlement.

There is another reason why I am confident we can achieve that settlement. I see around the table in Europe—around the ECOFIN table, where I was yesterday— many countries as concerned as we are about the future of jobs and investment on the European continent, people who know that the EU is not working as currently arranged.

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rose

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I will give way to the Scottish nationalists in a moment.

It was not this Chancellor but the German Chancellor who said the other day:

“If Europe today accounts for just over 7% of the world’s population, produces around 25% of global GDP and has to finance 50% of global social spending, then it’s obvious that it will have to work very hard to maintain its prosperity and way of life.”

That was the leader of Germany speaking. I believe that there are out there other people who also seek change, but above all, for the United Kingdom, because of the changes happening in the eurozone, we need a new settlement and I am confident that the Prime Minister will deliver it.

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The Chancellor of the Exchequer and I know that the UK is halfway out of the European Union. Does he agree that the best way for the Scottish people to remain within the European Union is to vote yes in the referendum next year?

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As our Scotland analysis papers show, Scotland would have to apply to join the European Union as it became a new state. I am glad the Scottish National party is taking part in this debate on economic policy. Perhaps we will get a clearer view from SNP Members, after the shambles of the past three weeks, of what their policy is on the currency that Scotland would use, should Scotland vote to leave the Union. We have not had a clear answer. Some members of the SNP have said that Scotland should have its own currency, others have said that Scotland should join the euro, and still others have said that they would negotiate a monetary union with all of us in order to keep the pound. There is complete confusion in the SNP ranks and until they have a clear answer to that, they will not be listened to on much else.

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Does my right hon. Friend agree that the Government are committed to what one might call a policy of negotiate and decide, although that has a familiar ring to it? Would it not help the clarity of this debate if the Government set out exactly what they intend to negotiate on? That has not been clear from anything they have so far said.

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As my hon. Friend knows, and he takes a close interest in these matters, this is the beginning of a process of setting out what we want to achieve in a renegotiation, and in a conversation about that. Of course, we will then seek to achieve that renegotiation, achieve that new settlement—I am confident that after the election the Prime Minister and a Conservative Government will be able to achieve that—and put it to the British people in a referendum.

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One of the things my right hon. Friend drew attention to was the problems facing our European neighbours and the challenges posed by their welfare states. Our action in getting on top of the problems of welfare, reforming welfare and making sure that work pays is key to dealing with our place in the world and making this country competitive. I draw a distinction between that and the attitude of the Labour party, which has opposed every welfare reform proposed by this Government.

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My hon. Friend is right. There was a ludicrous remark—I do not know whether anyone noticed it—from the shadow Chancellor when he said that Labour supports tough welfare reform. Labour Members have voted against every single welfare proposal put to the House. The shadow Chancellor thinks the benefits cap is “too low” and that it is not set at the right level at £26,000. That is the problem. Any view of Britain, and any view of western nations, is that they need to do more to constrain the growth of entitlement spending and more to make sure that welfare pays, and to spend the money that they save on things such as infrastructure in Northern Ireland, broadband, high-speed trains and the Crossrail project under London—the vital economic infrastructure that our country needs.

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rose