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Commons Chamber

Volume 566: debated on Wednesday 10 July 2013

House of Commons

Wednesday 10 July 2013

The House met at half-past Eleven o’clock


[Mr Speaker in the Chair]

Oral Answers to Questions

Northern Ireland

The Secretary of State was asked—

Intergovernmental Co-operation

4. What recent assessment she has made of co-operation between the UK and Irish Governments. (163463)

As my right hon. Friend the Prime Minister and the Taoiseach said in their joint statement, the relationship between the UK and the Republic of Ireland has never been stronger or more settled. We particularly value the co-operation that we have received from the Irish Government and the Garda on security matters.

The Secretary of State will know that the First Minister and the Deputy First Minister recently announced that all-party talks would take place, under an independent chair, on a range of outstanding issues, including parading, flags, and dealing with the past. These are due to commence soon and to finish by the end of the year. Does she agree that both Governments have a vital role to play in these talks and in helping all the parties to find agreement on these vital issues?

I can assure the hon. Gentleman that both Governments have warmly welcomed the announcement of that group; it is very timely that the First Minister and the Deputy First Minister have proposed it. I am delighted to tell the House that an independent chair has been confirmed—the eminent Richard Haass from the United States will take on that role. As we will see in forthcoming days, this demonstrates once again the importance of looking at long-term devolved solutions on matters such as flags and parading.

The inability of the National Crime Agency to operate in Northern Ireland is a serious impediment to the fight against organised crime, trafficking, paedophile rings and terrorism on both sides of the border. What discussions has the Secretary of State had with the Irish Justice Minister and the Northern Ireland parties to sort this out?

I have had a number of discussions of that sort, and I can provide some reassurance. The NCA will be able to operate in Northern Ireland in relation to matters that are not devolved, including border controls, human trafficking issues, and matters to do with Her Majesty’s Revenue and Customs, so it will have a role there. It can also provide advice and support to the Police Service of Northern Ireland in relation to devolved matters. Although it will not be operational on the ground, it can still provide a resource to assist the PSNI. I will continue to work with the Northern Ireland parties to see whether we can make the NCA’s role in Northern Ireland the same as it is elsewhere in the UK.

Given that we recently lent the Republic of Ireland billions of pounds to help it through its financial difficulties, to what extent are the Irish Government helping us to renegotiate our terms of membership with the European Union?

The UK and the Republic of Ireland do have many useful occasions to co-operate on European matters. The Republic of Ireland certainly has a different view from the UK Government on further integration, but on commercial matters—single market matters—we work well together.

May I gently say to the Secretary of State that cheeky ingenuity should be met by exemplary brevity? That is what she has provided, and we are grateful to her.

Given all her discussions with the various parties that she has to speak to, the Secretary of State will be aware of the perverse decision made last night by the Parades Commission, which has rewarded bad behaviour and punished good behaviour in relation to parading. What is she going to do about it?

I am working closely with the Chief Constable and the Justice Minister in their preparations to do everything they can to secure a peaceful 12 July. I believe it is important for everyone in this House and the Northern Ireland political parties to call on all concerned to work for a peaceful 12 July. It would be hugely damaging to Northern Ireland if the good news from the G8 were blighted by scenes of rioting on the streets of north Belfast.

We want to see that peaceful situation continue. We do not want to see any trouble on our streets. Does the Secretary of State accept that the Parades Commission has made the situation immensely worse and created severe tensions? Last year republicans brought out machine guns and attacked and shot at police, while Unionists and loyalists behaved impeccably. Republicans have been rewarded; Unionists have been punished. How on earth does the Secretary of State expect people to react in such a situation? Is it not time for the Parades Commission to be replaced by something more sensible?

I know that the right hon. Gentleman has strong views on these matters, and the fact that these events relate directly to his constituency give him an important say on them. I recognise the anger in parts of the loyalist community about this decision, but it is vital that people recognise that the Parades Commission is the lawfully constituted authority. Respect for the rule of law is crucial. It would be immensely damaging to Northern Ireland if we had a violent 12 July. Whatever people think of the Parades Commission’s determination, I hope they will listen to the statement made yesterday by all five party leaders on the importance of the rule of law and a peaceful 12 July and comply with the commission’s determination.

15. Now that the Home Secretary has decided that she is in favour of the European arrest warrant, will the Secretary of State for Northern Ireland arrange an early discussion with the Home Secretary’s Irish counterpart on how to make the warrant process less bureaucratic and a more effective weapon in the fight against organised crime north and south of the border? (163474)

I have had a number of useful discussions with Alan Shatter about this matter and how the Republic of Ireland views it. Discussions are taking place between Home Office Ministers and the Irish Justice Minister. I am sure they will continue as part of the Home Secretary’s efforts to ensure we reform and improve the way in which the arrest warrant works.

12. On economic co-operation, the British-Irish Council helps increase trade and boost growth between the United Kingdom and the Republic of Ireland. What more can the Secretary of State do to boost the maximum level of economic co-operation between nations right across these islands? (163471)

The recent meeting of the British-Irish Council produced some very useful conclusions on matters such as energy and the creative industries, and the Prime Minister used the G8 to strengthen relations between the UK and the Republic of Ireland. He very much welcomed the Taoiseach’s input to the G8 discussions. We are determined to continue to maximise the benefits that come from the G8 in terms of economic activity in Northern Ireland and future friendly relations with the Republic of Ireland.

The Economy

The Government wish to rebalance the economy to help Northern Ireland compete in the global race for jobs and investment. This is the aim of the economic package agreed between the Government and the Executive. The successful G8 has also demonstrated to the world that Northern Ireland is very much open for business.

I am grateful to the Secretary of State for that reply. She will be aware that at the beginning of this month the Northern Ireland Independent Retail Trade Association warmly welcomed the initiative being spearheaded by the shadow Business Secretary, my hon. Friend the Member for Streatham (Mr Umunna), to make 7 December “small business Saturday”. Will she put on record her support for that proposal and outline the concrete steps she will take to ensure that it is a success?

Small business Saturday was raised with me by Glyn Roberts of NIIRTA when I met small businesses just a few days ago. The Government are determined to rebalance the economy to create the right conditions for growth in Northern Ireland. That was the aim of the extensive economic package that we agreed with the First Minister and Deputy First Minister, which was broadly welcomed by people such as the Taoiseach, the US President and even the shadow Secretary of State. That provides a good platform to help small businesses.

One of the obstacles to the growth of the economy in Northern Ireland has been the lack of funding from banks to help small and medium-sized enterprises. What discussions has the Secretary of State had with the banks so that funding can be made available to these companies?

I have had extensive discussions with the banks, Treasury Ministers and the Finance Minister of the Northern Ireland Executive. That informs an important part of the work stream that we will take forward as part of the economic package.

The Secretary of State will agree that, because of the shape of the Northern Ireland economy, public contracts represent a significant part of the market opportunity for our private sector. Does she therefore agree that any implications of sleaze or partisan hands being greased in relation to public contracts or any other governmental decisions that could favour the private sector should be investigated to the full?

These are devolved matters. It is, of course, for the Assembly to investigate any allegations made along those lines. It is not for me as Secretary of State to intervene in those allegations. I am sure the Assembly and Executive will deal with them in an appropriate manner.

Inward Investment

3. What recent discussions she has had with Ministers in the Northern Ireland Executive on inward investment. (163462)

The Secretary of State and I have frequent meetings with Executive Ministers about further inward investment in Northern Ireland. That was a key focus of the economic pact that was concluded and agreed on 14 June. Our efforts are now focused on the G8 investment conference in October, which my right hon. Friend the Prime Minister will attend.

I am grateful to my hon. Friend for his reply. Will he join me in welcoming the announcement of a business-led taskforce to look at how EU rules are holding back businesses? Does he agree that that initiative will be vital for Northern Ireland’s economic development as much as for the rest of the UK?

I welcome the taskforce and the Northern Ireland Executive’s promotion of the 5,900 jobs that they would like to see with an investment of £375 million through foreign direct investment. That is something we support.

Further to the question from the hon. Member for Foyle (Mark Durkan), inward investors will look at governance as part of due diligence before investing in any region. Given the serious allegations about political interference in public housing contracts, does the Secretary of State agree that it is within her remit to call for a full independent inquiry under the terms of the Inquiries Act 2005, in consultation with the Executive?

Northern Ireland has an excellent police force and their investigations will look into any accusations that are made. We look forward to hearing from the police.

On a recent visit to the United States, members of the Northern Ireland Affairs Committee were told that bad publicity from certain paramilitary organisations in Northern Ireland would be a deterrent to inward investment. There is, however, a lot of good news in the Province, so what will the Minister do to promote that over and above the very rare occurrences of bad news?

The good news, and particularly the G8, showed the whole world the good things that are going on in Northern Ireland, and how its normalisation process has moved forward enormously. All that good news and good publicity will go if there is anything like what we saw on the streets in terms of rioting and paramilitary activity, which we should all condemn.

I hope that Members on these Benches will welcome the cross-community efforts made by the hon. Member for Harlow (Robert Halfon)—an orange suit on Monday and a green suit today.

May I ask the Secretary of State how the Government intend to capitalise on opportunities for inward investment that originate from the G8 conference in Northern Ireland, and the good news that has flowed from that?

The October investment conference that the Prime Minister will attend is the next step forward in showing normalisation and that Northern Ireland is a good place to invest. Before that, the world police and fire games—the second largest sporting event in the world—will be held in Northern Ireland, and 7,000 competitors and thousands of supporters will be in Northern Ireland to see how well it is doing.

Corporation Tax

We recognise the potential benefits of devolving corporation tax in Northern Ireland. We are continuing to consider the technical and financial implications of such a change, and will make a decision no later than the 2014 autumn statement on whether to devolve rate-setting powers.

There remains significant concern in Northern Ireland about the reduction in the block grant should the rate of corporation tax be equalised with the south. What discussions has the Secretary of State had with the Chancellor and the Northern Ireland Finance Minister about the consequences for the block grant, and by how much would it reduce if corporation tax were equalised with the south?

I have had extensive discussions on that matter on a number of occasions with the Northern Ireland Finance Minister and Treasury Ministers, including the Chancellor, and that issue is one reason why we must consider carefully before deciding whether to go ahead with the change. We must ensure that the numbers are correct and that we have thought through all the consequences before a decision is made on whether the devolution should take place.

In answer to an earlier question the Secretary of State mentioned her determination to rebalance the Northern Ireland economy. Given that any decision on corporation tax is at least 17 months away, what other weapons will she help to provide in the armoury of the Northern Ireland Executive to help inward investment in our private sector?

We have already started on that work by bringing the G8 to Northern Ireland to demonstrate what a fabulous place it is to do business. We have also agreed an extensive economic package with the First and Deputy First Ministers, with extra funding for PEACE IV, extra structural funds and the retention of 100% assisted area status, which has enabled the Northern Ireland Executive to create 3,000 new jobs in the past three months alone.

Bill of Rights

The Government would like to see the issue resolved on the basis of consensus among the parties in Northern Ireland, and we remain open to taking whatever action might be required should there be such a consensus.

The Minister is aware, as is everybody in the House, that a Bill of Rights was an integral part of the 1998 Belfast agreement. We have waited 15 years for it. How much longer must we wait while people cannot make their minds up? Surely the Government have a responsibility to ensure that this moves forward and should not just pass the buck on to people in Northern Ireland.

I do not think anybody in Northern Ireland or in the House would say that the matter has not had an awful lot of attention in the past 15 years. The previous Government were unable to find a solution. I understand the problems that they had, and people have to understand the problems that we have. We need a consensus, and then we can move on. Until we get consensus, we cannot do that.

At a time when newts and bats can stop a multi-million-pound planning application, will the Minister explain to me and the House how pursuing a Bill of Rights that does not address the basic right of an unborn child can possibly be value for money, and why it should be high on anybody’s priority list?

I respect the hon. Gentleman’s views, but he has just explained exactly why the Bill of Rights has taken 15 years and there is a lot of work still to come on it.

14. Given that an Ipsos MORI poll showed that 80% of the supporters of the main political parties in Northern Ireland were in favour of the introduction of the Bill of Rights, will the Minister outline how the Government will use that level of consensus to bring forward a Bill of Rights for Northern Ireland to reflect all the protections that are needed and the need for the full implementation of the Good Friday agreement? (163473)

Eighty per cent. is not a consensus, and it leaves 20% of the population of Northern Ireland that are not yet in agreement. If they can get together and form an agreement, we can move on.

The Minister will be well aware that under the terms of the Belfast agreement, any future Bill of Rights for Northern Ireland is supposed to deal with issues particular to Northern Ireland. Since parading is particular to Northern Ireland, what steps are the Northern Ireland Office, the Secretary of State and the Minister taking to ensure that the right to parade is guaranteed in any future Bill of Rights?

The Secretary of State and I have had a lot of discussions on the matter, but the Parades Commission is an independent body and we have to accept its legal decisions. We may not all agree with a decision, but it must be adhered to.


It is vital that the determinations of the Parades Commission are obeyed and that the rule of law is respected. We encourage all concerned to work to ensure that parades pass off peacefully and that different traditions can be celebrated in an atmosphere of mutual respect and understanding.

The Parades Commission has an unenviable task, and although I commend the work of the commissioners and acknowledge the difficulty of the job that they have to do, it is clear that there are issues to consider about confidence in their deliberations and decisions. Does the Secretary of State acknowledge that, and does she agree that we need to address the matter in the weeks and months to come?

I certainly agree that the Parades Commission’s decisions can spark controversy but, in a sense, that is inevitable given the nature of its role. I welcome the initiative to consider a reform of parading matters, which we spoke about earlier, which provides an opportunity for all of us in the House to call on all concerned to work constructively and peacefully together so that parades can pass off peacefully in an atmosphere of mutual respect.

For many, like myself, the Parades Commission in Northern Ireland has a reputation of driving the communities further apart and being deliberately provocative in its determination to humiliate the Orange tradition in Northern Ireland while rewarding violent republicanism. What is the cost of that unelected, unaccountable quango that the Secretary of State keeps in place, and is it not long overdue that it is abolished?

The cost of the Parades Commission is set out in the Northern Ireland Office annual accounts. I know there are concerns about the Parades Commission’s decisions and I know that they are controversial, but it is absolutely crucial that the rule of law is respected. All of Northern Ireland will suffer if the pictures that go around the world this weekend are of violent scenes. There is a way to ensure that these events pass off peacefully. I urge everyone to seek that.

Has the Secretary of State consulted Lord Ashdown, whose commission included both a senior republican and a senior member of the Orange Order, and was able to come to a consensus? Will she also talk to Roger Poole, whose chairmanship of the Parades Commission was very successful? There might be lessons there.

May I endorse the view expressed by the Secretary of State that the decisions of the Parades Commission have to be supported? Does she and the Northern Ireland Office have any plans to work at or develop better dialogue, so that contentious parading can be avoided in the future?

I am grateful to the hon. Gentleman for his support. It is vital that Parades Commission determinations are obeyed. He is also correct to say that local dialogue is the way forward. I welcome the fact that that took place for a few days last week. I hope that both sides will continue that dialogue, with a view to a local and sustainable resolution to parading next year.

More than 550 parades are taking place in Northern Ireland over the 12th, the vast majority of which will pass without incident. I wish those taking part an enjoyable and peaceful day. There are, however, a number of very contentious parades. Will the Secretary of State update the House on arrangements to ensure that the Police Service of Northern Ireland is able to deal with any public order issues that arise? Of course we hope that none does, but we must always be prepared.

I spoke this morning to the Chief Constable for exactly such an update. The shadow Secretary of State will be aware that that includes approximately 600 mutual aid officers from Great Britain, drawing on the experience of the G8. Those officers have started to arrive. The PSNI is doing all it can to ensure that we have a peaceful 12 July. I hope it will receive the support of the whole community in seeking to achieve that.

I thank the Secretary of State for her response. She will know, as I do, that there is particular concern regarding the Ardoyne. I have spoken with representatives of the Orange Order and the residents’ association, and continue to encourage them to re-enter talks to try to find a way forward. The Parades Commission has given its determination and the law must be respected. Does the Secretary of State agree that even at this late stage we must not give up on dialogue, we must not give up on talks and we must not give up on trying to find a peaceful way forward?

I am in complete agreement with the shadow Secretary of State. Dialogue is always helpful, no matter how late in the day. It is particularly important in finding a sustainable way forward for next year’s parade.

The Economy

8. What recent discussions she has had with Ministers in the Northern Ireland Executive on rebalancing the Northern Ireland economy. (163467)

I had extensive discussions with Executive Ministers prior to the publication of our economic package, “Building a Prosperous and United Community”. I look forward to working with the Executive on implementing this important programme of work.

I thank the Secretary of State for her answer. What plans does my right hon. Friend have to ensure that the highly successful G8 summit in Lough Erne leaves a lasting economic legacy for Northern Ireland?

The G8 was tremendously successful. We have had some rather grim matters to discuss this morning in the House, but we should not forget that the world saw a positive picture of a scenically beautiful Northern Ireland that is open for business. The next opportunity to capitalise on it is an investment conference in October, which the Prime Minister will attend.

I recently met the head of Tourism Ireland, who told me about the great success of the new Titanic museum in Belfast. Does the Secretary of State agree that this shows that marketing Ireland as a whole can help to rebalance and benefit the Northern Ireland economy?

There are some advantages to that. We are looking at ways to encourage visitors to the Republic of Ireland to extend their stay to visit Northern Ireland. That is why our economic package contains proposals for a visa waiver pilot to enable those from certain countries with an Irish visa to travel to the UK.

Further to that last, excellent question, I am sure the House would agree that it would be mean spirited and churlish to do anything other than welcome the announcement of the economic package, notwithstanding that it was a re-stating of much that was announced by the previous Government, but may we have a little more detail about what has been agreed with the Northern Ireland Executive, and, above all, may we have some knowledge of the time frame for implementation?

We are pressing ahead as soon as possible with our start-up loan system, which we hope will be in operation within weeks; we have already agreed—[Interruption.]

Order. The hon. Gentleman asked a serious question, and the Secretary of State is trying to answer, but there is far too much noise in the Chamber. Let us hear the right hon. Lady.

The package includes top-ups for the Peace IV programme and structural funds; the retention of 100% assisted area status; a major G8 conference in October; measures to boost lending to business; a £20 million investment plan for research and development; agreement on the potential mechanism for taking forward further work on corporation tax devolution; a commitment to a new way forward on enterprise zones; a potential visa waiver pilot; and a number of other measures.

Prime Minister

The Prime Minister was asked—


Before listing my engagements, I am sure the whole House, and indeed the whole country, will wish to join me in congratulating Andy Murray on his historic Wimbledon success. To become the first British player to win Wimbledon for 77 years is a fantastic achievement and will rightly go down in our history books.

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

Today, the Government are setting out plans to modernise Royal Mail and to allow hard-working—[Interruption.]

Order. This is exceptionally discourteous. We have Question 1. The hon. Gentleman will ask the question; and that question, and the answer to it, will be heard.

Today, the Government are setting out plans to modernise Royal Mail and to allow hard-working postmen and women to own 10% of the shares. Will the Prime Minister tell us what support he is expecting to see for this measure?

I thank my hon. Friend for his question. I think there will be widespread support around the country for modernising this great public service, for getting new capital into the service and for ensuring that 10% of the shares go to the people who work for Royal Mail. Remarkably, it was proposed by the Labour party when it was in government, but of course, because the trade unions now oppose it, Labour has to oppose it too—fresh evidence today that it is still in the pockets of its trade union paymasters.

Let me first join the Prime Minister in paying tribute to Andy Murray for his fantastic victory—following Virginia Wade’s victory in 1977. It was a fantastic achievement; he showed extraordinary determination, and the whole country is incredibly proud of him.

As the Government consider party funding reform, will the Prime Minister tell the House how much his party has received in donations from hedge funds?

Order. The Prime Minister, I know, will want to answer the question put to him, and we must hear him do so.

I am not surprised that the right hon. Gentleman has this sudden interest in party funding. Let us be frank: every donation to the Conservative party is fully set out and public. Let us be clear what this real scandal is about; it is about trade union fixing of political appointments to this House, so when he gets to his feet, let us hope he addresses the 40 seats that Unite has fiddled, and let us also hope he publishes the Falkirk report and tells us—[Hon. Members: “Answer the question!”] Labour Members do not want to hear—[Interruption.]

Order. I am always concerned about the rights of Back-Bench Members, and they will be heard; and if we run over for the purpose, because of this sort of conduct, so be it. They will be heard. Please, let us have a bit of order and some answers.

I do not think the Prime Minister wanted to answer the question, did he? So let us give him the answer: the Conservative party has received £25 million from hedge funds. Now, next question. In the Budget, the Chancellor gave hedge funds a £145 million tax cut. Can the Prime Minister tell us: was it just a coincidence?

The top tax rate under this Government is going to be higher than it ever was under the right hon. Gentleman’s Government, but let me tell him this important point. There is a big difference between donations to the Conservative party and donations to the Labour party, and the difference is this: donations to the Labour party buy votes at your conference, buy candidates and MPs in this House, and pay for the votes that gave him his job. They paid their money, they bought their votes, they put him in his place, and that has not changed a thing.

I will tell him what the difference is: 6p a week in affiliation fees from ordinary people up and down this country, against a party funded by a few millionaires at the top. And what is—[Interruption.]

Order. Mr Ellis, you find it so difficult to control yourself. I am sure you did not when you were practising at the Bar. Calm it, man! Get a grip of the situation!

What is shameful about it is that the Prime Minister does not even know about the extra tax cut he gave to hedge funds. He says he wants reform, so I have a proposal for him. I am willing, as I have said before, to have a £5,000 limit on donations from trade unions, businesses and individuals, as part of a fundamental reform in the way our parties are funded. Is he willing to do that?

First of all, let me deal with—[Hon. Members: “Answer!”] I will answer. Let me deal with 6p a week—[Interruption.]

Let me deal with 6p a week. Here are the figures since the right hon. Gentleman became leader: £8 million from Unite, £4 million from GMB and £4 million from Unison. They have bought the policies, they have bought the candidates and they bought the leader.

I have long supported caps on donations. I think we should have caps on donations, and they should apply to trade unions, to businesses and to individuals, but let me say this. There is a—[Interruption.]

Order. There is still too far much shouting, on both sides of the Chamber. The Prime Minister I think is concluding his answer.

Let me be frank with the right hon. Gentleman. There is a problem with a £5,000 cap, and it is this. It would imply a massive amount of taxpayer support for political parties; and frankly, Mr Speaker, I do not see why the result of a trade union scandal should be every taxpayer in the country paying for Labour.

So there we have the truth: the Prime Minister is ducking funding reform. He does not want it to happen. Let us test his willingness to reform in this House. Current rules allow MPs to take on paid directorships and consultancies, as long as they are declared in the Register of Members’ Financial Interests, and Members on both sides of the House abide by those rules. I say: in the next Parliament—this will affect both sides of this House—MPs should not be able to take on new paid directorships and consultancies. Does he agree?

I think that what matters is that everything is transparent and open. Those are the rules we agreed. The right hon. Gentleman made me an offer—[Interruption.]

Order. I said a moment ago that the Leader of the Opposition must be heard, and he must be. The Prime Minister must also be heard.

The right hon. Gentleman made me an offer. Let me make him an offer. If he wants change, there is a Bill coming to the House of Commons next week that will cover trade unions. If he wants to legislate to move from opting out to opting in, if he wants to give union members a chance to choose whether to donate and to vote on whether they should give to Labour, we will legislate. Will he accept that offer of legislation? Yes or no?

I have to say that the right hon. Gentleman will have to do a lot better than that. He must answer the question on second jobs—[Interruption.] Let me tell him and all the Members opposite that between now and the general election, they will be subject to this test: do they support second jobs, new directorships and consultancies—yes or no? That is the test. Let us try the right hon. Gentleman with another test. I say—[Interruption.]

Order. The question must be heard, and the people whom I might have thought about calling to ask a question who are shouting from a sedentary position might just as well leave the Chamber.

As well as ending new directorships and consultancies, there should be a limit in the next Parliament on how much people can earn on top of their MP’s salary, as happens in other countries. The public would expect nothing less. What does the Prime Minister say?

What is interesting is that the right hon. Gentleman does not want to talk about the trade unions stitching up parliamentary selections. He does not want to address that, but that is what this scandal is about. Let us ask what has actually changed since yesterday. Will the unions still have the biggest vote at the conference? Yes. Will they still be able to determine the party’s policy? Yes. Will they still have the decisive vote in choosing the Labour leader? Yes. Those are the facts: they own you lock, stock and block vote.

This is a man owned by a few millionaires at the top of society, and everyone knows it. Here is the difference between him and me: I want action on second jobs; he does not. I want party funding reform; he does not. I am proud that we have links with ordinary working people; he is bankrolled by a few millionaires. The party of the people. The party of privilege.

It is not the party of the people; it is the party of Len McCluskey. That is the fact—[Interruption.]

It is not the party of the people; it is the party of Len McCluskey. They buy the candidates, they buy the policies and they buy the leader. What is Labour’s policy on Royal Mail? It is determined by the Communication Workers Union. What is its policy on health? It is determined by Unison. What is its policy on party funding? It is determined by Unite. It is no wonder that that the right hon. Gentleman thinks like Buddha: he wants to be reincarnated and come back as a proper leader.

Q2. Three quarters of a million British people suffer from heart failure, a condition—[Interruption.] (164129)

Thank you very much, Mr Speaker.

Three quarters of a million British people suffer from heart failure, a condition that uses 1 million hospital beds every year. Recent research funded by the British Heart Foundation has found that even low levels of air pollution can significantly increase the risk. Will the Prime Minister commit to meeting European standards on air quality? If implemented, such a commitment could increase life expectancy by up to eight months.

My hon. Friend makes an important point about air quality. We have seen real improvements in recent years, and that makes a genuine difference to public health. Important discussions are ongoing in the European Union at the moment, particularly about car emissions, and I will perhaps write to him about our conclusions on those issues.

Q3. The Government have diverted EU regeneration funds intended for South Yorkshire to benefit wealthier parts of the UK. The chair of Sheffield City Region local enterprise partnership has said that the arguments of local business have been ignored, and that the decision will have a hugely negative impact on jobs and growth. Why has the Prime Minister ignored local business leaders, and how can he justify allocating 34% more per head to Cheshire than to South Yorkshire? Do not this Government always have the wrong priorities and stand up for the wrong people? (164130)

We have done a very fair assessment not only between the regions of the United Kingdom, but between the nations of the United Kingdom about how to distribute this money. We have distributed it in a fair way. If we look at Yorkshire and the Humber, we see employment up by 11,000 this quarter and 86,000 since the election, but as the hon. Gentleman is a member of Unite, it is not surprising that he does not mention that fact.

Q4. Does the Prime Minister welcome last Friday’s vote to give the British people a say on their relationship with Europe—a vote with a stark contrast, in that those in the Labour party chose to stay away and squabble with themselves over fixing within the unions? (164131)

I congratulate my hon. Friend the Member for Stockton South (James Wharton) on how he presented his Bill on a referendum in the European Union. There was unanimous support on this side of the House from the Conservative party. What was noticeable is that although there was a 19-page briefing from the Labour party—like every other bit of paper nowadays, we find it lying around the House of Commons—Labour Members could not make up their mind which way to vote.

Does the Prime Minister agree with a former Conservative treasurer that the money received from Asil Nadir is tainted and that the Conservatives have a moral duty to give it back? When will he return that money?

The hon. Gentleman should start with the fact that his party has taken £1.6 million—not a £5,000 cap—from Mr Mills and advised him how to dodge the tax.

Q5. Under the last Government, communities such as Thanet were left and abandoned on benefits. Was my right hon. Friend impressed by the thousands of jobs created in Sandwich, London Array and our jobs fair? This Government are putting people back into work. (164132)

My hon. Friend is absolutely right. I was impressed on visiting Thanet to see the jobs being created by the London Array. It is providing jobs in shipping for seamen, jobs in engineering, apprenticeships; it is a really important investment for this country, and we hope to see many more like it in the future.

Q6. Is the Prime Minister aware that there is widespread agreement in this House about the importance of investment in infrastructure and indeed widespread agreements about its job-creating potential? Can he therefore tell us why, after three years in office, employment in the construction sector has fallen by 84,000 people? (164133)

Employment in construction is currently rising, and the recent news on construction has been very good. That is because we have an infrastructure plan, a fifth of the projects are under way and we have road building at far higher levels than it ever was under the Labour Government. Whereas Labour electrified literally five miles of railway line, we are going to electrify hundreds of miles of railway line. I note that the hon. Gentleman does not mention the fact that he has been paying rent to Unite in his constituency. Normally, it is money from Unite to Labour; in this case, it is from—

Is my right hon. Friend aware that after yesterday’s surrender of powers by the Home Office to the European Union by bringing the European Court of Justice into the arrest warrant, the Commission has welcomed it as pragmatic? Has pragmatism overtaken the Prime Minister’s popular desire to repatriate powers?

The Home Secretary’s announcement yesterday represents the repatriation to the UK of 98 powers. There were 133 items on the justice and home affairs list, which is a massive transfer of power back here to the UK. I think my hon. Friend should welcome that.

Q7. A carer and her husband who has Parkinson’s disease were moved to a two-bedroomed property because she found it impossible to sleep when they were sharing a room. The cumulative effect of this Government’s welfare changes means that she is going to have to find an additional £1,000 a year. Carers UK has published evidence showing that the discretionary payment scheme is benefiting only one in 10 people. That is the scheme that Government Ministers frequently pray in aid. Was it the Prime Minister’s intention that nine out of 10 carers should face eviction, debt arrears and bailiffs? (164134)

Let me make it clear that disability living allowance, the main benefit received by disabled people, is being uprated by inflation and excluded from the welfare cap. When it comes to the spare room subsidy, anyone who needs to have a carer sleeping in another bedroom is exempt from it. There is also the discretionary payment. [Interruption.] Labour Members shake their heads, but the fact is that they have opposed each and every one of our welfare savings, and it is now Labour’s policy to adopt our spending plans. They cannot go on accepting the plans but criticising them at the same time.

It is one year since the Government suspended aid money that goes directly to the Kagame regime in Rwanda over the role that the regime played in supporting warlords and militia gangs in the Congo. Recently, the UN confirmed that Rwandan army officers are still involved in such activities. Does my right hon. Friend agree with me that those actions are unacceptable for a Commonwealth nation? Will he work with his international counterparts to ensure that those committing war crimes are brought to justice?

Those committing war crimes should always be brought to justice. I have raised the issue of support for the M23 with President Kagame on a number of occasions. We need to bear that in mind in looking at our aid programme, as my right hon. Friend the Secretary of State for International Development has done.

I think we should also recognise—this goes across parties in this House—that British investment in aid in Rwanda has created one of the great success stories of African development over the last decade. We should continue to invest in that success and lift people out of poverty while delivering a very clear message to President Kagame at the same time.

All Members of Parliament have the clearest possible duty to their constituents. Let me make this point. Do I think the House of Commons benefits from people like the right hon. Member for Blackburn (Mr Straw) and his experience? Do I think the House of Commons benefits from the right hon. Member for Sheffield, Brightside and Hillsborough (Mr Blunkett), who comes to this House with his experience? I think we do benefit. I am not sure that we benefit from my immediate predecessor, but there are Opposition Members who give good service to this House.

We are all celebrating Andy Murray’s historic victory this week. The Prime Minister may not know that history was also made in 1954, when Dave Valentine, a Scotsman, was the first man to lift the rugby league world cup trophy for Great Britain. The 14th rugby league world cup is happening this year—the first major sporting tournament on these shores since last year’s wonderful London 2012 Olympics and Paralympics. Will the Prime Minister give it full support and will he come to one of the games?

I was not aware of that important piece of history and I am very grateful to my hon. Friend for bringing me up to date. I strongly support the fact that we are holding this tournament and will give it all the support I can. Obviously, between now and then we have the small issue of the Ashes, and it is important that we hold that as well.

Q9. When the Prime Minister entertained the hedge fund owners of Circle health, the private hospital company, to a dinner for donors in Downing street, what did he promise in return for their £863,000 donation to the Tory party? (164136)

Let me just give the hon. Gentleman the figures: £8 million from Unite; £4 million from GMB; and £4 million from Unison. The difference is this. Those donations—they buy your leader, they buy your policy, they buy—[Interruption.]

Q10. Does the Prime Minister agree with me that it is welcome that 2,500 out-of-work households in London can no longer claim more than the average working family earns—a welfare reform opposed by the Labour party at the behest of its union barons? (164137)

The Labour party has opposed every single welfare change that we have made—£86 billion in total. People in this country, including trade union members, will find it inexplicable that the Labour party thinks you are better off on benefits than you are in work. That shows that not only does it have the wrong relationship with the unions—it has the wrong values, too.

Order. Basic manners would suggest that the question be heard. Just as I said about Mr Lord, so, too, I say that Cathy Jamieson will be heard.

Q11. Perhaps the Prime Minister can tell the House whether Mr Aidan Heavey’s donations to the Conservative party had any influence on the Foreign Secretary’s intervention in his company’s tax dispute? (164138)

As I said, the donations to the Conservative party do not buy votes at our party conference; they do not buy votes for our leader; they do not mean donors can select candidates. That is the unhealthy relationship in British politics, and the Opposition can bluster all they want, but they have been found out in Falkirk and they are being found out across the country.

Q12. Every Shropshire child receives £4,612 per annum for their education. In other parts of the country that figure is as high as £7,000, £8,000 or £9,000. This funding mechanism is completely unjust and puts Shrewsbury children at a disadvantage. Will the Prime Minister do everything in his power to help the Education Secretary change this funding mechanism before the unions try to block it? (164139)

We agree that the current system is unfair, and my hon. Friend gave the figures. We have committed to consulting on how best to introduce a national funding formula for 2015-16. We will consult widely all the interested parties to get this right. That will obviously include all Members of Parliament, and I know he will campaign very hard on that issue.

The Tory Chair of the Treasury Select Committee has described the Government’s banking reforms as “falling short” and in some respects “virtually useless”. Is this the pay-off for all the millions the banks have poured into the Tory coffers?

It is this Government who commissioned the Vickers report. It is this Government who committed to a ring fence around retail banks. It is this Government who are legislating to have criminal sanctions against bankers. What did the last Government do? What did those two do when they were sitting in the Treasury when Northern Rock was handing out 110% mortgages? They were knighting Fred Goodwin and watching while Rome burned.

Q13. On Friday the town centre of Bury will fall silent as the people of Bury lead the nation in paying respects to Drummer Lee Rigby, who was so horrifically murdered on the streets of Woolwich. Will the Prime Minister join me in paying tribute to all his family and friends and his comrades in the Fusiliers for their calm and dignified response to their loss, and thank all those in the Church, our armed forces, the police and public services who have been engaged in the planning and preparation for the funeral? (164140)

My hon. Friend speaks for the whole country and the whole House when he talks about this issue. We should all pay tribute to Drummer Lee Rigby for his service to our country. I heard about it at first hand when in Afghanistan meeting other members of his regiment. We should also pay tribute to his family for all the pain and difficulty they are going through, and I am sure it will be a very fitting and moving service on Friday and the whole country will be mourning with them.

I have a JCB factory in my constituency, and I represent its parliamentary interests as part of my parliamentary duties. Will the Prime Minister tell us how much the Foreign Secretary was paid by JCB while he was in opposition?

JCB is a great British company that exports all over the world. Instead of trying to talk it down, we should be celebrating it. It is opening businesses; it is creating employment; it is training apprentices; it is backing our academy programme. How typical of the party opposite; all it wants to do is talk down great British businesses.

Q14. Does the Prime Minister agree that what this Government do, as when they helped us save the Medway Insolvency Service, is represent the interests of ordinary, decent trade unionists, who too often are lions led by donkeys? (164141)

I absolutely agree with my hon. Friend, and may I pay tribute to him for his work in saving the Medway Insolvency Service? This is important; the fact is that those in the Labour party are in hock to union leaders, and that is why they refuse to investigate the scandal of these rigged appointments. That is what this scandal is about, and that is what they refuse to talk about.

Large developers are major contributors to Conservative party funds, so could the Prime Minister tell the House what role they have played in shaping Conservative party planning policy?

As a member of Unite, the hon. Lady speaks with great authority on this subject. Let me explain again: when people donate to the Conservative party they are not buying votes for the leader, they are not buying policies and they are not buying votes at the party conference. The reason the Leader of the Opposition has his job is that trade unions bought votes in the Labour party and put him where he is. That does not happen in any other political party, and if Labour Members have got any sense at all, they will realise it is profoundly wrong.

Q15. I am sure the Prime Minister will agree that there is no better way to build a stronger economy and a fairer society than through apprenticeships. In Solihull, the number of apprenticeships has nearly doubled already, and I am on a mission to build on that success by working with local businesses to create 100 new apprenticeships in 100 days. Will the Prime Minister support that objective? (164142)

I would certainly support my hon. Friend’s campaign, as I would support the campaign of all Members across the House to encourage people to take up apprenticeships. That is about encouraging not only young people, but businesses. In Solihull and the west midlands we have the advantage of Jaguar Land Rover, a company that is really powering ahead, taking on many more employees and also investing heavily in apprenticeships.

This morning, a constituent contacted my constituency office threatening to commit suicide because they were so depressed from the effect that welfare reform was having on them. I would like to say that that was a unique incident, but it was not. Will the Prime Minister tell the House what the Government are doing to analyse the effect of welfare reform on the mental health of this country and how he is going to react to it?

As I have said many times at this Dispatch Box, I am always happy to look at individual cases, but the fact is that we badly need to have welfare reform in this country; the system was completely out of control. Housing benefit was out of control, and disability living allowance had gone up by a third in the past 10 years. We need reforms, and it is no good the shadow Chancellor gesticulating, because he now is in favour, apparently, of welfare reform; the only problem is that he opposed all £86 billion of the reforms that we have made.

Engineering work financed by this Government is under way to re-double the line between Stroud and Swindon, which is fantastic news. Does the Prime Minister agree that it is a good example of sensible investment in infrastructure, leading to economic growth for Gloucestershire?

My hon. Friend is absolutely right. Investing particularly in some of the branch lines which have been single-track lines, such as the ones that serve my constituency, and turning them into double-track lines really makes the service far better and far more reliable; we can also get more people out of their cars and on to trains, and use the service like that.

What I say to the hon. Gentleman is that he needs to examine again this relationship between the unions and the Labour party—that is the problem. [Interruption.] Yes, they do this: they give you the money, they buy the votes, they buy the leader. That is how it works.

Royal Mail

Mr Speaker, today I have laid a report in Parliament announcing that the Government have decided to proceed with a flotation of Royal Mail shares on the London stock exchange via an initial public offering. A sale will initiate the final stage of the Government’s postal sector reforms. The overarching objective of those is to secure the universal postal service—the six-day-a-week service, at uniform and affordable prices, to all 29 million addresses in the UK, which is vital to the UK economy.

Four years ago, the independent review of the postal sector, led by Richard Hooper, concluded that the universal service was under threat. The previous Government accepted the review’s package of three main recommendations and the Bill to implement them, which would have permitted a minority sale of Royal Mail shares, was withdrawn.

In 2010, Richard Hooper’s updated report confirmed his initial findings and that a package of measures was needed to secure the universal service. Through the Postal Services Act 2011, which I introduced three years ago, we have implemented two elements of the package by establishing Ofcom as the postal regulator and taking on Royal Mail’s historic pension deficit.

As set out in today’s report, we will now implement the third and final element of the Hooper recommendations by selling shares through an IPO in this financial year. We will retain flexibility on the size of stake to be sold as that will be influenced by market conditions, investor demand and our objective to ensure overall value for money for the taxpayer. It is our intention to dispose of a majority stake, taking into account shares sold and those allocated to employees.

The IPO will include a retail offer to enable members of the public to buy shares on the same terms as the big institutional investors. At the time of the IPO, the Government will allocate 10% of the shares to an employee share scheme. Those shares will be free to eligible employees, recognising that many would otherwise find them unaffordable, and I want to strengthen employee engagement by ensuring that employees own a real stake in the business. Employees must retain their shares for at least three years, giving longevity to the scheme. Our scheme will be the biggest employee share scheme of any major privatisation for nearly 30 years.

Eligible employees will also receive priority in allocation if they purchase shares in the retail offer. I want to reassure employees that ownership change does not trigger any change in their terms and conditions. The Communication Workers Union will continue to be their recognised representative and employees’ pensions will continue to be governed by the trustees. As part of a three-year agreement, Royal Mail is also prepared to give assurances on the continuation of a predominantly full-time work force; a commitment to provide and enhance existing services to customers using the current work force with no change to the structure of the company in relation to these services; and no additional outsourcing of services.

Royal Mail is profitable and its overall financial position has significantly improved. That is partly due to the Government’s action so far, but considerable credit is also due to the management and the work force who have implemented a modernisation plan. The challenge now is to maintain that positive momentum. In recent history, Royal Mail’s core UK mails business has swung between profit and loss. In the 12 years since 2001, it suffered losses in five of those years and more than 50,000 jobs were lost. Resting on the current level of progress is not enough.

Under public ownership there is simply not the freedom to raise capital in the markets. A share sale will not only provide commercial discipline but give Royal Mail future access to private capital, enabling the company to continue modernising and to take advantage of market opportunities such as the growth in online shopping, building on its success in parcels and logistics. Recent estimates are that that market is probably worth £75 billion in the UK.

There are various myths that we must rebut. Contrary to what is being claimed, after a sale, Royal Mail will still be the UK’s universal service provider. That includes services to urban and rural areas and free services for the blind. Only an affirmative resolution in Parliament can change these minimum requirements. Free services for the armed forces are entirely independent of ownership and Royal Mail is fully reimbursed for those services by the Ministry of Defence.

Ofcom’s primary duty is to secure the provision of the universal service. It also has duties to promote competition where that benefits consumers. I want to be absolutely clear that should the two duties be in conflict, the universal service takes precedence. In March, Ofcom published a statement on its approach to end-to-end competition, making it clear that should a threat to the universal service arise from this competition, it has powers to take any necessary action. Ofcom is currently the most appropriate body to assess and react to such threats to the universal service, but as a safeguard, the Government have retained powers to direct Ofcom with respect to certain regulatory levers, such as reviewing the financial burden of the universal service and taking mitigating action to ensure that the universal service is maintained.

I also confirm that Post Office Ltd will remain a publicly owned institution, although we continue to explore mutualisation. The Government have committed to the fact that there will be no further closure programme. Royal Mail and Post Office Ltd signed a 10-year commercial agreement in 2012 to ensure that they will continue to be strong business partners.

In conclusion, the Government’s decision on the sale is practical and logical. It is a commercial decision designed to put Royal Mail’s future on a long-term, sustainable basis. It is consistent with developments elsewhere in Europe; privatised operators in Austria, Germany and Belgium produce profit margins far higher than Royal Mail’s, and have continued to provide high-quality, expanding services. The time has come for the Government to step back from Royal Mail and allow its management to focus wholeheartedly on growing the business and planning for the future. It is time for employees to hold a stake in the company and share in its success. This Government will give Royal Mail the real commercial freedom that it has needed for a long time, and I commend this statement to the House.

We opposed the Government’s privatisation of Royal Mail during the passage of the Postal Services Act 2011; we oppose it today. Maintaining Royal Mail in public ownership gives the taxpayer an ongoing direct interest in the maintenance of universal postal services in this country; helps safeguard the vital link that the Royal Mail has with the Post Office; and ensures that the taxpayer gets to share in the upside of modernisation and the increased profits that Royal Mail delivers. Despite that, the Government have pressed on regardless with this sale, and they have failed adequately to justify why they must sell now.

On one side, there is an unusual coalition against this move: the Opposition; the Conservative-supporting Bow Group, which described this move as “poisonous”; the Royal Mail’s employees, represented of course by the CWU; and the National Federation of SubPostmasters. The Minister of State, Department for Business, Innovation and Skills, the right hon. Member for Sevenoaks (Michael Fallon), wrote to a constituent in 2009 saying that he, too, was opposed. On the other side, there is the Government, who now include the Minister of State. The Government are ignoring the huge changes that have taken place since the passage of the Act. Chief among them is the more than doubling of Royal Mail’s profits to £403 million, which calls into question assertions that there is no prospect of the Royal Mail being self-financing in the future.

Having nationalised the organisation’s debts by taking on its pension liabilities, the Government now want to privatise the profit at the very time it is making money. How on earth does that make any sense? Now that the Government have determined to pursue this course, there is every sign that this treasured national institution is being sold off on the cheap to get income quickly to a Treasury whose economic strategy has failed. As long as the Government fail to address key questions about Royal Mail, which I will outline, that will be the conclusion that people will be entitled to reach.

I have the following questions for the Secretary of State. First, Royal Mail faces competition from other postal service operators who are not subject to the same high performance and service quality standards as it is, putting it at a competitive disadvantage. How will this not depress the sale price, and what will he do about it? Secondly, this cannot be allowed to put the Post Office at risk. What guarantees can he give that a privately owned Royal Mail will renew the agreement under which the Post Office provides Royal Mail products, which is essential to the Post Office’s future? What will happen in 2022? Is it not the case that he cannot give any guarantees on what will happen when the agreement expires? On the future of the Post Office, when can we expect to hear more on his plans for mutualisation? On what date will that commence?

Thirdly and finally, is it not the case that there is every prospect that a privatised Royal Mail will seek to sell off valuable locations in high-value urban centres for a fast buck, which will be replaced by distant depots, sorting offices and the rest, which are hard to get to for consumers and small businesses? Yes, there have been successful privatisations in times past which have delivered for the British people, but there have also been examples in rail and energy under the last Conservative Government which were badly executed privatisations that resulted in a long-term bad deal for consumers and small businesses. It is therefore not surprising that the British people oppose this move today.

I think the most interesting and eloquent part of the Opposition’s response was what the hon. Gentleman did not say. He did not say that the next Labour Government, if there is one, will renationalise Royal Mail. He is opposed to privatisation, but he is not proposing to reverse it. That eloquent silence will be heard not just by the investors, but by the trade unions, so we know clearly that we are now on an irreversible course.

The hon. Gentleman talks about pressing on with this sale and his colleagues use the phrase “fire sale”. This is the longest fire sale in history. It has taken five years from the inception of the process under a Labour Government. He talks about self-financing. He knows perfectly well what the rules of public finance are—that a nationalised institution is not able to borrow freely in the markets, as it would wish. It is useful to compare the experience of Royal Mail with what is happening in, for example, Germany. The hon. Gentleman often cites Germany as a role model for good industrial policy, and we have many lessons to learn from it. Germany has a privatised mail system. In the past two years it has invested €750 million and will do so next year, raised on the market, competing ahead of Royal Mail in what are increasingly international markets. I hope he heeds that experience.

The hon. Gentleman worries about a race to the bottom in competition. The main competition for Royal Mail has not come from private competitors; it has come from technology. Within the past 10 years, mail has lost 25% of its business because of e-mail and we have to respond to that. Royal Mail was declining. It was in danger of losing the universal service obligation. We are now giving it the tools to compete and to be a successful enterprise—something that will benefit the country and the workers within it.

I warmly welcome my right hon. Friend’s statement about the floatation of Royal Mail. That is long overdue. He gave a commitment to no further closures by Post Office Ltd. Will he therefore look into proposals by Post Office Ltd to close the Crown post office and move it to the back of a shop, against the wishes of thousands of my constituents and against the wishes and interests of businesses located in that part of Littlehampton?

There are indeed many individual cases which are difficult, often because postmasters or postmistresses wish to retire, but the big picture in respect of the Post Office, which I hope my hon. Friend will recognise, is that we have stopped the mass closure of post offices that took place under the previous Government. We have a network of 11,500 post offices which we are preserving. This Government, despite the financial pressures on them, committed themselves over this spending review to spending £1.3 billion on modernising and upgrading the Post Office and giving it a real future.

The Postal Services Act 2011 insisted that the universal postal service must be financially sustainable. Given the huge loss of rural services in privatised Post Offices across the world, particularly in New Zealand, what magic wand will the right hon. Gentleman give to Ofcom to turn rural services from loss-making to profit-making?

Of course there is no magic wand, but with a combination of modernisation and support, and maintaining community-based post offices, which we are committed to do, many of the warnings that the Opposition have given us will be superfluous.

Will the Secretary of State confirm that what he has announced is consistent with the Liberal Democrats’ 2010 manifesto and the coalition agreement, in that only a minority of shares will be put out to the private sector for purchase and the majority interest will be retained by the Government and the employees? That is what I support. I do not support a majority sale.

I made it very clear that the Government plan to become a minority shareholder in the company and that the majority will be a combination of shares sold in the market and shares held by employees. We are not predicting at this stage how far the sale will go, as that will depend on the market.

There will be a combination of institutional and private investors. There will be a retail offering that can be obtained by two routes: by applying to the Government directly over the internet, and through brokers. Ownership will be widely dispersed.

Some 20 years ago, as Post Office Minister, I tried to privatise Royal Mail. We could not get it through because of Labour intransigence. Labour Members were wrong then and they are wrong now. Has not the only result of the delay been a lack of investment and an inability on the part of this publicly owned corporation to respond to international and technological challenges?

I know that it is tempting to blame the Labour party for a lot of things, but I seem to remember that the attempted privatisation under the hon. Gentleman’s stewardship ground to a halt because Mrs Thatcher was against it. We have moved on and circumstances are different. Indeed, this is a substantial commitment to making a real success of what the Prime Minister called a very important public service.

Why does the Secretary of State not consider the kind of business model used by Welsh Water, which the Library has advised me is perfectly compatible with the Act, which successfully combines social obligations and commercial imperatives and raises capital more cheaply without contributing to Government debt? A survey by the Tory Bow Group shows that 67% of the public oppose privatisation, as do 96% of the work force. Why does he not stop dogmatically pursuing a flotation and instead adopt that positive, popular and viable alternative?

There is a long and complex debate about how water companies are operated. Of course, they have extremely high gearing because of the nature of their business and do not require anything like the same level of equity. We have a model that combines the best use of equity markets and the level of debt that the company will need to finance its future investment.

Does my right hon. Friend agree that, although Royal Mail’s financial position has improved, it still lags considerably far behind international competitors such as Deutsche Post, Belgian Post and Austrian Post? Is not the simple fact that Royal Mail, as part of the public sector, has its hands tied in a way that its international competitors do not?

Yes, it is tied because of the limitations on borrowing possibilities and what many people perceive to be the potential for political intervention. The companies that the hon. Gentleman mentioned—in Austria, Belgium and Germany—all of which are privatised, are indeed highly profitable, and they also invest heavily. They are making deep inroads into the international logistics market and it is time Royal Mail was competing successfully with them.

As the Secretary of State has said, Royal Mail’s performance has gone from strength to strength, so why will the Government not commit to building on what has been achieved and keep it in public ownership, where we can guarantee that future profits will be invested in what is good for Britain, rather than what is good for a few select shareholders?

We are building on the success of the modernisation of the last few years, and I pay tribute to the management and the work force who have made that possible. The one factor that the hon. Lady’s model does not deal with is how a company of that kind raises substantial amounts of capital when it would be in direct competition with schools, hospitals and other bodies that require public sector investment. That is the big inhibition at the moment.

Settle post office, deep in the Yorkshire dales, has benefited hugely from the Government’s Post Office reforms. Will the Secretary of State confirm that one of the most rural areas of Britain will benefit even more from the changes he has announced today?

Post Office Ltd is a separate organisation under a publicly owned umbrella, and within that there are large numbers of highly competitive, self-employed entrepreneurs who run the post office network. We are supporting it substantially, modernising it and preventing large-scale closures. There is indeed an excellent future for the hon. Gentleman’s local post office.

The Secretary of State said that this process began five years ago with the Hooper review, and he is right, but will he also confirm that the critical difference between the Bill he passed and the one proposed by the previous Government was that our Bill contained a clause stating that Royal Mail must remain publicly owned?

Indeed. We are moving to a higher level of private involvement than was envisaged under the 2008 proposals, and the reason, which I have given very clearly, is that that minority state ownership would not have enabled the company to borrow as freely as it should.

I warmly welcome the proposals. Will the Secretary of State say a little more about the Government’s role in setting performance standards and ensuring they are met, specifically in relation to the proportion of letters and packages that should be delivered in a certain time scale and what is an appropriate price for consumers to pay for that service?

The Government will not be involved in day-to-day oversight of Royal Mail; it will be governed by the regulator, which will set the appropriate standard.

Royal Mail workers and their management have co-operated in a process of radical change to transform Royal Mail into an efficient, effective and profitable world-class company. The public do not want privatisation, and posties do not want privatisation. Will the Secretary of State join me in paying tribute to Royal Mail workers, who by a 96% vote in a ballot said, “Keep your bribe. We want to remain public posties”?

There was a substantial vote on that consultative ballot, but I hope that the hon. Gentleman is not suggesting that it takes precedence over the vote of the House of Commons, which after all brought the process into being. I have already freely acknowledged that the CWU, despite the rhetoric we sometimes hear from it, has played a very constructive role in the modernisation, and we want to help it, as a result of this share offer, to become further aligned in the long term with the interests of the company. If the company makes money and succeeds, the CWU will derive additional benefit.

Will my right hon. Friend confirm that the six-day-a-week service will continue after privatisation and across the whole country?

Absolutely. That is the fundamental of the universal service obligation, which can be changed only by an affirmative vote of this House.

The Minister acknowledged the importance of the contractual relationship between Royal Mail and the sustainability of the post office network, and in a previous answer he acknowledged the issue of elderly sub-postmasters retiring. What assessment has he made of the viability of the post office network, given the uncertainty that the privatisation of Royal Mail will create in the minds of people who might take on post offices when sub-postmasters retire?

As I explained, there is currently a 10-year agreement in place, which takes us into the Parliament after next. Few other businesses operate with that degree of regulatory certainty.

This is a very good day, because privatisations are good, which is why they have not been reversed in the past. It is also a good day because this privatisation includes shares for workers. Will the Secretary of State elaborate on the 10% shareholding that the Government will be giving free of charge to Royal Mail employees?

I do not think that a great deal of elaboration is necessary. As I said, the shareholding will be free of charge. In addition, workers will have priority, should they wish to buy an additional shareholding. The principle under which the share scheme will operate is that it will be locked in for three years to give the arrangement longevity. I imagine that most postal workers will want to hold the shares for at least five years to take full advantage of the tax incentives available, for example the absence of capital gains tax, under the current scheme.

The Secretary of State might be sincere in what he says, but does he not realise that the vast majority of the public, particularly in the countryside and in rural areas, just do not believe that the universal service is guaranteed, because they know what has happened in other privatised industries? How can he ensure that it really will be guaranteed? I do not believe it, most Opposition Members probably do not believe it, and Conservative Members who fought against it last time, when Margaret Thatcher was against it, do not believe it. This is a very wrong decision.

The best way of reassuring the public is to demolish some of the myths. The fact is that the universal service obligation was clearly underwritten by Parliament; it is embedded in legislation and cannot be removed. I hope the hon. Lady will pass that message on to her constituents.

May I commend the Secretary of State for this most welcome announcement? The people in my constituency who will be most concerned about it will be the postal workers. Will he spend a moment reassuring them about their future in a privatised Royal Mail? In particular, what does he anticipate the additional capital that a private Royal Mail will be able to take on will do for them and their jobs?

As I explained, Royal Mail has offered a three-year deal to the workers which they are still considering. It is relatively generous in respect of pay—considerably in excess of the public sector norm. They are being given assurances on the nature of work and the absence of any further outsourcing. They will benefit under these proposals from the appreciation of the shares they receive free of charge. I would have thought that if I were a Royal Mail worker thinking of my individual situation, I would think this a very good deal.

Is not this statement a total and cynical violation of the election manifesto on which the Secretary of State fought the last election—which, with some distaste, I hold in my hand? Is not this typical of a Liberal Democrat who made promises on the basis that he would never expect to have to carry them out? He has said that there will be no further closure programme. How does he reconcile that with the plan to close Wellington street post office in Gorton in my constituency, which has aroused fury in local residents?

I find it extraordinary that Labour Members are raising the issue of post office closures. I think that three major waves of closures took place under the previous Government. We have stopped that and we are investing very heavily in new infrastructure to enable post offices to compete.

Public sector Royal Mail wants to close a delivery office at South Bank in my constituency and has recently stopped sorting mail in the Tees valley altogether for the 750,000 people who live there. Does my right hon. Friend agree that a private sector Royal Mail will be more likely to review such decisions for overall value for money and customer service?

Yes, I am sure that it should do that, but I do not wish to comment on the details of the industrial dispute that has led to that difficulty.

Does the Secretary of State share my concern that a private buyer is more likely to sell off delivery offices in town centres, moving them to out-of-town and less accessible locations for those picking up parcels? What guarantees can he give to consumers and small businesses who rely on our Royal Mail sorting offices?

I thought that in the first part of her question the hon. Lady was perhaps mixing up the Post Office and Royal Mail. Of course, the post office network remains publicly owned, with all the implications involved. The private Royal Mail will be able to use its assets to the best possible advantage. Of course there will be change, much of it driven by technology.

Why does my right hon. Friend think that Labour Members and their CWU friends have been exaggerating the myths about the risks faced by Royal Mail, other than for their own political gain?

The hon. Gentleman makes my point for me. I am trying to work constructively with the CWU, as is my colleague, the Minister of State, the right hon. Member for Sevenoaks (Michael Fallon). We realise that it is in its interests that this succeeds, and we are trying to persuade it to work with us constructively.

The Business Secretary said that as part of a three-year agreement Royal Mail is prepared to give a number of assurances. Ultimately, what control will the Government have in seeing that those assurances are implemented?

Let me clear: these were not Government commitments but assurances by the management of Royal Mail, who will, I hope, reach a satisfactory agreement with their work force. It is currently under dispute, but there will be a traditional type of industrial agreement and I am sure that it will be honoured.

I welcome modernisation of the Post Office, but does my right hon. Friend agree that the Post Office and Royal Mail are not just places of economic capital but important parts of our social fabric? Please can he reassure hard-working Harlow postmen and postwomen that privatisation will not lead to a repeat of what happened with some of the utility companies, particularly water companies, where they have avoided tax, directors have awarded themselves huge bonuses, and prices have gone up by ridiculous amounts?

Of course we need to get tough with systematic tax avoidance. My colleagues in the Treasury have been setting out how we want to do that, because it was allowed to happen for far too long. The essential point is that this is not just a typical business; it is a major national institution with social obligations. That is why I began by saying that the overarching objective is to secure the universal service obligation.

The Secretary of State only has to look at the rail and energy companies to see examples of how badly executed privatisation has led to sub-standard service and high prices that put those services out of the reach of many of my constituents. Is he seriously telling this House that he is going to ignore the overwhelming concern of the majority of the British public and fail to protect such a vital institution?

We had 12 years of a Labour Government who had an opportunity to reverse many of the privatisations that occurred, and they did not. I presume that was a recognition that the balance of advantage was positive.

I welcome the Department’s bravery in setting out this initiative so that Royal Mail can gain access to the investment and innovation that are available to other competing services. I particularly welcome the statutory protection for the six-day universal service for rural areas and the provisions for employee ownership. Does the Secretary of State agree that those in this House who want to support public services do them no favours by locking them in aspic and denying them that which makes the private sector able to flourish and succeed?

Yes, I am sure that is absolutely right. I hope that those words will also be taken to heart by the CWU.

Is the Secretary of State aware that about 30 years ago Mrs Thatcher privatised countless public utilities? It was called the share-owning democracy: the British people would hold the shares, they would last for ever, it would be nirvana. The net result was that all those public utilities—oil, gas, water, electricity—are now owned abroad. What guarantees can he give, as a little Liberal, on just how we manage to keep this so-called share-owning democracy in this country? Why doesn’t he do the decent thing—meet Billy Hayes and the CWU, scrap this, act like a man, and get back to where he used to be?

I have perfectly amicable conversations with Mr Hayes and his colleagues, and they will undoubtedly continue. I was not sure whether the hon. Gentleman’s tirade was directed at privatisation or foreign ownership; they are rather different issues. I think that foreign owners have made a major contribution to this country. Some of our leading manufacturing companies are run by foreign owners who have invested in the long term and have made a real commitment to this country. I am certainly not going to impose nationalistic restrictions on ownership.

Ever since the penny black, we have had the monarch’s image on our stamps. Will my right hon. Friend assure the House that the Queen’s image—the Queen’s head—will remain on our stamps?

Indeed. That was raised when the Postal Services Act 2011 went through the House two and half years ago. The commitments were made then, and they are embedded in legislation.

Will the Secretary of State confirm what proportion of the sale proceeds will be reinvested in the business rather than taken as profit?[Official Report, 15 July 2013, Vol. 566, c. 3-4MC.]