Skip to main content

Commons Chamber

Volume 608: debated on Tuesday 19 April 2016

House of Commons

Tuesday 19 April 2016

The House met at half-past Eleven o’clock

Prayers

[Mr Speaker in the Chair]

Oral Answers to Questions

Treasury

The Chancellor of the Exchequer was asked—

National Insurance Numbers (Other EU Nationals)

1. When HM Revenue and Customs plans to publish data on the number of active national insurance numbers used by people from other EU countries. (904537)

The Government are committed to providing data on active national insurance numbers used by people from other EU countries. HMRC is currently compiling that information and is working closely with the Office for National Statistics, which is reconciling the four main sources of international migration data. The data on active national insurance numbers will be published as part of, or alongside, the ONS’s publication. It is up to that independent statistics authority to decide when it is ready to make public the information.

I have been asking HMRC for the figures since January. The British people have a right to know such facts, particularly in the context of the UK’s EU referendum debate. Will we know before 23 June how many foreign nationals from other EU countries have national insurance numbers?

It does take some time for HMRC to combine and match multiple datasets and hundreds of millions of lines of its own and the Department for Work and Pensions’ data. The intention is to publish the information alongside the ONS analysis. I note that according to its website the ONS plans to publish in May a note on migration incorporating the latest available migration data, and helping to explain further why the two datasets show different trends.

What about the 3.3 million people—one in 10 of the existing workforce—who pay their national insurance and tax and whose jobs are linked to UK exports to the EU? Does the Minister agree that leave campaigners should not just cross their fingers and dismiss reality and that Members on both sides of the House have a duty to spell out the fact that leaving the EU would put real jobs at real risk?

The hon. Gentleman will be aware of the Treasury analysis published yesterday that shows the various models and the consequences were we to leave the EU, including a permanent reduction in our GDP compared with what it otherwise would be and significant damage to productivity growth. The hon. Gentleman is right to highlight that point.

Do the Government welcome the opportunity to bring forward actual data without the need to project forward 14 years using techniques that have proved to be inaccurate every six months?

As I said, HMRC has gone through the data and will provide them to the ONS. It is for the ONS to decide the timing, but I have drawn the House’s attention to what it has said.

Returning to the Treasury analysis, it compares one scenario with other scenarios, and all three possible scenarios for leaving the EU would leave this country poorer than we otherwise would be.

The impact of EU membership on jobs is obviously significant. Will the Minister pass on my congratulations to the officials who did the useful analysis that was published yesterday? A regional breakdown on page 65 of the document suggests that 100,000 jobs in the north-east are dependent on EU exports. I had thought that the figure would be 140,000, so will he ask the officials to look at it again with a view to revising it up?

I will certainly take that representation on board. Of course, the north-east of England has the very large Nissan plant, which provides a significant number of jobs. The argument in the Treasury analysis is that we benefit from an open economy. If we leave the single market, we become a less open economy, which will have a cost to the British people in their living standards.

The disgracefully dodgy document published by the Treasury yesterday is, frankly, worthy of the children’s programme “Jackanory”. The immigration figures suggest that there will be 3 million more immigrants in this country by 2030, placing my hon. Friend in clear breach of the Conservative manifesto commitment to reduce immigration to tens of thousands a year. What is his response to that accusation?

The numbers are based on the ONS projection that was used at the last Budget. No account is taken of the achievements of the renegotiation secured by the Prime Minister. On the Treasury analysis, a large number of independent economic commentators have argued that it is broadly in the right direction. My hon. Friends who advocate that we should leave the EU should come forward with their own analysis, setting out exactly what model they would follow and what the economic consequences would be.

First-time Homebuyers

We are both building more houses and helping young families afford those homes. Some 400,000 new homes are being built over the years of this Parliament, half of them starter homes for first-time buyers. In the Budget I also launched the new lifetime ISA, so that young people no longer have to choose between saving for a home and saving for their retirement—we are going to help them do both. All this from a Conservative Government who support people’s aspirations to buy their own home and, in time, pass that on to their children.

Following the promise of an extra £19 million from the Treasury to help make Bicester garden town a reality, will the Chancellor update the House on the other means he is using to encourage house building, particularly for first-time buyers?

I am delighted that we can support the community that my hon. Friend so ably represents in Parliament, and provide money for the upgrade of the M40 junction and a new secondary school to go with the new homes being built in Bicester. Of course that comes as part of a suite: we are investing in new starter homes and in shared equity products for people; our help to buy ISA has been used by hundreds of thousands of people; and the new lifetime ISA will also help young people. Those are all things we are doing to make sure this a home-owning democracy.

But there is a problem, because the Office for Budget Responsibility says that lifetime ISAs will increase house prices, as they will increase demand and there is relatively restricted supply. Is the Chancellor confident that his measures to increase the supply of housing will mean that the OBR is able to revise that analysis—yes or no?

I agree that it is vital that we not only help people afford homes, particularly young first-time buyers, but build more homes. That is the plan we set out in the spending review; a big priority of the capital budget was the additional billions we will be spending on building homes—much more than was spent under the last Labour Government.

As I say, we have the products to help first-time buyers in this country afford housing, but I make this observation on migration: you cannot have access to the single market without accepting the free movement of people. That is an absolutely clear principle, which has been made very starkly clear to this country by Germany and France, and is internationally accepted. If we want access to the single market, we have to accept the free movement of people.

Will the Chancellor confirm that the number of under-35s who own their own home has fallen by a fifth since he came to office?

Under this Government the number of first-time buyers is up by 57%, whereas under the last Labour Government in the last Parliament it fell by 50%.

Perhaps the Chancellor will be hearing for the first time that the number of under-35s heading homes they own has fallen by more than 280,000 since 2010. Indeed, the number of affordable homes available to buy has halved since then. Private rental prices rose by 2.6% in the year to February, with incomes failing to keep pace. In September, the Government spoke of a “national crusade” to get 1 million homes built by 2020, but in November that figure was more than halved. Shelter says the Government’s starter homes scheme takes away homes that people on typical wages could afford. Is it not true that home ownership is in freefall because of the housing crisis, with young people who are aspiring to own being the hardest hit?

I have already said that the number of first-time buyers is actually up by 57% under this Government, and I would make this observation: we cannot have a strong and successful housing market, and people getting on the housing ladder, unless we have a strong and successful economy. If we followed the prescription of the Labour Front-Bench team, of nationalising half the economy and imposing punitive tax rates, there would not be anyone able to afford any home in this country.

23. Is it not the case that this Government’s lifetime ISA could help to produce, at maximum rates, a home deposit of up to £50,000, and, even at lower rates of savings, a deposit enough for a terraced home in Norwich costing £120,000? (904559)

The lifetime ISA will be a very popular and successful new saving product precisely because it does not require people to choose between saving for a home or saving for their retirement; they can do both. We are also now looking at ways for people to draw on their savings during their lifetime for particular emergencies, or for when they need bits of money, like they do in the United States with the 401(k) scheme. The lifetime ISA will be a radically new savings product, and it will do what we need to do in this country, which is build a savings culture.

Productivity

3. What assessment he has made of recent trends in the level of productivity; and what steps he is taking to increase productivity. (904539)

Productivity performance in the UK has been weak since the financial crisis, as it has been in all developed countries. The Government published their productivity plan “Fixing the foundations” last year. At the Budget, we announced additional reductions in corporation tax and business rates to incentivise investment, and gave the green light to infrastructure projects such as Crossrail 2 and High Speed 3.

The Scottish National party has continually argued that the UK economy is in dire need of investment to stimulate productivity. Despite the productivity plan, the Chancellor seems determined to persevere with policies that stifle productivity. What policies have the UK Government enacted that will encourage an increase in productivity?

The hon. Lady is right in saying that there is an issue in relation to productivity in this country, but there is an issue across all major developed economies. Over the past year, productivity growth in this country was about 1%, which compares with 0.9% across the G7. On specific measures, we have established the National Infrastructure Commission, protected science funding at the Budget and spending review, introduced the Housing and Planning Bill, announced the apprenticeship levy, which is coming in, and announced a £100 billion infrastructure programme over the course of this Parliament.

Does the Chief Secretary to the Treasury agree that, by being a member of the European Union, this country benefits hugely from a cross-fertilisation of good ideas across the European Union, the supply chain, and foreign direct investment at 50%? Our trade, too, also benefits from our being in the single market—[Interruption.]

Order. No! The hon. Gentleman is very, very wide of the question. I have great respect for him. He has put his thoughts on the record, but they have absolutely nothing to do with the question on the Order Paper, to which the Chief Secretary will not therefore reply.

May I press the Minister? He cannot just hide behind what he claims to be happening in all advanced economies. We are performing worse than most, particularly France. Is the reason for that not to do with the lack of skills of our workers and the lack of good education in our country? Will the Chancellor’s silly policy on forced academisation help or hinder?

We recognise that there is an issue with productivity, which is why we published the productivity plan, but in terms of growth, the UK was the fastest-growing major economy in 2014. Last year, we were in second place; this year we are also projected to be in second place, growing at a healthy rate. Therefore, with regard to growth, this country is doing very well indeed.

Does the Chief Secretary to the Treasury agree that £540 billion invested by foreign businesses in the UK over the past decade is vital to our future productivity, and that, if we left the EU, the uncertainty of our trading relationship with Europe and the world would put that investment in jeopardy?

I agree with my hon. Friend. Leaving the EU would damage UK productivity. It has the potential to deny access, or to make access more difficult, to markets and investment. It is worth noting that the UK, with 28%, is the No.1 EU destination for foreign direct investment, and a large part of that is to do with our status as an EU member.

It was five years in office before we saw a productivity plan, and what happened last year? Productivity in the UK was 18 percentage points below the average for the rest of the G7. One sector that needs help is the UK steel industry. It needs more capital investment to be more competitive. How much money will the Government invest in steel in the next 12 months to improve productivity and save British jobs?

The hon. Gentleman mentions the figure of 18 percentage points, and I refer him to an earlier answer in which I said productivity has been a long-standing issue in the UK. In fact, the figure was 17 percentage points back in the 1990s. As he well knows, the action we have taken on steel includes securing state aid to compensate for energy costs, securing flexibility over EU emissions regulations, ensuring that the procurement rules can also allow social and economic factors to be taken into account, and continuing to tackle unfair trading practices. The Government have been very active on steel, and that has not ended today.

Tax Havens

5. What his policy is on requiring multinational companies to disclose to the public the profits they hold in tax havens (a) in British overseas territories and Crown dependencies and (b) elsewhere. (904541)

12. What his policy is on requiring multinational companies to disclose to the public the profits they hold in tax havens (a) in British overseas territories and Crown dependencies and (b) elsewhere. (904548)

The Government are leading the world in the fight against tax evasion and it was Britain that first demanded that multinationals publish, country by country, where they pay tax. Thanks to our leadership, that is now being taken up at a European level. Multinationals selling into Europe will be required to report the tax they pay, including in ultra-low tax locations. Britain has also got its leading allies to agree to share information on the beneficial ownership of companies. We are now seeking international leadership on a blacklist of tax havens, with punitive action against the jurisdictions on that blacklist. We want the rest of the world to follow our example; where we lead, others should follow.

I thank the Chancellor for that answer, but Conservative MEPs have voted six times on instruction from the Treasury to block EU-wide measures against tax avoidance. What action will the Chancellor take to get all Crown dependencies to establish a public register of beneficial ownership?

At a European level, we are now getting agreement to ensure that multinationals should disclose where they pay tax around the world, including in ultra-low tax jurisdictions. We have just agreed with our leading European allies, France, Germany, Italy and Spain, that we will exchange information on beneficial ownership. In terms of public registries, we are literally one of the very few countries in the world—one of only two or three countries in the entire world—to have committed to a public register, but we want all jurisdictions, not just our overseas territories but all the other advanced economies of the world, to follow our lead.

Last month, I tabled a series of written questions about the tax gap resulting from individuals and businesses using overseas territories and Crown dependencies. All seven questions were grouped into one answer from the Financial Secretary, which basically said, “We have no idea.” Now that the Government have been shamed by the Panama papers into hasty action, will they finally rectify the extraordinary situation whereby the Government have no idea how much is lost to the Treasury in this way each year? Would a public register of beneficial ownership not help in this regard?

We have published more detail on the tax gap than the previous Government and we have shown that it is at one of its lowest levels in our history. This Government have collected £26 billion more than was being collected by a Labour Government in extra compliance.

Tax havens are merely a symptom of a much wider problem, which is that too often the wrong values are at the heart of our financial system. There is too much greed. There is insufficient reciprocity. There is still too great a disconnection between the real economy and the needs of our society. Eight years on from the financial crisis, what is the Chancellor’s genuine assessment of how much has changed for the better?

That is a perfectly reasonable question, and it was well put. A huge amount has changed. There is much tougher regulation of the financial system, and we have better regulators. Banks are more on the case of bad action in their areas, but it is true that more needs to be done to create a proper culture in the banking system in which they treat customers fairly and seek to do the right thing. That is happening, and the banks that do it will get rewards from customers in the marketplace. Like other professions, the industry is seeking to improve its standards of conduct.

The Chancellor will be aware that the reporting requirements for private companies are a lot less stringent than those for publicly listed companies. Although the register of beneficial ownership is an improvement, we need to know not just who owns a particular company but how much tax they are avoiding. If a company gets away with not publishing income, turnover or profit, that will not do. May I ask him what steps he will take with our overseas territories to ensure that this is rectified?

Of course, all companies have to pay their correct taxes, and we have taken action to ensure that. Country-by-country reporting is designed precisely so that people can see in particular where multinational businesses pay tax.

The recent information-sharing agreement that the Chancellor has just referred to could turn out to be a very significant step in the fight against tax evasion, and I support it. The public are right to be upset when businesses or individuals do not pay their fair share of tax. Evasion needs to be rigorously pursued, but does the Chancellor agree that when that is caused by tax avoidance, it is the job of Government to simplify the tax code and close the loopholes exploited by the avoiders?

I broadly agree with my right hon. Friend. I welcome the welcome that he gives to the agreement that we have with four other European countries on the exchange of information on beneficial ownership. We hope that will set an example that not just the rest of Europe, but the rest of the world will follow.

On tax avoidance, of course it is the responsibility of the House of Commons and the Government to try to make sure that the tax code and tax law are simple and do what is intended, but we are in a constant race, as has always been the case, against highly paid accountancy firms and the like, who design very contrived systems to avoid tax and avoid the intention of Parliament. There has been a significant development in our jurisprudence whereby the Supreme Court now takes into account the intention of Parliament, as well as the letter of the law. I think that is right, because as I say, there is sometimes a bit of an arms race in relation to the tax code, and the wishes of Parliament should be taken into account by our courts.

I congratulate my right hon. Friend on the agreement that he has just reached. Is it not the case that HMRC employs 26,000 investigators who work to stop tax evasion and avoidance, and that they have brought in more than £2 billion over the past six years from offshore tax avoidance? Does he agree that we should congratulate HMRC on doing the good job that its investigators are doing, and thank them for their work, and that anyone who criticises HMRC in that respect is just plain wrong?

My hon. Friend is right to highlight the good work that HMRC does. It has never been popular to be a tax collector in any country at any point in history. HMRC is doing a good job in that respect. We are putting more resources in so that it can target particularly wealthy individuals who are evading tax. We now have 26,000 people employed by the Government to ensure that people comply with our tax laws.

I congratulate the Chancellor on the work that he has done to close loopholes—more than any previous Chancellor—but does he recognise that a low-tax economy will attract wealthy people from all over the world to invest in our economy, create jobs and pay more tax, so the Exchequer draws more tax in the end?

I entirely agree. We as Conservatives believe that there should be low taxes, but taxes that are paid. That is the right approach. That is why we have reduced corporation tax, and why we are reducing income tax by raising the tax-free personal allowance. When we cut the top rate of tax, we collected more income for the Exchequer.

With the tax gap now at its lowest level on record, does the Chancellor agree that this Government have done much more to ensure that the taxes that are owed are paid than the Labour Government ever achieved?

My hon. Friend, who is an excellent Member of Parliament in the west of England, is right. We get lots of suggestions from the Labour party about what we should do about tax. Labour was in office for 13 years and had Treasury Ministers answering questions for 13 years. Not a single one of these things happened when they were in charge, and no one believes that if Labour were ever back in charge, it would be tough and take action.

Shall we bring the discussion back to today? In the Panama revelations about the behaviour of offshore companies, the Chancellor could not fail to notice the key role played in many of those deals by UK-headquartered banks and UK-based intermediaries. For example, HSBC and its affiliates created more offshore companies through Mossack Fonseca than any other bank. In view of the significant role played by UK banks, will the Chancellor support the new clause tabled by Labour to today’s Bank of England and Financial Services Bill, requiring British financial institutions to record the true owners of any companies or trusts that they work for? Will he also, like me, welcome the proposal from my right hon. Friend the Member for Birkenhead (Frank Field) for a register of the beneficial owners of property in the UK to tackle money laundering, often linked to tax evasion?

First, we are introducing a register of the beneficial ownership of companies and trusts that need to pay tax, and of course banks must therefore comply with it. Secondly, we are introducing—this will be in the Queen’s Speech—a new criminal offence of facilitating tax evasion, which will apply to the corporate sector in Britain as well. That is in addition to the criminal offence we have introduced that says ignorance is no defence when someone comes before the courts if it is found that they have been evading taxes.

Tax havens lead to a loss of revenue here as individuals can hide through opaque structures and businesses simply do not pay UK tax in respect of where economic activity takes place. Given the revelations from Mossack Fonseca, has the Treasury carried out a new assessment to calculate the scale and size of the revenue lost to the UK?

There are already a large number of ongoing investigations in respect of Panama, which we hope will lead to prosecutions, and the Government already had data on Mossack Fonseca. If there is additional information available in the Panama papers—despite our requests, the media organisations have not yet handed all that information over to us—we will act on it.

Can I ask the Chancellor to be more assertive and to go much further? Mossack Fonseca is the fourth biggest such firm in Panama, and I presume that there are dozens, scores or hundreds of smaller ones, and there will be many, many more in other countries. The scale and scope of this are likely to be astronomical. He and the Government need to go much further. We need to have a much clearer understanding of the scale of this. I ask him to make all the representations he can to the Panamanian authorities and other jurisdictions where similar activities are taking place.

To be frank, representations are not going to be enough with some of these jurisdictions. That is why we want international agreement to a blacklist that jurisdictions will go on if they do not comply with the norms that we are establishing on transparency, exchange of information and the like. Once they are on the blacklist, they are subject to penalties and punitive action—sanctions, if you like—so that it is clear that they cannot carry on doing business in the way they have been. If the whole world comes around on that—there was welcome support for this British-promoted concept at the G20 last week in Washington—so that we get that blacklist and that punitive action, I think that we will help to solve this problem.

Corporation Tax

6. What assessment he has made of which groups within the UK population will benefit from planned changes to corporation tax. (904542)

13. What assessment he has made of which groups within the UK population will benefit from planned changes to corporation tax. (904549)

Corporation tax cuts have been a central part of the Government’s economic strategy, and that strategy is working; there are 2.3 million more people in employment since 2010. The further cuts in the main rate announced at the Budget, which will bring it down to 17% by 2020, will benefit over 1 million companies, large and small. Lower corporation tax rates will support UK companies to invest and grow, creating jobs as they do so.

One of the justifications for the corporation tax cut was that businesses would pass it on to workers through the increase in the living wage. Evidence is now emerging that some companies intend to pocket the tax cut and squeeze conditions for their employees, so what steps do the Government intend to take to monitor that?

The cuts in corporation tax will result in greater investment in this country, and greater investment drives productivity growth, and productivity growth is what will drive higher living standards. Let us remember that it is this Government who have brought in the national living wage, and we have seen very large numbers of people see increases in their wages and salaries.

Owing to changes in personal independence payments, people with disabilities are set to lose £1 billion at the same time as corporation tax is being cut, so can the Minister honestly say that he is comfortable with prioritising big business over disabled people?

We are providing more support to help the disabled get into employment, but let me just make this point to the hon. Gentleman, and to the House: the way this country is going to be prosperous and able to afford good public services and support for the most vulnerable is by having a strong, growing economy, and competitive business taxes help us to have that strong, growing economy.

Is my hon. Friend aware that the Federation of Small Businesses has said that the decision to further lower corporation tax to 17% is an important statement of intent and will provide a boost for the affected firms? Does he agree that that will help to further underpin the enterprising economy that we need?

I completely agree, and my hon. Friend is absolutely right to highlight the comments of the FSB. The reductions in corporation tax will help small businesses and large businesses, and they will help to drive a competitive and dynamic economy.

Does my hon. Friend agree that it is easy to trot out phrases such as “tax cuts for companies”, but it is vital that we have low corporation tax to attract investment into this country and to ensure that we have jobs here? The Chancellor has repeatedly encouraged companies to pass on tax cuts to workers, which is where they should go.

My hon. Friend is absolutely right to highlight that. All taxes are ultimately paid by people, but business taxes that discourage investment discourage the economic growth we need in this country, and that growth is what this Government are determined to deliver.

General Anti-tax Avoidance Principle

A general anti-avoidance rule was considered by an independent study group led by Graham Aaronson QC in 2011. The group recommended an anti-abuse rule for the UK because it felt strongly that it would strengthen and complement existing tools available to HMRC. The Government accepted the recommendation and introduced a general anti-abuse rule in 2013, striking the right balance between protection against avoidance and certainty for taxpayers.

One way to put an end to aggressive tax avoidance is a general principle—a principle, not a rule. I am sure the Minister understands there is a difference: people can find a way around a rule, but it is not easy to do that with a principle. Will the Government therefore back their public statements about tackling aggressive tax avoidance and legislate for a general principle of tax avoidance?

I remind the hon. Gentleman that the last Labour Government looked at this issue and declined either a general anti-abuse rule or a general anti-abuse principle because of fears of uncertainty. We believe we have got the balance right. However, alongside the introduction of the anti-abuse rule, we have brought in measures to deal with accelerated payments and promoters, we closed 40 tax loopholes in the last Parliament and we have announced 25 closures in this Parliament already. It is worth pointing out that avoidance is coming down.

Support for the Economy (South-west)

9. What assessment he has made of the effectiveness of measures to support the economy in the south-west announced in the Budget 2016. (904545)

We announced at the Budget an extensive package for the south-west covering both rail and road: a new marine hub enterprise zone in Cornwall, a £4.5 million boost for ultra-fast broadband across the region and, to top it off, a £900 million devolution deal with the west of England. The south-west will also benefit from the income tax cuts and business rate reductions announced in the Budget.

One item that went largely unnoticed in the Budget was the £19 million for community land trusts in the south-west to mitigate the impact of second home ownership. How will that money be allocated? Will my right hon. Friend work with me and fellow Conservative MPs in the south-west to ensure that that money is put aside to help people to purchase plots and to help working people to get on?

My hon. Friend is right that we will be releasing £19 million for community-led housing in the south-west. I look forward to discussing with him how we might best approach that issue. We are also introducing a new right to build and reforms to planning, which will boost the custom-build sector in Cornwall and beyond.

Does my right hon. Friend agree that the Labour Government underfunded infrastructure projects in the south-west, resulting in lower productivity in the region and hence less of a contribution to the national economy than we should have had, but that it is this Government who are turning that around with their huge £7.6 billion commitment to infrastructure and connectivity?

Just as long as the Chief Secretary focuses on what this Government are doing. He does not need to burble on about the past.

I welcome the opportunity to say something about what this Government are doing on infrastructure in the south-west. We have 35 projects in the infrastructure pipeline in the south-west with a value of £23.2 billion. At the Budget alone, we announced improvements to Exeter St David’s station, at Weston-super-Mare and at Cheltenham Spa station. I have already mentioned community housing. There is also a fund to provide more and better roads in the south-west.

Solar Power

We are continuing our support for solar, keeping the small-scale feed-in tariff scheme open beyond January 2016, setting tariffs on a path to help transition the industry to a sustainable, subsidy-free future.

I thank the Exchequer Secretary for that very short answer. Given that the EU’s VAT reform action plan will give Governments discretion in applying rates of VAT, including on solar power, will he confirm categorically to solar installers in my constituency that the UK has officially and permanently dropped the proposal to hike solar VAT to 20%?

The reduced rate of VAT remains in place on all 11 of the categories of energy saving materials. Following the decision by the European Court, we have consulted interested parties on the issue and, given the complexities involved, we are still considering the responses.

Does my hon. Friend agree that about 90% or more of the solar-powered energy available in Britain has been put in place under this Government? Does he also agree that, in order for intermittent renewable power to provide a steady baseload, the investment with which the Government are supporting battery technology is absolutely key?

My hon. and learned Friend is, of course, right on multiple counts. Solar has been a great British success story: more than 99% of the installed solar PV capacity has happened since May 2010. He is also correct to say that the development of battery technology here and elsewhere is incredibly important for the future.

I am sure that the Exchequer Secretary will welcome the report published today by the Environmental Audit Committee, which finds that membership of the European Union has been overwhelmingly positive for the UK’s environment. Our Committee is also conducting an inquiry into the Treasury’s approach to sustainability and the environment. Will he encourage his colleague the Chancellor to come before the Committee to discuss the Treasury’s approach to solar power, offshore wind, waste and recycling policy?

I look forward to reading the hon. Lady’s report. The Treasury takes a balanced approach to making sure that we stay on target to meet our commitments. We are on target to meet our commitment of 15% of renewable energy by 2020, but we must do so in a cost-effective way, recognising that the subsidies to early stage technologies can only be paid for by taxpayers.

Will the Exchequer Secretary join me in congratulating the UK solar power industry on being one of the top 10 in the world? It is larger than that in Australia and slightly smaller than that in Spain, despite having a rather less advantageous climate.

Indeed. Were it only the case that the sun would always shine. Under Labour, we had the highest dependency on fossil fuels in the G8 and the lowest contribution from renewable energy of any major EU country. As I said earlier, the deployment of solar power has been a great success story since 2010.

One of the big things this Government could do to help solar and, indeed, all renewables is to remove the double charge on storage, whereby storage is charged when it takes on the power and charged again when it gets rid of the power and puts it back in the grid. Will the Treasury consider changing its approach and helping storage? It could do so with a stroke of a pen and it would make a huge difference. I urge the Treasury to stroke that pen and make sure that that change happens.

The tariffs are designed to make sure that there is a reasonable and appropriate return to investors. They have to be adjusted periodically when costs come down. Of course, one of the great parts of the success story of solar is the fact that costs have come down by about two thirds since 2010.

According to the Solar Trade Association:

“Government will be spending just 1% of new expenditure under the Levy Control Framework supporting solar power…yet mainstream analysts expect solar power to dominate future energy supply.”

With that in mind, will the Chancellor promise to do much more to ensure that Britain becomes a market leader in the industry, or are we going to let China take the lead yet again?

Britain does have a leadership position in the industry, but we need a balance. We need a portfolio of energy sources and to recognise the importance of baseload power. That is why the development of new nuclear is also so important.

UK-Iran Financial Transactions

11. What steps he is taking to facilitate transactions between UK and Iranian financial institutions. (904547)

The Government fully support expanding the UK’s trade relationship with Iran. The Treasury is actively liaising with UK banks and industry bodies, to understand concerns and help re-establish financial channels between the UK and Iran.

Despite the improving diplomatic relations between the British and Iranian Governments, UK businesses still face significant barriers to completing legitimate banking transactions for trade purposes. Will the Minister look at what more can be done to help to facilitate financial transactions between UK and Iranian banks, so that the UK economy can begin to benefit from this new market?

I thank my hon. Friend for her question. She is right that the situation with the payment channels between the UK and Iran is quite challenging, particularly because the US still has its primary sanctions in place. We have been speaking to banks at the highest levels. We have also been liaising with the US authorities to push for further clarity for UK banks. It is worth pointing out that some banks have a more extensive US business than others do, and that therefore it might be worth companies in my hon. Friend’s constituency and elsewhere considering switching to banks that have less exposure in the US.

Given the opportunities for British businesses in Iran as a result of the relaxation of sanctions, could the Treasury have a word with our friends the Americans to make sure that they do not seek to use their banking regulations to prevent some of the commercial deals that may flow to British companies as a result of that relaxation of sanctions?

My right hon. Friend is right to highlight one of the key issues. I assure him that we are working at all levels in discussions with the US authorities to ensure that British companies selling to Iran are able to put that money into UK bank accounts.

Manufacturing Exports

It is Export Week, and I can announce that UK Export Finance has provided more than £15 billion of support to exporters since 2010 and UK Trade & Investment has more than doubled the number of businesses that it helps to more than 54,000.

UK industrial production and manufacturing output suffered sharp falls in February, and they remain well below 2008 levels. Meanwhile, the Office for National Statistics reported that house prices in London have reached an average of £524,000, which is 49% higher than their pre-recession peak and out of the reach of all but those who are on six-figure salaries or who have benefited from a trust fund inheritance. When will my constituents see the Britain held aloft by the march of the makers, and the economy rebalanced towards the north of England, as the Chancellor promised?

I encourage the hon. Lady to seek an Adjournment debate to elaborate further on her question. I am sure that she and her constituents will welcome the fact that employment in the north-west is at the highest level on record; that more than 89,000 businesses in the north-west will not pay business rates; and that 360,000 people in the north-west will now benefit from the living wage.

British exports to China have more than doubled since 2010, led by Havant-based manufacturers such as Colt and Lewmar. Will the Minister join me in congratulating those businesses, and will she encourage others to follow their lead by supporting and maintaining the Government’s pro-export policies?

It is wonderful to hear during Export Week about Colt and Lewmar, and their fantastic work exporting overseas. It is a key priority of the Government to continue to encourage more firms to export. In fact, we have ambitious aims to have another 100,000 businesses exporting over the life of this Parliament.

The current account deficit is at a post-war high of more than 5% of GDP, and 44% of our exports go to the European Union. It took Canada seven years to negotiate a free trade agreement with the European Union. Does the Minister agree that the last thing that exporters need, and the last thing that the one in 10 jobs that depend on our exports to the EU need, is the uncertainty that the referendum is bringing—and, indeed, that Brexit would bring—to them and to those jobs?

The last time I looked, I thought it was also Labour policy to have such a referendum, but I agree with the hon. Lady that it is very important that she and others get out the message about the value of exports and the importance for manufacturing of the UK’s membership of the single market. That is why I shall vote in the same way as her on 23 June.

Topical Questions

The innovative Claims Consortium Group in Taunton Deane has just received an Investors in People gold standard award, one of only 300 companies in the UK to have done so. It began in a back bedroom in Milverton just a few years ago, and it now employs 300 people. Does my right hon. Friend agree that not only is Taunton Deane an excellent place to do business, as this company demonstrates, but so is the whole of the wider south-west, thanks to the infrastructure and connectivity injections this Government are giving it?

Let me join my hon. Friend in congratulating the Claims Consortium Group on its award. I am glad that it has been recognised for its hard work. She is absolutely right that Taunton, and indeed the whole of the south-west, is a great place to do business. We are now investing huge sums in the roads and railways, broadband and housing. Of course, without her I do not think we would be having the A358 upgrade. There is a general lesson, which is that when the south-west votes blue, the voice of the south-west is heard in Parliament.

It is not just on tax that people are concerned about the behaviour of the super-rich and its impact on the economy. I hope that the Chancellor will join me in welcoming the action taken by shareholders at BP’s annual general meeting against the excessive pay awards recommended by the company’s remuneration committee. The chief executive’s pay in FTSE 100 companies has risen from 50 times the average employee’s in the 1990s to 150 times today. Will he support measures to tackle the remuneration racket? To many, an old boys’ network appears to operate to set each other’s pay. In particular, will he support the widening of shareholder representation and employee representation on remuneration committees?

It is absolutely right that companies and the shareholders who own those companies think about their pay policy, act responsibly and do not pay excessive amounts to chief executives who do not deserve them. It is this Government who introduced those shareholder votes—they did not exist under previous Labour Governments—and I am glad that shareholders are using the opportunity we have given them. I do not think, if this is what the hon. Gentleman is hinting at, that we should be putting trade unions on company boards, but I do agree that we should make sure that shareholders use all the tools available to them.

T5. Will the Chancellor update the House on any discussions he has had for a potential city deal for the Swansea Bay city region, and on what he can do to drive growth and create jobs in south-west Wales, particularly in my Gower constituency? (904531)

First, we are now in conversation with Swansea about what we can do for the city deal. We are of course acutely aware that we need to help the steelworkers in Port Talbot. We are working to achieve a sale of the site, but we are also helping those who have already been made redundant. We are also looking very closely at the tidal bay lagoon scheme and at whether we can make that fly as well.

T3. Analysis by the House of Commons Library, including that on the 2016 Budget, shows that, cumulatively, 86% of savings in the period between 2010 and 2020 will come from women’s pockets. What has the Chancellor got against women? (904529)

The analysis by the House of Commons Library is fundamentally flawed. First, it assumes that every pound of Government borrowing benefits people. It also does not highlight the fact that it is higher rate taxpaying women such as me, whose child benefit has been ended, who form the largest part of that group. Is the hon. Lady saying that her party wants to reinstate child benefit for higher rate taxpayers?

T6. Last year when I held a small business breakfast in Wimbledon, the level of business rates was the biggest issue, so my constituents are understandably delighted with the Chancellor’s permanent doubling of small business rate relief. Will my right hon. Friend say what else he is doing and what else the Government can do to support small businesses to ensure that they invest for growth and further jobs? (904532)

Small business is absolutely fundamental to the economy and to job creation. That is why we had such a big package in the Budget to help ease the burden of business rates and why we reduced corporation tax, which is paid by small companies that are in profit. We have also increased the annual investment allowance so that small businesses can invest in the future. To help them with the burden of the national living wage we have increased the employment allowance so that they can employ four people on the national living wage and pay no national insurance at all.

T4. The Panama papers unearthed an array of revelations, amid which was the exposure of the relationship between tax and land ownership. What steps are the Government taking to ensure transparency of land ownership across the UK? (904530)

This Government are bringing in a register so that we will know the beneficial ownership of people or structures holding property in this country. We have not had that before, and we are making progress on it.

T7. In the Budget, the Chancellor outlined measures on tax avoidance and evasion to bring in about £12 billion. How much more does he expect to bring in from the measures announced since, which we all welcome, to make every business in this land pay its fair share? (904533)

The Office for Budget Responsibility assesses and puts on the scorecard the estimated revenue that we will raise from tax avoidance, but it will be around an extra £1 billion a year just from the measures in the Budget. In last year’s Budget after the election, we had measures to raise £5 billion from clamping down on aggressive tax avoidance and evasion. The fight continues.

T8. Following reports in this morning’s Daily Mail that energy firms overcharged customers by £130 for their energy this winter, does the Chancellor agree that Treasury cuts to incentives for building new renewable energy sources were another one of his bad ideas? (904534)

As we covered earlier, the tariff system in place to encourage renewable energy has to deliver a balanced portfolio of energy, and it does so. Of course, we encourage energy firms always to pass price cuts that they benefit from on to their customers.

T9. All 31 local firms that have reached the final of my Havant small business awards will benefit from the Government’s corporation tax cut. Will the Chancellor join me in congratulating all the finalists and confirm that the Government will continue to support small businesses across the country? (904535)

I join my hon. Friend, who is such an excellent voice for Havant in this Parliament, in congratulating the small businesses in the Havant constituency. They are thriving, and we are helping them with major improvements to roads and infrastructure in the area.

T10. Ministers will have heard the concerns of small business organisations about the change to quarterly tax returns. What are they doing now that that change is in place to monitor its operation and ensure that it does not become unnecessarily burdensome to small businesses? (904536)

Let me be absolutely clear with the House that we are not talking about quarterly tax returns. This is not about having to do a full tax return but about reporting; indeed, the purpose of the changes is ultimately to reduce the burden on businesses. It will start to be introduced in 2018. I hope that we will set out further information about the plans in the coming weeks. The intention is to ensure that we reduce the tax gap and, ultimately, help businesses to comply with the tax system.

I thank the Chancellor and the Economic Secretary for their good humour in their dealings with me over the past few days. This afternoon I will be moving new clause 9 to the Bank of England and Financial Services Bill. Are the Government now minded to accept new clause 9?

It is quite right that we take action against money laundering. That cannot only be done in this country—it needs to be done internationally. We should focus our effort, our resources and the force of the law where the risks are greatest. Like other Members of Parliament, I have been concerned that banks are at risk of going too far and being disproportionate when applying their rules to politically exposed persons in Britain, and their families in particular. I have written to the chief executives of the individual banks. My hon. Friend has worked with us on this issue and has tabled his new clause. We are happy to accept it because we are all trying to achieve the same goal.

The Public Accounts Committee report issued last week highlighted the £16 billion of the tax gap that is tax fraud. The money brought into the Treasury for that has stayed pretty static, at 3% of total tax liability. Does the Chancellor think that there is more to be done, and does the fact that the number of the wealthiest individuals being investigated will increase from 35 to 100 by 2020 not demonstrate that he has missed an opportunity?

We are taking strong action on tax evasion and significantly increasing the number of criminal investigations—I understand that around 90 investigations into offshore tax evasion are currently ongoing. We announced in the Budget last summer an additional £800 million for Her Majesty’s Revenue and Customs to support its activities, and through the common reporting standard—and ultimately through registers of beneficial interest—we are now getting access to much more information so that we can take on offshore tax evaders.

Order. Quite a lot of people whom I would have called have toddled out of the Chamber. There seems to be a bit of a lack of stamina—very unfortunate—although not from Lucy Frazer.

I welcome the fairer funding consultation that has just closed. When taking into account figures for growth in pupil numbers, will the Minister consider the actual numbers for the new school year, rather than the previous one, to ensure that we have a truly fairer funding formula?

The national funding formula will address historical unfairness. As now, school budgets will be set on the basis of the pupil census in the October prior to the start of the funding year, giving schools the certainty they need. The Department’s consultation also proposes to include a new factor to recognise in-year growth, targeting funding to schools with significant increases in pupil numbers.

Nobody has ever accused me of a lack of stamina, Mr Speaker. Am I right and accurate in my assessment that LIBOR funds can be used only for charitable purposes and will not go to a Department?

The question is, I hope, about Air Ambulance Northern Ireland, and I confirm that we are working with the charity and the Northern Ireland Executive on how those funds are delivered. They will go to the air ambulance charity, which I know will be broadly welcomed across all communities in Northern Ireland.

In his document published yesterday, the Chancellor posed the question:

“Is our national security best served by retreating from the world?”

I hope that he is not foolish enough to suggest that those of us who wish the United Kingdom to leave the European Union want to retreat from the world, because the truth is far from that. We want the United Kingdom to break free from the sclerotic shackles of the EU and its superstate, and embrace the exciting world out there that befits the world’s fifth largest economy, a nuclear power, and a permanent member of the United Nations Security Council.

Of course I respect my hon. Friend’s views. We are having a referendum, and his vote and my vote count equally. I would make the point that our membership of the European Union enhances our national security—that point was also raised by the Secretary-General of NATO last week. Not one of this country’s allies or friends abroad are recommending that we leave the EU.

The number of people sleeping rough on our streets has doubled since 2010 and increased by 30% in the past year alone, which is a shocking indictment of Government policy and society as a whole. Will the Chancellor step in and intervene in the shambles that is the Housing and Planning Bill, and ensure that support for homeless people such as hostels and specialist accommodation is protected?

In the Budget we provided more than £100 million extra to help with the problem of homelessness and the particular problem of rough sleeping. We have provided money for second-stage accommodation for people as they leave hostels, to ensure that they have secure accommodation to go to. I am always happy to listen to further representations or ideas from the hon. Gentleman or any other Member.

The Treasury cannot even get its forecast for growth and the deficit correct for next year. Does the Chancellor realise that instructing his officials to produce a speculative report based on thoroughly tendentious figures about what might or might not happen in the event of Brexit simply belittles the reputation of the Treasury for economic competence and forecasting? Instead of relying on fear, why does he not give us his vision, compared with our vision of a free people in a free Parliament, controlling our own borders and leading the world towards free trade?

Our positive vision is that by being part of a reformed EU we can raise living standards, create more jobs and make sure that consumers have access to lower prices. We have set out in the Treasury analysis a range of possibilities for the alternatives that might happen if Britain leaves the European Union. All of them would make Britain permanently poorer, but if my hon. Friend and the leave campaign want to produce their own plan and their own analysis, then be my guest.

Last week, the Financial Secretary confirmed to me that details obtained from Crown dependencies and overseas territories and shared with the UK would not be passed on to other tax jurisdictions. If that remains the case, there is a real chance that the UK would be complicit in tax evasion. Will the Chancellor urgently review the situation to ensure that tax is paid where it is due?

It is the case that the Crown dependencies and overseas territories are, at our prompting, ensuring that they have got registers of beneficial interests. It is also the case that the UK is co-operating, as my right hon. Friend the Chancellor has made clear, with other jurisdictions. I hope we move to a position whereby public registers are the norm, but even before we get to that point, clearly we will look at the opportunities for the information on the central registers to be shared among co-operative economies and jurisdictions.

I remember the good old days when the Chancellor regarded Treasury predictions as so discredited that he established the Office for Budget Responsibility instead. I cannot think what could have changed. The GDP projections in his dodgy dossier are predicated on breaking our manifesto commitment on immigration, while the cost implications of his new policy of mass migration for school places, housing, health and transport are not made explicit in the document. Why is that?

We are having a referendum, and people are going to take different views on the prospects of the United Kingdom as we go forward, but the public want facts and information. We have set out in the analysis produced by the Treasury what we think the likely impacts on the economy will be, and this analysis has now been supported by the London School of Economics. It gives out a similar message to that provided by the Bank of England on the economic shock that would come if we leave. Then there are bodies such as the International Monetary Fund and others saying a similar thing. The weight of evidence and the weight of opinion is clear: there would be an economic price if we left the EU. Some regard that as a price worth paying, which is a perfectly respectable argument, but it is not one that I agree with.

Libya

With permission, I shall update the House on the current situation in Libya and on what the Government are doing to support the new Libyan Government of national accord.

Yesterday, I visited Tripoli; it was the first time that a British Foreign Secretary had done so since 2011. The fact that the visit was able to take place is a positive sign of the progress made in recent weeks, including in the security situation in and around the capital. During my visit, I met Prime Minister Sarraj and members of the Presidency Council in the naval base that has been the headquarters of the Government of national accord since they relocated to Tripoli on 30 March. I welcomed their commitment to representing all the Libyan people and the progress they have made in establishing the GNA as a Government of the whole of Libya.

I underlined to Prime Minister Sarraj the UK’s support for the GNA as the only legitimate Government of Libya. They have the endorsement of the Libyan political dialogue and the majority of members of the House of Representatives. I believe the Libyan people want them to succeed. We look forward to the House of Representatives completing its formal vote of endorsement in line with its obligations under the Libyan political agreement.

I was encouraged to hear from Prime Minister Sarraj and his Ministers about the steps they are taking to assume control of Government Ministries in Tripoli. After five years of conflict following the overthrow of Gaddafi, the Libyan people are weary of fighting and eager for peace. They want a Government who will start to address the many challenges Libya faces. It is important that the international community works in partnership with the GNA as they continue to consolidate their position and take forward their work to meet the needs of Libyan citizens across the country.

In my meetings, I emphasised the need to keep up momentum on the political process and to deliver practical progress on the ground. I was encouraged to hear that a clear plan was being developed to address some of the immediate challenges: delivering security, tackling Daesh, restoring basic public services, countering people-trafficking, restarting oil production, and getting the economy back on track.

We agreed that delivering security was fundamental to improving the day-to-day lives of the Libyan people and creating an environment for economic reactivation. The security agenda must, of course, be owned and led by the GNA, but the UK, along with other European nations, stands ready to respond to requests from the Libyan Government for assistance in training the Libyan armed forces in order to improve their effectiveness in providing security and in the fight against Daesh. Prime Minister Sarraj and I agreed that we should continue to work closely to establish what those training and technical support requirements were, and what role, if any, the international community could play in helping to meet them.

A number of Members have speculated in recent days that the Government might be on the cusp of committing British troops to Libya in a combat, or combat support, role. I am pleased to have the opportunity to clarify the situation. I am clear about the fact that there is no appetite in Libya for foreign combat troops on the ground. We do not anticipate any requests from the GNA for ground combat forces to take on Daesh or any other armed groups, and we have no plans to deploy troops in such a role. I will, of course, keep the House informed of any plans that we develop in the future in response to requests from the Libyan Government, but the type of mission that we currently envisage would be focused on providing training and technical support, away from any front-line operations.

The Libyan economy is suffering from the effects of years of conflict and the impact of low oil prices. It is clear that the Presidency Council is focused on the immediate need to alleviate the pressures on ordinary Libyans, including those arising from the current squeeze on liquidity in the banking system, the shortfall in power generation and the shortage of basic commodities, as well as the slightly longer-term challenge of ensuring the effective functioning of the key state financial institutions—the Central Bank of Libya, the National Oil Corporation and the Libyan Investment Authority—and the challenge of rebuilding oil production and export capacity. As I said to Prime Minister Sarraj, the UK stands ready to provide whatever technical assistance it can with those issues, in all of which British companies have relevant experience and expertise to share.

As for the migration threat, there is clearly an urgent need to tackle the challenges arising from irregular migration and the organised criminal and terrorist networks that facilitate so much of it. In my discussions, I highlighted our desire to work in close partnership with the GNA to make progress on that issue, including progress in tackling the people-smugglers and traffickers. As part of that initiative, we should look at creating a package of support that could include extending the EU’s naval Operation Sophia and building the capacity of the Libyan coastguard to support, and eventually take over, the operation, but clearly such a package would be implemented only at the invitation of the Libyan Government.

Yesterday I announced that Britain would allocate £10 million for technical support to the GNA in this financial year, to be delivered through the conflict, security and stability fund. The package will support the strengthening of political participation, economic development, and the delivery of capacity in security, justice and defence. We will work closely with the GNA to ensure that that support is channelled into the areas where it can have the greatest effect.

After years of conflict in Libya, the formation of the Government of national accord and their arrival in Tripoli have the potential to mark a real turning point in Libya’s fortunes. The challenges facing the GNA should not be underestimated, and delivering the security and economic development that will allow the Libyan people to realise their country’s huge potential will not be an easy task to fulfil, but the UK, together with many of our international partners, stands ready to assist. It is in all our interests that Prime Minister Sarraj and his Government are able to re-establish security, reactivate the economy, and defeat Daesh in Libya as quickly as possible. I commend this statement to the House.

I thank the Foreign Secretary for giving me advance sight of his statement. The situation in Libya over the past five years has been bloody and dangerous, and it is important to recall that it was Colonel Gaddafi’s brutal and violent response to the protests that erupted early in 2011 that triggered a civil war and United Nations Security Council resolution 1973, which authorised a no-fly zone and action to protect civilians. This House voted to support that action, but since Gaddafi’s fall, Libya has become a land of rival governments awash with rival militias. There is also the growing presence of Daesh and insecurity. Questions have been raised about the focus of this Government, and indeed of the international community, on what followed.

I join the Foreign Secretary in praising the enormous efforts of Libyan politicians, of the United Nations and of Special Representative Martin Kobler to reconcile the competing institutions and encourage them to form a single Government of national unity. I also join him in supporting UN resolution 2259, which has recognised the progress that has been made and called on member states to provide support to the new Government as requested .

We on this side of the House welcome the establishment of the Libyan Government of national accord led by Prime Minister Fayez Sarraj. As the Foreign Secretary said, they face a formidable task in ensuring security, restoring public services, building up the economy and tackling the threat from Daesh, but does he agree that their ability to do so will be determined by the extent to which they can gain support and consent right across Libya as they face the task of re-establishing governance in all parts of the country? Will he set out what assessment he has made of their capacity to do that, particularly in respect of the rival militias? Can he say anything more about the conversations he is having with our allies, including other EU Foreign Ministers, about what further steps could be taken to support stability and peace in Libya? Does he expect there to be a further UN Security Council resolution?

The United Kingdom Government indicated previously that they were not contemplating a British combat mission in Libya. Given the circumstances there, I think that that is the right approach to take, and I am grateful to the Foreign Secretary for confirming again today that the Government have no plans to deploy British troops in such a role. Can he therefore give us a categorical assurance that, were that view to change, any proposal to deploy forces in a combat role would come before this House for a vote?

The Foreign Secretary has, however, spoken about the possibility of providing training for the Libyan military. Did Prime Minister Sarraj ask for specific types of technical or training support during their recent discussions? Does the Foreign Secretary envisage that any such deployment, should it happen, would take place in Libya, or might it involve providing training in a neighbouring country? Will he give an undertaking that he will come to the House before any such deployment takes place and seek its approval as appropriate?

On economic development, we support all efforts by the international community to assist the new Government in improving the lives of their citizens and getting the economy moving again, including through oil production. On migration, is further support being requested by the new Prime Minister, or is that being considered through the EU naval operation in the Mediterranean, Operation Sophia, to enhance Libya’s ability to disrupt criminal human smuggling and people trafficking? The people of Libya have suffered a great deal in recent years, and this moment is enormously important for their future. It is the responsibility of the world community to do all that it can to help the new Government to succeed.

I thank the right hon. Gentleman for his response. Let me join in his praise of UN Special Representative Martin Kobler—it was remiss of me not to give that praise myself—who is an absolute dynamo. Since he was appointed, he has literally been shuttling between the parties, groups and power brokers in Libya. It is very much due to his energy and effort that we have got where we are today.

There is a Government of national unity, but we should be clear about Libya’s historical context: it is a country that has traditionally had a high degree of devolution in its governance structure, which is often held together by a strong man at the centre. We now need to find a new model, under which the Government of national accord will be a national umbrella organisation, but Prime Minister Sarraj has made it clear that that will work only if municipalities are empowered and prepared to take on a significant degree of devolution. A devolved model is the only model that will work.

I also need to make it clear that the Libyan Government are in a very early stage of operation. At the moment, the Prime Minister and his Ministers are sitting in a naval base, physically separated from the civil servants who could support them. Yesterday, they retook operational control of three Ministries, which is a good step forward, but it will only be as they are able to re-enter the Ministries and regain working contact with civil servants that they can start to do some of the detailed work. That situation underpins and shapes my answers to some of the right hon. Gentleman’s questions, because he is absolutely right that the GNA can succeed only with the support and consent of the various factions in Libya.

Let me say one other thing by way of scene-setting. When I went to Tripoli yesterday, I was expecting to find the Government incarcerated in a heavily fortified military base, defending against all comers, but that is not the situation. The base is relatively lightly defended, and it was clear that the Prime Minister’s ability to operate there is based on the consent and acquiescence of the militias operating in that part of the capital. He is acutely conscious of the need to build a bottom-up consensus around his activities.

The right hon. Gentleman asked me about the European Union. I returned from Tripoli to Luxembourg last night, where there was a discussion at 28, including Defence Minister colleagues, about future support to Libya, looking at the possibility of extending Operation Sophia in a counter-migration role. No decisions were taken, but the matter is clearly high on the European Union’s agenda. The key will be to develop a package that also addresses Libyan top priorities. The Libyans are focused on migration, but it is in all honesty not their top priority. We have to create an environment in which delivering on Europe’s top priorities also addresses those of the Libyan people.

The right hon. Gentleman asked about a UN Security Council resolution. I have not heard anyone suggest that there is an immediate need for a further resolution. The next moves at the UN will be the granting of some exemptions to the arms embargo, and possibly the unfreezing of some assets to allow the Government to function properly.

The House would of course be consulted were the UK Government to decide at any point that they wanted to insert ground forces, or any forces, in Libya in a combat role. We do not envisage that happening in the current circumstances.

The right hon. Gentleman referred to the situation in which a training deployment is contemplated, and asked me whether we would seek the House’s approval for a training deployment. I should be clear that it is a question not of approval, but of consulting the House and allowing it to express an opinion through a vote, and the history of the past three years shows that the Government will take great notice of that. However, that would not be the case in the event of a training deployment. We have training deployments around the world. In fact, my Ministry of Defence colleagues informed me just before I came to the House that we currently have 16 permanent training deployments. It is not appropriate for the House to be consulted on such a deployment as if it were a combat deployment.

Did the Libyan Prime Minister ask for training support? Not explicitly, but he did indicate that the Libyan Government may well ask the international community for some form of support as they develop their plans. I gained the personal impression that his instinct is very much at the lighter end of the scale. He clearly does not want to be seen to be dependent on foreign support and wants to do as much as possible internally, using Libyan capabilities. Of course, if there is any question of training, we would want to look at the options for training outside Libya, as well as the permissibility of training inside Libya.

I welcome the Foreign Secretary’s statement and last night’s European Council conclusions on Libya. The sanctioning of the Speaker of the House of Representatives is welcome, as he has been a particular obstacle to the formation of the GNA. Also welcome is the commitment that the EU—and, I therefore assume, the British—contribution will be coherent and co-ordinated with other international support under the overall co-ordination of the United Nations Support Mission in Libya. A coherent British contribution will be easier with the consent and understanding of this House. It might need to include, for example, airstrikes on Daesh targets in addition to the training mission to which he alludes.

I counsel the Foreign Secretary that he is dancing on pretty thin ice when it comes to differentiating between a training mission in a combat zone and other missions, and when he talks about not seeking to carry this House’s approval. I notice the language he has used in talking about being away from the frontline of operations. I wonder whether he can say anything more about that. I urge him to continue to try to carry this House with him.

I am grateful to my hon. Friend, who is right that any kind of international support will be more effective if it is properly co-ordinated. The work of the European Union, the Libya international assistance mission—LIAM—and the UNSMIL planning cell, which is already in operation, should be and will be co-ordinated.

Let me be clear that any proposal to carry out airstrikes in support of a counter-Daesh operation absolutely would trigger the convention that the Government consult the House and allow a vote, through which the House could express its view on the proposed intervention.

I understand my hon. Friend’s concern, which he has expressed several times both in the House and in various newspapers, that the lines between what is a combat mission and what is a training mission could be blurred in situations such as Libya’s, but we are clear that we can make that distinction. I draw his attention to Afghanistan, which is a kinetic theatre if ever there was one, yet our training mission has been successfully conducted there for the past 15 months with great effect. In Iraq, we carry out training activities in an active war zone. There is a big difference between training and advising troops and engaging in combat activities. The Government are extremely mindful of that distinction and of the obligations that they have entered into in respect of consulting the House.

I also praise the work of Martin Kobler and of the British ambassador to Libya, whom I met in Tunis and who has been making the best of a very difficult job. Libya has been an unmitigated disaster for this Government. We even had a sitting US President criticise a sitting UK Prime Minister. A UN official described the UK’s humanitarian efforts as

“paltry bone-throwing from a European country whose bombers reaped so much destruction”.

We do not have a good record on Libya.

Following the questions of the right hon. Member for Leeds Central (Hilary Benn) and the Chair of the Foreign Affairs Committee, who raised a good point as usual, will the Foreign Secretary tell us how much of the mission he envisages taking place on Libyan soil? As for what he calls a training mission, will any deployment of UK troops on Libyan soil be brought to this House for consideration? Given that he can only have meetings in the naval base, how does he envisage a training mission in Libya taking place at the moment? Finally, does he commend the US President’s candour in saying that Libya was his worst mistake, and what does he think has been the Prime Minister’s worst foreign policy mistake?

It is very easy to sit on the Opposition Benches hurling stones, but I am afraid that the world is not a neat and tidy place, and we have to deal with the situations that present themselves. The hon. Gentleman talks about the humanitarian work, but I remind him that, when we intervened in Libya in 2011, it was to prevent an imminent genocide in Benghazi and that that successful intervention saved countless thousands of lives. Libya is a rich country, and we should not forget that—$70-odd billion-worth of Libyan assets outside the country are currently frozen by a UN Security Council resolution. This is about getting the Government in place and then releasing those assets so that the Government can function. Libya is not a country that needs humanitarian assistance in the conventional sense. It needs technical support with good governance, and help to get into a position where we can release its assets to it to enable it to function.

The hon. Gentleman mentioned the British ambassador. I join him in paying tribute to the work of our ambassador, who is currently based in Tunis. He came with me yesterday to Tripoli and it is his fervent desire, as it is mine and Prime Minister Sarraj’s, to reopen the British embassy in Tripoli as soon as we are able to do so. Unfortunately, the location of our current buildings in Tripoli is in a rather less secure part of town, so I cannot promise that that will be imminent, but we will keep the matter under constant review and do it as soon as we can.

The hon. Gentleman asked whether any training mission to Libya would take place on Libyan soil, and I have to say to him, yet again, that there is no training mission, there is no putative training mission and there has been no request for a training mission. I speak as a former Defence Secretary when I say that, if there is a request for such a mission, the military will clearly want to ensure that it is undertaken with the minimum risk possible to UK personnel. Therefore, their first preference would be to do it here, their next preference would be to do it somewhere in the region and their third preference would be to do it in Libya, if it is safe to do so. I assure him that we will spare no effort in trying to ensure that any support we do give to the Libyans will be delivered in a way that represents the least possible risk to the British forces delivering it.

There can be no doubt that our intervention in Libya in 2011 has, as some in this House have suggested, been an unmitigated disaster resulting in many thousands of casualties, the establishment of Daesh and a vicious civil war. Looking forward, given that this country is at a tipping point of its involvement with Libya, given developments on the ground, what lessons can we learn?

My hon. Friend, as so often, asserts as fact that there “can be no doubt” on something that is deeply contentious, and I very much take issue with him. The situation in Libya is very difficult and the situation post-2011 was very messy, but countries in many parts of the world do not function as Britain or Switzerland do, and we have to deal with the real situation on the ground. We should look to the future. We should be positive about this potentially affluent country regaining stability and being able, once again, to function as an effective state, allowing the Libyan people to get on with their business. There is a weariness after five years and a growing sense that, if a properly devolved form of government can be established that co-opts the various militias and regional groupings, this can work.

What assessment has the Foreign Secretary made of the size of Daesh in Libya and its capability, and does he have any idea what its plan is? Is it going to sit tight or move outwards to try to expand into the rest of Libya?

Speaking from memory, I think that our current assessment—the last assessment I have seen—is that there are probably up to about 3,000 Daesh fighters in Libya, of whom a significant number would be foreign fighters. There is a generally accepted view that what Daesh is doing in Libya at the moment is very much a holding operation, seeking to hold an area of ground, possibly as a bolthole if it finds that its freedom of manoeuvre and freedom to operate is coming under intolerable pressure in Syria. There are many pointers to the fact that now is the time to move against Daesh in Libya, while its presence is still relatively thin on the ground and while its operation is very much in a holding phase.

One measure of success of the new Libyan Government will be the creation of a functioning economy and, as a step towards that, a functioning central bank. Can Britain play any role in helping them achieve that?

Yes, and yesterday I offered Prime Minister Sarraj technical support in relation to the central bank, the national oil company and the Libyan Investment Authority. It is a tribute to Libyan resilience and ingenuity that international partners recognise the figures who have continued to run those institutions throughout this period of chaos over the past few years as technically competent and well motivated—they have been doing a good job. Prime Minister Sarraj has now brought the competing appointees—the eastern and the western chairmen of each of those institutions—together to work together and to seek to forge consensus on how the institutions can go forward as truly national institutions on a collaborative basis.

I was interested in what the Foreign Secretary had to say about the current state of Daesh, and how it needs to be contained now and not allowed to spread further. Are we talking to other allies, such as Jordan, about working on training deployments and training up troops? If we do not contain Daesh now in north Africa, it will simply be an expanding problem.

Yes, we are talking to other partners, such as Jordan, about how we can provide support to the Libyan Government. Of course other actors are acting independently; Egypt has a recognised vital interest, because of its long land border with Libya, and some of the problems Egypt has been facing in the Western desert are directly attributable to penetration from Libya. The House will recall the continuing issue of General Haftar, the commander of the Libyan national army. He is an important figure who commands significant military forces in the east but is unacceptable as a command figure to many who are supporting the new Government. That is one of the big challenges Prime Minister Sarraj is facing.

I very much welcome the Foreign Secretary’s statement and, in particular, the reassurances it contains about the use of British troops exclusively in training and mentoring, if that becomes necessary. Does he recall the disaster that was the training of Libyans in the UK? Will he assure the House that those mistakes have been noted and lessons have been learnt, and that, if he does intend to train Libyans in the UK, as his statement suggested, we will not make those mistakes again?

Yes, and we are not the only ones who had a poor experience with seeking to train Libyans outside Libya—the Italians and Bulgarians had similar experiences. Prime Minister Sarraj referred to that yesterday and is acutely conscious of what was not a very glorious episode in Libyan history. The situation on the ground has changed, but clearly we would look for the most effective location for any training. It is probably the case that that would not be in the UK, for climatic reasons as much as for anything else; we need to train people in an environment as close as possible to the one in which they will be operating. As I have said, there has been no request and there is as yet no plan, so I am afraid I cannot impart to the House any more information.

May I welcome the progress that has been made but say that I am disappointed that more has not been offered to deal with the migration crisis? There has been an 80% increase in the number of crossings between Libya and Italy. This time last year, half a million people were waiting in Libya to get to Italy. As we know, the European Union is offering Turkey €3 billion to deal with the migration crisis and offering Libya nothing. What we need is permission to enter Libyan coastal waters in order to stop the people traffickers. Did the Foreign Secretary ask for that permission? When can we have that permission, so that we can deal robustly with people trafficking?

May I say to the right hon. Gentleman, whose question, I am sure, is well motivated, that he is approaching this in exactly the wrong way? We are not likely to get the buy-in we need if we, as a bunch of Europeans, go to Libya and say, “Here’s our priority agenda. What are you going to do about delivering it?” What we must do, and what I suggested to my European colleagues last night that we should do, is package the objectives that we want to achieve with the objectives that are priorities for the Libyans. That is the only way that Prime Minister Sarraj will be able to sell to the Libyan people a package that in any way questions Libya’s territorial sovereignty and that allows foreigners to operate in Libya’s waters. We must be acutely sensitive to the concerns in Libya about foreigners. I am in a rather strange position in that, on the one hand, I have one bunch of people in this House who are primarily concerned to ensure that we do not have any foreigners going into Libya, and, on the other, the right hon. Gentleman who is desperately keen to get some foreign naval forces into its territorial waters. The truth is that we must balance this very carefully and get a package that works for the Libyans as well as for the European agenda.

The Foreign Secretary and the shadow Foreign Secretary speak in grandiloquent terms of Prime Minister Sarraj, a Government of national accord and even a House of Representatives. Any member of the British public watching “News at Ten” last night would have seen our Foreign Secretary and the Prime Minister of national accord holed up in a naval base, unable to leave because they control none of the country. Apparently, they now control three ministerial buildings in a country the size of western Europe. Can we have a reality check, please? Can the Government at last realise that their bid to undermine authoritarian leaders such as Saddam Hussein, Gaddafi, who had a deal with the Italian Government to return migrants, and now Assad has just involved the region in death and destruction? Can we just learn the lessons, try and find a strongman, and do what the Chairman of the Home Affairs Committee wants—and what we all want—and find a way of creating some kind of safe haven for migrants to be returned to?

The Chinese have a saying that a journey of 1,000 miles starts with a single step. I urge my hon. Friend to view this process in that context. Self-evidently, I did manage to get out of the naval base in Tripoli yesterday and return to these shores.

My hon. Friend is being a little harsh on Prime Minister Sarraj and what he has achieved. There is a process going on whereby militias—who, only a couple of weeks ago, were threatening to shoot down any aircraft seeking to enter the airport in Tripoli bringing his Government back into the city—are now patrolling the streets outside that naval base and were present on the ground when I landed in Tripoli yesterday. They have recognised and given tentative consent to this Government process to go forward. Its success will depend on Prime Minister Sarraj making the right judgments and being patient enough to bring all the relevant parties with him as he develops a plan for his Government.

I thank the Foreign Secretary for an advance copy of his statement and congratulate him on his recent visit. Given the failure of the past two Labour Administrations to secure adequate compensation for victims of Libya-supplied Semtex in Scotland, England and Northern Ireland—at the same time America was able to get that compensation—will he now indicate that he will redeem this situation and place on the agenda of the Government of national accord and the Prime Minister that compensation will be a key issue that this Government will pursue with the new Administration?

I can confirm that it is already on the agenda. Prime Minister Sarraj is aware of our focus on this issue, but it is a question of timing. At the moment, the Government have not got access to the great majority of their ministries and civil servants. They do not have access to their assets, so it would be premature to make that the No.1 issue. However, this Government are focused on the need to raise and to resolve these issues at the right point in this progression, and Prime Minister Sarraj has already been notified that we will do so.

We have seen a very thoughtful exchange between the Foreign Secretary and his shadow. Although there are flickers of optimism, the atmosphere remains very sombre, not least because, as other Members have pointed out, we have responsibility to a large extent for what has happened in Libya over the past five years. I say to my right hon. Friend, who has dealt with this whole issue of technical and other expertise very skilfully, that the British public would be very reluctant if there were any sense that our expertise was going into helping one side rather than another in what could still be a very bloody civil war. Although I appreciate that these are difficult things and that there are often no good guys on either side, there must be an appreciation that that would be something that would cause angst to the public if we are to have a functioning Libya in the years ahead.

I am grateful to my right hon. Friend for that. If only it were so simple as there being two sides; there are about 120 sides as far as I can make out. He is absolutely right. Of course we must ensure that our support is targeted at the Government of national accord. We have to look for bright spots. One of the positive things that I take from the situation in Libya is that, by and large, the different factions are not motivated by ideology, particularly by extreme religious ideology, as they are in some of the other conflict zones. A lot of this is to do with traditional money and power interests. It is about people wanting to protect their local fiefdoms and making sure that they and their communities get their share of the wealth of the state. Prime Minister Sarraj is going about this in exactly the right way. He is going with the grain of Libyan society, recognising that reality and trying to build a consensus mechanism around it.

What guarantees can the Secretary of State offer that our key partners, particularly in Europe, have a coherent strategy on good governance and nation building as well as on the vital issues of migration and counter-terrorism? What reassurances did he get this week from the Government of national accord that they have a plan to broaden out what is essentially a UN-backed political deal, so it is not beholden, and therefore vulnerable, to the many rival regional factions?

The most effective step to broaden out the legitimacy of the Government will be the vote in the House of Representatives on the endorsement of the Government. The HOR is committed by the Libyan political agreement to do that, and we hope that it will happen very soon. On the question of our European partners, it is inevitably true that, for 26 of the other 27 EU states, excluding Ireland, migration is at the top of the agenda. It falls to me to urge them, as I urged the Chairman of the Home Affairs Committee, to accept that, if we want to make progress on the matter, we must try to set this in a context that makes sense not just to us, but to the Libyans.

I welcome the progress the Foreign Secretary has outlined and appreciate his point about the practical realities on the ground. With that in mind, the long-term prospects for Libya are clearly linked to its economic prospects, which are in turn largely linked to the prospects of its oil industry. What steps, at this early stage, are UK Trade & Investment and the British Government taking to ensure that UK industry can play its full part in bringing the Libyan oil industry back on to the global market?

My hon. Friend is absolutely right. Libya has Africa’s largest oil and gas reserves and a population of only 6 million, so, clearly, it is, in per capita terms, a potentially wealthy country. I am glad to report that British companies have traditionally played an important role in Libya’s oil and gas industry, and Prime Minister Sarraj specifically made the point yesterday that BP would be very welcome back in the country. I shall pass that on to BP’s management.

The Foreign Secretary has said that there is no appetite in Libya for foreign combat troops on the ground. Is there any appetite in the Libyan political system for foreign air forces or foreign naval forces operating in Libyan territorial waters?

On the latter point, we have already seen a clear wariness of any suggestion of foreign naval forces operating in Libyan territorial waters, even if the focus is counter-migration rather than counter-Daesh. I cannot rule out—it would be wrong to do so—any future requests for air or naval support for a counter-Daesh operation. I can envisage Prime Minister Sarraj, if his Government are successful, being able to muster enough ground forces to mount an attack on the Daesh stronghold around Sirte which, of course, is a coastal port. It is certainly the case that the Libyans will not be able to develop naval or air assets in any reasonable period of time to support such an operation, and it is quite possible that, from a military point of view, they would seek assistance from outside. Prime Minister Sarraj would have to balance that military imperative with the political issues that would arise if he were to request foreign assistance. There has been no such request and no discussion of such a request, but if it comes, we will consider it. If we think that the UK should participate in such action, we will come to the House and allow it to express an opinion through a vote.

Order. A further 21 hon. and right hon. Members are seeking to catch my eye, and I am naturally keen to accommodate all of them. Brevity will assist me in doing so.

I thank my right hon. Friend for his statement. I know that I might be a lone voice, but I urge him to guard against parliamentary approval for every military intervention we undertake, which is out of keeping with an enemy that moves fast and that we need to go up against. May I ask the Foreign Secretary about a distinct strategy specifically to target Daesh, separate from but complementary to the wider diplomatic peace strategy? One can reinforce the other, but if we wait for the perfect political settlement before we start, we will be waiting forever.

I will treat my hon. Friend’s warning on the use of war powers with the importance it deserves. As he will know, my right hon. Friend the Defence Secretary published a written statement yesterday setting out the Government’s position. We must maintain the operational flexibility we need while ensuring that the House of Commons has proper involvement in any proposed combat deployment.

I am sorry; what else did my hon. Friend ask me?

Before the formation of the Government of national accord, there was discussion among the international community about how we would deal with Daesh if there was no solution on the ground in Libya. We concluded that it would be pretty much impossible for us to do so. I am very pleased that we now have a Government formed in Libya that we can support to do that job.

The UK’s past intervention in Libya has been an unmitigated disaster. The mess we have left behind has caused enormous reputational damage to the United Kingdom and that cannot happen again. Given that we are offering training and technical support to armed forces away from the front line, will the Secretary of State tell me what armed forces we will be training and supporting, given that Libya has myriad competing militias and groups?

Another assertion. I can tell the hon. Gentleman that it was not the view of the people I met yesterday that the intervention in 2011 was an unmitigated disaster. It has rid the country of Gaddafi and averted a genocide. He talks in the present tense about training support, and I say yet again that we are delivering no training support in Libya at present. If any request from the Libyan Government for training support were made, it would be for militia groups that had signed up to the Government of national accord’s security plan and were being incorporated into the Libyan security forces that will be formed from them.

Like the right hon. Member for Birmingham, Edgbaston (Ms Stuart), I was struck by the Foreign Secretary’s correct comments that we need to continue to move against Daesh in Libya. What discussions have been held with Gulf state nations about helping that effort?

We do, of course, have continuing discussions with all Gulf states. It is a well-known fact that both Qatar and the UAE have in the past been active in Libya, but it is also fair to say that all Gulf states have been somewhat distracted by the war in Yemen and have not, perhaps, played as active a role recently as they did earlier in the conflict.

Given the turmoil in Libya in the five years and one month since the House of Commons authorised action, does the Secretary of State regret having the UK acquiesce to transferring a mission that was designed under the responsibility to protect to avoid a genocide to one focused on regime change?

This was a complicated situation on the ground and, having embarked on the mission to protect the population of Benghazi against genocide and having had to follow where that took us to protect the population from the retribution that the regime was seeking to vent on it, we did what we had to do. I think we should be proud of having rid Libya of the tyrant Gaddafi, who had effectively dismantled the structure of government in Libya. That is why Libya has had its problems of the past few years—there was no government structure in Libya.

Deploying British troops to Libya, even in a strictly non-combat role, would add significantly to the demands already placed on them. Can the Secretary of State provide any clarity about how many troops would be necessary and when we can expect to learn from the GNA whether British assistance is required?

I am afraid that I cannot, really. I can give a personal view: I would expect that we would be talking about a training mission of the sort of scale of those that we are carrying out in other countries around the world. I therefore would expect there to be between tens and hundreds of trainers, not thousands of trainers.

The Foreign Secretary says that we must tackle Daesh, but Prime Minister Sarraj only operates with the permission of the militia. Does not the Foreign Secretary think that in certain circumstances some of the militia are aligned with malevolent forces, particularly in other parts of the country, and is he not concerned that the militia are at the heart of the Government and of the future process of government? Where will that leave Libya in the future?

I think that there is a misunderstanding about what the militia are. After 2011, Libya fragmented. Every city, every town and every region had its armed forces—armed men who were protecting their communities. That does not make them bad people. They are not extreme Islamists in most cases; they are simply people who have formed home defence units, and they are the only force on the ground. It is not possible to talk about raising new Libyan armed forces that will then take on all the militias—that would be a completely unrealistic project. The only way forward is to co-opt militias into a nascent Libyan armed forces, backed by a political system that is highly devolved and that assures them of autonomy and fair shares of Libya’s wealth for the communities they seek to back.

Further to the point raised by the hon. Member for North Antrim (Ian Paisley) about Libyan-sponsored IRA murder, not only in Northern Ireland but in England, including in this city, while I understand the Foreign Secretary’s comments about timing, given that there is an emerging Government in Libya and that we will at some point be releasing between £7 billion and £8 billion of frozen assets from this country alone, will he and his ministerial team continue to do all they can to get compensation for people and their relatives who have suffered for far too long?

Yes, the assurance that I gave to the hon. Member for North Antrim (Ian Paisley) extends, of course, to the WPC Yvonne Fletcher case.

Last week, on the Floor of the House, with a note of urgent caution, the hon. Member for Beckenham (Bob Stewart) reminded us of how missions change and about the impact on our armed services, who might have to make decisions on the hoof. I urge the Secretary of State to reflect on that debate and the participation in it.

We are consistently told in this Parliament that NATO is our primary model of defence, yet all we heard about in the statement was the European Union and Europe’s role. I am grateful for the European Union naval deployment and other initiatives by our European partners, who are doing a great job, but if the Libyan Government of national accord makes a request, what role will NATO play in that, given the myriad other organisations and nations involved, from Jordan to Hungary?

May I gently suggest that the hon. Gentleman submits his academic treatise to his PhD adviser?

I thought that the hon. Gentleman was all in favour of the EU doing more. We are very clear. NATO is our principal war-fighting alliance, but we are not talking about war fighting here. We are talking about stabilisation, training and rebuilding, and the European Union and bilateral arrangements delivered by other European countries are absolutely the right way to go about achieving that. It is not a role of NATO.