Commons Chamber

  House of Commons

Tuesday 21 October 2008

The House met at half-past Two o’clock

Prayers

[Mr. Speaker in the Chair]

Oral Answers to Questions

Transport

The Secretary of State was asked—

Ports

Mr. Brian Binley (Northampton, South) (Con)
1. What recent discussions he has had with the Secretary of State for Communities and Local Government on the effects of recent changes to the rating system in ports on the operation of those ports.

The Parliamentary Under-Secretary of State for Transport (Jim Fitzpatrick)
Following representations that I have received on behalf of businesses in ports, I am in correspondence with the Minister for Local Government, and our officials at the Department for Transport have been discussing the matter with officials at the Department for Communities and Local Government.

Mr. Binley
In the light of damning remarks by the Treasury Committee, what comfort can the Minister offer to struggling companies working in 55 UK ports, which are faced with 200 per cent. business rate increases while wealthy port owners will have a windfall?

Jim Fitzpatrick
While researching for my response to the hon. Gentleman, I naturally looked at Northamptonshire to see what particular port was of special interest to him—

Mr. Binley
We are a seafaring nation.

Jim Fitzpatrick
I am not critical of the hon. Gentleman at all. As Minister with responsibility for shipping, I am grateful for any interest in the subject, as I know that shipping feels undervalued and that it is not give the credit that it is due. I can tell the hon. Gentleman that the Government are aware of the concerns of businesses within ports about the backdating of business rates, and are we are looking at the position. Other right hon. and hon. Members have also made representations.

Mrs. Louise Ellman (Liverpool, Riverside) (Lab/Co-op)
Can my hon. Friend give the House an assurance that he is dealing with this matter as a matter of urgency? Does he accept that levying retrospective business rates in ports such as Liverpool and Hull has an effect on the economic regeneration that is so evident in our ports?

Jim Fitzpatrick
As my hon. Friend, who is the Chairman of the Transport Committee, knows, during a debate on regional matters by our right hon. Friend the Secretary of State for Communities and Local Government she was given an assurance that the Government are aware of the concerns about backdating raised by business within our ports, and we are looking at the situation. Indeed, I had a telephone conversation with the Minister for Local Government earlier today; we are looking into this as a matter of urgency.

Robert Neill (Bromley and Chislehurst) (Con)
In the course of his discussions with the Minister for Local Government, will the Minister seek to resolve a paradox? The Financial Secretary to the Treasury indicated to me in a written answer that retrospective taxation should be imposed only

“where the Government consider that it is necessary to protect revenue and…is fair, proportionate and in the public interest”.—[Official Report, 9 October 2008; Vol. 480, c. 802W.]

How can that be reconciled with another written answer from the Financial Secretary saying that no impact assessment was made of this retrospective decision—or, indeed, with the written answer from the Minister for Local Government saying that no assessment has been made of the amount of revenue that might be raised, and, I assume, protected?

Jim Fitzpatrick
I am at a slight disadvantage in not having to hand the three replies that the hon. Gentleman refers to. I can say that assessments have been made of the financial impact on ports and the businesses within them in respect of the increase in revenue afforded as a result of the examination of business rates within ports by the Valuation Office Agency. As I said in response both to the hon. Member for Northampton, South (Mr. Binley) and to my hon. Friend the Member for Liverpool, Riverside (Mrs. Ellman), the Chair of the Transport Committee, the Government are looking into these matters and we will respond as soon as we can.

Mrs. Claire Curtis-Thomas (Crosby) (Lab)
My hon. Friend will no doubt be aware that I am the Member of Parliament representing the Mersey Docks and Harbour Company—a fantastically thriving port. It had been decimated by the Tories, so in 1997 unemployment was very high. I accept what the Minister has said about his intervention in this very important matter, but will he come to visit our port, and some of the very successful companies that are working there, in order to hear about their prospects for the future under this Government?

Jim Fitzpatrick
I am grateful for my hon. Friend’s generous offer of a visit to the city of Liverpool and the port in her constituency. I am visiting ports as a matter of routine, and I will certainly look to see how quickly I can fit this particular visit into the schedule, and write to my hon. Friend about it.

Mr. Julian Brazier (Canterbury) (Con)
The Minister knows of the desperate plight faced by those all those who serve the shipping industry, with the collapse in shipping rates. Will he confirm not only that there was no impact assessment of any sort, but that while the ports that stand to do well out of this were all consulted, there was no consultation of any kind with any of the businesses that will be adversely affected?

Jim Fitzpatrick
As I have explained over the last few minutes, this is very much a matter for the Department for Communities and Local Government, to which the Valuation Office Agency is responsible and reports in respect of its activities. I can reassure the hon. Gentleman once again that assessments have been carried out. I have to apologise to the House for not being in a position to confirm whether a full impact assessment was made, but I will ask my DCLG colleagues whether that was the case, and I will certainly let the hon. Gentleman know the position as a matter of urgency.

New London Airport

Andrew Rosindell (Romford) (Con)
2. What recent discussions he has had on the possibility of development of a new airport to the east of London.

The Secretary of State for Transport (Mr. Geoffrey Hoon)
The Government consulted on an option for a new airport in north Kent in preparing the 2003 “Future of Air Transport” White Paper. As the White Paper makes clear, that option and other proposals for a new airport in the Thames estuary were rejected in favour of supporting development at existing airports in the south-east of England. That remains the Government’s position.

Andrew Rosindell
Has the Secretary of State considered the effects of airport expansion, or of the building of new airports, on wildlife, birds and the wider environment? What guarantees can he give that the country’s rich biodiversity will be protected? Will he undertake to consult the Royal Society for the Protection of Birds before conducting further airport expansion in our country?

Mr. Hoon
I am grateful for the hon. Gentleman’s question, because one of the main reasons why the Mayor of London’s proposals are not practical is that building an estuarial airport in places of ecological sensitivity, which have large seabird populations, is not practical, because of both the impact on the environment and the risk of bird strike—a phenomenon not unknown to those who operate aircraft. Perhaps surprisingly, I find myself agreeing with the hon. Gentleman, and I trust that he will communicate his views firmly to the Mayor of London.

Ruth Kelly (Bolton, West) (Lab)
I congratulate my right hon. Friend on his recent appointment as Transport Secretary, and I look forward to him dealing effectively but resolutely with all issues, particularly the need to secure more aviation capacity in the south-east. Does he agree that the problem is not just the local environmental impact of a potential new airport in the Thames estuary, but the lack of a substantial work force locally? Is it not fantasy politics to suggest that a Thames estuary airport could ever obviate the need for a third runway at Heathrow?

Mr. Hoon
Let me take this opportunity to pay tribute to the excellent work completed by my right hon. Friend during her service in the Department for Transport. She was well respected within the Department and across the transport industry. I am grateful for her comments, not least because she displays a knowledge and  understanding of the issues, which I hope in time to acquire, and which certainly far outstrips the rather feeble views set out so far by Opposition Front Benchers on such questions. Clearly they lack any consistent support from their Back Benchers, as we have seen recently. It is disappointing that they have not paid attention to the voice of British business on a question as vital as the future of the United Kingdom’s major airport. I hope that there is some principled reason for their position, but I suspect that there may not be.

Mr. Crispin Blunt (Reigate) (Con)
The Secretary of State may be a little complacent in his duties if he says that it would be perfectly proper to consult the RSPB about an estuarial airport. The United Kingdom is likely to need a 24-hour airport in the future, and historically, demand for air travel has grown constantly. If the Government did not keep the options under review they would not be doing their duty, and they should not dismiss the suggestions of the Mayor of London so lightly.

Mr. Hoon
In preparation for the 2003 White Paper, some 400 different possible sites were examined. Other than the existing airports, one was examined in greater detail, and even that was rejected on grounds of feasibility, cost and practicality. It cannot therefore be said that the Government have not looked in detail at the options. The hon. Gentleman is right, however, to say that it is always necessary to keep such issues under review. Given that a major undertaking involving the consideration of 400 possible sites was carried out very recently, I hope that he accepts—fair man that he is—that there is not much point in reviewing the whole issue again so soon.

Mr. Brian H. Donohoe (Central Ayrshire) (Lab)
But one thing is for certain: if we do not increase capacity in this country, the trade will end up in Europe, either at Schiphol or at Charles de Gaulle. Is that not one thing that the Opposition have not considered?

Mr. Hoon
If they have not considered it, they have not considered the matter carefully. I agree with my hon. Friend that it is important to consider the 100,000 jobs provided by Heathrow in the surrounding area, the impact on British business, and the impact on overseas investment: 70 per cent. of companies that invest for the first time in the United Kingdom do so in places less than an hour from Heathrow. All those are major considerations. If the Opposition’s position rests somehow on an environmental case, they need to face up to the fact that the great majority of people travelling into Heathrow, who catch long-distance flights, would transfer their journeys to continental airports such as Schiphol, Paris and Frankfurt. There would be no saving of carbon, but instead—[Interruption.] Opposition Front Benchers are laughing, but this is not a laughing matter as far as British jobs are concerned. British jobs would be exported to the continent, which is a remarkable result for a party that is supposed to be anti-European.

Waterloo International

Dr. Vincent Cable (Twickenham) (LD)
3. What progress has been made on the conversion of Waterloo International for the use of London suburban rail services.

The Parliamentary Under-Secretary of State for Transport (Paul Clark)
Works to convert one platform of Waterloo International for domestic use will be completed by December 2008. The Department continues to work with South West Trains with a view to some existing services operating into and out of platform 20 from next year.

Dr. Cable
I thank the Minister and his predecessor for their support for this project, but the rail operators are saying that they cannot improve services unless they have more rolling stock. Will the Government give priority to that additional investment, under their accelerated programme for railway investment?

Paul Clark
The hon. Gentleman will be aware that there are, in a sense, two stages—a short-term and a medium-term solution—in relation to, in this instance, Waterloo station. In the short term, we need to establish a service by next year through South West Trains. The longer-term solution will involve HLOS—the high-level output specification—and the reconfiguration of all routes into Waterloo, with longer trains to meet capacity requirements. That is part of the £10 billion package in which the Government are investing until 2014.

Mr. Denis MacShane (Rotherham) (Lab)
The Minister may be aware that Waterloo International, designed by that great British architect Nick Grimshaw, is one of the finest steel and glass constructions—if not the world’s best—since the Crystal Palace was built for the great exhibition in 1851. Alas, at present we can only see it from the top of the London Eye. As the Minister contemplates what will happen to Waterloo International, will he arrange for one or two buildings around it to be demolished, so that we can actually see one of the finest bits of glass and steel architecture built in recent years?

Paul Clark
I thank my right hon. Friend for his comments. I am currently dealing with issues related to transport, but he is right to point out that redeveloping and proceeding with plans in an optimal way invariably involves many other players. We will certainly take his comments on board, and I am sure that the relevant authorities will imagine seeing Waterloo in the same splendid way as we now see the Barlow shed at St Pancras.

Sir George Young (North-West Hampshire) (Con)
As well as finding out whether Waterloo International might be used for London suburban rail services, will the Minister find out whether it might be used for services from further afield—from Hampshire and the south-west, where there is enormous pressure on the train service?

Paul Clark
The right hon. Gentleman has raised a wider issue, relating to capacity and ways of making the best possible use of our existing facilities and infrastructure. The current HLOS plan is to build on capacity and the available options through that £10 billion package. My right hon. Friend the Member for Bolton, West (Ruth Kelly) has asked Network Rail formally to consider a number of options for the period beyond 2014, and we await further work which will undoubtedly start to feed ideas into the work stream in 2009.

Stephen Hammond (Wimbledon) (Con)
I welcome the Minister to his new role, and hope that he is as successful in it as his predecessor.

Every morning commuters from all over south-west London, and indeed from further afield, are reminded that they travel on one of the most overcrowded parts of our railway network, yet they continue to see four platforms not being used. The Government knew in 2004 that Eurostar services would go to St Pancras, yet only one platform will be in operation before 2014, as the Minister has just confirmed. According to estimates provided by industry, it would cost only £10 million to bring the other four platforms into use, and it is costing half a million pounds to mothball them. Is this any way to treat commuters?

Paul Clark
One thing of which I am certain is that we must invest constructively in infrastructure fit for the 21st century. I am well aware of the vast increase in passenger journeys over the last ten years, causing substantial demand on our safe, secure and relatively efficient network. That is important. Reliability has improved tremendously and South West Trains’ latest figures show that its reliability is up to 92.5 per cent from August to September. That is what people want: reliable services at a reasonable cost.

On investing, there will be many demands on the £10 billion to which I have referred to increase capacity. I am sure that other hon. Members from all regions have demands in their neck of the woods. We are dealing with the short-term requirements to 2009; the longer term will involve changing capacity at Waterloo and other stations.

A46

Paddy Tipping (Sherwood) (Lab)
4. What highway improvements are planned on the A46 between Newark and Widmerpool.

The Parliamentary Under-Secretary of State for Transport (Paul Clark)
Plans for substantial highway improvements on the A46 between Newark and Widmerpool are well developed and being reviewed by the east midlands region in its assessment of funding priorities. The Department for Transport expects to receive the region’s advice early in 2009.

Paddy Tipping
Let me welcome my hon. Friend to his new position, and immediately ask for his help in resolving a problem that applies to the whole of the east midlands. He recognises the problem; it is simply one of funding. The road scheme costs £370 million, and it is simply unreasonable to ask the regional pot to fund it. It is like keeping a whale in a bucket. Will he look again at this matter?

Paul Clark
I thank my hon. Friend for his words of welcome. I am well aware that this has been a long saga. He will be well aware that the costs for the scheme have increased tremendously. He mentions £370 million, but he will find that the figure is between £370 million and £500 million, at some £437 million. We are looking at the possibilities. The Highways Agency is working closely with the region and the local authorities in the east midlands to see whether there is a possibility of phasing, and we are expecting that work to be completed shortly.

Mr. Kenneth Clarke (Rushcliffe) (Con)
May I too welcome the Minister to his new responsibilities, and also ask for his help? Is he aware that the decision of one of his recent predecessors to make this a regional rather than a national priority has had the inevitable effect of causing indefinite delay to an important scheme on a dangerous road that is very important to the regional economy? If the Government are now serious in their stated intention of giving greater priority to capital expenditure in the course of reviving the economy, surely this is an obvious scheme to consider. It has already gone through years of preparation, has practically completed the planning process, and is ready to be started in a comparatively short time—in the next year or two, if the Government were to make the funds available.

Paul Clark
I hear exactly what the right hon. and learned Gentleman is saying and I thank him for welcoming me to my post. There are many schemes that right hon. and hon. Members would describe as absolutely critical, for a whole host of very sound reasons. We took the decision, rightly, to bring together the decision-making processes on roads, economic development and housing at regional level so that there could be a better understanding and meshing of those requirements at regional level, where, as I am sure the right hon. and learned Gentleman will accept, the importance of schemes is best known. In terms of regional priorities and whether this scheme can proceed, let me add that the Highways Agency is working closely with the east midlands region to see what phasing of this scheme there could be, to make the right hon. and learned Gentleman’s dream—and the dream of my hon. Friend the Member for Sherwood (Paddy Tipping)—come true.

Patrick Mercer (Newark) (Con)
May I welcome the Minister to his post—and may I expose my dream to him as well? No wonder prices for this scheme are increasing disproportionately, because we have been talking about it since 1958, and nothing has been done. The fact remains that Newark is being strangled economically by this one piece of road that has not been dualled. We have good pieces of road running up to Lincoln and in the other direction down to Leicester. Unless something is done about this quickly and effectively, which it can be, Newark will continue not to fulfil its full economic promise. May I invite the Minister and/or the Secretary of State to come and visit, and to see exactly what are the effects on my constituency of this dangerous road, which is long overdue for improvement?

Paul Clark
I am interested in the fact that this road scheme has been waiting since 1958—and I wonder why progress was not made under other Administrations. [Interruption.] Yes, the former Chancellor, the right hon. and learned Member for Rushcliffe (Mr. Clarke), may have had something to do with that. The safety issues are rightly recognised locally, by the region, by the Highways Agency and by us, but there must be an order of priority for schemes. It is necessary for that to be built into the whole programme for the allocation of funding, which over this period is tremendously higher both regionally and in terms of the strategic network of roads. We always take into account invitations to visit, although whether there can be a visit soon is another matter.

Seafarers’ Pay

Gwyn Prosser (Dover) (Lab)
5. When his Department last held discussions with the Department for Business, Enterprise and Regulatory Reform on the application of the national minimum wage to seafarers.

The Parliamentary Under-Secretary of State for Transport (Jim Fitzpatrick)
There has been regular contact between the Department for Transport and DBERR on this issue, going back many months. The last discussion at official level was on 16 October.

Gwyn Prosser
I am sure that my hon. Friend shares my pride that Labour’s minimum wage has made this a fairer country and taken millions of people out of poverty—but when are Ministers going to take action to close the loophole that allows foreign seafarers sailing between British ports to be paid as little as one third of the national minimum wage—sometimes less than £2 an hour? Will he meet me and my colleagues, and DBERR representatives, prior to our discussions of the Employment Bill, so that we can stop this exploitation of working people?

Jim Fitzpatrick
I well remember the introduction of the national minimum wage; I remember staying up all night to fight the Conservatives tooth and nail, while they did everything they could to prevent it from being introduced. The application of the national minimum wage to seafarers is a complex issue, as my hon. Friend knows, and it is the subject of ongoing discussions within Government. Three Departments have an interest: DBERR as the owners of national minimum wage legislation; the Department for Transport because we have general responsibility for seafarers’ employment rights; and the Foreign Office because of the implications for international law. Ships are generally governed by the law of their flag state even when on what is known as innocent passage through the territorial waters of another state. Any changes to national minimum wage legislation would need to be consistent with international law. I know my hon. Friend knows that, and that he also knows that we are trying to address this question.

Adam Price (Carmarthen, East and Dinefwr) (PC)
UK seafarers can be denied the national minimum wage by foreign flagged vessels even when they work exclusively out of UK ports—and, as we have just heard, foreign seafarers face racial discrimination on UK ships. Why do we continue to allow this kind of thing to happen in UK territorial waters, when we would never allow it on UK territorial land?

Jim Fitzpatrick
The national minimum wage currently applies to those who are working, or who ordinarily work, in the UK under their contract. For seafarers, “in the UK” means in internal waters—in other words, the water and waterways to the landward side of the baseline. It applies to those working on UK-registered ships, unless the employment is wholly outside the UK or the worker is not ordinarily resident in the UK. It applies to offshore workers—for instance, on oil rigs in territorial waters—but excludes workers on ships in the course of navigation or engaged in dredging or fishing. The maritime unions are campaigning to get the extension to which my hon. Friend the Member for Dover (Gwyn Prosser) referred, and we are doing what we can to address the issue.

Midland Main Line

Mr. Philip Hollobone (Kettering) (Con)
6. What steps are being taken to raise line speeds and reduce train congestion on the midland main line.

The Secretary of State for Transport (Mr. Geoffrey Hoon)
Network Rail has proposed line speed enhancements on the midland main line as part of the plan to deliver the capacity improvements sought by the Government in the July 2007 rail White Paper. The independent Office of Rail Regulation has indicated that it is minded to agree to that project. A final determination is expected from the ORR at the end of the month.

Mr. Hollobone
When the next timetable change happens, half the trains north from Kettering will be lost, and all the fast trains between Kettering and the capital will disappear, because of capacity constraints on the midland main line, inadequate line speeds and the Department’s insistence that services between Sheffield, Nottingham, Derby and the capital be sped up. Can the Secretary of State reassure my constituents in Kettering that the line speed upgrades that he has just promised will ensure that those services are reinstated to Kettering as soon as possible?

Mr. Hoon
I have admired the consistency with which the hon. Gentleman raises issues of behalf of Kettering and his constituents, but I thought that he was less than generous in his observations about improvements on the midland main line, not least those that affect Kettering. Not only will significant investment improve line speeds, but a new timetable that comes into force in December is likely to provide two trains an hour from Kettering to London, one of which will actually start in Kettering. As he will be aware, there are times when those of us who catch the train from further up the line at Derby, Nottingham and Leicester fill it before his constituents have the opportunity to get on. Starting a train at Kettering and having an hourly service direct from Kettering to London will mean that his constituents are well served. I hope that when he goes from this place and talks about the remarkable improvements in the service from Kettering, he will give them a bit more praise than he has so far.

Sir Peter Soulsby (Leicester, South) (Lab)
I welcome the Secretary of State’s positive response to the question, and I know that he knows the line very well. Does he agree that the most significant improvements to it can be achieved only as a result of electrification? Does he share his predecessor’s commitment to a study of electrification, and does he recognise that, uniquely among main lines, this one has a very positive cost benefit attached to it?

Mr. Hoon
I am grateful to my hon. Friend for raising that issue. He will be aware that I take a close, indeed personal, interest in the midland main line, as a regular user of it. I certainly share my predecessor’s enthusiasm for electrification, and I assure my hon. Friend that the Department will examine it very closely.

Mrs. Theresa Villiers (Chipping Barnet) (Con)
I welcome the new ministerial team to their posts. Typical—you wait months for a new Transport Minister, then three come along at the same time.

The Secretary of State’s predecessors promised extra carriages. How many have been ordered for the midland main line?

Mr. Hoon
I thank the hon. Lady for her welcome. I remember her as an enthusiastic Member of the European Parliament, where she had a deserved reputation for a practical and pragmatic approach to issues. I am sorry that on her return from Brussels to Notting Hill she seems to have fallen in with a bad crowd. Nevertheless, I look forward to answering her questions, not least on the midland main line. I am delighted that she is so enthusiastic about it that she has chosen this matter to discuss with me. I use the line on a very regular basis and I can assure her, as I have assured Labour Members, that close attention will be paid to future investment in the midland main line.

Mrs. Villiers
I think that the answer that the Secretary of State is groping for is actually “zero”. The Government’s response to congestion on the midland main line and the rest of the network is wholly inadequate and painfully slow. He cannot even give a straight answer about the new carriages that they have promised time and again. Will he deliver all 1,300, and will they be in addition to the new Thameslink carriages? If he really wants to tackle congestion on the rail network, will he work with me on a cross-party basis to take forward plans for high-speed rail for this country?

Mr. Hoon
Again, I am sorry to hear such a grudging view of the investment in the railways that the Government are planning. We have proposed to spend £15 billion on improving our rail network, of which £10 billion will be devoted to reducing congestion. That is an enormous commitment. I am sorry that the former Conservative Chancellor of the Exchequer is not in his place, because he will know that no previous Conservative Transport Secretary could ever have made that commitment. I am proud that my predecessors were able to secure such support from the Treasury to allow that investment to go ahead.

Rob Marris (Wolverhampton, South-West) (Lab)
May I suggest to my right hon. Friend that with the £15 billion of investment, to try to increase rail line speeds and reduce train congestion, we should nationalise the railways, just as we are nationalising the banks, by not renewing the franchises as they fall due? Many of those franchises, just like the banks, are bankrupt and would not be operating except for huge Government subsidy. Let us move the railways back into state ownership. What are his views on that?

Mr. Hoon
I think that I am grateful to my hon. Friend for his question—I may have to reflect upon it. I am sorry that he takes that view of the contributions that have been made by train operating companies, not least because there has been a remarkable change in the usage patterns on the line that we have just been debating, the midland main line. Whereas trains used to stop only at Derby, Nottingham and Leicester on their way south, passing all the stations in between, there is now an hourly service from stations such as Kettering right down the line, and that has made a huge change to the usage. A further change has been the way in which off-peak services have attracted rail users. When I travelled down from Derby to London on Saturday, the first class compartments were full. In the days of the nationalised railways, those compartments would, sadly, have been completely empty on Saturdays. I hope that he gives some credit to the innovation that the private sector has brought. The position of Network Rail has clearly changed in recent times, and we ensure that Network Rail provides a safe and reliable system for users of the rail network. Thus, on balance, I shall probably resist his invitation.

Norman Baker (Lewes) (LD)
I formally welcome the Secretary of State to his post on behalf of the Liberal Democrats, merely observing that the average tenure of office of a Secretary of State for Transport since 1945 is considerably less than 18 months—that is, of course, some way short of the next general election.

On the midland main line, is not one of the causes of the capacity constraints and the failure to electrify the cuts that have been made to the Department for Transport’s budget? Rather than the investment that the Secretary of State mentions, the reality is that the rail budget has reduced by 17 per cent. this year and is now lower than in 2003-04, whereas the road budget has doubled. Given that, and given the Secretary of State’s unhelpful response to the Select Committee on Transport on the subject of fares and his support for aviation, is it not clear that the new Transport Secretary is no friend of either the railways or the environment?

Mr. Hoon
I thank the hon. Gentleman for his qualified welcome. He and I had many dealings in my time at the Ministry of Defence, and I always admired his ability to dig himself into a trench and launch a constant barrage at what he perceived to be the enemy; sadly, he sometimes did so after the war had finished. Nevertheless, I look forward to debating these issues with him. As a start, he might perhaps like to examine the remarkable increases in investment in the railways and the remarkable improvement in passenger journeys on our trains. I assure him that while I am Secretary of State for Transport—however long that might be—there will be no lack of investment in or commitment to our rail network.

Topical Questions

Mr. Gordon Prentice (Pendle) (Lab)
T1.  If he will make a statement on his departmental responsibilities.

The Secretary of State for Transport (Mr. Geoffrey Hoon)
With permission, Mr. Speaker, I would like to take this opportunity to set out to the House the new ministerial responsibilities in the Department for Transport. I shall, of course, maintain an overview of all transport policy. My noble Friend Lord Adonis will take responsibility for our national road and rail networks, the environment and climate change. The Under-Secretary of State for Transport, my hon. Friend the Member for Poplar and Canning Town (Jim Fitzpatrick), will cover our international aviation and maritime networks, road safety and transport security. The Under-Secretary of State for Transport, my hon. Friend the Member for Gillingham (Paul Clark), will take responsibility for all our local transport networks, including responsibility for buses, taxis, cycling, light rail, walking and general accessibility policy. That role is known otherwise in the Department as the Minister for Adjournment debates.

Mr. Prentice
May I repeat a suggestion that I have made to every single one of the Secretary of State’s predecessors whom I have encountered, but without success? Why not set up in his Department a dedicated unit of civil servants to work with people outside to reopen disused and dismantled railway lines? That is crying out to be done. I have a railway in my constituency between Skipton and Colne, and I am sure that it would benefit if he had the best minds in his Department working on this issue to re-establish a railway that was closed in 1975.

Mr. Hoon
I am grateful for my hon. Friend’s consistency on this question. I am sure that, with his commitment to local government and democracy, he will not mind me saying that if there is a strong local case for reopening railway lines, the case can be made and brought to the Department, where it will be looked at favourably. I am sure that he would not want me to interfere in these matters from the lofty heights of central London, as it would be better if he could persuade the local authorities along the line in question to make the case for reopening the line and to get on with it.

Mr. Greg Knight (East Yorkshire) (Con)
I welcome the Secretary of State to his new role. Will he now focus his mind on what is scheduled to happen on Monday next week, when we are due to debate the remaining stages of the Local Transport Bill? Is he aware that already 68 pages of new clauses and amendments have been tabled, many of them by the Government? There is still time for more to be added. On reflection, does he agree that one day’s debate is woefully inadequate, and will he have a word with the Labour Chief Whip to point out that this situation verges on contempt of Parliament and that we need two days?

Mr. Hoon
I am grateful for that welcome. Having served as Chief Whip and as Leader of the House, I am reluctant to interfere in the wise decisions made by the business managers. I know that the Under-Secretary of State for Transport, my hon. Friend the Member for Gillingham, is looking hard at the amendments and trying to find a sensible way to deal with all of them. It is a matter for the business managers to allocate time, and I am confident that there will be sufficient time for a full and proper debate of the remaining stages of the Bill.

Mr. Lindsay Hoyle (Chorley) (Lab)
T5.  Can Ministers look into the situation whereby Chorley borough council was granted £4 million by Royal Ordnance to provide a new railway station at Buckshaw in Euxton? The cost was estimated at £4 million, but Network Rail now says that it needs £6 million to build that new railway station. It comes on the back of a wagon, so why will it cost £6 million? What can Ministers do through their good offices to bang heads together to get that railway station up and open?

Mr. Hoon
My hon. Friend was a persistent questioner at Defence questions and I am delighted to see him in his usual place for Transport questions. On the particular issue that he raises, I may need a little more notice to answer his question in detail, but I assure him that he will get a full and complete answer.

Andrew Rosindell (Romford) (Con)
T2.  The Secretary of State will be only too aware of the magnificent work carried out by the brave men and women of the Royal National Lifeboat Institution, who take part in nine out of 10 sea rescues around our shores. Will he comment on the impact on safety at sea if Ofcom gets its way and decides to introduce charges for VHF frequencies for rescue charities such as the RNLI?

The Parliamentary Under-Secretary of State for Transport (Jim Fitzpatrick)
I fully agree with the praise heaped on the RNLI by the hon. Gentleman, as I am sure does the whole House. I was lucky enough to visit its headquarters in Poole only a few months ago, and I saw for myself the excellent facilities and the plans to improve them even further. I am sure that he knows that the spectrum issue is the subject of consultation that is about to close. I can assure him that the issues that he raises have been brought to the attention of the appropriate authority. Issues remain to be resolved, but I can assure him that we are involved, and as a result of this exchange, his concerns will be fed back to the Department involved.

Ms Katy Clark (North Ayrshire and Arran) (Lab)
The Minister will be aware of the concern among offshore workers following recent guidance from the Treasury on the seafarers’ earnings deduction. Will he confirm that he has spoken with the Treasury about that and assure offshore workers that they will not be adversely affected by the guidance?

Jim Fitzpatrick
The Department has had informal discussions with Nautilus UK and Her Majesty’s Revenue and Customs following the special commissioner’s decision in the Pride of South America case. Although there have not been any discussions with the Treasury, I understand that my right hon. Friend the Financial Secretary to the Treasury is aware of the concerns raised by the decision. HMRC will work closely with stakeholders on the interpretation of the commissioner’s decision to ensure that it is implemented in a fair and practical way.

Mr. Simon Burns (West Chelmsford) (Con)
T3.  Has the Minister had an opportunity to read the conclusions of the independent inquiry set up by Essex county council—his noble Friend Lord Whitty took part in it—to look into the problems of congestion and traffic accidents on the A12? Is the Minister aware that the A12 is probably the main road into the hinterland of the east of England, leading to the ports at Harwich and Felixstowe? What are the Government prepared to do to assist Essex county council in funding the improvements that are badly needed?

Jim Fitzpatrick
The A12 has been referred to by the hon. Gentleman and other hon. Members before. As he knows, the matter has been under consideration for some time. In respect of road accidents and collisions, we are about to launch the consultation early next year on our post-2010 strategy. We are looking at the EuroRAP—European road assessment programme—assessment system for roads, whereby accident rates are fed into that which ought to be done to reduce casualties and instances of death and serious injury. The A12 may well be prioritised above its station, given the description that the hon. Gentleman has just provided, but it will form part of a strategy for 2010 onwards.

Mr. John Leech (Manchester, Withington) (LD)
In welcoming the Secretary of State to his new position, may I urge him to review the drink-drive limits and to make proposals to bring us into line with most of the rest of Europe?

Jim Fitzpatrick
The Department is on record as saying that we will issue relatively soon our consultation on drink-drive limits as well as on compliance and enforcement on a range of other issues, such as driving with drugs, careless driving, speeding and so on. That consultation will come out shortly. We have said so far—we have been misreported in the press—that we will not recommend a reduction of the limit to 50 mg, in line with other European countries. We have said that it might not and probably will not be one of our recommendations, but having a drink-drive consultation obviously opens up the question. There are strong feelings on the issue, so we fully expect that a number of organisations will argue for such a change. The evidence will be tested against those submissions and we will look at the conclusions in due course. Although some other European countries have a 50 mg limit, they do not have the same penalties as us for drink driving. Some have a points penalty and a fine, and their record on road safety is not as good as the UK’s. The issue is complex and emotive, and I am sure that it will be fully examined as a result of the consultation.

Mr. Laurence Robertson (Tewkesbury) (Con)
T6.  The Secretary of State referred to the Office of Rail Regulation’s consultation, part of which is a proposal to double the line between Swindon and Kemble—a proposal that many of us in Gloucestershire have been fighting for for many years, with good reason. The line between Gloucester and Cheltenham and London is totally inadequate for a city and town the size of Gloucester and Cheltenham. Will the Secretary of State have a word with the office and stress how important that proposal is?

Mr. Hoon
Of course, the office is totally independent, and its remit is independent of the Department for Transport. Nevertheless, I am grateful to the hon. Gentleman for raising yet another illustration of where the significant investment that the Government are making available to the network might produce benefits by reducing congestion and improving journey times. I hope that those on his Front Bench can emulate the commitment to railways that the Government have made.

 Tony Baldry (Banbury) (Con)
T7. The Chancellor of the Exchequer says that he is bringing forward public building programmes. Will the Secretary of State be very kind and bring forward the upgrading and improvement of junction 9 on the M40? It is work that seriously needs to be done if we are to see the development of Bicester. The last group of Transport Ministers undertook to get the work done, and it would be really good news if the right hon. Gentleman would get on with it.

Mr. Hoon
I shall take that as an early Budget submission.

Mr. Alistair Carmichael (Orkney and Shetland) (LD)
T8.  May I ask the Secretary of State to have an early look at the actions of the Driving Standards Agency with regard to the introduction of the new motorcycle test? The agency believes that it is acceptable to require people from Orkney to travel to Wick on mainland Scotland to take their test. Will he join me in impressing on the DSA that that is not acceptable, and that provision needs to be made available within the island groups?

Jim Fitzpatrick
I assure the hon. Gentleman that the DSA keeps under close scrutiny the new arrangements that will be introduced in due course for the new multi-purpose test centres and the new motorcycle test. He will know about the criteria that have been laid down, and we are aware that they do not fit in certain parts of the country. We will look very closely at the arrangements that will be in place for his and other constituencies. We have deferred the introduction of the new test for six months because of the concerns expressed by the motorcycle training sector. That shows that we are listening, as we will continue to listen, to representations from hon. Members.

Women and Equality

The Minister for Women and Equality was asked—

Equality Bill

Mr. Mark Harper (Forest of Dean) (Con)
1. When she expects the Equality Bill to be ready for introduction.

The Parliamentary Secretary, Government Equalities Office (Maria Eagle)
We are making good progress in preparing the Bill. It is a significant challenge to simplify all the existing legislation and to strengthen protection in the ways that we are proposing. I therefore cannot give a precise answer as to the timing of the Bill’s introduction, but the House can rest assured that we are getting on with it and that the Bill will be introduced when it is ready.

Mr. Harper
I am grateful for that response, and wish the Parliamentary Secretary no insult when I say that I hope that the Minister for Women and Equality will be back with us shortly and in time for business questions on Thursday. I am interested in the Parliamentary Secretary’s answer, as the director general of the Government Equalities Office suggested in an interview in Whitehall and Westminster World on 27 August that the Bill would be introduced to the House at the end of February or in early March. I received a written answer from the Parliamentary Secretary’s predecessor on 6 October that simply committed to it happening sometime during this Parliament. Perhaps she cannot give us an exact answer, but will she give us some idea as to whether the director general’s suggestion about February or March is accurate, or whether the Bill will be introduced later? That would be very helpful to all the organisations that wish to lobby us about the contents of the Bill.

Maria Eagle
When preparing legislation, I am a great one for pressing for it to be brought forward as soon as possible, but I am also keen to make sure that it is in a fit state to be dealt with properly by this House. I think that that is desirable, but I have been doing this particular job for only a week and a half and I do not wish to commit myself to a precise date. [Interruption.] No, the Bill is in a fit state, but I and my officials will be pressing to make sure that it is introduced in the best possible state and as soon as possible.

Julie Morgan (Cardiff, North) (Lab)
Does my hon. Friend agree that the measures in the Equality Bill should apply in good times and in bad, and that progressive policies that address inequality, such as the right to request flexible working, should not be the first to go when there is a downturn in the economy?

Maria Eagle
I agree completely with my hon. Friend. I also agree with my right hon. Friend the Chief Secretary to the Treasury, who said yesterday that we will carry on supporting flexible working, because a whole load of people need it. That is absolutely true, and it is important that fairness is at the forefront of our employment practices at times of economic downturn as well in the good times. We intend to make sure that it remains that way.

Mr. Shailesh Vara (North-West Cambridgeshire) (Con)
The timetable for the Equality Bill has slipped already, and we now hear that the Government are seriously considering scrapping their commitment to the right to an extension of flexible working and paid maternity leave. Given that, and the importance that the Minister for Women and Equality places on the Bill, will the Parliamentary Secretary give a firm commitment that the Bill will be on the statute books before the next general election?

Maria Eagle
I think that the hon. Gentleman is overreacting to coverage in the newspapers that has gone a bit too far. His own party has also had coverage in the newspapers. On the Sunday before last, The Observer suggested that the shadow Secretary of State for Work and Pensions was saying that flexibility should be scrapped immediately and that there should be less regulation of businesses, by which he meant less employment protection. There are different signals coming out of the hon. Gentleman’s party. At the same time, the right hon. Member for Maidenhead (Mrs. May) is proposing a private Member’s Bill—

Mr. Speaker
Order. I must say to the Minister that she should be speaking about the responsibilities of her Department. We will leave it at that.

Judy Mallaber (Amber Valley) (Lab)
In reviewing the equality legislation, will my hon. Friend take full account of last week’s debate on the report on women and work by the Business, Enterprise and Regulatory Reform Committee, including its recommendations on flexible working, introducing clarification on the use of public procurement to promote such policies, and ensuring that businesses meet their requirements to promote equality?

Maria Eagle
I am happy to give my hon. Friend that commitment. As she is aware, public procurement is worth up to £160 billion of business in any particular year. It is sensible that the Government’s commitment to closing the gender pay gap and promoting equality should make use of that purchasing power. When the new Bill gets on to the statute book, which will be as soon as possible, it will ensure that the purchasing power of public procurement can be used to promote these desirable objectives.

Public Service Employment

Mr. Philip Hollobone (Kettering) (Con)
2. What discussions she has had with the Equality and Human Rights Commission on organisations which discourage people from ethnic minority backgrounds from seeking employment in public services.

Maria Eagle
I have not yet had any formal discussions with the Equality and Human Rights Commission. I will have a formal meeting for the first time in November.

Mr. Hollobone
Does the Minister agree that it is an absolute disgrace for the Black Police Association actively to discourage black people and those with Asian backgrounds from joining the Metropolitan police service? What action would the Government take against an organisation that said that only white people should join a public service?

Maria Eagle
The hon. Gentleman has every right to that opinion, but the Black Police Association is a self-organised group that is entitled to say what it wishes about the experience of black people in the police, on which it has a perspective. My right hon. and learned Friend the Minister for Women and Equality has strongly supported the Home Secretary’s decision to set up a nationwide inquiry into the recruitment and promotion prospects of ethnic minority people in the police service. It is right that the Equality and Human Rights Commission should have an interest in the fact that ethnic minority employment is 15 per cent. below the national average. The extent to which that is caused by discrimination is a matter for the commission, but the individual views of people in a self-organised group are not.

Adoption

Paul Rowen (Rochdale) (LD)
3. If she will review the adequacy of the leave entitlements of those about to adopt children.

Maria Eagle
The Government have a strong record on supporting working families, including those looking to adopt children. I am pleased to say that since April 2003 couples and individuals who are adopting children have had the right to take up to 52 weeks’ adoption leave provided that they give their employers sufficient notice. This is equivalent to the rights to maternity leave.

Paul Rowen
I welcome the Minister to her place. I accept her answer, but is she aware that couples who are adopting are given approximately only 50 per cent. of the paid leave available for couples who have their own children? I have encountered two cases in which that has happened. Does she agree that given that those children often need more support, their adoptive parents should be able to have the same amount of maternity or paternity leave as is given to other couples? That would be a big help.

Maria Eagle
The hon. Gentleman will have to talk to me outside about individual cases, which I am happy to take up on his behalf. Women who have given birth are required by law to take time off—a minimum of two weeks if they work in an office or four weeks if they work in a factory. Maternity pay for the first six weeks after a mother has given birth is now 90 per cent. of her pay. He may be referring to the fact that that is different for those who are adopting. If I have got that wrong, I am happy to talk to him about the precise circumstances of his constituents and try to provide him with an answer. He will recall that until April 2003, those adopting children had no right to any leave or pay for that purpose. I hope that he therefore accepts that this is an advance.

Lynne Featherstone (Hornsey and Wood Green) (LD)
I welcome the Minister to her place. Given the change in the law, what monitoring are the Government doing to ensure that same-sex couples are not excluded from adoption, particularly by religious agencies and particularly in light of recent reports that the Catholic Children’s Society (Westminster) is openly trying to dodge that new law?

Maria Eagle
The law relating to that issue applies equally to all adoption agencies. There was a 20-month transitional period, as the hon. Lady may recall, for the Catholic adoption agencies, which had particular concerns, to adjust their policies and procedures to comply with the law. That is due to end on 31 December 2008. It would be unacceptable to have an exception in the law for any agencies that were offering publicly funded services in respect of regulations designed to prevent discrimination. Statistics are collected about adoptions, and I can assure my hon. Friend that it will be possible to use them to check whether any discrimination is taking place.

Equality Panel

Miss Anne Begg (Aberdeen, South) (Lab)
4. What the objectives are of the equality panel; and if she will make a statement.

Maria Eagle
The Government have a proud record of tackling inequality. By introducing the national minimum wage, extending flexible working and expanding access to child care, we are seeking to level the playing field. My right hon. and learned Friend the Minister for Women and Equality set up the national equality panel to help us do more. Its objective is to close the gaps in our current understanding of inequality and to examine, for instance, why even today, by the age of six, talented children from poor families are overtaken by less talented children from richer families.

Miss Begg
I accept that, as my hon. Friend says, the Government have a good record on the entire equalities agenda, but there is still much to do, particularly in relation to the gender pay gap and, as she said, the life chances of children brought up in poverty. Will she confirm that it is the Government’s intention to carry on making sure that the equalities agenda is at the top of their agenda, especially as in times of economic downtown, that may be one of the areas to which less attention is paid?

Maria Eagle
I agree with my hon. Friend that there is still more to be done and we intend to do it, not only through the provisions that will be enacted in the Equality Bill when it is taken through the House, but by increasing the transparency of what goes on so that we can better understand the causes of inequality. She knows that across Government we have a number of public service agreement targets, which are designed to make sure that we reduce health inequalities, close educational attainment gaps between those who are deprived and those who are less deprived, narrow the gap in employment for those who are disabled, lone parents or members of ethnic minorities, and increase equality generally. We are setting ourselves tough targets to ensure that we do that, and I can assure her and the House that we will continue to make progress.

Fiona Mactaggart (Slough) (Lab)
As a former Minister for disabled people, my hon. Friend is aware that traditionally there have been people across Government in various Departments who have championed different equalities issues. Now, in her present role in the Ministry of Justice, she is expected also to take responsibility for equalities. Is she able to call on champions in every Department to ensure that all these issues are mainstreamed in every Department?

Maria Eagle
I certainly hope to be able to do that. Going into my eighth year as a Minister, I am starting to feel as though I have been in every Department and had to deal with these issues. I am able to call upon that experience. The public service agreements and targets across Government, which are cross-cutting and which I mentioned in answer to my hon. Friend the Member for Aberdeen, South (Miss Begg), indicate that the whole Government are committed to the equalities agenda and that we are increasingly mainstreaming our efforts in that regard.

Trafficked Women

Mr. Peter Bone (Wellingborough) (Con)
5. What discussions she has had with ministerial colleagues on the number of places made available in refuges to women who have been trafficked for the purpose of sexual exploitation.

Maria Eagle
The interdepartmental ministerial group on human trafficking, of which I am a member, regularly discusses that subject. This year, the Government invested a further £1.3 million in the POPPY project to support these vulnerable victims, taking the total to £5.8 million since 2003. That provides 35 supported accommodation places. The Government will expand the support services for the victims next year as part of our commitment to implement the Council of Europe convention against trafficking in human beings.

Mr. Bone
I am grateful to the veteran Minister for her response. Does she agree that 35 places are far too few, given the thousands and thousands of victims of human trafficking? There is a great imbalance.

Maria Eagle
I agree that we need to do more. In fact, we are now developing a national referral mechanism that will enable the POPPY project or similar accommodation projects to take referrals from other areas to ensure that we develop more capacity for helping the vulnerable victims of a horrific offence.

Mary Creagh (Wakefield) (Lab)
Is not the imperative now to expand the model created by the POPPY project across the country? We do not want young women who have been sexually exploited coming to just one area—basically, south London—and putting pressure on housing, although we hope that they are granted leave to remain. As we consider rolling out the model, is it not important that joined-up agencies work together for those women, who have often been the victims of violent and sexual crime?

Maria Eagle
My hon. Friend will be aware that the POPPY project takes referrals from areas other than just London. Via the interdepartmental ministerial group on human trafficking, I am liaising with my ministerial colleagues on funding to try to make sure that we can expand our capacity to deal with the victims of those horrific offences and ensure that the women get proper support once we have managed to get them out of the exploitation into which they have been trafficked.

 Driving Instructors Convicted of Sexual Offences (Suspension)

15:37:00

Willie Rennie (Dunfermline and West Fife) (LD)
I beg to move,

That leave be given to bring in a Bill to make provision for the immediate suspension from the Register of Approved Driving Instructors of driving instructors convicted of sexual offences; and for connected purposes.

I am standing here today because of a brave young woman called Lesley Anne. Learning to drive can be a stressful experience; people have to learn all the signs and how to do three-point turns and hill starts. They should not also be thinking that their driving instructor could be a sexual predator. Lesley Anne Steele’s was, and almost three years ago she suffered a humiliating and degrading sexual assault. Thankfully, her instructor, James Bennett from west Fife, was convicted. Yet even after that conviction, he continued to be a threat to young women, as he was permitted to continue as a driving instructor.

However, picking Lesley Anne as one of his victims was the biggest mistake that Bennett made. She is not to be messed with at all, and has a steely resolve—Steele by name, steel by nature. She was determined that what happened to her would never be allowed to happen again and waived her right to anonymity so that she could tell her story. That is when she got me involved.

Shortly after the incident, Lesley Anne wrote to me:

“On the day of the trial, Mr Bennett was found guilty of assaulting me and with immediate effect was placed on the sex offenders’ register. I was relieved that this was finally over and thought that Mr Bennett wouldn’t be allowed to continue to teach. The following day I received a call from a friend who had just seen Mr Bennett out teaching. Then my partner spotted Mr Bennett on the Monday, picking up a pupil close to our house.”

Now, that is rubbing her nose in it. He was close to her house, in the small village that she lives in.

Together, Lesley and I have discovered massive failings in the Driving Standards Agency and loopholes in the law. Lesley Anne received an apology from the predecessor of the Minister here today, and the DSA and the then Minister made commitments to make substantial changes. Many of those changes were made, but the law remains the same. All of that happened two years ago. I am frustrated that such urgent legislative changes have still not been made.

There are more than 40,000 approved driving instructors in the UK in whom we entrust our safety on the roads. The overwhelming majority of them are upstanding members of society. My issue is not with them, but with those who seek to tarnish their reputation—those who are a threat to our learner drivers. The nub of the issue is that the Driving Standards Agency does not have the right to suspend an instructor from the register of approved driving instructors. It does have the power to remove, but only after the full procedure is followed, including an individual’s right to appeal. If the offence committed is serious, but not serious enough to warrant a custodial sentence, the instructor could operate for a further 42 days after conviction. I have no objection to the individual’s right to dispute the proposal to remove, but I do not see why that cannot be undertaken under suspension. The Government agree with me, and I want to give them some credit for the progress that they have made.

First, the Minister at the time admitted that there was a loophole, and admitted the mistakes that had been made and the flaws in the system. He made a personal apology to Lesley Anne, and I thank him for that. Secondly, the DSA and the Government introduced enhanced criminal record checks for all current and future instructors. That process, conducted during the past year, weeded out eight offenders who can no longer pose a threat to learner drivers. If it were not for Lesley Anne, those people would still be on the road. Thirdly, they changed the complaints procedures and customer care, so that complaints, such as those made by Lesley Anne, will be dealt with in a more sympathetic and effective manner. However, it should not require the involvement of an MP to get such a complaint dealt with seriously. The profession of driving instructor is now a notifiable profession for the Home Office and the Scottish Executive. If an instructor is convicted of an offence, the DSA is automatically notified, which was not the case before.

However, despite that progress, it is regrettable that two years on, the loophole of a lack of power to suspend remains in place. Some have suggested that instructors should be suspended immediately on being charged, not just when they are successfully prosecuted. However, the requirement to prove guilt, rather than simply allege, is a right that must be protected. Malicious allegations should not be permitted to have more effect that they already do. During a debate in Westminster Hall in November 2006, the then Minister, the hon. Member for South Thanet (Dr. Ladyman), told me:

“Current legislation is clearly deficient, and we need to change the law through primary legislation as soon as we can to ensure that we have the power to suspend people immediately on conviction for such offences.”—[Official Report, Westminster Hall, 28 November 2006; Vol. 453, c. 54WH.]

In the past two years there has been at least one case of a driving instructor being successfully prosecuted but not jailed for that offence. David Austin from Suffolk was convicted of sexual assault. I understand that he has been removed from the register, but I do not know whether he was teaching after conviction and before he was removed. If he did not teach, it was his choice, because it is not within the DSA’s power to remove him. That must change. We must remove the power from those individuals to continue teaching.

Doing research for the debate, I discovered that the problem was identified before I raised it today. In 2005, in the Rochdale Observer, there was a story on a driving instructor who was convicted of sexual assaults on female pupils but who continued to teach. The article read:

“Despite being found guilty of nine offences last month, Peter Knowles, aged 67, has a legal right to keep giving lessons according to the Driving Standards Agency.”

The DSA knew about the situation earlier than the point at which I raised it in the House, which makes it more difficult to understand why we have not made any further progress two years on.

If my Bill does not make progress today, I hope that my contribution in the Chamber will spur on the Government—perhaps by some other mechanism—to introduce the legislation that is required. If the power to suspend is not introduced immediately, we will not be performing our duty to do everything that we can to protect learner drivers.

Lesley Anne has now passed her driving test and is a very proficient driver, no thanks to her instructor. She also recently married and is enjoying life. Let us pass the legislation and get the situation sorted, for her sake and for the thousands of young women who learn to drive every year. I commend the Bill to the House.

Question put and agreed to.

Bill ordered to be brought in by Willie Rennie, Mr. Mark Lancaster, Ms Katy Clark, Nick Harvey, Mr. Adam Holloway, Gordon Banks, Jo Swinson, Linda Gilroy, Mr. Alan Reid, Danny Alexander, John Barrett and Mr. David Hamilton.

Driving Instructors Convicted of Sexual Offences (Suspension)

Willie Rennie accordingly presented a Bill to make provision for the immediate suspension from the Register of Approved Driving Instructors of driving instructors convicted of sexual offences; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Monday 27 October, and to be printed [Bill 154].

 Opposition Day

[19th Allotted Day]

Immigration Controls

Mr. Speaker
We come to the main business. I inform the House that in both debates I have selected the amendments in the name of the Prime Minister.

15:46:00

Damian Green (Ashford) (Con)
I beg to move,

That this House notes that the Government’s immigration policy has resulted in a quadrupling of net immigration since 1997; further notes that the European Commission predicts that the UK population will reach 77 million by 2060; further notes that the Select Committee on Communities and Local Government said in July that the pressure on resources as a result of this level of immigration ‘increases the risk of community tensions escalating’; further notes that the Chairman of the House of Lords Committee on Economic Affairs said in April that ‘the argument put forward by the Government that large-scale immigration brings significant economic benefits for the UK is unconvincing’; and calls on the Government to introduce a limit on economic migration from outside the EU, to ensure that immigration remains a real benefit to the country’s economy and its public services and to reform the marriage visa system to encourage better integration into British society.

My first task is to welcome the new immigration Minister to his job, and it is a real pleasure to do so. He has made an impact already; indeed, he has made such an impact on the Home Secretary that she has decided that it might be wiser not to let him open the debate for the Government. It would be useful for the House to discover what he has said that she disagrees with.

The immigration Minister gave an interview on Saturday in which he said that he wanted a limit on the numbers coming to Britain. That sounds sensible. In fact, it sounds like every interview that I have given on the subject for the past two years. Sadly, he gave another interview on Sunday, in which he said the opposite, describing talk of a limit as nonsense.

I can only assume that the second U-turn came after a talk with the Home Secretary, because she has spent the past two years energetically criticising the policies that on Saturday the Minister said he would introduce. She spent two years saying that any limit on immigration would be arbitrary and unworkable. Her immigration Minister now wants a limit. She spent two years saying that there are huge economic benefits to immigration at any level. He says that it has been too easy to get into this country.

I do not want to be unfair on the Minister and accuse him of disagreeing only with the Home Secretary. He also disagrees with himself. There are so many contradictions in what he has said that I will ask her to comment only on the main one. In his now notorious interview with The Times on Saturday, he said:

“We have to have a population policy and that means at some point we will be able to set a limit on migration.”

He is nodding—that is Conservative policy, and that is a good thing. However, on “The Politics Show” on Sunday, the Minister was asked by Jon Sopel,

“don’t you want to go further and put a cap on the total population?”,

to which he said:

“Well I think frankly Jon, there’s a lot of nonsense talked about the cap.”

Not unreasonably, Jon Sopel said:

“hang on, so there will be a cap or there won’t be a cap?”,

to which the Minister replied:

“Well you tell me what you mean by a cap Jon and I’ll tell you the answer”.

So on Saturday he wants a limit and on Sunday it is nonsense to want a limit.

I am happy to say that there has been more clarity in the Minister’s subsequent interviews. He is completely clear in The Guardian today, where he is quoted in the headline as saying, “We have lost people’s trust on immigration”. He is right about that, but the Home Secretary might care to explain why her junior Ministers are going around admitting that her policies are a disaster. Is she a little worried by this? If not, she should be.

The Minister went further in the speech that he made yesterday. To give balance, I shall quote him this time in The Daily Telegraph. According to that newspaper, he said that the Government had

“implemented policies that had damaged both those moving to the country and the existing population.”

He also went a long way on asylum policy, saying that the Government’s asylum policy had caused

“untold human misery and division”.

He is right, although those are strong words. He made his best point while praising Dutch immigration policy, saying:

“We are about 10 years behind.”

Perhaps he would like to explain who has been in power during those 10 years in which immigration policy has been such a failure.

I think that we can now leave the Home Office team to sort out their differences—[Hon. Members: “More!”] I should love to give my hon. Friends more, but it is important to hear what the Home Secretary has to say about her junior Minister. It is also important to establish whether his candid admissions of failure have any substantial policy changes behind them. Even if we take the words in his Saturday interview at face value, there is a serious problem. Sometimes, he seems to be arguing that unlimited immigration was okay during the economic boom, but that it will not work for the economic bust that we are now experiencing. At other times, however, he argues that we need to treat this as a demographic problem. When he says that, he makes a lot more sense.

My right hon. Friend the Member for Witney (Mr. Cameron) made it clear a year ago that the Conservatives believe that population growth has been too fast and that it must be put on a more sustainable course. To achieve that, however, we need properly controlled immigration numbers at all times, not just in a recession. Without a limit, we cannot plan our public services properly, we would have little incentive to improve the training of unemployed people, and, most of all, we would make it more difficult for new arrivals to integrate easily and quickly into British life. I want an immigration policy that will help to make Britain a less tense, more cohesive society. One big charge that the Government must answer is that, over the past 10 years, they have achieved exactly the opposite.

Mr. Frank Field (Birkenhead) (Lab)
rose—

Dr. Phyllis Starkey (Milton Keynes, South-West) (Lab)
rose—

Damian Green
I shall give way just once or twice, because I am aware that many people want to speak in the debate. I shall give the co-chairman of the all-party group on balanced migration the first go.

Mr. Field
Given that the hon. Gentleman has now committed his party so clearly to introducing a cap, will he tell us where he will draw the cap?

Damian Green
The right hon. Gentleman will be pleased to hear that I shall be coming to that point later.

Some of the Minister’s remarks over the weekend not only set out the problem but threatened to make things worse. When he says:

“I’ve been brought in to be tougher…If people are being made unemployed, the question of immigration becomes very thorny”,

he is getting alarmingly close to blaming immigrants for rising unemployment. It is the duty of every moderate politician to exercise great restraint when addressing this subject. For the past decade, Labour has been the incompetent party on immigration. The Minister is in danger of making it the nasty party on immigration as well.

The chaos inside the Home Office is frustrating, because there is a chance for a new political consensus on immigration—perhaps symbolised by the formation of an all-party group. I think that we all agree that immigration can produce economic and social benefits, but it will do so only if it meets five criteria. First, it should be under control. Secondly, people need to know that there is a limit, and that there will be no sudden surges. Thirdly, people need to have confidence that the authorities are competent to deal with illegal immigration. Fourthly, our essential public services need to be able to cope with the number of people arriving. Fifthly, immigration policy must aim to attract people who will be of considerable benefit to our economy and our wider society.

Dr. Starkey
rose—

Mr. Denis MacShane (Rotherham) (Lab)
rose—

Damian Green
What a choice! I will give way to the right hon. Gentleman, as he has been commenting on this issue over the weekend.

Mr. MacShane
Will the hon. Gentleman define an immigrant for the purposes of this debate? Are Irish non-British citizens immigrants? Are the Europeans who are allowed to live and work here—as we can in any European country—immigrants? They all require housing, schooling and health services. Before we get much further into the debate, will he tell us what the Tory definition of an immigrant is?

Damian Green
What the right hon. Gentleman characterises as a Tory definition of an immigrant is exactly the same as his own Government’s definition, which is someone who comes here for more than 12 months. I am glad that he intervened, as it reminds me that he made a thoughtful point in The Observer on Sunday—[Interruption.] I am full of generosity of spirit today. The right hon. Gentleman said that the new immigration Minister’s comments

“risked triggering an ‘auction’ in which political parties competed for the most anti-foreigner soundbites.”

I agree. What I have just said is that the Conservative party will not participate in that auction and I hope that the right hon. Gentleman can persuade his colleagues and his Ministers not to participate in it.

Dr. Starkey
The hon. Gentleman’s motion quotes the report by my Select Committee on Communities and Local Government. I simply ask him to confirm that the Committee took no view on the level of immigration and that the parts he quoted referred to local pressures, particularly the fact that the funding that accrues to central Government from immigration was not redirected to local areas to deal with the pressure on local services?

Damian Green
What the hon. Lady’s Committee said—I have the quote here—is:

“The… pace of change… in some areas has”

resulted in migration becoming

“the single greatest public concern in Britain, overtaking concerns on crime and terrorism.”

That is exactly right. It is precisely the pace of change that has got out of control under the hon. Lady’s Government. We have had net immigration of just below 200,000 a year and it is precisely the argument of Conservative Members that if we carry on like that, we will carry on exacerbating the strains and problems that people perceive in immigration policy.

Several hon. Members
rose—

Damian Green
I have given way enough for the time being.

The fact that the Government’s policy is failing is sort of admitted by the hon. Lady’s own Minister, so it need not be a matter of controversy between us. The question is what we can do to alleviate the problem.

Mr. Humfrey Malins (Woking) (Con)
rose—

Damian Green
I will give way to my hon. Friend, but that will be for the last time.

Mr. Malins
Does my hon. Friend agree that the total inefficiency of the Government and the Home Office over the past 10 years has been the major problem, as evidenced by two things? First, the accommodation centres that they were going to set up for asylum seekers cost millions and came to absolutely nothing, and, secondly, it can sometimes take years to get a decision on immigration cases—and the process is getting even slower.

Damian Green
My hon. Friend is precisely right. It has indeed been a decade of incompetence and in his honest moments, the new immigration Minister admits it—[Interruption.] All his moments are honest, but the problem is that he honestly appears to believe different things on Saturday from what he believes on Sunday. What we need, and what we have proposed, is a range of measures to establish firm and fair immigration controls to the benefit of people in this country and, ultimately, to the benefit of new arrivals in Britain as well.

Let me make some concrete proposals, which I suggest the Minister and the Home Secretary could adopt. A Conservative Government would set an annual limit on the number of people from outside the EU who are allowed to come here to work. Such a limit would aim at a substantially lower inflow than we have had in recent years. Economic benefit would be the key test on which individuals would be admitted and the limit would take account of wider societal effects such as housing, public service provision and community cohesion. Most years, we would expect there to be a positive level of migration into the UK, but it would be substantially lower than current levels. The limit would be set after consultation with employers, local authorities and major public service providers—[Interruption.] Ministers on the Front Bench are chuntering hard about consultation. I appreciate that they do not like listening to other people, but if they knew their own policies, they would know that they set up the migration advisory committee and the Migration Impacts Forum precisely to get the information—it is useful to have it—that would allow us to set a limit. Our policy is very similar to what happens in Australia, which has a points-based system, but also a limit.

Fiona Mactaggart (Slough) (Lab)
rose—

Damian Green
I have given way enough.

Ministers are disingenuous in always referring to their system as being like the Australian system. It is in some small ways like that system, but it is unlike it in one key way. The Government do not propose a limit, but we do. That is one of the big differences between us.

Our second set of proposals are on marriage. Among our key proposals—some of which, I think, the Government would agree with—is that the lower age limit should be raised to 21 for both spouse and sponsor for marriages with people from abroad. If the Government have said that they will do that, I wish that they would. We also say that the spouse must have a basic knowledge of English before coming to the UK. That will be extremely important in improving community cohesion and integration in this country. Spouses should register before they go abroad to marry, particularly to avoid young women being spirited abroad for forced marriages. All potential spouses coming to the UK ought to take the “Life in the UK” citizenship test while they are here.

Our third set of proposals are on movements of people within the European Union. Clearly, one of the great failures of the past 10 years was that of the Government to predict how many people would come here when the EU expanded in 2004. Britain should put on transitional controls for any future new members, to avoid unexpectedly large numbers of arrivals at any one time. I hope that the Government will agree to that.

Our fourth set of proposals are on enforcement. No immigration system will inspire confidence if our borders remain as badly protected as they have been throughout the lifetime of this Government, despite the hard work put in by those manning the borders. We propose that a new UK border police force be created—it would be a specialist border force, the lead agency dealing with illegal overstayers and the specialist arm of the police in the battle against people trafficking. That would make an important contribution to making our borders safer.

In the past few days, we have heard a number of statements from the new immigration Minister, and he has contradicted himself. As a result, I am genuinely unsure whether he wants to change immigration policy in a direction that we would approve of, or whether he is simply spinning and trying to talk tough. If he is saying, as appeared to be the case in some of his interviews, that the Government’s current policies, which were announced before he took over, are enough to restore confidence in the immigration system, he is destined to be badly disappointed. The Opposition will continue to argue our reasonable, fact-based case on immigration. If hon. Members on both sides of the House do not address the concerns of millions of people about immigration, we are in danger of leaving the field clear for nasty, extremist parties, which simply want to stir up trouble between communities.

This country needs a Government who will put into practice effective immigration controls that will restore confidence in our borders. That is the best way to reduce tension between communities to allow all British citizens to share in the values of our country and the benefits of living here, and to make sure that our public services can cope with the demands on them. If the new immigration Minister moves policy significantly in that direction, he will do some good. If he cannot or will not, the tasks will fall to others. They are all absolutely crucial tasks, and they explain why the need for a firm, fair, balanced immigration policy remains one key reason why Britain needs another Conservative Government, as soon as possible.

16:03:00

The Secretary of State for the Home Department (Jacqui Smith)
I beg to move, To leave out from “House” to the end of the Question, and to add instead thereof:

“welcomes the actions of the Government in undertaking the biggest shake-up of the immigration system in decades; supports the introduction of the points based system for migration, which will ensure that only those with skills the UK needs can come to work or study; endorses the proposals set out in the Earned Citizenship Green Paper for newcomers to speak English, obey the law and pay their way; looks forward to the issuing of the first identity cards for foreign nationals next month, which will enable those who are here legally to prove it, helping to reduce identity abuse and prevent those here illegally from benefiting from the privileges of life in the UK; is committed to taking tough action against employers who exploit illegal workers knowingly; supports the removal of record numbers of foreign national prisoners; notes the Government’s doubling of the UK Border Agency’s enforcement budget within three years from 2006; pays tribute to the work of the single UK Border Agency; and welcomes the introduction of the electronic border system that will check every visitor against immigration and security watchlists and count them in and out of the UK.”

Without seeking to give offence to the hon. Member for Ashford (Damian Green), who made a reasonable fist of setting out the rag-bag of half-baked ideas that passes for his party’s policy on immigration, it is a mark of how seriously Opposition Members take the debate that the hon. and learned Member for Beaconsfield (Mr. Grieve) could not bring himself to be at the Dispatch Box in Opposition time this afternoon. Thankfully, we have his comments from a newspaper article published yesterday to guide us on his thinking, even though we did not have his thoughts in the Chamber this afternoon.

Mr. Dominic Grieve (Beaconsfield) (Con)
rose—

Jacqui Smith
The hon. and learned Gentleman cannot have it both ways. He cannot roll up and intervene, but not be willing to make a proper speech. But I will let him.

Mr. Grieve
I am grateful to the Home Secretary. I happily eschewed the possibility of addressing the House in return for the opportunity of hearing the ideas of her hon. Friend the immigration Minister, and I am deeply disappointed that we shall not be able to hear him develop those ideas this afternoon. I think I trust my hon. Friend more than she trusts hers.

Jacqui Smith
The point is that Members will hear from both me and my hon. Friend the immigration Minister today, but they will not hear from the shadow Home Secretary—unless he chooses to pop up and down on various occasions—because, despite having chosen this subject for an Opposition day debate, he has not chosen to present the argument himself.

Several hon. Members
rose—

Jacqui Smith
No, I will not give way yet.

I believe that people understand that migration can bring benefits to our country, but they also rightly demand a robust system, so that we can control who comes here, and so that migrants abide by our laws and contribute to our society. That is why we are completing the biggest overhaul of the immigration system in a generation. For instance, we are taking action to strengthen our borders.

Mr. Gerald Howarth (Aldershot) (Con)
The Home Secretary says that she has a robust system in operation. Can she explain why constituents of mine whose deportation was ordered at least four or five years ago are still in the country? Does she call that a robust system?

Jacqui Smith
I am sure the hon. Gentleman will be relieved to know that last year we removed one person from the country every eight minutes, and that—this is where he is wrong—we are on track to conclude most of our asylum cases within six months by the end of the year. When the hon. Gentleman and the Government whom he supported left office in 1997, the time scale was approximately 22 months. That is the difference between an effective immigration system and the system that we inherited.

Jeremy Corbyn (Islington, North) (Lab)
While my right hon. Friend is on the subject of asylum, may I ask whether she is concerned about the number of people in detention, the number of children in detention, and the number of apparent asylum seekers who, having been denied either the right to work or access to benefits, are living in desperate poverty and having to beg on the streets of this country? Does she not think that we need to review the humanity of our asylum system, as well as everything else?

Jacqui Smith
It is, of course, important—as I have just said—that we have speeded up decision making, and we are piloting other ways of ensuring that we can do everything possible to prevent children from being placed in detention.

Paul Rowen (Rochdale) (LD)
Will the Home Secretary give way?

Jacqui Smith
No. Given that the hon. Member for Ashford accepted only four interventions, I wish to make a bit of progress.

We are taking action not only to strengthen our borders, but to introduce a system to ensure that we select only those who can be of benefit to Britain, to ensure that newcomers speak English, pay their way and play by the rules, and to manage the local impact of migration. In April we launched a new UK Border Agency with the purpose, the powers and the punch to protect our borders in the 21st century. Our borders are already among the most secure in the world, and the UKBA has a clear purpose in protecting them, controlling migration for the benefit of the country and preventing border tax fraud, smuggling and immigration crime.

The combining of the Border and Immigration Agency, Customs at the border and UKvisas in a strong single force means that the numbers securing our borders are at an all-time high. There are 25,000 staff, including more than 9,000 warranted customs and immigration officers, operating in local communities, at the border and in more than 135 countries worldwide. However, we are determined to make the border even stronger, and we are doing so by reintroducing the border controls and exit checks that the Conservatives removed when they were in office. Our electronic borders system, e-Borders, will count 99 per cent. of non-EEA foreign nationals in and out of the United Kingdom by 2010, while checking them against watch-lists.

Mr. Nigel Evans (Ribble Valley) (Con)
I welcome any increase in border security, but the Home Secretary does not believe that there ought to be a limit or a cap on the numbers coming into this country. If unemployment continues to rise, will she reconsider her policy on introducing a cap on immigration?

Jacqui Smith
I am coming on to how precisely we have introduced a system that will enable us to be flexible and to meet the needs of the economy and the people of this country, unlike Conservative Members.

E-Borders is already delivering results and it is keeping people whom we do not want in Britain out. These checks make up just one part of Britain's triple ring of border security alongside fingerprint checks abroad and tougher enforcement in-country.

Mrs. Claire Curtis-Thomas (Crosby) (Lab)
Many of my constituents will be concerned about immigrants coming into this country and notionally stealing British jobs. My argument is that if the Conservative party had invested in equipping people with the right skills when it was in power, we would not need the people who are coming into the country now. I am pleased to hear what my right hon. Friend has said, but will she confirm that we will still open the doors of this country to the expertise that we need to buoy up our economy while the Labour party continues to develop the skilled people whom we need to look after ourselves?

Jacqui Smith
My hon. Friend makes an important point and I refer her simply to last week’s Government announcements on how we are investing extra money to ensure that people in this country have the skills to fill the jobs that exist.

Mr. James Paice (South-East Cambridgeshire) (Con)
Why do the Government continue to confuse the seasonal agricultural workers scheme, under which all the students go home because of the sponsorship arrangements, with the wider issues on immigration? Is she aware that because of the Government’s determination to wind the scheme down to try to appear tough on immigration, over £40 million worth of fruit and vegetables have been unpicked in this country and left to rot in the fields?

Jacqui Smith
I know that the hon. Gentleman and the hon. Member for Mid-Worcestershire (Mr. Luff) have raised this issue. We need to ensure that there is flexibility to aid the agriculture market in this country but, particularly by allowing those from within the EEA to take up such positions, we have made sure that there is the labour available to do that.

We need to be selective about who we let in to Britain, and that does not just start at the border. It starts and ends with an immigration policy that works in Britain's best interests with tough but fair rules in place. The introduction of the Australian-style points-based system is now fully under way, ensuring that those, and only those, with the skills the UK needs can come here to work and study.

Anne Main (St. Albans) (Con)
Will the Home Secretary give way?

Mr. Lee Scott (Ilford, North) (Con)
Will the Home Secretary give way?

Jacqui Smith
I give way to the hon. Gentleman.

Mr. Scott
In light of the Minister of State’s comments at the weekend, will the right hon. Lady confirm that she and the Government will be reconsidering their immigration policy?

Jacqui Smith
I was, before the hon. Gentleman made his slightly pointless intervention, going through the Government’s immigration policy. I was just referring to the points system, which gives us the controls that we need to cover close to three in five non-British migrants, work-related migrants and their dependants, and students. That is significantly more than the one in five covered by the proposals for a cap or a limit, even as described by the hon. Member for Ashford today.

Anne Main
Will the right hon. Lady give way?

Jacqui Smith
If the hon. Member for Ashford and the shadow Home Secretary believe so strongly in the merits of their cap, why do not they tell us what the cap will be? We know that they want one, because they keep waving it about. They should really stop being so coy. If the cap fits, they should wear it in public a bit more. They should tell us, as suggested by my right hon. Friend the Member for Birkenhead (Mr. Field), at what level they would set it and how it would work. If they cannot tell us that, if they say that they do not have the detail and if they say that they cannot decide, what makes them think it is such a good idea?

In one of the pithier sentences in his newspaper article yesterday, the hon. and learned Member for Beaconsfield said he would

“set immigration policy within a wider strategy that meets the changing demographic make-up of Britain, taking full account of its impact on our population and maximising the economic advantages while mitigating the costs and risks.”

That is quite a mouthful, but however much the hon. and learned Gentleman blusters—along with other Members—he rather misses the very point of the points system, which is that it is such a powerful way of controlling immigration precisely because it is flexible, and precisely because it is within our control.

Margaret Moran (Luton, South) (Lab)
As the Home Secretary says, does not the points system give us the flexibility to enable us to import skills in, for example, the IT industry? The Home Affairs Committee recently met IT executives in India, who commended the points-based system and deplored any introduction of a cap, as proposed by the Conservatives, because a cap system has destroyed the IT industry and its relationship with India in the United States. We do not want that in our country.

Jacqui Smith
My hon. Friend, from a position of considerable expertise, makes the very important point that we need the flexibility and control that the points-based system gives us. It is because Government can raise or lower the bar, depending on the needs of the labour market and the country as a whole, that the points system is such a fundamental change to our infrastructure for controlling immigration.

Anne Main
Will the Secretary of State give way?

Jacqui Smith
I will give way to the hon. Lady, for persistence.

Anne Main
On the points-based system, would the Secretary of State like to comment on the fact that while her party is talking tough rhetoric over here, it was widely reported in the papers that at a conference in Sylhet led by the chair of the Home Affairs Committee, and attended by six Members, it was said that:

“The number of Bangladeshis migrating to Britain would increase under the”

points-based system? Which of the following is the points-based system: is it a method of control or a method of importing additional people into the country?

Jacqui Smith
I am responsible for a lot of things, but I am not, thank goodness, responsible for what the Chair of the Home Affairs Committee chooses to say—at home or abroad.

The points-based system has meant, for example, that we have been able to bar low-skilled workers from outside the EU. In fact, if tier 2 of the points system for skilled migrants had been in place last year, there would have been 12 per cent. fewer in this category coming here to work, and we now have detailed plans on the table, put forward by the independent migration advisory committee, to reduce by nearly one third the number of jobs available to migrants via the shortage occupation route.

Mr. Field 
Before the Home Secretary finishes her speech, will she share with the House what thinking the Government are giving to meeting the needs of the economy by letting people in while also breaking the link between people coming here to work and automatically getting the right to citizenship, because the population has grown by people becoming citizens although in the first place they came here to work? It is that crucial link that the group on balanced migration wants to see broken.

Jacqui Smith
I shall come on to the precise point my right hon. Friend makes, and may I also say that I believe that he and the hon. Member for Mid-Sussex (Mr. Soames) have made an important contribution through their work, and that I certainly want to continue to discuss it with them?

Pete Wishart (Perth and North Perthshire) (SNP)
Will the Home Secretary give way?

Jacqui Smith
No.

The important issue in terms of the points system is that by adjusting the points and requirements as necessary, and based on proper evidence of what the economy needs and what is best for Britain, we can decide on the right numbers of highly skilled, skilled and temporary workers that we need in the UK.

Mr. Grieve
Will the Home Secretary give way?

Jacqui Smith
No, I will not give way to the hon. and learned Gentleman. If he wanted to have his say, he should have spoken in the debate.

The hon. Member for Ashford made a point about marriage and made quite heavy weather of the need to strengthen the rules to prevent marriage from being used as a means of avoiding immigration controls. He needs to pay more attention. We are already doing that. We are already raising the age of sponsorship and the age for applicants coming to the UK on the basis of marriage. We expect to have those rules in place by the end of the year. What is more, we are ensuring that spouses coming to the UK will need to enter into an agreement to learn English as part of the visa application process, in keeping with our goal of requiring all spouses to speak English before they come here.

Patrick Mercer (Newark) (Con)
rose—

Jacqui Smith
I will give way to the hon. Gentleman, although I note that I have given way far more times than the hon. Member for Ashford did.

Patrick Mercer
I am most grateful to the Home Secretary for her generosity. I was at the meeting in Sylhet to which she referred, at which we discussed the points-based system. Views were expressed on either side of the argument, but I was interested to hear the immigration Minister, who has responsibility for immigration, say that he believed that it was too easy to get into this country. Does the Home Secretary agree?

Jacqui Smith
I have just identified the way in which the points-based system would have ensured that, had the skilled route been in place last year, 12 per cent. fewer people would have come here. My argument is that we need an infrastructure that enables us to make the right decisions on the basis of economic evidence, not a crude cap that at the very best would cover only one in five of those coming into this country.

Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)
Does my right hon. Friend agree that the Opposition’s case is much weakened by their refusal to distinguish between controlled immigration and asylum? Any kind of crude cap shows that they do not really understand what the system is all about.

Jacqui Smith
My hon. Friend makes a very important point. The Conservatives are a party that went into the general election with a manifesto commitment to limit our asylum quota and people’s ability to come here and claim asylum. I do not know whether that is still its policy, as the hon. Member for Ashford did not refer to it today, but that is a fundamentally different issue from controlling the rest of migration.

As we set out in our draft earned citizenship Bill in July, we are making major changes to what we expect of migrants before they can progress to British citizenship. That was the point that my right hon. Friend the Member for Birkenhead referred to. There will no longer be an automatic right to stay here after five years. We have listened to the British people, and the message is clear: they want newcomers to speak English, work hard and play by the rules. Those changes do not make Britain anti-foreigner—far from it. They reassert the value of Britishness and rightly reaffirm that the privilege of British citizenship should be earned.

Mr. MacShane
I very much agree with the Home Secretary’s arguments, but I ask her to be little bit careful in talking about language, because 800,000 British citizens currently live in Spain, and at the last count 17 of them spoke Spanish.

One of the most worrying aspects of this whole debate is the extraordinary adoption, by the fluent French-speaking shadow Home Secretary, of President Jacques Chirac’s anti-Polish policy of limiting workers from the new Europe. Will my right hon. Friend say that the Poles who have been here have contributed to our economy? They are going home now, but this anti-Polish stuff from the shadow Home Secretary is a disgrace.

Jacqui Smith
The hon. and learned Member for Beaconsfield might be a fluent French speaker, but we have heard neither French nor English from him today. My right hon. Friend is, of course, right. Recent research by the Department for Work and Pensions, for example, showed that those who had come from the new EU accession countries had made an important contribution, and that there had not been a detrimental effect on British workers either.

Mr. Grieve
rose—

Jacqui Smith
I give way to the hon. and learned Gentleman for another go.

Mr. Grieve
I am most grateful to the Home Secretary. First, may I just clear up this point, about which she asked? We intend to honour our international obligations to asylum seekers to the letter.

Secondly, if the Home Secretary intends to follow the policy that she has just announced, how will she meet the anxieties expressed by the immigration Minister that population increase in this country will continue to be driven by immigration? No points system as she has described it will enable her to deal with that point.

Mr. MacShane
Why doesn’t he make a speech?

Jacqui Smith
Fair point: why does the hon. and learned Gentleman not make a speech if he has something to say? He is promulgating a policy that would put a cap on one in five individuals who come to this country. We are proposing a policy that gives us controls over three out of five migrants who come to this country. People need to ask themselves which of the two parties has the most comprehensive approach to controlling migration.

We have overhauled the routes for those coming to the UK and we have taken swift and visible action on those who are no longer entitled to stay.

Several hon. Members
rose—

Jacqui Smith
I am going to make a bit of progress.

In the space of three years, we will have doubled the enforcement budget. I seem to remember that the hon. Member for Ashford and his colleagues failed to support that doubling in Committee, so he can talk tough on enforcement, but he does not vote for the money—no change there. Last year, we removed someone from this country every eight minutes—that included more than 4,200 foreign criminals—and we carried out about 7,000 operations against illegal working, leading to more than 5,500 arrests. Since introducing new penalties for employers to combat illegal working in February, we have levied more than 850 fines—some £8 million-worth—against irresponsible and exploitative employers. Of course, Conservative Members tried to weaken those measures when they came before the House, and they continue to oppose one of the Government’s key policies to prevent abuse and illegal working: identity cards.

Next month, we will issue the first compulsory ID cards for foreign nationals, as the first stage of the national identity scheme. ID cards will help us to protect against identity fraud and illegal working, they will reduce the use of multiple identities in organised crime and terrorism and help us to crack down on those trying to abuse positions of trust, and they will make it easier for people to prove that they are who they say they are.

ID cards for foreign nationals will replace old-fashioned and easily-forged paper documents, and they will make it easier for employers and sponsors to check a person’s entitlement to work and study and for the UK Border Agency to verify someone’s identity. If Conservative Members were serious about protecting Britain’s borders, they would support the introduction of ID cards for foreign nationals. I am talking not only about biometric visas, but ID cards, which are an integral part of the national identity scheme that they say they will scrap.

We are absolutely clear that we need to strike the correct balance in Britain’s migration policy, weighing the economic benefits with impacts on communities and public services. Of course, it is vital that we take the social impact of migration into account. That is why we set up the Migration Impacts Forum to provide us with independent advice on how migration affects public services and local communities, and it is why we are also asking migrants to pay more in the future, towards a fund to help services deal with the short-term pressures of migration.

Fiona Mactaggart
rose—

Jacqui Smith
I apologise to my hon. Friend, but I am coming to a conclusion.

When it comes to protecting our border, enforcing the law, selecting what skills we need here and setting high expectations of those who come, the Government will continue to act in Britain’s best interests on immigration. The points system gives us the grip and flexibility to adjust the numbers coming here according to the needs and circumstances of the time—we heard nothing new from the hon. Member for Ashford on that today. Our proposals on earned citizenship mean that migrants understand very clearly that permission to come here to work or study does not give them the right to settle here indefinitely. Again, there was silence from the hon. Gentleman on the tough measures that we will take to make sure migrants speak English, obey the law and pay their way.

The introduction of ID cards for foreign nationals next month will further strengthen our protections and provide greater reassurance. In the Conservatives’ opposition to ID cards, we see another gaping hole in their argument. This Government are facing up to the challenge, even while the shadow Home Secretary looks on, and I commend my amendment to the House.

16:29:00

Chris Huhne (Eastleigh) (LD)
We welcome this debate; the motion is right to highlight the chaos of the Government’s immigration policy. There is a widespread crisis of confidence over not just what we are aiming to do, but whether we can do it. The debate raises issues of Government policy concerning both the fairness and the integrity of the system.

There are three elements to what has been epic mismanagement. The first is the sheer scale of the mistakes, judged by the difference between projections by the Home Office and the outcome; the second is the clear lack of control at our frontiers and within them; and the third is the lack of preparedness in local communities that have been affected by unplanned and unexpected increases in population. I shall deal with each in turn.

First, if we look at immigration from the A8 countries—the central and eastern European transition member states—we can see that the UK, Ireland and Sweden were alone in agreeing to immediate freedom of movement without transitional provisions. The Home Office predicted—and the House took the decision on the basis of that prediction—that there would be 13,000 EU migrants a year, or 52,000 by the end of last year. The outcome was 766,000—1,373 per cent. higher than the Home Office’s forecast. In all the history of Government projections, I doubt that there is a single other number of such importance that has been proved so extraordinarily wrong.

In retrospect, we should have had transitional arrangements too. The Liberal Democrats backed the Government’s policy on the basis of the Home Office forecast, and no one can have imagined that it would be out by such an order of magnitude. However, we must remember the substantial benefits of free movement—[Interruption.] I am happy to give way to the immigration Minister. I am unable to make head or tail of what he is saying from a sedentary position. More British people live in the rest of the European Union than citizens from the rest of the EU live here. The right hon. Member for Rotherham (Mr. MacShane) is right to point that out.

Mr. Ian Davidson (Glasgow, South-West) (Lab/Co-op)
Does the hon. Gentleman agree that there is a difference between those two groups, in that many of the Britons who are abroad have retired and are not competing in the job market, but eastern Europeans here are competing in the job market? Unemployment in my constituency is now more than 10 per cent. for males, so that is a cause for concern.

Chris Huhne
I certainly agree that there is a difference, but the hon. Gentleman may not like the difference that I would point to. If our citizens live on the Costa del Sol in Spain they have access to Spanish health services and are a drain on Spain’s resources. If Spanish citizens or central and eastern Europeans come here, they pay tax and national insurance here and contribute to the running of our public services. Yes, there is a difference, but not the one that the hon. Gentleman suggests.

Mr. MacShane
I am at one with that last argument. Does the hon. Gentleman share my sympathy with a south Yorkshire lady of Danish origin who has lived here for 24 years and given dedicated service as a local councillor? A newsletter was distributed about her recently, describing her as non-British. She is hurt and offended, and south Yorkshire is outraged. Which party distributed that newsletter? It was the Liberal Democrats.

Chris Huhne
I have the utmost respect for the right hon. Gentleman’s investigative skills, but perhaps he could show me the leaflet and I might then be able to comment on it. From what he says, it is not something that I would have been prepared to sign off.

We must remember the self-correcting nature of the flows of people. The anecdotal evidence—we do not yet have the official figures—shows that Polish and other central and eastern European workers are returning home to take advantage of the opportunities there. I am told that single tickets for return are selling much better than those for journeys in the other direction. It is, in other words, a different type of immigration, which could be called turnstile immigration. It is very useful both for us and for the new member states.

Lembit Öpik (Montgomeryshire) (LD)
Does my hon. Friend agree that countries such as Estonia, with which I am very familiar, have a migrant population who come to this country to make an economic contribution and to learn skills but with the intention of sharing those skills and that wealth back in their own country? They do not intend to abandon their home country, but to take advantage of the free flow that my hon. Friend has rightly highlighted as an advantage of the European Union, for the collective benefit of us all.

Chris Huhne
I am grateful to my hon. Friend for that intervention. He certainly has a lot of expertise in the matter of Estonians, in particular—[Interruption.] I know that those on the Conservative Front Bench have a particular expertise in the matter of Etonians, but that is a different issue.

My hon. Friend’s point is absolutely correct. Many of the central and eastern European migrants who have come here have done so in order to build up a nest egg and to go home, start a business and make a contribution to the extraordinary and praiseworthy growth of those economies.

Pete Wishart
Does the hon. Gentleman accept that throughout the UK each constituent nation has different requirements? Scotland, for example, has depopulation, and we need to address that. Does he agree that we need fully to adopt the Australian version of the points-based system and to give flexibility to national Governments to deal with their own immigration requirements?

Chris Huhne
I am very grateful to the hon. Gentleman for that point, which he has made before. I shall come on to exactly that point. I agree wholeheartedly with him, and when those on the Government and Opposition Front Benches pray in aid the Australian system, they clearly do not yet know the full flexibility of the system that they are talking about.

Faced with the surge in EU immigration that undoubtedly took place, which was unexpected and unplanned for, we should surely have adjusted non-EU immigration flows as a balancing factor. That is just common sense. However, the Government have not done that.

Jacqui Smith
Does the hon. Gentleman not understand what I spelled out in my speech? We have closed off tier 3 of the points-based system to reflect the impact of inter-EU migration.

Chris Huhne
I entirely accept that, but the Home Secretary also has to accept that her Government, whom she has supported, have been in office for 11 years. There were some 145,000 work-related non-EU migrants in 2006 and 124,000 in 2007. Taken with the net immigration of non-EU migrants, that is a substantial flow. Its consequences have been unplanned and unforeseen. Closing the stable door after the horse has bolted is all very well—the Government are very good at it—but it is about time that it was done.

David T.C. Davies (Monmouth) (Con)
I am very interested in what the hon. Gentleman is saying. It is the first time, I think, that I have ever heard a Liberal Democrat politician, in stating that non-EU immigration should have been controlled more, suggesting that there needs to be some overall cap on immigration. Is that a new Liberal Democrat policy?

Chris Huhne
The hon. Gentleman is clearly not as great a student of Liberal Democrat policy as he pretends to be. He obviously was not in the last immigration debate—

Mr. Grieve
It takes many years to understand it.

Chris Huhne
It does not take any years at all to understand it.

The official Opposition cannot escape responsibility. When the Tories were in government, they took leave of their senses and removed exit checks. Short-term work permits and student visas are, as a result, far more difficult to enforce. Some 346,000 student visas were issued in 2007 to non-EU citizens, and that is a good thing, too. Our higher education is something of which we can be proud. However, how many have returned? We have absolutely no idea who was here, who should be here or who is here. That is precisely why there is a crisis of confidence in the system.

I am glad that both the Government and the Conservatives are now in favour of a national border force, an idea that we introduced to the debate. We need it, along with exit controls, employer checks and enforcement. Between 1997 and 2006—[Interruption.] I realise that those on the Conservative Back Benches do not even know when they are stealing other people’s policies, but those on the Front Bench, at least, ought to know that. Between 1997 and 2006, only 37 employers were found guilty of employing illegal immigrants. The number is rising: in 2007 there were 35 criminal prosecutions, but in the six months from January to June 2008 there were 42. The Government are rightly tightening up but, by God, they are still only scratching the surface.

Mr. Gordon Prentice (Pendle) (Lab)
The hon. Gentleman was speaking about Liberal Democrat policy but now he is straying back to the 1990s. He will correct me if I am wrong but, when Paddy Ashdown was the leader of the Liberal Democrats, it was that party’s policy to allow 5 million to 6 million Hong Kong Chinese into this country.

Chris Huhne
The hon. Gentleman is right to remind me and the House of that, but this country had certain specific obligations to the population of Hong Kong, because the people involved were British passport holders. He may not recognise those obligations, but under certain circumstances this country must allow people to come here. For example, we very honourably took in 50,000 Huguenot asylum seekers—for that is what they were—even though that number represented 1 per cent. of our entire population. Such action is entirely appropriate under certain emergency circumstances, and I am grateful to the hon. Gentleman for the point that he raises, although it is irrelevant to this debate, which is about economic migration.

The most recent estimate from the Government comes from 2001 and shows that we have 430,000 illegal immigrants. That is the result of the Government’s mismanagement—

Stephen Pound (Ealing, North) (Lab)
Will the hon. Gentleman give way?

Chris Huhne
I will, although I think that I am giving way even more than the Home Secretary did. However, I am delighted at the interest among Labour Members in our policy.

Stephen Pound
I am profoundly grateful to the hon. Gentleman, and I shall try not to disappoint him. He referred to the slight increase in prosecutions for the employment of illegal immigrants, but will he share with the House the real figure—that is, the number of illegal immigrants employed by each of the people prosecuted? Will he also share with the House the massive increase in the number of people affected by and caught up in those prosecutions?

Chris Huhne
I will not share those figures with the House, as I am sure the hon. Gentleman can tell us off the top of his head. If he cannot, we can both consult the Library and so discover in due course whether he has a good point. However, it was a nice stab in the dark—well done!

Simon Hughes (North Southwark and Bermondsey) (LD)
Before my hon. Friend moves on, does he agree that our party has always argued for certain principles and wanted other parties to accept them? For example, we believe that this country should do its duty by those with whom it has a connection and a link—such as the people from Hong Kong, the east African Asians or the Gurkhas—but that we should always have the proper and effective immigration controls that we have not had for many years. In addition, we believe that people who are not EU citizens should be allowed to stay only if there is a justification for Britain’s having them here, and that there should be a policy to regulate that.

Chris Huhne
I am grateful to my hon. Friend, as he has made the matter extremely clear.

The third element of the crisis of confidence is the lack of local preparedness among councils and police, health and housing authorities. The London boroughs of Brent or Newham offer good examples of what I mean. On a recent visit to Newham, I was told that GP registrations were running tens of thousands higher than the census projections, which means that there is no follow-through in budgets for the local police or NHS. It is therefore essential that we plan for managed immigration, not least because that would allow us to prepare local areas sensibly for the arrival of those given permission to be here.

The Conservative Opposition’s motion calls for a limit to immigration, and that is certainly more sensible than some of their previous calls for an annual cap, but there is a typical failure to define terms. In addition, there is a contradiction in the motion: in one place it welcomes the real benefits of immigration, yet in another approvingly cites somebody from the other place as saying that “large-scale immigration” has uncertain benefits. It would be interesting to hear from a Conservative Member exactly what the difference is between the real benefits of a low level of immigration and the unpersuasive benefits of large-scale immigration.

Anne Main
I served on the Communities and Local Government Committee, and the report to which its Chairman referred earlier in the debate touched on exactly that point. The Government were severely criticised for not anticipating the pace of change. The communities that we visited felt the strains of the rapid process of change, and that is exactly what the motion is about. The sheer pace of change, and the volume of people involved, meant that some communities described themselves as feeling overwhelmed.

Chris Huhne
I am grateful for that intervention; I entirely agree with the sentiment. On the other hand—and I hope Members excuse me for being a boring old economist by background—it would have made sense to come up with a number in the motion so as to clarify the difference between the two concepts.

Let me give some examples of why a simple cap or limit of the sort that the hon. Member for Ashford (Damian Green) proposes would be problematic. One of them comes from my own experience. When I was running a team of economists in the City, I needed at one stage to hire a PhD in economics who was an Arabic speaker. We knew that there was absolutely no chance of finding such a person in the London labour market, because we had advertised and failed to do so. [Hon. Members: “What?”] I can assure hon. Members of that, although I should add that there was one other criterion: a knowledge of middle east politics.

In that particular case, in the October of that year we needed to find an immigrant. If the hon. Gentleman’s policy of implementing a cap had been in place, and the limit had already been reached, I presume that I would have had to wait until January. That would have had a serious knock-on effect on the employment prospects of other people in the London labour market, because that person was complementary—[Interruption.] Conservative Front Benchers are saying, “You should train them.” I do not know whether they have any idea of how long it takes someone to study for a PhD, but it is certainly not three months, even with the substantial brain power that the Conservatives have at their disposal.

I will give a more populist example for those of us who are football fans. What about Robinho, as a Brazilian citizen? Would the Conservatives say to Manchester City, just ahead of the transfer window, that it could not possibly hire Robinho? [Interruption.] The hon. Member for Wolverhampton, South-West (Rob Marris) might say, “I hope so”, but I am sure that those who are Manchester City supporters—[Interruption.] The immigration Minister is a Manchester United supporter, so he will not be sympathetic. However, for those who are Manchester City supporters, we would have to be a little more realistic about taking one year with another and looking at the needs of particular employers at particular times. It is odd to see the Conservative party, which is meant to understand the market economy, proposing a mechanism reminiscent of the Soviet Union’s Gosplan.

We should remember, too, that these jobs may well be complementary to national jobs and create more employment for UK citizens. That is why the Minister’s dalliance at the weekend is so regrettable. He must have known that there is a long track record in this country of blaming foreigners and immigrants during economic downturns, so it is particularly regrettable that he should have made those comments at this time.

Turning to the point made by the hon. Member for Perth and North Perthshire (Pete Wishart), who is sadly no longer in his place, a single limit is also difficult. That is not only for reasons to do with skills and its arbitrary nature, but because not all parts of the country have the same needs. Scotland wants growth. Its population has recently been in decline. It has less than 10 per cent. of the UK’s population with a third of the land area. It has absolutely no problem with water resources. The situation in the south-east is precisely the opposite. England as a whole is almost as densely populated as the Netherlands, and the south-east of England is the most densely populated region in Europe, at the limits of environmental sustainability. There was recently a proposal to build a desalination plant on the Thames to get fresh water, for heaven’s sake. We usually only hear about that sort of thing in Saudi Arabia. London is drier than Istanbul. The non-governmental organisation Waterwise has pointed out that the south-east of England has less water available per person than Sudan or Syria.

A points-based system should take account not only of skills but of local needs, as is the case in Australia. Neither the hon. Member for Ashford nor the Home Secretary told the House that the points-based system in Australia takes account of different economic circumstances in different parts of the country.

Damian Green
The hon. Gentleman accuses the Home Secretary and me of not telling him things. Can he tell us how, if somebody has a work permit to live in Britain, he proposes to lock them in Scotland and stop them moving away if they want to? If he does not do that, everything that he has been saying for the past two minutes is nonsense.

Chris Huhne
That would be enforced in exactly the same way as we currently enforce immigration control within our borders—by inspection of employers. If people have the right work permit, they are allowed to go on working in the same place. That is what happens in Australia. It is not rocket science. If the other two Front-Bench teams had looked at the Australian system, they would know that that is how it works. All areas of Australia are eligible for a scheme that allows sponsorship by an employer in that local area, except Brisbane, the gold coast, Sydney, Newcastle, Wollongong, Melbourne and Perth. The Australians make a clear distinction between the parts of the economy that need migrant workers and population growth and those that do not.

Trevor Phillips, who was appointed by the Government, recently broached that as a potential policy option. I am surprised that the hon. Member for Ashford is making such play with the difficulties, when the system is already operating effectively in Australia.

Mr. Davidson
Do I take it that it is Liberal Democrat policy for scores of Government inspectors to tour the south of England trying to identify people who have escaped from Scotland? That seems to be the thrust of the hon. Gentleman’s argument. Unless there are border controls at the Scottish border, there can be no realistic expectation that those who are allowed into Scotland will be retained there.

Chris Huhne
The hon. Gentleman is wrong. The way that the scheme operates in Australia works well. There are the same policing arrangements as we have for work permits in the UK. I have cited the figures. The hon. Member for Ealing, North (Stephen Pound) upbraided me for not pointing out the number of illegal immigrants who had been found in such raids. That is the standard way—ask the Home Secretary—in which we enforce these matters. There is no need for any internal border controls. That is a scare story.

Anyone in breach of a work permit in Australia is deported. It is as simple as that, exactly as it would be if someone were found to be an illegal immigrant in breach of their conditions. Another condition has merely been added.

Rob Marris (Wolverhampton, South-West) (Lab)
I expect that I know rather more about the Canadian system than the hon. Gentleman knows about the Australian system, and they are very similar. I lived in Canada for nine years. I was an immigrant in Canada. Internal controls do not work unless one is prepared to say to immigrants, using the hon. Gentleman’s kind of example, “You can have your job in Scotland, with one employer, so you can’t leave that employer”—it is like slave labour—“for evermore.” That is the problem with the system that he is proposing. If people are given a time limit, as they certainly should be given in anything like such a system, within four years they will all move, as it were, from Scotland to London.

Chris Huhne
I am grateful to the hon. Gentleman for raising that point. That is not the experience in Australia. What happens there is similar to our own arrangements under any other work permit. After a certain period working in the economy, migrants are entitled to apply for citizenship. The hon. Gentleman is right that at that point they can move anywhere in the area, but the experience of Australia is that they do not. They have put down roots and stay where they have settled. That has had the desired effect of contributing to population growth in those areas.

Fiona Mactaggart
rose—

Chris Huhne
I shall not give way any more. I have been unusually generous in doing so and I must make progress.

We object to the language in the motion and the fact that the Chairman of the House of Lords Committee on Economic Affairs should be cited as a sage on the matter. His Committee regrettably ignored the evidence of two extremely distinguished macro-economists, Professor Steve Nickell and Professor David Blanchflower, which was nevertheless cited in the report. Professor Nickell said that immigration might reduce the equilibrium rate of unemployment. Blanchflower said the same thing in different terms—that immigration had lowered the natural rate of unemployment. The Committee seems not to have understood what that meant. It means clearly that the economy could have dynamic gains and produce more output without unsustainable inflationary pressure. That, in turn, would boost income per head.

I also regret that the motion contains nothing about better integration and the common values of tolerance and respect for the rule of law. Those are a key part of proper policy. It is appalling, for example, that the Government have cut the teaching of English as a foreign language. Without a stress on the integration of our existing migrant communities, the Conservative party risks sending out a subliminal message at variance with the wording of its motion. I hope that that is not intentional; it is, however, the effect, and we regret it.

We welcome much in the Government amendment, but the inclusion of identity cards for foreign nationals on its own is enough to rule out our support. The cards are entirely symbolic, as foreign nationals have passports already; they have been targeted for ID cards for no better reason than to accustom the rest of us to the cards’ introduction and because they will not have votes at the next general election. Judging by their amendment, the Government’s migration policy is merely moving from the chaotic to the emblematic. In neither case do they deserve our support, and we oppose their amendment.

Several hon. Members
rose—

Mr. Deputy Speaker (Sir Alan Haselhurst)
Order. I remind the House that from now on there will be a 10-minute limit on Back-Bench contributions to the debate.

16:56:00

Mr. Frank Field (Birkenhead) (Lab)
I wish to make two very simple points. I speak as joint chairman of the all-party group on balanced migration; no doubt the hon. Member for Mid-Sussex (Mr. Soames), the other chairman, will also speak if he manages to catch your eye, Mr. Deputy Speaker.

First, I want to emphasise the impact that recent levels of immigration have had on many of our constituents, who have not been heard about in this debate—certainly not during the last contribution. Secondly, I want to mention what I thought was new from the Home Secretary. Conservative Front Benchers, of course, wanted to make much of what they thought was the difference between the views of the Home Secretary and those of the immigration Minister; perhaps a careful study of Hansard tomorrow will suggest that that difference is less than they were hoping for.

What we have not heard so far in this debate, for good reasons, is the voice of our constituents. They have been on the receiving end of immigration. It is all very well to give a partial view, based on what the House of Lords report said about the gains or non-gains of immigration in respect of the impact on our national income. However, we ought also to think about what immigration has meant in human terms. In the recent past, we have experienced in this country a rate of immigration the like of which we have never experienced. It would be extraordinary if a country as densely populated as ours could take that rate of immigration with no adverse consequences for some of our constituents, particularly the low-paid ones.

Mr. Parmjit Dhanda (Gloucester) (Lab)
I am listening with real interest to my right hon. Friend, who has a lot of experience in these matters. As the child of a migrant myself, having grown up in the ’70s and ’80s at schools in this country, and often at times of depression, I think that there was far more racism in our schools then than there is now. I accept the fact that there are issues of churn. However, to be fair, if we look at cohesion across the board, we see that more than 80 per cent. of people in our local communities feel that they live in a cohesive community.

Mr. Field
I am particularly grateful for that intervention and would like to emphasise the key words that my hon. Friend uttered. He was here as a child, newly arrived, when the economy was not booming. One of the things that I so welcomed about the speech by my hon. Friend the immigration Minister is that he was clearly looking at a country in which—let me put it euphemistically—a boom might not go on for ever. We have a duty to plan for the worst, but we should obviously hope for the best. I emphasise that it would be inconceivable for anyone in this House to argue that the levels of immigration we have experienced have had no impact on the chances of employment for many of our lowest-paid constituents, or that they have had no impact on wage rates. Of course we can see gains when we look at the global figures, but they look a lot more sparse when they are averaged out among all of us. Levels of immigration have given rise to a new servant class in this country.

Chris Huhne
rose—

Mr. Field
The hon. Gentleman took a very long time, and I am anxious that other Members should get a chance.

The reintroduction of a servant class for those of the upper middle class has clearly meant very big gains for them, and has significantly changed their standards of living. It has not been so good for those at the bottom of the pile who have been competing for those jobs. My first point is that at least there is now some agreement among all parties that we have experienced record levels of migration to this country, and although that has had some beneficial effects, it would be absurd to argue that it has not had some less beneficial effects, particularly for the poorest members of society, which is my second point.

My third point is that we ought to be careful about the idea of the society to which we belong. My hon. Friend the Member for Gloucester (Mr. Dhanda) raised that point just now. We do not know the consequences for people’s sense of identity, and that of those around them, when they have been subjected to levels of immigration that we have never experienced in our history. We are talking about 25 times what we have normally experienced. Perhaps we have the most extraordinary ability to adapt, but I wonder about that. 

I want to come back to this point, if I have time. At a time when the Government are developing a positive view of citizenship, I hope that that view embraces my constituents who are as English, or British, as I am. All of us need our sense of national identity defined and reaffirmed. It is not merely something that we want newcomers to our society to embrace; there is a real loss of identity, regardless of immigration, among the host population itself. I would like the idea of an earned citizenship to be extended to all of us. We should not take it automatically that just because we are born here, we know what it is like and what is expected of us as citizens in our society.

The hon. Member for Ashford (Damian Green) looks puzzled by that, which shows the extent of the problem. If we had been in this Chamber in Edwardian times, we would have all had a clear idea that one of our central duties was to teach ourselves and the population the idea of being a good citizen. For 50 years in this country, we have somehow assumed that people get that idea by osmosis. It is quite clear, when we look at the disorder in our streets—the rise in levels of violence and so on—that ideas of citizenship do not automatically pass from one generation to another. While it is crucial for the question of immigration that we look at how we earn our citizenship—the Government call it positive citizenship—we need to extend the idea to embrace all of us.

The last factor that my constituents would want represented in the debate is that we have experienced, since the end of 1992, growth that this country has never experienced before. Sadly, it looks as if that growth is now faltering. It is foolish to think that the policies that may have been appropriate during the most rapid economic growth that we have ever experienced will also work during a downturn. Therefore, I applaud what the immigration Minister said in sounding a note that acknowledged that the Government realise that in an economy where there might be fewer jobs, we might need a very different immigration policy from the one that we have pursued in the recent past.

That brings me to my second, crucial point, which is one that the cross-party group on balanced migration has tried to make. In the past, we have assumed that the needs of the economy can be served in a way that allows people who come here to work to gain citizenship automatically. The Home Secretary made a very important point in her speech, which was lost in some quarters of the House. It was that we ought now to put up for question the idea that someone who has been here for five years should automatically gain citizenship. If that is so, I do not see much difference between the speech that we have heard today from the Home Secretary and the two speeches that we have heard so far from the immigration Minister.

The main point that the cross-party balanced migration group has been trying to introduce into the debate in this place and in the country is that the immediate needs of the economy for people to come here and fill vacancies that cannot be filled by people who are already here do not necessarily mean that those people ought automatically to get citizenship. The main thrust of our argument is that the needs of the economy are different from the needs of citizenship and the wider society.

What I hope we will hear from the Government—perhaps we will hear an even clearer statement when my hon. Friend the Minister winds up later—is that earned citizenship here will be capped. We would not expect the Minister to say what that cap should be at this early stage of the debate, given that although the Opposition claim that capping the number of people coming here to work has long been their policy, the hon. Member for Ashford could not tell us where that cap might be set.

Chris Huhne
rose—

Mr. Field
I want to finish now, if I may.

However, it is important that we in the House begin to think of a two-part points system: points to come here, so that people come here only because there are vacancies that cannot be filled by people who are already here, and then points to earn citizenship. If we can send out the message that we are going to break the link between the needs of the economy and growing the population through immigration, this debate that the Opposition have called will have been well worth while.

17:07:00

Mr. Nicholas Soames (Mid-Sussex) (Con)
I commend the right hon. Member for Birkenhead (Mr. Field) on his speech and hope that the House listened with great care to what he said in this important debate.

For centuries the British isles have been a destination for immigrants and a source of emigrants. The flow of people has contributed to one of the strongest societies and one of the most dynamic economies in the world. Likewise, Britons have emigrated across the world, taking with them their skills and our customs, traditions and, of course, language. The benefits of migration are therefore not in any doubt. Our country, just like any other, would be much the poorer but for the contribution that immigrants have made here and that Britons have made overseas.

However, I hope that the House paid attention to the points that the right hon. Gentleman made. Many of us believe, as do many of our constituents—their voices have been woefully under-heard in the Chamber—that we should reflect the deep anxiety in the country and that we must ease the pressure that the sheer scale of current immigration is placing on our public services, environment and, indeed, the cohesion of our society.

As the right hon. Gentleman said, he and I arrived at many of the same conclusions—he rather ahead of me—and decided to form the cross-party group on balanced migration. The purpose was to try to have a rational debate based on the facts—an extremely unusual thing in this debate—to put forward some positive and workable proposals, and to listen to the ideas that others wish to put forward in a rather more forgiving atmosphere. To that end we sent every hon. Member a copy of our booklet, which sets out a new approach to controlling immigration and which was headed by the right hon. Gentleman “Balanced migration”. He and I are very grateful to the Home Secretary for receiving us and for giving us an encouraging and courteous reception. We now have high hopes from the words that have been expressed by the immigration Minister.

I want to deal briefly with two misconceptions. Some people say that recession means that immigration is no longer an issue. Others point to departing Poles and draw the same conclusion. We have published research this week that clearly shows that, during the three recessions of the past 38 years—1975-76, 1981-82 and 1993—immigration did indeed decline for a year or two during each one. It then picked up afterwards. Indeed, it has picked up dramatically since 1997, as the right hon. Member for Birkenhead said. This is clearly no answer to the immigration problem, unless of course we are to live in an endless recession.

On the second point, it is true that some Poles and other European Union migrants are going home, but others are still coming. The probability is that arrivals and departures will come into balance in a few years’ time. The conclusion to draw, therefore, is that the bulk of continuing immigration will inevitably be from outside the EU and could therefore be controlled if the Government had the political will to do so. Already, in 2006, 68 per cent. of foreign immigration was from countries outside the European Union.

All of us who are concerned about this matter were delighted that the new Minister suggested at the weekend that the Government were now thinking afresh on the principles that underpin immigration policy. That is greatly to be welcomed. Let me remind the House precisely what he said:

“This Government isn’t going to allow the population to go up to 70 million. There has to be a balance between the number of people coming in and the number of people leaving.”

That implies two things. First, it implies that there will be a limit on immigration. Secondly, it suggests that the Government appear to accept the thrust of our argument that, to stabilise our population, immigration should be brought into line with emigration.

This change is certainly necessary. According to the Government’s own statistics, England’s population will increase by nearly 10 million by 2031, and 70 per cent. of that increase—that is, 7 million people, or seven times the population of Birmingham—will be a result of immigration. They will all need to be housed. The Government’s own household projections show that immigration will account for 33 per cent. of new households. When the figures are updated with the 2006 population estimates, the percentage will be closer to 39 per cent. Clearly, further action is essential.

Mr. Davidson
If the hon. Gentleman is prepared to accept that there has to be action on the 68 per cent. of immigration that comes from outwith the EU, does he have a policy for dealing with the 32 per cent.—on his figures—that comes from within the EU? Surely that is the elephant in the room. We cannot control the external migration if we are not prepared to control the internal migration.

Mr. Soames
That is certainly the elephant in the hon. Gentleman’s room. The answer is that we are obliged by treaty obligation to allow those people to come here and to move freely through the European Union, just as we can. The question is whether the Government have the will to control the other part of the equation, and whether they choose to exert it.

I give the Government credit for moving towards a major reform of the immigration system; credit where credit is due. But the points-based system lacks one essential and critical aspect: a limit on the number of people allowed to settle here. The reality is that a points system with no limit on the numbers able to come and settle here is largely pointless. This brings me to a key point of the cross-party group’s proposal, which was elegantly espoused by the right hon. Member for Birkenhead. It is that we should split economic migration from settlement. We must balance the needs of the economy with those of society, while honouring our EU and other commitments.

Chris Huhne
Will the hon. Gentleman give way?

Mr. Soames
I will not give way.

Hence our proposal arises to permit skilled workers from outside the EU to come to Britain, provided that both the vacancy and their qualifications are genuine, but on the strict understanding that it is for a maximum of four years. The number allowed to settle here would thus be confined to a small number selected by a further points system.

The longer-term policy aim would be to bring immigration into line with emigration—hence the term “balanced migration”. The Minister said in his BBC interview on Sunday that he would ensure that breaking the limit between economic migrants and settlement would be part of Government policy. That, too, is extremely welcome. However, like many hon. Members and members of the public, we have all come to treat the Government’s words with caution and, in light of today, they clearly need to carry a health warning.

Let me end, if I may, by asking the Minister three very simple questions, which I would like him to answer at the end of the debate. First, given that he does not want the population of the UK to rise to 70 million, he must now want to limit immigration to the UK. Will he confirm to House tonight that there will be such a limit on the number of people allowed to settle here? Yes or no? Secondly, how will that limit work in practice? Thirdly, will he confirm that the Government will break the link between non-EU citizens being given the right work here and the almost automatic right that they have to settle here? The truth is this—that if our population is to be stabilised, which it absolutely must be, immigration has to be substantially reduced. What the House needs to know is the scale of the Government’s effort, commitment and will to bringing down the scale of current immigration.

17:16:00

Mr. Roger Godsiff (Birmingham, Sparkbrook and Small Heath) (Lab)
It is a pleasure to follow my right hon. Friend the Member for Birkenhead (Mr. Field) and the hon. Member for Mid-Sussex (Mr. Soames), who made excellent speeches. In welcoming this debate, may I make the point that immigration has been the taboo subject of British politics for far too long? The reason is self-evident. Ever since Enoch Powell made his infamous speech in Birmingham back in 1968, politicians from mainstream parties—with a few exceptions who have perhaps been brave, foolish or sometimes both—have avoided the subject for fear of uttering a wrong word or saying something politically incorrect, and thus being labelled as racist or anti-immigrant.

Because mainstream politicians have not debated such issues as numbers and the effect that immigration might—I say might—have on public services, particularly in inner-city areas, the only parties that have talked about those issues have been racist or xenophobic parties such as the British National party, which has been left with a wide-open field to talk about immigration on its own terms and to draw its own conclusions.

There is not the slightest doubt, furthermore, that the wider electorate want the mainstream parties to debate this issue. In nearly every single opinion poll asking voters what issues they are most concerned about, immigration appears as one of the top five priorities. For us to ignore the fact that the electorate want us to debate the issue and instead to peddle the simplistic mantra that globalisation is wonderful, that we need immigration to grow the economy and that the trickle-down effect benefits everybody, while ignoring the very real pressures that an increasing population puts on public services, particularly in inner-city areas, does a great disservice to the cause of good community relations in our multicultural society.

As I have already said, I welcome this debate and I also welcome the frank comments made by the new immigration Minister, irrespective of whether he subsequently retracted them. I support the Government’s steps to make the immigration system stronger and fairer, particularly to ensure that only applicants with skills needed here can come to work or study and that newcomers learn to speak English. But, above all, I welcome the fact that the Government will now ensure that people visiting the United Kingdom are counted in and counted out. At long last, we will know how many people enter the country legally each year, and how many leave.

For a number of years, after embarkation controls were abandoned by the previous Conservative Government, I tabled questions asking how many people came legally to visit and study, and how many left. The Home Office consistently told me that an average of nearly 900,000 people came every year, yet it had no idea whatever how many left. That was nonsense, and I welcome the change proposed by the Home Secretary.

The constituency that I represent—Birmingham, Sparkbrook and Small Heath—is probably the most diverse and multicultural in the country. Apart from what we could call the old immigration—from Ireland, Scotland and Wales—there has been immigration into Birmingham and my constituency from Pakistan, Kashmir, India, Bangladesh, Sri Lanka, Yemen and, latterly, from Somalia and the horn of Africa. The multicultural make-up of my constituency and Birmingham has added to the vitality of that great city.

We must be careful, however, that we do not undermine the excellent community relations that we have built up in that city. The spectre of rising unemployment poses the greatest threat to multicultural cohesion because it is self-evident that if unemployment rises, we need fewer people coming to the country, as the new immigration Minister has said, especially when in parts of my constituency, in Sparkbrook, the unemployment rate has remained above 15 per cent. even during the 10 years of economic growth and falling unemployment nationally.

Mr. Davidson
Given that parts of my constituency have similar male unemployment figures, does my hon. Friend agree that we need to consider controls over EU migration, and not just controls over migration from outwith the EU?

Mr. Godsiff
As always, my hon. Friend makes an excellent point, and, as always, I agree with him.

It is right that we debate the controversial issue of immigration rather than avoiding it. I support and welcome the all-party balanced migration group, set up by my right hon. Friend the Member for Birkenhead and the hon. Member for Mid-Sussex, and its informed contribution to the debate about immigration. My constituents—many of whom, as I said, are immigrants—want an immigration system that is firm and fair. I welcome much that the Government are doing, and I commend the amendment.

17:23:00

Miss Ann Widdecombe (Maidstone and The Weald) (Con)
I think it beyond dispute that the Government have mishandled immigration. In recent months, they have been active in trying to address a problem that they themselves allowed to grow over the previous 10 years. When they came into office in 1997, the attitude was that it was racist to talk about control of immigration—indeed, I should know, because I was talking about the control of immigration. The initial signals sent out were all that the system would be relaxed: the primary purpose rule was abolished; an amnesty was granted to 25,000 asylum seekers who had not even had their applications processed; and some high-profile deportation decisions taken by the previous Government were reversed. So, the signal went out: the system is now more relaxed.

Fairly recently, when the Opposition were asking for quotas—which we were allowed to have under EU law, and as some other countries were proposing to have—when we faced the likely influx of immigration from eastern Europe, the Government’s attitude was that we were being alarmist, that we had it wrong, and that it would all be perfectly all right on the night. That was a disastrous prediction, which has proved to be wholly without foundation. I think that there is merit in some of the Home Secretary’s proposals, and I welcome some of them, but they have come very late.

We all tend to talk about immigration as if it were a single mass lump, but it is roughly divisible into three separate strands, although of course there are sub-strands. The first strand is work permits. On the whole the work permits system benefits us: we compensate for the deficiency of skills by bringing people in. However, what was said by the right hon. Member for Birkenhead (Mr. Field) is very true: over the years, it has become a rather stealthy method of entering the country for the purpose of home settlement, rather than merely to gain work at a restrictive time. Although there may be nothing new about that, if we are now thinking seriously about how to limit immigration, I think it right for us to examine the link between those who come here lawfully on work permits, but as a means of—equally lawful, at the moment—permanent settlement.

Chris Huhne
Will the right hon. Lady give way?

Miss Widdecombe
I should like to continue for a short while, but I promise to give way later.

Chris Huhne
Will the right hon. Lady give way on the point that she has just made?

Miss Widdecombe
On that point? All right.

Chris Huhne
I am grateful to the right hon. Lady for giving way, because I wanted to intervene on the right hon. Member for Birkenhead (Mr. Field) on exactly this point.

The scheme that you propose has been tried in both Switzerland and Germany. It is the Gastarbeiter scheme. The truth is that in a developed democracy, when the period for which people have come here to work has ended, there is not the will to throw them out again. As a result, they settle and, eventually, must be absorbed. I am afraid that you are going for a soft option which does not exist.

Mr. Deputy Speaker
Order. I am sorry to have to correct the hon. Gentleman, but he has continually used the second person, thus involving—no doubt unintentionally—the Chair. He must get his language right.

Miss Widdecombe
Indeed, Mr. Deputy Speaker, I have heard you make no pronouncement on this subject for a very long time.

I must tell the hon. Gentleman that if the problem is absence of will, we shall have to find the will. We shall have to implement the systems. That is what today’s debate is is about: it is about finding the will that has been remarkably lacking in the past.

The second strand of immigration is the equally lawful but vast-scale immigration from the eastern bloc of the European Union. We had an answer to that, if only we had implemented it: to set quotas. It is possible that some of it will right itself, with people going back because of the economic downturn, but we need to take a much firmer approach to understanding that even if immigration is welcome—and I welcome the Polish plumbers: they are terrific—if it is on an unpredicted large scale, it will put a sudden pressure on the infrastructure with which we simply will not be able to cope. One of the reasons for the deep resentment that sometimes emerges from various sections of the community is not that the immigrants are unpleasant and not that people do not want them, but people’s recognition that schools, hospitals, housing and other services simply are not geared up to deal with a sudden influx of that order.

Mr. Davidson
Does the right hon. Lady believe that we need managed controls on future EU migration, particularly if Turkey joins the EU?

Miss Widdecombe
Yes, I do. I think that experience teaches us that we must find some method of ensuring that we can exert more control than we have exerted so far.

The third strand, which I particularly want to address because it has been very much pushed to one side in recent public debate—swamped by the Polish plumbers—is the asylum system, which is still the biggest source of abuse of immigration in this country. It is the easiest way for people to come in clandestinely and then utter the magic words “I claim asylum”. They must then be admitted to the country while we examine their claims. As this is a country without identity cards and with a flourishing black economy, even now, it is also a country in which it is phenomenally easy to disappear. It is very hard to—

Paul Rowen
Will the right hon. Lady give way?

Miss Widdecombe
I want to pursue this issue for a while as it relates directly to a point raised by the Home Secretary. This is a phenomenally easy country in which to disappear and the message that goes out is, “If you can get in to Britain, you are very unlikely to be removed.” Twice today, the Home Secretary came up with a ludicrous statistic: that we are removing somebody from this country every eight minutes. Once the Government have stated targets, it is, as the Home Affairs Committee pointed out, the soft targets that are removed.

We do not have an army of immigration officials trying to find those people who came over here, registered and then disappeared into the system, precisely because they are mighty hard to find. Instead, we have people going to the doorsteps of those who have stuck by the rules, given their names and addresses to the Home Office and reported faithfully every week. Before now, on constituents’ behalf, I have given chapter and verse in this regard. Then we hear, “Oh look, it is a removal.” We must distinguish between removing those who are seriously abusing the system and removing those who have stuck to the rules but who may then be unsuccessful. There is a huge distinction and it is one that the Home Secretary was very careful not to make.

I can only say that I stand by the policy that I have always advocated for the control of the abuse, not the use, of the asylum system. I believe that all new asylum seekers should be housed in secure reception centres while we consider their claims, so that we can distinguish much more quickly the genuine ones who get clogged up in the system. That cannot, of course, be done by Tuesday afternoon; it has to be rolled out. Under that system, we will know where those to whom we will say no—which can be 80 per cent. in any given year—are, and will be able to remove them. Then the message will go out: “Come to Britain with a false or flimsy claim and you will be detained, dealt with quickly and sent back.” Nobody will pay £5,000 to a human trafficking agency for that.

That is not to say that we do not welcome those who are genuine, but simply trying to solve this by finding—by whichever way it is done—some overall number, as the Home Secretary seemed to suggest, and saying that everything has to be dealt with within that number, will not allow us to make the distinction between those who use the system and those who abuse it.

Paul Rowen
Will the right hon. Lady give way?

Miss Widdecombe
I will in half a second. The greatest resentment that people feel towards immigrants is towards those who come here illegally, play the system and do not contribute. If we are seen to address that, there will be a generosity towards the others.

Paul Rowen
I am grateful to the right hon. Lady. Does she agree that in addition to the abuse, perhaps the greatest issue as regards asylum seekers are the legacy cases—the 430,000 people in this country whose whereabouts are known to the Government and whose cases are still unresolved? Does she agree that that is a real and pressing issue?

Miss Widdecombe
It is obviously in the interests of fairness and efficiency to resolve people’s cases. With my system acting as a deterrent to people coming in, we would have fewer cases to deal with and we would be able to resolve them much more quickly. I regard my proposed system as a contribution towards greater fairness and efficiency. As I said, there are genuine people clogged up in the queue.

Mr. Frank Field
Does the right hon. Lady accept that if we had a Government who were more successful in controlling our borders, the case that she is making would become more important as people sought other ways of entering when, up to now, they have found it easy to come here legally?

Miss Widdecombe
The right hon. Gentleman and all the House will accept that, whatever we do, people will try to find ways round it. That is why I am trying to counteract such disappearances.

However, none of this is to say that we should not welcome genuine asylum seekers. We live in safety; we will walk out of this place tonight without fear of arrest or persecution because, even under this Government who try to police everything, we still live in a reasonably free country. We should remember that, but that is not to say that we should ever tolerate the consistent and growing abuse of our system, which does a disservice not only to the indigenous community, but to those who are welcome here and who seek to join us on a lawful basis.

17:35:00

Stephen Pound (Ealing, North) (Lab)
It is an honour and a pleasure to follow the right hon. Member for Maidstone and The Weald (Miss Widdecombe), and I do not mean to cause offence, so I hope she will not mind too much if I say that Poland is not in eastern Europe. This is not as difficult as the difference between Kentish men and men of Kent; a brief examination of an atlas will show that Poland is in fact at the heart of Europe.

Miss Widdecombe
I meant that Poland was a former eastern bloc country, which it was.

Stephen Pound
Not for the first time, and certainly not for the last, I stand corrected.

It is absolutely right that almost every contributor to this timely and important debate has mentioned the extraordinarily beneficial impact of immigration on this country. These islands are, in fact, a nation of immigrants. I sometimes think that my hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart) is probably the only purely English Member of this House. If we think about what makes up our nation, it is clear that we have been refreshed by constant waves of immigration. However, despite—or, maybe, because—of this, we have never been able, at least during my brief time here, to discuss this subject objectively and sensibly; we seem to have squeezed ourselves into, as it were, a lobster pot of liberalism, whereby we are so anxious to avoid giving offence that we cannot realistically discuss it. One of the easiest things for Members to do in this House is to make a speech in defence of unlimited immigration to this country, and to talk about the great advantages of that, and always to play the race card in a way that is not normally thought of, as it is actually playing the racist card. We can easily make a speech that is something of a Southwark squirm, going on and on about the great advantages and simply refusing to accept that there are also profound differences and disagreements.

The hon. Member for Ashford (Damian Green)—who appears to have been temporarily deported from his place in the Chamber—made an extraordinarily interesting contribution, but he was wearing the fixed smile tinged with anxiety of the charity mugger as he was trying to make his case, because the point he was making sits ill with the reality of his party’s actions when it was in power. I cannot be the only hon. Member who remembers that in 1997 people would come to advice surgeries who had done 14 years on student visas—14 years doing degree after degree, and constantly coming back and retraining. After 14 years, many of them were married and had children, and it would have been a vicious cruelty to have then forcibly removed them from this country.

We have heard about legacy cases. There were people coming to my surgery in the late ’90s and the beginning of this century who had been here for so long that they had almost forgotten where they came from, and these people were in many instances supported and subsidised by crooked solicitors and lawyers. If there is one thing we should do above all it is to continue in our examination of, and clamping down on, those blood-sucking leeches who take cash from the weakest and most vulnerable people by holding in front of them the false promise of British citizenship in exchange for a lump sum in cash. That was the reality then.

David Taylor (North-West Leicestershire) (Lab/Co-op)
I would be grateful if my hon. Friend could find the time during his contribution to respond to the suggestion made by the hon. Member for Mid-Sussex (Mr. Soames) and my right hon. Friend the Member for Birkenhead (Mr. Field), the co-founders of the group on balanced migration of which I am a member, of breaking in two the process of arrival here and ultimate settlement, with just a stage for points to be obtained for employment purposes, and then points at a later date, perhaps, to be obtained for settlement. Does my hon. Friend not agree that it is important to break that automatic link?

Stephen Pound
My hon. Friend seldom rises to speak in the House without enlightening us. He scatters the caliginosity that sometimes reigns here, and as ever I agree completely with him. He is absolutely right that there has been an automaticity in the process. The assumption was encouraged, in many cases by those who should have known better, that once a person had worked here for a certain period, the process would be just as the right hon. Member for Maidstone and The Weald said. It was assumed that someone would claim asylum, be refused, appeal, be refused, go to an asylum and immigration tribunal, be refused, make a human rights appeal, be refused and then somehow get exceptional and then indefinite leave to remain. They would then become a British citizen. It was a tedious, long process that utterly destroyed any attempt to have managed, let alone balanced, immigration.

We are discussing not specifically asylum seekers but the Australian points-based system, secure borders and border controls. Above all, we are discussing a profound and fundamental disconnect between what is often said in this House and what is felt, feared and expressed by our constituents and in the wider world. I am not saying that we are guilty of some trahison des clercs, but we seem not to be in tune with the majority of people in this country. In that darkness, extremism grows. If we do not confront the issue utterly seriously, people who have no interest in democracy will flourish. That is the true problem, and that is why it is so important that we discuss the matter today.

Mr. Davidson
Given that my hon. Friend is on his train of challenging sacred cows and listening to the views of our constituents, does he agree that we ought to be questioning whether uncontrolled EU migration should continue to be accepted?

Stephen Pound
My hon. Friend, in his seductive way, tries to lead me down a different byway.

Mr. Davidson
Is that a yes or a no?

Stephen Pound
No, I do not agree with my hon. Friend on this occasion, but I do believe in a managed, balanced migration system, wherever the migrants come from. We are a European nation and part of Europe, and I am proud to be a European and a Londoner. We gain massively from our membership of the European Union and I see absolutely no problem with it, but it does not completely devolve power and control over our own borders. That is why, given all that I have heard from the Minister, I salute him and am immensely grateful to him for raising these often uncomfortable subjects. He has done the House and the nation a great service. Since April, 11,000 potential illegal immigrants have been detected and prevented from crossing the channel. That sort of action and work and the move towards a border agency are very important.

The hon. Member for Ashford talked about a border police that would be responsible for removals. When I am on holiday, I sometimes find it embarrassing to admit my job, and sometimes I suffer from difficulties. Can the hon. Gentleman imagine what sort of person would admit to being a member of the deportation squad? That is what we are talking about—a sort of Waffen-SS of the Border and Immigration Agency. The people involved would have the specific job of being deporters. Who would do that, and how could they do it objectively? That is why the existing structure of the UK Border Agency is so much more sensible, so much better and so much more with the grain of public opinion.

Alistair Burt (North-East Bedfordshire) (Con)
Before the hon. Gentleman completely wipes the slate clean about how these matters were handled in the past and praises the fact that we are now able to talk about them in a responsible atmosphere, will he concede that when my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) and I introduced regulations to control asylum benefits and made many of the same arguments about the difficulties of controlling asylum and immigration when we were in office, we did not get the same considered reception from the Opposition Benches? The undercurrent from the Opposition was that our motives were wrong, which is not how the current Opposition are prepared to handle the debate. We would have been able to have much better discussions had the Opposition at the time handled the matter differently.

Stephen Pound
Not for the first time, people conflate asylum with immigration. We are not talking about asylum. It has been heard strongly from Conservative Members that no one is talking about resiling from our position on people seeking asylum in this country. That is not what we are talking about; we are talking about people who come to this country by different routes, be it those who come as students and subsequently stay, or those who come through arranged marriages and then enter into a society and a community, which is not in their interests or ours. We are not talking about simple asylum per se, because, as far as I am aware, no one in the Chamber is saying that we should resile from our international obligations to offer asylum. Denying benefits to asylum seekers very much comes into that category, and if the hon. Gentleman did not receive the support of all parties in this House, it was perhaps because of the point that he was making and the way in which he was making it. Surely we can agree that there cannot be one person in this Chamber who does not feel that we must have a fair system that works and is in the national interest. The disconnect worries me, because my constituents, like most of our constituents, do not believe that our system is fair. That is why I support the Prime Minister’s amendment.

Miss Widdecombe
This follows on from what my hon. Friend the Member for North-East Bedfordshire (Alistair Burt) said, and it leaves aside the question of asylum. When we proposed—I was the poor muggins who had to take it through—to oblige employers to check up on the right to work of the people whom they were employing, we were cried down by Labour Members, who said that it was unreasonable. Everything has changed. The tone has changed. Does the hon. Gentleman recognise that Labour Members have not contributed much to that change?

Stephen Pound
I accept that the tone has changed since the late Enoch Powell, when he was Health Minister, spent the early 1960s going round the West Indies begging people to come here. I accept that it has changed since the Opposition proposed some fantasy island where asylum seekers would be housed. I accept that the tone has changed, but I hope that, like me, the right hon. Lady and all in this Chamber will accept that the current situation is not about race; it is about numbers and volume. That is more important for our nation and the people whom we are sent here to represent than any possible partisanship on this matter. We have to go forward, accepting that everybody has made mistakes in the past and that we are living with the dragon’s teeth sown then. We have to address this issue tonight, and the amendment tabled by the Prime Minister lists a safe, sane and sensible way forward that will ultimately unite, not divide.

17:48:00

Mr. Peter Lilley (Hitchin and Harpenden) (Con)
I am grateful for the opportunity to speak in the debate, which is so different in tone and content from so many debates that this House has had on immigration over the years. A number of distinguished contributions have been made, including those by the right hon. Member for Birkenhead (Mr. Field), my hon. Friend the Member for Mid-Sussex (Mr. Soames), and the hon. Members for Birmingham, Sparkbrook and Small Heath (Mr. Godsiff) and for Ealing, North (Stephen Pound).

The Government’s case on immigration up to now—we are about to find out whether or not it has changed as a result of the appointment of the new immigration Minister—has been based on three pillars. First, that mass immigration is economically necessary and brings substantial economic benefits; secondly, that mass immigration is socially beneficial, giving us diversity and cultural benefits that are wholly positive; thirdly, as a consequence of the first two, that the only reason anyone can have to oppose mass immigration is bigotry and a bigoted hostility based on a caricature of all immigrants as scroungers, criminals, layabouts and ne’er-do-wells, that we should have no truck with that and that any opponent of mass immigration must be motivated by bigotry and hostility to immigrants.

As far as I am concerned, I have never accepted that caricature of immigrants. I believe it to be, essentially, the reverse of the truth, which is that most people who come to this country to live, work and settle are hard-working, law-abiding and motivated only by a desire to do better for themselves and their families. The caricatures sometimes portrayed in some of the tabloids are the reverse of the truth.

However, because I do not accept the first two pillars on which the Government’s case has been based, I have always thought that there are other reasons why we should question the need for mass immigration. I shall not dwell on each of the supposed economic benefits that the Government have from time to time suggested, because I have rebutted them in a pamphlet entitled “Too much of a good thing? Towards a balanced approach to immigration”. Its title presaged the formation of the all-party group on balanced migration. Those supposed benefits were also more authoritatively refuted by the House of Lords Committee report on immigration, which has not received an adequate response from this Government.

I know of no serious study that has found any substantial economic benefits from mass immigration accruing to this or any other country. The Canadian royal commission concluded:

“The broad consensus…is that high levels of immigration will increase aggregate variables such as labour force, investment and real gross income, but cause…real wages to decline.”

A similar conclusion was reached by a similar high-level US study set up by Congress. In this country, the Government’s favourite think-tank, the Institute for Public Policy Research, published a study by Mark Kleinman that concluded:

“There is not a compelling long-term case for increased immigration purely in terms of economic benefits.”

The leading economist on such matters, Professor Borjas, has concluded that the economic benefits from immigration are small, and not a single academic body has concluded that they are high. So the Government’s case, as far as the economics are concerned, has always lacked substance. That is not to say that we should have no immigration, but the case for mass immigration as economically necessary is wrong.

I have often said that immigration is like a lubricant, not a fuel. Cars need a certain amount of oil, otherwise they will not go. If they have lots more oil put in, they do not go any faster—indeed, they clog up. Immigration is not the fuel that is needed to make an economy grow faster. Of course we should allow some immigration, to lubricate the economy, but we should not allow or encourage mass immigration in the belief that it is economically necessary.

Mr. Davidson
Given that the right hon. Gentleman seems to be expressing the view that there should be controls on migration, is he of the view that there should be controls on migration from the EU?

Mr. Lilley
I do not think that they are either necessary or desirable, for the simple reason that there is little net migration from one wealthy country to another. There has been some immigration from the new poorer countries that have come into the EU, and we should have exercised the powers that we had under the treaty to limit that. We did not, it is too late and I would not advocate leaving the EU in an attempt to put the clocks back—because that is what would be necessary to change the situation. In the longer term, there is likely to be little net migration within the EU unless and until we are foolish enough to allow Turkey in without appropriate measures to deal with the potential demand from that very large and very poor country.

The co-chairman of the US Senate committee, Professor Teitelbaum, enunciated what he called Teitelbaum’s law—that there is no such thing as temporary immigration from a poor country to a rich country. The counterpart is that flows between developed countries are normally for comparatively short periods, five or 10 years, and reverse themselves.

As for the alleged social benefits that flow from mass immigration, I accept that some immigration does bring the benefits of diversity and cultural variety, but those benefits do not increase proportionately with the numbers. Having one Indian restaurant is fine, as is having two or three Indian restaurants, but 10 times as much benefit is not gained from 10 Indian restaurants, just as mass numbers of people with different cultures do not bring proportionately greater benefits than comparatively modest numbers. The idea that we need to allow unlimited—or mostly unlimited—immigration to achieve some of the benefits of diversity and cultural enrichment is mistaken.

Anne Main
The Communities and Local Government Committee visited Peterborough and talked to residents, many of them from different ethnic backgrounds. They said that the problem was that the new influx was causing strains because of its sheer volume. It was not the ethnicity or the diversity that were the problem, but the sheer pace of change, and that was causing problems in settled ethnic minority communities.

Mr. Lilley
That is certainly true, and I found that when I represented much of the seat now represented with such distinction by my hon. Friend in St. Albans. I have represented large numbers of Bangladeshi, Pakistani and other ethnic groups, as I now do Sikh and other groups in my constituency. Many of them have grave reservations about the impact of continued mass immigration on the stability of their communities.

Sometimes there is something rather patronising and fundamentally racist—in an anti-British sense—about some of the arguments. As the hon. Member for Ealing, North almost suggested, we are held to be in need of a constant influx of people because we need refreshment and strengthening, without which we poor Brits could not survive. Of course we want to welcome a flow of people from abroad, but the idea that everybody who comes to this country is so superior to those already here is a bit of an absurdity.

Stephen Pound
That is a parody of what I said. We all know the consequences if a group of people descend into inbreeding without refreshment from outside. I am not saying that we are an inbred society, but refreshment from outside is healthy.

Mr. Lilley
In parodying the hon. Gentleman, I was taking over his normal role, and I apologise for that.

I became interested in the issue of immigration not primarily because of the economic, social or other consequences, but because I was puzzled about the constant rise in the targets for new house building imposed on my constituency. When I looked at the figures, I found that the driver was net immigration into this country which, according to the numbers to which the Government have admitted, will account for a third of the expected population growth and household formation. If we allow for the increased projection in immigration, the figures show that more than 40 per cent. of new housing in the UK is required to accommodate the net inflow from abroad. That is absurd. If we had a more balanced migration policy, with those coming to live, settle and work here roughly balanced by those returning home or emigrating, we would not have the same unmanageable pressures to build new homes in the south-east and on the green belt.

It is not unreasonable in a country—England—that is now the most densely populated country in Europe, even more than the Netherlands, for people to be concerned by and worried about that fact. Most of them are not motivated by bigotry or hostility to incomers, many of whom are their neighbours. If those people are members of the upper middle classes, as the right hon. Member for Birkenhead said, they have personally benefited from the availability of relatively cheap servant labour. Indeed, it constantly puzzles me that in this House, an issue that is essentially a class issue—the desire of the upper middle classes to have an unlimited supply of labour—is supported more by the party that is supposedly the party of the working class than it is by those on the Opposition Benches.

We need to know whether the Minister is changing policy or not, or whether he is simply making outrageous statements to get publicity, as has been done so many times by Home Office Ministers. The right hon. Member for Sheffield, Brightside (Mr. Blunkett) deliberately used the word “swamped” to get controversial headlines. His successor, the right hon. Member for Norwich, South (Mr. Clarke) talked about driving out people who are a burden on this country. His successor, the right hon. Member for Airdrie and Shotts (John Reid) said that foreigners come to this country and steal our benefits. We have had all those statements, which get good headlines and create the impression that policy is being changed, but policy is unchanged and the number of people who are allowed to come here, to settle and to work in this country increases inexorably.

Last year, there was a gross inflow of more than 600,000 people to this country. That is far larger than anything that has been experienced, both proportionately and in absolute terms, by this country in the past. It is time that we changed the policy, as the Minister said that he would before he subsequently appeared to change his mind on the radio, backtracked and rowed away from the idea.

18:01:00

Colin Burgon (Elmet) (Lab)
I begin by doing something that is very unusual for me—defending a Manchester United supporter; I understand that the Minister is one.  I am not requesting a job by defending him, but I watched his performance on the TV and I thought he was straightforward. The proposals are to be welcomed.

The debate is also to be welcomed because, as several Members have said, the issue is very important among our voters. We do it a disservice by not bringing it to the attention of the House and speaking about it in a much more detailed and vigorous way. We must have the debate, and it is being conducted constructively. That is particularly true of the comments made by my right hon. Friend the Member for Birkenhead (Mr. Field). His proposals offer us a way of developing some consensus on the issue.

It is also right to want to discuss, consider and debate the question about the optimum population of the country. We have heard comments about the growing population in the south-east of England, the various environmental pressures that it gives rise to, and the population per square mile. It is legitimate to ask what numbers we think that the country, as a given area on the planet, can sustain.

It is right that such a legitimate discussion should be held in the context of the policies of a nation state. The debate about what is legitimate and what is within the realm of a nation state is critical at the moment. Over the past 20 years or so, we have seen the concept of a nation state denigrated by globalisation and the forces that have been unleashed by neo-liberal ideology. I would argue that in the past few weeks we have seen a classic example of what unregulated markets can do and of the chaos that spins out from markets being unregulated. Unless we manage migration, it has the same potential to cause massive repercussions and problems in our society. As I said, the concept of the nation state has been undermined by the supremacy of the neo-liberal theory that the world exists simply as a place in which the free movement of goods, capital and labour is to be supported at every turn.

Let me pick up on some of the comments made by the Conservatives. We have, in effect, had an incomes policy in this country for the past decade. That incomes policy is a migration policy. It has hit not the big earners, but the unskilled and the semi-skilled. If we refuse to accept that, we refuse to come into contact with reality. Any MP worth their salt gets out and about, and that is what they pick up. Evidence has already been quoted from the House of Lords Committee that was set up and from various Trades Union Congress reports showing that the net effect of mass migration has essentially been to drive down the wages, terms and conditions of the unskilled and the semi-skilled.

Some people trot out the argument that we have always had migration into this country. Let us stop and consider the historical examples. We are moving in completely different times from those that we have had before. Earlier, the example of the Huguenots was quoted. The edict of Nantes, as we all know, was revoked in 1685 and the Huguenots were faced with a choice—either they stayed in France or they left. It was a matter of life and death.

I owe my presence here to the large migration of the Irish community in the 1840s, following the failure of the potato crop. At the same time, the British empire was exporting food from Ireland, even though people were starving. The Irish came here because it was a matter of life and death. Similarly, one could argue that for the Jewish population that arrived at the turn of the century, following the pogroms in Russia, it was a matter of life and death. Commonwealth immigration in the 1950s and 1960s was essentially part of the political deal. We had exploited those countries for 100-odd years, and the deal was that they could have access to this country, too.

What drives the current movement? We have heard it expressed: people want to develop some form of capital to go back to their original country and set up a business. If the migration that we are experiencing at the moment is driven by no more than the “honourable” desire to drive a Mercedes, build up a little capital, get a big business and acquire the latest electrical goods, I will not be won over by that. That form of movement will be fought in the last ditch.

What steps can we take to address the huge population movement? I am sorry that my hon. Friend the Member for Glasgow, South-West (Mr. Davidson), with his absolute obsession with asking everybody about their policy towards the EU, has left. If he were present, I would tell him that I think that we should be raising the point in the EU that nation states ought to have the ability to control migration, even within the EU. That is a sensible policy. If the institution is not flexible enough to respond to that, there must be question marks against it.

We cannot divorce mass migration movements from global inequality. People seek to migrate to the UK, to other countries in western Europe and even to the United States because they cannot have well-paid jobs in their own countries, because they have no proper health service and because they have no proper education. The role of the International Monetary Fund and the World Trade Organisation in determining the outcomes in their states has been particularly injurious. In accepting that this is a global issue, we need fairer trade and more aid. This is a global issue, but the essential instrument for addressing it is the nation state. We should focus on that in the future.

18:09:00

Mr. Mark Field (Cities of London and Westminster) (Con)
It is a pleasure to follow the thought-provoking contribution of the hon. Member for Elmet (Colin Burgon). It has been an interesting debate, which has often been at cross purposes. I will probably have a share of that in my speech today. However, I very much agree with two speeches made by Labour Members, who said that the British National party has picked up support and votes only because mainstream politicians have so patently failed to articulate public concerns, to the extent that the only outlet for such worries about immigration is often to be found at the extremes of the political arena. Anyone who is complacent about these matters need only look at the BNP’s success at local elections to see that, week in and week out, in places where one would not expect the BNP to have even the tiniest bit of support, it is getting 15 per cent. to 20 per cent. in council by-elections.

Had we always made room for sensible, rational discussion on immigration, the immigration system would have been sharpened and improved to the benefit not just of the indigenous population—by which I mean both the black and white indigenous population—but of those seeking new lives in the UK. Those who seek to silence debate on this topic by crying racism should be under no illusions about the nature of the current system. It is, I am afraid, often confused, inequitable, unjust and so administratively chaotic that not only is the British taxpayer being failed but legitimate migrants and illegal immigrants alike are often being mistreated.

I hope that the House will forgive me for being slightly parochial, but I represent the Cities of London and Westminster constituency in the heart of our capital. Westminster especially—which to most British people is uninhabitable because of the exorbitant cost of renting or owning property here—is one of the top destinations for immigrants arriving in Britain for the first time. It is a constituency of the very rich and the very poor, and an area of incredible hyperdiversity and hypermobility. That causes some very real problems on the ground, and I spoke about them in the House only a couple of weeks ago when I set out the difficulty faced by Westminster city council in providing services for all those unaccounted for in census data. I am sure that those difficulties will be familiar to all hon. Members who represent other inner-city seats.

Immigration is the single biggest issue in my constituency postbag. It gives me—or I suppose it would be more honest for me to say my private office—daily exposure to the chaos that is rife in the Home Office system. I do not want to make an overly partisan point, as it is fair to say that many of the problems predate 1997. I suspect that they will remain for some years to come unless we get a grip on them.

The people who write to me are not necessarily voters, but my staff and I devote enormous amounts of time to trying to help them with their various complaints against the Home Office. In preparing this speech, I looked only at the last week of cases that have been brought to my attention. It was a light to medium case load, with nothing exceptional and no out-of-the-ordinary cases. From the replies that I have received from the Home Office, it is clear that there were three cases in which a constituent had arrived in the UK many years ago, had been denied asylum, had had numerous appeals rejected and yet was still living here—and that is a problem to which a number of other contributors to the debate have alluded.

In fact, one person had been told that he had no basis of stay and yet he resided—I can only assume mistakenly—in one of our precious social housing properties. That is heartbreaking, considering the number of letters that I get letters from lifelong Westminster residents who are forced to leave the capital as a result of being employed in low-paid jobs that make them just wealthy enough not to be considered a priority for social housing.

I do not wish to be accused of taking any of the Government’s actions out of context for political gain in this debate, so I shall simply read the UK Border Agency’s reply to another of my other constituency cases that came in this week. I shall call the constituent Mr. A, for privacy reasons, but the letter speaks for itself in exemplifying just how ludicrous our immigration system can be. It states:

“Mr A arrived in the UK and applied for asylum on 15 September 1996. The asylum claim was refused on Third Country grounds on 17 September 1996.”

So he arrived more than 12 years ago, and his asylum claim was refused just two days later. The letter continues:

“On 23 September 1996 it was decided that his claim should be considered substantively, and Mr A’s application for asylum was refused on 11 August 1998. Mr A applied for Further Leave to Remain on the grounds of marriage on 18 July 2000”.

The House should note that that was two years after he had been refused asylum.

“He requested that his application be considered together with his application for asylum. Mr A’s appeal against the decision to refuse him asylum was dismissed on 9 October 2001…Further representations were submitted on Human Rights grounds on 30 November 2001 and additional further representations were submitted on 22 December 2004”.

Again, another three years seem to have passed in the flick of an eye.

“Mr A was sent a family questionnaire for consideration under the terms of the Family Indefinite Leave to Remain Exercise on 8 March 2005. He was found to be ineligible due to an unspent criminal conviction on 5 October 2005.”

There was a further reconsideration of his application on 2 March 2006, and he was again found to be ineligible, as he had not declared that he had a criminal conviction. Further representations were submitted in June 2006 and a request for humanitarian protection was made at that stage.

The case remains outstanding. I am sorry to have gone into such detail, but it is not untypical of the sort of case that MPs see. Heavenly only knows when it will be resolved, but the whole sorry catalogue of events represents a relatively unexceptional constituency case and raises many questions. For instance, why, after he had been refused asylum so often, was this constituent not deported?

I could go into some detail about other, similar cases but I appreciate that time is tight in this debate. However, I feel that the easiest option for reducing the overall number of immigrants would be the most ill-advised route in many ways and, to that extent, I do not entirely agree with the contributions that have been made by hon. Members on either side of the House.

An ever-expanding number of non-EU nationals—and especially people working in highly skilled, global industries—are coming to this country and boosting our economy. A drastic reduction in that group would be neither desirable nor advisable. Similarly, we could relatively easily slash the number of non-EU students coming here to study, or prevent them from staying on to work for two years after graduation. However, I believe that the Labour Government have got that matter absolutely right over the past 10 years: we need to encourage that set of people, not least because many of them will return home as great ambassadors for this country in the decade to come.

Among the other groups of people who come to live here are the many dependants, relatives and would-be relatives of previous immigrants. They often arrive with very few skills and little understanding of the English language. I think that all hon. Members accept that that issue will continue to be very sensitive, and there are strong practical reasons why Members of Parliament who are in contact with the Home Office need to ensure that at least some of those immigrants will continue to come to these shores. A degree of hypocrisy is often evident: we all make great representations on behalf of our constituents because we recognise that there might be some electoral advantage down the line, but we also make strong statements about the generality of the matter. Complaints about immigration can be applied to each and every one of us, as Members of Parliament, just as much as they are to the Home Office.

It seems to me that we could also look to stem the number of asylum seekers who come here as political refugees, or indeed to restrict the major immigration influx coming from the EU. As many other hon. Members have pointed out today, however, we are signatories to several international agreements and we are also a signed-up member of the EU. Short of withdrawing from such treaties and reneging on our duties as an EU member state, there is little that we can do to stop such parties coming to our shores. Even so, it was interesting to hear the hon. Member for Elmet and the right hon. Member for Birkenhead (Mr. Field) make it clear that they felt that it should be possible for nations in an expanded EU to have some special immigration arrangements.

Given the severe limitations on our room to manoeuvre, it is all the more important that we deal effectively, swiftly and pragmatically with each and every person who makes an application to live here. I fear that the quota system for immigration will lead to a distortion of statistics, priorities and our economic needs. Above all, it is therefore crucial that we tighten the current decision-making process, stand firm once a decision has been made, and act quickly to remove any person found to have no basis of stay.

As other hon. Members have pointed out, the relatively clement economic weather until recently has allowed us to turn something of a blind eye to many of the problems that I have described. However, a continued refusal to get a grip on our immigration system risks causing conflict in British communities that will haunt us in the decades to come.

18:18:00

Martin Salter (Reading, West) (Lab)
I see that the immigration Minister has returned to the Chamber, and I welcome him back to his place, as many of the comments that I intend to make will be aimed in his direction. I and many of my colleagues support his intervention in the debate over the weekend—certainly his first intervention, anyway.

I rise to speak against the rather negative motion tabled by the Conservative Opposition. In my short contribution, I shall draw on my own experience of representing the multi-ethnic and multicultural town of Reading for the best part of 25 years—first as a councillor and then, for the past 11 years or so, as its Member of Parliament. I will also draw on the evidence given to the Home Affairs Committee about the Government’s new points-based immigration system and the advantages that it will bring.

We all, if all too rarely, get moments of stunning clarity—others might call them flashes of inspiration—in our busy lives as Members of Parliament. Luckily for me, I was uncharacteristically inspired at an event one Saturday in the summer of 2004 in helping to produce a piece of work of which I am immensely proud. It became a book celebrating the contribution to Reading made by the people who came to our town from all over the world in search of a better life. Two years later, with the help of the Heritage Lottery Fund, Reading borough council and local charities and volunteers, our book, “Routes to Reading”, was published, chronicling the stories of 19 people—from Bosnia to Barbados, from Italy to Ireland, from Uganda to Ukraine—who now make up the rich and diverse community of Reading. I urge other hon. Members to set up similar projects in their constituencies, particularly if, like me, they are sick to the back teeth of immigrant communities being regularly trashed by sections of the media who seem happy to do the hate-filled work of the British National party for them.

I will read into the record the background to the Reading immigrants project, as it gives a useful insight into the patterns of immigration to my town:

“The event was held at St. Giles church in Southampton Street and I was invited along in my capacity as a local MP with my predecessor Sir Anthony Durant”—

who some Conservative Members will remember with affection.

“Sitting at the front of the church I looked out on the sea of faces, many of whom I had known for most of the 20 years that I had spent in public life in Reading. There were people from St. Vincent, Barbados, Jamaica, Guyana, Grenada and elsewhere. Somewhat morbidly I recalled how we were all aging fast and then I realised that unless steps were taken soon all these people’s memories and stories would be lost and an important part of the history of our town would never be told.

You see, Reading is a town based on immigration. Initially from rural areas in the south of England in the 19th century as people moved off the land to work in the factories, brick kilns and mills which sprang up as part of the industrial revolution. There followed further immigration from Wales, Scotland and Ireland as workers sought new opportunities not available to them in more economically depressed areas.

The stories collected by this project, of which a selection are reproduced here, tell of people fleeing war-torn Europe following the Second World War, Bosnia in the 1990s, and political persecution in Zimbabwe. They tell of people seeking security and freedom, a new life to overcome poverty or a desperate situation at home. They tell of separation and romance, some coming to join their partners, or to seek out new opportunities.”

My town is a diverse community with a proud record of good race relations. While it is legitimate for us to talk about community cohesion and the impact of large-scale migration, let us never fall into the trap of using language so intemperate that we demonise people who have made such a contribution to the country and communities in which we live.

Having celebrated the contribution made by the majority of hard-working members of our immigrant communities, I turn to the policies designed to ensure that migration is properly managed and that our systems are fair and transparent. I support the introduction of the points-based immigration system; indeed, my only regret is that the Government failed to introduce it much earlier. I have just returned from a Home Affairs Committee visit to India and Bangladesh, where we saw the points-based system in operation. It became clear to members of the Committee that it was working pretty well in the visa centres that we visited in Dhaka and Delhi. However, concerns were expressed in three areas. First, should there be an independent review of decisions, not just the administrative case review that takes place at the moment? Secondly, will global companies, many of which are based in India, be able to obtain the work permits that they need to enable their businesses to prosper? Thirdly—we have all read about this in the press—Bangladeshi restaurateurs were worried about potential shortages of trained curry chefs and their inability to qualify through the tier 2 process.

Having taken evidence—unlike the hon. Member for St. Albans (Anne Main), I was actually at the various meetings in Bangladesh—my personal view is that those concerns are unfounded or resolvable. For example, it would be perfectly possible to introduce a more transparent system into refusal decisions, but I do not think that anyone would want us to take the route of allowing for a judicial review and the inevitable delays that that would trigger. A judicial review in such circumstances would only jam up the process; and after all, a work permit is not an inalienable human right.

As my hon. Friend the Member for Luton, South (Margaret Moran) said, we had an excellent meeting with the trade association, the National Association of Services and Software Companies, or NASSCOM—a body with more than 1,200 members, of which more than 250 are global companies from the UK, the United States, the European Union, Japan and China. It was clear from talking to the people at NASSCOM that on the whole the points-based system was working well, and that many of their initial fears were unfounded. Based on a study carried out in 2007, NASSCOM found that the average stay of employees of its member companies in the UK was 18 months, so the pattern of migration was short-term working rather than longer-term settlement.

Mr. Andrew Pelling (Croydon, Central) (Ind)
Given the hon. Gentleman’s expertise having served on the Select Committee, does he feel that the points-based system could be used at times of economic downturn, as I would like, to bring about a net reduction in population, taking advantage of overall emigration from this country?

Martin Salter
The hon. Gentleman is inviting me to bring my conclusions into the middle of my speech. I think that my hon. Friend the Minister would say that the points-based system, as opposed to a crude cap, gives us levers and valves that can be turned within the existing five tiers to manage the flow of numbers, but based against the needs of communities, public services and the economy. That is the difference between the two approaches.

The Conservative motion is somewhat incoherent. We have heard good contributions from Conservative Members that make the case for an overall cap in numbers. However, the motion recognises that nothing can be done about the flow of workers in and out of the EU. In that context, a cap would be fairly meaningless, and Conservative Members should reflect on that.

There is another reason why a crude cap should be approached very carefully. We heard from NASSCOM that the US quota system issues about 65,000 work permit visas annually. The quota opens on 1 April. By 6 April, there are about 150,000 applications, which are then dished out on a lottery basis. That hardly takes into account the needs of business or the changing needs of the economy over a 12-month cycle.

The Committee also considered what would be the likely impact on our economy if Britain were to introduce such a crude cap. We asked British high commission staff to estimate the impact on UK business of a quota on UK immigration. Overall, the value of bilateral UK-India trade alone is £9 billion annually. The staff considered that the Indian IT sector in the UK is worth £3 billion to £4 billion annually. It was made clear to us that if we took the approach of a crude cap, as proposed in the motion and elsewhere, much of that business would transfer to eastern European countries and the British economy stood to be the net loser. The points-based system is the right approach, but it will need Ministers who are forthright enough to say no, and who will turn the taps, pull the levers and use the mechanisms that the system delivers to control and manage migration.

I have worked with the right hon. Member for Maidstone and The Weald (Miss Widdecombe) and with parties across the House in trying to get justice for Gurkhas. How would that fit with the Conservatives’ proposed cap? If a quota system were introduced tomorrow, would they breach it if we got the right policy decision from the Home Secretary, as I hope we will in a few weeks’ time, to allow in a few Gurkhas each month—people who are prepared to put themselves in the way of a bullet to defend this country, and who we all want, in our heart of hearts, to be given settlement rights in this country? I am afraid that the Conservatives have not thought through their policies, despite the fact that they have made some good contributions.

Finally, I want to turn to what occurred in Sylhet as regards the concerns of the Bangladeshi restaurateurs. We have between 300,000 and 400,000 people of Bangladeshi origin in Britain, some of whom are in the most deprived communities. I do not accept the argument that it is only possible to recruit a trained Bangladeshi curry chef from people who are already living in Bangladesh. Nor do I accept the absurd contention in the latest edition of Curry Life—a magazine that I commend to all hon. Members—that the points-based system is completely racist. A system that applies equally to a white Russian, a black Jamaican or someone from south Asia is not racially motivated. It is about meeting the needs of the economy, and the needs of the restaurant sector can be met by internal UK recruitment or the establishment of a college in Sylhet, part-funded by the Department for International Development, which will allow the training of chefs to enable them to acquire the tier 2 qualification.

This is an important debate, if not a coherent motion. It is right and proper that we have a new approach to migration, but it is equally right and proper that we clearly acknowledge the massive contribution of immigrant communities to all our communities and to making Britain the liberal, tolerant society that we should all be proud of.

18:30:00

James Brokenshire (Hornchurch) (Con)
I am delighted by the welcome given by many Members on the Government Benches to this debate. When I was preparing my comments over the weekend, I wondered whether it would be an example of a brave new period of bipartisanship, given that the new immigration Minister, whom I welcome to his position, was making statements in the press following his appointment, such as

“On a common sense level there has to be a limit to the population”

and

“You have to have a policy that thinks about the population implication as well as the immigration implication”.

It seemed as though the Minister accepted a great deal of what we on the Opposition Benches have been saying consistently for a long time about the need to take proper account of the pressures on public services when considering population and migration policy—accepting the need for limits to net migration to help promote strong community cohesion and recognising that the previous uncontrolled approach to migration was in need of urgent change. Those initial comments appear to have been amplified and broadened over the past few days, even if they now seem to have been withdrawn. We look forward to seeing which Minister will respond to the debate and the interesting points that have been made.

The debate has exposed stark divisions on the Government Benches and highlighted yet again that the Government are talking tough, seemingly for the benefit of the tabloids, rather than taking action for the benefit of the country, and it has laid bare yet again confusion in the Home Office. I was sorry for the immigration Minister when I heard that in tonight’s Evening Standard the Prime Minister has put out a statement of support for him, which I hope will not add to his discomfort.

The debate has opened up some differences of opinion between the Home Secretary’s comments today and those of the Minister over the past few days. The Minister said:

“It’s been too easy to get into this country in the past and it’s going to get harder”,

yet the Home Secretary said today, “UK borders are amongst the most secure in the world.” The Minister said:

“I think it”—

that is, the immigration system—

“has been too lenient and I want to make it harder”,

whereas the Home Secretary said, “A robust system is in operation”. The Minister said:

“We have to have a population policy and that means at some point we will be able to set a limit on migration.”

He also said:

“On a common sense level there has to be a limit to the population”,

yet we heard again from the Home Secretary, “There is no need for a crude cap.” Finally, we hear that the Minister said that

“people didn’t believe the authorities knew what they were doing and there’s a very good reason for that—they didn’t”,

whereas we hear the Home Secretary saying, “We have an effective immigration system.” We wait to hear how the Minister reconciles the differences of opinion that appear to have opened up on the Government Front Bench this afternoon and how a consistent response will be achieved. We look forward to that with interest.

The debate has been wide ranging and we have heard some interesting contributions. The hon. Member for Eastleigh (Chris Huhne), who is not in his place, seemed to open up a new division between Scotland and the rest of the country. We may not have followed his line of argument, but I agree that we should not blame immigrants in a downturn. We need to treat that issue carefully. The right hon. Member for Birkenhead (Mr. Field) and my hon. Friend the Member for Mid-Sussex (Mr. Soames) made some important points about the all-party balanced migration group. It would be interesting to know whether, as was implied in their contributions, the Government share their views.

The hon. Member for Birmingham, Sparkbrook and Small Heath (Mr. Godsiff) rightly characterised the sensitivities aroused by the debate. It was interesting to hear that he welcomed the frank comments from the Minister, even if they have been withdrawn. My right hon. Friend the Member for Maidstone and The Weald (Miss Widdecombe) was right to point out that the debate has changed. She was also right to say that the Government have mishandled the immigration system. The hon. Member for Ealing, North (Stephen Pound) correctly emphasised the beneficial impact that immigrants can have. The question is the extent, nature and circumstances of that, which is the key part of the debate.

My right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) highlighted the bigotry and hostility that may characterise the debate and was right to draw attention to the report from the House of Lords Select Committee on Economic Affairs and its recommendations. We wait to see whether the Minister responds more formally and properly to a number of the points raised in the report, in particular the recommendation that

“The Government should have an explicit and reasoned indicative target range for net immigration, and adjust its immigration policies in line with that broad objective.”

The hon. Member for Elmet (Colin Burgon) welcomed such a serious debate, and we are grateful that he welcomed our calling it. My hon. Friend the Member for Cities of London and Westminster (Mr. Field) emphasised the extent to which immigration issues feature in his constituency postbag, as they do for so many of us. Finally, the hon. Member for Reading, West (Martin Salter) drew attention to patterns of immigration in his constituency. On his point about the Gurkhas, we have made it clear that they should be entitled to settlement because of the contribution that they have made to the armed forces and to the interests of this country.

In the past 20 years, our population has grown by about 4 million. Over the next 20 years it is projected to grow by around 9 million—more than twice as fast. Latest figures from the Office for National Statistics suggest that our population of just under 61 million today will grow to nearly 63 million by 2011, 65 million by 2016 and more than 71 million by 2031. Part of the increase is accounted for by a change in Britain’s birth rate, which had been declining but is now increasing, and a rise in life expectancy. However, the most important source of population growth, as we discussed today and have seen in recent years, accounting for about 70 per cent., is inward migration from abroad. [Interruption.] We welcome the hon. Member for Eastleigh back to his place.

According to the Government, net migration is of the order of 200,000 a year. These increases are on a different scale from what we have seen in the recent past. The House of Lords Committee on Economic Affairs described the scale of net immigration as “unprecedented in our history”. Non-EU migration, excluding British citizens returning to live in this country, accounts for nearly 70 per cent. of all immigration. Of course overall non-EU migration includes asylum seekers, students and family members, as well as economic migrants. We can and should limit non-EU economic migration, balancing the needs of the economy with the need to promote community cohesion and moderate the impact on public services.

The figures hide more fundamental shifts in population. If a community experiences a sudden upsurge in its population, as we heard from many hon. Members in all parts of the House, the way in which it delivers and configures its police service, schools, health care and housing policies has to change. Crucially, because of the Government’s lax control and lack of information about population, that money does not follow the people. Local authorities, police forces and the health service find that their already tight budgets are stretched to breaking point by a sudden and seemingly unplanned and woefully unanticipated increase in population. The Local Government Association estimates that as many as 25 local authorities face funding shortfalls because Whitehall has underestimated the size of their populations.

Although the immigration Minister has floated some personal thinking on the issue, the Prime Minister and the Government cannot tell us whether they think that the population of this country is too low, too high or just about right. Perhaps the Minister will give us his thoughts on whether our population is growing too fast, too slowly or at about the right pace. Perhaps he will confirm whether he does think that there is a maximum limit beyond which the population of this country should not go. I remind him of his quote from last weekend:

“This Government isn’t going to allow the population to go up to 70 million. There has to be a balance between the number of people coming in and the number of people leaving.”

Does he stand by that quote, and is it supported by the Prime Minister and the Home Secretary?

The Minister’s weekend comments on migration and population were framed—ill-advisedly, I think—in the context of employment and the downturn in the economy. I say ill-advisedly because a population strategy needs to be able to address all conditions in the economy. The issue does not suddenly become relevant because of changed market conditions; indeed, the Government’s previous failure to act is one of the things of which we have been most critical.

The approach should be consistent, dealing with the good times as well as the bad, and with the boom as well as the bust. Our domestic unemployment rate is shockingly high. Nearly 5 million adults of working age are on out-of-work benefits—and 4 million of them, according to the Government’s own figures, want to and could work if they had the skills, incentives and support. Perhaps most shockingly of all, 1.3 million young people between the ages of 16 and 24 are not in education, work or training—nearly 20 per cent. more than when the Government came to power in 1997. Despite the Prime Minister’s rhetoric of “British jobs for British workers”, the reality is that 80 per cent. of new jobs created since 1997 have gone to migrant workers.

Britain has gained from the arrival of highly skilled workers in this country to meet skill shortages. However, although we need to accept and be honest about the fact that some immigration is good, it is not necessarily good in every circumstance. In particular, the advantages should not be overstated; that is why, as the House of Lords Committee on Economic Affairs stated in its report, GDP per person is the most appropriate measure to assess the benefits of migration. On that measure, the benefits are not so clear cut.

If the Minister is serious about putting proper limits on economic migration, I welcome that seismic shift in Government thinking. If he is prepared to accept past mistakes and policy failures, that will be a welcome step forward. If he is willing to acknowledge that this country is lagging behind other European countries in managing migration, that will be a breath of fresh air. However, after more than a decade of uncontrolled immigration, strained public services stretched by population shifts and a catastrophic failure in forecasts, I, for one, am not holding my breath.

18:43:00

The Minister of State, Home Department (Mr. Phil Woolas)
I thank right hon. and hon. Members for kindly welcoming me to my new job; I am especially grateful to those on the Conservative Benches for their kind words. I pay full tribute to my right hon. Friend the Member for Birmingham, Hodge Hill (Mr. Byrne), my predecessor in this portfolio, who has, with my right hon. Friend the Home Secretary, put into place the architecture of an immigration policy that will introduce the biggest changes and shake-up to United Kingdom immigration since the arrival of the Windrush in the 1950s.

As the Home Secretary has already said, Britain’s migration policy needs to strike the correct balance, weighing the economic benefits with the impacts on communities and public services. This afternoon we have had a good and serious debate. The most important point to come out of it has also been a passionately held view of mine for years: that the worst thing to do is not to talk about the issue.

The second point to come out of the debate is that the House must show that it does not cast doubt on the motives of right hon. and hon. Members in making their policy changes. That is important, and I welcome the point made strongly by the right hon. Member for Hitchin and Harpenden (Mr. Lilley). People understand that migration can bring benefits to our country, but they also rightly demand robust systems so that we can control who comes here and so that migrants abide by our laws and contribute to our society. My experience in my constituency is that the migrants themselves believe that most strongly; in that respect, there is a misunderstanding in this debate.

It is critical not only that we talk about immigration, and without questioning each other’s motives, but that this House is seen to be debating the issue. That is why I am pleased by the turnout this afternoon. I suspect that the debate will not receive as many column inches as short interviews over the weekend, but that is just the nature of the beast.

Alistair Burt
I welcome the Minister to his position; we have sparred a number of times in other contexts, and it is good to see him in his new role. May I take him back to what he has just said about the change in tone and atmosphere? That point is highly significant. Part of the Government’s problem in dealing with immigration has been that when in opposition, they imputed to the Conservative party completely wrong motives in respect of how we tried to deal with the problems. What has changed substantially is that the penny has dropped and that the Minister and his colleagues realise that they got it wrong. If they admitted that, it would help to clear the atmosphere and help us to go forward.

Mr. Woolas
I know the hon. Gentleman well; his constituency covers Yarl’s Wood and he has a deep knowledge of immigration issues because of that, and previous experience. It will not help if I go into people’s motives from this Dispatch Box; I simply say that it is important that we do not question each other’s motives. Let me answer those critics who have questioned mine. Anyone who knows my constituency, as the hon. Gentleman does, will know that its ethnic minority population is greater than my majority; the motive assigned to me by some outside the House would hardly be a good electoral strategy.

In answering the important points that the House has made this afternoon, let me describe how we intend to put into place the substantial change in policy described by the Home Secretary earlier. First, we are strengthening the border. Fingerprint visas are an important part of that; anyone applying for a visa—currently, three quarters of the world’s population—now has their fingerprints checked against UK databases. So far, we have enrolled more than 2.8 million sets of fingerprints. I hope that hon. Members will welcome in a non-partisan way the fact that, as at August 2008, we had detected more than 3,600 cases of identity swaps. A number of Members have said this afternoon that the credibility of immigration policy depends on the belief and reality that the Government and the authorities have the figures. What has been announced is important, and is a move towards that.

Secondly, there is e-Borders. The pilot scheme for our electronic border system has already checked more than 50 million passenger movements since January 2005, and that has contributed to more than 2,100 arrests for crimes including murder, rape and assault. E-Borders will cover 95 per cent. of European economic area nationals, excluding UK nationals who are coming back, by the end of 2010.

Thirdly, we have ID cards. We will be introducing these for foreign nationals next month, to lock people to one identity so that those who are here legally can prove it, and to help to deal with those who are here illegally. By 2014-15, 90 per cent. of foreign nationals, excluding EU nationals, will have an identity card. I believe that there is a consensus for those measures, to help to build the credibility of the policy so that the public are reassured that people are here legitimately and for a purpose. Fourthly, we will have a new single border force with new powers for front-line staff. There is not time to go into the detail on the points made by the hon. Member for Ashford (Damian Green) about the police force and its structure, but the end goal is shared.

We come to the question of the points-based system and how we answer the question that has dominated the debate. The Government will roll out in the next few weeks and months the points-based system that is at the core of the change that I have described. That system is about getting only the right people in, and no more, but it is flexible and responsive to the needs of the United Kingdom. Those needs, to answer the point directly, are defined as economic needs, and we will take into account the social needs of our country. We already have the migration advisory committee, chaired very capably by the excellent Professor Metcalf, and we have the Migration Impacts Forum, which provides us with advice to balance those two factors.

The points-based system that we are introducing is a more powerful cap in policy and statistically than the crude cap proposed, as I understand it, by the hon. and learned Member for Beaconsfield (Mr. Grieve) and his team. I shall explain briefly why. The Conservative policy with a cap, or a limit—if we want to use that word—would cover only one in five migrants under the current system. It is not a population cap. The confusion between a population cap and migration limits has bedevilled this debate. It is the misunderstanding of that by some here, by others outside and, if I may say so, particularly by some upstairs, which is bedevilling the debate. The cap proposed by the Opposition excludes refugees and asylum seekers, European Union nationals and the 350,000 plus students who come to this country each year.

Damian Green
Will the Minister make it clear that he is saying that the Government intend to lower the number of overseas students coming to this country? Is that his policy?

Mr. Woolas
That is not what I am saying at all, and it is not the implication of what I am saying. There is a clear difference between the statement that it is right to look at the population trends of our country—the hon. Gentleman quoted my interview accurately, as did the journalist in question—and the population predictions. This is where the Tory party has the rug pulled from under it. Its population predictions do not take into account the implementation of the points-based system that this Government and this Home Secretary have put in place. Therefore, the Tories political strategy of saying to the country that the Government do not control immigration and, by implication, do not control population, is blown out of the water.

Mr. Frank Field
Might the Minister find time before he finishes to comment on what I thought was the most significant sentence uttered by the Home Secretary this afternoon? She said that the Government now believe that a five-year period of work should not automatically lead to citizenship just because one has been here for five years. That breaks the link between coming here to work and growing the population by immigration.

Mr. Woolas
I would say that every utterance of my right hon. Friend the Home Secretary is significant, whatever her junior Ministers have been doing. The answer to my right hon. Friend’s question is yes. The answer to the question of my right hon. Friend, who is co-chair of the group on balanced migration, and the answer to the question that has been asked outside this place, is that the Government’s policy is that there should not be an automatic link between coming to this country to work and settlement at the end of that period. That is an important point.

Rob Marris
On a connected point, I hope that the Minister can tackle this loophole. I get complaints from some of my constituents, as I am sure he does, about a classic situation, involving a minority. A UK-born woman marries a man from Pakistan. He comes here for two years and a day, gets indefinite leave to remain, divorces her, goes back to Pakistan and brings in another wife. We do not say to him, “You’ve divorced your UK-born wife. Even though you’ve been here more than two years, get out of here and stay out.” We ought to.

Mr. Woolas
The example that my hon. Friend gave is something with which I am very familiar in my constituency as, I am sure, are my right hon. and hon. Friends and others on the Opposition Benches. The Government’s policy is that a spouse has the right to live with a UK-national spouse. My hon. Friend and I have debated that point before, and we will no doubt debate it in future.

Let me compare the cap proposed by the Opposition and the implication of the points-based system that we are introducing. The fact is that the cap proposed by the Conservatives would capture only one in five migrants. The points-based system, without a specific numerical objective, which I believe is impractical and misleading, gives us the necessary controls to cover close to three in five of those in the inflow of non-British migrants. That is how we square the circle put to us this weekend and today.

Damian Green
rose—

Mr. Woolas
In anticipation of further elucidation of how the Opposition will square their policy by saying to the country that there will be a population cap, while they have a detailed policy that covers only one in five migrants, I give way to the hon. Gentleman.

Damian Green
The Minister has just said two contradictory things again, as he keeps doing. He told the right hon. Member for Birkenhead (Mr. Field) that there will be no right to stay here, even if a person has been working here for five years.

Mr. Frank Field
No automatic right.

Damian Green
There will be no automatic right. The Minister told the hon. Member for Wolverhampton, South-West (Rob Marris) that he wants to preserve the rights of foreign spouses of British nationals, even if they have been here for five years. So when he says there is no automatic right, he means that there is no automatic right unless someone is married. That is the first exception, and there will be others as well. He should stop deceiving his right hon. Friend.

Mr. Woolas
The hon. Gentleman is deliberately sowing confusion between the work-based element and the spouse-based element. I do not think that my hon. Friend the Member for Wolverhampton, South-West (Rob Marris) is suggesting that a UK national should not, under the conditions we are putting in place, be allowed to bring his spouse into the country. [Interruption.] I do not think that he is saying that.

Along with the proposals for earned citizenship, it is crucial that this country helps immigrants to help themselves to integrate into our society. That is what I, my right  hon. Friend the Home Secretary and the Government believe has not always been the case in the past. It is crucial that we bring that help to bear.

The change in the policy has been introduced primarily through the points-based system. There will be tougher border controls. We will have credibility in being able to count people out and count people in, which everyone believes is necessary, and we will have additional policies on earned citizenship. We see the real reason why the Conservative party has been excited this weekend. It has had the rug pulled from under it because we have exposed the fact that its policy is not what it claims to be. Indeed, on closer scrutiny, it is a weaker policy on controlled migration than the Government’s.

This Government have put in place the most significant changes in immigration policy since the 1950s. We are doing so with a consensus in the country. What the Conservatives cannot stand is the idea that we, in an egalitarian way, have stolen their clothes.

Question put, That the original words stand part of the Question:—

Division 277
21/10/2008 19:00:00
The House divided:
Ayes: 164
Noes: 355
Question accordingly negatived.

Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments):—

Division 278
21/10/2008 19:14:00
The House divided:
Ayes: 281
Noes: 199
Question accordingly agreed to.

Mr. Deputy Speaker forthwith declared the main Question, as amended, to be agreed to.

Resolved,

That this House welcomes the actions of the Government in undertaking the biggest shake-up of the immigration system in decades; supports the introduction of the points based system for migration, which will ensure that only those with skills the UK needs can come to work or study; endorses the proposals set out in the Earned Citizenship Green Paper for newcomers to speak English, obey the law and pay their way; looks forward to the issuing of the first identity cards for foreign nationals next month, which will enable those who are here legally to prove it, helping to reduce identity abuse and prevent those here illegally from benefiting from the privileges of life in the UK; is committed to taking tough action against employers who exploit illegal workers knowingly; supports the removal of record numbers of foreign national prisoners; notes the Government’s doubling of the UK Border Agency’s enforcement budget within three years from 2006; pays tribute to the work of the single UK Border Agency; and welcomes the introduction of the electronic border system that will check every visitor against immigration and security watchlists and count them in and out of the UK.

Economic Performance and Business

Mr. Deputy Speaker (Sir Michael Lord)
We now move on to the debate on economic performance and business. Mr. Speaker has selected the amendment in the name of the Prime Minister.

19:26:00

Alan Duncan (Rutland and Melton) (Con)
I beg to move,

That this House notes that, despite inheriting a strong economy and presiding over 10 years of growth, the Government has raided pension funds, increased taxation, reduced savings, encouraged debt, increased government borrowing and that 1.7 million people are now unemployed; further notes that inflation is at a 16-year high, unemployment is rising at the fastest rate for 17 years and property sales are at a 30-year low; regrets the pain that is now being caused to business by the severe financial turmoil and the Government’s failure to prepare the British economy for any downturn; further notes with concern the Ernst & Young Item Club’s report that the UK economy has deteriorated dramatically in the past three months and is already in recession; further notes that the number of British businesses in distress has more than doubled since the start of the year; expresses concern that the limited availability of credit and the predatory behaviour by both banks and HM Revenue and Customs risks exacerbating the detrimental effects on business; calls on the Government to introduce an urgent package of measures to alleviate business pain, including allowing small and medium sized enterprises to defer their VAT bills for up to six months and cutting small business National Insurance contributions by 1p for at least six months; and endorses these measures as a first step towards alleviating business pain.

I move the motion tonight at a time of probably the greatest threat to business survival that this country has seen for 70 or 80 years. The prognosis is dire, the pressure is great, and many businesses already are feeling that the pressures on them will drive them to extinction—[Interruption.] The hon. Member for Wolverhampton, South-West (Rob Marris) may well laugh, but his laughter here will not be appreciated by his constituents who are facing this business pressure. Nor is the House pleased that there is no Minister of Cabinet rank to reply to the Opposition motion tonight.

There have been Cabinet Ministers in the other place in the past, but when we were in government, they were always matched by a Member of this House of Cabinet rank. When Lord Carrington was Foreign Secretary, the then Ian Gilmour was in the Cabinet here; when Lord Young was in charge of the Department of Trade and Industry, there were two subsequent Ministers of Cabinet rank in this House. Now we have an unprecedented situation in which the noble Lord Mandelson is in the Cabinet speaking for business, but no one of Cabinet rank from the House of Commons sits around the Cabinet table to speak for it. I hope that that deficiency in accountability will be remedied.

We have seen boom and bust before, and I am perfectly prepared to admit that we have seen deep and difficult cycles of economic activity even under a Conservative Government. We saw it first in the ’70s with a secondary bank collapse and absurdly judged loans to Latin America. We also saw as part of a cycle of sheer idiocy the then adviser to Prime Minister Harold Wilson, Harold Lever, say that countries do not go bankrupt, but the banks that lend money to them can. It seems that we have seen a complete loss of collective wisdom among the banking sector today.

Boom and bust has been a regular phenomenon in history; I fell on something that proves that beyond all doubt. It was these words:

“"The budget should be balanced, the treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance."

That was Cicero in 55 BC. He foresaw most things, although, it would seem, not quite the necessity of having a budget for international development. I may not quite be Cicero—my humility extends that far, although I am told that Demosthenes was a little chap—yet in analysing the history of booms and busts, I have tried to be honest in what I write.

I can refer the House to a document that I wrote in 1993, which, I am reliably assured by someone who subsequently worked in No. 10, was pinched almost wholesale by the then Chancellor and turned into public policy—at least the good bits were, such as its recommendation for independence for the Bank of England, but not, I am afraid, the other good bits calling for caution and good sense in the management of the economic cycle. It is all there, and perhaps the now Prime Minister should read it once again and realise his own folly.

The Prime Minister inherited the best economy that any democratic party has bequeathed to another. New Labour promised to be prudent, and to be fair, that lasted for a couple of years. But it quickly softened and buttered people up with changes of language and habit, which quickly started the slippery slope on which the country is now journeying. New Labour refused to use the word “spending”. What might seem just a little twist in jargon showed an underlying pollution of its attitude to prudence. “Spending” became “investment”, but spending, except in certain classical terms, is not investment. As soon as the Government polluted the language, they polluted their intellectual integrity—now even the BBC is happy to use such language.

The Government’s first action was to attack pensions. We have spent more than 10 years campaigning against the raid on our pension funds. The short-sightedness of that attack on pensions is now having dire consequences for many people embarking on their retirement. The Prime Minister sold our gold at the worst possible price—the cost can now be measured in many billions. Crucially—again, this is in my document from 15 years ago—he completely mucked up the regulatory framework. He dismissed in excoriating terms the Conservative party’s suggestion that the Bank of England should continue to enjoy supervision over the creditworthiness of banks, saying that it was nothing more than the old boy network that was typical of that party. How wrong he was.

Stephen Hesford (Wirral, West) (Lab)
On the pensions point, the hon. Gentleman is completely wrong. The House has debated the issue a number of times, and each time has come to a decision that is contrary to the one that he puts forward. He well knows that the responsibility for the pension—[Interruption.]

Mr. Deputy Speaker
Order. The House must give the hon. Gentleman the time to make his point, but he must make it briefly.

Stephen Hesford
The hon. Member for Rutland and Melton (Alan Duncan) knows that the decision on the pension funds was nothing to do with the Prime Minister—he was continuing a policy undertaken by the previous Tory Government. The problem with the pension funds was the dotcom boom and the fall in share prices.

Alan Duncan
I have not heard such economic lunacy in the House for a long time. The Chancellor’s decision in his first Budget to raid advance corporation tax credits for £5 billion a year destroyed our pension funds. The House has been taking decisions that are contrary to my opinion for well over 10 years, and that goes a long way towards explaining the mess that we are now in.

The key thesis, which the Opposition have been advancing for a long time, is that anyone who thinks that they can defy economic gravity over an extended period, to the point that they believe that the economic business cycle has been abolished, is foolhardy. The most attested and continuing economic phenomenon is the business cycle. The only issue in doubt is how long the cycle is likely to last. What should underpin any analysis of the importance of the business cycle is that the fiscal policy of a Government, if they are wise, should be counter-cyclical. A sensible Chancellor should save in the good times so that something is in the kitty for the bad times. The former Chancellor, now Prime Minister, claimed to be doing just that but did exactly the opposite.

At the end of well over a decade of unprecedented, continuous economic growth, where should Britain be? We should have lower taxation, lower spending, high savings, Government borrowing should hardly exist—we should be in surplus—we should have a massive pensions pot, as we had but no longer have, and we should have low unemployment, and yet we start with unemployment of 1.7 million. However, at the end of a long, prosperous and significant period of economic prosperity, we are at the wrong end of the scale. Taxes have shot up, spending has continued to climb dramatically, borrowing is very high, debt is beyond any magnitude that anyone could have predicted, and the percentage taken by the state is up to, and will exceed, 39 per cent. The Chancellor has consumed the boom.

David Taylor (North-West Leicestershire) (Lab/Co-op)
The motion refers to increased taxation, and the hon. Gentleman says that taxation has shot up. Is he surprised to hear that during the 11 and a half years of Mrs. Thatcher’s stewardship, from May 1979 to November 1990, the proportion of taxation to GDP was more than five full points ahead of the proportion during the period for which the current Prime Minister was Chancellor. The hon. Gentleman admires that soi-disant priestess of low taxation, but it was the Labour party that reduced taxation in the first 10 years after its return to power.

Alan Duncan
In 1979, thanks to a Labour Government, we inherited an economy that was on its knees. The necessary corrections had to take place over a long period, to clear up the mess that we inherited. In contrast, the economy that we handed over to new Labour, as it was then happy to be called, was in the best imaginable condition, and generations of people in the future will lament the fact that new Labour had the best and turned it into the worst.

Mary Creagh (Wakefield) (Lab)
When the hon. Gentleman talks about handing over the economy in mint condition in 1997, does he include public sector debt, which was then running at 43 per cent. and by his own statistics is now running at 39 per cent. of GDP? When he talks about the semantics of investment versus spending, how does he classify a £250 million new hospital for my constituency? Is that investment or spending?

Alan Duncan
The hon. Lady will want to eat her words in due course, even on her own basis of accounting. Thankfully, we can advise her of the truth, and we should thank my hon. Friend the Member for Braintree (Mr. Newmark) for his excellent work, which has revealed in detail the Prime Minister’s false accounting, whereby much that has been spent has been hidden. When I was in the oil business, something that was not paid for was not properly bought. Looking at the other side of the coin, a deal is only done when the money is in the bank. As Chancellor, the Prime Minister put so much off balance sheet, on a 25-year mortgage, that the payment for those hospitals and schools will not be completed for more than two decades. If the hon. Lady is proud of that debt—she is—we look forward to writing to her local paper to point out exactly where her pride lies. I am sure that it will come before her fall.

On the point made by the hon. Member for North-West Leicestershire (David Taylor), the Government have claimed that the national debt is £645 billion. However, as my hon. Friend the Member for Braintree has pointed out in an undeniable piece of simple but honest arithmetic, the fact is that it is £1,854 billion—equivalent to 126.9 per cent. of GDP or just under £76,000 per household.

Rob Marris (Wolverhampton, South-West) (Lab)
Nonsense!

Alan Duncan
I look forward to writing to the hon. Gentleman’s local paper too.

Rob Marris
rose—

Alan Duncan
I will give way in just a second.

The present financing of this country’s debt exceeds the annual expenditure on either law and order or defence. The Prime Minister’s claim that debt is considerably lower than it was a decade ago is so self-evidently false that I am astonished that he is shameless enough not to be prepared to come to the House to apologise. The man who has mortgaged the country needs to be better at the arithmetic.

Rob Marris
In relation to the hon. Gentleman’s earlier comments to me, I shall try to refrain from laughing at his malapropisms in future, as opposed to the content of his speeches.

What I actually meant when I spoke from a sedentary position just now was that the hon. Gentleman’s figure was a nonsense figure. It was a nonsense figure because it compared apples with oranges. If we measure the figures in the same way—even taking into account all the private finance initiative projects, as I think we should—the accumulated national debt in the United Kingdom, which, incidentally, doubled under the last Conservative Government, is considerably lower as a proportion of GDP product than the national debt in, for example Italy, France and Germany, let alone Japan. That is because the present Government paid some of the national debt while they were fixing some of the very leaky roof that we inherited after 18 years of Tory misrule.

As for some of the comments that the hon. Gentleman made about my hon. Friend—

Mr. Deputy Speaker
Order. Interventions are becoming speeches.

Alan Duncan
If the present Government were required to follow the same standards that a business follows in explaining its balance sheet and honestly reflecting its debt, they would become an unbankable proposition. The debt is far bigger than the Government are willing to admit. I consider that my hon. Friend the Member for Braintree has done the country a service in presenting the figures honestly; but let us look at the other side of the equation.

I painted a picture of Government profligacy, but the problems really arise when Government arrogance is combined with hubris on the part of bankers. We have seen that once again, with an enormity that no one could ever have contemplated. Debt, and the extension of debt, became nothing less than an exercise in pyramid selling, and as a result the banks have had to be bailed out. The question remains: what next? Will we now see calm and certainty in our financial markets, and therefore in our business community?

My fear is that it is not over yet. It may be that the best we shall see is great volatility, but even that can be very destructive. Many instruments in hedge funds have not been put into the market to cause further upset, but they will. When that happens, if it happens, it will not just affect banks once again; it will affect what is left of pension funds, and hence it will affect equities as we have not yet seen them affected. There is a real danger of further institutional turmoil, despite the relative calm that we have seen in the banking sector over the last few days.

On the back of that, we can already see many of the malign consequences hitting the business community. Everyone will now wish for lower interest rates, in the hope that they will somehow stimulate further economic activity. The base rate has gone down a little and will probably go down further, but the real cost of borrowing has not gone down in the same way. Indeed, it has gone up. We are seeing a severe divergence between base rates and borrowing rates, and in the real world it is the borrowing rate that will hurt businesses.

Moreover—again, we have not yet seen this hit the British economy—that potentially conflicts with the need to finance Government borrowing. We need a low rate of interest for economic recovery, but perhaps a higher rate to fund Government borrowing. If it is just the former, the danger is that we will see—alongside everything else that we have seen—a dramatic collapse in the value of the pound.

Whatever variable we look at now, the prognosis is dark. That prognosis has been put to the country by the likes of Ernst and Young and Deutsche Bank. The former has said that it expects unemployment to double, the latter that this will be not a shallow but a very deep recession. Already in the economy, we see the figures becoming more and more distressing. We have seen unemployment rise by 146,000 in the last quarter, and we have seen a member of the Bank of England monetary policy committee say that it is likely to exceed 2 million by Christmas. We have seen others say that jobs will be lost at a much faster rate than the rate at which the Government can create them, and that unemployment may even exceed 3 million.

We have seen the number of property sales collapse by more than 50 per cent. Capital Economics has said that house prices are likely to plummet by more than 35 per cent. Already there are more than 300,000 householders in negative equity, and the value of mortgages lent to British home-buyers fell by 95 per cent. in August. According to the CBI, manufacturing confidence has collapsed: the single-quarter fall is bigger than it has been for 28 years. So the picture is already dire.

Stewart Hosie (Dundee, East) (SNP)
May I make a narrow point about the 95 per cent. collapse in mortgage approvals? How much of that does the hon. Gentleman ascribe to the Government’s botched announcement about stamp duty, which coincided with that month’s fall?

Alan Duncan
No doubt the hon. Gentleman has a point. The botch was a serious botch. However, given all that we have seen since, I do not think that it can be blamed for what has happened nearly as much as the former Chancellor’s 10 years of economic mismanagement.

I fear that the picture that I have painted will now be converted to the most detrimental squeeze on small and medium-sized enterprises. I do not think we have seen anything yet. We already see the prospects of repossessions and insolvency, and the danger of insolvency—or the midway point, putting a company into administration—is that this will not be like previous recessions, in which many companies were able to emerge from administration or at least remain as entities. It was at least possible for someone to take them over and restructure them, breathe life back into them, and return them to the commercial world as going concerns. The danger on this occasion is that such companies will be killed stone dead, and because there is insufficient finance around, there will be no prospect of their revival in any shape or form.

Barry Gardiner (Brent, North) (Lab)
Given that the hon. Gentleman has been speaking for 21 minutes and that all he has done is try to rubbish the past 10 years, may I ask whether he has a single positive suggestion to offer small businesses in this time of crisis—or is this just an exercise in rhetoric?

Alan Duncan
I am afraid that the hon. Gentleman’s pettiness knows no bounds. These are probably the most serious issues that we have had to discuss in the House for decades, and it is important for him to understand the origins of the severity of the problem. If he reads the motion, he will see exactly what we are going to do, and if he listens a little longer, he may learn about what we are going to do. Twenty-one minutes is not long for a Front-Bench speech, and the hon. Gentleman should be patient instead of being so petty.

We are seeing the British economy go from overheating to permafrost in one fell swoop.

Mr. Jamie Reed (Copeland) (Lab)
Will the hon. Gentleman give way?

Alan Duncan
No.

The key to that is bank lines. It is severely in doubt whether the Government’s promises will be converted to the real lending and cash flow to which the Prime Minister and other Ministers have referred. We need to recognise that the banks are already facing great difficulty. I have some case studies. I will not go through them all; I think that all Members will have encountered similar cases in their constituencies.

Mr. Reed
Will the hon. Gentleman give way?

Alan Duncan
No.

It goes a little bit like this. The bank says, “You used to have £100,000 as a bank line, but now I am going to take it back.” Then, because it has some guarantees from the company, it calls in the assets and forces the company to realise them by selling them at something like half their value in a broken market. The bank takes the money. In comes the VAT man and says “Pay my VAT.” The combination of those two activities does not just cause the company difficulty; it closes it down. In the absence of alternative sources of funds, there are many companies now facing those pressures. They are being closed down by a combination of HM Revenue and Customs and the banks. On the back of their closing down, those involved often have to cash in personal guarantees and sell their main asset, which is their house. The picture is very grim.

I commend the Daily Mail and The Sun for their campaigns on the things that ought to be done to try to assist cash flow, because even the majority of companies in this country will be in a battle for survival.

There are some things that we can do and must do. Yesterday, at our business survival summit, we proposed a series of measures. Like the Government, we accept that paying promptly is crucial. If councils and Government agencies pay after ten days, that can only help struggling businesses to get through this difficulty. We will be watching very carefully to ensure that Government organisations pay as the Government have promised that they will.

Sir Robert Smith (West Aberdeenshire and Kincardine) (LD)
As well as the public sector setting an example, does he think that larger companies that are still cash-rich need to take on board that their supply chain will not be there unless they, too, do all they can to benefit the cash flow of their suppliers and contractors?

Alan Duncan
I totally agree with the hon. Gentleman’s message of great sense and I hope that all companies that can pay, will pay and will follow exactly the standard that he has just described in his intervention.

We would like to see a reduction in national insurance contributions for the smallest companies. They are the ones that employ the most people, that often live most from hand to mouth, and that have the fewest assets against which they can raise money from the bank. Although the measure is small, it is exactly of the kind that can help them get through this difficult period.

Likewise, we think that companies ought to be able to defer their VAT payments if that is what it takes to assist their cash flow. We think they should pay for that at the normal default rate; call it 7 per cent. But 7 per cent. is less than half of the 15 per cent. that banks are now charging many companies of this size. I think the Prime Minister will rue the day that he taunted us about interest rates at 15 per cent.; now, most companies getting short or medium-term credit are having to pay 15 per cent. or more.

Mark Durkan (Foyle) (SDLP)
Will the hon. Gentleman give way?

Alan Duncan
No.

In addition, we would like to see a reduction in corporation tax for small business, for which we have been calling ever since the last Budget, which, from the Conservative Benches, we described as a tax con. As my hon. Friend the Member for Hertford and Stortford (Mr. Prisk) illustrated today by visiting small shops in London, we want to see small businesses applying for that business rate relief to which many are entitled but for which not all apply.

The Minister of State, Department for Innovation, Universities and Skills, has announced today £350 million for Train to Gain. The House should be aware that this is the reheating of an old announcement and, as a policy, it will not give the immediate relief that our businesses are crying out for.

This country will have to put debt on top of debt. We should be in a position to use a Government surplus to help this country turn the corner in such difficult economic times. The Prime Minister, when he was Chancellor, mortgaged this country to the hilt. We are in desperate times, which prove the abiding truth of post-war Britain: that Labour Governments always run out of money.

19:54:00

The Minister of State, Department for Business, Enterprise and Regulatory Reform (Mr. Pat McFadden)
I beg to move, To leave out from “House” to the end of the Question, and to add instead thereof:

“notes that in the 1980s Britain experienced two recessions with unemployment reaching three million on both occasions, a thousand businesses a week were lost and that interest rates reached 15 per cent.; further notes that the roots and effects of the current financial crisis are global and unprecedented in recent decades; believes that at such a time it is essential that the Government acts to restore stability and confidence and therefore supports the action the Government has taken to inject liquidity into the banking system, to recapitalise the banks and to make funds available to resume the medium term lending essential to small businesses; further notes that the UK is better placed than in the past to get through the economic downturn with an economy that has produced three million more jobs over the past decade and enjoyed strong growth and low inflation; supports Government measures such as the Prime Minister’s announcement to reduce to 10 days the payment period from central government to small businesses and to bring forward funding for small businesses available through the European Investment Bank; and believes that the Government should reject public spending cuts at this time and continue working with the banks to ensure the availability and competitive pricing of lending to the small and medium-sized business sector.”

I welcome the opportunity to talk about the importance of small businesses to Britain’s economic strength, to pay tribute to the courage and entrepreneurship of the people running those businesses and to set out the steps we are taking to help small businesses as we face difficult economic times.

Anne Main (St. Albans) (Con)
Will the Minister give way?

Mr. McFadden
I will in just a moment.

As the Chancellor of the Exchequer said a few months ago, we are facing a combination of global economic circumstances that we have not seen for decades.

Anne Main
On the help that the Minister says he is giving to small businesses, will he give me a frank answer? Some £300 million of grants from the East of England development agency and other development agencies were taken away from small businesses and shifted towards housing. I have yet to have an answer about why that has happened. Is that a way to help small business?

Mr. McFadden
The hon. Lady’s party is not even sure if it would keep regional development agencies if it ever got the chance.

International credit conditions led banks to stop lending to one another. This resulted, first, in the difficulties we have seen in the banking and financial system, and now in the problems being faced by small and medium-sized enterprises and by homeowners in the wider economy.

In the circumstances, it was vital and right that the Government put their full force behind, first, restoring stability and then restoring confidence. We acted decisively to do that. First, we injected short term liquidity into the lending system, with the Bank of England making available up to £200 billion to the banks under the special liquidity scheme. Secondly, we recapitalised three of the leading banks, injecting fresh capital worth £37 billion. A condition of the recapitalisation is a commitment from banks that they will maintain the availability and active marketing of competitively priced lending to small and medium-sized enterprises at a level at least equivalent to that of 2007.

The origins of the crisis are global, so at the same time as taking firm action in the UK the Prime Minister and Chancellor have been working with their counterparts around the world, and interventions similar to those that we made have been announced in a number of other countries.

Restoring stability has been our first priority. Stability and strong banks are absolutely essential for the economy to work. Without stability, small businesses cannot access the credit they need, trade in the high street slows down and the investment decisions on which the economy depends become much more difficult to take forward.

Alan Duncan
Do Her Majesty’s Government accept any blame whatever for exacerbating the problems that we now face in the financial markets?

Mr. McFadden
Her Majesty’s Government have acted decisively to try to deal with problems that have their root in the international credit problems to which I have referred.

Our actions on the financial front have been essential, but as the impact of the financial squeeze spreads it will hit small businesses. We will have to act decisively here, too—and we are—to help them through the difficulties they are experiencing.

Mr. John Redwood (Wokingham) (Con)
Will the Minister at least agree that Northern Rock and Bradford & Bingley were British institutions under a British regulator who made British mortgages available to British people, and that theirs was entirely a British crisis?

Mr. McFadden
If we had followed the advice of the Conservative party, we would not have been able to take the action we took over Northern Rock and Bradford & Bingley. Time after time during this crisis, the judgment shown by the Conservative party has been proven to be wrong.

Small businesses are absolutely vital to the economy, to creativity, to innovation and to enterprise. There are 4.7 million small businesses in our economy and the numbers employed in small businesses have gone up by 1.5 million since 1997. In total, they employ around 60 per cent of the private sector work force and contribute as much as large business to UK output. There is no doubt about the importance of the small business sector to the economy. The Government want to support the small business men and women who build a business, take a risk, see a market gap, innovate to fill it and employ so many people, contributing so much to the country in the process.

Mr. Jamie Reed
Does my hon. Friend agree with me and the many business people in my constituency that there is a direct correlation between unprecedented public investment over the past 10 or 11 years and the number of new small businesses within the UK economy, and furthermore that it would be an act of economic vandalism to cut public spending either now or over the next economic cycle as that would devastate—nay, crucify—small businesses throughout this country?

Mr. McFadden
My hon. Friend makes a strong point and, of course, all those small business people will have heard the Opposition Front-Bench spokesman say tonight that his party wants public spending to be lower.

The World Bank says Britain is among the best places in the world to do business—it is second in Europe, and sixth in the world—but despite this good record and strong position, many small businesses are facing difficulties during the current period and will continue to do so in the months to come.

Stewart Hosie
Small businesses are struggling, particularly with access to capital, and we know that the banks are not lending at reasonable rates—instead, they are lending at very high rates. Might the Government wish to re-examine their capital gains tax proposals, as to provide a disincentive when there is not access to traditional lending from banks might be the wrong thing to do?

Mr. McFadden
We did, of course, announce changes to the capital gains tax proposals some months ago.

In our dialogue with small businesses, the issue they have raised with probably the most urgency is access to finance. Small businesses need to be able to borrow to invest and to keep their companies moving, and we will monitor the commitments made—to which I have referred—on the availability of finance to small and medium-sized enterprises. In addition, the Government have brokered contact between the European Investment Bank and UK banks to help release more funds for small businesses, and the four largest banks have signalled their interest in securing a further £1 billion from the EIB for lending to small and medium-sized enterprises.

Sir Robert Smith
How do the Government plan to monitor the availability commitment on lending to small businesses, especially in respect of ensuring due diligence? How will the banks be measured on the delivery of that promise, and what will the fact that the availability has to be on the books, even if it cannot be taken up, do to the banks’ finances?

Mr. McFadden
These were the conditions to which the banks taking part in the recapitalisation scheme agreed. The Secretary of State announced this morning to the Business, Enterprise and Regulatory Reform Committee that there will be a meeting involving him, the Chancellor and the banks within the next few days.

I referred to EIB finance, but other actions can also help business gain access to finance. Earlier this year, the Government made available an extra £60 million for the small firms loan guarantee scheme, taking the total to £360 million, so that in the more difficult months to come the scheme has the resources to help many more firms.

In addition to access to finance, there is the issue of cash flow, which is another urgent concern for many small businesses. Late payment of invoices can cause severe—and sometimes lethal—problems for small businesses. That is why the Prime Minister announced that central Government would pay bills within 10 days. That will bring forward some £8 billion-worth of payments on top of the £58 billion already paid in this period. In addition, we have gone further, with regional development agencies, which spend £750 million a year with suppliers, also signing up to this target. The chief executive of the NHS has today written to NHS bodies asking them to follow suit, and my right hon. Friend the Secretary of State for Communities and Local Government will also be writing to the Local Government Association to encourage its members to play their part.

Mr. Mark Prisk (Hertford and Stortford) (Con)
The Minister mentioned the Secretary of State for Communities and Local Government. How will the Government monitor late—or, indeed, prompt—payments by that Department when the Secretary of State told me in a written answer that it keeps no figures on the promptness of its payments?

Mr. McFadden
The payment target is for central Government, and my right hon. Friend the Secretary of State for Communities and Local Government has also written to local government encouraging it to play its part.

Regional development agencies have an important role to play in helping small businesses at this time. We remember that in past recessions when the Conservative party was in power there were no regional development agencies, and local communities and areas were often abandoned to their fate. RDAs have demonstrated—for example, with the MG Rover taskforce in 2005 and in response to last year’s floods—their capacity to move quickly and directly to respond to urgent problems in their area. Let me offer a couple of examples from the regional development agency for the west midlands. It has moved to lift the £100,000 cap on selective finance for investment in England. It has made available an extra £1 million in community development finance institutions to help provide finance for firms that cannot get it from mainstream institutions. Therefore, while the Conservative party continues to place a question mark over the very future of RDAs, under this Government RDAs are already playing their part to respond to the difficulties the economy faces.

Alan Duncan
Given that that has never been said and that comments have been made specifically to the contrary, I invite the Minister to withdraw that comment and to apologise.

Mr. McFadden
If the hon. Gentleman is confirming that his party would keep the RDAs, I am sure everyone would be happy to have that clarification.

Mr. Philip Hollobone (Kettering) (Con)
There are big issues to do with cash flow for small and medium-sized manufacturing businesses and sky-high utility bills. Commodity bills have fallen around the world in recent weeks, however, and petrol prices are now coming down. However, utility bills remain stubbornly high. Is the Minister doing anything to bash the utility companies over the head, to make sure they play their part in supporting small and medium-sized manufacturing concerns?

Mr. McFadden
My right hon. Friend the Secretary of State for Energy and Climate Change made a statement to the House last week on precisely that topic, and I encourage the hon. Gentleman to read it.

As well as access to finance and helping with cash flow, another important support the Government can give at these times is making sure that correct advice is available to companies through the Business Link service, which already provides advice to more than 850,000 customers. It will offer free heath checks, providing advice and support to businesses if they want that over the coming months.

We are also working closely with business groups and others to improve the guidance for employers that is made available from Government. This matters because if Government can improve the guidance we issue, businesses have to spend less on external advice they may not need, so such services can lead to real savings for small businesses.

When times are tough, we understand that training budgets are sometimes cut. That is why my right hon. Friend the Secretary of State for Innovation, Universities and Skills today announced greater flexibility in the Train to Gain programme, making it available for more short-term training and a greater range of employees than has previously been the case.

I understand that small businesses have concerns about regulation, but, of course, some regulation is part of the decent society that we all seek to promote. We also understand, however, that that can be easier for the larger company with more resources than for the small firm. That is why in recent years we have made a number of changes that have benefited small firms in particular. For example, changes to how the minimum wage and training are dealt with will save businesses an estimated £5 million a year. Changes to the VAT annual accounting scheme are benefiting more than 1 million businesses through doubling the upper threshold for paying VAT in instalments to £1.35 million, and simplified pension scheme returns are estimated to save businesses about another £1 million.

Mr. Brian Binley (Northampton, South) (Con)
I am grateful to the Minister for giving way. He is a generous man, and I thank him. [Interruption.] Well, he is a nice man, and I ask my colleagues not to be so mean.

The truth of the matter is that we are still threatening small businesses with sizeable additional regulation. Will the Minister agree today to put off the parental leave and flexible working proposals while we help small businesses get through what will be a very difficult two years?

Mr. McFadden
We have made no decisions on specific proposals such as that. It makes sense to consider everything in the pipeline at a time such as this.

My hon. Friend the Member for Copeland (Mr. Reed) mentioned procurement, which is an important issue. Business needs work and orders to survive, and the Government, as a purchaser, have a critical role to play. We have commissioned Anne Glover, the chief executive of Amadeus, to report to the Government ahead of the pre-Budget report on removing barriers to small businesses winning a greater share of the public sector procurement market, which is worth £175 billion a year. On cash flow, on access to finance and on training and advice, the Government are working on practical measures to help businesses through the current downturn.

I should like to turn to one or two of the points that the hon. Member for Rutland and Melton (Alan Duncan) made in describing the Opposition’s menu.

Rob Marris
I congratulate my parliamentary neighbour on a fine speech and on his well-deserved promotion, but I urge him and the Government not to be blown off course. He is rightly talking about the big picture—the world turmoil in financial markets and the leadership that our Prime Minister has shown not only in the United Kingdom but around the world. What do we get from the Opposition, who want to make out that the turmoil is even worse than it is? We get a shopping list consisting of five things: paying promptly, cutting national insurance contributions by 1p for six months, deferring VAT, cutting corporation tax for small businesses and getting businesses to apply for business rates. Is that going to solve a world crisis? No.

Mr. McFadden
The people of Wolverhampton, South-West are very well represented in the House. The measures that the Opposition have suggested do need to be examined, however. The hon. Member for Rutland and Melton spoke of cutting national insurance for small businesses, but he did not say that his party proposes to fund that by abolishing reliefs on investment in plant and machinery, which will be very important to get us through the downturn and back on the road to prosperity. In fact, he was silent on the fact that his party proposes to fund its plans by taxing the investment needed by small businesses.

The hon. Gentleman spoke also of automatic qualification for small business rate relief, but he neglected to mention that the Conservative party voted against the Second Reading of the Bill that introduced that relief in the first place. I have examined the Division record and found that both the Leader of the Opposition and, perhaps to my greater surprise, the Conservative spokesman on small businesses voted against the Bill. Small businesses are entitled to react with scepticism when the Opposition suggest that they want qualification to be automatic.

Mr. Nick Raynsford (Greenwich and Woolwich) (Lab)
In his research, has my hon. Friend noticed that the hon. Member for Cotswold (Mr. Clifton-Brown), who is on the Opposition Front Bench today, summed up for the Opposition in that Second Reading debate and announced that they would oppose “root and branch” the Bill that introduced small business rate relief?

Mr. McFadden
My right hon. Friend was, of course, the Minister who took the Bill through the House, so he speaks with great authority. What the country is looking for is not such flip-flopping but the decisive leadership that this Government have shown.

Perhaps we should not be surprised by the truth of the Opposition’s stance. We remember well the recessions when they were in power—two recessions, with 3 million unemployed not once but twice, base rates of 15 per cent., 1,000 businesses a week going to the wall and untold damage to local communities. Faced with the threat of severe financial instability, this Government have acted to restore stability to the banking system. In so doing, we have protected the essential foundation upon which small and medium-sized businesses operate. Now, through the action that we are taking on early payment, on improving cash flow, on training and advice, and locally through the RDAs, we are determined to work with small businesses, which are the backbone of our economy, to help them through these difficult times.

This is one of the most enterprising countries in the world. We believe in creativity and innovation, and we see risk not as something to be avoided but as a fact of life and an opportunity for business to show entrepreneurship. We have many business people who have built world-class, innovative businesses over the past decade. Business will face difficult times in the coming months—there is no denying that—but this Government will work with British businesses to ensure that we get through this period and that they can come out the other side doing what they do best—helping our economy grow, employing our workers and making our country stronger and more prosperous for the future.

20:16:00

John Thurso (Caithness, Sutherland and Easter Ross) (LD)
I, too, welcome this opportunity to discuss small businesses and the aid that can be given to them. I might risk the possibility of the hon. Member for Rutland and Melton (Alan Duncan) writing a letter to the Caithness Courier or the John O’Groat Journal, both of which I know he has read from time to time. On a lighter note, I cannot help but note that the Secretary of State, as the newest day boy in the other place, is shadowed on these Benches by Britain’s only downwardly mobile politician. [Interruption.] Those who know understand. The hon. Gentleman introduced his remarks with a wide sweep across the state of the economy. Indeed, he went back more than two millenniums, starting with Cicero. I shall not follow him down that line, because I would prefer to concentrate more on what help can be offered to small businesses. However, I wish to make two points first.

First, the Government did not actually create this mess, but they certainly made it worse through the hollow boasting that they had abolished boom and bust. That was matched by the hubris of the City, where a heady mixture of testosterone and greed has brought about a situation in which toxic debt seems to be on the back of all companies. The Financial Services Authority completely underestimated the scale of the problem, as the evidence that the Treasury Committee has heard makes abundantly clear. It is clear also that the FSA was deeply under-resourced, as its current chairman has recognised. Light-touch regulation has proved quite insufficient, and I cannot help but notice the irony in the fact that the Conservatives were calling for a lighter touch until a very short time ago.

Secondly, I wish to pick up on the comments of the hon. Member for Rutland and Melton on debt. It is important that we get the facts right. Although the current account has a substantial deficit, which is a matter of considerable concern, the level of debt compared with GDP as measured by most normal international measures is actually lower than in many European and G7 countries. It is important to establish that, because if we agree that the economy will need a stimulus—I certainly think that we are in recession, and that it is likely to be deep if we do not act—it is almost certain that we will need to borrow more to put that stimulus in place. Behind that is the assumption that the debt that has been put in place to help save the banks will be repaid, which is still an if. We have to hope that the measures taken will succeed, in which case that money will be repaid. We need to be cautious in our criticism on debt.

As has been said this evening, cash is the oxygen of commerce. I was in charge of businesses during the previous two recessions, so I know pretty well what most owners and managers are thinking and doing at this moment. They are stretching their creditors and shrinking their debtors, wherever possible, and they are cancelling capital expenditure, reducing orders and attempting to cut costs. That, in itself, is a downward spiral, because as the larger businesses succeed in doing those things, so the situation is passed on to the suppliers and all the way through to the small and medium-sized enterprises, which are often at the bottom of the business food chain. Above all, businesses are trying to ensure that their facilities with banks are maintained, rather than called in and reduced, and that the charge for them remains reasonable.

In addition, many small businesses that have not previously needed credit are finding that they need it because of the working capital pressure, but if they ask a bank for a facility today, they receive a polite laugh, at best. At the heart of the motion is assistance to all businesses, particularly small businesses, especially with regard to cash flow. That core sentiment ought to be shared by Members in all parts of the House, and, because I agree with it, I shall advise my Liberal colleagues to support it. Although I agree with the diagnosis, I do not agree entirely with the prescription; I have considerable doubts about it, but I shall return to those later.

The Government amendment is, at heart, about the need to restore stability and confidence in the banking system. It is clearly impossible to gainsay that; no one would argue that returning to a stable banking system is not a precursor to getting the economy to move forward. The balance of both the motion and the amendment seems to be the usual tit-for-tat that goes on between the two Front-Bench teams. I have a suspicion that the many small business men whom I know—they will be watching this debate in my constituency—will be rather put off by that, because they are looking for a little more from this House. They are looking for us all to be somewhat more constructive.

Let me address some substantive points. The first priority for any business at any time is a stable environment in which to do business, and for that reason it is crucial that the banking system is stabilised. That is the overarching prerequisite, without which we cannot proceed. We do not yet know whether what the Government have done has been successful—it would be a brave person who would say that it has—but it appears to be working. On this occasion, the Government acted firmly, and I hope that what they have done is working, because only one weapon is left in the locker: 100 per cent. nationalisation. I am sure that none of us, save perhaps one or two people who still reminisce over the 1983 Labour manifesto, wants to go down that route.

The second priority for business must be to get the economy moving again. Confidence and stability is a precursor to doing that, but some fiscal stimulus will undoubtedly be needed. Measures such as advancing spending and advancing planned investment will be important, but, to echo a point that has been made by my hon. Friend the Member for Twickenham (Dr. Cable) on many occasions, lately from these Benches, it is equally important to help people to help themselves.

Three measures can help to do that. The first is to have lower taxes for the lower paid, so that they can have more money in their pocket, which they can give to other people, who can then spend it. The second is to have lower interest rates. I sincerely hope that the Bank of England will seriously consider a further reduction in those. The third is to tackle the high cost of fuel, which is a burden on both businesses and homes. That issue could be tackled in a number of ways, not least by helping to invest in more insulation for houses. That would have the added benefit that many builders who are in trouble would receive work. I declare an interest: I live in the far north, so I have a cold house and such insulation would be very welcome.

There is no doubt that the economy needs stimulus. The third priority for business, which is what we are discussing today, is the need for short-term measures to be taken to tackle the current crisis. The Government are in discussions with the banks. It is clear that as part of that negotiation the Government must agree with the banks a protocol for the way in which the banks will deal with business. That protocol should address a number of things, the first of which is the fact that most overdraft facilities, although granted for a year, are repayable on demand. I have seen evidence in my constituency of companies whose facilities are being changed at 24 hours’ notice. I ask the Government to stipulate in a protocol with the banks that there should be a 28-day minimum period, at least to give companies the ability to renegotiate, change or seek advice and look for alternatives. The Government can and should address that core problem in that negotiation. It would be wholly unacceptable if the taxpayer, having paid for the bail-out of the banks, found only that the banks were protecting their profits by a credit squeeze on the high street.

The Government could also examine term loans. Many small businesses have term loans, which typically run for five or seven years. In the climate that existed a year or two ago, they could secure rates of 1.75 to 2.25 per cent. above the base rate, which is reasonably priced finance. It would be a simple measure to give them a holiday on the capital repayments with an extension of the term without penalty. For six months or a year, they would have only to pay the interest component, and the repayment period would be extended accordingly. It is a simple proposal, but it could put a lot of money into many businesses quite quickly.

We also need to address the rates and fees that the banks are charging. About the best rate available is 1.75 per cent. over base, but many small businesses face rates as high as 3 or 3.5 per cent. over base. We are now seeing considerable increases in those rates, as well as increases in fees. All those points could help small businesses, practically and quickly, with cash flow.

Then there is the issue of payment terms. The Government have committed to paying their bills more quickly, and that is welcome. I would like to see evidence that that is actually happening, because I cannot see a large bureaucracy that has a computerised monthly supplier payment system moving towards the 10-day payment of bills with any great ease. It is a good idea, but I would like to know how it will happen. Small businesses also need to be brought into the procurement chain. One of the problems that small businesses face is winning business in the first place.

As my hon. Friend the Member for West Aberdeenshire and Kincardine (Sir Robert Smith) said in his intervention, a major part of the problem is not Government-contracted payment, but private sector payment. I know of one plc that has just raised its payment terms unilaterally, by letter to all their suppliers, to 90 days end of month from 30 days end of month. That is seriously unhelpful. We are not in the business of legislating on the contractual terms between businesses, but the CBI could look at that issue. It might like to consider asking all of its member companies to agree to a code of conduct on payment, as that would be helpful.

We will, I hope, come through the present difficulties, and in the longer term we need to learn the lessons from it. In a way, the City has been a dutiful wife to the Conservative party for many years, but for the past few years it has had a passionate affair with the Government. I suspect that both the affair and the marriage are in deep difficulty.

We live in a period in which old-fashioned financial values have gone overboard. The City has gone from its useful and necessary purpose of providing capital to being the originator of a sort of debt market casino. Sub-prime may have been the spark that lit the fuse of the crisis, but the bomb was all the toxic debt. We need to return to a culture in which the masters of the universe are the servants of commerce. We have an opportunity to achieve that by restructuring and promoting enterprise and support for business.

My last point is on the burden of regulation. We need to examine the cumulative effect of regulation. If we look at any individual regulation, it is hard to say that it should be abolished, because regulations are full of good intentions to protect or help people. But the cumulative effect is to take considerable time from concentration on making the business productive. One idea would be to consider how many bodies have the right to inspect businesses, to see whether one or two inspections could do the job of the many to reduce the work load involved.

If today’s small business people feel much as I did in 1991, they are worried about being squeezed and about squeezing their cash flow to meet the payroll. They are looking to this House for support and help in the short term, and it is right that we should deliver that for them. In considering short-term help, we must also address the underlying causes and seek a long-term change in culture. We have to get away from the irresponsible bonus culture to one that rewards real enterprise and those who are building businesses. That will not be achieved through gimmicks, but through serious policies that we will undoubtedly address on another occasion.

Several hon. Members
rose—

Madam Deputy Speaker (Sylvia Heal)
Order. There is approximately one hour left for contributions from Back Benchers. Several Members clearly hope to catch my eye. I ask hon. Members, when making their speeches, to bear the time factor in mind so that more Members can be successful in making a contribution to the debate.

20:34:00

Laura Moffatt (Crawley) (Lab)
I shall heed your advice, Madam Deputy Speaker. I oppose the Opposition motion and support the Government amendment.

I think that it was the Prime Minister who said, “If everybody complains that I don’t smile much, that is because these are difficult times and smiling is probably not the right thing to do at the moment.” I agree with that. The situation for our business community is pressing, and for many Labour Members interacting with, understanding and listening to our business community are part of our core business as MPs, and so is getting those messages back to our Ministers.

Headline-grabbing announcements to try to deal with a difficult time are not the way forward. A hard, long slog is required, and that is what, over many years, the Government have put into supporting business and enterprise in the UK. Of course, the big prize was economic stability. When we are having discussions with the business community, they never argue with the fact that we have done a brilliant job on that front.

My constituency is in the south-east, in the heart of the Gatwick diamond and the heart of the south-east’s economy. The area is an enormous driver for business in the UK, and I firmly believe that before 1997, it was ignored and simply left alone to be in the forefront. It was always felt that it did not need help and support. That was utterly wrong. The first thing that we needed to do was to put in regional support, even in those regions that were incredibly successful. I support the Government in the introduction of the regional development agencies, which have been a great driver in moving forward.

At this time of global economic turmoil, nobody is immune, but there is plenty that we can do. Business, Government and Members of Parliament can come together to understand what business needs and to try to address the most pressing issues. Plenty of advice is available from Government agencies and organisations. Many of them were mentioned by my hon. Friend the Minister, so I shall not go into detail. We ought to pay tribute to many of the businesses in our communities that take the supply chain seriously and that value small businesses as a part of that supply chain, helping them to become more efficient and paying them decently.

I welcome the announcement that the public sector will pay decently for procurement, but business can do that, too. Thales in Crawley employs 2,500 people and has made a new investment of £100 million in the area. That company values its supply chain, meets those who form a part of it and talks with them about how best to proceed. Varian, a company that produces fantastic diagnostic and treatment linear accelerators, values its supply chain. It brings the members of that chain together once and year and awards are handed out. All those companies, in these difficult times, have protected themselves against waste and against being unable to face difficult circumstances. There are many such examples. BAA has a regular “Meet the buyer” event where people from large and small businesses can come together and understand what small businesses need.

The issue is not just about how we support business and that is why, listening to the debate so far, I have found it limiting. What matters is how we treat our communities and the places where we live, and how we deal with transport issues. Whenever we address our business communities, the one thing they want to talk about is how to make transport systems better and how they can best get into London more quickly. That is only possible when we invest in rail and when we ensure that such changes happen.

Small government cannot deliver the sort of investment that businesses need to do their job. I do not think that this is the time to start to talk about cutting investment in the public sector or in our communities. The heart of those communities will make our business communities successful, too.

Last Friday, I was at the Crawley and Gatwick chamber of commerce. I pay tribute to its president, Steve Rham, who brought together more than 100 small businesses to celebrate that organisation’s 70th birthday. I gave the keynote speech, which gave me the opportunity to speak to the people at each table. I learned that they want the Government to listen and to give them down-to-earth support. They want Ministers to make sure that there is enough runway capacity—and I know that Opposition Members have opposed the development at Heathrow. The people to whom I spoke are deeply worried about that, as they know that doing business overseas means that they must have access abroad. They do not support the Opposition’s stance on that matter.

The people I met on Friday want Ministers to listen to their concerns. They were delighted with the campaign led by Jeremy Taylor of the Crawley and District Industrial Association to retain the Gatwick Express. People need to be able to get into London as quickly as possible so that they can do their business and return to their firms in the south of England. That is how a Government can truly listen to business, and it is about more than simply producing headline-beating figures.

The other big issue that many people choose not to talk about is the provision of affordable housing for the work force. It is no good talking about providing businesses with what they need if the regional assembly opposes the Government’s figures for how much housing is needed in the south-east. We have to be able to house workers properly and decently, as they are the people who make businesses in the south-east operate. At present, for all that is said in Government, the people in the regional assemblies do the opposite, with the result that business is more difficult to operate.

We must fight that sort of opposition tooth and nail. We must support business, take action on banking and get transport right. We must make sure that there is enough runway capacity in the south-east, and that people have access to training and education. It is hard to believe that there are thoughts about getting rid of Train to Gain, which has so much support—both among those who undertake the training and among the employers who know the value of that training. Getting rid of Train to Gain would be reckless at a time like this.

The Government are getting on with the real work of supporting business, but we need more than just a quick fix. Ministers need to listen to Back Benchers and their ideas, and to bring forward proposals accordingly. We will get through this awful time if we support our businesses and our communities.

20:42:00

Mr. Brian Binley (Northampton, South) (Con)
First, may I congratulate my party on bringing this vital debate forward? Hundreds of thousands of people involved in small business will pay attention to our words tonight.

They will hear some fine words in the debate but, as my grandmother used to say—and I have mentioned this to the House in a previous debate—fine words butter no parsnips. People outside the House are looking for action, and that is what we need to talk about.

I need hardly tell the House that people in the small business sector are very worried. They recognise that they are vulnerable because they do not have the financial depth of the big corporates, and they are concerned that they will have to handle the present economic difficulties for perhaps two or three years to come.

However, the people who run small businesses are not foolish, and they know that they present difficulties are not their fault. They know that their fight for survival was created, not by themselves, but by a corporate sector that forgot the basic rules that we all live by, and by a Government who encouraged that sector to do so. My grandmother could have told us that 125 per cent. mortgages were crazy, but Northern Rock seemed to want to live off the back of that foolish mechanism. My grandmother could have told us that the build-up of personal debt was crazy, but that was encouraged by our now Prime Minister, who used to be Chancellor.

My grandmother could also have told us that people cannot have what they cannot afford to pay for. She knew some very simple and basic concepts that people in the clever banking sector forgot about. They thought  that they could beat the market in real terms by lending money to people who could not afford to pay it back, and that what they called derivatives would let them come out the other end of the deal in a successful way. We now know that that was crazy, but we also know that the present Government have contributed sizeably to the situation in which we find ourselves.

Other Members have gone through many of the issues, and I will not rehearse them. All the small and medium-sized businesses out there will say that this is not about the death of capitalism—we have heard a lot about that—but about poor financial sector dealings and a Government who refused to recognise that one cannot have what one cannot afford.

So how did this happen? I could talk about the deregulation of the Bank of England, the setting up of a regulatory agency that could not do the job, and the raid on private pension funds. I could talk about the growth of the numbers in public sector employment—600,000 since 1997, all having to be paid for by the wealth-producing sector—or about regulation, with an extra burden of £66 billion, all on the back of the wealth-producing sector. We all know that those burdens have been placed on the wealth-producing sector, and know where the truth lies. No wonder that the International Monetary Fund has intimated that among the western nations we are one of the worst prepared to deal with the present crisis. If that does not lie at the door of Government, I do not know what does.

Let me turn to how the banks are dealing with this. If the banks get it right, we are in with a chance, and the Government, because of the taxpayers’ money that they have put into the sector, are in a better position to ensure that the banks do get it right. However, I am fearful that that will not happen to anything like the degree that is necessary. Too many small business owners are asking their banks what contingency they might expect should they hit a bad debt and they find it takes longer to have their invoices paid or have a one-off hit on an otherwise profitable business. Sadly, the banks are responding by putting up interest rates on overdrafts, threatening to cut overdraft facilities and asking for personal guarantees, so that a partner in a small business has to go home to his partner and say, “We’ve got to put our house on the line.” She may well reply, “We’ve worked hard enough for this business—we’re not going to those lengths.” The Government need also to take those factors into account when they talk to banks.

Banks are no longer structured to help small businesses. In 1989, when I started a business that now employs 140 people, the bank manager was effectively in the cupboard and came out whenever I needed him. One cannot get those sorts of decisions at a local level any more, because they have to be shoved up the line to accountants who think they know better but, in truth, know nothing about the local sets of circumstances or the businesses they should be serving. Consequently, bad decisions are made. We need to ensure that the banks make quick decisions for small businesses. That means that those decisions are made by the branch concerned, not driven up the chain until they reach an accountant who knows very little about the situation.

The Government can be involved in several other areas, many of which have been set out by the Daily Mail. I want to relay to the Minister some of the messages that I have received from small and medium-sized businesses so that he might take note of them. I am not suggesting that all these measures are practical, but they might be worthy of consideration or amendment or represent ideas that can be put into effect relatively quickly and greatly help the small and medium-sized business sector. Those businesses are fighting for survival and need a response now, not in two weeks’ or two months’ time. They need to know what their contingency is now so that they can properly plan to get through the vital period that they face over the next six, 12 and 18 months.

I have spoken to people in small businesses, who tell me that they need consistency from the banks. There is inconsistency between banks and between regions, and small businesses are getting different responses from different banks and different regions, depending on who they deal with and where they live. Surely banks ought to be much more consistent. Given that it is viable, people with a small business ought to know what they can expect when they go to talk to their bank.

May I tell the Minister that only three banks can access much of the EU funding for business? We should encourage all banks to register for the scheme. They are not doing so, and the Minister might consider that.

Lorely Burt (Solihull) (LD)
Does the hon. Gentleman share my concern about the lack of flow-through of the European Investment Bank funding and the fact that the Government seem to be interfering in the process, which is holding it up? I do not know of a single company that has received any money yet.

Mr. Binley
That is true. Bureaucracy gets in the way of much funding that could otherwise flow more quickly. I ask the Minister to consider that fact, too. Furthermore, banks are not complying with what the Government are saying about negotiation fees, which are increasing, not decreasing.

Will the Government examine the scope for cutting fuel duty? We have spoken about it many times in the House, but there is now an opportunity to do so and I hope the Government might take that on board. Will the Government look at the rates charged on empty properties that builders cannot sell? A number of local authorities are charging rates on new builds that have not been sold and there will be more of those. Will the Government review VAT on repairs on property? ECOFIN proposes that it should come down from 17.5 per cent. to 5 per cent., which would be a great help for the small building sector and enable it to get on with the repair of our housing stock.

The Minister might like to think about spreading business loss over three years for tax purposes, rather than looking at the situation for one year. I have many more ideas, and I shall write to the Minister to add those to the list that I have given. Small and medium-sized businesses are, and will be, fighting for survival over the coming months. Our duty in the House is to do all we can to support them through this difficult period because they provide jobs, growth and, more importantly, creativity in British industry. We must ensure that that lives and is around in two or three years’ time.

20:52:00

Margaret Moran (Luton, South) (Lab)
If the small business community is not depressed enough by the current economic situation, it will be even more depressed by the speech of the hon. Member for Rutland and Melton (Alan Duncan) from the Opposition Front Bench. The speech was short on solutions and long on omissions.

The Opposition omitted to mention who was adviser to the then Chancellor at the time that we were dumped out of the exchange rate mechanism, with all the consequences of doubling unemployment and huge numbers of small businesses in my constituency going bust as a result. The Opposition omitted to mention that they got it wrong on Northern Rock and almost every other financial measure that we have introduced to ensure financial stability for businesses large and small. They omitted to mention that they advocated cutting Train to Gain which, as we heard, is enormously successful and will be extremely important to sustain our small businesses. They omitted to mention that they voted against the small business rate relief, yet are now campaigning as though they had supported it—long on spin, short on substance.

The measures that our Government have produced are practical, workable and swift in their implementation. I declare an interest. I was the first fellow of the Industry and Parliament Trust to undertake a small business fellowship. That has helped inform me about the incredible value of small businesses, certainly within my constituency. The energy, innovation and employment that they contribute to our economy are vital. I am also chair of the all-party group on social enterprise, and I want to ensure that in this debate we do not underestimate the importance of social enterprise in providing a triple-bottom-line value, which, although the sector is small, reflects where we need to go in terms of business confidence.

My constituency is generally seen as an area of bigger business. Vauxhall had plants there, although they are sadly long gone. I welcome the Opposition’s apparent new-found support for regional development agencies; without them and European funding, thousands of my constituents would have lost their jobs and not been able to gain jobs swiftly. I sincerely hope that we will not need similar support for IBC Vehicles Ltd, which is seeing more down days. We need to ensure that our regional development agencies are on their toes so that they can support small businesses as quickly as possible and that all the mechanisms to allow them to do that are in place.

We have heard a lot of sensible and practical solutions from the Government; I do not want to repeat ones that have already been mentioned. We need to ensure that all public bodies—and I mean all: local authorities, registered social landlords and so on—conform to the Government’s suggested payment timetables. We need to encourage large companies to follow that lead as well. They should genuinely partner with small companies and protect their supply chains; we have heard how important that is. I commend London Luton airport, which recently held an event to encourage local supply chains and work with them more productively.

The Government must look at their procurement and tendering processes in relation to small businesses and social enterprise; frankly, they are not good enough. If we are to ensure the lifeblood of small businesses, getting the contracts through quickly and in a streamlined way will be critical.

Given that we face a credit crunch, this plea may sound a bit bizarre, but I also want the Government to support small business so that it can maintain and not lose sight of its corporate social responsibility agenda. We talk about CSR in the context of big business; actually, we need to ensure that small businesses are part of the game and to recognise that there is a valuable bottom line for them if they get involved in CSR.

At this sort of time, it seems that that should be the last thing that we should suggest. I think, however, that the converse is the case. During the global economic crunch, people are losing trust in financial institutions and businesses, and they need to see trust and responsibility restored—with customers and suppliers and between businesses. In this new economic era, people need to see that businesses and financial institutions can be responsible and that we can have confidence in them being there for us in the long term. In that way, responsible businesses will have confidence in their products and services, in buying and selling and in controls to reduce risk and maximise opportunity. They will then be focused on long-term success—economic, social and environmental—not on the short-term, get-rich-quick projects that got us into this mess in the first place.

People are looking for such businesses and we need to support our small business sector so that they get them. [Interruption.] Some Members are looking askance at me, as if what I am saying is totally irrelevant. I say to them that there is evidence to support my theory. Business in the Community has done research that shows that involvement in corporate social responsibility improves bottom-line financial performance. There is too little evidence in respect of small and medium-sized enterprises, but there is evidence of a real return on investment. Indeed, today, I had a meeting with a company called Commercial, which provides print, stationery and office equipment. It has taken that approach on the environment.

Lorely Burt
Will the hon. Lady give way?

Margaret Moran
I am sorry, I have not got time.

That company managed to reduce its waste costs by 80 per cent. over the last three years. It is now aiming for zero landfill, which will take a huge cost out of its bottom line. It is evangelical about it, and it is partnering other small businesses to give them similar benefits. That is the sort of model we should be aiming for, and that is the message that Government need to get across to small business. We need to support and co-ordinate small businesses so that they can see that there are environmental and economic benefits from that kind of activity, which will pay off in the short, medium and long term.

The Government need to look further at support for social enterprise. Who lives and breathes the creation of profit and of employment and enterprise? It is social enterprises. If we are concerned, as we must be, about small businesses laying off staff, with all the implications that has for unemployment, who are the least likely to lay off staff? It is social enterprises. Their focus on the triple bottom line means that they will support those retaining people in employment, and many of them are all about the creation of more employment and help for those who are unemployed.

Returning to the evidence base for what I am saying, Business in the Community has done research that shows that small companies that manage their environmental and social impact in a more efficient way are better able to cope with future economic challenges. It found that, in a declining market, the companies it measured which were involved in corporate social responsibility were outperforming their counterparts by 3.7 per cent. between June 2001 and June 2004, and that a further group were outperforming their peers by 72 per cent. in the same period. Those businesses found such involvement had a practical, bottom-line impact.

The evidence from the Social Enterprise Coalition is that social enterprise lenders provide better liquidity where it is most needed and, in many instances, they have increased their lending to those that need it most—look at community finance development institutions and credit unions. They are resilient businesses, delivering the jobs, skills and services most needed in times of economic crisis in communities. Their reservoir of skills and local expertise is an asset for recovering regional economies that should not be wasted at this time. We must not lose their experience in building in that triple-bottom-line benefit, including the social and environmental experience that they bring.

There are opportunities for us to think anew about the new kind of business that people want—responsible and not fly-by-night. We need to help to bolster such new businesses, to build support with business, consumers and customers. By providing greater support to small businesses within the CSR agenda, and providing greater support to social enterprise, we could see a new vision of the kind of small business that we want. Those businesses will have the energy and initiative to bring wider benefits to the local and national economy.

21:03:00

Anne Main (St. Albans) (Con)
I am pleased to follow someone else who is in the east of England, but I was amazed at her complacency about some of the things that have affected the east of England. I am no great fan of development agencies or regional assemblies. It is interesting, however, to note that those are the Government’s delivery vehicles for grants. We cannot ignore the fact that the Government have decided to take away a substantial amount of money from the grants directly affecting businesses, and have used it to prop up the housing market. Only in August, we were told by the then Exchequer Secretary to the Treasury:

“The East of England is being affected by global uncertainty…so here in the East of England we are determined the government along with regional and local agencies such as EEDA will all work together to ensure that businesses get the support they need.”

The Minister for the East of England said:

“In these difficult times we must keep calm and continue to work to our strengths. I am confident that the region’s innovative businesses, which are investing so heavily in the skills of their staff, have the right approach. But, more can always be done,”

which is why we will be

“working with the business community to make sure that everyone is equipped to meet the challenges”.

That was in August. In October the Government did a big U-turn, pinching a large amount of money— £300 million—from those very businesses, and believe me, Madam Deputy Speaker, they think that that is a problem. As David Kingham, the managing director of Oxford Innovation, one of the country’s leading providers of managed work spaces, puts it:

“We have a problem in banking, clearly, and an impact in the housing market. But the last thing we want is the cost of that to start to damage small business investment.”

Unfortunately, it already has.

Barry Gardiner
Will the hon. Lady give way?

Anne Main
No, I shall not give way, because other hon. Members have waited a long time to speak.

Walter Herriott, Mr. Kingham’s counterpart, said that he had lost public funding from the East of England Development Agency for the first time in 15 years.

“Within the last week, because of…funding of first-time buyers, we have been squeezed by the testicles,”

he said, obviously finding the experience a very painful one.

Needless to say, when the Select Committee on Communities and Local Government looked into the auditing of how things were going in the east of England, I asked the question. I said that small businesses might be finding it difficult. I said that there had been some criticisms from small businesses locally, which have said that money has been taken away from business development through the RDA to prop up the housing market. I asked how that could be justified. What research had been done into the impact on struggling small businesses?

A Mr. McCarthy, an official, said to us:

“ministers took that decision very carefully and with some degree of reluctance. It was a decision taken in consultation with the Prime Minister and with John Hutton as well as by ministers in our Department; it was not a unilateral decision.”

He went on to say:

“Therefore a conscious decision was taken to fund an initiative”

to prop up the housing market—my words, not his—

“because that money is all about buying their completed stock as well as helping first time buyers who cannot access a home at the moment. I think that despite it being difficult and painful for ministers, it does something which helps industry and helps first time buyers now.”

But the pain and the difficulty is being felt by small businesses.

I asked the Minister in an earlier intervention what he thought about that, but all he said was, “Oh, I’m glad to see that you’re all supporting RDAs now,” focusing his attention always on the delivery vehicle, not on the grants that are being stolen. The Government have decided to put money towards house building, investing in propping up the housing market, at the expense of small businesses.

Barry Gardiner
Will the hon. Lady give way?

Anne Main
If I am generous enough to give way, the hon. Gentleman will have to be incredibly brief.

Barry Gardiner
I am extremely grateful to the hon. Lady. Does she appreciate that putting money into the housing market is one of the best possible ways of supporting electricians, tilers, plumbers, joiners, roofers, handymen, carpet layers and all the other small businesses that go with housing?

Anne Main
I am very sorry that I took that intervention. The fact that the Government are going ahead with hundreds of thousands of extra houses that are under dispute in our area is more about saving their house building programme.

It cannot possibly be right that small businesses should be used as the whipping boy. They have put up with an awful lot of economic pressures already. They have been regulated to death and now, in their hour of need, they are unfortunately being seen as a ready pot of investment that can be taken away. What is more, the Government are being so quiet about all this. It seems that no matter whom I ask, they all say, “Oh, we’re all in favour of regional assemblies and RDAs now, are we?” That is not what we are talking about; that is the delivery mechanism.

I look forward to seeing the Secretary of State come back tonight and tell us whether he has made any calculations of the impact that taking away that future investment will have on small businesses that were looking to receive it from the Government. As far as I know, there have been no such calculations. I have been told nothing other than that the decision was a difficult one. I would love to know what information informed it.

21:09:00

Stephen Hesford (Wirral, West) (Lab)
Before I retrace our steps to see how we got into the international credit crunch, I should like to say something more positive. This is a debate of genuine concern for small businesses, and for the enterprise sector generally, but I have not heard a lot from the Opposition about how we can talk the economy up instead of talking it down. For example, the national chairman of the Federation of Small Businesses came to Liverpool recently to host a lunch in that magnificent city. It was the first visit to the city by the national chairman of the federation. He gave the very positive message about the enterprising benefit that the federation was gaining from the city being the capital of culture. As hon. Members will know, Liverpool is the European capital of culture this year. He said that he wanted to look forward to what Liverpool and the sub-region of Merseyside could do, not only this year but in the future. He wanted to build in to the region not only the fantastic year that we are having with the capital of culture but the benefits that will survive beyond this year and go forward.

The Federation of Small Businesses was amazed, having done some thinking outside the box—to use a rather ugly phrase—to have become so involved with the creative industries, as it had not really thought of doing so. Liverpool has long been well known for its creative industries. The message was that, yes, this is undoubtedly a difficult climate, but if they think positively, there are ways for small and medium-sized enterprises upwards to build confidence. Rather than talking down the region, we need to talk it up.

I should add, in parenthesis, that the Tories’ favourite think-tank—from which I understand many of their as yet unspoken policies might yet emerge—produced a report during the recess that recommended that people who lived in Merseyside and Liverpool should forget the area and move to the south-east. That appeared to be the apotheosis of Tory policy. Other hon. Members have noted the apparent change in Tory policy—I do not know whether that is what we are witnessing—and their new interest in regional development associations. Labour Members will certainly not ignore the regions, however, as some of my hon. Friends have already said.

I want to retrace our steps in regard to the analysis of the credit crunch. I have put it to the hon. Member for Tatton (Mr. Osborne) that he had previously admitted that the tsunami of the credit crunch and the toxic sub-prime mortgages could not have been foreseen. That is certainly the case, and it is the reason why we are now in the middle of this global crisis, so it is completely disingenuous of the Opposition to keep talking down the situation and trying to blame these foreign circumstances on my right hon. Friend the Prime Minister. If people think that I am wrong about that, perhaps I may pray in aid Mr. David Smith, the economics editor of The Sunday Times. He describes the Tory claim—which I do not have time fully to reiterate—that everything lies at the door of my right hon. Friend as just plain “daft”—[Interruption.] The hon. Member for Northampton, South (Mr. Binley) says that he has not made such a claim, but those on his Front Bench have done so. They repeated that calumny tonight.

What David Smith goes on to say is that we have to recognise that the normal tools of central banking are sometimes not adequate for the crisis that comes along—a crisis that the hon. Member for Tatton said could not have been foreseen. He goes on to explain that what we have experienced is an extreme version of market behaviour built around derivatives and toxic financial products, with which we are now stuck.

Mr. Andrew Pelling (Croydon, Central) (Ind)
It was impressive that the Government were determined to take action quickly, but is not one of the problems that they have not dealt with those toxic assets on bank balance sheets? It would have been better if they had arranged more debt with the banks in order to remove the toxic debts from their balance sheets and repair their wounds.

Stephen Hesford
The hon. Gentleman is absolutely wrong. The Americans tried that, raising $700 billion with the idea of buying toxic debt, but it simply did not work. The markets hated it and Wall street crashed on the back of that wrong action; the right way of doing it is what my right hon. Friend the Prime Minister suggested—recapitalising the banks and putting liquidity back into the system. The hon. Gentleman is, as I said, absolutely wrong. I am glad that we did not take his advice and I am glad that we ignored the advice of other Conservative Members on a number of issues such as Northern Rock and Bradford & Bingley. Had we taken it, we would have done a Lehman’s and the problem would have been even worse.

Conservative Members argued earlier that we cannot afford to borrow or to use good old-fashioned Keynesian economics to help the economy through these hard times. Well, Maurice Fitzpatrick of Grant Thornton points out that Britain’s public debt position, which is better than any other G7 country, gives us a big advantage. Even a UK debt figure of between 40 per cent. and 50 per cent. of gross domestic product is half the G7 average of 93 per cent.; America is on 61 per cent., Germany on 63 per cent.; France on 64 per cent., Canada on 68 per cent., Italy on 104 per cent., and Japan on 195 per cent. We are in as good a place as any to be able to afford the borrowing that my right hon. Friend the Prime Minister has put in place.

As for us having a big public deficit—[Interruption.] I would be grateful if the hon. Member for St. Albans (Anne Main) did me the courtesy of listening to what I am saying. These are serious matters, but she is grinning all over her face—[Interruption.]

Madam Deputy Speaker
Order. May we please have some courtesy shown in the Chamber?

Stephen Hesford
Thank you, Madam Deputy Speaker.

As for the so-called budget deficit, John Hawksworth of PricewaterhouseCoopers noted that

“partial nationalisations (taxpayer stakes in banks)… do not add to public-sector net borrowing… They are… below-the-line financial transactions”,

which means that they do not put pressure on the Chancellor to raise taxes or cut spending. As the Government have made clear, we are not going to cut spending.

In conclusion, on the micro-way of supporting small businesses, I welcome what my hon. Friend the Minister said earlier in opening for the Government. We will not talk down the economy; we look forward to the measures that the central Government have suggested to their suppliers to pay within 10 days; we look forward to the increased support for Train to Gain; and we welcome further initiatives on local Business Links. I agree with what my noble Friend the new Business Secretary said:

“We understand that small and medium sized businesses are facing tough times as a result of the global economic squeeze… The Government has taken steps to ensure that banks are properly capitalised and can start lending again”.

I look forward to moving forward positively with the banks starting to lend again so that small businesses can once again have confidence in the banking system.

21:19:00

Mr. Charles Walker (Broxbourne) (Con)
It is simply amazing to hear the contributions of Labour Members. You would not believe, if you had tuned in for the first time—

Madam Deputy Speaker
Order. I might or might not believe whatever is being said, but perhaps the hon. Gentleman will consider his phraseology.

Mr. Walker
I was referring to the general public in the rounder use of the word “you”.

The general public would not believe, if they had tuned into the parliamentary channel for the first time, that the Government had been in power for 11 years. We have had 11 years of Labour misrule. For the first 10 years, the Chancellor, now the Prime Minister, told us all that he had abolished boom and bust, and that the economic miracle being experienced by the UK was entirely down to his stewardship—that it was nothing to do with a strong global economy, and that it was down to his guidance and supervision. He is a bit like Macavity—as soon as things go wrong, as was bound to happen after his spending splurge and 10 years of debt-fuelled extravagance at the taxpayer’s expense, he says, “It’s not my fault, guv. It’s nothing to do with me. I’m totally misunderstood. It’s all to do with these horrible Americans and the sub-prime debt market.”

The hon. Member for Wirral, West (Stephen Hesford) said that the sub-prime collapse could not have been forecasted. But as my right hon. Friend the Member for Wokingham (Mr. Redwood) has said—

Stephen Hesford
rose—

Mr. Walker
I will not give way to you. I really will not give way to the hon. Member for Wirral, West.

Madam Deputy Speaker
Order. I ask the hon. Gentleman to remember that we should have courtesy in this Chamber.

Mr. Walker
I am sorry. I am unable to give way to the hon. Member for Wirral, West. He forgets that Bradford & Bingley and Northern Rock were lending not in the United States of America, but in the United Kingdom. They were advancing people mortgages of five or six times their annual earnings. They were allowing self-certification, and lending money to people who had no hope of paying it back. They have caused human misery on an enormous scale.

Today, 80,000 homes are under order of repossession. What will the figure be in 2010, when it is estimated that house prices will have fallen by 35 per cent. from their peak? The Government should at least say sorry to the hundreds of thousands if not millions of people whom their policies will drive out of work. Their policies will cause significant unemployment over the next three or four years.

It is all very well to talk about history lessons, about 1997 and 1979, but those years are exactly that—history. This is the here and now. The problems have happened under this Government’s watch. The Prime Minister must face up to the fact that he has driven this country to the edge of financial crisis. A lot of very good businesses will pay the price of his mismanagement.

Let us remind ourselves of the figures. The banks are being underwritten by £500 billion of taxpayer’s money. That is an astronomical figure—half a trillion pounds. The Government only manage to spend £650 billion a year, so nearly 80 per cent. of that, which they raise from the taxpayer and the debt markets, now underpins our banking system. If that is not a financial disaster, I do not know what is.

I also point out to the hon. Member for Wirral, West and the hon. Member for Brent, North (Barry Gardiner)—before the last reshuffle he was the forestry ambassador, not that it was a ministerial position—that the £500 billion must be paid back at some time in the future. Guess who will be paying it back—the taxpayer, for generations to come. That will not be easily forgotten.

Mr. Pelling
The hon. Gentleman talks of the very large size of the £500 billion bail-out. In the light of that, is it not appropriate to ask whether the money was well spent? Reference was made earlier to whether the use of debt and the removal of toxic assets from bank balance sheets constituted a better approach than recapitalisation through equity. After all, it is the innovative and very successful scheme recently established by the Swiss National Bank that allows the removal of those toxic assets, improving the quality of the bank and removing the Government from the embarrassment of constantly being asked—bearing in mind that they are a majority shareholder—what they will do about the minutiae of the management of those banks. Surely that would have been a better way to spend such substantial amounts.

Mr. Walker
My hon. Friend makes a good point, but the Government are asking us to take everything on trust. How can we trust a Government who have taken the country to the edge of financial ruin? No trust is left.

The hon. Member for Luton, South (Margaret Moran), who is no longer in the Chamber, talked of corporate social responsibility. I do not think she understands that the most responsible thing that small businesses can do now is try to retain their work forces—try to retain people in jobs so that they can put food on their tables. This is the level of the crisis facing small businesses.

I see the Minister of State making a few sedentary interventions. He really is living in cloud cuckoo land if he thinks that banks will lend at 2007 rates. Small businesses are having their loans renegotiated by banks at rates of upwards of 15 per cent. They are seeing their interest rates trebled, and that is pushing very good and viable businesses to the wall at this moment.

Mark Durkan
Will the hon. Gentleman give way?

Mr. Walker
I am sorry; I do not have time to give way to the hon. Gentleman.

I really believe that, after 11 years, the Government probably—or definitely— should have done a better job on the economy. For the last 11 years the Chancellor, now the Prime Minister, has said, “Trust me: I know what I am doing.” Well, clearly he has not had a clue. He has been making it up as he goes along.

The four Labour Members who spoke this evening will all lose their seats at the next general election. They will pay the price for the Prime Minister’s failure, and ultimately he will have to explain himself to them when they are looking for new jobs.

21:27:00

Mr. Mark Prisk (Hertford and Stortford) (Con)
This has been a short but timely debate. I know that it is of great concern to the millions of small businesses in our constituencies, and I am sure that many of them will have followed what has been said. I know that those in my constituency are keen to find out not only what we plan but what the Government’s response will be, so I look forward to the Minister’s reply.

The debate began with an excellent exposition from my hon. Friend the Member for Rutland and Melton (Alan Duncan). With his usual historical and indeed oratorical insight, he rightly exposed the way in which the Government’s policies have directly weakened the nation’s finances. In responding, the Minister mentioned a number of initiatives that the Government had taken— although, on closer examination, I could not see any new money included over and above the current Government spending plans. While I believe that the Minister is a decent man, I was slightly saddened that, like other Ministers, he could not bring himself to accept that the Government had even a scintilla of responsibility for the events of recent months.

The hon. Member for Caithness, Sutherland and Easter Ross (John Thurso), the Liberal Democrat spokesman, spoke with his usual charm, but also contributed some useful insights, not least because—like a number of those who have spoken—he has had experience of real businesses. I welcome his party’s support for our motion, although I understand that he may have a few caveats along the way.

My hon. Friend the Member for Northampton, South (Mr. Binley) brought his usual energy and insight to the debate—again, born of someone who has actually been involved in starting and running a business. He knows and understands what is actually involved.

We then had a number of varying contributions from Labour Members—from the hon. Members for Wirral, West (Stephen Hesford), for Luton, South (Margaret Moran) and for Crawley (Laura Moffatt). My worry is that I did not hear from a single Labour Back Bencher any mention of how the overdrafts and pressures on small businesses today are affecting their constituents. I hope that that was an oversight on their part. I am sure that their constituents hope that as well.

I turn lastly to my two neighbours in Hertfordshire. My hon. Friend the Member for St. Albans (Anne Main) rightly expressed her anger at the way in which the Government offer money to businesses and then quickly take it away. One cannot plan a small business if there is that constant merry-go-round of Government funds. That was a perfectly reasonable criticism which I hope the Minister will take on board.

Last but by no means least, we had the enthusiastic and energetic contribution from my good neighbour the hon. Member for Broxbourne (Mr. Walker). He was right to be angry and passionate about the issue. The frustration that many of our constituents feel is that, while Ministers try to pass the buck, the people who in the end will pay the price for the current problems are the taxpayers. We will pay for the Government’s mistakes.

For much of the past 16 years, the global economy has been growing. Here in the UK, it has been a boom that has lasted through two Governments and three Prime Ministers. Yet in the past decade we have seen this golden opportunity squandered, as the current Government have taxed and borrowed without ever preparing for the future. They have taken us from boom to bust. Thus, despite soaring tax revenues, as the IMF has noted, the national debt has climbed inexorably. Even before the downturn bites on Government revenues, we have a higher budget deficit than almost any other major country, unless of course one counts Pakistan, Egypt and Hungary.

Part of the problem has been the arrogance of a Chancellor, now Prime Minister, who believed that he had for ever ended the cycle of boom and bust. Indeed, in 1997, he promised that under his stewardship, our economy would

“be built not on the shifting sands of boom and bust, but on the bedrock of prudent and wise economic management for the long term.”

How hollow that boast must sound to the thousands of families in our constituencies whose homes are about to be repossessed.

Our economic performance has been slipping behind that of our competitors. Our productivity lags behind most G8 nations and the rising tax burden is pushing good firms abroad. According to the World Economic Forum, we have fallen from fourth to 12th in its key measure of international competitiveness. British business is doing its best, but all too often that is in spite of the Government, not because of it. Thus, since 1997, there have been over 100 stealth tax rises, which by 2010—an interesting date that is clearly in the minds of the Government—will have cost business £80 billion.

The tax system itself now has become a burden for businesses large and small. According to one of the leading independent surveys in the last year, the average small company now spends 50 hours every year just complying with the tax regulations, never mind the rest. It is this toxic combination of tax and red tape that has been strangling enterprise, despite all the promises and ministerial photo opportunities.

The Prime Minister, of course, likes to boast—the Minister repeated it today—that there are more small companies today than there were in 1997. Indeed, the numbers have grown, but at a slower rate than the increase in population. So for all the talk of an entrepreneurial culture, the net result is that today fewer of us are starting up a new business. It is just as concerning that fewer small businesses today employ people than was the case 10 years ago. Indeed by last year, seven out of 10 small firms no longer employed anybody. What a wasted opportunity.

Before I came into politics, I ran my own business for 10 years. I passionately believe in the importance of small and medium firms in our economy. It is they who generate £1,400 billion of our national wealth, and even now, despite the burden of this Government, they still employ more than 12 million people. I and my Conservative colleagues never forget that it is not the Government who create wealth and private sector jobs; it is the private and small businesses who create the wealth and the jobs on which the rest of us rely. That is why I have followed the events of recent months with a sense of foreboding, for as we have all watched the stock market screens turn red, I knew it would be the hard-working business owners and their staff who would pay.

We need to act fast to help these firms. The best start would be if the Government were to scrap their planned tax rises for small businesses. What is the economic logic of increasing small company corporation tax by more than £370 million in this of all years? The tax hike should be reversed, and if the Government do not do it, we will.

To be fair, it is true that over the past week or so we started to hear more positive noises from Ministers. They are right to highlight the importance of tackling late payment by central Government. Indeed, I am glad that Ministers are now following my party leader’s call to ensure that all levels of government—national, regional and local—pay due invoices within 20 days.

However, today’s announcement by the Government on staff training is not so promising. When we look closely, there is no new money and, indeed, most of the elements of the scheme involve things that already exist, so what at first appeared to be a good idea turns out to be just spin. The problem with the Government at present is that with their new boss, Lord Mandelson, at the Department for Business, Enterprise and Regulatory Reform—and it is a pity he is not able to be present—we have spin rather than substance. As there is no new money and this scheme largely contains measures that already exist, I invite the Minister to intervene and tell us how much additional money on top of his current spending plans he intends to put in.

Mr. McFadden
Given that the hon. Gentleman is talking about the training budget, will he confirm that it is still his party’s policy to remove £1 billion from the Train to Gain budget?

Mr. Prisk
I would love to be standing on the other side of the Dispatch Box and be able to answer, as a Minister, the Opposition’s questions, but let us be clear: we will use the money that is put into training to most effect. That is why, for example, we will use some of it to give £2,000 to every small business, so that they can use that money properly.

I invite the Minister to intervene again, and let me ask him a simple question. Is the £350 million that his Secretary of State has talked about today new money or not? Does he not wish to answer? I think the House will note the silence of the Minister on the question of any new money.

Rob Marris
rose—

Mr. Prisk
I am delighted to give way to the other Member for Wolverhampton. Perhaps he will be a little more eloquent than his colleague the Minister.

Rob Marris
I do not know about new money, but £37 billion sounds like a lot to me. The Opposition motion to which the hon. Gentleman is speaking tonight contains two measures—although I must say that I do not think they are sufficient. Can he tell us what those two measures will cost?

Mr. Prisk
I will tell the hon. Gentleman exactly that in a moment, because when I turn the page of my speech I will get into the details, and as he knows I like to make sure the details are right. I am happy to do that, therefore, but I am sure that the House has noted that there was no offer, even from the Labour Back Benches, of new money.

It is the noble Lord Mandelson’s birthday, so we should at least send him some greetings. The new Secretary of State for Business, Enterprise and Regulatory Reform was reported as having said yesterday that he had plans to delay a number of laws on flexible working, banking holidays and, indeed, paid maternity leave. Yet within hours the Chief Secretary to the Treasury said that that was not the case, and that the Government would not do anything to hurt decent working people. Indeed, the TUC went further, saying the reported plans were “astonishingly irrelevant”.

Who is right? What can small firms expect from the Government? We would love to ask the Secretary of State for Business, Enterprise and Regulatory Reform, but we cannot do so as he cannot be here because he sits in the other place, so perhaps the Minister can help. Is his Department reviewing the laws, and when does he expect to implement them? Who counts more in this debate, the Secretary of State or the Labour party’s paymasters?

To answer the hon. Member for Wolverhampton, South-West (Rob Marris), our motion sets out the urgent need for positive action. I shall run through the actions that we propose. First, we will allow small and medium-sized enterprises to defer their VAT bills for up to six months. For a typical business with a VAT bill of a third of a million pounds, that could free up £90,000, which could be the difference between survival and failure for some businesses. As a jeweller in my constituency pointed out to me, they do not seek special treatment, they just want a little flexibility and a little understanding.

Secondly, we would cut payroll taxes for the smallest employers, to help them save money and so keep jobs. That would mean that a local firm with, say, four employees and a wage bill of £150,000 would save £100 each and every month. Thirdly, we will help small businesses, especially shops, to claim their small business rate relief. Just half of the firms that are eligible currently claim that relief, and we want to help them. That is why we will provide a new way for them to make their claims directly.

Another matter that has been mentioned is banking, which is crucial to small firms. The way in which small businesses are being dealt with by their banks is of great concern. We heard from my hon. Friend the Member for Northampton, South about how some long-established firms are finding their overdrafts being called in without warning, and from the hon. Member for Caithness, Sutherland and Easter Ross about how the rates on those overdrafts have suddenly increased significantly. It is not because those firms have become a riskier prospect; it is simply a direct result of the credit crunch.

In recent days, Ministers have said that unreasonable actions by the banks against mortgage holders will not be tolerated, but what about small businesses? What can they expect from the Government? I hope that the Minister will be able to tell us exactly what the Government regard as unreasonable action by the banks. After all, as a shareholder, or at least a putative shareholder, in some of the major high street names, the Government will no longer be able to walk on by. I would say to the banks that they need to think carefully about how they treat their customers. After all, we as taxpayers have bailed out the banking system. Pulling the rug from under good firms’ feet would be neither wise nor acceptable.

Businesses in this country face a severe challenge, and for some it may prove fatal. We will return in time to the fundamental question of why, after 16 continuous years of growth, the nation’s finances are so poor. At this moment, however, the priority is to reach out and help the millions of small businesses that are the backbone of our economy. My party has set out a positive plan for action, and just as Ministers have helped the banking system, so the Conservatives stand by small businesses. They need help to manage their cash flow; we will provide it. They need supportive banking; we will enable the Government to achieve that. They need help to cut their costs. We believe that our plans could make a real difference to millions of firms and their staff. I urge the Government to adopt our ideas—as their own, if they wish—and to work with us to help our businesses survive and prosper in the coming months.

21:43:00

The Minister of State, Department for Business, Enterprise and Regulatory Reform (Mr. Gareth Thomas)
I agree with the hon. Member for Hertford and Stortford (Mr. Prisk) to the extent that the priority for the House and the Government must be to concentrate on what we need to do to help small businesses through the difficult economic climate that we now face.

This has been an important, interesting and useful debate, and it has highlighted the regard in which small businesses are held—to be fair, Members of all parties have demonstrated that—and the remarkable contribution of innovation, creativity and competitive challenge that small businesses bring to our economy. The debate has allowed the Government to highlight our continuing sense of responsibility to assist small businesses in navigating the difficult economic times that we are entering.

If I may, I wish to take this opportunity to salute the contribution to that agenda of my immediate predecessor. Lord Jones is a great ambassador for business in the UK, and if at times he is occasionally controversial, he is also a real enthusiast. I cannot promise a similar style, but all of us in the Department for Business, Enterprise and Regulatory Reform will be just as passionate for British business as he was. Indeed, I relish the chance to champion the imagination, dynamism and ability of our business people. I should say that Lord Jones has agreed to be one of 14 business ambassadors who will help the Prime Minister and the Secretary of State for Business, Enterprise and Regulatory Reform to promote British business overseas—I will also be involved. I welcome all their commitment and contribution to this agenda.

My hon. Friend the Member for Luton, South (Margaret Moran) rightly reminded us that when we think about small businesses, we need also to consider in our analysis the contribution that social enterprises can make to the economy and their specific needs in the economic circumstances that we face. We will indeed do that. I join the right hon. Member for Rutland—[Interruption.] Okay, just the hon. Member for Rutland and Melton (Alan Duncan)—I apologise for exaggerating his importance. I join him in welcoming the campaigns by both The Sun and the Daily Mail to champion the needs of small business. I shall discuss some of the specific comments that they have made in due course.

As the Minister of State, Department for Business, Enterprise and Regulatory Reform, my hon. Friend the Member for Wolverhampton, South-East (Mr. McFadden), rightly noted, outside organisations, not least one as significant as the World Bank, have said that Britain is still among the best places in the world to do business—it is second in Europe and sixth in the world. Of course, we cannot relax about that business environment. We know that many small businesses are facing considerable difficulties and will face more difficulties over the current period, so there will be much more for the Government to do in the months to come.

The hon. Members for Caithness, Sutherland and Easter Ross (John Thurso) and for Northampton, South (Mr. Binley), my hon. Friend the Member for Crawley (Laura Moffatt) and one or two others noted the issue that small businesses have raised most urgently with, I suspect, both sides of the House—access to finance. As the Minister noted, small businesses need to be able to borrow to invest and to keep their companies moving. That is one of the reasons why we will monitor the commitments made on the availability of finance to small and medium-sized enterprises by Britain’s biggest banks. It is also one of the reasons why my right hon. Friends the Prime Minister and the Chancellor have put so much time into working to ensure that Britain’s biggest banks can continue to lend money.

Mr. Binley
rose—

Mr. Thomas
Before I give way to hon. Gentleman, may I pick up the specific concern raised by the hon. Member for Solihull (Lorely Burt) in an intervention on him? It dealt with the question of whether the Government were in some way holding up Britain’s biggest banks’ access to the European Investment Bank’s funding. Let me make it clear to both hon. Members and to the House that we are certainly not seeking to delay the banks’ access to that funding. The four largest UK banks have signalled their interest in taking up to £1 billion from the EIB to help small firms. We are engaged in close dialogue with the EIB in order to satisfy it on points concerning risk sharing with the banks. We are also working to facilitate access for smaller banks to EIB funding.

As I have previously alluded to, as the Minister of State made clear and as my right hon. Friend the Secretary of State made clear in his appearance before the Select Committee this morning, further meetings with the banks will take place later this week to make sure that they are thinking through, and delivering on, their commitment to continue to lend to small businesses at a level commensurate with what they lent in 2007.

Mr. Binley
The Minister said that he would monitor the reaction of banks to requests from small businesses for overdrafts, contingency funds and other loans. Will he do more than that and, as a major shareholder, intervene where there is a real need? Will he do that quickly, because the reaction is not as he believes it to be at the moment?

Mr. Thomas
As I have already said, we are actively talking to the banks about how to ensure that they deliver on the commitment that they have made. I understand the profound concerns of many small businesses about access to lending and whether the banks will genuinely deliver on the commitment that they have made to the Government to continue to lend at a rate commensurate with 2007. That is one of the reasons why the Secretary of State and the Chancellor of the Exchequer will continue to meet the banks. Indeed, they are meeting them later this week. I recognise that the House is also concerned to ensure that monitoring takes place, so I hope that all hon. Members will welcome that continuing direct dialogue with the banks.

Mr. Prisk
Can the Minister confirm that if hon. Members, of whatever political persuasion, discover that small businesses face unreasonable behaviour from the banks, he and his colleagues will take those cases up and ensure that such abuse does not persist?

Mr. Thomas
We receive all sorts of correspondence from Members of Parliament representing the concerns raised with them in their constituencies. If hon. Members are approached by small businesses that face real difficulties, we will look into that and see what can be done to help. I hope that the hon. Gentleman will recognise that the prime responsibility to ensure genuine access to finance lies with the banks. They have some work to do to convince the small business community that they will follow through on their commitments. I hope that the House will recognise that we are continuing to monitor the banks’ commitments closely.

Mr. Geoffrey Clifton-Brown (Cotswold) (Con)
At a time when base rates are coming down, many small businesses find that their effective rate of borrowing, including arrangement fees, is double what it was last year, with many paying 15 per cent. Will the Minister send a clear signal to the banks tonight that that is unacceptable if the business fundamentals are the same as last year?

Mr. Thomas
My right hon. Friend the Chancellor has made it clear on many occasions that we recognise the considerable concern among the small business community and more generally about rates of lending and the price of that lending. That is why we are continuing to have an active dialogue with the banks, which continues on an almost daily basis. As I have said, the Secretary of State and the Chancellor will meet the banks later this week.

We can take other action to help business gain access to finance. We have already allocated an extra £60 million for the small firms loan guarantee scheme—a 20 per cent. increase—taking the total available to some £360 million, so that in more difficult months to come the scheme will have the resources to help many more firms.

Many hon. Members noted the need for prompt payment of business invoices because of the sometimes huge difficulties that late payment can generate for small businesses. I hope that hon. Members will welcome the commitment by the Government to paying their bills within 10 days. As my hon. Friend the Minister made clear, that will bring forward some £8 billion in payments, on top of the £58 billion already paid within this period. Hon. Members will note that regional development agencies have also signed up to that target, as has the chief executive of the national health service, who has written to all NHS bodies to ask them to follow suit and to ensure that primary care trusts, NHS hospitals and so on deliver on the same commitment.

As my hon. Friend the Minister also made clear, the Secretary of State for Communities and Local Government has written to the Local Government Association to encourage its members to play their part, too. I join the hon. Member for Caithness, Sutherland and Easter Ross and my hon. Friend the Member for Luton, South in noting the important contribution to prompt payment that all businesses can make, particularly big businesses. The Government have delivered for our part by introducing legislation back in 1998, by taking the action taken by my right hon. Friend the Prime Minister, and by taking the further action that has been initiated today.

I should acknowledge that many private sector firms are already committed to prompt payment. Some are already identified on the Institute of Credit Management’s website, which I commend to the House. The hon. Member for Broxbourne (Mr. Walker) dismissed the concerns of my hon. Friend the Member for Luton, South about corporate social responsibility, but, with all due respect to him, I think that it is incumbent on private sector firms to exercise the same responsibility as Government and to pay their bills on time. That is a matter of corporate social responsibility. I welcome those names that are already on the ICM’s website, and I hope that there will be many more to come.

In his opening speech, my hon. Friend the Minister also noted the additional advice that will now be available through Business Link. It is already providing support to some 850,000 customers in any one year. Free health checks offering advice and support to businesses will be available, if they are wanted, over the coming months.

Training matters, too, as my hon. Friend the Minister acknowledged. My right hon. Friend the Secretary of State for Innovation, Universities and Skills has also acknowledged that and has announced today that there will be further flexibility in the Train to Gain programme, which will help to make more short-term funding available and enabling a greater range of employees to benefit than has been the case until now.

It was somewhat disappointing to hear the intemperate nature of the opening comments made by the hon. Member for Rutland and Melton. There was no apology for the dismal record of the Opposition when they were in power. There were two terrible recessions in which business after business went to the wall and honest, hard-working people, both those running businesses and those working for businesses, saw a lifetime of effort and graft swept away by the arrogance of the then Government who simply would not listen. Three million people were unemployed—not once, as my hon. Friend the Minister said, and not twice. Interest rates were at a record level, at a base rate of some 15 per cent. At the heart of both recessions, 1,000 businesses went to the wall every week. That is the record of the Opposition and I suspect that that is why the hon. Member for Rutland and Melton sought to take such an unnecessarily partisan approach to the issues that small businesses face.

It is a matter of regret that hon. Members such as the hon. Members for Broxbourne and for St. Albans (Anne Main), chose to follow that intemperate approach—

Mr. Walker
Will the Minister give way?

Mr. Thomas
Not at this stage, no.

I say gently to the hon. Member for Rutland and Melton that it is not surprising that we in the Government should not know from one day to the next whether his party supports the continuation of regional development agencies—

Several hon. Members
rose—

Mr. Speaker
Order. It does not matter whether the Minister has two minutes left or not. He is not going to give way.

Mr. Thomas
The Opposition flip and they flop, they shilly and they shally and every single time they get the necessary response wrong. That is why we will continue to provide support to businesses. We recognise the challenges that small businesses as well as large businesses face, and we will continue to support them in the challenging times to come.

Question put, That the original words stand part of the Question:—

Division 279
21/10/2008 21:59:00
The House divided:
Ayes: 214
Noes: 301
Question accordingly negatived.

Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments):—

Division 280
21/10/2008 22:13:00
The House divided:
Ayes: 343
Noes: 158
Question accordingly agreed to.

Mr. Speaker forthwith declared the main Question, as amended, to be agreed to.

Resolved,

That this House notes that in the 1980s Britain experienced two recessions with unemployment reaching three million on both occasions, a thousand businesses a week were lost and that interest rates reached 15 per cent.; further notes that the roots and effects of the current financial crisis are global and unprecedented in recent decades; believes that at such a time it is essential that the Government acts to restore stability and confidence and therefore supports the action the Government has taken to inject liquidity into the banking system, to recapitalise the banks and to make funds available to resume the medium term lending essential to small businesses; further notes that the UK is better placed than in the past to get through the economic downturn with an economy that has produced three million more jobs over the past decade and enjoyed strong growth and low inflation; supports Government measures such as the Prime Minister’s announcement to reduce to 10 days the payment period from central government to small businesses and to bring forward funding for small businesses available through the European Investment Bank; and believes that the Government should reject public spending cuts at this time and continue working with the banks to ensure the availability and competitive pricing of lending to the small and medium sized business sector.

Delegated Legislation

Ordered,

That the Social Security (Miscellaneous Amendments) (No. 4) Regulations 2008 (S.I., 2008, No. 2424), dated 10th September 2008, be referred to a Delegated Legislation Committee.—[Mr. Roy.]

Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Delegated Legislation Committees),

Value Added Tax

That the Value Added Tax (Finance) (No. 2) Order 2008 (S.I., 2008, No. 2547), dated 29th September 2008, a copy of which was laid before this House on 29th September, be approved.—[Mr. Roy.]

Question agreed to.

Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Delegated Legislation Committees),

Competition

That the Enterprise Act 2002 (Specification of Additional Section 58 Consideration) Order 2008 (S.I., 2008, No. 2645), dated 6th October, a copy of which was laid before this House on 7th October, be approved.—[Mr. Roy.]

Mr. Speaker
I think the Ayes have it.

Hon. Members
No.

Division deferred till Wednesday 22 October, pursuant to Standing Order No. 41A (Deferred divisions).

European Union Documents

Motion made, and Question put forthwith, pursuant to Standing Order No. 119(9) (European Committees),

CAP ‘Health Check’ and Community Action on Rising Food Prices

That this House take note of European Union Documents No. 9656/08 and Addenda 1 and 2—Draft Council Regulation establishing common rules for direct support schemes for farmers under the Common Agricultural Policy and establishing certain support schemes for farmers, and Draft Council Regulation on modifications to the Common Agricultural Policy by amending 320/2006, 1234/2007, 3/2008 and an unnumbered document relating to the Common Market Organisation for wine, and Draft Council Regulation 1698/2005 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD), and Draft Council Decision amending Decision 2006/144/EC in the Community strategic guidelines for rural development (programming period 2007 to 2013) and European Union Document No. 9923/08, Commission Communication—Tackling the challenge of rising food prices—Directions for EU action; supports the Government’s negotiating aims that the ‘Health Check’ should cut further the trade and market distorting nature of the CAP, reduce regulatory burdens, give farmers greater control over their business decisions, and direct more public spending towards delivery of targeted public benefits; and considers that the separately proposed measures to tackle rising food prices are adequate and proportionate to the scale of the problem.—[Mr. Roy.]

Question agreed to.

Petition

Planning and Development (Dorset)

22:27:00

Annette Brooke (Mid-Dorset and North Poole) (LD)
A proposal to build 2,750 dwellings—a new town, in effect—was introduced in the south-west regional spatial strategy following a representation from a developer at the examination in public. The proposal is opposed by every local democratically elected body and every elected representative, as well as by almost 100 per cent. of local residents, on whose behalf I present the petition tonight.

The petition states:

The Petition of people living in the Mid-Dorset and North Poole Constituency,

Declares the Petitioners’ concerns that the proposal to build 2,750 homes in the vicinity of Lytchett Minster village in the green belt will result in one urban sprawl and threaten the loss of individual identity for their villages and communities, increase traffic on already inadequate roads, put pressures on hospitals and other health services and on schools and endanger heath lands. The Petitioners further declare that it is not an effective way to tackle the housing needs of local young people.

The Petitioners therefore request that the House of Commons urges the Secretary of State for Communities and Local Government to respond to the views of Purbeck District Council, supported by Dorset County Council, local town and parish councils and many individual constituents, by removing the proposal for the 2,750 homes in the vicinity of Lytchett Minster village from the South West Regional Spatial strategy.

And the Petitioners remain, etc.

[P000274]

Energy Policy (Scotland)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Roy.]

22:29:00

John Robertson (Glasgow, North-West) (Lab)
I want to start by declaring an interest as chair of the all-party parliamentary group on nuclear energy. I am delighted to have this opportunity to promote discussion on the future energy needs of Scotland. This is a much-needed debate. We currently have a First Minister who is constructing his own folly in Edinburgh and creating a whole new age of irresponsibility by gambling like the banks with Scotland’s future energy. This has been brought through the back door with planning policy in a way that was never intended in the devolution settlement. And there was good reason for that, with energy being an issue that transcends borders and one which is fundamentally important to the whole nation.

The First Minister is pursuing not an energy policy but an energy prejudice, through planning restrictions that have only one criterion: no to nuclear, regardless of the effects.

John Mason (Glasgow, East) (SNP)
Will the hon. Gentleman give way?

John Robertson
No, I will not.

With power comes responsibility, and the First Minister’s opposition to nuclear power demonstrates his inability rationally to examine the need for a balanced energy policy and the benefit that nuclear generation has delivered over the past 40 years. It is safe, reliable and, according to expert analysis, affordable. It would help us to reduce greenhouse gases, maintain security of supply and provide affordable energy for Scotland. Today, I want to ask the Minister of State, Department of Energy and Climate Change what his Department will do about its responsibility to provide this for the people of Scotland who are being frustrated in that respect.

Throughout its history, Scotland has been extremely fortunate with energy. There has been a long-term contribution from our nuclear plants, which at their peak delivered over 50 per cent. of our electricity needs. Even today, they still provide over 20 per cent. of our current base load. We have been self-sufficient in oil and gas, due to the huge investment in and exploitation of our natural resources in the North sea, and we have also had a profitable and viable coal industry.

So nuclear, coal and gas, with a contribution from limited hydro generation, have provided core sources of energy and the welcome balanced energy policy that has been so important to maintaining our way of life. But this now hangs in the balance. Our two remaining nuclear plants, at Hunterston and Torness, will both reach the end of their life cycle some time in the 2020s. Hunterston recently announced a life extension until 2016, but it must be recognised that continuing generation after that date will be extremely difficult and will require substantial engineering solutions if it is to continue to contribute to our base energy load.

Anne Moffat (East Lothian) (Lab)
I congratulate my hon. Friend on securing this important debate. Having mentioned Torness, will he place on record the hard work of the skilled work force in my constituency?

John Robertson
My hon. Friend asked me to do that before the debate, and I am only too glad to support her work force and the excellent contribution that they have made to energy in Scotland.

It will come as no surprise to my colleagues that I was somewhat bemused when the Scottish National party Administration welcomed Hunterston’s life extension, but where there is life there is hope—and where there are nationalists, there is always hypocrisy.

In parallel to this, our two coal-fired power stations at Longannet and Cockenzie are scheduled to close at the end of 2015, on account of European emissions legislation. Even if this could be avoided, those two coal-powered stations will have reached their 48th and 52nd birthdays by 2020. Because of this, the environmental impact and the reliability of these fossil fuel plants will be significantly worse than modern equivalents. So, with the imperative of climate change, and the SNP’s manifesto pledge for a greener Scotland, this should be setting alarm bells ringing.

I am in favour of a comprehensive, balanced energy policy including coal, gas and nuclear, and I fully support the development of renewables to meet our future need. I am deeply concerned, however, that while the SNP Administration in Edinburgh advocate low-carbon energy, they reject nuclear power. Nuclear power is a proven, operational, safe and clean core source of low-carbon energy, whose emissions levels are, according to the UN, similar to those of renewables.

John Mason
Will the hon. Gentleman give way?

John Robertson
I will not give way to the hon. Gentleman, because he did not ask me before the debate whether he could speak.

So, the SNP’s dogmatic opposition is completely illogical and damaging. I have to say that, south of the border, the Conservatives are not much better. Their flip-flopping on nuclear is unhelpful and dangerous, and it is about time that Conservative Back Benchers gave their Front Benchers a wake-up call.

The need for a truly balanced energy policy utilising all proven sources, which the Government have recognised, has been reinforced by this year’s events. Increases and fluctuations in the price of oil and the effect on the economy have underscored the need to reduce our dependence on imported fossil fuels. My constituents feel that need when they get their food and energy bills, but current SNP policies will leave Scotland at the mercy of world events and dependent on gas for our core source of the energy needed to meet at least 50 per cent. of our electricity needs. I would urge the Minister not to stand by—energy is not a devolved area—as we surely cannot allow dogma and misinformation to impact detrimentally on the people of Scotland.

While I completely agree that Scotland is well endowed with natural resources to generate a large proportion of its electricity from renewables, there are practical problems that affect both security and cost. Research and development are never cheap and require huge capital investment to bring any development to fruition. Carbon capture and storage plants, for instance, are being developed in different countries at present, but that is expensive and on current estimates it will be 2030 before a commercially viable plant is fully operational. Investing in research and development for renewables is vital, but even if they can deliver the Edinburgh Executive’s ambitious target that 50 per cent. of our electricity will come from renewables by 2020, where will the other 50 per cent. come from?

We should not be taken in by the greenwash and saltire swathing of statistics by the SNP. It trumpets the 2006 figures on a lower proportion of nuclear generation as showing a greener Scotland, but it fails to disclose an increase in the use of gas and a reduction in the share from renewables. So a cleaner Scotland it certainly was not in 2006—and that provides a lesson on where I believe the Scottish Nationalists’ energy policy will lead us.

Further evidence was borne out in an astonishing piece in a recent Sunday newspaper, when the First Minister claimed that the green revolution would enter a new phase with a return to “Old King Coal”. While that might make for benign headlines, perhaps the First Minister is unaware of research showing that levels of radiation are up to six times higher for people living around coal plants than for those living around nuclear plants. Perhaps he is also unaware of the thousands of miners still living in Scotland today who suffer from the effects of working in the pits, and unaware of the heavy price they pay in terms of bronchial, chest and lung diseases. But he must surely know of the vast sums of money that the taxpayer has quite rightly had to pay for the extraction of coal and of the recent warning from the wind generation industry that a funding injection is needed to meet the targets. Our security of supply is now in real danger and the energy prejudice being played out by the SNP in planning policy is not only illogical, but highly dangerous. If the SNP continues to oppose nuclear and our two existing coal plants close in 2016, there will be no alternative but to turn to gas for our core energy supply.

The decision to build a new generation of nuclear plants is, in my view, sensible and necessary and should play a role in meeting our needs for Scotland. The decision to sell British Energy to EDF Energy will, I hope, kick-start new nuclear build as soon as possible, but the First Minister’s prejudice could deprive Scotland of the delivery of a low-carbon energy source.

A new reactor on the Hunterston site is supported not only by the work force, but by local communities, which is regrettably more than can be said for a number of renewable developments with which we have had problems. That opposition has set us further back in meeting the challenge we face. Taking the opportunity provided by new nuclear build, with no cost or subsidies to the taxpayer, makes sense and it is vital if we are to avoid dependency on imported gas. The First Minister will not listen to reason—[Interruption.]

Mr. Deputy Speaker (Sir Michael Lord)
Order. The hon. Member for Glasgow, East (John Mason) of the SNP needs to know that this is an Adjournment debate, not a general debate, so it is really a matter for the Member whose debate this is and the relevant Minister—and nobody else. I understand that the hon. Gentleman is new to the House, but he should bear that in mind.

John Robertson
It makes sense to have the opportunity of new nuclear build with no cost to or subsidies from the taxpayer. If we are to avoid dependency on imported gas, its development is vital. The First Minister will not listen to reason, but will my hon. and learned Friend? Few more important topics face the country at the moment than energy supply. Does he agree that the SNP should not frustrate Scotland’s needs by the back door? Does he agree that we need to revisit the issue of planning policy? Would he support an independent body with jurisdiction for all of the UK to advise on energy sources in planning decisions, which have been plagued by prejudice?

Tonight it is also important to express our thanks to those in the nuclear, coal and gas industries in Scotland. In particular, I thank the nuclear workers, not just those in the constituency of my hon. Friend the Member for East Lothian (Anne Moffat), but those at Hunterston who have contributed for almost 40 years and made sure that our core energy levels have been kept high.

The nuclear industry is a soft target for the media and those opposed to nuclear energy. Any problem, however trivial, has been blown out of all proportion and the atmosphere of mystery and fear has been perpetuated. Yet there has not been a single major nuclear emergency in Scotland and the industry has an enviable safety record compared with coal, gas and oil. That safety record is no accident: the regulation and safeguards adopted by the industry, which is more closely monitored, isolate the dangerous radioactive waste from the living environment. Nuclear power contributes only 0.5 per cent. or so to the population’s annual exposure to radiation, with 85 per cent. occurring from natural sources and 14 per cent. from medical treatment. Therefore, the First Minister should be ashamed of his constant misleading rhetoric and demonisation of workers in the nuclear industry.

I want to move on from how we will keep the lights on, to press my hon. and learned Friend about another important energy issue: keeping the heating on. I have raised that topic with several Ministers, in several Departments, and in several Sessions. I make no apologies for revisiting it today.

Throughout the country, many people would have switched on their heating on 1 October. But as a Glasgow MP whose constituency has high levels of pensioners and benefit claimants, I know that many of my constituents will face an unacceptable dilemma this winter as they weigh up which essential costs to cut. The rise in food and energy prices means that two core needs are being hit, and that will not come as news to my hon. and learned Friend. From his time in the Department for Work and Pensions he will know that the measure that we use to calculate the state pension increase—the retail prices index—is at its highest level since 1991.

In Scotland the problem is more acute than in the rest of the UK: incomes are lower, but the heating season is longer and more bitter. About a third of homes in the country have no connection to mains gas, and in the multi-storey flats in my constituency I see people with storage heaters, running on the most expensive fuel. I would be the first to admit that the Government have done a lot to prevent people from having to face such unacceptable choices. In my constituency the unemployment rate is down by 4 per cent. and 15,000 people receive payments worth hundreds of pounds a year to help with their heating bills. But we can and must do more.

Back in March, I asked my hon. and learned Friend to work with energy companies to identify the poorest consumers in need of social tariffs. I know that the BT basic scheme for a fixed phone line involves the DWP helping it to identify eligible customers. Therefore, can he tell me what progress has been made on co-ordinating action over energy?

I welcomed the statement by the Secretary of State for Energy and Climate Change last Thursday that he would bring in legislation if energy companies continued to overcharge customers on prepayment meters. But earlier this year Ofgem also found that customers on social tariffs often did not receive the best deal available, so will my hon. and learned Friend undertake to follow the Secretary of State’s no-nonsense approach on social tariffs?

When my hon. and learned Friend was in his former post, I also lobbied him for a consolidation of the increase in the winter fuel allowance. I put my support for that on record again. Moreover, I repeat my call for support in relation to winter fuel bills to be extended to other vulnerable groups who receive no extra support in the winter—the unemployed, those on income support, the disabled and those with children.

My hon. and learned Friend may mention the cold weather payment in this context. I will make two points about that payment: it is available to only a small minority of those in fuel poverty, and it kicks in only after seven days of below-freezing temperatures have been forecast.

As my hon. and learned Friend will doubtless know, it does not take a week to die or fall ill in the cold; it takes just one bitter night when someone does not put the heating on. I urge him, in his new Department, to work with colleagues throughout Government to provide more help for people this winter. If he is looking for somewhere to start, I suggest the profits of the energy companies themselves. He cannot miss them: they are huge.

I hope that the link between the two issues that I have raised is clear. Both are key to Scotland and my constituents. We cannot have a new age of irresponsibility that gambles on keeping the lights or the heating on.

22:45:00

The Minister of State, Department of Energy and Climate Change (Mr. Mike O'Brien)
I congratulate my hon. Friend the Member for Glasgow, North-West (John Robertson) on securing the ballot. He is right to ask, on Scotland’s behalf, whether the Scottish National party will keep the lights on in future decades.

In recent decades, Scotland has been dealt a wonderful hand in energy. North sea oil and gas have boosted its economy, and still have much to contribute. Scotland is rich in potential for renewables such as wind turbines. However, that hand has changed in recent years. Oil and gas are there now, but will decline in the decades to come. Onshore wind turbines will be vital to the achieving of our renewables target. Offshore wind turbines in shallow water have further potential, but some of the shallow areas involve environmental and other issues. Scotland, with United Kingdom Government support, has developed the first deep-water offshore wind farm, the Talisman project, but offshore wind farms in deeper water are more expensive. The technique still needs to be improved if the cost is to be reduced.

In any event, wind requires back-up generation. Given the requirement for steady and consistent electricity supplies at times of peak demand and the fact that wind is by its nature intermittent, there have to be other sources of generation. Onshore wind turbines have potential, but planning is a devolved matter. Unless the SNP wants turbines all over the Scottish landscape, it will limit the number of turbines.

The requirement for that steady and consistent electricity supply must be borne in mind. It is possible to obtain some of it from coal, and, as a Member of Parliament with a working pit in his constituency, I do not need to be reminded of the importance of coal in the context of energy. In the long term, if we can get carbon capture and storage right, coal—as part of a wider energy mix—has the potential to make an enormous contribution. We should therefore work very hard to develop carbon capture and storage, but we cannot pretend—for it is a mere pretence—that coal provides the complete answer. King coal may have been the way forward 100 years ago, but in an era in which we must deal with climate change issues, we cannot claim that it provides the whole answer. It must be seen as only part of a wider energy mix, which means recognising the key role that nuclear generation will have.

Nuclear generation can provide part of the back-up generation that, as I have explained, is necessary, but the SNP has rejected new nuclear power generation. That leaves an emerging gap in Scottish energy provision. In the decades to come Scotland will have to obtain some of its baseload electricity from other sources, perhaps from England and probably from nuclear power stations in England.

That is not a problem in the United Kingdom, because we share energy generation, which is the way it should be. Scotland supplies England with power, and we work together. For an independent Scotland, however, it just does not add up. The First Minister is a bright guy—he is, after all, an energy economist—and he knows that there is a gap in the SNP’s energy policy. It is just too tough a decision for him to acknowledge that he must do something about the nuclear case.

John Robertson
My hon. and learned Friend makes a strong argument. May I draw his attention to the knock-on effect on jobs and infrastructure at Hunterston and Torness, and to the billions of investment that could come Scotland’s way if it signs up to new nuclear energy?

Mr. O'Brien
My hon. Friend makes a strong point. It is not just the jobs that are enormously important. My hon. Friend the Member for East Lothian (Anne Moffat), who represents Torness, identified the risk that SNP policy poses to Scottish jobs in the nuclear industry at the moment. The rejection of future development of nuclear generation does put jobs at risk—it is very difficult to get away from that. Not only is there an emerging energy gap but jobs are at risk, and substantial investment that could otherwise be made would be denied to Scotland

There is a real gap in SNP energy policy. It is too tough a decision for the First Minister to acknowledge the nuclear case, so he is letting it drift. He will not endorse the case for nuclear but he wants British Energy to keep its offices in Scotland. He opposes new nuclear build but has extended the life of Hunterston to ensure that jobs and generation continue a bit longer. It is a half-baked policy and we need some change.

Energy policy cannot be allowed to drift. Energy powers our economy, heats our homes and propels our transport. It is essential. Securing the UK's energy supplies as we make the transition to a low carbon economy is one of the greatest challenges that our country faces. As a result, our efforts are focused on three principal issues. First, we must ensure the greatest degree of energy security for the United Kingdom, including Scotland. Secondly, we must address the threat of climate change. Thirdly, we must do all that we can to ensure energy is affordable.

These challenges require tough decisions and effective action. The UK Government is making those decisions and we want to work with the Scottish Executive in delivering on them, but the SNP policy on nuclear is not sustainable. Nuclear can play an important role in giving all of us in the UK a diverse low carbon energy mix and increasing our energy security. To remove nuclear from the mix, as the Scottish Nationalists propose, would seriously threaten our ability to deal with our energy challenges and increase the costs in doing so, including for consumers.

Nuclear accounted for 26 per cent. of electricity generation in Scotland in 2006, the latest year for which figures are available. The position of the SNP inevitably will impact upon the jobs available in Scotland and the massive—approximately £3billion per reactor—investment opportunity that a new nuclear power station brings to an area.

Industry has made clear its interest in investing in new nuclear in the UK. The recent £12.5 billion proposed takeover bid by EDF for British Energy confirms this; that is important for Scotland. The timetable of actions set out in the Nuclear White Paper published earlier this year should allow companies to start building new nuclear power stations in 2013-14 and start operation in 2017-20.

We know we are in a competitive global market for new build. Across the world other countries are also supporting nuclear because it is low carbon and adds to the number of technologies in the energy mix. That is why we have set up the new Office of Nuclear Development and the Nuclear Development Forum. Both will help to facilitate new build, help to maintain the UK as one of the most attractive places in the world to invest and help business take advantage, both here and overseas, of the opportunities new nuclear will bring. I hope therefore that the Scottish Nationalists will reconsider their position on nuclear policy.

On coal, I repeat that I represent a mining constituency and I recognise the importance of coal. Coal carbon emissions are clearly an issue that we cannot duck. But in the long term, coal is potentially an important alternative source of energy if we get the science right. That is why the UK Government are exploring the possibility of overcoming the problems with carbon capture and storage. The UK is leading the way in the search for technological solutions that will make these fossil fuels cleaner. We are supporting the world's first commercial-scale demonstration project for post-combustion carbon capture and storage in a coal-fired plant. This technology has the potential to capture 90 per cent. of carbon emissions and is a crucial tool in the global fight against climate change. However, old king coal cannot be the single answer to the need for back-up generation, but coal should be part of that diverse energy policy to ensure long-term security of supply.

Renewables are important in our energy and climate change strategy. The UK is committed to meeting its share of the EU target for 20 per cent. of renewable energy by 2020 in heat, power and transport. We are making rapid progress, but the 2020 target requires us to go dramatically further and faster. Therefore, the measures we set out in our draft renewable energy strategy published over the summer are aimed at delivering a tenfold increase in the use of renewable energy by 2020.

Scotland is rich in renewable resources, and much of the renewable deployment necessary for achieving the UK’s EU targets will be in Scotland. Scottish Ministers have responsibility for the implementation of the renewables obligation in Scotland, our main mechanism for stimulating the growth in renewables. We welcome the Scottish Executive’s commitment and work in this area, in particular through their co-operation on the Energy Bill currently before Parliament. We are working to develop a new regulatory regime for offshore electricity transmission to support the development of up to 33 GW of offshore generating capacity. I am delighted to say that today’s opening of the Lynn and Inner Dowsing wind farms off the Lincolnshire coast, which I was able to attend, has taken us through the 3 GW barrier for wind generation. It also means that we have now overtaken Denmark to become No.1 in the world for installed offshore wind capacity. My right hon. Friend the Secretary of State for Energy and Climate Change announced that we would be making an amendment to the Energy Bill to allow feed-in tariffs to encourage small-scale electricity generation, in view of the important role that it can play in meeting our renewable targets.

The exploitation of oil and gas is another important issue that is close to Scotland’s heart. We want to work with the Scottish Executive to make sure that where we can develop the resources—which are often now much more difficult to access than they were in the past—we can develop a strategy that ensures that Scotland and the whole of the UK can make best use and get the best benefit from what remains of oil and gas in the North sea. It will be there for some time to come. The offshore industry is a global industry that places a premium on stability. The UK’s fair and flexible fiscal and licensing regime successfully incentivises the research, innovation and investment that are in Scotland’s interests as much as those of the UK as a whole.

In the light of rising fuel bills, we must also protect the vulnerable in our society. High oil prices are impacting disproportionately on the poor, so we must continue to make the eradication of fuel poverty a priority for action. That is why the Government announced last month a new £1 billion package of measures to help families on middle and modest incomes permanently cut their energy bills. Alongside targeted extra help for the vulnerable this winter, and with new funding of £910 million from energy suppliers and electricity generators, this will support the widest programme of energy improvement to British homes since the conversion to North sea gas in the 1960s. Following Ofgem’s report on energy supply published earlier this month, we told the representatives of the big six energy companies that we needed to see rapid action.

We believe that the interests of Scotland are best served by being part of a UK-wide energy policy. The Scottish National party knows it has a gap in energy in Scotland in the future. Only as part of the UK can we ensure Scotland has the right energy mix. No one says the lights will go out tomorrow in Scotland—that will not happen—but my case is that the energy gap in the future can be filled by a number of energy sources, including nuclear as part of a wider energy mix. Our policy is based on the principle that a regulated, competitive energy market is the most cost-effective way to deliver secure energy supplies and lower emissions. We need to ensure that devolved energy policy in areas such as Scotland include the promotion of renewables and energy efficiency and a wider energy mix. We recognise the importance of the Scottish Executive—

The motion having been made after Ten o’clock, and the debate having continued for half an hour, Mr. Deputy Speaker adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at one minute to Eleven o’clock.