House of Commons
Monday 24 October 2005
The House met at half-past Two o'clock
Prayers
Mr Speaker in the Chair
Oral Answers to Questions
Culture, Media and Sport
The Secretary of State was asked—
Licensing Act
My Department continues to receive a number of representations about the Licensing Act, mainly relating to the fees review, the consultation on temporary event notices and the timing of the second appointed day. On the issue of whether the Government should press ahead with full implementation of the Licensing Act on 24 November—the second appointed day—the key stakeholders are supportive, and that is what the Government intend to do.
I am sure that the Secretary of State will be aware of the widespread concern that many of my constituents feel about the legislation. In particular, they are deeply concerned about the rise of alcohol-fuelled antisocial behaviour. Many establishments in Camberley town centre have been pressing for extensions to their licences, but unfortunately local residents who do not live in the immediate vicinity are barred from making representations. Local councillors who are deeply concerned about preserving the character and tranquillity of that town centre are also gagged from making their representations heard when deliberations are made on the extension of licences. What can the Secretary of State say to reassure my constituents that she takes seriously the threat of alcohol-fuelled antisocial behaviour and that she will show respect for those local people who cannot have their voices heard in the debate because of her legislation?
On the first point, on alcohol-fuelled antisocial behaviour, it is precisely because of the new police powers in the legislation that we intend to press ahead and secure its implementation as quickly as possible, so that those powers are at their disposal. On the second point, in looking at the performance of local authorities around the country, to which I pay tribute for setting up the new regime, I am pleased that in 95 per cent. of the cases in which residents make representations against variation in hours, their concerns have been met and a satisfactory conclusion reached.
Does my right hon. Friend agree that the problems of binge drinking and antisocial behaviour have grown as a result not of the licensing laws, but as a by-product of an increasingly selfish society, nurtured in the early 1980s? Does she also agree that a more civilised regime is essential to reform the existing drinking culture?
I certainly agree that a regime that combines tough law enforcement and powers to crack down on antisocial behaviour and alcohol-related crime, linked to the end of the curfew for the law-abiding majority, is the right way to go, and that is the way in which the Government intend to proceed.
Will the Secretary of State comment on a contradiction at the heart of Government policy with regard to alcohol disorder zones as proposed in forthcoming legislation and the 2003 Act? Is there not a contradiction between rising antisocial behaviour as a result of excess alcohol consumption and, at the same time, the introduction of alcohol disorder zones?
No, I certainly do not accept that there is any inconsistency. We have a big problem with alcohol-fuelled violence and binge drinking. The 2003 Act makes a necessary, but not complete, contribution to solving that problem. The Violent Crime Reduction Bill, which is legislating for the introduction of alcohol disorder zones, is a second very important stage. Put together, the powers of the Violent Crime Reduction Bill and the powers of the 2003 Act give the police unprecedented powers to crack down on alcohol-fuelled disorder. That is why getting the legislation enacted is so pressing.
Is my right hon. Friend aware that 1,700 premises licences and 2,000 personal licences have been awarded in Blackpool? Will she congratulate seaside towns on getting the balance right between listening to the representations of the local community and taking account of the needs of visitors, to ensure that our seaside towns continue to prosper?
I thank my hon. Friend for that. I certainly do pay tribute to those councillors who sat on local authority licensing panels in seaside towns and, indeed, across the country for their magnificent effort in getting us to the position in which 97 per cent. of licences are transferred to the new regime. We also have a new regime that gives power to local residents in a way that they have never had before.
Does the Minister accept that in communities such as mine licensees are applying for exactly the same extended hours, thus defeating the Government's goal of staggering closing? Drunks will now come out onto the street at a time that is more disruptive to the community. They will have had even more to drink and police resources will be diminished.
The pattern established by authorities around the country is different from the position in her constituency. We are indeed seeking to avoid replacing one fixed closing time with another for the reasons that she identified. I suggest that she make representations to her local council to address the problem.
My right hon. Friend is right that the Licensing Act gives enormous power to local authorities, but there is confusion about how far they can push the boundaries, particularly with regard to the role of councillors who wish to make representations in the area where they live. Will she look at that and at whether, for example, councillors can make children's areas no-smoking areas?
We have undertaken to review the implementation of the Act, and when we do so we will of course look at that. When Parliament considered that point it sought to ensure that councillors who raise concerns with the local authority—such concerns could result in a licensee losing their licence—do so in their representative capacity. I am happy on the strength of the experience to date to give the House an assurance that we will look at that issue in our longer-term review of the Act.
Figures out last week showed violent crime up by 6 per cent. on the same period last year. The Secretary of State has already referred to the link between binge drinking and violent crime, so does she not accept that the new licensing hours will simply make the problem worse?
No, I certainly do not. The Association of Chief Police Officers wants the Act to be implemented on time, as do local authorities. They recognise something that seems to have escaped the right hon. Lady for many weeks—the police need those new powers to tackle alcohol-related crime. In her constant opportunistic opposition she is in effect voting against the voices in the police and local government saying that we need those powers to make a serious attack on alcohol-related crime.
I suggest that the Secretary of State listen more carefully to the question in future. I did not ask about the licensing law and the new powers; I asked about the new licensing hours. Senior police officers have made it clear that new powers are welcome but that extended licensing hours are not. A Scotland Yard report predicts an
"increase in the number of investigations of drink-related crimes, such as rape, assault, homicide and domestic violence".
The chief constable of North Yorkshire said that longer hours would lead to
"increased criminality, drink-driving, road casualties and antisocial behaviour".
The licensing spokesman for the Association of Chief Police Officers said:
"People are going to drink more because of longer hours and there will be lots more crime and disorder."
Why are the Government ignoring them?
Some of the crimes that people commit while under the influence of alcohol are hideous. There is no dispute in the House about that, but I would not want the right hon. Lady to think that this was a decision that was reached lightly. The Government are determined to push ahead with the implementation of the Licensing Act, because we can provide protection to innocent victims by giving the police powers to take effective action. She used a pick-and-mix strategy to find a chief constable who agrees with her, but the president of ACPO has made it quite clear that the police do not have any objection to flexible hours per se. We have worked closely with the police to meet their concerns. We are going to implement the legislation on 24 November and many people will be saved from attack, assault and injury as a result.
Lottery Funds Distribution
We will respond to the PAC's report before 15 December. We agree broadly with its conclusion that lottery money must get to the communities as quickly as possible, and that we need to do more to ensure that distributors do more to get the balances down. I would also like to place it on record that we have reduced lottery balances by a third since 1999.
I am grateful to my right hon. Friend for his reply. It is essential that the Government follow that route. Will he give me a reassurance that the Department will redouble its efforts to ensure that the balances are used, particularly in constituencies such as his and mine, which have traditionally received less lottery funding than other parts of the country?
Much as I would like to say yes to the last part of my hon. Friend's question—we accept that Barnsley and Sheffield are the centre of the universe— I cannot guarantee that lottery money will be there. Seriously, however, we are determined to get the balances down, and I hope that we will get support on the National Lottery Bill, whose Committee starts sitting tomorrow. The Bill contains measures that will help the lottery distributors to get the balances down to between £1.5 billion and £1.7 billion, which we think would be reasonable. I hope that those measures will help us to achieve that objective.
Is it not prudent for the Heritage Lottery Fund, which has recently granted £3 million to the Droitwich canals, to keep its money in the bank until it is ready to be spent, when we see the amount of money that the Government commit to the original purpose of the lottery reduced year on year, as they shift funding to other causes? Would it not be prudent to keep that money in the bank, as we are so fearful of what the Government might do to that funding stream in future?
No. If the hon. Gentleman reads the PAC report, which we agree with, he will find the answers to his questions. It would be wrong to say that the Heritage Lottery Fund, the distributor, does not have to look again at these issues. Some of the measures that we hope to take in the National Lottery Bill, whose Committee starts tomorrow, will bring some discipline into these matters.
In regard to changing the lottery, it is an evolving scene. We have moved from capital spending to more revenue spending, but that was after wide consultation with the general public. That is the way in which they wanted it to evolve. The hon. Gentleman is wrong on both counts.
Can my right hon. Friend confirm that the Heritage Lottery Fund is to continue, contrary to rumours that have been circulating? I should like to declare an interest, in that I am the president of the Keighley and Worth Valley Railway Preservation Society, which has benefited from lottery funding in the past.
I honestly do not know where these rumours come from. We take these matters seriously, so far as the Heritage Lottery Fund is concerned, and we have guaranteed it up to the end of this licence. We have also said that serious consideration must be given to enabling the good causes programme to continue after the beginning of the new licence. If we are talking about a commitment to ensuring stability of spending on good causes in the medium to long term, then, crikey, I do not think that any Government could have done more than we have. It is despicable of people to try to undermine the Heritage Lottery Fund by spreading these rumours, and they ought to stop immediately.
Rather than leaving the money in the bank, would it not be better to use it to finance an organisation called the Severn Area Rescue Association, whose application for just £5,000 for a new Land Rover to launch its lifeboats was turned down because it could not provide details of the social background of the people it rescued? I am sure that the Minister would not want its members to try to assess the wealth of the people they were dragging out of the river. Does he agree that a better way forward would be for the lottery people to review their criteria?
I would not disagree with that. This is one of the reasons why we are bringing the Bill before Parliament again, and as I said earlier, we are moving with the times and trying to evolve what is probably the most successful lottery in the world. We have put these matters out to wide consultation to assess how the general public and the lottery players want the money to be spent. I have no doubt that the Big Lottery Fund will respond to some of the issues that the hon. Gentleman has mentioned, but I cannot comment on the specific case that he raised. If he wants to write to me, however, I will take the matter up with Stephen Dunmore of the Big Lottery Fund, and I will write to him with the response.
In my right hon. Friend's response to the report, will he consider carefully what more can be done to assist small organisations in making grant applications, and particularly to direct money to smaller organisations in our more deprived communities? Will he also encourage a more rounded view to be taken of the receipts from each constituency? The receipts from Warrington town centre are not allocated to my constituency at all, even though it is the shopping area for Warrington, North.
My hon. Friend probably knows that several reviews have taken place, and we have tried, wherever possible, to factor in some of the concerns that she has just expressed. Broadly speaking, I hope, we are getting that right. The distribution in terms of geography and the indices of deprivation is now factored in—we have gone from capital to revenue spending, and have made it much easier, and will continue to do so through the Big Lottery Fund, for small organisations not only to apply but to get awards. We are trying to simplify and make such applications much more user-friendly, which is the whole object of the exercise.
The Minister's complacency is wondrous to behold, but the fact is that organisations such as the New Opportunities Fund, a lottery distributor under direct Government control, missed the Government's target to reduce its balances by a massive £376 million. He can add that failure to the Government's lengthening list of missed targets. Is not the real lesson of all this simple: Government interference in the lottery simply does not work? Should not the Minister therefore interfere less in the lottery, not more, as the Bill proposes? Will he drop the draconian power in the Bill that effectively allows the Government to nick lottery balances and give them to anybody the Secretary of State chooses?
I have no doubt that we will have that debate in Committee in the coming weeks, and it will be very interesting. I will give reasons in Committee, rather than at the Dispatch Box, and the House will be able to debate those further at a later date. Through the Bill, we are taking no more powers than existed under NOF or the Community Fund, and we will debate those in Committee. In terms of the balances, we have been reasonably successful, although there is no doubt that we can do better. We have brought them down by a third, from £3.73 billion to £2.3 billion, which is not good enough—we want to get to around £1.8 billion to £1.9 billion, which is at least sustainable. We will continue those efforts, and I hope that the hon. Gentleman will support the Government's Bill in Committee in the next few weeks. That will help us to get those balances down to the figure that I have indicated, which we think is reasonable.
Media Literacy
The Government have placed a statutory duty on Ofcom to promote media literacy. As part of that duty, Ofcom has recently undertaken a large-scale audit of media literacy skills, knowledge and understanding in the UK. Ofcom is currently analysing the data that it has gathered and will publish that early next year.
I welcome the Department's efforts to promote media literacy, not least because it is vital to empowering people and enabling them to participate effectively in democratic processes, but will the Minister undertake to find a way of measuring it? That would enable progress also to be measured, and resources to be targeted appropriately.
I know that the hon. Gentleman is keen to establish an all-party parliamentary group to consider media literacy, and that Ofcom is keen to work with him. Data that Ofcom is currently gathering will enable the Department to make progress, but I remind the hon. Gentleman also of the work of the media literacy taskforce, which involves broadcasters' ensuring that we educate our population better, and protect our children better, in a complex technical age.
Licensing Act
It will not be possible to assess the impact of the Licensing Act 2003 until after the new regime is fully in force on 24 November. However, the legislation is already having a positive impact as the police, environmental health officers and residents use the opportunity to influence licences. We will conduct a full assessment of the Act after its implementation.
I thank the Minister for his reply, but I am particularly concerned about under-age drinking. I welcome the tough new penalties for selling alcohol to those under 18. There was a particular problem in an area in my constituency called Buckland, where antisocial behaviour was linked with under-age drinking. A partnership was formed between the local Co-op store, the police, the council and residents. On investigation, they found that it was not a case of stores selling alcohol to children, but a case of adults purchasing alcohol on children's behalf. The partnership organised a local awareness campaign, but when the police spoke to parents, they encountered a lax attitude towards children's drinking. Would the Government be prepared to undertake a nationwide awareness campaign?
My hon. Friend has campaigned assiduously in her constituency, and we will certainly consider her suggestion of a national advertising campaign. That would, I think, be the right way in which to educate parents about their responsibilities. It is also important for us to implement the extra powers in the Act, such as the fine to punish those who sell alcohol to under-age drinkers, and the powers in the Violent Crime Reduction Bill which enable us to close for 48 hours premises that persistently sell alcohol to under-age drinkers.
A genuine fear in my constituency is that the Licensing Act will increase crime, disorder and antisocial behaviour. The Secretary of State has emphasised the extra powers that the Act will give the police, but the enforcement of the law will depend on there being enough police resources. The law is due to be introduced just before Christmas, when resources in the Metropolitan police area in London are likely to be considerably stretched because of the heightened terrorist threat that exists at that time. What representations has the Minister made to his Home Office colleagues with the aim of ensuring that we shall have enough police to deal with the problems that I expect to result from the introduction of the Act?
The hon. Gentleman makes a good point. We are having discussions with the Home Office and the police about how they can use the extra powers in the Act over Christmas to do exactly as he suggests. The Act is, however, already producing an improvement in licensing conditions. It has led to more people joining Pubwatch. The police are using it as a way of persuading people to sign up to CCTV and pager schemes and to employ extra door staff. The licensing process has tidied up and toughened the regime that operates in pubs, and it will help us to deal with problem pubs that have got away with their practices for too long under the current licensing laws.
Does the Minister agree that a much under-reported aspect of the Act is the extent to which it empowers local communities to take action against the noisy and disruptive premises in their midst? Will he tell us the exact difference between the new situation and the old one, in which communities were disempowered from taking action against noisy premises in their neighbourhoods?
It was in response to campaigning by Members of Parliament that we introduced those extra powers. Any Member who has tried to have a pub closed down knows that it is virtually impossible to do so. Only 0.2 per cent. of premises failed to have their licences renewed last year. The Act provides for a review that any resident, the police or the council can use at any time to deal with a problem pub. We believe that the Act will change for ever the incentives provided for landlords, who will now know that if they misbehave or cause disorder on their premises, they will be on probation, that they will be targeted by the police and the council, and that their premises may be closed down.
We already know that judges, doctors, many senior police officers, officials in the drink industry and the public at large are deeply concerned about the negative impact of the Licensing Act; but what about the Minister himself? When he was personally involved in drafting for the Labour party that infamous text message
"cldn't give a XXXX 4 last ordrs? vote Labour 4 xtra time",
did he imagine that, shortly before the 2001 general election, that message would give the impression that under Labour there would be a crackdown on binge drinking, or the impression that under Labour young people would have more time to get drunk?
I have great respect for the hon. Gentleman, but he should know better than to believe everything that he reads in The Mail On Sunday. I can clarify that that report was total fantasy and that I had absolutely nothing to do with it. I was not working in Millbank; I was campaigning in Stalybridge and Hyde. As the Secretary of State has made clear, we regret that text message, but it had nothing to do with me.
In the light of answers given to my hon. Friends the Members for Portsmouth, North (Sarah McCarthy-Fry) and for Wolverhampton, South-East (Mr. McFadden), will the Minister undertake to contact licensing authorities about this issue? There seems to be confusion at that end as to what they will allow residents to do. Four constituents have complained at separate surgeries that Dudley council, my licensing authority, is establishing a 100 m limit concerning the ability to object to licences, renewals or extensions. Will the Minister remove this confusion and give particular consideration to the portfolio holder who wrote to my local paper on Friday, saying that only residents who lived a short distance could—
Order. May I appeal to every Member who asks a supplementary to be brief? It is not only the hon. Lady who was at fault; there were others. I call Anne Main. [Interruption.] Sorry, I forgot about the answer.
It probably was not worth waiting for, Mr. Speaker. [Laughter.] The definition of what constitutes a vicinity is a matter for local authorities, and we have written to them to encourage them to be as flexible as possible. As the Secretary of State said, we will review the guidance, and I encourage my hon. Friend to contribute to that review. We will look at this issue sympathetically.
Given that the Minister is encouraging the police to participate more and to help residents to oppose inappropriate licensing applications, what is his opinion of the fact that the licensing authority in my constituency did not take into account anecdotal evidence from the police concerning the Blacksmith's Arms and the committing of 15 non-arrestable offences? It appears that the police's word carries no more weight than that of a licensee who says that he can manage the situation.
I obviously cannot comment on an individual case, but my experience across the country is that the police are proving successful in objecting to applications. For example, some premises are being closed down because they have a previous history of drug dealing or of causing disorder. As the hon. Lady knows, under this legislation there will for the first time be a review mechanism, so if the problems occur that she and the police are worried about, they can ask for an immediate review of the licence in question. The powers to deal with the minority of pubs and bars that cause problems are therefore much more stringent under this legislation, and they can be used much more rapidly.
Will the Minister cast a quick eye over a potential unintended effect of the Act, which is to prevent voluntary organisations from holding fairs such as Nantwich fair? It would be very unfortunate if we lost what is a traditional fair because of the cost involved.
I am very happy to meet my hon. Friend or her constituents to discuss this issue. It has been clarified that there is no need for similar events such as the Somerset carnival to be licensed, but I am happy to examine whether the particular example of Nantwich fair is covered by such exemption.
Alcohol-related deaths have risen by 18 per cent. across the country, and in some places by more than 40 per cent. Does the Minister accept that this figure is likely to rise again under the new Act?
No, I do not. Such problems are occurring under the existing legislation, which contains a loophole whereby hundreds of premises can remain open in all our city centres after 11 o'clock—320 can do so in Manchester, for example—but to exploit that loophole they have to put on dancing and music. If one were to try to design a system that is likely to make alcohol-fuelled violence worse, that would be it. That is why we want to change the system and to have such decisions made locally, on the basis of local circumstances and the advice of the local police.
Listed Sporting Events
I have said that I intend to review all listed sporting events, including cricket, around 2008–09. At that time, which will be 10 years after the last review, we will be in a position to take account of changes in the broadcasting of sport and of broadcasting in general, in the run-up to digital switchover.
Did the England and Wales Cricket Board ask the Government to be released from the informal agreement reached by the then Secretary of State in 1998—that although cricket was to be delisted, the majority of home test matches would continue to be available live on free-to-air TV? In the interests of the many rather than the few and in the interests of all who cannot afford £400 for Sky sports, should not the main test match series in the summer be restored to the A list forthwith?
I thank my hon. Friend for that question. No, the ECB did not ask to be released and I must also say that the status of the reported gentleman's agreement is somewhat unclear. Lord MacLaurin has taken steps to clarify it and to explain that the ECB had no choice. The point at which cricket was delisted was also the point at which the Government ceased to have a direct role in the decision. From then on, the decision became a matter between the ECB and the broadcaster. Clearly, the ECB sought to maximise the income from broadcasting revenues, which accounts for 80 per cent. of its income available to spend on the English team and grassroots cricket. In view of the very high level of interest in the matter—reflected in the early-day motion—I have undertaken to review the listed events at the appropriate time.
When the right hon. Lady comes to review the matter—hopefully before 2008—will she consider the position of the supporters of these national sports who are faced with a monopoly from one subscription provider? Will she examine the idea that I put forward in a ten-minute Bill in 1998—that A or B-listed events, if not available for a free-to-air broadcaster, must be sold to more than one subscriber?
When the time comes to undertake the review, I will certainly ensure that it takes account of all the relevant factors and representations at the time.
I wonder whether the Secretary of State would consider separating broadcast rights from broadband rights? One way to settle the problem quite quickly would be to allow the current Sky system to continue with the Ashes, but for broadband rights to be reallocated to provide another way of seeing these events live.
My hon. Friend makes an important point, and by 2008 there will be considerably more material, with an increased take-up of broadband. As I confirmed to the hon. Member for Reigate (Mr. Blunt), I will certainly ensure that the terms of reference of the review take account of all the relevant broadcasting issues at the time.
Television Licences
The BBC, as television licensing authority, has responsibility for the collection and enforcement of the licence fee and TV Licensing operates as agent for the corporation. It is for the BBC, initially, and, ultimately, the governors, to satisfy themselves that TV Licensing's methods are appropriate. However, as indicated in the BBC Charter Review Green Paper published earlier this year, the Government are considering what improvements might be made to the collection arrangements.
I thank the Minister for that somewhat bland answer, but what does he make of TV Licensing harassing a pensioner couple in my constituency—threatening them with court action, fines and enforcements visits in December, January, February, March, June and August, with each letter becoming even more threatening? All that is despite the fact that they do not actually have a television and have told the company so. Is that no longer a valid excuse, or does the BBC need every penny it can get?
I have looked at the hon. Gentleman's correspondence and I have sympathy with him and his constituents. He may not be happy with the bland constitutional settlement that we have reached on this issue, but it is for him to address the governors about it. We will look further into the matter in the context of the White Paper and I am sure that the governors should look carefully into the problem that the hon. Gentleman has described.
There are areas where licence evasion rates are much higher than the national average, especially in parts of Northern Ireland. If TV Licensing is aware of every dwelling where there is a television set, as its advertising says, and if it is also aware of the location of every valid licence, will the Minister announce a severe crackdown on those areas where evasion rates are higher than the national average and publicise them so that people know that there will be a crackdown in areas where evasion is highest?
The hon. Gentleman is right to say that the evasion rate is higher in Northern Ireland, and we could all speculate on the reasons for that. In the end, it is for TV Licensing to make those decisions; it is not for me to decide on its prosecution policy, but it has managed to decrease the evasion rate from nearly 13 per cent. in 1991 to 5 per cent. in 2005.
Will the Minister tell the BBC that if it goes ahead with its proposal to increase the licence fee 2.3 per cent. above inflation for several years in succession, the chances of more people taking part in that evasion will rise astronomically? It is time that somebody put their foot down and told the BBC it had better keep in line with inflation.
My hon. Friend makes a good point. We shall be scrutinising the BBC's proposals in detail and have hired consultants to look at them. My hon. Friend can be reassured that we shall not be soft on the BBC's costs.
What assessment has the Minister made of the service in Welsh provided by TV Licensing in Bristol? Last week, after complaints from constituents, I telephoned TV Licensing five times. I was put on hold five times, listened to the abysmal music played on such occasions five times and, thankfully, was eventually cut off. Does the Minister agree that to all intents and purposes the Welsh language service does not exist?
I cannot promise that I have made a detailed assessment of that service, but I am happy to look into it. I am very happy if Members want to suggest better music to the BBC or indeed make any other representations.
2012 Olympics
No, because we believe that a well run third licence competition is the best way to ensure that we maximise returns for good causes, including the Olympic draw. That is what is happening. The National Lottery Commission is busily preparing a statement of main principles which will be published early in November.
Given that of the £2.3 billion that the Olympic games will cost, £1.5 billion is to be raised from the lottery, what assessment has the Minister made of the risks of that £1.5 billion not being raised; and can he tell the House when he intends to publish the funding plan agreed between Her Majesty's Government, the regulator and the operator?
This has been subject to wide-ranging debate in the House. We have carried out financial modelling, which was scrutinised by the International Olympic Committee. The committee and the House were satisfied with the modelling, so we have no reason to depart from it. To date, the lottery has been highly successful in terms of the Olympics. The response has been fantastic and we have already banked the first £3 million for the Olympics. Camelot was surprised at the take-up and had to reprint earlier than anticipated. Everything shows that the Olympic draw is successful; people are buying the scratchcards, so we do not believe that we need to depart from the statements made to the House a few weeks ago.
As the Minister knows, I supported the establishment of a lottery specifically for the Olympics, but with the proviso that there should be some assessment of its impact on sports funding as a whole. Given the possibility of an extension of the franchise, will my hon. Friend keep a close eye not just on what the lottery is doing for the Olympics but also on the lottery funding available for sport overall? It would be a great shame if we made enormous strides for the Olympics and the developments for sport, but lost out on grassroots and club sport.
That is true and we shall continue to review the situation, not just for sport but for all good causes. It is important that we keep a balance. We told the House what we anticipated that the displacement would be, on advice from several parties including Camelot, and we have no reason to depart from that. The figures presented to the House some months ago still stand and there is no evidence to show that we should depart from them.
Given the point just made by the hon. Member for Loughborough (Mr. Reed), given that the Olympics is a national one-off event, and given that the Government specifically excluded the Live Aid concerts, is there now not an overriding case for going back to the Chancellor of the Exchequer and reclaiming the £320 million that the Government propose to take in tax from the Olympic lottery games and ploughing it back into sport for legacy issues?
I will always go back to the Treasury and see whether we can get more money into good causes and particularly into sport, but I want to make it perfectly clear to the House that all our financial modelling, which we presented to the House and in the candidate file to the IOC, was modelled on the fact that that tax would be paid. That does not detract from the soundness of the financial case that we put. If we can get another £300 million from the Chancellor, I would be delighted, as always, to bring more money to sport. We have asked that question, and the answer has been no. We will continue to make representations—not just on that tax, but on many other issues.
May I just put it on the record that the Government have invested more in sport than any Government have done for many years? I am extremely proud of that, and nit-picking, such as that in which the hon. Gentleman is engaged, does not fit a Government who have put more into sport than any other Government.
Church Commissioners
The hon. Member for Middlesbrough, representing the Church Commissioners, was asked—
Building Faith
Since publication, we have been developing new ways of working with many partners, but the outstanding church building repair need—£373 million—is substantial. Departments, led by the Department for Culture, Media and Sport, are planning a formal response and we look forward to building upon it.
I encourage my hon. Friend to ask the DCMS to provide a quick and positive response to this very timely initiative. Will the funds available under the report be provided not just for the sustainability of church buildings, but for building inter-faith cohesion that provides, for example, urban-rural exchanges, exchanges between faiths and anything that breaks down barriers in our local communities?
I am grateful to my hon. Friend for that question. The whole tone of "Building Faith in Our Future" is multi-faith and intended to promote rural-urban exchanges. On the distribution of funding, I have had extensive discussions with the Archbishops Council and the Bishop of London on how best to bring "Building Faith in Our Future" into the highest reaches of government, and I shall seek a meeting with the Chancellor of the Exchequer shortly.
It must be a fact that the Church Commissioners face an increasing problem with funding clergy pensions, so church building repairs will come after that. Does the hon. Gentleman agree that if we are to maintain the fantastic architectural heritage of parish churches across the country, we need more than the DCMS just making a response or a statement? We need a clear commitment from the Chancellor of the Exchequer that there will be a fund to maintain the fabric of parish churches; otherwise, many of them will start to fall into serious disrepair.
I am grateful to the hon. Gentleman for that question. Church architecture has been described as the most supreme expression of English architecture, and he is right in the sense that church buildings are among the greatest tourist attractions in the country. In 2003, 86 per cent. of the population visited a place of worship. The reason why we want to see the Chancellor of the Exchequer is not only to explain the document, but to get a commitment from the Government that there will be church state funding and that it will spread beyond all Departments.
My hon. Friend will know that one of the people who will have to take the report forward is the new Archbishop of York, John Sentamu. Did my hon. Friend notice over the weekend the reports of the horrendous racist abuse that the archbishop has received in the form of e-mails and letters—some covered in excrement? It has been extremely distressing for him and his family. Will my hon. Friend take this opportunity of wholeheartedly condemning that, and pointing out that some who maintain that they are Church members cannot be faithful members of the Church if they adhere to such beliefs?
I am grateful to my hon. Friend for drawing that to our attention. It is a despicable aspect of our society, with which the archbishop has to live. However, the good news at the weekend is that he will be enthroned in York, there will be 3,000 people at the enthronement and there will even be a picnic. It is a moment of rejoicing, and he and the Church will overcome the sort of abuse that my hon. Friend described.
Cathedral Properties
May I at the outset congratulate the hon. Gentleman on his election to represent the diocese of Salisbury in the new General Synod to be inaugurated by Her Majesty next month? On his question, the Church Commissioners have made no such assessment, but I am open to his suggestions.
I am grateful to the hon. Gentleman for his remarks. Is he aware that the Government have cut the grant to English Heritage, which in turn has had to cut the grant to English Cathedrals? Many English cathedrals have for years depended on rental income from their properties in their cathedral closes, notably at Salisbury and Norwich, but does not new legislation mean that those leaseholders have the right to purchase those properties, thus depriving the cathedrals of their only income? That is a paradox that I hope the Church Commissioners will address urgently. Will the hon. Gentleman mention the matter to the Chancellor of the Exchequer when he visits him?
I am grateful to the hon. Gentleman. The Leasehold Reform Act 1967 is engraved in my heart, as I was studying for the Bar at the time. It was reformed by the Commonhold and Leasehold Reform Act 2002, which enabled the situation described by the hon. Gentleman to develop. I recall that he pointed out at the time the danger of that happening. If there is a weakness in that legislation, he may seek to rectify it in the Charities Bill; he may seek the help of the Association of English Cathedrals; and he may also seek my help.
Electoral Commission Committee
The hon. Member for Gosport, representing the Speaker's Committee on the Electoral Commission, was asked—
Postal Voting
The Electoral Commission takes the view that a key element in increasing public confidence in postal voting is improving the security of the process. Since 2003, the commission has therefore made a series of recommendations for changes to electoral law, which are designed to improve the security of postal voting in Great Britain. The commission welcomes the fact that the Government are taking forward many of its recommendations in the Electoral Administration Bill, which is due for its Second Reading in the House tomorrow, although it is disappointed that the Bill does not provide for the introduction of full individual voter registration in Great Britain.
In the Kettering constituency, some 16,000 voters are registered to vote by post, which is one of the highest proportions of the electorate anywhere in the country. Nevertheless, that is still a small percentage of the 81,000 voters who could do so. I congratulate my hon. Friend on identifying the point about secure individual voter registration. Only if that is put in place by the Government can voters have full confidence in the system of voting by post.
Yes, it is true that registration for postal voting varies considerably, for example, from 45 per cent. in Newcastle to 3.1 in Glasgow, East. Similarly, turnout varies considerably. In my hon. Friend's constituency, I believe that the turnout of postal voters was 60 per cent., compared with an average across the United Kingdom of 76 per cent. It is alarming that in its report on participation in the 2005 general election, the Electoral Commission reported that, for the first time, research showed that the number of people rating postal voting as unsafe was higher than the number of people who rated it as safe.
Has the Electoral Commission done any work on the number of postal votes that arrived after the poll in the general election was closed? That would be an interesting figure, bearing in mind some of the complaints that were made about the problems of getting out the postal votes in the first instance.
I congratulate my hon. Friend on finding a point that is not covered in my copious briefing. I will brief myself immediately after Question Time.
Church Commissioners
The hon. Member for Middlesbrough, representing the Church Commissioners, was asked—
Octavia Hill Properties
I congratulate my hon. Friend on so ably articulating the concerns of her constituents in Octavia Hill. I know that she has been to meetings with clergy and residents. The covenants to which she refers expired in the late 1970s.
Does my hon. Friend think that Octavia Hill, who was a wonderful woman and a Christian socialist who devoted her life to the poor of inner-city areas, would be turning in her grave if she knew that the Church Commissioners had decided to sell off the rest of their properties? Will he guarantee that if the Church Commissioners sell off the rest of those properties, they will do so to a registered social landlord and not to a 50:50 partnership between a social landlord and a private landlord, as has already happened? Will he guarantee that rent levels will be protected? Does he agree with my constituent, who is a tenant of the Church Commissioners—and who was very proud to be a tenant of the Church Commissioners until now—and who wrote to me this week:
"Is this what the church has become? Has money now become so important that you are willing to destroy a community that you have always protected?"?
I am grateful to my hon. Friend for mentioning Octavia Hill, who was a great associate of John Ruskin. She died in 1912, but the socialism to which she aspired and which she inspired has certainly endured for many a year.
On my hon. Friend's specific questions, we are a long way from a new owner. In the past, the new owners of properties sold by the commissioners have not changed the inherited rent increase policy or issued any statement regarding future policy on rent increases.
The commissioners have never been social landlords and they will act in accordance with the law on the sale of freeholds, although I stress that we have not yet begun to talk to any potential new owners.
On openness with tenants, I cannot give my hon. Friend or her constituents any more information, but they will be informed of every step on the way.
The hon. Gentleman knows that in my borough, Southwark, as in the next-door borough of Lambeth, a considerable number of people are tenants of the Church Commissioners. Can he assure me that none of them will lose their homes, that none of them will have their homes transferred to a landlord without their agreement and that the Church will continue to take responsibility for people on the lowest incomes, irrespective of whether it feels obliged to remain as their landlord?
I refer the hon. Gentleman to the Church Commissioners' track record on these matters. He knows that we sold properties in Stoke Newington, Maida Vale and Waterloo earlier this year and, as I have said, the new owners determined their own rental policies. However, I stress that that sale involved the freehold only and that existing tenancy arrangements were unchanged. The Church Commissioners will listen to all the points raised by tenants, but they have a statutory obligation to manage their funds in the interests of the Church, in the interests of those who receive moneys from the Church and in the interests of the cure of souls.
Commission Land
The commissioners' landholdings total approximately 122,000 acres, and they were valued at £317 million in December 2004. They form part of a property portfolio valued at £1.3 billion in December 2004.
Given the hon. Gentleman's earlier remarks, may I take this opportunity to repeat my congratulations to the incoming Archbishop of York, who will be made to feel most welcome in the district?
How many of the landholdings have been added to or taken from the overall property portfolio? How many properties are included in that portfolio, and what is the annual cost of maintenance?
As the hon. Lady knows, the Church Commissioners publish their annual accounts every year, and those accounts include all the information to which she has referred. If any particular item is not included in those reports, I will be happy to send her the information in the post, if I can find it.
I am sure that my hon. Friend is aware of the increasing pressures on clergy. In my own benefice, for example, we have three churches, but no vicar. My hon. Friend has mentioned £317 million of land property. Can he guarantee Church members in struggling benefices, and in my benefice in particular, that the Church Commissioners are getting value for the land that they are maintaining, that they are ensuring that existing clergy are put into post in places where they are needed, and that the pension pot, the maintenance of which is vital for the recruitment of clergy both now and in the future, is being adequately topped up?
I am grateful to my hon. Friend. As he knows, we passed a pension measure some years ago that transferred the burden of pensions to the diocese, but of course we maintain a responsibility to those who were in post at the time. It is a changing scene in terms of land values, dioceses and parishes. Where there are weaknesses we seek to rectify them, and where we can be positive we seek to be so. It is a major matter. The commissioners' assets are £4.3 billion, which require oversight. Any point that is made on the Floor of the House is carefully taken into account, as will be that raised by my hon. Friend.
Does the hon. Gentleman agree that the juxtaposition of huge landholdings with patently inadequate pension provision for retired clergy persons is a standing disgrace and an indictment of the commissioners?
If I may refer back to my law practice, the two are not mutually exclusive, so we can link them together if the hon. Gentleman so wishes. However, each one is a separate problem and must be dealt with separately.
Opposition Day
[8th Allotted Day]
Railtrack
We now come to the main business—Opposition day, eighth allotted day, on the Government's handling of decisions relating to Railtrack—[Interruption.] Order. Perhaps the hon. Member for Stockport (Ann Coffey) could keep quiet.
Before I call the hon. Member for Rutland and Melton (Mr. Duncan), I inform the House that I have selected the amendment in the name of the Prime Minister.
I remind the House that last week the matter of the evidence of the right hon. Member for North Tyneside (Mr. Byers) to the Transport Sub-Committee was referred to the Committee on Standards and Privileges, so Members should not refer in this debate to matters that will fall to be judged by that Committee.
I beg to move,
That this House deplores the lack of openness and transparency of the Chancellor of the Exchequer and Ministers at the Department for Transport, Local Government and the Regions in their plan to restructure Railtrack; questions the Government's propriety in the method by which they sought an Administration Order for Railtrack; condemns their attempted intimidation of the Rail Regulator; abhors their cavalier and dismissive contempt for Railtrack shareholders; criticises the conduct of the Chancellor of the Exchequer's special adviser for usurping the proper role of Ministers; notes that the Government's approach to the entire project was dictated by the Chancellor; and considers this episode an example of disgraceful impropriety in the formation of policy and the execution of government decisions.
Thank you, Mr. Speaker. I think that the House will respect the fact that the right hon. Member for North Tyneside (Mr. Byers) has chosen to come to this debate, although that sits in stark contrast with the obvious absence of the Chancellor of the Exchequer, who is mentioned in the motion.
This debate is about one thing and one thing only—the conduct of new Labour in Government. It is about the way in which the decencies and proprieties of how we are governed have been bypassed, corrupted and polluted. It is about the erosion of independence in the civil service, the abuse of power by Ministers, the arrogance of unelected advisers, and the institutionalised contempt displayed by new Labour to the power and authority of Parliament.
That is my speech.
My right hon. and learned Friend is very kind. We all have a treat in store when he winds up later. He will do greater justice to this matter than even my hard work in researching it.
This debate is about how the sorry episode of Railtrack's demise illustrates all the faults that I have listed, and it is about why the Government are so profoundly culpable for what they did. Today's debate—as we understand your ruling, Mr. Speaker—is not about matters that are being considered by the Standards and Privileges Committee. We are acutely aware of the important dividing line that separates the issues that we are focusing on and the issues being considered by that Committee. We will be extremely careful, Mr. Speaker, not to trespass on the accusations against the right hon. Member for North Tyneside that will be considered by the Committee. There is no need to do so; the guilt of this Government is palpable and can be proved without any such reference.
Nor is this debate about the Railtrack shareholders' case against the Government. As the judge made clear, he was required to adjudicate only on the one specific charge of misfeasance—an accusation that presented a very high legal hurdle, namely, that the then Secretary of State had acted with targeted malice. Far from vindicating the Government in all respects, as they try to claim, the court case merely excused them from that one extreme and specific charge. The judge was not asked to undertake a review of the Government's conduct, nor to express any opinion on their actions more generally. As the judge categorically made clear, that is the duty of this House; a duty that we now face.
It is not as though the judgment was uncritical. Even about the right hon. Member for North Tyneside, Mr Justice Lindsay inimitably said:
"His explanation as then given seemed to me to be little above gibberish, but it will be for Parliament to assess what he meant."
Indeed; Parliament will assess what the right hon. Gentleman meant. Parliament must now also assess the Government's wider conduct. Even the Government's counsel said:
"This case . . . has aroused intense political interest but, Your Lordship, it is not a political tribunal, or even in this case a court of judicial review, and the question therefore is not whether this decision was wise or careful or fair or reasonable or procedurally sound, it is simply whether it was malicious."
The court case left many aspects of the despicable issue unscrutinised, and it is now our duty to engage in that scrutiny.
All of us in the House face a test—a test of moral probity. We can choose simply to follow the party line or we can exercise our conscience on this matter of justice and take the necessary steps to remove from our Government those whose standards have fallen so grievously low. This House is the place for the redress of grievance. That is what we must now do. As the chairman of the shareholders action group said after the court case:
"We now look to Parliament to hold the Government and"—
he said "Stephen Byers"; we say the right hon. Member for North Tyneside—"to account." We must not dash their hopes.
Despite the Government's amendment, the debate is not about the merits and demerits of how Railtrack is or was owned. We are not here to discuss the intricacies and rights and wrongs of who owns the railways. Any attempt to turn the debate into one about who should own the railways, or even to say that Railtrack was failing to perform well, would be utterly outside the debate's intended remit. Any such attempt would be a diversion from the focus of the motion, which is entirely to do with the Government's conduct.
The debate and the action that must follow from it are entirely about the corruption of the proper process of government by the then Department for Transport, Local Government, and the Regions, the absent Chancellor of the Exchequer, the Treasury and even the Prime Minister.
Will the hon. Gentleman and the Conservative party accept some responsibility for the creation of Railtrack and thus the deaths of a number of people due to lack of maintenance by that organisation?
That is not a debate for the Chamber today. We are discussing the conduct of the Government, not the merits of Railtrack.
The House, by election and majority control, lends authority—
Will the hon. Gentleman give way?
Yes. Here is one of the culpable ones.
I can understand why the hon. Gentleman does not want to consider the conduct of Railtrack, which, as the judge rightly said, was lamentable, and was not only failing on the ground of safety but sending the business towards bankruptcy. Why does he not want to defend his Government's creation?
I am defending the motion, which outlines a charge against the right hon. Gentleman and others of what I believe to be grave misconduct in the Government. By the end of the debate, he will have no excuse to rise to his feet again.
We have, over centuries, established proper and abiding procedures for scrutinising the conduct of the Executive. Parliament and its many Governments have earned an enviable reputation in the world for honesty and incorruptibility in our dealings. That is why we have a ministerial code, which makes it clear that announcements should be made in the House. Policy should be clear and openly expressed; that is why we have Green and White Papers. Significant changes in policy and significant decisions should be explained to the House.
Let me trespass for a moment on the comments of the hon. Member for Keighley (Mrs. Cryer). It is as far as I will go today, but let me at least show her that courtesy. The debate about private versus public ownership has been at the heart of political difference for decades, if not centuries. In some respects, it defines the difference between left and right. However, today's debate is not the place for that argument. Our motion is only about the process of government and the conduct of Ministers and officials when the Government took back ownership of Railtrack.
We have, to some extent, been here before. My right hon. Friend the Member for Maidenhead (Mrs. May) led a debate on the matter on 13 Nov 2001. In many respects, she made a remarkable speech because within weeks of Railtrack's demise, thanks to the thoroughness of her research, she asked some extremely prescient questions. Five years later, we can see that she homed in on exactly the right details and that she received in response evasive, mealy-mouthed and inaccurate answers.
Now, we know much more than we did then. During the High Court case this summer, a mountain of incriminating evidence was presented to the court and a stream of letters and meeting notes have been additionally released to me and to others. All that evidence shows a catalogue of impropriety—a deceitful plan to manoeuvre to present Railtrack as insolvent, and so force a railway administration order on the company as a means of getting it back for free.
The hon. Gentleman said at the outset that he wished largely to ignore the judgment and I can see why. It would be highly inconvenient for him if he did take it into account. Does he accept that all this evidence and all these documents were laid before the court, that the court was invited to find that the Government, Ministers and others had acted improperly, and that the judge found the complete opposite?—[Interruption.] No wonder the hon. Gentleman is seeking advice. The whole basis on which he is constructing his case seems to be falling apart before he gets going.
The Secretary of State could not be more wrong and he knows it. The evidence before the court was to prove one particular aspect of the alleged misbehaviour of one person, the right hon. Member for North Tyneside. It was nothing to do with the conduct of the Government more generally. The judge specifically said in his judgment that it is for Parliament to adjudicate on the conduct of the Government. That is what we are doing today.
I am sorry, but the hon. Gentleman has either not read the judgment or has drawn the wrong inference from it. The judge, in respect of the evidence given in court by my right hon. Friend the Member for North Tyneside (Mr. Byers), said that that was a matter for the House of Commons. However, in his judgment he examined every piece of evidence put before the court, which of necessity meant examining the background against which Ministers acted, and he found at no stage that anyone in the Government had acted improperly. Surely the hon. Gentleman must accept that, unless he is saying that he does not accept the judgment.
That was a nice try, but again it is completely wrong. As the Secretary of State well knows, the judge was only looking at the specific allegation put to the court about the conduct of the right hon. Member for North Tyneside when he was Secretary of State, which may explain why the Government's own QC accepted as evidence everything offered by the rail regulator in court, which I believe I will prove is damning for the Government.
It is clear that one thing that the Secretary of State and his predecessors ruled out was formal renationalisation. They believed it to be too expensive. They were not prepared to renationalise the company because they wanted it for free. It is as though they have got rid of their clause IV, but secretly replaced it with clause V. No more overt nationalisation of industry—replace it with the covert nationalisation of industry. No more budgets for nationalising a company—use clause V and simply pinch it.
However, the right hon. Member for North Tyneside was merely the front man for that; the real puppet master was in the Treasury. Crucial to the Chancellor's involvement was the aggressive and insensitive figure of Shriti Vadera, dubbed by Martin Sixsmith "Gordon's representative on earth." It was she who codenamed the plot Operation Ariel. It was she who first asked, and I quote from an e-mail of 31 July:
"Can we engineer the solution through insolvency?"
That was not something that the judge had to study and to judge upon. It is only now clear what a central role the Chancellor played in the whole plot.
The right hon. Member for North Tyneside told the High Court about a special list that had been nicknamed the 10 commandments—10 conditions that needed to be satisfied before the plan to crush Railtrack was hatched. Can we guess who the 10 commandments came from? Yes, they came from the Chancellor—and it gets better. I have obtained from the Permanent Secretary at the Department for Transport minutes of a very interesting meeting in September 2001, where further details of the plot were discussed behind Parliament's back. Let me quote a small part of the official record of the meeting. It states: "The Secretary of State"—to us, the right hon. Member for North Tyneside—
"asked when the Chancellor would be in a position to be able to agree his questions had been answered satisfactorily. Shriti Vadera thought this should be possible next Wednesday."
That shows that the Chancellor was in this up to his neck.
Abundant evidence was produced in the court case showing that from the very beginning of 2001—six months before the right hon. Member for North Tyneside became Secretary of State—the Government planned to seize Railtrack's assets and use railway administration as the means to that end. The papers show that right up to the day before they went to court—7 October 2001—the Government were seriously worried about not having adequate evidence of Railtrack's insolvency. Again, I could give the House scores of examples in which it is abundantly clear that that was so, but I shall offer only a few.
On 3 August, the right hon. Gentleman wrote a memo to the Prime Minister in which he deals with options for dealing with Railtrack. He talks of the not-for-profit trust, which became the company limited by guarantee option, which was soon after adopted, saying:
"The option of a not-for-profit trust has attractions as a non-nationalisation alternative to a failed private sector solution."
The House knows that to be lawful a Minister may use statutory powers, such as the power to apply for an administration order, only for the purpose for which they were conferred. The administration power of the Secretary of State was given to him by Parliament to enable him to react to the insolvency of a railway company. In the present case, the evidence is overwhelming that the right hon. Gentleman used— I would say misused—his powers to try to create that insolvency.
Will the hon. Gentleman give way?
The right hon. Gentleman is welcome to intervene, but he is getting into ever deeper water because he is one of the guilty band.
Is it the hon. Gentleman's argument that Railtrack was solvent and had good prospects and that its managers would have been able to make a statement to their half-yearly meeting that it was able to continue trading solvently?
For reasons that I shall explain in due course, the water is becoming ever deeper for the right hon. Gentleman.
Surely it would be easier for the House if the hon. Gentleman answers now.
Unlike the right hon. Gentleman, I am happy to advance a logical argument according to a logical structure.
The right hon. Member for North Tyneside continued:
"We have work in hand to ensure we are ready to use the railway administration procedure if necessary. We could be forced down this route by events or"—
this is crucial
"we could choose to go down it as an interim step to an eventual solution. It is clear that we ought not to contemplate taking Railtrack into administration, which we could achieve by withdrawing Government support, without being equally clear about how we would like it to come out of administration".
Is that the language of reacting to Railtrack's alleged insolvency, or of wanting to create it?
On 23 August 2001, Mr. Dan Corry, special adviser to the Secretary of State, e-mailed a civil servant in the Department for Transport, Local Government and the Regions, saying:
"I have spoken to SOS about where we are getting to . . . He is very attracted to the option of pushing them"—
that is, Railtrack
"into administration. It does not cost too much, allows us to signal a big change."
Pushing?
Then, we have the infamous minute provided to the Secretary of State by Mr. Rowlands, now the permanent secretary at the Department for Transport and then the No. 2 in the Department, on 31 August 2001. He deals with how to take out Railtrack using the mechanism of railway administration. He writes:
"Under the legislation, however, Railtrack's funding and obligations are matters for the Regulator. We cannot see a way of proceeding without sidelining him."
The next part looks like options, including a "very short Bill" to give the Secretary of State "power to issue directions" to the regulator, which
"would remove his ability to frustrate Ministers' chosen solution."
On 13 September 2001, there was a meeting with the Secretary of State and his civil servants. The private secretary's note records the discussion. Mr. Linnard says
"if pull plug, may not collapse straight away."
Clearly, the Government wanted the company to collapse and were disappointed that it might not. He goes on to explain, "risk RT"—that is Railtrack, and then there is a reference to the rail regulator—
"go to Court. Unreasonable. Got right of appeal to"—
rail regulator—"under law." That is a damning minute.
Will the hon. Gentleman give way?
I leave it to the Secretary of State to intervene if he wishes to do so.
I wish to intervene because, contrary to all the evidence, the hon. Gentleman is trying to make a case that Railtrack was solvent, was a going concern, that there was nothing really wrong with it and that there was a conspiracy to bring down a healthy company. As I shall demonstrate shortly, that is not quite the case. I am wondering how the hon. Gentleman can square what he says with a letter that was sent to the Department in March 2001 from Railtrack, which states that on its own analysis, on the day when its shares were trading at 800p a share, the company thought that they were worth 60p a share. Does that not suggest that there was something wrong with the company?
Again, that is irrelevant to the case that we are making. The fact that it was a fairly lousy company in the eyes of the Secretary of State does not excuse him from the conduct that I am demonstrating.
I have my answer.
The right hon. Gentleman says that he has his answer. I shall let him intervene in a moment. I want to present my case. The right hon. Gentleman has forgotten one crucial ingredient and that is the rail regulator. A clear picture emerges of the Government—
That was not my assessment; that came from Railtrack. It said that at a time when people were being allowed and encouraged to buy shares at 800p a share, the company thought that the value of the company meant that they were really worth about 60p a share. That is not my judgment but the judgment of Railtrack.
Again, the Secretary of State is missing out a crucial ingredient in the propriety of Government conduct, which is the relationship between the regulator and what they said to the court. As I have already begun to build up in the case—there is more to come, which will make the right hon. Gentleman even less comfortable—a clear picture has emerged of the Government's intention to engineer insolvency, combined with an understanding of the regulator's power to stop it.
Will the hon. Gentleman give way?
Not now; I will not give way for the moment.
We can see also that there was another aspect. The Renewco deal, which was to bring £1.5 billion in Government grants to Railtrack in 2001 instead of 2006, presented problems for the Government because they were committed to using their best endeavours to set it up. Mr. Linnard says in the meeting:
"SRA thinks we're going to do Renewco."
That is the Strategic Rail Authority. Sir Richard Mottram replies: "Slow it down." Then the right hon. Member for North Tyneside says that
"in relation to the chance that Railtrack will appeal to the rail regulator for additional funding"—
this is a crucial point that the Secretary of State is trying to deny—
"PM wants Regulator out of it."
On 14 September 2001, Mr. Linnard—No. 3 in the Department—writes a further note to the Secretary of State discussing taking Railtrack out and replacing it with what he refers to as a "non-equity solution", a euphemism if ever there were one. He writes that
"the non-equity solution could only be achieved through railway administration."
So we see railway administration being used as a means to an end—the end being seizing Railtrack's assets and taking out a FTSE 100 company by the back door. That was political assassination writ large.
The hon. Gentleman is obviously not taking account of paragraph 64 of the judgment, where it says:
"A Railtrack note, prepared for John Robinson (the new chairman) in June 2001 stated that the situation was worse than expected. Neither the Regulator nor Railtrack could estimate the costs of running and maintaining the infrastructure with any certainty, the assumptions on which the [prior financial] settlement with the Regulator were completely unworkable, major cost over-runs . . . were still not under control, Railtrack's bloating operating costs were not being addressed. If the subsidy and pricing regime was left unchanged, the company was heading for liquidation."
Is the hon. Gentleman not building his case on very unsure foundations? He is trying to demonstrate that this creation of a Tory Government—Railtrack—was solvent when its own people were telling it that it was not.
The right hon. Gentleman's argument goes crashing to the ground when we realise that the independent rail regulator estimates that the Government's administration programme for Railtrack has cost the taxpayer £14 billion, which is eight times the Government's worst estimate of Railtrack's deficit.
Will the hon. Gentleman give way?
One more time. The right hon. Gentleman will have an opportunity to respond.
The hon. Gentleman says that the regulator is crucial. Again, he is trying to make a case that there was nothing basically wrong with the company. When he looked through the documents lodged in court, he would have seen a letter from the then chief executive of Railtrack, Steven Marshall, dated 29 June 2001, to the then rail regulator, Tom Winsor. He said: "You"—the rail regulator:
"went on to reassure us that if Railtrack was on the cliff edge, you would not be seeking to push it over."
He went on:
"The cliff's edge is closer than you may realise—the Board is obliged to take a view of the company's solvency on an ongoing basis and explicitly on 'going concern'".
Does not that suggest that there was something very wrong with the company in June 2001, as well as earlier in the year?
There was a lot wrong with the company, but there was even more wrong with the conduct of Ministers and officials in the way in which they tried to address the problem. That is the case that we are laying out.
Shortly after Mr. Linnard's memo, the Secretary of State sent another communication to the Prime Minister and the Chancellor, in which he said:
"Our advisers say they have unearthed no killer facts which I could use to force the company into railway administration. And Counsel has warned that a contested petition for administration would be seriously risky and therefore to be avoided."
Is this the language of reaction to insolvency? It is clear that even then they did not think that Railtrack was insolvent. Plainly, the Government were misusing their powers.
On 25 September 2001, the Government's investment bank advisers began to get cold feet about the plan to cut the company's financial lifeline by extinguishing the independence of the rail regulator. Mr. Challen of Schroders wrote to Mr. Rowlands and Shriti Vadera:
"Furthermore we remain (as laymen) surprised that the Government can, with impunity (albeit through a Parliamentary process), remove the effect of a key component of the regulatory regime on the basis of which shares were sold, shares have been traded and contracts have been entered into."
On 26 September 2001, Mr. Rowlands again minuted the Secretary of State as suggesting:
"short paving legislation . . . making the Regulator subject to Ministerial direction, so that he could not use the discretion available to him under current statute . . . to frustrate Government's new approach to Railtrack."
The next day, the Secretary of State met his officials, together with Mr. Adonis—now Lord Adonis—Brian Hackland of the No. 10 policy unit, Shriti Vadera of the Treasury and others. The minutes of the meeting say:
"The Secretary of State said that"—
a "short bill" to take the Regulator under direct political control was
"needed to ensure that the option of an appeal to the Regulator was closed off."
The handwritten notes of the meeting add colour to that. Mr. Rowlands is recorded as having said: "talking about closing" Railtrack's "escape route" shows that the Government are no longer behind the company, which he calls a "hammer blow". It was a meeting at which the right hon. Member for Warley (Mr. Spellar), with all his brilliance, sat. As the then Minister of State, he added that
"legislation has got to close off all options".
Does the right hon. Gentleman want to comment on that?
Answer.
I am pleased that the hon. Gentleman asks me to comment. In the face of insolvency, the Government had to take action. That is the case. Unfortunately, he seems to believe that endless public money should have been pored into that utterly unworthy enterprise. That is the basis of his case, and he criticises us for protecting public funds and the transport system.
That was not about reacting to the company's insolvency; it was about cutting its financial lifeline, and the right hon. Gentleman has just condemned himself with his own words. Indeed, the company was not insolvent, because that lifeline was available. As it would have taken highly controversial primary legislation and a period of months in which to pass such legislation, including the use of the Parliament Act, to sever that lifeline, the Government had a major problem. How could they present the judge with a convincing case that Railtrack was already insolvent when that lifeline was still intact? They were seriously worried.
The Government knew that they were planning to use the railway administration regime for a collateral, and therefore illegal, purpose. They knew that to secure a railway administration order they had to convince a High Court judge that the company was insolvent. They knew that it was not insolvent as long as the rail regulator's jurisdiction was intact. They knew that they could not sever that lifeline without legislation, and that they could not pass such legislation in a short enough period of time, so they decided to present to the Court a case that contained serious and culpable omissions.
The anxiety at the time was graphically illustrated by Ms Shriti Vadera in another of her incautious e-mails. On 2 October, she said that the rail regulator
"is the total wild card. I hope we are all aware of the risks here . . . We cannot silence him over the weekend and if he stands up and says he has a grand plan which could keep the company"—
note the word "keep"—
"solvent, we're up the creek."
Methinks it is Gordon's representative on Earth who is up the creek now. Is that the language of a Government reacting to an insolvency, or is it the language of a Government who know that their case for insolvency is shaky or even non-existent?
On the morning of 7 October, the day on which the Government went to court, the Secretary of State had a final meeting with his officials, his outside advisers, Dan Corry and the notorious Jo Moore. The minute of the meeting shows the shakiness of the evidence of insolvency, as it records that
"work had gone on overnight to consider whether the company was solvent or insolvent."
That work had been presented to counsel who, crucially, had offered the opinion
"that on the evidence before him he would expect a Judge to conclude that the company was insolvent and that a railway administration order would be made."
There was definitely a plan to engineer the artificial insolvency of Railtrack without reference to Parliament as a means of re-acquiring the company at no cost to the Government but at the expense of the shareholders. There are no two ways about it. Perhaps the most pitiful example of new Labour's attitude towards private ownership emerged during the course of the trial. It demonstrates beyond all doubt the utter contempt that Ministers and special advisers had for shareholders. I remind the House that 90 per cent of Railtrack's employees held shares in the company, and many of the shareholders were small investors, so we are not talking about big business or fat cats. Gordon's representative on Earth has described shareholders as "grannies" on many occasions. If the "grannies lose their blouses", Ms Vadera cynically observed, it would not matter, as they were only
"shareholders who had added no value to the company".
What a motley bunch—the Chancellor, his contemptuous special adviser, and the weedy lackey of a Secretary of State for Transport saying, "Yes, Gordon, no, Gordon, can I be nice to you in Cabinet, Gordon?"
Order. The hon. Gentleman knows the conventions of the House. He should refer to the Chancellor of the Exchequer correctly.
I am referring to his representative on Earth, Mr. Speaker.
I fully accept what you say, Mr. Speaker.
Let me put the record straight. If the hon. Gentleman wants to refer to that representative on Earth, as he puts it, he should refer to the Chancellor's representative on Earth.
That does sound grander, Mr. Speaker. The Chancellor's representative on Earth let the cat out of the bag when she wrote in one of her memos:
"It's the American investors we have to worry about."
It is unprecedented, according to everyone I have spoken to in the House, for someone mentioned so specifically in a motion not to turn up to hear what is said. How on earth could the Chancellor, if he were here, stand up and talk about a Britain of opportunity for all, not just a few, when his representative on Earth has shown such contempt for shareholders and was worried only about American investors?
This whole sorry saga has undermined investor confidence in Government projects. It was the process of Government, the bypassing of Parliament, and secret back-room meetings that precipitated this loss of trust. All this happened at a crucial time for the Government. Private finance initiatives are the cornerstone of many Government projects, and I am sure that the Secretary of State will agree that investor confidence is critical to the success of these projects.
Let us take a look at a letter written by 22 senior City fund managers to the Chancellor in March 2002, in response to this Railtrack scandal. They said:
"There is a straightforward issue of trust. A range of Government initiatives rely on the development of partnerships between the private and public sectors . . . We believe that many of our colleagues in the private sector will now be wary of entering into such relationships and that damage has been caused to the trust that previously existed between Government and the City."
If an investment partner is so unreliable, how can anyone expect people to risk their capital when the Government have behaved so despicably in this case?
As the House knows, independence of economic regulation is of fundamental importance to the financial regime for the railway industry, especially as regards the financing of Railtrack. It was the company's financial lifeline, and it was, and remains, of immense importance. During the period up to and immediately after the administration order was made, the Government displayed two characteristics that were extremely damaging and alarming to confidence, in their actions and their iron-control mindset. They showed that they did not understand the importance of independent economic regulation and regarded it as a disposable commodity; and they showed such contempt for the constitutional significance of an independent institution that they had to devise a discreditable plan to extinguish that independence, to prevent it from interfering with their plan to seize the assets of a FTSE 100 company for nothing. What does that say about the stability of the independence of other institutions?
Since he took over as Secretary of State, the right hon. Member for Edinburgh, South-West (Mr. Darling) has been at pains to stress how important he and the Government regard independent economic regulation. On 12 June 2002, he stated:
"As the Government announced in October 2001, they have been considering whether the railways regulatory framework continues to be fit for purpose given the changing circumstances faced by the UK rail industry. The Government's considerations have been guided by . . . key overarching principles:
Providing sufficient comfort and protection to operators and lenders through independent economic regulation and in order to regulate monopoly/monopsony elements and to secure private investment in the railways at an efficient cost".—[Official Report, 12 June 2002; Vol. 386, c. 1262W.]
He went on to say that the Government regarded that principle as an "essential continuing requirement".
On 15 December 2003, he said:
"In a statement to Parliament in June 2002, I set out the key overarching principles for the regulatory framework for railways. Independent economic regulation was one such overarching principle for which there was an 'essential continuing requirement'. This remains the Government's position."—[Official Report, 15 December 2003; Vol. 415, c. 122WS.]
Having so assuredly asserted the essential importance of independent economic regulation, is the Secretary of State now going to go back on all those statements, which were intended to steady markets and reassure investors, and defend the secret Bill of October 2001 and the extraordinarily detailed plans that were put in place in the summer of 2001 to extinguish the independence of the rail regulator? Let us see how he both defends a violent attack on independent economic regulation in 2001 and at the same time asserts that independent economic regulation is an essential continuing requirement of private investment in the railways.
There was also a rescue plan, which, as the Government were well aware, threatened their plot to take over Railtrack. RenewCo, as it was called, was a new company, and planned jointly between Railtrack and the Strategic Rail Authority. Through that mechanism, Railtrack would be able to bring forward billions in Government grants and also borrow extra money against that financial security. Does it sound like a good plan?
Who will pay for that?
The Secretary of State mutters from a sedentary position, "Who will pay for that?" I remind him again that he has since paid far more than that in the arrangements that have followed the improper takeover of Railtrack. This was a massive threat to the Government's plot to present Railtrack as insolvent.
Again, the process of government was totally ignored by Ministers and unelected special advisers; leaked emails and memos show the true extent of the deceit and plots that were hidden from the House. We now know that in July 2001, the Chancellor's representative on Earth was writing to colleagues and asking:
"Should we be approving Renewco at this point in time when it could enable Railtrack to avoid insolvency for a while and rob us of a cleaner insolvency trigger?"
That is clear and damning evidence that the Chancellor's special adviser was seeking to block the deal. The right hon. Member for North Tyneside wrote in that crucial memo in September 2001 to the Prime Minister and the Chancellor that with regard to the RenewCo rescue plan:
"I therefore conclude that we should not proceed with it. This will hasten the onset of Railtrack's financial problems".
So there we have it—the Secretary of State for Transport was seeking to
"hasten the onset of Railtrack's financial problems".
Again, he is damned by his own words.
It gets worse, however. A central element of the Government's attempts to wreck the plan was to ensure that any RenewCo debt was classified as public sector debt. In that way, the Chancellor could refuse to agree the plan, claiming that it was unacceptable for its debts to appear on the public accounts. But what about the Office for National Statistics? It decides the classification of where the debt lies, and was therefore another obstacle for the Government. Another battering ram was needed to smash through and plough on with the plan to
"engineer the solution through insolvency".
The Chancellor's representative on Earth described the ONS in one of her e-mails as
"the joker in the pack and a deal killer".
The national statistician has confirmed, in a written reply to my right hon. Friend the Member for Maidenhead, that
"originally the ONS decided to classify 'RenewCo' as a private sector institution",
but after receiving "new information" from the Treasury, it concluded by 5 October 2001 that the company
"would be classified as public sector borrowing".
We have now seen the evidence, as it has been released to the High Court, showing precisely what was going on behind the scenes at the Treasury. We now know that officials from the Treasury e-mailed the head of public sector accounts at the ONS encouraging him to re-examine his original classification of RenewCo. The Treasury official wrote:
"A holding reply today would help. It is very urgent. Something along the lines that you want to reconsider the case in the light of this new information",
to which he might have added, "Sir Humphrey".
In the face of such damning evidence, how can the Chancellor possibly claim that his Department was not attempting to influence the classification? There is now no doubt: his order to "reconsider the case" was a deliberate strategy to wreck the rescue plan.
As the evidence makes perfectly clear, it was not the ONS advising the Treasury but the Treasury ordering the ONS around. It is time that we saw all the communications on the issue between the Chancellor's Department and the ONS.
I wonder how many Railtrack shareholders there were in the hon. Gentleman's constituency.
I do not have a clue, but may I ask the hon. Gentleman a question? I have listened long and hard to his speech, and he has mentioned the shareholders on numerous occasions. Is he going to express any interest whatever in the role of the taxpayer?
The hon. Gentleman does not quite seem to be the brightest. I have mentioned this three times already, but I shall explain one more time so that he understands. The amount of money that has gone into the equivalent of Railtrack since its artificial insolvency, created by the Government, is far more than was ever predicted in the worst possible scenarios offered by consultants to the Secretary of State.
Let me say more about our case against the Government. There was one more obstacle—a formidable obstacle—to the Government's secret plan: the independent rail regulator. I emphasise the word "independent", as the holder of that office, established in 1993, oversees the economic regulation of the railways. Independence from the Government has always been critical, but the Government were very worried. Ministers and special advisers were quaking in their boots. Why? Because in situations that were difficult for Railtrack, the independent rail regulator had power to throw the company a financial lifeline. During the summer of 2001, the office of the rail regulator therefore posed a significant threat to the Government's secret plans. Perhaps that is why Brian Hackland, head of the Prime Minister's policy unit at No. 10, e-mailed colleagues in September 2001 to ask:
"Could the regulator thwart us?"
"Thwart" is a telling word. The regulator was a potential threat to the covert plan. Even the Chancellor's representative on Earth was panicking.
On 7 October 2001, the Secretary of State's officials called the High Court to secure the availability of the duty judge, Mr. Justice Lightman, to hear an urgent matter. It was a Sunday. Mr. Justice Lightman received a stack of papers from the Secretary of State's solicitors in the early afternoon, and a hearing was convened at the offices of the Government's solicitors at 5.45 pm.
As the House knows, it is the Government's duty, when engaged in any kind of litigation, to tell the whole story to the Court. They are not entitled to assume that the judge already knows the facts, and of course in this case the judge could not have known all the facts—until then, the Government had done an excellent job of keeping everything secret. It was crucial for the Secretary of State to convince the judge that the company was insolvent. If he could not do that, there could be no railway administration order—[Interruption.]
The hon. Member for Stockport (Ann Coffey), muttering from a sedentary position behind the Secretary of State, says that it was the Court case. It was not.
I remind the House that the legal advice that the Government had received from their own counsel was that a contested petition for administration was seriously risky and must be avoided. The advice from counsel that morning was carefully hedged. It was, I remind the House, that
"on the evidence before him he would expect a judge to conclude that the company was insolvent".
But what was the evidence before him and, more important, before the Court? And was it complete?
On 23 October 2001, the Government helpfully placed in the House of Commons Library the papers that the judge saw on 7 October 2001. The papers were also produced in the Railtrack shareholders' case. A careful examination of them reveals not only what the judge was told but, more important, what he was not told.
It appears that many extraordinary assumptions were made about the judge's knowledge of the details of the rail regulator's powers, and about the fact that earlier in 2001, he had announced that he would carry out two interim reviews of Railtrack's financial requirements in the light of the Hatfield crash. The papers given to the judge do not adequately explain the nature of the rail regulator's powers—powers to advance potentially billions of pounds more in financial support to Railtrack—or the fact that he had twice announced, in January and May 2001, his intention to carry out such a review. The judge was told nothing of that. [Interruption.] The Secretary of State nods his head, but he will have to make a powerful case to deny this if he himself is not to be in the dock.
The railways' economic regulatory regime is extremely complex. No judge could be taken to know about it in the detail necessary to obviate the need to inform him of the rail regulator's powers and public statements in 2001.
I am sure that the hon. Gentleman has studied the rail regulator's evidence. He will know that the regulator made a great point of coming before us and saying that although he had those powers, Railtrack had not asked him to use them. Indeed, the first contact was made only when he was asked for a £4 million cheque, on the weekend before Railtrack believed that it was going to become bankrupt. He was then asked if he could find the money in cash—I paraphrase his evidence, which the hon. Gentleman will have read—and he explained that that was not possible. Since then, he has slightly rewritten the way in which he gave that evidence, but the reality is surely that he made it clear that he was not asked to use those powers.
I ask the hon. Lady to consider this issue seriously and even to contemplate revisiting it in her Committee. I believe that the rail regulator would tell the Committee that he did not protest about the insolvency because he did not believe that a case for insolvency existed, and certainly not to the point where what he would consider a dishonest case was put to the judge. That is crucial to the judgment of the propriety of what we are debating today.
As I said, the railways' economic regulatory regime is extremely complex and no judge could be taken to know about it in detail. Indeed, if he could be taken to have such detailed knowledge, why was it necessary to explain to him—in the papers given to him and in the oral hearing—much simpler and more easily accessible features of that regime: the railway administration provisions of the railways legislation?
The evidence of insolvency put before the judge was extremely thin.
Railtrack was represented at that hearing. Why did it not object to the order, and why did it not point out that there could have been a further regulatory review?
In my view, Railtrack should have done so and is culpable for not having done so. The principal basis of the Government's case that Railtrack was insolvent was a report from Arthur Andersen, which stated:
"We have no information regarding Ariel's ability to raise additional funding via alternative sources."
The report was heavily relied upon as evidence of Railtrack's insolvency. The evidence of the then rail regulator to the High Court in the shareholders' case says that if Arthur Andersen did not know about the rail regulator's power to award additional money to Railtrack in higher access charges, someone should have told it, and in any case, someone should have told the Court.
Will the Secretary of State tell the House why the Court was not told about the availability of an alternative source of finance via the rail regulator, and whether it was assumed that a bald statement that the Government had decided to introduce a Bill to enable the Secretary of State to give directions to the rail regulator was enough to excuse the need to provide such an explanation.
May I point out that the rail regulator was appointed by the Deputy Prime Minister, who was then Secretary of State for the Environment, Transport and the Regions, and that it was widely regarded as a controversial appointment? It is not surprising that Railtrack did not apply to the regulator, who was throughout the period—how shall I put it?—perhaps struggling to establish his political independence.
My hon. Friend, having held the post of shadow Secretary of State in the past, has considerable expertise in this matter, and I hear what he says.
Why, too, one might ask, was there no mention by the rail regulator of the Hatfield statement on 15 January 2001 or again on 24 May? That provided undeniably crucial information about the willingness of the rail regulator to conduct an interim review, but it was not disclosed to the judge. The Secretary of State may say that the judge was told that the independence of the rail regulator would soon be blown away, so there was no need to tell the judge about his powers. However, the right hon. Member for North Tyneside told the House on 13 November 2001 that if the judge had known that the rail regulator had the power to do an interim review and had started the process, he would probably not have made the administration order. That is a stark admission, as it could only be because, until the rail regulator's independence had been removed and he had been stopped from doing an interim review, the company was not insolvent.
The independence had not been removed and the rail regulator showed, by his offer to Railtrack on 6 October, when senior management called the regulator to ask for a review—to be told that he was willing to start the process and make an announcement to that effect—that he had not been stopped from carrying out that review. The Government had tried to intimidate him with the threat of legislation, but the rail regulator was not intimidated. It was Railtrack that had been scared witless by the threat, which is why it foolishly turned down the rail regulator's offer to start the interim review process. It could not be assumed that a short Bill to enable the Secretary of State to give directions to the rail regulator would pass in time to stop the regulator's interim review proceeding. The right hon. Member for North Tyneside admitted in court in 2005 that it could not have been passed in time.
Given that when the rail regulator did carry out the interim financial review, which the Government had been prepared to legislate to stop—this was after Network Rail took over—he awarded the company an extra £7.4 billion over and above his October 2000 settlement to the company, how could it possibly have been assumed that Railtrack was insolvent when that jurisdiction was still in place in October 2001? Members have been quizzing me on that matter again today, and those are the facts.
Until the legislation could be passed and brought into effect—if, indeed, it could be passed at all—the jurisdiction of the rail regulator and his announced intention to use it meant that Railtrack was not insolvent. That much is apparent from the internal communications from and between the Treasury and the Department for Transport, Local Government and the Regions. For example, why else would Ms Vadera say in her e-mail of 2 October 2001 that the rail regulator was the "total wild card" and that everyone should be aware of the risks, including the possibility that
"if he stands up and says he has a grand plan which could keep the company solvent we're up the creek"?
In particular, I say again, the use of the word "keep" clearly indicates that the company was not insolvent and that the Government knew it.
Secondly, why would Mr. Linnard be recorded as saying that emergency legislation would be needed
"to ensure that the Rail Regulator cannot frustrate our plans to restructure Railtrack"?
Why would numerous meeting notes and e-mails speak of the need for legislation to close off Railtrack's escape route via the rail regulator? Why would Mr. Rowlands, in his minute to the Secretary of State of 31 August, have said:
"We cannot see a way of proceeding without sidelining"
the rail regulator, given that
"Railtrack's funding and obligations are matters for the Regulator"?
He explained that emergency legislation would "remove" the regulator's
"ability to frustrate Ministers' chosen solution".
Why, at the transport stocktaking on 18 September, did Mr. Rowlands say that Railtrack could fight the petition for railway administration in court and might win, and that the regulator had to be "closed off"? Why would the Government's counsel advise that a contested petition for administration was
"risky and must be avoided",
if the company was genuinely insolvent?
There are many other such examples, but they all point to one thing: the company was not insolvent and the jurisdiction of the rail regulator was the one thing that would keep it solvent.
If, as might be asserted, the company was insolvent despite the powers and declared intention of the rail regulator to carry out an interim review, it would not have been necessary for the Government to go to such extraordinary lengths to neutralise it with their disgraceful emergency legislation, and to keep secret the fact that they planned to do just that. That was why the legislation was needed.Nothing of all that was put to the judge on 7 October 2001.
Recent statements on behalf of the Secretary of State have said that it was the High Court, not the Government, that put Railtrack into administration. The House knows that. What needs to be disclosed and explained concerns the facts that the High Court was and was not given to enable it to make that decision.
The Secretary of State has said, and will no doubt say again, that Railtrack did not oppose the application for the administration order. We know that too, but it is completely irrelevant. It was the Government's obligation to tell the whole story to the judge, whatever was or was not said by Railtrack.
By the time of the Court hearing, Railtrack's senior management had made many mistakes. Perhaps the greatest was not to realise how the powers of the rail regulator insulated and protected the company against a political assault of that kind. By then, they were like rabbits frozen in the headlights of the Government juggernaut bearing down on them. The Secretary of State must now explain the actions of his predecessor and his officials and advisers in this sorry affair.
Will the hon. Gentleman give way?
No.
I contend that the Government had a duty to tell the Court in October 2001 all the facts and that they deliberately withheld that crucial component. The failure to make an honest disclosure to the judge about the power of the rail regulator is yet another—perhaps the most—shameful scar on the Government's honesty. It was and is an absolute scandal.
The High Court case has shed light on a sly and deceitful plan to implement a clandestine policy without telling Parliament. Yet again, the Government have corrupted the proper process of government, which would have been genuinely to seek all channels of finance to assist Railtrack in avoiding financial difficulties. The proper process of government would have been to respect the independence of the rail regulator, not to corrupt the position with the stench of the Government's political games. The proper process of government would have been for Ministers to make decisions at Cabinet level, not to use unelected puppets to control operations from the Treasury. The proper and decent process of government would have been to come to Parliament in June 2001 and announce that a review of the railways was under way. The proper process of government would have been to disclose all the material facts to a judge in chambers, not to conspire by deceit and complicity to deny him the facts as they knew them.
Success has many fathers; failure is an orphan. The Chancellor called all the shots on this issue, and his absence shows that he is trying to hide. He was the organ grinder and the right hon. Member for North Tyneside was but the monkey. The Chancellor wrote the score; his representative on Earth did his dirty work.
The proper processes of government have, yet again, been shamefully sidestepped by Labour. It is to the detriment of our democracy, and it is an enduring testament to the corruption, deceit and arrogance of this pitiful and mucky Government.
I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:
"welcomes the judgement in the recently concluded Railtrack court case which, after weeks of evidence fully tested by cross examination, completely dismisses the claimants' allegation of wrongdoing on the part of Government; further welcomes the fact that the judgement exonerates entirely the way the Government responded to its growing concerns about Railtrack's financial position and the propriety of the process that led to Railtrack being put in Administration, including the Government's stance in relation to the Rail Regulator; notes that the judge described Railtrack's request for unlimited public funding and support, which was made in part to maintain its share price, as a "hopeless proposition"; and that there were good public reasons for the policy developed; congratulates the Government for bringing under control the situation which resulted from the previous Government's botched privatisation and putting ownership of the track into the hands of a not-for-dividend company operating in the broad public interest; and recognises the significant progress that is being made by Network Rail in improving performance on the railway and in bringing costs under control, in stark contrast to the management incompetence shown by Railtrack."
The hon. Member for Rutland and Melton (Mr. Duncan) started his speech by asserting that the matters that he has spent the past hour and five minutes discussing were not, in fact, discussed in the recent court hearing, and he seemed to employ a very selective use of the facts in relation to this case. The truth is that all these matters were considered in depth after a long trial by Mr. Justice Lindsay, whose judgment was given just a couple of weeks ago.
I will refer to most of the points that the hon. Gentleman made and to what the judge had to say about them; but, essentially, it seems to me that the hon. Gentleman sought to make exactly the same case as the claimants made in court. He chose to ignore the fact that the judge found against the claimants and found that all the matters complained of by the hon. Gentleman and the Conservative party had no basis in fact, as I shall demonstrate.
The other curious thing about the hon. Gentleman's speech is that, when he started, he seemed to suggest that the solvency or otherwise of Railtrack was an irrelevancy, yet towards the end of his speech he seemed to suggest that the company was a going concern with nothing wrong with it and that it was only the dastardly Government who brought about its downfall. That flies in the face of all the facts, as I will demonstrate.
Let me put to the right hon. Gentleman a question that was obviously not dealt with by the judge or the court, but that surely ought to be a matter of great concern to the House of Commons. A quotation has just been attributed to Shriti Vadera to the effect that the small shareholders do not matter—it does not matter if grannies lose their blouses—and that we ought to care only about the American investors. Does the right hon. Gentleman think that that is an acceptable attitude for a Treasury official or an adviser to the Chancellor of the Exchequer to take?
I do not know whether the hon. Gentleman has read the judgment. The judge deals with the evidence of the special advisers in paragraphs 10 to 12 and in other places as well. On the central charge made by the Conservatives today, the judge makes the point that only Ministers, who are accountable to Parliament, can make such decisions. Moreover, he found that Ministers acted correctly in the face of the evidence before them.
The right hon. Gentleman purports to quote what the judge found. Will he remind the House of whether the Chancellor of the Exchequer or the right hon. Member for North Tyneside (Mr. Byers) was the defendant in this case?
I was the defendant in the case, to be precise, which is why I read the judgment with great interest. Of course the material decision complained of was taken by my predecessor, my right hon. Friend the Member for North Tyneside (Mr. Byers). I say in passing—it would be interesting to hear what a former Chancellor of the Exchequer has got to say—that it would be quite extraordinary if the Chancellor, whoever it happened to be and whatever political party was in government, did not take an active interest in railway finances. After all, they consume a remarkably large amount of the public finances, so it is no surprise that the Chancellor should take an interest. In fact, the complaints made by the Conservatives and by the claimants related to the decision taken by my predecessor.
rose—
I have mentioned the right hon. and learned Member for Rushcliffe (Mr. Clarke), so I shall give way to him.
Of course I took a close interest in railway finances when I was Chancellor of the Exchequer, and I would have expected to have a crucial say in them. We would have exchanged Cabinet papers and had a meeting of a Cabinet Committee. I would certainly not have sent along a special adviser to make cynical remarks about all those involved and to try to devise strategies for getting rid of the shareholders' interests in a company, and I certainly would not have expected the then Secretary of State for Transport to allow himself to be used as a cipher, as the right hon. Member for North Tyneside (Mr. Byers) did.
Perhaps if the right hon. and learned Gentleman had taken a bit more interest in the public finances, he would never have allowed Railtrack to be set up in the first place. As I shall demonstrate, the setting up of Railtrack cost this country dear in every sense of the word.
On 26 July 2001, Miss Vadera told Treasury colleagues that
". . . we need a trigger to insolvency that we decisively pull."
Given that all the main lines in this railway disaster lead to No. 11, will the Secretary of State explain why not a single Treasury Minister has had the decency to turn up and account to Parliament for the Chancellor of the Exchequer's policy of dodgy accounting and expropriation?
The matter to which the hon. Gentleman refers was one of the central matters before the court. Lord Justice Lindsay did not find that the claimants' case was established, and he examined all these things.
I shall start with what the judge said—this flies in the face of the earlier comments of the hon. Member for Rutland and Melton that the judge paid no attention to these facts—about that splendid company, Railtrack, on whose behalf the hon. Gentleman spoke today. The judge stated at paragraph 274:
"In terms of railway performance, it had suffered not only Ladbroke Grove but Hatfield and the disruption that followed it. It was thought that some restructuring of it within the next 5 years was inevitable. It was seen as 'frankly a mess', with weak management at the zonal levels . . . It had difficulty even in funding the necessary regular maintenance. It had major projects without the skills to manage them . . . Its own business plan accepted that it had not maintained and renewed the railway to an acceptable standard. Its skills base as to engineers had diminished and its training fell short of what was needed. It was reported as suffering from institutional paralysis."
Lord Justice Lindsay went on at paragraph 275:
"Its own financial plan acknowledged the unreliability of its own estimates and a persistent inability to keep within budgets. It had virtually no management control; there was management paralysis. The Department had identified an amortisation error which, it thought, meant that it would be bust 'in spades' in CP 3"—
that is, control period 3. He continued:
"Railtrack itself as well as brokers had identified an intrinsic value in its shares way below the market price."
Having summarised that evidence, he stated at paragraph 276:
"Against such a perception in both railway performance and financial terms there were plainly ample and sound policy reasons for the government wishing to be rid of Railtrack and for the railway assets to be passed into the control of another or others. There were good avowable and avowed public reasons for Mr. Byers"—
my right hon. Friend the Member for North Tyneside—
"to develop a policy to that end. He did so, drawing on advices given to him by Civil Service and other advisers whose skill, honesty and competency has not been called in question."
[Interruption.]
The hon. Member for Rutland and Melton says, "So what?" Railtrack had severe financial problems and severe management problems. It would have been extraordinary if any Government had not taken the necessary action to look after the public interest.
rose—
I am overwhelmed. I shall start by giving way to my hon. Friend the Member for Rhondda (Chris Bryant).
Is not the truth of the matter that the entire privatisation was built on sand, and that the only question is whether it was sinking sand or builders sand? One of the things wholly lacking from the debate so far, which most people in the country would find extraordinary, is the conduct of previous Governments in setting up the privatisation.
I have consciously concentrated my remarks on the conduct of the Government against what was happening with Railtrack in 2001. Many other criticisms of privatisation could be made, but the central point of the Opposition's argument today is that Ministers acted improperly in the face of what was happening to Railtrack. Given what was happening to Railtrack, the financial state that it was in and the poor state of its management, it would have been extraordinary if the Government of the day—whatever Government—had not taken appropriate action to look after the public interest.
We quite accept that the company was in a lamentable state, and that any Government had a duty to consider restructuring it to make the privatisation—the present Government always agreed with us on a privatised railway—work more successfully. The question at stake is: what was the position and interests of the shareholders, particularly the small shareholders? Was the company totally insolvent? That could be decided only by the independent regulator, because he determined the revenues of the company and whether it was entitled to more financial support. It was when the Government threatened to legislate to stop him doing anything that the company was made insolvent by the Government. That is what damaged the interests of the grannies, the railwaymen and the shareholders, whose interests the Government overlooked.
That argument depends on the Government taking the view that not only should there be a review, but that, as a consequence of what it says, the regulator should tell the Government to produce a lot more taxpayers' money to keep the company afloat. The regulator does not have its own supply of money. The only place from which money can come is the Government. That argument is absolute nonsense.
The right hon. and learned Gentleman has inadvertently taken me to my next point, which concerns shareholders. The shareholders have every reason to be angry—but with the then directors of Railtrack. As I have said—
rose—
I will give way to the hon. Member for Windsor (Adam Afriyie), but I want to make some progress first.
Railtrack wrote to the Department in March 2001, saying that it had financial difficulties. At paragraph 38 of the judgment, the judge says that Mr. J.W. Smith, who wrote that letter, stressed the group's need to
"maintain an 'A' credit rating, which, in his view, required the announcement of a package confirming government support for"
the
"Group. 'It is this', he wrote, 'which will enable us to raise £5bn by 2003'. That would be bound to cause concern at the Department as it would imply support, unascertainable in amount, for an individual company".
Of course that was going to cause concern, especially considering the content of the letter.
Two things in the letter interest me. First, Smith says that if the Government agree to bring forward £1.45 billion of deferred income, it will leave room for what he describes as "hope value": what an indictment of the directors that they were reduced to hoping that hope value would come into the company.
Secondly, a chart summarising the shareholder value analysis is attached to the letter, and Smith goes on to say:
"you will appreciate the market's sensitivity of this analysis"—
too right he did. The analysis showed that although shares were trading at £8 a share, the company thought that they were worth 60p. If I were a shareholder in the company and found out that the directors knew that the shares were worth a fraction of what they were trading at, I would wonder why they did not issue a trading statement. Surely, they were misleading people, and the market, by allowing people to buy and sell shares at £8 a share when the company thought that they were worth a mere 60p.
I shall give way in a moment. That is, perhaps, indicative of the directors' attitude to their shareholders. They thought that no matter what they had done, or what they did in the future, all that they would have to do would be to come cap in hand to the taxpayer and say, "Bail us out." In fact, the company had serious problems. This is not only about what was said internally. ABN Amro—the judge also mentions this—valued the shares at about 58p. Surely the alarm bells should have been ringing throughout the company, which was in deep financial trouble.
I do not think that any Conservative Member disagrees with the right hon. Gentleman's criticism of Railtrack's management, but he misses the point altogether. No one suggests that there was no problem, or that Railtrack was a brilliantly successful company. The question is: having decided to take action—in the right or wrong direction; it does not matter—did the Government proceed in a straightforward and fair fashion, or in an underhand, cynical way that showed a cynical disregard for the interests of small shareholders? That is why the quotation from Shriti Vadera is so important. Does not that reflect all too well the new Labour values that permeate the Government, including the Treasury?
The Government did act appropriately. My point is that the directors knew that the shares were worth a fraction of what they were trading at, because they knew that the company faced deep-seated problems. I mentioned the valuation of the shares earlier. I am also bound to draw the House's attention to the fact that the company wrote to all its shareholders in April 2001 drawing attention to its agreement with the Government, which states:
"The Government stands behind the rail system but not behind individual rail companies and their shareholders, who need to be fully aware of the projected liabilities of the companies in which they invest and the performance risks they face."
That was sent to every Railtrack shareholder.
I want to make some progress, then I will give way.
It is clear to me that not only did the company know that it had substantial problems but that its shareholders knew that the Government's commitment was behind the rail system but not behind any particular private company. I am glad that in the face of the facts, which we were not going to get from the hon. Member for Rutland and Melton, it is now common ground that this company was in a far from healthy financial state. Paragraph 64 describes the note that Mr. John Smith of Railtrack prepared for the incoming chairman, Mr. Robinson. He said that
"the situation was worse than expected, neither the Regulator nor Railtrack could estimate the costs of running and maintaining the infrastructure with any certainty, the assumptions on which the settlement with the Regulator . . . had been based were completely unworkable, major cost over-runs on the "—
west coast main line—
"and the Channel Tunnel Rail Link were still not under control, Railtrack's 'bloating' operating costs were not being addressed. If the subsidy and pricing regime was left unchanged, the company was heading for liquidation."
So it is perfectly obvious that the company and its directors knew that the company had deep financial problems. I repeat that for any Government to have ignored that, and for any Government not to have put in place contingency plans, would have been absolutely extraordinary. Without wishing to labour the point—
rose—
I will of course take interventions, just as the hon. Member for Rutland and Melton did.
Let me repeat the point. The then chief executive of Railtrack, when he wrote to the regulator, said:
"The cliff's edge is closer than you may realise."
This company had major financial problems.
My concern, like that of many others throughout the country, is for the smaller shareholders, especially the elderly and those with pension funds. It seems to me that questions in the House are not often directly answered. Will the Secretary of State answer this: does he accept, on behalf of his Government, any responsibility at all for the plight of the shareholders who have been harmed?
The responsibility for the shareholders lay with the directors of Railtrack. Railtrack had allowed itself—[Interruption.] Let me just demonstrate, to answer the hon. Gentleman's question. This is what the directors of Railtrack told the Department when assessing the situation that they faced on 27 July 2001. They said that they had
"no access to bank finance";
that committed facilities
"were available for less than nine months";
that they had "major drawdown" expected on bank lines; and thought it would be "problematic around October".
Their access to the bond market was "doubtful", as was the ability of the board to sign off on the bond prospectus.
The point is that the directors of the company had a clear responsibility to the shareholders. It appears that they thought that the only way around that was to come back to the taxpayer and say, "Please bail us out."
I will give way in a minute.
It is worth reminding the House that on 20 August the directors of Railtrack were proposing to set aside the regulatory regime for four years—so much for the much vaunted independent economic regulation. They wanted unconditional funding from the taxpayer. They wanted to emerge after the four-year period with their shares worth between £3.50 and £5—and of course the Government would have to underwrite that value. In the meantime, they were going to carry on with a dividend of 20p per share. In other words: everything courtesy of the taxpayer.
Let me put this to the hon. Gentlemen—if they accept that this was a company with deep-seated financial and management problems: how on earth could the Government be justified in simply saying, "Have some more money"?
The fact is that the company was operating in an environment in which very shortly after it was taken into administration it required another £7 billion to underwrite it or to keep it in operation. When the Secretary of State describes the circumstances known to the directors, that was the environment in which the company was operating prior to October 2001. Subsequently, is it not true that the Government had to give the company, as Network Rail, £14 billion to achieve solvency?
The hon. Gentleman ignores the fact that the company did not have only financial problems. Everybody accepts that in the late 1990s and the first part of 2000, and after Hatfield, it became apparent that the deep-seated problem of successive years of lack of maintenance meant that costs were rising. However, it was to do with the management as well.
It is worth repeating Railtrack's comments about the genesis of its problems because they show that the problems were due to management as much as finance. Railtrack defined the problems as lack of any recent major projects experience inherited from British Rail. It did not have the expertise in-house to deal with such matters. The company defined another problem as
"stunning commercial naivety in agreeing to loosely-scoped, fixed-price contracts"
years in advance of its ability sensibly to price the risks or lay them off on contractors. It also stated that that was compounded by guaranteeing outputs without adequate timetabling work and without scoping infrastructure works. That, in turn, was compounded by more traffic and a declining infrastructure.
In other words, the company's problems were not only financial but due to management. In the days following the judgment, the hon. Member for Rutland and Melton appeared reluctant to admit that the Tory position was to give that poorly managed company, which had financial problems, more money.
Let me revert to the point that my hon. Friend the Member for Reigate (Mr. Blunt) made. If the company had not been forced into insolvency, it would have remained a FTSE company and retained access to global capital markets, which Network Rail does not possess because its only source of finance is the Government. Will the Secretary of State confirm the figure of £14 billion? How much extra has the process cost the taxpayer?
The point is that the company was insolvent. It approached the Government to say that it could not make ends meet. Paragraph 105 of the judgment refers to a representative of Railtrack's advisers, Credit Suisse: First Boston, and states:
"He said Railtrack had virtually no management control, it was the worst case he had seen for a period and that there was management paralysis. It had major projects without the skills to manage them."
Yet Conservative Members' central argument is that the Government should have given Railtrack more money through a regulatory review. That is nonsense.
What were the Government supposed to do with a company that was painting a picture throughout 2001 of financial difficulties and self-confessed management failings? The Tory answer is, "Give them more money." I do not believe that the majority of people would agree with such a proposition.
I appreciate that the Secretary of State is in a difficult position and that he is probably trying to tough it out. However, will he tell us whether, in reflecting on the behaviour and language of the Chancellor of the Exchequer's special adviser, he believes that it was seemly, measured, transparent and reasonable? If so, he has lost his moral compass.
The hon. Gentleman has said some silly things in his time and his comment is up there among them. The central charge against the Government in the Opposition motion is that Ministers acted inappropriately. The Opposition used more florid language, but that is the charge. The Secretary of State and Ministers—they make the decisions—acted correctly when faced with a company that had deep financial problems and deep-seated management difficulties. It is becoming increasingly apparent that the Opposition would have asked the regulator to undertake a further review and would have given the company more money. [Interruption.]
Order. We cannot have a chorus of sedentary comments. The subject of the debate is heady stuff, but it must be conducted in an orderly manner.
The Opposition view is, to some extent, that of Mr. Robinson, chairman of Railtrack. The judge said:
"Mr. Robinson's heart-felt evidence that the Government created Railtrack's insolvency is not acceptable. Not only did he, in so saying, ignore his own evidence and that of others that without government support Railtrack was unable to pay its debts"—
Railtrack's own evidence was that it was unable to pay its debts—
"but in any event a provider of funds does not 'create' an insolvency by providing only that to which the recipient is entitled. The Government can be said to have failed to avert Railtrack's insolvency but that cannot be said to be a fault in the Government unless one can postulate a duty on government to have funded Railtrack without limit and without condition",
which the judge described as "a hopeless proposition." That gets to the nub of the Opposition's case. They appear to say that the Government should have funded Railtrack without limit and without condition, which, as the judge says, is "a hopeless proposition." That is why, as I say, the Government were entirely right to take the necessary steps to develop plans in the event that it should prove necessary to put in place a body to take over running the railways if the company failed. It was almost inevitable that it would fail.
This really will not do. My hon. Friends the Members for Buckingham (John Bercow), for Grantham and Stamford (Mr. Davies) and for Windsor (Adam Afriyie) asked the Secretary of State whether it is acceptable for a senior Treasury official to describe Railtrack investors as grannies and to say that it does not matter if the grannies lose their blouses. Is that acceptable—yes or no?
Is not it amazing that, in the face of the facts, Conservative Members have to depart from their central case? The facts are that the company was insolvent, it was badly managed and the Government were absolutely right to put in place contingency plans.
Will the Secretary of State give way?
Not just now, but I will do so before I sit down.
One should look at the evidence and the judge's findings. Mr. Justice Lindsay looked at all the evidence over a few weeks and concluded that the Government acted entirely correctly.
I want to come to the regulatory point, of which the hon. Member for Rutland and Melton made much. By way of background, it is worth bearing it in mind that the regulator himself had been quite critical of Railtrack. In the summer of 2001, he gave a speech that caused some consternation in Railtrack. He said:
"Railtrack should put away the begging bowl, and stop spending valuable management time hawking themselves . . . round Whitehall, and knuckle down to getting train services back to a sustainable level of reliability and quality of service."
That was the regulator's starting point. He felt that Railtrack should be getting on with the job and with the settlement that he had made. However, the question of whether my right hon. Friend the Member for North Tyneside was right in ruling out a further regulatory review was considered by the judge. He said:
"I do not see that he",
my right hon. Friend,
"or the Department can be fairly criticised for anticipating that if there was to be no funding beyond Railtrack's present legal entitlement then legislation might be needed to be sure that that important policy decision could not be undermined. I see no ground for any material inference against Mr. Byers."
Furthermore, the judge says at paragraph 276:
"If he",
my right hon. Friend,
"had good public reasons for the policy, as I hold he had, I do not see it as a fault in him . . . to have said that if necessary he would ask Parliament to legislate so that the policy could not be thwarted."
In other words, Mr. Justice Lindsay considered those matters and found that my right hon. Friend did not act in any way that was inappropriate.
Interestingly, when we see what the regulator said when he appeared before the predecessor to the Transport Committee—
Will the Secretary of State give way?
I will in a moment.
The regulator made it clear that there was no prospect of being able to find the amount of money that the company needed, more or less over the weekend. Indeed, as the judge said, remarkably, Railtrack said that, unless the regulator could promise an unspecified number of millions of pounds on the Monday, there would be no point in having an interim review. In other words, the interim review could not have provided the lifeline that the Conservatives believe that Railtrack could have received.
Therefore, first, did the then Secretary of State act properly? Yes, he did. Mr. Justice Lindsay looked at that and found he acted appropriately. Secondly, as both the regulator himself and Mr. Justice Lindsay observe, even if there had been a regulatory review, it would not have helped Railtrack because its financial position was so bad that at that stage it would not have saved them.
The Secretary of State is giving his quotes rather quickly. He touched on the point that the judge said:
"I do not see it as a fault in him . . . to have said that if necessary he would ask Parliament".
I point out that the Secretary of State left out the words in brackets:
"I do not see it as a fault in him (or, at any rate, not one relevant to the tort I am considering)".
The Secretary of State seemed to leave that out. To put the facts on the record, the judge did not clear the former Secretary of State on this point.
Our case is not that the Railtrack directors acted impeccably. There is agreement about most of the criticisms of the Railtrack directors, but none of the criticisms from anyone else said that the company was insolvent. Only the independent regulator could determine that, and the Government threatened to legislate to stop him intervening because they wanted to make it insolvent. All the other charges against Railtrack may stand, but the insolvency and the cost to the shareholders are down to the Government and the then Secretary of State and his colleagues.
I do not know whether the right hon. and learned Gentleman has read the judgment, but if he has he will know that it was the company itself that was outlining its financial difficulties and the company itself that said there would be questions about whether it could continue as a going concern. It is an important point, even to the remains of the Opposition's discredited case, that throughout 2001 the company was constantly asking itself whether it could continue to trade as a going concern, such was the state of its financial position. The Conservatives' position appears to be that, if only an interim review had been allowed, the regulator would have produced millions of pounds, for which Railtrack had asked earlier in the summer. Money would have to have come from the taxpayer—it could have come from nowhere else—to save the company.
That is what the Government feared. That is why they stopped him doing it—
Order. The Secretary of State must either give way, or not give way.
I did not need to give way, Mr. Deputy Speaker, because I could hear what the former Chancellor was saying.
Looking through the papers, one is struck by how, earlier in the year, when my right hon. Friend the Member for North Tyneside became Secretary of State, he foresaw no structural change taking place in the industry. At that time, he had no reason to believe that Railtrack was in such a state. It is all in the papers available at the Department—all the papers lodged with the court are available to be inspected by anyone who wants them. The judge made the point that the Department had made a full disclosure, as the House would expect.
I simply do not accept the proposition that, right from the start, the Government aimed to bring about Railtrack's insolvency. The Government did not do that. The first hint of financial problems came from the company itself in March, when it said that its shares were worth a fraction of the price at which they were trading. In each visit that Mr. Robinson and his colleagues paid throughout the summer, it was made clear that the company had deep management and financial problems. The Opposition case seems to be that the Government should have ignored all that and said to the company, "Have another regulatory review, have some more taxpayers' money", which is an extraordinary position to take.
The Secretary of State is being extremely generous in giving way to me. Will he say why the Government threatened to legislate to take away the regulator's powers? Surely their only motive was their fear that the regulator would offer financial support and stop the insolvency that was the Government's objective, as all the papers make clear.
As the right hon. and learned Gentleman knows, because he interrupted me, a few moments ago I quoted Mr. Justice Lindsay saying that a policy decision was taken, so it was entirely understandable that the Secretary of State did not want that decision to be undermined by a further regulatory review.
The difference between us and the Opposition is becoming clear. It seems to be common ground that the company had big financial problems and was not well managed. The difference is that the Opposition think that the Government should have allowed an interim review and given more public money to a company that was in desperate straits. If that is what their case comes down to, I am happy that the public should judge us. We acted entirely appropriately in reaching the decision that the company could not be saved and that it was necessary to take appropriate steps to put a fresh administration in place after Railtrack had gone.
Will the Secretary of State give way?
No. I have given way to the hon. Gentleman enough.
The idea that we should have simply bailed out a failing company is absolute nonsense.
Will the right hon. Gentleman give way?
Not now—I might do so before I finish.
The hon. Member for Rutland and Melton made much of the order for administration. Mr. Justice Lightman said:
"This is clearly a case where the making of a railway administration order is not only appropriate, but absolutely essential".
The hon. Gentleman says that the judge should not have made that decision, suggesting that incomplete information was laid before him. I repeat the point that Railtrack could have objected to the administration order. It could have said, "If you only allow the regulator to come in and bail us out, everything will be fine." Indeed, Mr Justice Lindsay, in his judgment on 14 October, said:
"Mr Byers is accused of engineering a situation in which he could present evidence that Railtrack was or was unlikely to be able to pay its debts. But that needed no engineering."
That is what the judge found. My right hon. Friend the Member for North Tyneside did not engineer the situation. The judge makes the point that Railtrack was unable to pay its debts and that that did not need engineering. Unfortunately, Railtrack had demonstrated in spades that it was unable to pay its debts.
It seems that the foundation upon which the Conservatives seek to build their case falls apart. Railtrack was heading towards insolvency throughout 2001. It had grossly underestimated its costs, it had lost control of its finances and it was in deep financial trouble. Its own advisers said that there was management paralysis. The difference between us seems to be that the Tories would have said, "Never mind, have some more taxpayers' money." Our position is quite different. Our position was that in the light of these difficulties the Government were not prepared simply to bail out the company. It was appropriate, when the company eventually went into administration, to put in place an organisation that could run the railways properly.
It is worth bearing it in mind that under Network Rail unit costs are coming down. It now knows its unit costs. It has taken maintenance back in-house, which has saved millions of pounds. The company is being run properly as a railway rather than an adjunct of a property company. It is clear to me, coming relatively fresh to the situation, having read the court judgment and having considered all the evidence, that the Government and our Ministers acted entirely properly. That is why I believe that the House should agree to the amendment and throw out the nonsensical motion that has been tabled by the Conservative party—a party that is discredited for the way in which it brought about rail privatisation and allowed Railtrack to be created.
What chutzpah! The Conservatives, the Frankenstein creators of the monster that led to the privatisation of the railways, are now admonishing and advising the Government on their handling of the railways. Whatever next—De Lorean advising on start-up businesses, Naomi Campbell providing anger management training or perhaps Jeremy Clarkson promoting fuel-efficient vehicles.
Sometimes, the Conservatives are justified in rebutting attacks that are based on what they did when they were in Government eight years ago, but, in relation to the privatisation of the railways and Railtrack, unfortunately the damage has been so longstanding that they cannot simply bat it away. Perhaps the Conservatives were looking for hope value in the debate—hope that their record would be forgotten. I think that people should be reminded of their record on this issue.
I shall give a few examples of Railtrack's performance. At the time of administration, it was preparing to pay a fine of at least £10 million for failing to reduce train delays. There was Lord Cullen's public inquiry into the deaths at Ladbroke Grove, which found Railtrack to be an incompetent and inadequate company. Railtrack's poor performance was also the subject of a report by consultants Booz Allen Hamilton, which was very critical of the lack of investment by Railtrack. It found that track renewals had averaged only 1.3 per cent. per annum during the control period, which was 1995–2001, which was a low rate of renewal compared with European railways, which typically replace 2 to 3 per cent. per annum. Railtrack's 1995 business plan referred to 2.2 per cent. renewals per annum, not 1.3 per cent., which it delivered. Clearly it was far short of delivering on its targets.
The National Audit Office report, published on 14 May 2004, entitled "Network Rail—Making a Fresh Start", quoted a number of factors that contributed to Railtrack's failure, including a lack of attention to its core business, leading to underinvestment in the infrastructure, loss of engineering skills and poor asset knowledge.
Given the background of the Hatfield crash, the record for track failure rose by 42 per cent. All that occurred after Railtrack took over responsibility for track safety from British Rail. No wonder the hon. Member for Rutland and Melton (Mr. Duncan) did not want to talk about Railtrack.
Does the hon. Gentleman accept that if we talk about whether the privatisation of Railtrack was right or wrong or whether the financial health of Railtrack was in a good or bad state, we risk ignoring the central Conservative contention that the treatment of private investors was shabby and that the Government should not have behaved as they did?
The issue of the private investors and their investment was addressed by the court case. The wider public want to hear about the debacle that was Railtrack and the privatisation of the railways. They want to see some humility from the Conservative party, which has not been displayed today.
The Tory obsession with a man—the right hon. Member for North Tyneside (Mr. Byers)—and the desire to dwell on past events is extraordinary. The right hon. Gentleman's behaviour has been referred to the Standards and Privileges Committee, and it is the right body to decide his fate. We should be using this valuable parliamentary time to look not at what went wrong but at how we can improve the railways. The decision to turn Railtrack into a not-for-profit company was originally a Liberal Democrat idea. It was the right decision given that the Tories botched the privatisation of our railways.
As we are in the middle of a leadership race for the Conservative party, I thought it might be instrumental to look at what the candidates have to say about the railways, and railway privatisation and, specifically, how the railways should progress. When the right hon. Member for Haltemprice and Howden (David Davis), the shadow Home Secretary, was Chairman of the Public Accounts Committee, which considered rail privatisation in 1998, he stated:
"If something is done badly, it is done badly."
He came clean and accepted that privatisation was done badly.
Let me remind hon. Members of some of the facts revealed in that report. It gave a damning verdict on rail privatisation, which saw a handful of former British Rail managers become multimillionaires within a matter of months. The best example of that was Sandy Anderson, who made £33 million in six months.
Taxpayers' money.
Exactly.
The MPs on the Committee said:
"Such large profits risk discrediting privatisation as a whole",
which is something of an understatement. They went on to say:
"The public are understandably concerned when they see a small number of individuals making personal fortunes at a time when complaints about the industry are rising."
The right hon. Member for Haltemprice and Howden said:
"I am not embarrassed. You have to be iron-hard in impartiality"
as Chairman of the Select Committee. He went on to say:
"If something is done badly, it is done badly."
Perhaps I can help the hon. Gentleman. We are happy to accept that in some respects at least Railtrack was a basket case. He does not need to dwell on that. What matters is the conduct of the Government. His party's amendment
"condemns the way in which the Government handled the process and the operation of the Department for Transport, Local Government and the Regions at the time".
That is the kernel of the debate. Perhaps we could join forces and hear him concentrate on that.
I will dwell on that shortly. However, it is important to consider the way forward.
As I said, two Conservative Members of Parliament are standing in a leadership contest, and I looked for more up-to-date information on what they have to say about the railways. I checked out the website for the shadow Home Secretary. On 29 March, he listed 14 campaigns, all of which he seemed to have launched on that one day. The website did not list other campaigns since that date, which perhaps explains what is happening to his leadership campaign.
A rail campaign was listed. The right hon. Gentleman's website says:
"he has campaigned for Howden to get a direct train to London."
Clearly, that is the beginnings of a transport policy. It is slightly constituency-centric and perhaps a little bit self-interested, but at least it is a start.
The hon. Gentleman may care to reflect that the successful campaign that my right hon. Friend the Member for Haltemprice and Howden (David Davis) conducted on that issue enabled him to double his majority over the Liberal Democrats at the general election.
The hon. Gentleman makes an interesting point, but I repeat my view that basing one's transport policy on the need to secure direct trains from one's constituency to London is short-sighted.
I thought it appropriate to look at what the hon. Member for Witney (Mr. Cameron) said about transport policy, specifically rail. In part of his website headed "Quality of Life" he states:
"We must give voice to a Conservative instinct that has been silent for too long: our belief that the quality of life matters as much as the quantity of money. People in Britain today don't just want to be better off financially, with decent, well-paid jobs. They don't just want public services that work. They want Britain to be a place which lifts the spirits."
Such a place, he goes on, is
"where streets and public spaces aren't filthy; where getting around isn't such a hassle".
That is the first part of the hon. Gentleman's transport policy. In a section on a dynamic economy he says:
"We must show that we understand all that needs to be done to create a dynamic economy . . . So our vision should be to help make Britain the most civilised place in the world to live."
He goes on to say:
"Public service investment—as well as reform—is vital for our competitiveness. Spending on things like education and transport is a positive good, not a necessary evil."
That is the second part of the hon. Gentleman's transport policy, but it is sad that his website finds it necessary to state that spending on education and transport is
"a positive good, not a necessary evil."
Surely, even the most ardent supporters of the Conservative party could not fail to agree that stated goals such as ensuring that
"getting around isn't such a hassle"
and spending on transport
"is a positive good, not a necessary evil"
hardly constitute a transport policy. I looked for salvation in the Conservative manifesto entitled "Are you thinking what we're thinking?".
Order. The hon. Gentleman is in danger of going down a branch line. The debate is about the Government handling of decisions relating to Railtrack and the Prime Minister's amendment to the motion. The hon. Gentleman is not speaking directly to that at the moment.
Thank you, Mr. Deputy Speaker, I accept your point. It is worth, however, stating briefly that the Liberal Democrats agree with the Conservative manifesto about the need to bring
"stability to the rail network, avoiding further costly and inefficient re-organisation."
The incompetence demonstrated by the Conservative Government when they created Railtrack and privatised the railways does not exonerate Labour. The hon. Member for Rutland and Melton identified some interesting facts, including the number of miles of new railway line to be built in the next few months. In 2007, 24 miles will be completed, so I assume that this year none will be built. He also told us that just three transport projects costing £500 million or more have commenced since 1997. Things were supposed to be different, as the 1997 Labour manifesto makes clear:
"The process of rail privatisation is now largely complete. It has made fortunes for a few, but has been a poor deal for the taxpayer . . . There must be convenient connections, through-ticketing and accurate travel information for the benefit of all passengers."
The Secretary of State may wish to comment on the need for convenient connections, which are not yet available at King's Cross, St. Pancras or in the Thameslink box. They will not be available at Stratford station unless a travelator is provided. And we await progress on through-ticketing in relation to the Oyster card.
A subject that Conservative speakers have repeatedly raised in this debate is the link with the Chancellor. They have asked whether he has had an active hand in everything surrounding Railtrack and its demise. The evidence that all lines lead to the Chancellor in relation to transport policy involves not Railtrack but the public-private partnership for the tube, but I shall not dwell on that subject, Mr. Deputy Speaker, because you would probably call me to order. However, that partnership has not been a great success, and I do not imagine that the Chancellor will want to stress his involvement in it.
In a final comment on Labour's performance, I must point out that the Strategic Rail Authority was to have been the solution to these problems, and the body that would have ensured that the strategic planning infrastructure was appropriate. The Government announced the legislation to introduce the authority to great fanfare in 2000, but now, just a few years later, it has very inconveniently been disbanded, with millions having been handed over to consultants in the process.
A clear consensus is emerging that Britain's transport problems can be solved only by environmentally sustainable strategies, and that the railways will form an essential part of that solution. That is why this debate should have been about the future of the railways, not about things that have happened in the past. Those issues were examined in the court case, and the Select Committee on Standards and Privileges will consider the activities of the right hon. Member for North Tyneside, which is the appropriate course of action.
I did not agree with much of what the hon. Member for Rutland and Melton said, but I agree with him that the House is the place to redress grievances. They include those that were imposed by the decades of underinvestment in the railways—the delays, the cancellations and the overcrowding—that previous Conservative Governments inflicted on the travelling public, aided and abetted to a certain degree by the present Government. Those are the grievances that people want to see redressed today, but it is clear from the debate that people will remain dissatisfied. They will get only forced indignation and no humility from the Conservatives. The travelling public's grievances will have to be redressed on another day.
I listened with great attention as the motion was moved by the hon. Member for Rutland and Melton (Mr. Duncan). I spent just over three weeks in the High Court at the end of June and the beginning of July, and the hon. Gentleman's speech was a total rerun of every argument that was put before the court. There was nothing new in his contribution. None of the documents to which he referred was new or fresh. I think that he said that some of them had been leaked, but they were all disclosed to the public during the court proceedings. In relation to the evidence that was put before the court when I petitioned for administration, the bundle of all the documents that we put before the High Court was also put into the Library of the House by the end of October 2001. So all the details and documents have been made available to Members of the House and, indeed, to the wider public. My right hon. Friend the Secretary of State was right to say that the judge had complimented the Department on its full disclosure, including that of documents that would usually have had legal privilege attached to them and would not have been disclosed in the normal course of events.
The hon. Member for Rutland and Melton is now back in his place, and I have to say that I have had many insults in my time in politics, but to be called "weedy" by him really takes the biscuit.
Here we go!
As the judge said of the comment made by Sriti Vadera, it was a term of endearment.
And I took it as such, as always. I was disappointed by the hon. Gentleman's contribution, however, because I was looking for some substance and detail, and something new. I am afraid that it was a rehash of the arguments that were put on behalf of the claimants in the court case, which they comprehensively lost when Mr. Justice Lindsay had the opportunity of examining their claims in detail. It really was tabloid advocacy—all headlines and no substance.
Given that the Conservatives have chosen to have a half-day debate on this issue, it is interesting to see that their priority is to re-fight the battles of four years ago, when public opinion was not in favour of Railtrack. The public now realise that what we did in putting the travelling public first, not the interests of Railtrack shareholders, was absolutely right. That was the crux of my decision. The Conservatives have never apologised for the privatisation of Railtrack. Constantly, they put the interests of 250,000 Railtrack shareholders above those of the 2.5 million who travel on our railway system every day. The Conservative party is still the same—it will always be for the few and not the many, and will always be on the margins of politics in this country as a result.
Serious allegations have been made about the conduct of the Government leading up to the decision about administration. Because of the amendment moved by my right hon. Friend the Secretary of State, however, we can also consider the nature of the privatisation of Railtrack in the first place. I am delighted that the former Chancellor of the Exchequer, the right hon. and learned Member for Rushcliffe (Mr. Clarke), will be replying to this debate. I hope that he will explain to the House what value there was for taxpayers in his writing off £1.4 billion owed to the taxpayer so that Railtrack would not inherit the debt, thereby making it more juicy for potential shareholders. That was a bung of huge proportions from the former Chancellor—to make the privatisation fly in the markets, he made a £1.4 billion gift.
It is worth reminding the House that under the Conservative Government's Railways Act 1993, which saw the privatisation of large sections of the railway system, Railtrack, responsible for the infrastructure, was kept in the public sector. That was for a good reason: everybody realised that the infrastructure operators and licence holder had to be accountable to the travelling public, not to private shareholders. However, John Major, the former Prime Minister, desperate to unite a party that was bitterly divided over issues such as Europe—if I can say that to the right hon. and learned Member for Rushcliffe—wanted a bone of dogma to give his braying Back Benchers. That dogmatic bone was the privatisation of Railtrack, pushed through in 1996.
Every independent commentator said that it simply did not make sense to have the licence holder in the private sector, accountable to shareholders and with a legal duty to put their interests first, not those of the travelling public. The right hon. and learned Member for Rushcliffe, however, when Chancellor of the Exchequer, wrote off £1.4 billion of taxpayer's money to make that privatisation float. In addition, a £69 million surplus had been made by Railtrack while in the public sector. What did he do with it? He did not use it for schools or to employ more nurses. He held it back and then showered it over the new shareholders in Railtrack like confetti—£69 million of confetti. That money was made while Railtrack was in the public sector, when those recipients were not even shareholders. That was how generous the right hon. and learned Gentleman was when he was Chancellor.
On the fundamental point of the motion, and as the hon. Member for Rutland and Melton has made clear, had the Conservatives faced the problems that we had in 2001, he would have been even more generous. He would have said to the regulator "Get on! If you want to give them billions, that is fine by us." Billions to Railtrack, a company that was clearly failing.
May I ask a question to which I did not receive an answer from the Secretary of State? I have been listening carefully to the right hon. Gentleman. Does he accept any responsibility whatsoever for the plight of shareholders, especially the elderly, whose pensions will suffer?
When I was Secretary of State, I obviously had to have regard to the interests of shareholders, which is right and proper. But, as Secretary of State for Transport, I also had an overriding consideration: the travelling public. People chose to invest in Railtrack shares, and they received the value that was in the company. That is the nature of shareholding. There was value in the company—what was it? £2.50 or £2.60 per shareholder—and it was right for the shareholders to receive that amount. That was what the company was worth.
It is for investors to think carefully about where they are putting their money. Shares can go down as well as up, and Railtrack was a bad investment for many people. There are questions that the former shareholders should be asking the directors of Railtrack.
The privatisation of Railtrack was really a last throw of the die by the John Major Government. It was introduced because he was desperate to bring his party together. It is fascinating to look back at the terms on which Railtrack was promoted to the financial sector. At the weekend, I came across the comments of one financial adviser. He said
"Railtrack is essentially a property company".
He went on
"Railway stations provide a captive audience of passengers who are all potential customers".
Because of the way in which Railtrack ran the system, the passengers were in the stations for even longer waiting for the delayed trains. That financial adviser was absolutely right: these were the captive customers for those who were trying to promote the sale.
Railtrack was sold for £1.9 billion. It was clear that it had been undervalued. When the right hon. Member for Haltemprice and Howden (David Davis) chaired the Public Accounts Committee, the Committee issued a stinging criticism of the privatisation. Commenting on why it was rushed through before the 1997 general election, the right hon. Gentleman said
"The timing of the sale was a factor in the poor value achieved".
The Department acknowledged that Railtrack
"had been undervalued and sold in haste."
That was the background to the botched privatisation of Railtrack. What sort of company was it in the private sector from 1996 onwards? In his report on the Paddington crash at Ladbroke Grove, Lord Cullen said that the company suffered from "institutional paralysis". In a recent court case dealing with the Hatfield derailment, it was revealed in the evidence before the court that Railtrack, the company that the Conservatives would have kept in business, had failed to act for over a year after being told that rails near Hatfield were badly cracked and in need of replacement. That is the company so cherished by the Conservatives; but that was the finding of the judge in the recent Hatfield court case.
The judge, Mr. Justice Mackay, went on to say that the Hatfield derailment and the neglect that was there constituted
"one of the worst examples of sustained industrial negligence in a high-risk industry I have ever seen".
That is Railtrack. That is the performance of Railtrack. The Conservatives have alleged that somehow I personally engineered the collapse of Railtrack, but the evidence makes clear that I did not need to, because of the nature of Railtrack.
Just so that I know what the right hon. Gentleman's case is when I reply to the debate, may I seek clarification? I am astonished. I thought he was a Blairite, but he seems to be saying that his conduct was based on a hatred of the privatisation—although I do not recall his talking about a need to renationalise—and that his actions constituted a punishment of the company for its past misfeasance in respect of some of its duty. Reading the papers, I rather thought that his main motives at the time were to get hold of its assets at minimum cost and at the shareholders' expense, and to ensure that the successor company kept its debts off the public balance sheet. There is no mention of this concern for the travelling public, this desire to avenge the wrongs of nationalisation or the dreadful instance of the Hatfield crash. Is the right hon. Gentleman saying that all that chicanery was aimed at protecting the travelling public and provoked by his dreadful memories of how awful the whole policy had been in 1996?
That was an interesting intervention, although it was more of a winding-up speech. There is no chicanery here. I am sure that this was the right decision, and I am even more confident of that now than when I took it way back in October 2001. Politically, I can see the value of the private sector in some parts of public service, but I do not accept that contracting out to a private sector company that is accountable only to shareholders is the right way forward for good, high-quality public services. If we can get the private sector to work for the public service, that is acceptable. Railtrack was working in no one's interest, which is why I was not prepared to give it yet more public money when it came asking for it.
Does the right hon. Gentleman accept that the Government have any responsibility since 1997 for the institutional paralysis that seems to have overtaken Railtrack and its board because of their perceived and open attitude towards Railtrack?
That certainly was not the thrust of Lord Cullen's judgment when he issued his public report on the tragic crash at Ladbroke Grove. It was Lord Cullen whom I quoted earlier, and he referred not to the actions of the Government but to the nature of Railtrack itself, which was suffering from institutional paralysis.
A lot has been made this afternoon of Railtrack's not being insolvent. My right hon. Friend the Secretary of State has gone through a number of clear statements showing that Railtrack itself told the Government that it was in great difficulties. Mr. Smith, an employee and senior member of Railtrack who was the interface between the company and the Government, wrote to the Government on 16 March 2001, when shares in Railtrack were trading on the market at £8 each. He said that in the view of Railtrack and its board, the true value of those shares was 60p each. Some Conservatives argue that we, the Government, allowed a false market to develop in Railtrack shares, but that letter shows who allowed that to happen.
If Railtrack's insolvency was so inevitable, why did the right hon. Gentleman, as Secretary of State, threaten the regulator with a quick Bill to abolish him?
If the hon. Gentleman can rein himself in for a few minutes—I know that he finds that difficult—I will address the matter of the regulator.
Following Railtrack's letter of 16 March 2001 about its view of the value of the shares, it produced, on 31 March, its business plan for the five years to March 2006. The judge in the case called it a remarkable document. He said that it accepted that processes for maintaining and renewing the railway to an acceptable standard had clearly been broken, and that there were no robust plans in place to live within the rail regulator's targets, even before the lessons of the Hatfield derailment. There was a significant unwillingness by managers higher up to live within budgets and plans, and the business plan could not
"be regarded as an acceptable plan in financial terms".
That is Railtrack's own five-year business plan, which was produced at the end of March.
Railtrack's audited results for the year ending 31 March 2001 appeared on 24 May 2001. For the first time, the Railtrack Group had made a loss, after taxation, of £559 million—down from the previous year's profit of £295 million. That, I would have thought, would have given a stark warning to many of the private shareholders and small investors, to whom the hon. Member for Rutland and Melton and others have referred. A gap of £3.6 billion was disclosed between budgeted income and expenditure during what is called control period 2. The projected cost of the west coast main line had increased and escalated to £6.3 billion as a result of Railtrack's management. All that led Mr. Justice Lindsay in the High Court to comment:
"It would not, in my view, be unfair to comment that a company which needed, as did Railtrack, to give very careful attention to whether its accounts could properly be prepared on a going concern basis was a company which was likely to be heading towards seriously difficult times."
That was the view taken by the judge in the High Court case.
The final piece of the jigsaw in respect of the real value of Railtrack came on 4 June 2001, when the financial brokers ABN Amro, released a circular with a selling recommendation to the market as to the value of Railtrack shares. It analysed the financial position of Railtrack in some detail and there were dire warnings. It said that investors should be in no doubt that their equity was in danger of being wiped out and that the rising levels of debt threatened to engulf the value of its regulated assets, rendering the equity worthless. The then current share price of 438p implied wildly optimistic outcomes. Based on its expectations of performance, Amro valued Railtrack's shares at 58p.
We can therefore see the financial position of Railtrack in the statements of Railtrack itself and from independent financial commentators who made it clear that the company was in great difficulties. Investors were warned to be careful in case their equity was wiped out. All the warning signs were there.
Then, of course, there is the view of the regulator. Conservative Members have made a big issue of the role played by the regulator. It was in many ways a unique privatised sector because, although regulation applied across all privatisations, Railtrack was the only privatised utility that depended on a public subsidy. Two thirds of its revenue came from taxpayers and no other regulator had the same responsibility. With the regulation of gas and electricity, for example, when the regulator makes his determinations, he is not signing a cheque on behalf of the Government. That is the difference: when the rail regulator makes a determination, it is not the shareholders or the private sector, but the taxpayer who bears the cost. We are talking about a structure that was set up under the Conservatives to make Railtrack work in the City: they introduced an independent regulator but, exceptionally, one who was using taxpayers' money to subsidise the company.
I want to deal with Mr. Winsor's view of Railtrack, but I will give way later.
Tom Winsor was the rail regulator at the relevant time and, on the evening of 12 June 2001, he made a speech to the Institute of Electrical and Electronics Engineers, which painted a bleak picture of Railtrack. He said that the west coast main line project had not been properly worked out and that things had got steadily worse, even after the Ladbroke Grove and Hatfield derailments. He said that Railtrack could not be trusted to deliver, that its share price had fallen below the 1996 offer price and that it had lost its essential skills base of engineers. The company, said Mr. Winsor, in a phrase to which my right hon. Friend the Secretary of State referred earlier,
"should put away the begging bowl and stop spending valuable management time hawking themselves unwanted round Whitehall and knuckle down to getting train services back to a sustainable level of reliability and quality of service".
That is what Tom Winsor wanted Railtrack to do.
The right hon. Gentleman makes a perfectly fair point when he describes the unique triangular relationship between the rail regulator, the Government and Railtrack. We accept that, but our case is that, because that relationship was enshrined in statute, the proper conduct of Government would have required him, as Secretary of State, and others in government to form public policy properly and to come honestly to the House and not do it on the sly, as we accuse him of doing, by applying improperly for a rail administration order and trying to ignore the statutory power of the regulator. If that is not true, why would Shriti Vadera have said:
"The rail regulator is the total wild card . . . I hope we are all aware of the risks here . . . We cannot silence him over the weekend and if he stands up and says he has a grand plan which could keep the company solvent, we're up the creek."?
I shall talk in detail about what happened but I want to address that point head on, as the politics of the decision are key.
The hon. Gentleman and the right hon. and learned Member for Rushcliffe seem to hold the view that once the Conservative Government had created this being called the rail regulator, with all his rights, responsibilities and duties, a new Government—a Labour Government in this case—could not touch him. That is the implication of what the hon. Gentleman said. The regulator was a Conservative creation, so how could the Labour Government have the audacity to unravel a Conservative privatisation?
Look at the facts that were before the court. I said clearly in court and to the rail regulator, who was acutely aware of the fact, that legislation would be needed and I would have to take it through the House and another place. Of course, that is what we would have done, had we needed to. Primary legislation would have been needed, but I have no doubt that, with my colleagues, we would have done what we needed to do if it was necessary because it was in the interests of the travelling public so to do.
For four years, the Government accepted that structure and the right hon. Gentleman well knew that it was on the basis of that structure that the shareholders had invested and held their shareholding. The only reason that he decided to legislate was to make the company go bust, at the expense of the shareholders. For four years, he had announced no intention of legislating.
It is clearly not the case that we were legislating to make the company go bust. The court was clear about that. Mr. Justice Lindsay, talking about the evidence that he had received from the chairman of Railtrack, commented:
"In his evidence to me Mr. Robinson accepted that without government support Railtrack was unable to pay its debts and that that had been true for a long time."
That was the situation: the company was unable to pay its debts. I decided as a matter of public policy that the Government would not bail out Railtrack with yet more public money.
To secure that public policy objective, I would have had to take legislation through this place and the House of Lords, but the Conservatives somehow find it grossly insulting that, when there is a change of Government, we want to do things differently. Well, we wanted to do things differently and we did. I believe that having a company to run the infrastructure that puts the interests of the public first is far better than having a company—Railtrack—which had a legal duty always to put its shareholders first. That was the fatal flaw in the Railtrack privatisation.
Mr. Winsor was robust in his approach to Railtrack, and it was for that reason that the company came to the Government and not to the rail regulator for an interim review—the route established by the Conservative Government when they were in office. Because the rail regulator was sending out such a clear message, the company decided to try to do a deal with the Government. I can understand why. A deal was done in April 2001, when £1.5 billion was brought forward in what was described as the endeavour settlement to assist Railtrack in its financial difficulties, largely as a result of Hatfield. A deal was done with the Government. The company pleaded poverty and £1.5 billion was made available. It is interesting that, within a month, £134 million of that sum had been given out in a dividend to Railtrack shareholders.
Another key point about the April settlement is that the Government made it clear that, although we would stand behind the railway industry, we would not stand behind individual companies and that shareholders needed to be aware of that fact. Unlike what the hon. Member for Rutland and Melton said, the Government were open about our approach to the railway industry. There were to be no more bail-outs. People learned lessons after the £1.5 billion in April and we hoped that that money would see Railtrack through, but the company told us that it needed more money.
Railtrack came to the Government in strictest confidence, however, so it was not something we could make public. The company wanted help but it told us about the position in confidence. The right hon. and learned Member for Rushcliffe will know from his outside interests that companies often approach the Government on a commercially confidential basis, which is not to be made public to the stock market or anybody else. That is what happened in that case and I make no apology for it. The matter was not something to be debated openly. A company was coming to the Government in private, in commercial confidentiality, saying, "We've got these problems. Can you help us out?". As a result, we held discussions, especially from 25 July, to try to resolve the difficulties that Railtrack faced. On 5 October, I had to decide whether to give more public money to Railtrack or tell the company that enough was enough and that, if it was insolvent, it should petition for administration.
The House debated the situation extensively in autumn 2001 and two distinct decisions were taken. On Friday 5 October, there was the decision to say no to extra finance for Railtrack. We paid all the money due to the company but nothing more. Then, on the basis of the advice I received on the Sunday morning, I agreed to petition for insolvency in line with my powers as Secretary of State.
The right hon. Gentleman has made great play of the fact that extra money was going to Railtrack, but will he answer the question that has been put several times this afternoon about whether an additional £14 billion of public money went to Network Rail?
We do not know whether it was additional because we do not know what the rail regulator might have decided in an interim review, so we cannot answer that question. However, we are now in a far better position with Network Rail, which can deliver in the public interest, as opposed to Railtrack, which had that fundamental flaw. The company was failing in management terms and it can also be argued that its structure and the way that it was set up—putting the interests of shareholders first—could not deliver for the railway. The performance figures show that the railways are on the mend. There still needs to be much improvement, but the structure that is in place and that is being built on by my right hon. Friend the Secretary of State is a far better one to deliver in the interests of the travelling public.
A specific point was made about the position of the rail regulator. Mr. Winsor was robust in his approach. He knew that I had to take legislation through this place and the House of Lords. That is why, when the Railtrack directors phoned him on the Saturday evening—incidentally, they said they were ringing him only for due diligence—he said that he could conduct an interim review, but that he did not have much time. He asked them when they wanted the money. They said, "By Monday." They wanted millions of pounds by Monday. That was the response of the Railtrack directors. Mr. Winsor indicated clearly that, although he could conduct a review, I would have to take the measure through this place and the House of Lords and that it would take time, but they did not want to know. They knew that the game was up and that Railtrack was a company that could not pay its way. For that reason, when the case got to the court on the Sunday, they waived the two-days' notice that was theirs. They could have delayed the whole thing by a couple of days to have proper conversations with the regulator. They did not do that, but waived their right to have another couple of days to try to get a deal with the rail regulator. They gave up—they did not want to know. That is what the Railtrack directors did in those circumstances.
Of course I give way to a former Railtrack shareholder.
As the House will recall, I took evidence on this point—and, yes, as the right hon. Gentleman says, I held Railtrack shares at the time. Why did he threaten the rail regulator? Why did he not allow the rail regulator to use the powers that the House had vested in the rail regulator under the legislation? By not allowing the rail regulator to use those powers, what message does that send to regulators in other industries?
I appreciate that the hon. Lady has only just come into the Chamber, but we have covered that issue extensively earlier in the debate. [Hon. Members: "Answer!"] I shall repeat it all if hon. Members want me to. It is a strange logic of what democracy is all about to suggest that, because a Conservative Government have created an edifice, a Labour Government cannot come in and change it. Yes, the hon. Lady is right: the Railways Act 1993 allowed the regulator to be in place. I indicated to the regulator that I would legislate if need be for powers to direct the regulator, but I did not need to legislate—in reality, there was no need to do so. That was the situation, but it is flawed logic to say that, somehow, a different Government cannot bring legislation before the House. Mr. Winsor was aware that legislation would be necessary, which is why he said, on the Saturday evening, "The Secretary of State has said that he wants to legislate, but that will take time. I can conduct an interim review while he tries to do so." I think that the hon. Member for Rutland and Melton made that point in relation to my speech in the House in November 2001.
I have a very brief question for the right hon. Gentleman: why did he not act in the four years after a Labour Government were elected?
I was the Secretary of State only from 9 June and some people say that I acted far too quickly, but the Government did act. We were trying to make the structure work, but it became very clear that that simply was not the case. That is why I took the decision. It is interesting to read the view of Mr. Justice Lindsay in the High Court, where he was taken through the arguments about my conduct. He says:
"I do not see that he",
referring to me—
"or the Department can be fairly criticised for anticipating that if there was to be no funding beyond Railtrack's legal entitlement then legislation might be needed to be sure that that important policy decision could not be undermined."
That was the view of the judge in the High Court case, and we are revisiting all the arguments that were heard in the High Court at the end of June and throughout July—but, no doubt, we will hear a few more now.
The right hon. Gentleman is right: he would have been entitled to come to the House to try to change the law, but he was working within existing statute law. Why did he not tell the judge who granted the administration order about the powers of the regulator, who, if he had chosen to exercise them, could have staved off the insolvency that was granted in that order?
All the relevant details were provided to the court, as far as I am aware. I refer once again to the point made by Mr. Justice Lindsay. In referring to the making of the order, he says:
"The learned judge"—
Mr. Justice Lightman—
"accepted that the Company either was or was likely to be unable to pay its debts. In his evidence to me Mr Robinson",
who was the chairman of Railtrack,
"accepted that without government support Railtrack was unable to pay its debts and that had been true for a long time."
So Railtrack gave up, effectively, because its directors knew the state that their company was in.
A major public policy decision was taken to say that no additional funding should be given to Railtrack, and we met all our legal obligations.—[Interruption.] The hon. Member for Rutland and Melton says from a sedentary position, "You didn't tell us," but the right hon. and learned Member for Rushcliffe was agreeing with me when I went through the nature of a major company coming to the Government in confidence with commercial information. I appreciate that the hon. Gentleman has never held Government office—he is unlikely ever to do so—but if he consulted the right hon. and learned Gentleman, he could have explained to him what the nature of government is all about. He would find that useful. It would not have any practical application—he will never have the chance—but it might be good for his wider knowledge of the way in which government works.
Railtrack was a flawed privatisation. Railtrack was obliged to meet the needs of its shareholders. With Network Rail, we now have a far better system that can put the travelling public first and we are beginning to see improvements in the railway system as a result. When the chairman of Railtrack met the Prime Minister in July 2001, he described his view of Railtrack. I shall quote because the language may not be quite parliamentary. He said that Railtrack was "a crap company". He was absolutely right in that analysis of Railtrack.
Despite all the criticism that I have had over the years from Railtrack shareholders, aided and abetted by Conservative Members, as they have been again this afternoon, I am confident that, when I took the decision in the autumn of 2001 to say, "No more extra money for Railtrack" and to put the interests of the travelling public first, I did so after proper debate and deliberation in government. I did it with the powers that I then had as Secretary of State for Transport, and I am absolutely confident that it was the right decision to take in the public interest and for those people who travel every day on our railway network. So I make no apology for that decision and for unwinding the Tory privatisation that was Railtrack. It was failing the industry and the travelling public, and we did things rightly and properly in the public interest. That is why I will support the Government amendment this evening.
It has been instructive to listen to both the current and the former Secretaries of State for Transport, who have been anxious to tell us what they did, but very reluctant to deal with why they did it, which is central to the point made by my right hon. and hon. Friends in the motion. I want to concentrate for a few minutes—I am conscious that other colleagues wish to speak—on the second half of the motion, which criticises the conduct of the Chancellor of the Exchequer's special adviser and then considers the impropriety in the formation of Government policy. That lies at the heart of the debate. As well as the hugely important issue of running an efficient railway, it is possibly even more important that we run a fair and decent Government, and the whole episode reveals that the current group of Ministers—especially the Chancellor of the Exchequer and his advisers—are not capable of doing so.
I shall concentrate on the use and behaviour of special advisers. As a former special adviser, I want to challenge the implication that the way in which special advisers' now routinely behave, which damages the reputation of the whole civil service, is in any way comparable with how they used to behave under previous Governments.
The events surrounding Railtrack illustrate that the Government no longer hold to one of their articles of faith. They have always believed that the public care only about what they do and not at all about how they do it. That theory was exploded by the Iraq war, when even some of those who supported the Government's policy were deeply disturbed by the Government's lack of candour about their reasons for taking action and, equally, by the slapdash way in which decisions are taken, which allows the lack of candour to flourish because it bypasses the proper systems of government.
What is transparent from both the files and today's debate is that the Government wanted to renationalise Railtrack. That policy could have been properly debated in the House. Indeed, that happened in other venues. That is an entirely proper policy debate. What is not proper, and what the Chancellor's special adviser in particular seems to have driven, are the efforts to renationalise by stealth and on the cheap. In particular, as we have heard throughout the debate, the Chancellor's special adviser was the driving force behind the contempt shown to Railtrack shareholders.
The audit trail is clear. On 26 July 2001, Ms Shriti Vadera wrote:
"I was thinking we need a trigger to insolvency that we decisively pull."
At the end of July she was asking in e-mails:
"Can we engineer the solution through insolvency—finding the right balance between not having triggered it and therefore avoid compensation. . . . but enough to be seen to have acted decisively".
She went on to state at the end of August that
"we have enough things to spend money on in the sector without worrying about bailing out shareholders who added no value to the company",
before her now notorious e-mail describing the shareholders as "grannies".
What the e-mails illustrate is not just Ms Vadera's contempt for small shareholders—that is a matter between her and her political masters, especially, perhaps, those Treasury Ministers who purport to support an enterprise economy—but how much real power lies in the hands of special advisers who seem to have no regard for any proper process of government. Permanent officials would not write e-mails like that about a sensitive matter of public policy, because they have proper regard for the way in which advice to Ministers should be devised and presented. Under previous Governments, special advisers would not have written like that, either. It is not a matter of pedantry or trying to wrap up advice in Sir Humphrey-style obfuscation; it is a decent regard for propriety, without which even democratic government loses its legitimacy. Governments have huge power. That means that individual officials have huge power and should exercise it responsibly.
Many people would say that it is wrong to talk about officials, because Ministers take responsibility for decisions. I wish that were still the case. Under this Government, Ministers too often duck and dive and try to evade responsibility. Just occasionally, the light shines on what is going on behind Whitehall's closed doors and we discover who is pulling the strings. The Government who brought us Jo Moore and still bring us Shriti Vadera have no right to hide behind constitutional or parliamentary proprieties. The people who tore up the old rule book cannot hide behind the old rules. In this case in particular, they cannot hide behind the old rules because Ms Vadera was clearly uninterested in maintaining the structure of the rail industry, which had been left in place to ensure that a proper balance was maintained.
We have just had an interesting debate about the role of the rail regulator and Mr. Tom Winsor's interpretation of it. It was entirely in the Government's power in four years to instigate a discussion and introduce legislation. They chose not to do so. When it came to the point where they wanted to renationalise Railtrack on the cheap, they realised that he might be an obstacle, so they started threatening him. The history of that episode shows that instead of having a proper policy debate, they choose to do things behind closed doors.
It is worth analysing who lies behind this manifestation of the increase in special advisers' powers and the misuse of that power. The plans for the destruction of Railtrack on the cheap were clearly hatched in the Treasury, and the spider at the centre of the web was the Chancellor of the Exchequer. It is a little ironic, but I feel sorry for the Prime Minister, who has had to suffer public rebuke following the Butler report for his informal style of sofa government. The Chancellor is in many ways more culpable of subverting the proper processes of government, because he is characteristically more thorough, more rigorous and more focused than the Prime Minister when he sets about subverting the processes of proper government.
The Chancellor's special adviser in this case was assiduous in pulling together and forcing through the policy that led to the collapse of Railtrack. To return to my first point, such behaviour on the part of a special adviser was unthinkable under any previous Government of any party. Special advisers are in a privileged position and should recognise that that brings responsibilities. That has clearly not happened in this case. Even more importantly, senior Ministers who appoint and employ special advisers should make it clear to them that they are expected to meet the highest standards of propriety—the standards that all of us expect from permanent officials. It is plain that the Chancellor does not expect or encourage his special advisers to meet those high standards.
All that is a most serious charge to lay at the Chancellor's door. He aspires to be Prime Minister. In that role he would be responsible for the conduct of all his Ministers. Why should Ministers or special advisers respect the rules when the Chancellor of the Exchequer holds the rules in contempt? The Government's conduct over Railtrack stinks, because those at the very top of the Government do not care about using their power in a proper, decent and fair way. For that they should be ashamed.
I am the Member of Parliament for Hatfield. I was in Hatfield on the day of the crash and have followed the goings-on with great interest as a result of the immediacy of the case to me. I pass the memorial at Hatfield almost every day and am familiar with the issues of the cracked corner rail, which led to that tragedy and the four deaths.
This, however, is not a debate about Railtrack and whether it was a good or bad company. This is a debate about the way in which Railtrack was renationalised on the cheap. That is the only subject of the debate, and all the contributions that we have heard this afternoon from the Government Benches about how it was something to do with the success or otherwise of Railtrack are red herrings. They are irrelevant to the case. I have been in business for the past 15 years. It is a company limited by guarantee, so there are shareholders. The idea that a Government can take away those shares without due process and, in this case, without reference in advance to Parliament, is appalling. That is exactly what happened.
The hon. Gentleman stated that the Government took away the shares of those who held shares in Railtrack. To ensure that he is not misleading the House, will he reconsider what he said? He will know that Railtrack shareholders got £2.50, I think, or £2.60 each, so they got the value in the company. The Government did not take away any shares from Railtrack shareholders.
Indeed. I am grateful for the right hon. Gentleman's intervention. Earlier, he told us that he thought shareholders got £2.50 or £2.60 when the company went into administration. I can tell him that the shares were at £2.80 when he effectively put Railtrack into administration, and the shareholders were compensated at just £2.50. I am happy to correct that assertion and to cover another point that I wanted to mention about the right hon. Gentleman's contribution.
Make no mistake: this is not an argument about whether we think Railtrack was a good or a bad company. It is not even an argument about whether we think the directors of the company were running the company correctly. There is well established company law to deal with all those matters. If the company was trading insolvently, just as if my company were trading insolvently, there are laws to deal with the directors in such instances. It is not good enough for the Government or the former Secretary of State for Transport, Local Government and the Regions to say that because the company was inefficient, or even if the company was in some way acting incorrectly in a legal sense, the only choice was to force it into administration, yet that is exactly what happened. The critical point is that it happened without reference to the House.
The same argument is used about the independent rail regulator and the idea that he could not have been approached differently. We have heard about the e-mails that were flying about. In one, the Government were concerned that the rail regulator might thwart them, and they considered the Office of the Rail Regulator a "total wild card". In the e-mails of September and October 2001, the Government said that if they could not silence the regulator, and if he stood up to them, the plan to keep the company solvent would be "up the creek". In other words, the right hon. Gentleman feared the rail regulator.
Time is short and it is important that we allow for sufficient summing up on both sides. As we have seen from today's debate, the project code-named operation Ariel was anything but whiter than white.
It gives me great pleasure to make one of my occasional guest appearances at the Dispatch Box.
I have followed the Railtrack case since the evidence in the court case first began to reveal to the public exactly how the whole process came about. One of my key interests in politics during this Government's period in office is the way in which standards in public life have been reduced and the way in which the Government have changed the decision-making process. In the past eight years, most of the proper process has been subverted by the way in which new Labour operates, of which the Railtrack case is a prime example—indeed, it is the best example that we have seen so far, because of all the evidence that has come out.
When the evidence on the Railtrack case came out, it did not get the publicity that it might have received because it followed the tragic London underground bombings. Then we had to wait for the judge to pronounce on whether the then Secretary of State was motivated by personal malice towards the shareholders. Today, the Government are trying to evade responsibility by introducing general arguments about the privatisation of the railways and the competence of Railtrack's directors, whom I will not defend. They are avoiding not only the decision itself, but the very way in which the decision was taken and the processes by which the ultimate insolvency occurred and the situation we face today arose.
This Government took over eight years ago, and they have changed the way in which the Government operate, to the detriment of good decision making and the proprieties of public life, such as openness to the public and accountability to this Parliament. They no longer follow any proper system of Cabinet government, collective responsibility or recorded open decision making. I have been through all the papers and, so far as I can see, no Cabinet paper was ever produced and most Ministers, including most members of the Cabinet, had no idea what was being planned. That is a classic example of informal decision making on the sofa of one Minister or another. The only people who had the first idea what was going on were the Prime Minister, the Secretary of State for Transport and his then colleagues and, crucially, the Chancellor of the Exchequer, who played a key role throughout.
Meetings were unminuted, and many departmental officials did not leave their fingerprints behind. Fortunately, not only were one or two minutes kept, but a series of extremely reckless and unsuitable e-mails went flying between Departments. The former Secretary of State has said that the Department willingly produced some of the information, when the whole ghastly tale began to be revealed.
This Government do not follow any of the normal rules of parliamentary accountability. We have just heard the right hon. Member for North Tyneside (Mr. Byers) discuss his intention to legislate, to which I shall return in a moment. This House was never informed about any Government plan to legislate to take away the independent regulator's powers. Indeed, when the report of the court proceedings was recently released, it came as a revelation to all hon. Members and to most Ministers.
In my opinion, the best example of the absence of parliamentary accountability is the lack of any appearance by the Chancellor of the Exchequer or even, so far as I have observed, any Treasury Minister. The Opposition motion is extremely critical of the Chancellor of Exchequer, because his special adviser orchestrated the policy and because he was mainly responsible for the way in which the Government planned to restructure Railtrack. I cannot remember a Minister who, having been personally chastised by a motion on the Order Paper, did not bother to stick his nose around the corner of the Chair, and it will be interesting to see whether his name appears in the Division list.
In my opinion—I am sorry to give this news to anyone who has not heard it—the Chancellor of the Exchequer will be the next Prime Minister of this country. Under the present Prime Minister, standards of parliamentary accountability have declined to a quite unacceptable degree, but I fear that the next Prime Minister will make the present one look like a democratic saint. The next Prime Minister is a control freak who disdains any criticism on the Floor of the House of Commons and leaves his colleagues to look after such matters for him.
One of the worst things that has been revealed by this case is the undermining of the independence of the civil service and the misuse of the role of special adviser—a subject on which I have previously made entire speeches. The Government always promise to introduce a civil service Bill to restore the independence of the civil service and to protect the civil service when it is made to do things of which it doubts the wisdom; unfortunately, the legislative programme never includes enough time in which to introduce it.
The special advisers in this case acted in an extraordinary manner. I will not repeat all the allegations against the special adviser to the Chancellor of the Exchequer, but she is obviously a formidable lady and she played a leading role. I pity the unfortunate officials in the then Department for Transport, Local Government and the Regions who had to contend with Jo Moore, who is, by all accounts, a very difficult lady, and who ended the ministerial career of the right hon. Member for North Tyneside for the time being.
The Chancellor's special adviser was also obviously regarded as extremely formidable. When she summoned meetings, all the officials attended, and when she gave guidance on the Treasury's view, it was followed. The right hon. Member for North Tyneside, who at least has the courtesy to smile, must remember the times when he wondered who was in charge of his Department. He had to take instructions from the people who came to see him from the Treasury.
Many of my hon. Friends who are present in the House tonight were formerly special advisers to Conservative Governments. I can see five former special advisers, and two of them were special advisers in the Treasury in my time. All those hon. Members will confirm that they would have been sacked if they had behaved like that. If my hon. Friend the Member for Buckingham (John Bercow), who was a special adviser in the Treasury, or my hon. Friend the Member for Bury St. Edmunds (Mr. Ruffley), who was also a special adviser, had sent such e-mails to the Department for Transport and had addressed the Secretary of State and his officials in the same way as the current Chancellor's special adviser, they would have been sacked. However, I would have expected any half-decent Secretary of State for Transport to have thrown out the Chancellor's special adviser and sent her back to the Treasury. When the Chancellor wants to issue instructions, he should have the courtesy to call a meeting and issue them himself.
What were those instructions, and what was the Government's motive? The right hon. Member for North Tyneside has attempted to evade the whole point of the debate. He relies heavily on the fact that the court found in his favour, but it did so because the shareholders had to climb the extraordinary mountain of seeking to demonstrate that he was acting out of a sense of personal malice against them, which they failed to do. The court expressly left open the politics of the matter, and I do not think that a court was the right place to determine the proper conduct of government, the parliamentary process and other things.
I have no personal malice against the right hon. Member for North Tyneside, but he cannot escape either on the grounds of the court judgment or on the evidence he cited, where he was just being disingenuous. He says that he was motivated by a concern for the travelling public, but they are not mentioned—there is not even a passing reference—in the e-mails. [Laughter.] Suddenly, he remembered Hatfield and Ladbroke Grove. There is nothing in the papers about punishment being imposed for the undoubted lapses in maintenance standards at Hatfield and Ladbroke Grove. He talked about how much he resented having the legislation, which was not his creation, that gave the regulator his role, and how it was really all the Conservatives' fault that that was there in the first place. He is a Blairite—a pro-privatiser. When the privatisation of the Royal Mail is proposed, if the Government can sort it out, he might even agree with me on that—I have no idea. During all his years in government he never showed the slightest interest in renationalising anything. For four years, his Government were in office and did nothing whatever to change the structure that they had, including the role of the independent regulator.
Let us have none of this. The right hon. Gentleman and Ms Vadera were not driven by a sense of concern for the travelling public or by a sense of outrage at the evils of privatisation or the rail accidents that had occurred. They were interested in two things. The first, which we have not touched on today and is the subject for a much wider debate, is the Chancellor's overriding concern that the new body that was to be set up should be off balance sheet. That is why it failed and every other device failed. The thing that the Chancellor was most concerned about personally was that it should not appear on the books and that any future debt should be totally off balance sheet.—[Interruption.]
The right hon. Member for North Tyneside (Mr. Byers) has just agreed.
It is impossible to deny it: it is set out time and again as a given. There were 10 commandments, but one was the most important of all—"We must not have an honest Red Book; the public accounts should not reveal the truth about this creature we are going to set up called Network Rail"—and that had to determine everything. If the Chancellor had come here today, we might have had a go at him about this: given that he makes all these speeches about the need to have genuinely independent statistics of value and the importance of having an independent office, what on earth is he doing bullying the Office for National Statistics to reach, as it eventually did, the absurd decision—which no other statistician I know agrees with—that the current debts and liabilities of Network Rail should not be on the public balance sheet? The only reason the Chancellor is able to say that he is following his prudent borrowing rule is that £20 billion-worth or thereabouts of current Network Rail liabilities are shown as being in the private sector—at least, they are not included in the public debt and are never used when the Chancellor describes his actual fiscal position.
So the Government's first main motive was to keep any debt off the public accounts—that drove everything and virtually stopped any other solution being chosen. The second, and the one that caused all the concern after the case, was that they must get hold of the assets of Network Rail either free of charge or at minimum cost, at the expense of the shareholders. That is what makes this example of abuse of public power particularly bad. All of us politicians, and anybody with a concern for public life, wish to see Cabinet government, the independence of the civil service, and proper accountability to Parliament. Those are very important constitutional issues. Sometimes the victim is public interest generally, and the problem is one of the proper administration of affairs. In this case, people were the victims—the shareholders whose assets had to be acquired, at minimum cost. The shareholders—I will not repeat the quotes, as they have featured often in the debate—were treated with total contempt, even being described by the Chancellor of the Exchequer's special advisers as grannies who would lose their blouses. The special advisers did not often mention the railwaymen. Ninety per cent. of the staff of Network Rail had shares in their own company. They were the shareholders. Conservative Members have been accused of being more concerned about 250,000 shareholders than about the travelling public. A quarter of a million of our fellow citizens—not all of whom were small shareholders, but very many of whom were—were to have their assets taken from them at the very minimum cost to the Treasury. All these heaps of paper are taken up with constant contrivance to achieve that result.
Does the right hon. and learned Gentleman accept that the share price of Railtrack had dropped dramatically—to £2.80, as I recollect—as a result of the ineptness of the management? In fact, the shareholders got £2.50, having estimated in March that the actual value in the company was only 60p a share. How were they being robbed?
They were obviously wrong in March. Everybody seems to have left to try to work out what assets would be available if the company was wound up. The price did go down to £2.80, which was below the level that the company had been floated at. It had at one time been £17. The fact is that we will never know what the value of the company would have been if the proper process had been followed. I shall turn to that in a moment.
This company was not insolvent. We do not know what would have happened if a proper financial review had been conducted, because the right hon. Member for North Tyneside did not allow it.
I will give way in a moment, but I am about to move on to the key question, which the right hon. Gentleman has not answered. Before asking me his question, will he agree that the main aim was to get the company into insolvency—that is repeated time and again—and to get the assets at low value? Can he find any expression of concern for the shareholders in these documents, apart from the fear of class actions in the United States—the Government were very worried about the American shareholders, who are litigious—and the fear of the institutional shareholders, who decided to cut their losses and bale out? If he will answer that, I will answer whatever question he wishes to ask me.
I know that the right hon. and learned Gentleman—[Hon. Members: "Answer!"] I am going to answer his question in two parts. First, he should read the judgment to see what the judge says about the way in which the term "grannies" was used; he is very clear about that.—[Laughter.] It is interesting that Conservative Members have obviously not read the judgment.
Secondly, the right hon. and learned Gentleman—this is the point on which I tried to intervene on him—is saying that taxpayers' money should have been used to give value to Railtrack shareholders. He must recognise, as the architect of Railtrack, that the regulator gives taxpayers' money as a result of any interim review, so he is saying, on behalf of the Conservative party, that taxpayers' money should have been used to increase the value of Railtrack shareholders.
On the first point, I concede that there are occasions when the word "grannies" can be used as a term of endearment, but it is not my interpretation that that was the tone being adopted by the Chancellor's special adviser.
On the second point, the right hon. Gentleman is misinterpreting what we are saying, as he and his right hon. and hon. Friends have done throughout the debate. We are not saying that if there had been a Conservative Government we would have put in a whole lot of money that the Labour party would not have put in. We are defending the then legal position of the independent regulator, which was undoubted. It was not for the Secretary of State to decide whether the company was solvent or received any income. We had legislated, I agree, for a situation whereby it was not a decision for the Secretary of State. The regulator had a statutory duty to make provision for these things. The whole basis upon which Railtrack had been floated was that of investment in the company by the shareholders. Of course the shareholders took a risk, but their measurement of that had to be based on what the judgment of the statutory regulator might be. That was the law—the right hon. Gentleman had made no attempt to change it. He acted because he feared that the powers of the regulator would stop him proceeding to his chosen route of insolvency.
Will the right hon. and learned Gentleman confirm that, in line with the structure that he helped to create, the trigger for the review would have been a request from Railtrack's directors? If so, will he concede that they made no such request?
That is poor mitigation. The right hon. Gentleman is accused of a crime—I use the word loosely; he is accused of an offence—yet he says, "I now realise that I needn't have done it." It is surprising that Railtrack did not resist. As I shall show, it was offered the opportunity to resist but it did not take it. It amazed the Government and it slightly amazes me that Railtrack did not challenge the administrative order. The right hon. Gentleman did not expect that; that is not what he was warned it would do.
Let me make it clear again: I do not defend the board of Railtrack. Those who say that the shareholders and the travelling public have cause for complaint against the board of Railtrack have some grounds. It was in a lamentable state and I accept that any Government would have been obliged to consider restructuring the company to put it on a sounder footing, and to decide what had to be done to make the privatised railway, which the Government continue to run, work better. We are arguing about what they did and how they did it. They chose the route of insolvency and subsequently realised that they did not have the legal power to make the company insolvent because all the relevant powers were in the hands of a regulator.
The Government held all sorts of private discussions. The lady from the Treasury pointed out that the regulator was the truly wild card. We have heard about all the connotations and how it was made increasingly clear to the Government that the chosen route of insolvency could be stopped by Tom Winsor, the regulator. They were discussing his, not their powers. The then Secretary of State for Transport cooked up the idea of legislating to take away the regulator's powers to make any decisions about the company's financial state or to give it any financial support. That was catastrophic. The regulator's decisions determined 90 per cent. of Railtrack's revenue. The train operators paid it for the use of the track and the signalling, and the regulator determined the amount. He had wide powers to undertake a financial review. The Government decided to make the company insolvent because that was the cheapest way of proceeding, but suddenly became aware of the existence of a truly wild card—a guy who had the legal power to do something about it.
Will the right hon. and learned Gentleman give way?
I shall do so for the last time because I do not want to detract from the main point.
I am grateful. I allowed the right hon. and learned Gentleman to intervene in my speech on several occasions. Is not his problem the fact that Railtrack knew that it was insolvent? It unquestionably could not pay its debts. It had been telling the Government for six months before October 2001 that it was in deep financial trouble. It might have wanted to approach the regulator, but not to get a second opinion about whether it was insolvent. The only reason for going to the regulator was to get barrel-loads of public money to stop it being insolvent. For that reason, the right hon. and learned Gentleman's argument falls down. We are not considering a company that was solvent in October 2001. By its own admission, it could not pay the debts and it wanted "millions of pounds by Monday morning". It could not get that.
It was for the regulator to decide whether the company was insolvent. Railtrack knew that as well as the then Ministers. Railtrack despaired of following that route. Regardless of what it requested, it was up to the regulator to decide whether to give it anything. The regulator was independent and had rightly been severe about Railtrack's past performance. However, the route of approaching the regulator was cut off.
The former Secretary of State has no answer to the question of why he got, in a meeting, the Prime Minister's personal authority to legislate, unless he feared that the regulator would produce a financial arrangement that would block the insolvency. There was no need to ask the Prime Minister for legislation if the regulator intended to do nothing. There was no need to contemplate emergency powers if Railtrack had accepted that it would not approach the regulator. The only reason for the device was to force an insolvency that the regulator might have stopped.
The former Secretary of State told the regulator of his intentions only on the Friday before the Sunday when he made the application for the insolvency. I shall read the judge's account of the evidence that was given about the meeting with the regulator when the then Secretary of State told him of his intentions. Tom Winsor said
"that Mr. Robinson's reaction would be likely to be an immediate application for an early interim review. Mr. Byers said that that had been thought of and that if such an application were made he had the authority (as he had) of the Prime Minister and Chancellor immediately to introduce emergency legislation to entitle the Secretary of State to give instructions to the Regulator. Mr. Winsor pointed out what adverse effects such legislation would have not just on railway financing but on regulated industries generally. He spoke, too, of implications under the Human Rights Act. He made no headway; Mr. Byers said an application to put the company into Railway Administration would be made on Sunday."
The regulator was told that if he acted he would be sacked and that, even more important, his powers would be taken away. That makes it clear that there was only one motive: to ensure that he could not undertake a financial review and the company could not be rescued.
Railtrack rolled over on the Sunday. It did not oppose the administration. By that time, it was disheartened, but the regulator had tried to stiffen its resolve. By Saturday, Mr. Winsor was talking to the chief executive of Railtrack. The judgment states:
"Mr. Winsor, on the subject of the threatened legislation, pointed out that it would take time to be passed and was a difficult card for the government to play. It would be likely to be resisted by reason of its effect on other regulators and other regulated industries. It would be hard fought and might not be passed at all, but, despite that, Railtrack showed no interest. He suggested that they might call the government's bluff but Mr. Robinson just repeated that the government would do it."
The unfortunate Mr. Robinson had lost heart and despaired. He considered a financial review and was told that the Government would legislate to remove the regulator's power and that there would be no review. The independent regulator invited him to call the Government's bluff because it would not have been easy to get the measure through the House. However, it was lucky for the right hon. Member for North Tyneside and the Government that Railtrack had finally had the stuffing beaten out of it. It was presented with a pistol but it did not fire it. It agreed to administration and the victims were the shareholders—the people who never discovered what the value of their company might have been. The scheme of putting the company into administration had been successful because the people in charge of Railtrack would not ask for a financial review. When told that the Government would legislate, they despaired.
It is a sorry and disreputable story. It shows the process of government being subverted and misused. It shows motives that would never have come to light without the litigation. Only when the shareholders came to court did anybody know anything about the stage-by-stage discussion, planning and plotting that had gone on between a few people to produce such an appalling result. That is why we have tabled the motion and why the debate is important.
Sooner or later, the style of government must be improved. When the current Chancellor becomes Prime Minister, my red hot tip for his successor is the current Secretary of State for Transport, who led for the Government in the debate. I hope that he raises the standard of government by an inch or two. To be fair to him, he did not defend all the processes that had been used; he tried to defend only the decision.
To show that the matter is not simply a bee in the bonnet of Conservative politicians, I shall quote the comments that Simon Jenkins made in The Sunday Times on 17 July, when the judgment came out. [Interruption.] He is an independent commentator. He has said rude things about me in the past month or two, and about many other hon. Members. It is no good groaning about independent critics. He is also careful what he says:
"The case is of massive significance to the integrity of British politics. It is the common man against Leviathan, the evidence portraying squirming ministers, bullying officials, money beyond dreams of avarice, chicanery and lies. Laid bare have been the inner workings of Tony Blair's courtier style of government. The Scott inquiry into arms-for-Iraq was small beer in comparison. The case tells us more about Whitehall's view of the world than ever did Hutton. It deserves a Spielberg movie to itself."
I cannot say that that is overstated. I do not think that it is understated, either. We have had an opportunity, because of the court case, to see the veil ripped away and to see what actually happens in the new Labour Government when they handle a controversial decision. It is not a pretty sight. The Government should not escape censure for that, nor should the then Secretary of State for Transport, Local Government and the Regions. But the person who should be held responsible above all for this dreadful mess is the Chancellor of the Exchequer.
Finally, with the right hon. and learned Member for Rushcliffe (Mr. Clarke), we have at the Dispatch Box one of the real authors of the Railtrack misfortune. The party that says that it wants to look forward has given us a perfect opportunity to examine its past and rolled out one of its crustiest dinosaurs for us to have a look at. But the fact that the dinosaurs could roar did not mean that they were not finished.
There was not a word of apology from the right hon. and learned Gentleman. We did not hear a word about his role in the creation of Railtrack.—[Interruption.] We did not hear a mutter of regret from any of the sad remnants of the Major Government who are sitting on the Front Bench today; I can see at least three of them. There was not a breath of apology, not a murmur of regret, so let me start by putting the record straight.—[Interruption.]
Order. The House must come to order.
The disaster that was Railtrack had its origins in the botched privatisation of the railway system, for which the Government whom the right hon. and learned Gentleman served were totally responsible. It was a disaster born of a feckless, economically illiterate and weak Government who were determined to force railway privatisation on the nation, whatever the price. As the price mounted, did the right hon. and learned Gentleman, who after all became Chancellor of the Exchequer before the privatisation was complete, once count the price? When he became Chancellor and the sale was being forced through before the general election, did he put his foot down and block the bargain basement disposal of national assets? Not at all. On the reorganisation of Railtrack, he was silent. When railwaymen and engineers were being elbowed from the board and replaced with retailers and property men, he did not utter a word to stop it—not a murmur.
In an intervention, the right hon. and learned Gentleman said that, when he was in office, things would not have been done as they were done by this Government. He said that the Conservatives would have convened a Cabinet Committee and exchanged ideas in memos. Did those memos and those Cabinet Committees stop the disaster that was Railtrack? Instead, that Government and that Chancellor pushed ahead. If anyone has lost money on Railtrack, if railway travellers wonder why rebuilding the railways has taken so long, and if taxpayers want to know why so much money went into the pockets of Railtrack for so little return, they need look no further than that Conservative Government and the right hon. and learned Gentleman. If they want to know what the Conservative party would have done in the same circumstances, they need look no further than the comments of Tory Front Benchers—[Interruption.]
Nor from Tory Front Benchers was there a word of regret. There was none of the humility that the hon. Member for Carshalton and Wallington (Tom Brake) suggested we should see from them. They have made it clear that, in the same circumstances, they would do what they did then, all leading to today's master-class in denial.
My right hon. Friend the Member for North Tyneside (Mr. Byers) reminded us of the state of the railways at the time. He reminded us that the neglect of those railways led directly to Hatfield. Not only was Railtrack insolvent, but it was not even fulfilling its basic obligations to maintain the railway.
The hon. Member for Ashford (Damian Green) alleged that we wanted to renationalise, but provided absolutely no evidence of that. He mentioned special advisers. The role of such advisers was dealt with in some detail in the judgment, but time and again, Conservative Members said that those advisers were not considered in the judgment. I do not think that they have read it. They were dealt with in detail and that judgment vindicated the Government every step of the way.
On the matter of advisers, I quote directly from the judgment:
"Until a policy decision is made, at which point the government can be expected to present a united front in support of that policy, there are likely to be very different and often conflicting arguments within the several ministries or departments likely to be affected by the decision . . . One can thus expect, before a policy issue becomes a decision of government, that Ministers will be found to be expressing very different views as the prospective policy is thrashed out. Still less, at that or any stage, will views expressed by Ministers' respective Special Advisers be the views of government rather than their commonly being their individual attempts to argue their corner in support of what they know to be or what they hope to be their Minister's inclinations or with a view to leading the Minister to the inclination which the Special Adviser prefers."
It is clear that the judgment specifically dealt with the role of special advisers.
The hon. Member for Welwyn Hatfield (Grant Shapps) mentioned that he was a director of a small business and said that its shareholders would be horrified at the idea that Government could take away their shares. The Government did not take away the shares of those who invested in Railtrack. Those shareholders were paid between £2.50 and £2.60 for each of their shares.
If insolvency was absolutely inevitable, why did the Government try to intimidate the rail regulator and threaten him with abolition?
Insolvency was not only inevitable, it was a fait accompli because the directors of Railtrack themselves had admitted that the company was already insolvent. That comes out of every page of the judgment. It comes out of every page of the witness statements. It comes out of every page of the bundle of evidence provided to the courts. What comes out of every single page of the judgment is that the Railtrack directors understood themselves that the company was already insolvent. They even had a document that told them that, when the company shares were trading at £8, they were worth just 60p. They even got a letter from one of their own advisers saying that 60p was an exaggeration and that the shares were actually worth 58p. The Government did not make Railtrack insolvent—it was insolvent all along.
Indeed, post Railtrack being put into administration, the Government did act, when restructuring the industry, to provide £500 million for the shareholders of Railtrack, so the idea that we took away the shares and—
Will the Minister give way?
I have no time. I am sorry. The right hon. and learned Member for Rushcliffe was only supposed to speak for 20 minutes, but like all his promises when in government, he broke that one, too.
I put it to the hon. Member for Welwyn Hatfield: what role does he think directors take in running a company? Whom should shareholders blame when things go wrong in a company? If his company went into insolvency, would he think that he had a right to go to his major customer and demand that it provide more money in return for no more services, just to keep his company going? Of course he would not.
As we have heard, the judgment is a complete vindication of the Government's position. After weeks of evidence and weeks of cross-examination, the judgment found—[Interruption.]
Was gibberish a compliment, then, on the part of the judge?—[Interruption.]
I am sorry, but I could not hear what the hon. Gentleman said because his Conservative colleagues were making so much noise.
The Government were right to put their contingency plans in place, and the idea that the Government should have funded Railtrack without limit and conditions was, in the judge's own words, a "hopeless proposition". The judge described what was the reasonable perception in Government of Railtrack in 2000 and 2001:
"It was seen as 'frankly a mess', with weak management at the zonal levels. It was pilloried in the Press for bad management. It had difficulty even in funding the necessary regular maintenance. It had major projects without the skills to manage them. It was being ground down by the Regulator (so said its own advisers)."
It was not the Government who sought not to go to the regulator. It was Railtrack itself that proposed to the Government that they should bail it out by giving it unlimited money, and freedom from the regulator for four years. When putting those plans to the Government, it insisted that the regulator should not be told about them.
The directors of Railtrack were directly responsible for the management of their company. The Opposition Front-Bench spokesmen and the remnants of the Major Government need to take responsibility for the fact that they put incompetent people on the board of that company, which led directly to its collapse and to the problems that we have experienced in the rail industry. The Labour Government have been vindicated, every step of the way, by the judgment. I suggest that we regard the Conservative motion in the same way as the judge described the shareholders' proposition: it is a preposterous idea.
Question put, That the original words stand part of the Question:—
Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments):—
forthwith declared the main Question, as amended, to be agreed to.
Resolved,
That this House welcomes the judgement in the recently concluded Railtrack court case which, after weeks of evidence fully tested by cross examination, completely dismisses the claimants' allegation of wrongdoing on the part of Government; further welcomes the fact that the judgement exonerates entirely the way the Government responded to its growing concerns about Railtrack's financial position and the propriety of the process that led to Railtrack being put in Administration, including the Government's stance in relation to the Rail Regulator; notes that the judge described Railtrack's request for unlimited public funding and support, which was made in part to maintain its share price, as a "hopeless proposition"; and that there were good public reasons for the policy developed; congratulates the Government for bringing under control the situation which resulted from the previous Government's botched privatisation and putting ownership of the track into the hands of a not-for-dividend company operating in the broad public interest; and recognises the significant progress that is being made by Network Rail in improving performance on the railway and in bringing costs under control, in stark contrast to the management incompetence shown by Railtrack.'.
Licensing Laws
We now come to the motion on licensing laws. Mr. Speaker has selected the amendment in the name of the Prime Minister.
I beg to move,
That this House notes the growing public concern that the Licensing Act 2003 will increase levels of violent crime and anti-social behaviour; observes that the cost to the taxpayer of rising alcohol-fuelled crime and disorder is already £12 billion a year; objects to the presumption in favour of late-night drinking irrespective of the views of local residents and local representatives; disapproves of the disproportionate burden of administration and increased costs for village halls, sports clubs and community centres; calls for local councils to have greater discretion to take into account the interests of their local community; and calls on the Government to cancel the full commencement of the Act and overhaul the primary legislation.
It is a matter of record that, since the Committee stage of the Licensing Bill, my party has consistently raised our concerns about the implications of the Government's proposal to introduce extended licensing hours. Both in Committee and since, we have argued that the drinking culture in the UK—in particular, the culture of binge drinking and the explosion of alcohol-fuelled violence and antisocial behaviour— has made the Government's plans dangerous and foolhardy.
Ministers offered us a number of reassurances in Committee. At the same time as promising that Labour could not give a XXXX for drinking-up time, the Prime Minister was also pledging:
"We will tackle the unacceptable level of anti-social behaviour and crime on our streets. Our 'zero tolerance' approach will ensure that petty criminality among young offenders is seriously addressed."
The reality on our streets is very different. There are now 1 million violent crimes a year and, in the three months to June, police recorded 318,200 violent crimes—up 6 per cent. on the same period last year. A particularly worrying statistic is that half the violence is due to binge drinking.
Is the right hon. Lady aware that the hon. Member for Witney (Mr. Cameron), the bookies' favourite to become the next Tory leader, has publicly declared his support for the Government? In the Oxford Journal, he said:
"The idea behind the Bill is to liberalise the licensing laws, simplify the system for getting an entertainment licence and let pubs stay open for longer, so long as there is no public nuisance. I would say 'amen' to all those things."
Given that—
Order. An intervention must be brief.
We have always said that it is about getting rid of the binge drinking culture. There are indeed powers in the Bill that my hon. Friends and I welcome, but I wish to concentrate on extended licensing hours and the problems that they will cause for people up and down the country, including the constituency of the hon. Member for Burnley (Kitty Ussher).
Two thirds of sentenced male prisoners—about 50,000 men—have admitted to hazardous drinking, and 25,000 of them have a severe alcohol dependency. Does my right hon. Friend agree that it is not surprising that the Government are in dereliction of their duty, because not one prison has a ring-fenced programme for dealing with alcohol problems?
My hon. Friend has made an important and valid point. She has spent much time examining the issues that we need to address if we are to ensure that prisoners can deal with problems such as drink. Under the current arrangements, there will be even more problem drinking and it is likely that even more people will end up in the position that she highlighted.
Has my right hon. Friend noticed that the point made in the earlier quotation from the Oxford Journal concerned the intentions behind the Act? Whatever those intentions were, the measure is badly constructed and has been badly introduced. The promises about safeguards that were made to our party and to others have been largely forgotten.
My right hon. Friend is right. It is disappointing not only that those safeguards have been forgotten but that Ministers continue to give those assurances to this day, despite the fact that it is patently obvious that our concerns have not been met.
Everyone in the House shares the right hon. Lady's concerns about binge drinking, so I hope that she will not suggest otherwise, but will she address the facts on the table rather than the myths that are being peddled? Scotland has had staggered licensing hours for some years and everyone involved, including the Association of Scottish Police Superintendents, has concluded that they have had far fewer problems with binge drinking as a result. Why has the right hon. Lady not taken that into account?
The Act has not resulted in staggered hours. Binge drinking is not a myth—it is a problem on the streets of our towns and cities. If the hon. Gentleman wishes to express concern about binge drinking, he has an easy option: he can join us and vote for the motion.
The cost to the taxpayer of the explosion of alcohol-fuelled crime and disorder is £12 billion a year, which is £5 billion more than the original estimate by the Downing street policy unit. I am not alone in thinking that extending licensing hours when we have an explosion of alcohol-related crime is sheer lunacy. Many hon. Members on both sides of the House have expressed concern about the impact of the new law. Earlier, in Culture questions, I cited the concern of three senior police officers, including Commander Chris Allison, the licensing spokesman for the Association of Chief Police Officers, who said:
"We are seeing hundreds of licensed premises applying for an extra hour during the week and two at weekends. People are going to drink more because of longer hours and there will be lots more crime and disorder."
The Secretary of State told me that I should not quote one senior officer selectively. I did not do so then and I will not now. The deputy chief constable of the British Transport Police warns that police believe that extending licensing hours could lead to
"more binge drinking and violence".
The chief superintendent of Derbyshire constabulary warned that
"all-night opening will have significant implications for both the police service and peace in the community."
He went on to say:
"Domestic violence often follows drinkers' arrival back at their home address. This is likely to be more frequent and prolonged than it currently is. This will affect violent crime statistics."
The deputy chief constable of north Wales said that it was "inevitable" that there would be
"an increase in violence of all types despite our best efforts".
I could cite more warnings. It is clearly not just me who is worried about the impact of the new laws.
I used to chair the public health committee at Newcastle city council. We conducted experiments during Euro 96 and on millennium eve, when we did not have any closing hours. The police are on the record as saying that far fewer people were arrested for violence and disorder on those two occasions than on a usual Friday or Saturday night. The right hon. Lady should consider that experience rather than picking out quotes.
I accept that the hon. Member for West Bromwich, West (Mr. Bailey) is keen to intervene, but he might let me answer the question from his hon. Friend the Member for North Durham (Mr. Jones) before popping up to ask one of his own.
One cannot extrapolate consistent consequences from the experience of just two nights. The problem is not staggered hours but people being disgorged on to the streets at 1 or 2 am—
Staggering home.
Indeed, the problem is people staggering home rather than staggered hours.
I wish to give my right hon. Friend a further example not only of a police officer objecting to the current arrangements but of the consequences of doing so. The chief superintendent in charge of the Isle of Wight police has complained that she cannot provide the resources to police Newport, Ryde and other towns at 3 or 4 am if long licensing hours are approved. The response of licensing officers for the Isle of Wight council was that that was not a valid objection under the law that the Government pushed through.
My hon. Friend makes an important point and I shall come to the problem of valid objections. That chief constable is not alone in her worries about police resources. Many police forces up and down the country have said that it will be difficult for them, with existing resources, to manage extended licensing hours and the resultant problems.
I shall give way first to the hon. Member for West Bromwich, West (Mr. Bailey), who has been assiduous in seeking to intervene, and then to my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski).
The right hon. Lady quoted selectively from ACPO, so may I give her another quote from that organisation? It says that
"it still has concerns about binge drinking and the consequences of longer opening hours in some cases. The answer to this is changing the behaviour of customers and proprietors as well as strong licensing regulations."
Does the Act not do just that?
That is the whole point. The Bill does not do just that. I suggest that the hon. Gentleman look at the comments made by Commander Chris Allison of ACPO, who said:
"Since our first submission to the government in 2000, we have consistently raised genuine concerns over the possible effects of extending the hours during which people can drink given the culture of excessive drinking that already pervades our society."
That is the point. The Bill does nothing to destroy that culture of excessive drinking. In fact, it encourages it.
My right hon. Friend said that the Act would adversely affect constituents in towns and cities. I would also like to mention the many people in the rural villages near Shrewsbury in Shropshire. Many senior citizens have come to my surgery to tell me how worried they are about the effect that the legislation will have on village life, with some pubs planning extensions until 4 am. Many senior citizens choose to live in small rural villages so as to have a peaceful, quiet life.
My hon. Friend is right. People's quality of life will be badly affected when the legislation comes into force, but even at this late stage the Government have an opportunity to think again.
Will the right hon. Lady give way?
No, I want to make some progress.
It seems that the Prime Minister agrees with us about the binge drinking culture. Last year, he said that
"as a society, we have to make sure that this form of what we often call binge-drinking doesn't become a new sort of British disease".
I say to all Labour Members that there is one way to do something about that: they should vote with us tonight to tell the Government not to extend licensing hours, because that will encourage the binge drinking culture.
Will the right hon. Lady give way?
No, I want to continue to make some progress.
In previous debates, and during Culture questions today, Labour Members have raised the issue of police powers to tackle the problem. However, I question whether existing powers are being used to tackle under-age drinkers and other problems related to drinking. The number of people found guilty of, or cautioned for, offences of drunkenness has fallen by almost 10,000 since 1997. The number of people under 18 found guilty of, or cautioned for, buying intoxicating liquor has fallen by 81 per cent. since 1997. In 2003, only 53 teenagers were found guilty of, or cautioned for, buying or trying to buy alcohol. I would welcome new powers to deal with the problems of alcohol and young people, and with problem pubs and clubs, but existing powers also need to be used effectively. It is rich of the Government to say that the Act must go ahead because it gives the police extra powers to deal with problem drinking when it will actually exacerbate the problem.
When the legislation came before Parliament, colleagues on both sides of the House were given certain assurances, as my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer) said. Ministers claimed that the new laws would give greater powers and discretion to local councils, and that local residents would have greater powers to deal with rowdy pubs and to shut down those that encouraged violent or antisocial behaviour. We were also assured, time and again, that the new laws would lead to the introduction of what the Prime Minister calls a European-style café culture. Tell that to the Council of Her Majesty's Circuit Judges, which, in its submission to Home Office consultation earlier this year, warned that
"those who routinely see the consequences of drink-fuelled violence in offences of rape, grievous bodily harm and worse on a daily basis, are in no doubt that an escalation of offences of this nature will inevitably be caused by the relaxation of liquor licensing which the Government has now authorised. We regard it as simply wishful thinking to suppose that the introduction of the Licensing Act will bring about the cultural change which Government envisages".
I find it incredible that, at this late stage, the Opposition are objecting to an Act that will expand police powers, give local authorities additional powers to refuse licences and enable tougher action on under-age drinking. More importantly, in January 2005, the current leader of the Conservative party said:
"If a local authority is given real power to decide, which the Government is not giving them, and if the local people in the area say, 'We'd like 24-hour drinking', why shouldn't they have it?"
Now—
Order. Interventions must be brief.
It just seems that there has been a change of attitude on the Conservative Benches.
I would welcome greater powers for local residents to have a say in what happens in their locality but, while the role of the magistrates has been transferred to local councils, the result of the Act in practice is that the new system fails to provide a proper say for local communities.
Will the right hon. Lady give way?
No, I want to make some progress.
Let us examine the detail of the Act's implementation. Applications are automatically granted unless an objection is made. However, only certain people are allowed to object. For example, residents can object only if they live in the immediate vicinity of the premises concerned. The definition of "vicinity" is down to the local authority. There are plenty of examples of local authorities that have adopted definitions such as 100 yd or 150 m, which has resulted in people being unable to object to applications for licence extensions until 6 am because they live 150 yd away from the pub or nightclub. They are told that they cannot object because they do not live close enough to it. Those who decide to take their objection to a magistrates court find themselves threatened with legal bills of thousands of pounds because they are responsible not only for the licensee's costs but for the costs of the local authority.
May I express my concern at the right hon. Lady' s lack of faith in local authorities? In Blackpool, the local council has certainly not decided on some arbitrary distance from an establishment. It has allowed anyone in the town to object to a licence application. Those objections then go to the licensing panel, which listens to everyone who has made an objection. It listens to the police and to the local community before reaching an informed decision on behalf of the people it represents. Will she acknowledge the hard work carried out by local councils—
Order. Again, I must say that interventions must be brief.
If there is a council that is genuinely taking local people's concerns into account, I am pleased to hear it. However, the hon. Lady might wish to go back to her local council and point out that, under the terms of the Act, it can take representations and objections only from people who live in the vicinity of the establishment concerned and that, under the DCMS guidelines, it has to give a definition of what "in the vicinity" means.
Is the right hon. Lady aware that counsel's legal opinion given to Colchester borough council is that elected councillors are not permitted to make representations on behalf of their constituents unless they have received a letter from a constituent first?
The hon. Gentleman makes an important point, which I shall address in a moment.
Is my right hon. Friend aware that parish councils are not statutory consultees under the Licensing Act? Is not that a scandalous omission, since they can best reflect the impact on their communities of a proposed application?
Indeed. I fear that that represents yet another example of the Government's attitude towards parish councils—trying to sideline them at every opportunity.
When I referred to the costs incurred by people taking their objections to the magistrates courts, I noticed the Under-Secretary of State for Culture, Media and Sport, the hon. Member for Stalybridge and Hyde (James Purnell) sitting with a smile on his face, apparently suggesting that I was wrong. I suggest that he talk to Labour councillors in Newcastle, where two councillors have been left with a £2,100 bill as a result of taking an appeal to the magistrates court. That is the kind of bill that people are facing.
So much for this legislation giving local people more powers. In reality, there are few powers to hold pubs and clubs responsible for rowdy or drunken customers once they are outside the licensed premises, even if the nuisance was caused by the pub having served them the alcohol in the first place. Councils and police cannot use nuisance and noise from outside a licensed premises as grounds for a closure order against a particular venue. Pubs and clubs can only be penalised if they make excessive noise from inside a pub, so licensed premises cannot be held responsible for the antics of their drunken customers leaving in the early hours, ruining the lives of those living nearby in the process. Again, as Commander Chris Allison of the Association of Chief Police Officers has said:
"We cannot just willy-nilly object because as soon as we object to a licence the licensee has a right to appeal and we have to provide evidence linking the premises with disorder. Often the disorder is a half-mile or more away from pubs".
Noise is not just car doors slamming, taxis drawing up and the general noise that comes with people leaving a pub very late at night. Many pubs also have beer gardens and people who live in the surrounding area might easily be kept awake until 1 or 2 am. The quality of their lives will be affected.
That is exactly what this is about: binge drinking and its impact not only on those who indulge in it but on local residents who live around such pubs, whose lives will be made a misery as a result of this Government's legislation.
The right hon. Lady is right to identify irresponsible licence holders or retailers selling alcohol, but she will also be aware that the Violent Crime Reduction Bill contains a provision to deal with them. Can she explain why her party voted against it, as did the Liberals and the nationalists?
If the powers are there to deal with irresponsible licence holders, I suggest to the hon. Gentleman that if he wants to do something about binge drinking, he vote with us tonight to ensure that this Government do not implement an Act that can only lead to more violence and disorder on our streets.
To return to what can be considered by a licensing committee, the advice given to one such in my constituency is that, in the absence of police evidence, it cannot consider complaints from people who live in the vicinity of a pub about what has happened. Given that the rural police force is rather stretched in my part of the world, it is unlikely that such evidence will be brought forward by the police.
Indeed. Of course, given that the police must bring forward evidence that there is disorder related to the pub rather than disorder in the streets, I assume that, effectively, there can be no objections—
A rubber stamp.
Indeed, it is just a rubber stamp. So much for local accountability.
Will the right hon. Lady give way?
No, I shall make progress.
The hon. Member for Colchester (Bob Russell) raised the issue of councillors and their position. We were told that they would have far more powers to tackle nuisance pubs, but, as he says, they cannot lodge an objection in their own right in their capacity as ward councillors. They cannot consider licensing applications from their wards as they might be biased in favour of local residents and, despite having a democratic mandate from local residents, they can object only if they live in the vicinity. In such circumstances, the code of conduct for councillors states that they have a prejudicial interest and should not be allowed even to address the licensing sub-committee, so they cannot speak up, residents are disqualified even if they live close to the pub, and police cannot object—hardly the brave new world of local accountability promised by the Government.
We believe that it is dangerous, indeed reckless, to press ahead with extending licensing hours in this way. It is simply not good enough for the Government to light the blue touch paper and retire to a safe distance. The consequences for our society are too great. Does the Secretary of State really believe that, if pubs are open longer—substantially so in many cases—people will not drink more? If she does, she should speak to David Daly, president of the National Association of Licensed House Managers, who is quoted in a newspaper today as calling these reforms "an absolute cock-up". He represents 3,000 managers of larger chain-owned pubs, and he has said:
"How we make our money is to make people binge drink".
He continued:
"Our fear is that managers will be pressured into selling more and more alcohol in a way that is not responsible. There is no doubt that people will drink more."
It does not take much to work out that, if pubs are open longer, people will drink more.
The Minister assured us when the Bill was passed that brawls at chucking-out time would end and that staggered closing would be introduced. What the licensing laws do is to impose less, not more, flexibility for local councils in deciding closing times, because the Government's guidance explicitly states that councils are to be discouraged from determining fixed closing hours or introducing staggered closing times. Yet stopping the pinch-point of people leaving at the same time was precisely one of the reasons why the Bill was supposed to have been introduced in the first place.
Will the right hon. Lady give way?
No, I have been generous in giving way, and I will make progress.
We have major concerns about the implications of the law in one final area: supermarkets. We have already heard about the problems of teenage drinking. The new laws allow for supermarkets that have planning permission to open 24 hours to sell alcohol during the same period and the Department for Culture, Media and Sport guidance creates a presumption in favour of 24-hour supermarkets having a 24-hour licence for off-sales. We all know the problems caused by many under-age drinkers having access to alcohol as a result of being able to buy it in supermarkets and shops. In effect, we are making it easier for young people to buy alcohol. That does nothing to alleviate the problems of binge and under-age drinking in this country.
We have heard from Ministers previously about those who do not want the changes postponed. They have cited ACPO and the Local Government Association, but they have not cited the growing list, from the judiciary to police officers, from the British Medical Association to the Royal College of Physicians, all of whom warn of the devastating consequences of pressing ahead with the Government's plans. Those are not groups with a political axe to grind—
I am sorry that the hon. Gentleman thinks that the judiciary and the BMA have a political axe to grind. Those are people talking about their experience of what happens with drunkenness on our streets and the violent crime that results from it. They are not people who, as the Minister has accused me of doing in the past, are playing politics. They are concerned people who deal with the consequences of the Government's folly. We can add to that list the many people living near pubs and clubs whose lives will be made that little bit more of a misery when the pub closes not at 11 pm or midnight but 1 or 2 am or later. They are worried, if not frightened, residents who will have to live with the consequences of extended drinking hours.
It is not too late for the Government to listen to the police, the judiciary, doctors and voters up and down the country and say, "Yes, we got it wrong. Let's abandon these plans for extended licensing hours. Let's work together to get rid of the binge drinking culture that damages our society." The question is not whether the Government are wrong, but whether the Secretary of State will have the guts to admit that the Government are wrong, and take this last chance to do something about it.
I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof,
"commends the Government on its effective publicity campaign that, together with the excellent work of licensing authorities, has resulted in 97 per cent. of those needing to make applications having done so, with the expectation that virtually all those who want a licence will have the necessary licence by 24th November; welcomes the involvement of more local residents than ever before in the licensing processes and their ability to influence the hours that premises open near their homes; notes that there is no presumption in favour of late night drinking in the Act and that it is for licensing authorities to decide appropriate hours of trading where any dispute arises; considers that the implementation of the powers to review premises licences after 24th November are a vital step in fighting anti-social behaviour; and believes that delaying the implementation of the Act would be contrary to the wishes of the police, licensing authorities, the Central Council of Physical Recreation, Action with Communities in Rural England and industry and would be an unacceptable waste of the resources and effort put in by those who have been preparing for full implementation since 7th February 2005."
It is the third time this year that Opposition Members have brought to the House the same old argument that the Licensing Act 2003 should not be implemented. As we have heard, they have put forward not a single constructive alternative, laying sins at the feet of a piece of legislation that has not yet been implemented. That argument is just about the most consistent thing about their position on the matter. For all their bluster, they failed to vote against the Bill's provision on extending opening hours when they had the chance to do so, and neither the Conservatives nor the Liberal Democrats tabled any amendments to the provisions about flexible hours in Committee or on Report. Nor did any of their Front Benchers speak against the provisions. Indeed, the predecessor of the right hon. Member for Maidenhead (Mrs. May), the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale), who is currently in the Chamber, said:
"As we made clear on Second Reading, we accept the need for reform of our licensing laws. We support some elements of the Bill. We agree, for instance, with the need for greater flexibility in opening hours, and we accept the argument for doing away with the universal chucking-out time."—[Official Report, 16 June 2003; Vol. 407, c. 172.]
So what have the Opposition done? Yet again, they have caught sight of a passing bandwagon and jumped right on to it.
My right hon. Friend will recall that, both in writing and in conversation with her, I expressed my deep reservations about the extension of licensing hours. I voted for the Licensing Bill in the end because she undertook to review the operation of the Act. If Britain's alcohol problems become worse, will the Government commit themselves to changing the law again in the future?
I have made clear, as has the Under-Secretary of State, my hon. Friend the Member for Stalybridge and Hyde (James Purnell), that the guidance will be reviewed, as will the implementation of the Act. Of course, given that the Act's intentions are to tackle alcohol-related crime and disorder, reduce public nuisance, increase public safety and protect children from harm, when we review it we shall do so in the context of its success in those four licensing objectives. With great respect to my hon. Friend, I think that that goes without saying.
There may be some agreement on just one aspect. Does the Secretary of State agree that if she is to fulfil the promise that she just gave the hon. Member for Luton, North (Kelvin Hopkins), there is one crucial requirement? Before anyone can conduct an assessment of the impact of the law, there must be agreed benchmarks against which judgments are given, but so far the Secretary of State has refused to consent to the establishment of such benchmarks. Will she now at least do that?
When the Act is implemented, we will set out the proposals for review, the terms of reference for review, and the way in which it will be conducted. I shall not be drawn into discussing the methodology at this stage, but we should be clear about one thing: it is this Government who have shown dedicated commitment to tackling alcohol-related violence, and the purpose of any review of the Act will be to ensure that if further improvements can be made, they are made so that the Act does that more effectively.
Will the Secretary of State give way?
No, I want to make some progress.
The right hon. Member for Maidenhead (Mrs. May) has failed to persuade the House before, and I believe that she will do the same today. The facts are simply not on her side; nor are the vast majority of experts in this business. The Association of Chief Police Officers, for instance, recently confirmed that it did not want implementation of the Act delayed. Local councils, as the new licensing authorities, have put enormous effort and good work into delivering the requirements of the transitional period, and I congratulate them on that. Only recently, the Local Government Association confirmed that it did not want that effort to be wasted.
People with direct interests include the hon. Member for Witney (Mr. Cameron), who, along with me and other Back Benchers, tended to make supportive noises about the Bill before it came into being. Although as company directors such people have a vested interest, they have supported the legislation nevertheless.
I agree with my hon. Friend.
Sandy Bruce-Lockhart, Conservative chairman of the Local Government Association and leader of Kent county council, is on record as saying:
"We support the Licensing Act and are fully committed to ensuring it is successfully implemented on 24 November."
In recent weeks, the Central Council for Physical Recreation has also confirmed its opposition to delay. It represents sports clubs that have gone through the conversion and variation processes, and have paid their fees. Then there are the tens of thousands of small businesses that have paid for their new licences and expect to see the benefits on 24 November.
What would my right hon. Friend say to the proprietors of the hundreds of small guest houses, clubs and other organisations in Blackpool that have already taken out licences if the advice offered to us by the right hon. Member for Maidenhead (Mrs. May) were taken and commencement were delayed?
The result would be chaos, confusion, and damage to those small businesses, which are a very important part of the tourism industry on which Blackpool relies.
Order. I understand the right hon. Lady's desire to respond to an intervention from her own Benches, but she should not turn her back on the Chair. More important from her own point of view is the fact that the microphone will not pick up her voice.
I am grateful for your advice, Mr. Deputy Speaker.
The right hon. Member for Maidenhead ignores local residents who have engaged in the process of licensing in greater numbers than ever before. Their time and effort in objecting to variations, where they have done so, would be wasted if she had her way.
We have already heard this evening about at least one Conservative Member with very strong views on the Act, who believes that it is rooted in common sense. He is such a keen proponent that he has been a director of the drinks company Urbium. His name has been mentioned a number of times this evening: he is, of course, the hon. Member for Witney (Mr. Cameron), and I believe that the right hon. Member for Maidenhead is backing him for the party leadership. Her position on the Licensing Act could just be a rather bad career move. The obvious conclusion is that the right hon. Lady and other Conservative Members would rather keep the status quo, which gives rise to all these problems, than come up with the practical solutions advocated by the police and others.
None of us is suggesting that there should be no change. We want the problem of binge drinking to be tackled, for instance.
The Secretary of State has quoted many people tonight. What does she think of the comments of Dave Daley, head of the National Association of Licensed House Managers? According to yesterday's edition of The Observer, he said that house managers were already being incentivised to the tune of £20,000 to ensure that people stayed in the pubs after 11 pm, drank doubles rather than singles, and drank more shots in between. There is a policy that encourages people to binge drink.
Pubs that act in that way risk being closed for breaching their licence conditions. The law has been strengthened. The voluntary code is being developed, and if licensees do not adopt it, it may become a licence condition. Pubs and clubs that think that that is how the new legislation benefits them should beware, because they risk losing their licences and their livelihoods if they behave in such an irresponsible fashion.
Will the Secretary of State give way?
No, I will not.
Research and police evidence clearly show—the Act is predicated on this—that there are two surges in street disorder, at 11 pm and at 2 am. Those are the chucking-out times for pubs and clubs. Pubs that chuck people on to the streets at exactly the same time generate the drunken loutishness that is captured on CCTV and in our newspapers throughout the summer. We know that the national curfew, dating from 1917, does not curb disorder but makes it worse, and we know that it does not prevent alcohol misuse but makes that worse as well.
My right hon. Friend has touched on a point that was raised by the right hon. Member for Maidenhead (Mrs. May) at least three times, relating to staggered hours. Staggered closing times are very desirable. In Wolverhampton—the premier nightclub spot in the west midlands, of course—that is effectively what we have had, thanks to the closing hours granted by the licensing committee. They have de facto led to staggered hours, but other places do not currently operate such hours, given that many establishments empty out at 2 o'clock in the morning.
My hon. Friend draws attention to an example of very good licensing practice in his constituency.
The curfew ensures that the law-abiding millions in this country, who might like the chance to enjoy a night out beyond 11 o'clock, are not allowed to do so. Meanwhile, those who do not abide by the law get away with doing so more often than not, because the police simply do not have the necessary powers to take decisive action. So in punishing everyone for the crimes of the minority, we have managed to deprive them of one of their freedoms of choice, and have done little to punish the minority.
All that will change on 24 November. At last, the balance will be tipped the other way. Adults will be given the freedom to have a drink after 11 o'clock, if the local authority and local residents agree. New and locally accountable procedures will ensure that the community decides whether to vary opening hours.
rose—
I shall give way to the hon. Member for Shipley (Philip Davies).
I am incredibly grateful to the Secretary of State for giving way. I am very intrigued by her comments about local accountability. Will she address the point raised by my right hon. Friend the Member for Maidenhead (Mrs. May) and the hon. Member for Colchester (Bob Russell), who said that local councillors, whose job it is to represent local people, are not allowed to speak up at licensing meetings on behalf of residents in their own wards? Unless they go through the convoluted process of putting such points in writing, they cannot represent their own constituents. Is that not outrageous?
If it were true, it would be outrageous, but the fact is that where local councillors are acting as representatives of those whom they represent, they have the power to do just that—to represent them.
rose—
I am going to make some progress.
The quid pro quo that this Act creates for the majority is also matched by the introduction of draconian new powers for the police to mete out swift and heavy punishment to the pubs and drinkers who abuse that new freedom. They can fine people on the spot for disorderly behaviour, and they can close down pubs that cause a nuisance. They can take away licences, and they will soon be able to declare an area that is persistently disorderly as an alcohol disorder zone, in which publicans will have to pay a levy to help cover the costs of extra policing. In addition, for persistent offenders there will be drink banning orders. Make no mistake: from 24 November, yobs will have to answer for their behaviour in a way that they have never experienced before.
I want the police authorities to know that they have the Government's full backing to use the new powers conferred on them to the full. I want publicans to understand that they have a duty of care to their customers and to local residents. The majority run respectable houses, and they will get the support that they need to keep things that way. But publicans who run disorderly pubs—who turn a blind eye to under-age drinking and persistently serve people who are already drunk—are on notice. I say to them directly that they have a month to mend their ways.
The House will remember that in July, the Opposition predicted that there would be chaos by November as the process of applying for new licences collapsed; that the Government had not done enough to publicise the requirements; that not enough applicants would have applied; that the views of residents would be ignored; and that licensing authorities would be unable to cope with the 6 August deluge. I can tell them today that they were wrong on all counts. We expect almost 100 per cent. of the premises that need licences to have them by 24 November. Application rates have already passed 97 per cent., and the publicity efforts of central Government, local government and industry—working in an effective partnership—have worked well. Residents have engaged with the system in large numbers, as we hoped they would, because of the new democratic accountability that we have brought to the system, giving power to local communities.
My right hon. Friend alluded to the contribution that local residents can make to the process, and in practical terms that reflects what has happened in my constituency. As part of the review, will she revisit the notification process? Many people still have not seen the blue notices in the premises or the newspaper adverts. Will she also confirm that local authorities and councils can notify residents that an application has been submitted?
I thank my hon. Friend for that intervention and I can confirm that last point. I also undertake that when we review and update the guidance, because we will have moved beyond the transition period, we will certainly take account of the point that he makes.
rose—
A large percentage of those who have become involved in local representations have influenced the outcome by securing changes in the opening hours of premises near their homes.
Will the Secretary of State give way?
I will not give way. The right hon. Lady has had plenty of time to make her points, and many Back Benchers wish to speak.
Some 95 per cent. of cases in which representations were made have been successfully negotiated with the local authority and the licensee. So having painted a lurid picture of chaos on our streets, the question that the right hon. Member for Maidenhead should answer is: which of the police's new powers does she want to delay? Does she want to delay the police's extended closure powers in respect of individual premises? Does she want to delay the new closure powers for environmental health officers? Does she want to delay the increased penalties for breaches of licence conditions—a point that was raised earlier? Does she want to delay the increased penalties for selling alcohol to children? Does she want to delay the tough new penalties for irresponsible retailers?
Does the right hon. Lady not approve of those powers? Does she not want to see changes to our drinking laws that increase protection for children? Is she happy that children can be sold alcohol in some 20,000 members' clubs and on booze cruises? So the police and environmental health officers will have new powers concerning the protection of children, the promotion of public safety, the prevention of public nuisance and the prevention and reduction of crime and disorder.
I listened carefully to the speech of the right hon. Member for Maidenhead, but I remain unclear as to what she wants. At best, she seems to want to wreck the Act, even though that would mean a continuation of the problems.
The fact is that binge drinking is a problem now. The Licensing Act forms part of the solution, and it is a crucial part of our strategy for combating alcohol-rated harm, but the national problem of alcohol abuse has many roots. This legislation is a necessary, but not of itself a sufficient, part of the cure. That is why, in partnership with the alcohol industry, a standards and principles document is being developed under the alcohol harm reduction strategy. It will be a voluntary code, but those parts of the industry that do not sign up to it will make themselves targets for review under the Licensing Act. So they should consider themselves on probation.
The code will promote a more responsible approach to sales promotions, happy hours and the various promotions that can cause binge drinking and the like. It will ensure that better training becomes a high priority for the industry, and it will set out examples of good practice.
Will my right hon. Friend give way?
I want to make some progress.
The alcohol harm reduction strategy will also focus on education. There will be new teaching materials for educating the public and educating our children in schools about problems associated with alcohol. The Violent Crime Reduction Bill will add to the measures for tackling the problems that alcohol misuse can cause. It will include drink banning orders to exclude violent and antisocial drinkers from premises that sell alcohol. It introduces alcohol disorder zones, enabling the police and local authorities to put in place action and measures to combat the problems of alcohol-related crime and disorder and to charge the premises selling alcohol for the additional enforcement costs when that becomes necessary.
Who would initiate that process if the problems that the Secretary of State has mentioned occur? Would a local councillor have the right to initiate it?
As the hon. Gentleman is aware, those powers have been greatly argued for by the police and are supported by local authorities. They are still subject to debate in the House, but I expect that the advocates of crime reduction on behalf of both the police and local authorities will ensure that their voices are heard and are represented in the legislation, although the way in which representations can be made has not yet been settled.
The Bill will also expedite fast-track reviews, where serious crime—drug dealing or the use of guns and knives—is associated with any premises. It will also create a Licensing Act offence of persistently selling alcohol to children and a new power to ban the sale of alcohol for up to 48 hours at the premises where the offence is committed. That is extremely important for addressing the current problem that much of the alcohol consumed by young people is bought not from pubs, but from off-licences.
My right hon. Friend makes a powerful case for how the legislation will help to tackle binge and under-age drinking. Does she believe that the Liberal Democrat policy of lowering the licensing age to 16 is, in the current circumstances and against the backdrop of these events, utterly irresponsible?
I hope that it is not too unkind to say that it is not unusual for the Liberal Democrats to come up with policies that are impractical and inconsistent. This is yet another example.
We take the issue of binge drinking and alcohol-fuelled violence very seriously indeed. We know that the Act and other measures will have an impact on every high street and just about every person in the country. That is why we shall tread with great care and review the operation of the Act carefully. However, if the right hon. Member for Maidenhead has her way, we shall be asking the police to fight 21st century yobs with 19th century laws. It simply will not work—[Interruption.]
rose—
Order. It is clear that the Secretary of State is not willing to give way.
The right hon. Lady should accept that she is wrong and that the very worst option is to continue as we are. That is all that the Opposition offer. On the Government side, we recognise the scale of the problem that the country faces and we recognise that the present law infantilises millions, while giving the yobbish minority free rein. We have done something about it, while the Conservative party flip-flops and operates in an entirely opportunistic way.
This country has a real problem with drink and disorder, and the Licensing Act will go a long way to tackling it head on. I urge the House to reject the Opposition motion, which is uninformed, opportunistic and denies the police the essential powers to tackle this 21st century problem. I therefore urge the House to support the amendment and reject the motion.
May I say that I have great respect for the Secretary of State and congratulate her again on her role in bringing the Olympics to London? I notice that she has been nominated by The House Magazine as one of its Ministers of the year, but on the basis of tonight's performance I do not believe that her chances of winning will be much good—[Interruption.] On the basis of tonight, I have to say that.
The Secretary of State has been very clear: she believes that this country has a serious problem with binge drinking. On that, we agree. She believes passionately that the new Licensing Act will help to solve that problem. On that, however, we fundamentally disagree. We believe that the Licensing Act should be placed on ice until binge drinking is brought under control. Similarly, in view of what the hon. Member for North-West Leicestershire (David Taylor) said, let me make it clear that, while the current binge drinking problem remains, no party would be responsible if it urged a reduction in the age at which people can buy alcohol. There, I am expressing the policy of the Liberal Democrats.
I am pleased to hear that evidence of a U-turn, albeit one performed behind a smokescreen. Does the Liberal Democrat spokesman agree that concern about binge and under-age drinking has been evident for a significant period and stretches back at least to the time of the Standing Committee examination of the Licensing Bill? Will he confirm that Liberal Democrat members of the Committee tabled no amendments, at no stage voted against clauses dealing with flexible licensing hours, and, indeed, nodded through the relevant legislation, as we have come to expect from Liberal Democrats in this place?
The hon. Gentleman is wrong: the Liberal Democrats voted against the legislation—full stop. That is clearly on the record. He should take into account what his Secretary of State said. She referred to a number of issues that she claimed had not been argued by either of the Opposition parties. She failed to point out, of course, that many of the issues came to light not in Committee, but in the regulations that resulted at a later stage. Many of those regulations are creating many of the current problems. The hon. Gentleman should also be aware of the huge delay. The Government have only just finished consulting—despite the fact that the Act was passed in 2003—on what to say about temporary events notices, which have not yet been debated on the Floor of the House. The hon. Gentleman really needs to check his facts about what the Liberal Democrats and others did during the Bill's passage.
I understand entirely where the Secretary of State is coming from. She and the hon. Member for North-West Leicestershire have said that we have a serious problem with binge drinking, but the real problem is that it is getting significantly worse every year. The figures are clear. The British crime survey released last week shows a 12 per cent. increase in violent assaults, in which alcohol was a major contributing factor. There has been a 15 per cent. rise nationally in
"violent offences committed in connection with licensed premises",
which amounts to almost 1,000 a week. Last year, there were an estimated 116,000 violent incidents against national health service staff—318 a day. Incidentally, that is 20 times the number of arrests at a football match.
Health problems are deeply concerning and getting worse. There has been an 18.4 per cent. increase in alcohol-related deaths over the past year. The overall cost of alcohol to the health service and others is about £20 billion a year, with one in 13 adults dependent on alcohol and nine children being admitted to hospitals in England every day with alcohol-related problems. The Secretary of State is right; we have a very serious problem, and, sadly, it is getting worse.
The real question for the House is whether the Licensing Act will help to solve that problem or make the situation worse. Much has already been said about the Government's motives for introducing the legislation. Their motives were clear. We saw them in that infamous text message:
"Couldn't give a XXXX 4 for last orders? Vote Labour for extra time."
Today, the Minister said that he regretted that, and the Secretary of State has said that it was silly. Nevertheless, it gave the public the clear impression that the Government were not interested in solving the problems of binge drinking, but were much more concerned with garnering the youth vote.
The Secretary of State said the message was silly and the Minister said it was unacceptable, but the spin continues. On the departmental website, we can read the regular bulletin "Licensing Countdown". I have in front of me the October 2005 edition. What sort of spin are the Government putting on it? Is it all about getting rid of binge drinking? What does the headline say? It says:
"Calling time on last orders."
That is hardly an indication that the Government are cracking down on binge drinking. The bulletin continues:
"During the summer the Government made an order confirming 24th November as the eagerly awaited 'second appointed day'."
Apart from the Minister and the Secretary of State, I know of few people who are eagerly awaiting 24 November, with all the chaos that will then be created on our streets.
If the hon. Gentleman was serious and genuine in what he is saying, why are people up and down the country, such as the Oxton Liberal Club in my constituency, applying for an extension of hours? He is criticising that, so what does he have to say about it?
I do not know the details, but if the Government create legislation and, as we have already heard, give opportunities for the licensing trade to increase what it earns, I am not surprised that people pursue such opportunities. I want clear Government legislation that gives people who want to drink responsibly the opportunity to do so without the rest of us having to deal with the problems of irresponsible drinking, of which there is, sadly, far too much in this country. Sadly, the problems are growing.
I want to make some progress.
I want to point out why the Government are wrong in their belief that the Licensing Act will help to solve the problem. In fairness, the House needs to hear their reasons. I would have thought that the Government would give us research evidence to show that increasing the availability of alcohol would in some way help to deal with the problem of binge drinking. The Government have not given us that evidence, but several respected bodies have done so. All Members have received an extremely useful briefing from the Parliamentary Office of Science and Technology—"Postnote", which, under the heading "Binge Drinking and Public Health", makes it clear that in countries with an existing binge drinking problem increasing the availability of alcohol leads to an increase in the amount of drinking.
If the Secretary of State and the Minister do not want to take note of that research, far more is available. I have a pre-publication copy of the International Journal of Drug Policy, which states that
"past experience suggests that the new licensing arrangements risk leading to a rise in heavy drinking, illicit drug use, violence, morbidity and traffic accidents. The lack of attention the UK Government has apparently devoted to the experience of other countries where on sale availability has been extended is remarkable."
The Government simply have not done their homework or given us the evidence to show how the legislation will do what they say it will do—reduce the problems of binge drinking. Very few people believe the Government. Judges, health experts, the licensed industry, local authorities and the public simply do not believe that the reforms will help. Judges have described the legislation as "close to lunacy". Let me quote the submission by the Council of Her Majesty's Circuit Judges to the Government's consultation:
"Those who routinely see the consequences of drink-fuelled violence in the offences of rape, grievous bodily harm and worse on a daily basis are in no doubt that an escalation of offences of this nature will inevitably be caused by the relaxation of liquor licensing, which the Government has now authorities."
Health experts say exactly the same as judges. Professor Christopher Day, a liver specialist at Newcastle university, believes that the Government have deliberately downplayed the medical evidence. The Royal College of Physicians says that there is already an epidemic of binge drinking and that the Licensing Act 2003
"flies in the face of common sense".
As for licensed industry experts, the right hon. Member for Maidenhead (Mrs. May) quoted Mr. Dave Daley, the president of the National Association of Licensed House Managers, who described the reforms as "an absolute cock-up". The Publican says that three quarters of licensees think that extended licensing laws will not help binge drinking.
The public, too, are desperately concerned by what is going on. The British crime survey released last week shows that the number of people worried about public drunkenness and rowdy behaviour was up from 20 to 23 per cent. A BBC poll showed earlier this year that 67 per cent. of people thought that the Licensing Act 2003 would increase trouble on our streets, with 62 per cent. saying that it would make Britain a worse place in which to live.
I want to ask the hon. Gentleman a simple question: does he not think that the extended police powers will help in some of the situations that he describes?
If the hon. Gentleman will forgive me, I will answer his question in a second. Frankly, in her speech, the Secretary of Secretary gave up on all the other arguments and concentrated solely on the police powers, so they deserve a very serious response.
The Secretary of State prayed in aid local authorities. She said that they are very keen on the legislation and want all the reforms to go ahead; but, in fact, that is hardly the truth, as she knows because she is the one who received the letter, dated 30 June this year, from the chairman of the Local Government Association, whom she has prayed in aid. That letter actually said that
"this is a challenging time for all parties and councils cannot be held responsible for inherent flaws in the system which we advised against in the first place".
That is hardly a ringing endorsement for the Secretary of State's legislation. It is not surprising that, as we have heard, local authorities are concerned that they cannot fully engage residents in licensing decisions. They are concerned about the role that local councillors can and cannot play. They simply cannot believe it when the Government say that their legislation contains no presumption for longer hours. We have heard that there is no such presumption in the legislation, yet the guidance says that the Government
"strongly recommends that statements of"
licensing
"policy recognise that longer licensing hours . . .
are
"necessary to reduce the friction of"—
and it goes on to justify what the Government are doing.
Local authorities cannot understand why the Government are not prepared to give a clear, legal basis for saturation polices, which experts have described as a legal nightmare. They do not understand why the Government cannot give them better help than they have received so far from the Office of Fair Trading about the ability of local authorities to set minimum drinks prices in their areas and, incidentally, to do something about soft drinks. They fail to understand how the temporary notice procedures will help, rather than hinder. We have not yet debated those procedures in the House, so perhaps we will come back to them later. Like very many other people, local authorities are desperately worried about all the red tape and bureaucracy that the legislation has introduced.
The landlady of the Pig and Fiddle, an excellent pub in my constituency, has spent £37 just on postage stamps to send back the various forms for the four pubs for which she is responsible.
What is the hon. Gentleman's opinion of the experience in Scotland, which has had longer and more flexible hours for some time? Will he be pressing his Liberal Democrat colleagues, who have some influence in the Scottish Parliament, to reduce opening hours to 11 pm? Surely that is the logic of his argument.
I never said I was in favour of 11 pm as a closing time. I hear what the hon. Gentleman says. As he asked the question, he will have assiduously studied what is happening in Scotland, and will know that that is under review. Being a firm believer in devolution, I will not tell the people of Scotland what they should do. However, I would gently recommend to them that they should not repeat the mistakes that we are making south of the border.
People in local authorities are confused about much of what is going on. For example, when the Government have a good idea—for once I agree with them—such as the "polluter pays" principle, whereby big pubs where lots of people go will pay more because they will have a greater impact on the surrounding area, local authorities fail to understand, as do I, why nightclubs will not have to pay the escalator charges, just because their primary purpose is not the sale of alcohol.
Local authorities are particularly perturbed about the Secretary of State's belief that the Government's plans will lead to staggered hours. In response the Minister will no doubt quote research that the Department has done to show that that will happen. When he studies that in detail and examines particular areas in a town or city covered by the research, he might find that the theory does not hang together quite so well. No doubt he will explain to the House how a local authority is meant to make staggered hours happen.
Let us suppose that two pubs are next door to each other. One applies to the licensing committee to stay open until midnight and the committee agrees, and a few weeks later the other pub makes a similar application. The local authority can hardly say, "No, sorry, the pub next door is staying open till midnight. You can only stay open until 11.30." Would it be allowed to do so under competition law or under the guidance? The answer is no, so it is not possible for a local authority to engineer the staggered hours that the Minister and the Secretary of State claim are possible under the Bill.
My hon. Friend makes a valid point about staggered opening hours. When I speak to landlords in my constituency, they consistently tell me that the reason they are going for extended hours is that all the other pubs are going for exactly the same hours.
I entirely agree with my hon. Friend. I need not comment.
I turn to the important subject of police powers, which the Secretary of State mentioned. Does the Bill contain sufficient police powers, which would not take effect if the legislation did not go ahead? That is not the case. If it were, there would not be so many people in the police who are so deeply concerned about the Bill. The Secretary of State and the Minister have referred to the position of ACPO. Sir John Stevens, the former Metropolitan Commissioner, said:
"The move towards 24-hour drinking needs to be slowed down. The fact that large groups of people will be coming out at 3 am or 4 am will mean we have to man the streets to ensure they behave."
Alan Gordon, vice-chairman of the Police Federation, which represents the rank and file officers, who ought to know what it is like out on the streets, said that many were at
"the end of their tether"
at the prospect of the legislation. He went on:
"Our stretched resources will be even more stretched, with more officers having to work late at night and therefore fewer available during the day.
It is very, very wearying and stressful for police to be constantly working extended late shifts, or all night."
The chairman of the Metropolitan Police Federation, Glen Smyth, said:
"Most nights of the week our officers are overwhelmed by a sea of drunken, violent, vomiting yobs who when they're not fighting each other, are falling through shop windows . . . That's now. What's it going to be like when we have a licensing free for all?"
The legislation has not attracted clear support, and the Secretary of State knows it.
The Secretary of State has said that some additional powers will be helpful, but the Government have already introduced some of the powers in the 2003 Act, such as the powers in sections 155 and 199 that allow police officers to confiscate alcohol from young people. She has made great play of the police's ability to close pubs for 24 hours at very short notice, but she should check the existing legislation—the 1964 Act already gives the police those powers, which were further extended in 2001.
The Secretary of State should consider the police's existing powers and examine whether they are being enforced. For example, she has referred to drunken people on the streets, who must buy their alcohol from somewhere. As the right hon. Member for Maidenhead knows, an existing law forbids landlords to sell alcohol to people who are drunk. That law was amended in 2001 to ensure that anybody who sells alcohol to somebody who is drunk is breaking the law. The House may be surprised to know that on average there are 11 prosecutions a year under that legislation. The Secretary of State may be taking a few additional powers, but most of those powers already exist, so we should make sure that the existing legislation is being used.
All the evidence suggests that the 2003 Act will not resolve the problem of binge drinking, and I believe that it will make the problem worse. I do not accept that chaos will occur if we do not go ahead with the 2003 Act, because all the existing licences for pubs, clubs and off-licences will continue until February 2007. There will not be chaos if the 2003 Act is stopped, but there will be chaos if we go ahead with it. The public do not want it, and I hope that the whole House will support the motion. Let us end the nonsense that the Government are going to deal with binge drinking, which is something that the 2003 Act definitely fails to do.
rose—
Order. I remind the House that Mr. Speaker has placed a 10-minute limit on Back-Bench speeches, which comes into operation now. However, hon. Members will be doing their colleagues a favour if they manage with less than that.
During the general election campaign, my Conservative opponent accused me and the Labour party of being in favour of 24-hour drinking. His slogan was, "Vote Conservative. Vote against 24-hour drinking". That slogan has nothing to do with the legislation. My constituency does not contain a single licensed establishment that has applied for a licence to allow 24-hour drinking. In my constituency, that Conservative campaign failed abysmally, which is one of the reasons why I increased my parliamentary majority.
Such misrepresentation continued after the general election campaign, with certain elements of the press suggesting that we will see a descent into chaos, the end of civilisation as we know it, confusion and anarchy. Having heard those prophecies of doom, it was not enough for me to take the Government's word for it, so I decided to go a step further and ask my local authority what is happening on the ground.
I therefore spoke to people at Caerphilly county borough council, and the first thing they said was—surprise, surprise—that not one single establishment had applied for 24-hour opening and none was likely to do so. Moreover, they said that far from confusion there is a great deal of orderliness in the new regime that has been introduced. Only this morning, they told me that 88 per cent. of previously licensed premises have already applied for a continuation of their licences and have been granted one. More are in the pipeline, and I anticipate that the figure will go up to the upper 90s before the process is completed.
So far, 483 pubs and clubs have made applications for licences in the Caerphilly borough, and it is interesting to note the detail of those applications. The breakdown is as follows: 218 are for conversions of existing licences, 249 are for varying existing licences, and 16 are for new premises. In other words, there is no uniformity whatsoever. In fact, nearly half the existing licensed premises want to continue as they are. That is what is happening in practice in one particular part of the country, and I would suggest that Caerphilly is fairly typical not only of many other parts of Wales but of many other parts of Britain.
Of the applications for varying existing licences, in many cases any objections from local residents were resolved at the hearing stage through mediation and agreement between the parties. That is a vital and central aspect of the Act, and in practice it is working very well. Of course, it is recognised that in some cases mediation has not led to an ideal situation so far as all parties are concerned. However, it is important also to recognise that, contrary to what some Opposition Members have said, there is no presumption in the Act in favour of longer hours over objections from local people. Let us be absolutely clear about that. Where there has not been agreement, all parties have been clear that the licences that were issued would be subject to strict monitoring and very careful review.
When I asked the chief executive of my local authority what he thinks about the suggestion that there could be an extension beyond the 24 November deadline, he told me in no uncertain terms that he and many of his colleagues in local government would be utterly against that. Caerphilly county borough council has worked extremely hard and effectively to meet the deadline, and we see no reason why it is not a reasonable deadline that we should continue to adhere to.
As a result of the hard work of Caerphilly council, 15 councillors have been properly briefed and trained to oversee the whole process. That is far more democratic than the former arrangement whereby determinations about licences were made by faceless magistrates whom nobody knew or had any contact with, and who often did not know or understand anything about the locality. The new arrangement is an important step forward for democracy, and the Government should be complimented—as should local authorities such as Caerphilly county borough council for introducing it so effectively.
Caerphilly council is taking two initiatives that add weight and importance to the legislation. First, the safer Caerphilly county borough community safety partnership has been established. As one of the first new licensing forums in Wales, it is bringing together, very effectively, all the stakeholders involved in the process, who meet monthly and produce their own newsletter. That has been very well received.
Secondly, the local authority is introducing a drinkwise scheme for responsible licensed premises. Again, it is the first of its kind in Wales. It will give accreditation to licensed premises that are following good practice. That is warmly to be welcomed.
In addition to those two initiatives, the local authority has had the wherewithal to recognise that other policy areas are affected by the legislation. For example, it is mindful of the fact that there will be a greater demand for taxis when some premises have extended opening hours. It has therefore established a taxi association to liaise with local taxi operators, and is in the process of introducing additional taxi ranks. All those measures are to be welcomed and show why many of the fears that were whipped up in Caerphilly just a few months ago have no basis whatsoever.
At the end of the summer, I took part in the police secondment scheme. I spent the best part of two weeks with Gwent police, especially in Newport. I naturally asked the police with whom I worked what they thought of the new legislation. I shall be frank: some believed that the Act would cause more problems and others thought that it would make no difference. However, the majority of police officers to whom I spoke believed that it would lead to an improvement in many young people's behaviour. Policemen and women on the ground, who are in touch with their communities and engaged in neighbourhood policing, look forward to the implementation of the Act.
One Saturday night, I spent a couple of hours in the custody unit at Newport police station. It was quiet for most of the evening but, as expected, from 11.15 pm till midnight, all hell broke loose. It happened because, as we all know, that is when the pubs close, the binge drinking takes place and the trouble occurs on the streets. That is one of the main problems that the Act tries to tackle and I believe that it will succeed.
The new powers that are proposed for the police complement the central element of this legislation. Contrary to the comments of the hon. Member for Bath (Mr. Foster), many aspects of the Act are brand new. It extends existing legislation and takes matters forward significantly.
I am mindful of the time limit that has been placed on Back Benchers and I shall therefore conclude. I do not want the implementation date of 24 November to be abandoned and I want the Government to ignore the scaremongering of Opposition Members. Above all, we should have the courage of our convictions and acknowledge that the Act will, slowly but surely, change attitudes and get to grips with the terrible problem of binge drinking.
I shall follow your advice, Mr. Deputy Speaker, and try to be brief.
When the debate was called, I anticipated that the Secretary of State and many Labour Members would refer to the position that the Opposition took during the Bill's passage. Since I was the Opposition spokesman at the time, I read my remarks before the debate. At the time, we supported more flexible opening hours. However, even then, we raised some anxieties and we based our support for the measure on the Government's argument that longer and more flexible drinking hours might reduce binge drinking, crime, disorder and public nuisance. I pointed out that, even at that time, several people were questioning that assumption and that it was not necessarily the view of several police officers or local authorities.
Nevertheless, the Association of Chief Police Officers recommended supporting the relevant provision in the White Paper, subject to two caveats. First, it was concerned that there may not be sufficient police officers available to deal with problems that might occur later in the evening or the early hours of the morning. Secondly, it echoed the concern of the hon. Member for Bath (Mr. Foster) that the consequence of more flexible opening hours might not be different closing times but, because of competition and for other reasons, pubs all closing at the same time but later in the evening. At that time, fewer police officers would be available on the streets. The same problems would therefore arise but with fewer people to deal with them.
Genuine concerns were therefore expressed during the Bill's passage but the Government assured us that the police believed that the measure would contribute to tackling the problems and we supported it on that basis. However, since then, there has been a stream of informed protest from a wide variety of groups.
Several hon. Members have already cited people who have expressed anxiety and I do not intend to repeat their remarks, but let us consider the number of different organisations that have voiced their concerns. From the police, we have ACPO—my right hon. Friend the Member for Maidenhead (Mrs. May) quoted the ACPO licensing representative—the chief inspector of constabulary; the former Metropolitan Police Commissioner; the Police Federation; and the chief constable of Nottinghamshire. It is plain that many police officers believe that the Act will make things worse.
The judiciary will have the job of enforcing the legislation, and both Her Majesty's Council of Circuit Judges and the Magistrates Association have been vocal in their criticism. In the medical profession, the Royal College of Physicians, the Irish Medical Organisation and, most recently, Professor Lord Winston, who sits on the Government Benches, have all expressed concern about the Act increasing the opportunities to drink and therefore increasing the likelihood of binge drinking, leading to alcohol-related disorder.
After the Bill reached the statute book, we discovered that concerns had been expressed not only outside Government but within Government. The then Home Secretary, the right hon. Member for Sheffield, Brightside (Mr. Blunkett), talked about the proposals in the Bill as
"a leap in the dark"
that risked "worsening the situation" of violent crime and yobbish behaviour, yet none of that was said when we debated the Bill.
I say to the Secretary of State and to the Minister who will respond to the debate that, at the time of the Bill's passage, we were willing to accept the assurances that the legislation was supported by the police and many others as a means of helping to solve the problem of binge drinking. Now we discover that there is a widespread belief that it will help to make the problem worse. We have changed our view on the basis of the fact that expert opinion is almost unanimous in its belief that the Bill poses real dangers. We now believe that the Bill should not be implemented. Having listened to expert opinion, we have demonstrated that we are a responsible Opposition. I just regret that the Government have not taken the same stand. I hope that, even now, the Minister will reflect on that.
In fact, not just expert opinion, but our own experience has led to our change of heart. I suspect that many hon. Members have been out with their local police, and I spent a night out with a police officer in a squad car. We responded to about 12 or 15 incidents. Every one was alcohol related. A lot is said about vertical drinking establishments in inner cities but the problem is now affecting every market town in Britain. Maldon and Burnham in my constituency both have a major problem with hooliganism that is directly related to alcohol. The incidence of such behaviour is another reason why we need to proceed cautiously.
I do not want to repeat the arguments that have already been advanced by the Front-Bench team; instead, I shall discuss two other aspects of the Act that have not been mentioned. First, let us consider its impact on village halls, which are central to many local communities. In my constituency, a new village hall was recently built, which cost £1.5 million. All the money for it was raised by the local community through the sale of land for building. That project did not receive any assistance from the lottery or Government. The village hall is a remarkable achievement, which will be a real asset to the community, but it needs to cover its costs. Those behind the project came to see me and said that the only way they could so was if they were able to rent the hall out for private functions on every Friday and Saturday of the year. At the vast majority of those private functions—parties, wedding receptions and the like— people will want to enjoy themselves and drink, but the village hall is limited to just 12 temporary event notices a year.
I know that the Minister has said that that limit will be considered and that a review is under way, but I hope that he will give at least some indication this evening that that limit will be raised significantly, because many village halls throughout the country will find it difficult to cover their expenses if they are confined to just 12 temporary event notices a year.
The other matter to consider is the effect of the Act on another institution that is central to many local communities—the sports clubs. The Central Council of Physical Recreation, which the Secretary of State cited in support of some of her remarks, has been vocal throughout in pointing out the huge burden and cost that the new provisions will place on thousands of sports clubs. I happen to be vice-president of Maldon cricket club, which, like many other such clubs up and down the country, is staffed largely by volunteers. It manages to muster three or four enthusiastic local teams, but it does a lot more. It provides an opportunity for young people in the community to learn about cricket and runs a quick cricket day for all the local schools. It is a hugely valuable resource.
I asked the club organisers about the impact of the Licensing Act. They replied that there are two types of cost—financial and time—and went through how they add up. They wrote:
"The 80 page Statement of Licensing policy from . . . District Council needs to be read and understood—minimum of 3 hours.
A training course held by . . . District Council—2 hours.
Fill in the 21 page application form and enclose copies of old registration certificates and Club Rules, plus production of plans of the building . . . highlighting emergency exits . . . 2 hours.
These had to be copied . . . a further 8 times and sent to Trading Standards, Child Protection, Police, Fire Service authorities . . . 1 hour plus £30 photocopying charge.
Notice produced and dispatched for insertion in the local newspaper—1 hour plus £184 charge by local newspaper.
Notice produced, copied and displayed locally in the vicinity of the Clubhouse—1 hour.
A query was then raised by the police which took 2 phone calls and a letter (with copies) to resolve—a minimum of 1 hour.
Maldon District Council then sent letter indicating that an objection had been received from a neighbour and therefore a Hearing had been arranged. It transpired . . . that the letter was about another matter which had been amicably resolved some time earlier . . . minimum of 1 hour."
The cost of the licence was £100, plus a £70 annual charge, so the total cost so far has been a minimum of 15 hours spent and £384—and the club has still not yet been told whether it has a licence.
The legislation is having a real effect on thousands of clubs that do an enormous amount for their local communities. They should not be treated in the same way as commercial licensed premises. The CCPR has proposed some sensible ways in which relief could be given to sports clubs—for example, classifying them all in band A. I hope that the Minister will be able to assure me that he will provide the vital help that the clubs need.
I wish to bring the debate back to its roots in actuality—what is happening on the ground. Like my hon. Friend the Member for Caerphilly (Mr. David), at the last election, I faced the suggestion of 24-hour drinking. That seemed to be the only line taken by the Tory candidate standing against me—it was the only thing I heard her say. It came as no surprise to me that that late-in-the-day concern about the issue arose so near to the election.
I think that the whole House accepts that licensing laws in England and Wales are out of date and do not work as they were intended to. The licensing regime in its present form was introduced almost 100 years ago, during the first world war. We have heard nothing about the fact that the licensing laws were relaxed under the Conservative Government. Hon. Members will recall that pubs used to shut at 3 pm, but that was done away with under the Conservatives—I see Opposition Members nodding—because it was thought a reasonable measure, and so it was. I submit that the new regime is simply an extension of that policy. It was right then, and it is right now.
Kicking off the debate for the Opposition, the right hon. Member for Maidenhead (Mrs. May) said that she did not want licensing applications to extend opening hours to 1 or 2 am. I have asked my local council to send me a copy of every licensing application in my constituency and I have looked at all of them. I can think of only one that was for hours beyond the ones to which I have referred. One premises called Aurora made an application for 4 am. In the end, the licensing committee extended its licence to 12.30 am. Of all the other licensing applications that have gone through in my constituency, none has gone past 12.30 am. There is the idea, as the hon. Member for Bath (Mr. Foster) said, that this is a licensing free-for-all. It was a scaremongering exercise during the election. It is a misrepresentation of what is going on throughout the country.
My hon. Friend the Member for Caerphilly said that he would find it difficult to believe that his constituency was unrepresentative. In the same way, I would find it incredible if my constituency were out of the ordinary. That opinion is rooted in what is happening and not in scaremongering. My right hon. Friend the Secretary of State mentioned that there was a success rate of about 95 per cent. in negotiations between local residents, local councillors and those making decisions. Having taken special care to examine applications in my constituency, I know that, far from local residents having no voice, and given that I have come across no applications for a licence extension beyond 12.30 am, it is clear that the councillors on the sub-committee have taken into account the observations and objections that it said are not being taken into account in other parts of the country—something that I do not accept.
The borough in which my constituency is located has had a problem with a ward that was represented by three Tory councillors. I have no idea what they were doing because it does not come within my common experience.
My right hon. Friend the Secretary of State said that we are not talking of a one-off strategy and that it is not a be-all-and-end-all answer to binge drinking. I note that the motion does not even mention binge drinking as a specific item to be debated. The Violent Crime Reduction Bill will add to the powers to regulate the way in which licensed premises can conduct themselves. An alcohol reduction strategy is running in parallel with that to try to tackle the concept of binge drinking.
The hypocrisy—I am sorry to use such a stark word—is writ large in my constituency. I have already said that, having gone through the applications there, I was startled to see that Oxton Liberal club made just the sort of application about which crocodile tears have been shed. It is the headquarters of the Liberal party in my neck of the woods.
As the hon. Gentleman has such a grip on the numbers of applications within his constituency, perhaps he could help us—perhaps the Minister will elaborate when he replies—by telling us how many applicants have not been able to have their applications submitted to enable them to continue trading. There are many in my constituency and I have been in extensive discussion with the Minister, in relation to much of which there has yet to be a response, to encourage applicants to submit their applications. They have been discouraged because the police were given no discretion within the 48-hour rule, whereby they had to receive copies of applications. Immense expense and trouble has been experienced by many existing licensees. If the Minister had given discretion to the police, the problem would not have arisen. For example, a publican who has been trading for 22 years has been treated like a new entrant.
Order. The hon. Gentleman must keep his interventions short.
I cannot help the hon. Gentleman. That problem has not revealed itself in my constituency.
The right hon. Member for Haltemprice and Howden (David Davis) came to Greasby in my constituency about seven weeks ago at the behest of the defeated Tory candidate, who seems to want to go at this issue like a dog with a bone. The right hon. Gentleman wanted the hours frozen, rejected the idea that pubs would be able to apply responsibly for an extension of just a few more hours and called the new licensing regime a huge social experiment that will make everyone's life a misery. Lastly, and presumptuously, he chose specifically to comment on the situation locally on the Wirral.
Having followed closely the licensing applications in my constituency, I knew that as the right hon. Gentleman spoke, the Oxton Conservative club was making the application that he said could not, in all conscience, be made. He rejected the idea that pubs could responsibly apply for a few more hours—just the type of thing that the local the Tory club was doing. It was a case of, "Do as I say, not as I do."
The hon. Gentleman is wearing a Tory tie.
I am pleased that someone recognises the sartorial nature of my tie.
Let us put the hypocrisy aside and get back to the genuine debate about whether hon. Members on both sides of the House can deal with binge drinking. It is said, variously and misleadingly, that the police are against our proposal. Chief Superintendent Alan Jones, the area commander of my borough, is firmly in favour. He does not have a problem with having the numbers to police it. He does not seem to have a problem with the principle that, over time, it will change the culture, as my hon. Friend the Member for Caerphilly said. In fact, the chief superintendent welcomes the changes and does not want us to avoid events on 24 November.
The debate is serious. The right hon. Member for Haltemprice and Howden has not replied to the letter that I wrote as a result of his escapade in Greasby. His approach was rude, opportunistic and cowardly—
Order. The hon. Gentleman must be careful with the words he uses about a right hon. Member of this House. He should withdraw that comment.
I withdraw the comment, but I ask the House to wonder why, after six weeks, the right hon. Gentleman has not bothered to reply to my letter.
The lifeblood of the economy in Scarborough and Whitby is the tourist trade. There can be no doubt that, if our town centres are full of rowdy drunks, it will be difficult to continue with the excellent progress that has been made in attracting families and the all-important conference trade to the east coast of Yorkshire. The changes to the licensing laws are all about making it easier for yobs to drink around the clock, while law-abiding small businesses and the people who use them are penalised and entangled in red tape.
Surely, the people who want to drink in Scarborough are tourists. The hon. Gentleman is not calling them yobs, is he?
That is puerile, and I shall deal with it later.
The Grosmont House hotel in Grosmont sleeps 10 and is situated next to the terminus of the North Yorkshire Moors railway, famous as the Hogwarts express in the Harry Potter films. Many people, having seen the film or Yorkshire Television's "Heartbeat" series, come to stay at that small family hotel, which is renowned for its local lobster. Some residents enjoy a bottle of wine with their evening meal, or have a glass of something before embarking on one of the railway's excellent dinner excursions. Others fancy a nightcap before turning in. Rosalind and George Andrews, the proprietors, faced with increased charges and a minefield of regulation, have decided reluctantly not to maintain their table licence. One of them would have to attend a training course, despite the fact that Mrs. Andrews completed a similar course before entering the trade and despite the fact that her husband has been a licensee for 38 years. The police have never been called to an incident in premises controlled by Mr. Andrews who, according to the Government definition, is untrained.
The requirement to provide detailed plans of the hotel is ridiculous. Mr. and Mrs. Andrews must submit plans not only of the bar, dining room and lounge but all the corridors and, surprisingly, the kitchen. Rosalind is not brewing moonshine in there as far as I know, nor is she manufacturing alcopops on the aga. Perhaps the Government know something that I do not, but I have not received reports of drunken youths prowling the North Yorkshire moors with jugs of Mrs. Andrews' rum sauce, gorging themselves with trifle or terrorising local people with brandy butter running down their chins—the only alcoholic products to emanate from her kitchen. The Andrews say:
"We are not a drinking establishment; it is a service we provide. We can't even give people a free drink with a meal. The only people to benefit from this are the town pubs where the trouble is."
If holiday makers decide to buy a bottle of plonk from the village shop they may well discover that it, too, has given up its licence. Other small shops, such as Sandsend stores, have spent days submitting and resubmitting forms despite the helpful assistance of Scarborough borough council. Village shops now face annual licensing costs that have leapt from £10 a year to £180—a stealth tax if ever I saw one.
To address the point made by the hon. Member for Stafford (Mr. Kidney), many hotels and guest houses in Scarborough are dispensing with their licences for similar reasons. Those that have reapplied have burned the midnight oil filling in interminable forms. The proprietor of the Whitely hotel, Martin Smith, said that the total cost for his 10-bedroomed establishment is about £1,000. Similar businesses that have transferred their licences under grandfather rights may still have to reapply.
Does my hon. Friend agree that the measure does not just affect smaller establishments in North Yorkshire? In Hammersmith and Fulham, our local paper carried the headline, "Booze Chaos", referring to the world-famous River Café—it was designed by Richard Rogers and was where Jamie Oliver learned his trade—which is struggling with its licence. Its manager described the legislation as "a mass of confusion".
I appreciate that this is a nationwide problem.
Where can people have a quiet drink once many small guest houses give up their licences? If they have children asleep upstairs, they cannot do so. If they want to go out, they run the risk of coming across the groups of people whose drinking the Government seem keen to encourage. This afternoon, I spoke to Boleyns nightclub on St. Thomas's street in Scarborough. It said that it currently closes at 2 am on a Saturday night but proudly added that, from 24 November, it could keep the bar open until 3 am. The new Opera House casino will soon open for gaming from 10 am until 6 am the following day—plenty of time to lose your shirt or your blouse if you are a granny. The bars will close at 2 am, but the casino confidently told me this afternoon, "We look forward to serving even longer hours after the law is changed."
While I welcome the principle of switching from magistrates courts to locally elected and accountable councillors, I am sad that the law of unintended consequences has once again come into play. Law-abiding responsible drinkers are having their holiday experience disrupted. Small businesses are facing disproportionate costs and bureaucratic burdens, while large pub chains and nightclubs are extending their hours and increasing their profits, resulting in obvious problems on the streets in the early hours. At a time when resorts such as Scarborough are trying to promote a café culture, the Government seem more interested in promoting the growing problems of an alcohol-fuelled yob culture. I support the motion calling for the postponement of the new measures and the extension of the transitional period until the problems that I have outlined have been adequately addressed.
I am staggered at the complacency of those Labour Members who seem to think that, as long as people are not making applications for 24-hour licences, everything is fine. The people of St. Albans are desperate for me to bring their concerns to this debate, as they will be badly affected by the Act. St. Albans is a lived-in city, not a desolate, late-night city. It is not a city that shuts up shop when everyone goes home to the suburbs. It has familiar large-name retailers, as well as small cobbled alleys, quaint historic quarters, picturesque conservation areas and lots of pubs. But people also live and sleep—or try to sleep—in the heart of St. Albans.
According to the chief licensing officer, St. Albans has more licensed premises per capita than anywhere else in Europe. The sheer number of those premises already causes problems with late-night noise, antisocial behaviour and policing issues. Those adverse effects are not covered in the Act. We are talking not about people bashing each other to bits on the streets, but about general rowdy behaviour that does not constitute an arrestable offence. At the moment, most of that noise and disruption ends at about 1 o'clock, when most of the drinkers disperse, often waking residents as they leave to go home. However, residents now fear that that disruption will carry on deep into the early hours of the morning. Okay, it might not go on for 24 hours, but 4 o'clock in the morning sounds pretty late to someone who has to get up at 6 o'clock.
The chief constable of Hertfordshire, Frank Whiteley, warned the Government that the new laws would be a disaster. Yes, that is another chief constable who is on record as a staunch opponent of the Act, and he says that his views have now hardened. At a recent meeting, he said that, because of the sheer number of licensed premises in St. Albans, he could not police them all. If he were even to try to do so, he would have to take resources from elsewhere. Front-line policing would have to be diverted to deal with licensed premises.
Between April 2004 and March 2005, there were 1,310 incidents of alcohol-related crime and disorder, and 848 alcohol-related arrests, most of which took place on a Saturday night. Seventy per cent. of police officers polled by Alcohol Concern reported that alcohol-related incidents frequently diverted them from tackling other crime. That is certainly true in St. Albans.
Like many other Members, I have spent a Friday night out with a local police inspector. My inspector and I visited a local pub, where we saw a young girl lying in the toilets, drunk and vomiting, at 10 o'clock. This was not because she was short of drinking-up time; she was just drunk. She is a product of our vertical binge-drinking culture. We saw men outside the Water End Barn, which has a later licence, so the drunkenness goes on until later. It takes £60,000 a week and is now licensed until 4 o'clock in the morning. In an attempt to get a slice of that very lucrative pie, other bars are following suit and applying for later licences. The complacency of Labour Members is not shared by the licensees of St. Albans; they all want some of that pie.
Will the hon. Lady give way?
No, I want to make some progress.
I have seen the police operating at first hand, and I know that they are reluctant to arrest a shambling drunk if he is not causing too much trouble. The figure of 848 arrests is therefore the tip of the iceberg. As our inspector pointed out, our cells and accident and emergency units would be overflowing if everybody who was drunk was arrested or sent for treatment. Individual revellers are often noisy, but do not commit an arrestable offence. So nothing much can be done as they clatter down the streets, keeping the people of St. Albans awake.
"Cumulative impact" is a vital factor in a city such as St. Albans, but the local council's licensing policy is far from robust, and "cumulative impact" is not accepted when applications are being considered. Each application has to be judged on its own merits. Many city centre residents have joined the Save Our Sleep campaign in an attempt to lobby the council. They are worried about the problems that the evening economy is bringing. They put up a spirited, well informed argument at the meetings, and they are regularly supported by our local police, who—such is their concern—have taken it upon themselves to alert residents to applications by giving out leaflets to affected homes. But this is all time-consuming for the residents, the police and, most importantly, the council, which has had to put masses of extra resources into dealing with these issues.
At present, we have six committees dealing with licensing. They have granted 400 licences, and still the deluge continues. Before the Act, the former, Labour, Member for St. Albans reckoned that only about 1 per cent. of licensees would apply for longer hours, but the figure is 40 per cent. Just as importantly, many of the premises offer music and entertainment. Some residents who have bought flats above small shops now find themselves above café bars that have turned themselves into late-night music venues.
Will the hon. Lady give way?
No, I will not.
With so many licensed premises in St. Albans, it will be almost impossible firmly to attribute blame, which is part of residents' problem. They are worried that if they challenge, they will have to pay their costs on appeal. Residents are also worried—the Government have not tackled this—that the future sale of their properties may be blighted if they keep being in dispute with local pubs and highlight the nuisance, so some are choosing to stay quiet. Some city centre properties are already blighted and some residents are moving out.
So how is the council coping and interpreting the policy? I believe that it is a shambles in St. Alban's, with brewers being the winners. At a recent licensing meeting, the chair gave her view that the council was "here to compromise". Perhaps that is the mediation to which one Labour Member referred. In this case, compromise means that if one applies to open until 3 in the morning, then quickly changes it to 2 in the morning, the objections of residents to 3 in the morning are deemed not relevant. Local police officers turn up to support residents with anecdotal evidence of rowdy behaviour—as I said earlier, they do not arrest everybody—but those views are deemed hearsay if an arrest has not been made, and the council cannot take it into account. St. Albans has also adopted a policy of not defining a vicinity. In theory, that means that anyone can object, but the reality is that the committee is left unsure as to how much weight to give to objections. Again, how will that stand up on appeal?
Worst of all, there is no concept of cumulative impact—the onus is on residents to monitor the licensed premises and then petition for enforcement if they can "show nuisance". It is a topsy-turvy way of dealing with the issue, which has residents and police wringing their hands. Is that what the Secretary of State meant when she assured us that the Act would increase the influence and power that residents and their associations would have over licensing? Well, my residents feel impotent. It does not matter what they say or do—the licences are being passed.
On a practical level, the chief licensing officer accepts that the police cannot patrol all these premises, but he has received an assurance from this Cabinet that he will have
"whatever it takes in resources to police this, including all-night council officers on duty."
The current noise nuisance hotline, which shuts at midnight, will now have to be extended until later. Can the Government honestly assure the council tax payers of St. Albans that all these extra resources will be covered by the fee? When the Secretary of State said that the fees will give local authorities the tools to do the job, did she envisage a 24-hour noise hotline, teams of additional council officers patrolling pubs, more enforcement officers, additional street cleansing and litter collection?
We need to stop before it is too late. We need to tackle the vertical binge drinking culture. If we want our cities to remain homes to families, welcoming to visitors and centres of tourism, we need to stop the binge-drinking culture and this flawed Act. I ask the Secretary of State to resile from her stated position and delay the implementation of the Act. It is folly. The people in St. Albans do not understand why you are not listening to them. Just because it is not causing a problem in your particular constituency—
Sorry, Mr. Deputy Speaker, just because in other hon. Members' constituencies—
Order. When the occupant of the Chair rises, any other hon. Member must sit down. I think that the hon. Lady has got the point.
You might see how impassioned I am, Mr. Deputy Speaker, on behalf of my residents.
If the Secretary of State will not delay the implementation of the Act, will she at least come to a public meeting in St. Alban's to tell my constituents why she will not do so?
I am grateful for the opportunity to make a short contribution to this important debate.
I should make a few declarations of interest. First, I am a member of the Campaign for Real Ale, was a judge at the great British beer festival this year, and opened the festival, which was superb. Secondly, I am a long-standing member of the all-party beer group and have been vice-chairman ever since it was formed. Thirdly, I own an off-licence in Swansea—[Laughter.] That is half my speech gone. And finally, I live next door to a pub in Pendleton in my constituency, which I frequent regularly.
I am one of the few Members who has had a look at one of these application forms. My sister received it, because we have an off-licence, and she got frightened and sent it to me. I looked at it, got frightened, and sent it back to her. We then employed a solicitor. What other Members have said about the cost is true—it has cost us well over £1,000 in solicitor's fees and to get an architect in to measure the shop, as well as various other costs. That is a heavy cost for us to bear, but I can only imagine the burden on many small rural businesses that do not sell much alcohol. One small business in my constituency has already let its licence lapse because it cannot afford to renew it and does not sell enough alcohol. Other smaller businesses and village halls will be affected, and it has come as a heavy burden.
We have been accused of scaremongering and opportunism. We have certainly not been scaremongering, and Esther McVeigh was not scaremongering in Wirral, West: she was absolutely right. What we have not been doing, unlike the Government, is pandering to people. I am thinking particularly of the message that the Government sent at the time of the general election, to the effect that if people voted for them they would be able to drink all day. I know that the Government regret that now, but the fact is that they did it. They were targeting younger people with mobile telephones.
The Government say that they want a café society. We, too, want to see more small wine bars opening. We are worried about the larger, urban pubs, which will contain several hundred people on Thursdays, Fridays and Saturdays. That is where the drink problems will arise.
The Secretary of State herself admitted that there is a problem with binge drinking in this country. The front page of today's edition of The Sun spoke of an alcoholic aged 12. One lady is so petrified of her 16-year-old daughter getting smashed on her birthday that she has taken a photograph of her daughter to 30 pubs so that she will not be served. The Secretary of State tries to pretend that the new laws will protect all those young people and their parents, but many of the laws are already in place. Moreover, many of the laws that she mentioned could have been introduced in splendid isolation, separately from the Act.
If there is currently a problem with binge drinking, is it not logical to expect that if many more pubs can stay open until 2 am, 3 am, 4 am and 5 am, the problem will become worse? That is what frightens us. We are not worried about the staggering of closing times, which will have many benefits for the police. Many businesses, however, will start closing at the same time—4 am. Once one of them starts staying open until 4 am, there will be huge pressure on all the others in the vicinity to do the same.
The Government have gone so far down the road that they will have to proceed with their plans just to save face, irrespective of the effects on the United Kingdom. It was the same when cannabis was reclassified from a class B to a class C drug. After the Government had spent £1 million on telling people that, actually, cannabis was still illegal, they set up a committee to look into the mistake that they had made and the impact that the change in the law had had. I suspect that the same will happen in this case. Binge drinking will get worse.
We saw the front page of The Observer yesterday. The head of all the licensed landlords in the country said that landlords were being offered incentives to keep people on their premises after 11 pm. They might be on the receiving end of as much as £20,000 in return for encouraging people to drink more—to drink shorts or doubles. To reach the targets that they have been set, landlords will have to persuade more people to stay longer and drink more alcohol. That will be a real problem, especially for those living nearby.
We were told that councillors would be able to object to noise, but the fact is that they will not. Councillors have been told that they cannot object to licence extensions unless they live in the vicinity, because otherwise they are not interested parties. The code of conduct, however, states that councillors living in the vicinity cannot object because that would be prejudicial. They are caught: whatever happens, they cannot object to extensions, and that prevents them from doing the job that they were elected to do.
I shall end my speech early, because I know that the Minister will want to respond to many of the points that have been made. We are not saying no to any change at all. The hon. Member for Wirral, West (Stephen Hesford) reminded the House that we changed the law to allow drinking in the afternoons, which I would describe as a sensible licensing extension. The Government's allowing drinking until as late as 5 o'clock in the morning is a sea change in comparison. We introduced that sensible change 20 years ago, but since then binge drinking has got much worse. More people are drinking more alcohol at a younger age, and this change to the law will make matters worse. The Government have made a mistake. It is still not too late to change it, but for goodness' sake, do it now.
If implementation of this Act were proceeding smoothly and it were being welcomed by the majority of our constituents and the electorate at large, I am pretty sure that we would not be having this debate. I strongly rebut the Secretary of State's claim that we are being opportunistic and are guilty of flip-flop—inconsistency. This legislation's progress has been inadequate; it has been late and badly prepared throughout. As the hon. Member for Bath (Mr. Foster) pointed out, in Committee we had no regulations, no guidance, no fee structure and no clear idea of implementation. There have been delays at every stage of implementation, and as many Members have said this evening, the application process has been a million light years away from the promises made by various Ministers.
When it became obvious that the Government were not addressing the binge drinking problem and ignoring representations from the police, the judiciary, local authorities and the village hall and sports club communities, we on the Opposition Benches opposed the legislation at every opportunity. The Minister in Committee raised the possibility of an amendment providing for a 20 per cent. limit on fees for sports clubs, but subsequent Ministers reneged on that. We opposed the Bill on Report and on Third Reading, and the Government's attempt to suggest otherwise is, at best, misleading, and, at worst, an outright calumny. In any event, since this Act was debated in the House in 2002 and 2003, the problem of binge drinking has escalated to the point where large swathes of society are now in despair at the Government's intention to press ahead with this Act and with the second appointed day.
A September Populus poll for The Times showed that the public are overwhelmingly against Government plans to extend licensing hours. It found that three fifths—62 per cent.—opposed the changes. Only a third—34 per cent.—were in favour of them. Women were against the changes by 71 per cent. to 25 per cent.; men were against them by 52 per cent. to 34 per cent. Not surprisingly, the only group in favour were 18 to 24-year-olds. In direct opposition to ministerial assertions, the proposals are not popular. People see the extension of licensing hours as having a direct correlation with crime, antisocial behaviour, ill health and additional costs to the taxpayer.
There are now 1 million violent crimes a year. Violent crime rose by 7 per cent. overall last year, on top of previous year-on-year increases. But the most important point is that nearly half of victims of violent crime thought that their attacker was under the influence of alcohol. The Home Office's report of June this year, entitled "Findings from the 2003 Offending, Crime and Justice Survey: alcohol-related crime and disorder", admitted that binge drinking is a major source of crime. It states:
"Binge drinkers accounted for a disproportionate volume of crime. They accounted for only 16 per cent. of the adult sample but were responsible for 55 per cent. of all offences reported by adults in the past 12 months . . . It is young male binge drinkers who have the highest rates of offending. This would therefore suggest that any measures to reduce alcohol-related offending should consider tackling binge drinking, particularly within the young male population."
More worryingly, the Government have fiddled and hidden evidence that shows the damaging effect of more late-night drinking. Papers uncovered by the BBC's "Panorama" programme show that, as originally drafted, the Government's alcohol harm reduction strategy, launched in March 2004, included evidence from other countries of the damaging effects of longer opening hours. The Downing street strategy unit, which consulted 17 experts in preparing the strategy, concluded that extending licensing hours could have a severe negative impact. It said:
"Restrictions on availability reduce consumption and general levels of harm. Relaxing availability increases general harm whether through more outlets (Finland), denser outlets (California) or longer hours (Western Australia)".
Such concerns were removed from the final version, which made no reference to opening hours. A source cited by The Sunday Times as being close to the strategy stated that civil servants
"drafted what they thought was a pretty decent strategy only to see it get decimated as it got passed around government departments".
The cost of alcohol-fuelled crime and disorder is already £12 billion—£5 billion more than the strategy unit predicted.
The alcohol committee of the Royal College of Physicians stated:
"Already, alcohol-related diseases are costing the NHS about £1.7 billion every year. Around 17 million working days are lost annually because of alcohol abuse, costing our economy £6.4 billion. 70 per cent. of all weekend night-time admissions to hospitals Accident and Emergency Departments are linked to alcohol. More than half of all violent crime is related to drink."
The committee believes:
"The places that will take advantage of changes in the law are not the local, neighbourhood pubs where responsible drinking already occurs and the staff know their customers. It will be the large, anonymous, urban establishments, with a young clientele, that will benefit most—but experience the most trouble, whether it is through an increase in street violence or in damage to health."
There are few powers in the legislation to hold pubs and clubs responsible for rowdy or drunk customers once they are outside their licensed premises—even if the nuisance was ultimately caused by serving alcohol. Most local residents cannot object to controversial proposals for late-night licensing in their town centre—unless, of course, they live very close by. Yet antisocial behaviour, crime and nuisance are not limited to the immediate area around the licensed premises; they can occur miles away as drunken revellers return home. Moreover, councils and police cannot use nuisance and noise from outside a licensed premises as grounds for a closure order against a particular venue. Pubs and clubs can be penalised only if they make excessive noise from inside a pub. Hence, licensed premises cannot be held responsible for the antics of their drunken customers leaving in the early hours.
The Secretary of State claimed earlier in the debate that the curfew, as she calls it, would be a thing of the past. However, as the hon. Member for Bath said, there is nothing in the Act to secure staggered closing times. Let me quote Peter Fahy, the chief constable of Cheshire police:
"In the various applications coming through, we are seeing a general extension of an hour or two on to existing hours. And that means that some of the problems we see on a Friday and Saturday night are now going to spread into other nights of the week."
The idea that we will be able to curtail antisocial behaviour by staggering the closure of these outlets is nonsense. As my hon. Friend the Member for Ribble Valley (Mr. Evans) said, publicans have looked at what their neighbours and competitors are doing and have put in for exactly the same extension of hours so that custom does not go elsewhere.
We ask in the motion for a delay, particularly in respect of the second appointed day.
Will the hon. Gentleman give way?
No, I am about to finish and the Minister needs time to respond.
If there were a delay, existing licences would continue, as they do at present under the transitional arrangements under the Licensing Act 1964. New licences could stand and fees paid would be held in abeyance. Parts of the 2003 Act could be implemented. A simple statutory instrument could be introduced to implement the parts of the measure on which there is common agreement, but the hours extension provisions could and should be delayed for a rethink because of the binge-drinking implications.
This has been a good debate. When we last debated the issue, the Opposition were worried about the fact that only 20 per cent. of premises had applied for their licence, so I start by paying tribute to the hard work of all local councillors and local officers who worked so hard over the summer to increase the figure to 97 per cent. I am sure that all parties will join me in thanking them for that.
In the light of what my hon. Friend has just said, I thank him for visiting the licensing unit of Brighton and Hove city council a few weeks ago to thank staff for their hard work—it really boosted morale. What will be the impact on those local government officers if the House agrees with the Opposition motion not to proceed with implementation on 24 November?
That is an extremely good point. It would be utterly demoralising for people such as the staff in Brighton and Hove council. The council is one of the best in the country and reached 100 per cent. extremely early, and I pay tribute to the work of the staff.
I listened with great interest to the speech of the hon. Member for North-East Cambridgeshire (Mr. Moss). He takes a serious interest in the issues. I especially remember him saying during our last debate in July:
"Flexible hours was never an issue. Twenty-four-hour drinking was never an issue".—[Official Report, 12 July 2005; Vol. 436, c. 798.]
I agree with him. There are real issues, however, as the hon. Member for Ribble Valley (Mr. Evans) made clear in an excellent speech. He referred to the case reported in The Sun today of the young girl who is already an alcoholic. The paper published a picture of her in a beer garden drinking a pint of beer. That is legal under current law. That is exactly why we are changing the law. Such problems are occurring under the current law and they need to be fixed.
Will the Minister resign if the extension of licensing hours does not lead to a reduction in violent crime and binge drinking? A simple yes or no will suffice.
I have only just got here, so I am not planning to resign yet.
It is not acceptable for 11-year-olds to be getting drunk and falling over in the street. It is not acceptable for pubs to use irresponsible drinks promotions to boost profits and it should be shameful for people to get so drunk that they end up in accident and emergency departments or, worse, cause someone else to end up there. We recognise those problems, as the hon. Member for St. Albans (Anne Main) said. It is exactly because they are happening under the current law that we want to change it and fix them.
Will the Minister accept that longer hours will not make people drink less, so they will not address the problem of binge drinking? If he wants evidence, he should look at Scotland where alcohol consumption rose after relaxation of the drinking laws and where binge drinking is still a problem in my constituency and in the rest of the country.
I shall return to that point later, but if the current hours regime had actually been designed to encourage binge drinking the situation would not be dissimilar to the one that exists. There is a loophole in the current law whereby people can drink in pubs after 11 o'clock, but only in pubs that put on dancing and music—the very ones about which we are most worried. There are 320 such pubs in the centre of Manchester alone, so the idea that people are not drinking after 11 o'clock at night is wrong, but they can do so only in the places that we would be most worried about if we were designing the law from scratch.
That is why we should be giving the powers to people at local level, so that they can make decisions based on local circumstances. My colleagues, my hon. Friends the Members for Wirral, West (Stephen Hesford) and for Caerphilly (Mr. David), made excellent speeches showing how local authorities are using their discretion to adapt their policies to local circumstances. A decision about the Dog and Duck in Leeds, for example, should be made on the basis of circumstances in Leeds, not by me in Whitehall deciding on a blanket closing time for the whole country.
But does the Minister agree that local authorities and local councillors need clarification of what they can and cannot do? Legal counsel has given advice that ward councillors cannot speak on issues in their ward unless a resident has asked them to do so on their behalf.
We shall be happy to look at that issue sympathetically in the review of the guidance and I hope that the hon. Gentleman will contribute to it.
It is clear under the Act that councillors can represent the views of their constituents when they have received representations; they can also seek representations.
Does my hon. Friend agree that, under the new law, not only do people have a say but, for the first time ever, they are informed when licensing applications come before councils? Under the previous system, they were neither consulted nor encouraged to complain to magistrates courts.
That is absolutely right. One of the key advantages of the Licensing Act 2003 is that it gives the power to local councillors—the people who are accountable for the consequences of binge drinking in their areas and who will have the best incentive to take those decisions in the interests of their constituents.
The Opposition argue in their motion for delaying the Act's implementation, but those at the front line disagree. The LGA, ACPO and the Police Superintendents Association disagree, and the opposition case has fallen apart as those stakeholders and the representatives of those organisations—
Will the Minister give way?
I have already given way significantly. I have only five minutes to make these points.
The police and some others are concerned about certain decisions. Of course, when they have those concerns, they have been successfully making representations to committees and getting some decisions overturned. ACPO has made it clear that it believes that the answer to the concerns about binge drinking is to change the behaviour of customers and proprietors, as well as introducing stronger licensing regulations. We agree with the police. If we delayed the Act's implementation, we would not get the powers that we need, contrary to what the hon. Member for Bath suggested in his speech. He is wrong to say that we would have those powers anyhow. For example, if we delayed implementation, we would lose the power for review, which will be central to changing the incentives open to landlords, so that they know that, if they misbehave or cause problems, they will face an immediate review by residents or the police.
The hon. Member for Bath said that we should just rely on the current powers, but ACPO says that those powers are broken, and it has told us that they want new powers. Frankly, it is not folly to implement the Act; it would be folly not to do so against the advice of the police.
If we delay the Act's implementation, we would not have the powers to deal with binge drinking and the costs placed on businesses would rise. Hon. Members made important points about the costs, and we will look at them in the review that Sir Les Elton is chairing.
I can assure the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale), who is the Chairman of the Select Committee on Culture, Media and Sport, that we will seriously consider the point that he made about village halls and sports clubs. The representatives of the Central Council of Physical Recreation and of Action with Communities in Rural England, who represent village halls, have written to hon. Members to say that they do not want the Act's implementation to be delayed. If we delayed it, they would lose the £2 billion of savings that they will get over the next 10 years and all the work, which he described so eloquently, that has been going on over the summer would have been wasted, and the money would have been wasted. Hon. Members have championed that cause, and they would not be thanked by their constituents if we imposed greater costs on them.
The hon. Members for Bath and for North-East Cambridgeshire said that we did not have evidence for the Act. In fact, flexible hours have been introduced in New Zealand, Victoria and New South Wales, and they have reduced alcohol consumption in all those places. Today's argument about delay is not about serious politics; it is just about chasing headlines. I believe that this is good legislation, but even those who have had concerns about the specifics of the Act now say that they want it to be implemented. When politicians in the House look at the Act impartially, they agree with us. The deputy leader of the Liberal Democrats served on the independent Nicholson committee in Scotland that recommended following the path that we are following and he backed our proposals. Why are the Liberal Democrats not following the advice of their deputy leader?
The hon. Member for Witney (Mr. Cameron), whom many Conservative Members back to become their next leader, has also said that he backs the proposals and the intention behind the Act. He has made it clear—
It is very clear that the hon. Member for Witney said:
"The idea behind the bill is to liberalise the licensing laws, simplify the system . . . and let pubs stay open for longer".
I would say amen to all those things. If that is a surprise to Opposition Members—
rose in his place and claimed to move, That the Question be now put.
Question, That the Question be now put, put and agreed to.
Question put accordingly, That the original words stand part of the Question:—
Question accordingly negatived.
Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments):—
Mr. Speaker forthwith declared the main Question, as amended, to be agreed to.
Resolved,
That this House commends the Government on its effective publicity campaign that, together with the excellent work of licensing authorities, has resulted in 97 per cent. of those needing to make applications having done so, with the expectation that virtually all those who want a licence will have the necessary licence by 24th November; welcomes the involvement of more local residents than ever before in the licensing processes and their ability to influence the hours that premises open near their homes; notes that there is no presumption in favour of late night drinking in the Act and that it is for licensing authorities to decide appropriate hours of trading where any dispute arises; considers that the implementation of the powers to review premises licences after 24th November are a vital step in fighting anti-social behaviour; and believes that delaying the implementation of the Act would be contrary to the wishes of the police, licensing authorities, the Central Council of Physical Recreation, Action with Communities in Rural England and industry and would be an unacceptable waste of the resources and effort put in by those who have been preparing for full implementation since 7th February 2005.
Delegated Legislation
Motion made, and Question put forthwith, pursuant to Standing Order 118(6) (Standing Committees on Delegated Legislation),
Civil Partnerships
That the draft Civil Partnership Act 2004 (Overseas Relationships and Consequential, etc. Amendments) Order 2005, which was laid before this House on 5th July, be approved —[Joan Ryan.]
Question agreed to.
European Union Documents
Motion made, and Question put forthwith, pursuant to Standing Order No. 119(9) (European Standing Committees),
Marketing of Maize Geneticallty Modified for Resistance to Corn Rootworm and Certain Pests and Herbicides
That this House takes note of European Union Documents No. 8635/05, draft Council Decision concerning the placing on the market, in accordance with Directive 2001/18/EC, of a maize product (Zea mays L. line MON 863) genetically modified for resistance to corn rootworm and No. 10785/05, draft Council Decision concerning the placing on the market, in accordance with Directive 2001/18/EC, of a maize product (Zea mays L. line 1507) genetically modified for resistance to certain lepidopteran pests and for tolerance to the herbicide glufosinate-ammonium; and supports the Government's view that all the requirements of the Directive have been met in relation to these products and their proposed use should be authorised.—[Joan Ryan.]
Question agreed to.
Motion made, and Question put forthwith, pursuant to Standing Order No. 119(9) (European Standing Committees),
Eu Common Strategy on Russia
That this House takes note of European Union Documents No. 8799/05 and Addendum 1, EU-Russia: Road Maps for the Common Economic Space, the Common Space of Freedom, Security and Justice, the Common Space of External Security and the Common Space of Research, Education and Culture; and agrees with the Government that the road maps for the Four Common Spaces agreed at the EU-Russia Summit on 10th May 2005 provide a valuable framework for the EUto achieve its objectives in its relations with Russia in the medium term. —[Joan Ryan.]
Question agreed to.
Committees
With permission, I shall put together motions 5 and 6.
Ordered,
Statutory Instruments (Joint Committee)
That Mr Jeffrey M. Donaldson be discharged from the Joint Committee on Statutory Instruments and David Simpson be added.
Trade and Industry Committee
That Sir Robert Smith be discharged from the Trade and Industry Committee and Mark Hunter be added.—[Joan Ryan, on behalf of the Committee of Selection.]
Petition
Council Tax
I am pleased to present a petition on behalf of my constituents. It was drawn up and circulated by Mr. Martin Leach of Romiley and contains 228 signatures from the Bredbury Green area of my constituency. Bredbury Green has a high proportion of pensioners, the most vulnerable group under the current inequitable system of local government finance.
The petition reads:
To The House of Commons
The petition of the Isitfair Council Tax protest campaign
Declares that the year-on-year above-inflation increases in Council Tax are causing hardship to many and take no account of ability to pay; further that the proposed property revaluation and re-banding exercise will make an already flawed system even worse.
The Petitioners therefore request that the House of Commons vote to replace Council Tax with a fair and equitable tax that, without recourse to any supplementary benefit, takes into account ability to pay from disposable income. Such tax to be based on a system that is free from any geographically or politically motivated discrimination, and that clearly identifies the fiscal and managerial responsibilities of all involved parties.
And the Petitioners remain, etc.
To lie upon the Table.
Affordable Housing (West Midlands)
Motion made, and Question proposed, That this House do now adjourn.—[Joan Ryan.]
I am pleased to have secured tonight's Adjournment debate on this important subject.
For most people, the penny has dropped that the housing sector is not one homogenous whole, although there are still some people who have ventured only so far as to think that there is overheating in the housing market in the south-east and problems of low demand in the north. Even within that simplistic view of the housing sector there are empty homes in the south-east and areas of high-priced housing and tight housing markets in the north. However, the situation is much more varied than that.
I like to think of the west midlands as a microcosm of the entire country's housing market. For example, in the west of the west midlands there are sparsely populated rural areas in Herefordshire, Shropshire, the north-east of the area and Staffordshire, Moorlands. In the centre, major conurbations such as Birmingham are regenerating, growing and becoming increasingly engines of future development.
In Stoke and in Sandwell, two areas of housing market renewal, we are trying to build up areas of housing where markets have become distressed in the past. In some parts of the region, in counties such as Warwickshire and Worcestershire, there are terrible housing hot spots where even key public sector workers cannot afford to buy a home.
On top of all that, the regional housing strategy that was agreed in June identified a need for a net 13,464 new affordable dwellings in the region in just three years, from 2006–08. It is important to impress on the Minister and on everyone who is interested in this subject that different solutions are required in different places. That applies in the west midlands and in the broader country, too. It is vital that the very diversity that makes the west midlands so fascinating and gives us so much economic and social potential should be matched with a housing sector that is also diverse, flexible and dynamic.
I hope to cover two central points. First, we need more affordable housing in our region—more than we already have and more than is planned. Secondly, rural areas need special attention if there is to be enough affordable housing for local people in their rural communities. What I mean by "affordable housing" is low-cost housing that people can buy on the open market, and subsidised public or private housing, whether it be for rent, sale or shared ownership. My starting point is Shelter's analysis and campaign on the subject, starting a few years ago with its million children campaign, which reminded us of the devastating impact of homelessness, overcrowding and unfit housing on children's health, education and life chances.
Shelter's analysis focuses on a chronic shortage of social rented housing. I hope to go further than that, but in its new campaign document "Building hope: the case for more homes now", it calls for 20,000 more social rented homes each year from 2008 to 2011, in addition to planned outputs. It says that that package could help to lift more than 150,000 children out of bad housing by 2011.
The Barker review of housing supply identified the broader lack of supply across all tenures. According to Barker, builders, who already provide about 160,000 new properties a year for open market sale, should raise that by between another 70,000 and 120,000 a year. Although registered social landlords and councils are adding nearly 20,000 new affordable homes a year, Barker suggests that an extra 17,000 a year above that is needed to meet expected future demand. Barker also says that there is a case for up to another 9,000 a year above that rate to make inroads into the backlog of need.
Of the 21 million or so existing homes in Britain, more than 1 million houses are below the current fitness standard—most are in the owner-occupied sector—500,000 households are in overcrowded accommodation, and 90,000 households are in temporary accommodation. On top of those problems, on 1 April 2004, 693,000 dwellings in England were standing empty—most of them in the private sector—and at any one time more than 300,000 potential homes stand empty for more than six months. That is more than the figure for every council's waiting list of those who have been accepted as homeless and in priority need. The amount of existing assets that stand empty when we could be putting them to use is a crying shame.
Against that background, what is the Government's position on housing policy generally? Under Labour since 1997, home ownership has increased by 1 million, and the target is set for another increase in this Parliament of a further 1 million home owners. This year, the Council of Mortgage Lenders published useful research called "Understanding first-time buyers". It shows that the number of first-time buyers has declined recently, but that they remain crucial to the health of the housing market as a whole. Renting fulfils a need for flexibility and mobility, but in the longer term 80 per cent. of young adults still want to be owner occupiers. However, the size of the deposit paid by first-time buyers has risen so that some of them rely on parents and grandparents for help with that. The research by the Council of Mortgage Lenders concludes that Government policy needs to focus on more flexible movement into and out of home ownership to reflect changing lifestyles. It also says that further development of an intermediate tenure could help to sustain the long-term future health of the housing market.
In addition to home ownership, the Government have raised the stamp duty threshold from £60,000 to £120,000. An extra 300,000 home buyers a year will be exempt from paying stamp duty as a result. The Government have also reduced rough sleeping in a dramatic way. The number of those sleeping rough is now less than one quarter of the figure given for 1998. In Birmingham in 1998—admittedly, these are estimates by the Office of the Deputy Prime Minister—there were 56 rough sleepers, but in 2005 there are just seven. That is a commendable performance.
Does my hon. Friend share my concern about the rising number of families in temporary accommodation in Birmingham and the long delays in council assistance with permanent housing? Since 1997, the number of relettings available from Birmingham city council have been reduced by half. The proportion of relets allocated to homeless families has increased from a third to three quarters. People who are not homeless have no chance at all of being given council housing.
My hon. Friend's statistics reinforce the urgency of the situation, to which I hope the Under-Secretary of State, Office of the Deputy Prime Minister, my hon. Friend the Member for Poplar and Canning Town (Jim Fitzpatrick) will respond in his reply.
The Government have plans for a stronger intermediate housing market to help people achieve home ownership at an affordable pace. A new "homebuy" scheme for council and housing association tenants has been planned. A first-time buyers initiative will help first-time buyers who cannot afford to own or part-own a home without extra help. Existing home ownership schemes such as the key worker living scheme and shared ownership are being strengthened. In addition, the Government are releasing more vacant public sector land for housing. Their funding for social housing has doubled, and they wish to improve not just supply but quality. Existing social housing, for example, is subject to the decent homes standard, which has raised more than 1 million homes to a decent standard. The Government are also concentrating on the need for warmer homes. In addition to work under the decent homes standard, projects such as warm front have provided insulation and improved heating in more than 1 million homes. Higher standards for building new homes so that they are sustainable are at the heart of the Government's strategy. The more public money that the Government pay to build homes, the more they can insist that those homes are built to a given standard. From next April, a code for sustainable building will be introduced, and it is pleasing that the Government have announced that they expect homes paid for by public funds to meet that standard.
By 2008, the Labour Government promise to build 30,000 new social homes, including new build by councils. Councils have stronger powers to bring empty properties back into use, and a range of legislation has been introduced to enable them to do so. For example, councils can impose a fuller council tax on empty properties instead of rewarding the owners for keeping them empty with cuts. Councils can secure information to track down the owners of empty properties so that they can hold discussions with them. The Housing Act 2004 includes a power for councils to exercise new empty property management orders so that empty properties can be brought into productive use for society's benefit.
A week ago, during the national week of action of empty homes, I published a pamphlet calling for a new classification of empty properties as "redfield" sites. Such sites would be used to designate land containing vacant property that could be brought back into use as residential housing. Government guidance to planners would require them to apply the sequential test to the provision of housing sites. Redfield sites containing empty properties would be considered first for their suitability as sites for new homes. Brownfield sites would be considered next and then, as now, greenfield sites.
The need for affordable housing can be met by building new homes; by converting existing houses and other buildings; and by bringing vacant homes and other vacant properties back into residential use. That national plan is applied locally by the west midlands regional housing strategy, a well-researched document prepared after extensive consultation with local authorities and other stakeholders. There are agreed priorities for the region, including urban and rural renaissance and something that the strategy calls "The Big Issue: Affordability". All those priorities have been developed within the context of mixed, balanced and inclusive communities.
West midlands housing resources for the current financial year include a Government housing allocation of more than £180 million. As a result of the last spending review an estimated 2,000 social rented units will be delivered in the west midlands in 2007–08. There is a desperate need to help large numbers of residents trapped in overcrowded or unfit housing, as well as people who have no permanent housing at all. An eighth of England's homeless live in the west midlands, and about 120,000 households are registered on council housing lists. There are 116,000 unfit dwellings and 75,000 empty homes. Last year, 5,332 council homes were sold under the right to buy, including 200 in Stafford.
Sadly, however, despite that background, the constituency of Stafford is not identified in our regional plan as an area of particular need requiring special help for meeting our needs for affordable housing. That dismays me, because I uncover in my casework a great deal of pressure across the board for help with affordable housing, be it from young couples looking for their first home, key public sector workers having trouble finding a home to buy, existing tenants of councils and housing associations wanting to move or to buy but finding themselves trapped where they are, or retired people on limited incomes who want to downsize but cannot find anywhere to suit their pocket. Increasingly, I am also having to advise people who have been knocked back by councils in homelessness applications to challenge them in the courts.
In addition to all this, the house price to average salary ratio in my constituency is as high as 8:1. Furthermore, 80 per cent. of the South Staffordshire district—part of which is in my constituency—is unsuitable for the building of new homes because of green-belt and other open countryside policies. That means that housing is concentrated in the existing villages, where restrictive planning policies result in very high prices that local people cannot afford.
The Shelter campaign's request for 20,000 additional social rented houses a year in England would translate into an extra 1,330 units annually in the west midlands during the three years from 2008. Shelter estimates that that could help to lift more than 11,500 children out of bad housing. Will the Minister acknowledge the urgency of the need for more affordable housing across the whole of the west midlands region? Will he also spare a thought for the specific needs of my constituency?
I would ask the Minister to adopt policies such as ensuring that Labour's manifesto promises relating to the Homebuy programme, the first-time buyers' initiative, the key worker living scheme, and shared ownership will apply in the west midlands. The key worker living scheme does not apply outside the south-east. Will the Minister ensure that there are stronger planning powers under new planning policy statement 3, when it appears, which would enable councils to secure affordable housing as part of all new developments? Will he also ensure that there is greater certainty for developers, registered social landlords and private property investors, so that they will invest in our region? Will he look at Shelter's Building Hope agenda, so that there can be more homes? Will he introduce policies for more funding, for stronger section 106 agreements, for modernising the private rented sector and for further reform of the right to buy?
I hope that we will take forward the Deputy Prime Minister's initiative for affordable homes built by modern methods of construction at affordable prices. I should like to mention that there is a developer in my Stafford constituency who would like to see affordable homes being built as part of his wider regeneration projects, but who argues for a tax credit arrangement for a public subsidy to him, instead of the complex system of applying for grants. He also has an idea for establishing an institute for modern building technology to train the labour force required for putting into practice modern methods of construction. I hope that all that will be welcomed by the Minister.
Rural housing needs particular attention. In the last Parliament, Labour set targets for the creation of affordable homes in rural areas, and met them. In our manifesto, we promised to explore how to ensure that a proportion of all new housing development could be made available and affordable to local residents and their families in rural areas. In fairness, the Government have now established what they promised in their rural manifesto: an affordable rural housing commission, chaired by Elinor Goodman, which is due to report early next year.
Let us remember that rural Britain generates 30 per cent. of the nation's jobs and 25 per cent. of its gross domestic product, all from 23 per cent. of the nation's population. However, the lack of affordable housing in rural areas is a key challenge. Many of my constituents have raised this issue with me many times. Sometimes, the houses are just not there to enable children to live in the places where they grew up. In other cases, the homes that are there are simply too expensive for them to afford, so they are unable to live locally.
The west midlands regional housing strategy goes so far as to suggest that, in rural areas, consideration should be given to allocating 100 per cent. affordable housing sites. That is an impressive commitment to what could be done through planning law to ensure that we can have affordable housing in rural areas. We also need special measures, including more stretching targets for new affordable homes in rural areas—recognising the higher costs of rural developments, both in land prices and unit building costs—and ring-fencing the investment needed to meet the higher targets. We also need innovative co-operative, mutual and other models under which the affordability can be locked in for all time. Similarly, we need to make more attractive the use of exceptions sites for new affordable homes.
On right to buy, I would also argue that councils in rural areas, and housing associations in rural areas with a population larger than 3,000, ought to have more protection from losing their stock to right to buy. Let me give the example of one village in my constituency, Wheaton Aston, where the South Staffordshire Housing Association has a stock of 58 units of affordable homes but currently has a waiting list of 74 and a turnover in 2004–05 of just three. For the full picture for my constituency, one would have to multiply those figures by a factor of about 30. To get the full picture in the west midlands, where there are 59 constituencies, one would have to multiply again. It is therefore a huge problem.
That is why, across the west midlands, there are families, single people and vulnerable individuals who have no secure homes of their own. Some would like to buy a home but cannot do so without help. Others would like to make progress towards home ownership, but there is no supply of intermediate housing for them. Others still want to rent, because they prefer this tenure long-term, or because renting suits their immediate needs. On the other hand, there are developers willing to provide, investors willing to fund, builders willing to construct, and registered social landlords and councils willing to manage. I am asking the Minister to join up the supply side and help meet the demand.
We should not rest while there is so much unmet need for affordable housing. Opportunity, ambition and lifetime achievement will be hindered until those in need can have access more consistently, in greater numbers and with wider choice to a range of affordable housing in all parts of the west midlands. I therefore ask the Minister to help the west midlands to help itself to meet the pressing need for affordable housing.
I thank my hon. Friend the Member for Stafford (Mr. Kidney) for raising the issue of affordable housing, which the Government consider to be of great importance to the future economic and social development and well-being of our country. Before moving to the specifics of the west midlands, I want to outline what we are trying to achieve nationally, as well as that which we have accomplished. Some of those issues were raised by my hon. Friend.
First, as my hon. Friend mentioned, the number of home owners has increased by 1 million since 1997. Repossessions have fallen from 75,000 in 1991 to just over 6,000 in 2004 and mortgage interest rates have remained at low levels over a considerable period. We have a strategy to increase housing supply, as set out in the communities plan and that is now delivering results in London and the south-east—a 36 per cent. increase in new homes built between 2001 and 2005, combined with increasing densities and reuse of brownfield land. That is addressing one of the causes of affordability problems: that, over several decades, we have simply not built enough new homes.
My hon. Friend raised the issue of homelessness and the fact that it is perceived as increasing and becoming the predominant route to social housing. We have tried to tackle the worst homelessness problems, as I am sure he knows. We have reduced rough sleeping by 75 per cent. and ended the long-term use of bed-and-breakfast accommodation for families with children. The number of people becoming homeless is also falling. The latest statistics, from April to June this year, show homeless acceptances as 17 per cent. lower than in the same period in 2004.
A range of measures are necessary in addition to a stable market and increasing supply to tackle the problem of the lack of affordable homes. Since 1997, we have doubled the investment in affordable housing for rent or purchase. Over the three years to 2006, £5 billion will be spent. That investment will support the delivery of our new range of simpler, more affordable, more accessible home ownership schemes. In the short term, through our new homebuy schemes, we will help more than 100,000 households to own their own home by 2010. Homebuy will provide a flexible shared equity-based product that will increase access to home ownership for those currently priced out of the market. It will also provide opportunities for social tenants to buy a share in their homes. Homebuy will reinforce the longer-term strategy by increasing home ownership opportunities for key workers now.
Many initiatives focus on the urban areas where key workers and first-time buyers have found it difficult to obtain affordable housing but, as my hon. Friend said, rural areas have not been and will not be overlooked. Current schemes are designed to be flexible enough to respond to the needs of rural as well as urban communities. The Rural Affordable Housing Commission is now examining issues, problems and solutions across the country in rural areas, and will make recommendations based on good practice.
Empty homes are also a factor in the contribution to an adequate supply. My hon. Friend produced a useful pamphlet that highlights the issue, but we do not agree that a new "redfield" label is required. Over the last decade, the number of vacant dwellings has dropped by nearly 180,000, to 690,000 in 2004. More remains to be done and we recently provided local authorities with a new tool—empty dwelling management orders—to support their efforts to return empty dwellings to use. There are also tax incentives to support the use of space above shops, the conversion of properties and the renovation of properties that have been empty for three or more years.
The west midlands contains some urban areas where market restructuring is essential and, indeed, is pressing ahead—for example, the north Staffordshire and Birmingham-Sandwell housing market renewal pathfinder areas. But in other areas there are significant affordability and supply issues comparable with those seen in parts of the south-east. The regional spatial strategy has had a key input in the update of the regional housing strategy that was completed in June this year.
The importance of housing in delivering the region's wider objectives is demonstrated by the commitment to an extensive research exercise. That research, which is the envy of many other regions, has provided a comprehensive picture of the housing problems in the west midlands. It was led by Birmingham university's centre for urban and regional studies, which identified the key issues and used extensive engagement to develop a consensus on the priorities for action.
The research resulted in the definition of four housing market areas in the region. In each area, surveys of needs and aspirations were considered together with average house prices, incomes and trends in household formation. It confirmed that affordability problems are experienced most acutely in the west and south of the region, where price-to-income ratios reach a value of nine. In the north of the region, although prices are lower, incomes are also lower. That has resulted in affordability problems that had not previously been highlighted.
On the basis of the estimates of affordable housing needs for each market area, a total of 78,000 affordable dwellings will be required across the region over the period to 2021. The central market area, including the Birmingham conurbation, has the greatest requirement: more than 45,000 dwellings. Issues highlighted include the need to provide improved choice of property type across the area, where terraced properties are over-represented.
Is my hon. Friend satisfied that there are enough new affordable homes, particularly for rent, to meet demand? I gave some figures earlier. In Birmingham, the number of re-lets has fallen from 9,200 a year in 1997 to 4,600. As a result, a higher proportion are being used to deal with homelessness. Will he ensure that the supply is adequate? Birmingham city council has been demolishing homes without building replacements. That council alone needs 3,000 new homes a year, more than even Shelter—
Order. The hon. Lady's intervention is going on rather.
My hon. Friend makes a strong point. I know that she has written to the Office of the Deputy Prime Minister. I also know that there is to be an Adjournment debate later this week to deal with aspects of the Birmingham difficulties.
I can only repeat what I tried to say at the beginning of my speech. Decades of decline in house building have led to a serious problem and the issue of affordable housing and the building of enough affordable homes in the country is at the top of the ODPM's agenda. We are doing all that we can to address the deficit in the meantime, and opportunities such as this to put on record what has been done nationally and regionally will help to fuel the debates and allow us to make progress, with the assistance of my hon. Friends.
In the west market area—Herefordshire and Shropshire—there are also high levels of home ownership, with significant retirement migration and a limited mix of properties. This pressure on prices has led to a requirement for 12,000 affordable homes. My hon. Friend the Member for Stafford will be most interested in the north market area, which covers Stoke and northern Staffordshire. This, like the central area, suffers from an over-representation of terraced properties. The economy is weak and insular, and generally low incomes have led to a requirement for 3,000 affordable homes.
To address the need for affordable housing in the west midlands over the next two years, £198 million has been allocated to the Housing Corporation—an 11 per cent. increase on the figure for the past two years. That funding is prioritised toward the mainly rural areas of the region in the south and west housing market areas. It will deliver an increase in affordable homes—from 1,200 for 2004–06 to 2,500 for 2006–08—in these largely rural areas.
To improve delivery, the Housing Corporation is seeking ways to improve the cost-effectiveness of its programmes. These range from innovative and modern methods of construction to working with leading partner registered social landlords. The regional housing board is facilitating region-wide sharing of good and innovative practice in the delivery of the regional housing strategy. Practitioners will be encouraged to think the unthinkable in considering the most effective ways of delivering affordable housing. Solutions will be sought from all sectors—legal, financial, technological, property, house-building, voluntary and charitable—as well as local authorities and RSLs.
The Government are delivering a stable housing market that in itself will help to address many of the factors associated with the affordability of housing. The west midlands regional housing board has gained a thorough understanding of the problems across the region and the regional housing strategy provides guidance on the issues to be addressed in each of the housing market areas. The Housing Corporation and the regional housing partnership will work with sub-regional partners to deliver more affordable housing, and to develop and implement best practice across the region.
Question put and agreed to.
Adjourned accordingly at two minutes past Eleven o'clock.