With permission, Mr. Speaker, I should like to make a statement on benefits uprating in the context of the Government's continued fight against poverty and our ambitious programme to renew the welfare and pensions systems.

I shall place full details of the uprating in the Vote Office and arrange for the figures to be published in the Official Report. I can confirm that most national insurance benefits will rise by the retail prices index, which is 2.7 per cent., and that most income-related benefits will be uprated by Rossi, at 2.2 per cent.

From next April, retirement pension will go up by £2.20 a week for single pensioners and by £3.55 a week for couples. When we were elected, the pension was just £62.45 for a single person. From April, it will be £84.25 for a single person and £134.75 for couples. That is a real-terms rise of 8 per cent. since 1997. Next year, the guarantee credit of pension credit will rise in line with earnings, so that no single pensioner need live on less than £114.05 a week and no couple on less than £174.05 a week. The threshold for the savings element of pension credit will be uprated so that it remains equal to the basic state pension. That means that a typical single pensioner will now gain from pension credit with an income of up to £158.75 a week, while a typical couple will gain on income of up to £233 a week.

Nearly 3.3 million pensioners are now in receipt of pension credit, with an average weekly award of around £43. We are reaching more people and ensuring that they get their entitlements. Following the introduction of pension credit, about 2 million pensioner households now qualify for more help, or qualify for help for the first time, with their council tax or rent. From this week, pensioners can make a single phone call to claim all three: pension credit, housing benefit and council tax benefit. That will be a very welcome simplification.

By targeting resources at the least well-off pensioners, we have succeeded in lifting nearly 2 million pensioners out of absolute poverty since 1997. We now spend an extra £11 billion a year on pensioners, with almost half of the extra spending going to the least well-off third. Had we simply increased the basic state pension in line with earnings, only just over a quarter of that extra spending would have gone to the least well-off third, who would have been £30 a week worse off than they are under these measures. On average, pensioner households are now £1,400 a year, or £27 a week, better off in real terms than they would have been under the 1997 system, with the least well-off third of households £1,900 a year, or £37 a week, better off in real terms.

As well as tackling the dreadful legacy of pensioner poverty that we inherited, we have also helped all pensioners and will continue to do so. My right hon. Friend the Chancellor confirmed yesterday that the winter fuel payment would be £200 for every year of this Parliament. He also announced that he would be setting aside an additional £300 million over the next three years, so that the Government's warm front programme can offer pensioner households on pension credit free installation of central heating, and all other pensioner households without central heating a contribution of £300 towards the cost of installing it. He also announced further help with the cost of insulation. I believe that the whole House will welcome those announcements.

We have now reached the unprecedented position in which pensioners are no more likely to be poor than any other group in society. That is a particularly remarkable achievement after a period in which earnings have grown so fast, thanks to the stability and steady growth that we have enjoyed in the economy since 1997. We need now to introduce further reform to ensure that our pensions system continues to deliver for future generations of pensioners, as it is doing for today's. So we warmly welcome the broad framework of the Pensions Commission's proposals and options, which were published last week. We believe that they will provide the right basis for building the consensus that we need, but there is still a great deal to be discussed and debated about the detail.

Yesterday, I issued a challenge to the pensions industry. It believes that it can produce an industry-led model that will meet the Turner objective of enabling everyone to save for a pension at low cost, while outperforming the one proposed in the report. I have therefore asked the industry to work up the details of its alternative approach by early February, ahead of a joint national pensions debate event between industry and Government, when those proposals can be closely examined. In the same way, as we embark on a major new consultation exercise involving every section of our community, we shall scrutinise the commission proposals and options, debating the best ways to achieve the objectives that the commission set out and to deliver a lasting pensions settlement.

If we are to meet the challenges of an ageing society and permanently eradicate poverty in retirement, we also need to address the inequalities during people's working lives. That is why our record in tackling child poverty is so important. It is why we are committed to supporting families in work, why our welfare reforms and our aspiration for an 80 per cent. employment rate are so important, and why we want to see a modern, active and inclusive welfare state. We have lifted more than half a million children out of relative low income since 1997. Twenty million people, including just over 10 million children, are benefiting from tax credits, and the child tax credit, which will also increase by earnings, is benefiting 6 million families.

The standard rate of maternity allowance and statutory maternity pay will be increased by the RPI to £108.85 a week. Whereas in 1997 the maximum maternity pay and child benefit payment for mothers at home with their first baby was just £2,610 for the first year, by 2007 it will rise to £8,300—a real-terms increase of more than £5,000. In addition, the Work and Families Bill, which received its Second Reading yesterday, introduces a new entitlement to statutory paternity pay to enable a father to take time off work and to receive statutory pay instead of his partner if she returns to work early. That gives parents greater choice in how they balance their work and caring responsibilities in the first year of their child's life. For the sixth successive year, we are freezing non-dependent deductions to relieve the pressure on low-income parents who are accommodating their adult children.

Work is the best route out of poverty. There are now more people in jobs in Britain than ever before—2.3 million more than in 1997. Unemployment is at its lowest for nearly 30 years, with long-term youth unemployment 90 per cent. lower than in 1997. In just 12 months, employment has risen by 330,000 to 28.8 million, and is the highest in the country's history. It has risen in every region and nation of the UK. The lone parent employment rate has increased by 11 percentage points since 1997, and nearly 1 million lone parents are now in work, while the number on income support has fallen by more than 200,000 since 1997.

As my right hon. Friend the Chancellor said yesterday, we are not going to abolish the new deal; we will strengthen it. We will offer learning agreements for teenagers in eight areas of the country, extend the new deal pilots to help lone parents back to work, and pilot personal action plans for those unemployed for six months or more. Our new deal for disabled people has seen nearly 75,000 job entries since its launch in 2001, with 200,000 disabled people helped into work through our total package of new deal programmes.

We are seeing very encouraging early results from the pathways to work pilots. In the first year of those, the number of recorded job entries for people with a health condition or disability almost doubled compared with the same period the year before. Their continued success has driven a significant rise in the proportion of customers leaving incapacity benefit in the first six months of their claim, compared with non-pilot areas. Overall, on a national basis, that early success would be equivalent to about 150,000 incapacity benefit claimants being helped into work each year. That success has underpinned our achievements in helping people off incapacity benefit, with new cases now down a third since 1997 and the first falls in the total count, which fell by 41,000 in the year to May 2005.

In March, the Disability Discrimination Act 2005 completed the most far-reaching programme of disability rights legislation that any European country has put in place. It fulfilled our manifesto commitment to deliver enforceable and comprehensive civil rights for disabled people, and is a major landmark in enabling disabled people to live independently, fully recognised and respected as equal members of society.

Last week, on the international day for disabled people, we launched the new Office for Disability Issues. From this week, the Disability Discrimination Act extended protection from discrimination to another 250,000 people. However, we are not stopping there. In January, our Welfare Reform Green Paper will go further in tackling exclusion from economic activity and independence across the working-age population.

In April, we shall take further steps to break down the barriers that face older workers. The radical tax simplification that comes into play on A-day will do much to help. The Pensions Act 2004 continues to improve the rewards for those who choose to delay taking their state pension—even for only a short period—and, in April, the first people will benefit from the new option of a lump sum for state pension deferral, which could be worth more than £5,000.

In the spring, our White Paper will seek to lay the basis for a consensus on a lasting pensions settlement. My right hon. Friend the Chancellor also announced yesterday a change to the treatment of charitable, voluntary and personal injury income payments in income-related benefits. They are already disregarded in pension credit and pension-age housing benefit and council tax benefit. To simplify the system further and encourage the work of charities, they will be disregarded from October next year in assessing all eligibility for income support and jobseeker's allowance. There will also be a 52-week grace period for lump sum personal injury payments when assessing entitlement to income support, jobseeker's allowance and working-age housing benefit and council tax benefit.

This year's uprating continues our commitment to promoting opportunities for the many, not the few. It contributes to our programme of reform, which balances rights with responsibilities and offers everyone the opportunity to build a decent income for their retirement. It takes another big step away from the legacy of pernicious poverty, which we are determined should never return.

I thank the Minister for his customary courtesy in letting me have an advance copy of the statement.

I imagine that many of my colleagues are somewhat preoccupied with announcements that relate not to benefits but to the Conservative party and its future. I should like to take the first opportunity in the Chamber to congratulate my hon. Friend the Member for Witney (Mr. Cameron) on his overwhelming election as leader of our great party.

As a party, we naturally support any uprating of benefits. When the time comes, we shall not vote against them, unlike the Liberal Democrats, who memorably once voted against an uprating.

Perhaps the Minister could tell me in his response how much more the basic state pension would be next year if it were increased in line with earnings, not prices, as my party promised at the last election.

The statement is badged as being on welfare reform, yet, nearly nine years after the Government were first elected, we continue to hear the tired old rhetoric. The statement referred to the Government's "ambitious" programme and a "programme of radical reform", but where are those ambitious or radical proposals?

Perhaps I can understand Ministers' natural caution. After all, when the right hon. Member for Birkenhead (Mr. Field) was appointed the first Minister responsible for welfare and pension reform, the Prime Minister told him to think the unthinkable. He was promptly sacked for doing so.

The Government continue to dither about the reform of incapacity benefit. After a delay of many months, we are now promised a Green Paper in January. The problems of the Child Support Agency remain dire, with the recent revelation that the agency is spending more on its recovery department than it is recovering. When will Ministers decide that enough is enough? Only the other day, the Prime Minister revealed his view that root-and-branch reform was needed. I appreciate that he is less and less able to influence events, but when can we expect a statement on the CSA's future?

As if that were not bad enough, many families throughout the land have been caused unnecessary worry by overpayments of tax credit and the insensitive pursuit of their repayment. It seems to have become a ritual on such occasions for Ministers to go on about the successes—or the alleged successes—of the new deal. It remains a stain on the Government's record that 1 million young people are not working or in education or training. When will Ministers make that tragic wasted talent a priority?

On pensions, I should perhaps declare an interest as I have some private pension provision. The Chancellor attempted to torpedo Lord Turner's report before it was even published. In a leaked letter, he said to Lord Turner:

"'you should not assume' that the current link of the pension credit to earnings will continue beyond 2008."

Will the Minister confirm that pension credit will continue to be linked to earnings beyond 2008? In the part of the letter dealing with the Turner report, it was said:

"We warmly welcome the broad framework of the Pensions Commission's"—

that is, its report—

"and we believe they are the right basis . . . But there is still a great deal to be discussed and debated about the detail."

Presumably, that is especially with the Chancellor. That is not exactly a ringing endorsement of an exercise that has taken three years and has cost £1.6 million.

Let me ask the Minister a direct question. Can he assure the House, with an entirely straight face, that he and his right hon. Friend are approaching the Turner report with a genuinely open mind? Was all this excellent work and analysis to be discarded on the say-so of the Chancellor? Does the Minister at least accept one of Lord Turner's central conclusions: that means-testing needs to be reduced? At present, nearly half of all pensioners depend on means-tested benefits. By 2050, that proportion will have risen to more than 70 per cent. Yet there are still 1.7 million pensioners entitled to pension credit who are not claiming it. The latest figures show that despite all the money that is being spent in the form of advertising and given all the efforts of the Pension Service, take-up is hardly increasing at all.

I shall make a prediction. I believe that, just as the Government have done with the measure of poverty or the timing of the economic cycle, they are about to move the goal post on their previously stated targets for pension credit and announce that in reality, the actual target should always have been lower. That is the Government's preferred method of tackling a difficult problem—just change the target or the methodology. We know that the take-up for other benefits, such as council tax benefit, is even more lamentable. The latest statistics show that in 2002–03 alone, pensioners were failing to claim up to £2.9 billion in means-tested benefits. No wonder 2 million pensioners are still living in poverty.

Only yesterday, the Chancellor of the Exchequer made it clear that the payment to help older people pay their council tax bills was a one-off for one year only. As it turned out, that was election year. Despite the amounts spent on local government finance, many councils, especially in the south-east, are predicting further sharp rises in council tax in addition to the massive rises that are already being suffered under the Government. Do Ministers not realise the terror that many pensioners have of receiving a council tax demand or a utility bill?

How can we ensure that older people keep warm when gas prices, especially, are soaring? The Government's lack of an energy policy is as glaringly apparent as their lack of a pensions policy. In its comments on yesterday's announcements, Age Concern referred to winter fuel payments, which it welcomes. It referred to the fact that, sadly, 31,000 pensioners died last winter as a result of the cold. It added that

"the Government needs to reform the basic state pension so that all pensioners know that they will have enough money in their pockets to pay their basic costs."

The growth in dependency on the state does not seem to bother the Chancellor. Does it bother the Minister, perhaps, that across British society as a whole, one third of households now rely on the state for more than half their income? If it does not bother him, it should.

Does it not add insult to injury to those in the private sector, and those who have no occupational pension, that the public sector are to enjoy the same pension terms, including retirement at 60 or even earlier, for the next 40 years?

Will the Minister tell the House where we are on error and fraud in the system? According to the Public Accounts Committee, about £3 billion a year could be lost through fraud and error.

Yesterday's statement, and the reaction of the Chancellor of the Exchequer to Lord Turner's report, proves—if proof were still needed—that it is the present incumbent of No. 11 who is the roadblock to reform in the welfare system, as well as across the whole of public services. For far too long the Department of Work and Pensions has behaved like a wholly-owned subsidiary of the Treasury. Is it not high time that Ministers started to come up with some ideas of their own for welfare reform?

The hon. Gentleman asked me about the uprating of the basic state pension. I have not been able to do the calculation that he asked about, but I can tell him that, as a result of this announcement, the basic state pension has risen since 1997 by 8 per cent. in real terms, as opposed to 1.7 per cent. after 18 years under the previous Government, so those who are concerned to have a higher basic state pension would do well to support the Labour party, rather than the party that he represents.

The hon. Gentleman talked about the radical reform of the welfare system. That is why the number of people in work is up by 2 million. That is why we have been able to lift 2 million pensioners out of poverty since 1997 and consigned abject pensioner poverty to the history books. Those are dramatic, radical and important changes, and we are determined to build on them in the next phase of welfare reform.

I can confirm to the hon. Gentleman that, in our response to the Turner commission, we do have a genuinely open mind. Nothing has been ruled in or out by the Government. The hon. Gentleman asked me that question directly and I give him that answer directly. We will bring back proposals in the spring, which I hope will be on the basis of as broad a consensus as possible across the House and across the country.

I hope that the hon. Gentleman welcomed the announcements by my right hon. Friend the Chancellor about additional help for 16 and 17-year-olds to move into work. I hope as well, given the points that the hon. Gentleman made a moment ago, that he welcomed the announcements about the expansion of the warm front programme to help pensioners to install central heating and installation. All those announcements directly address the issues that he raised.

The hon. Gentleman has a point about the rather low take-up of council tax benefit among pensioners. That is why the Pension Service is ringing up pensioners in receipt of pension credit to encourage and help them to apply for council tax benefit and housing benefit if they are entitled to them, in order that we can increase the take-up of those benefits among those who are entitled to them.

The hon. Gentleman asked about public sector pensions. It is worth making the point that, in not much more than 10 years, the number of people in public sector schemes with a pension age of 65 will more than halve, so the agreement that has been reached on public sector pensions will lead to substantial changes much more quickly than some people have realised. I think that that puts into perspective the point that he made about that.

On error and fraud, the extent of fraud has gone down by two thirds since 1997 in the most vulnerable benefits: income support and jobseeker's allowance. That is welcome progress. When the Conservative party was in office it did not even measure the extent of the problem. We have made dramatic progress.

Does the Minister accept the Opposition's line that large numbers of pensioners are eligible for but not claiming the additional help with pension credit? Does he share the experience that I have? I find almost no one in Birkenhead who for any length of time is eligible and not claiming pension credit. Has not that benefit proved itself to be extremely effective in channelling help to our poorest pensioners? Is not the problem one of long-term sustainability rather than non-take-up? One cannot run a free society by budgeting for 75 per cent. of pensioners being on means tests, and one is unlikely to get elected if it costs 13p on the standard rate of tax to deliver that benefit. Does not that make his comment about consulting about the Turner commission report that much more important? While every hon. Member welcomes the announcement that the Government are talking to people outside the House, might they talk to people inside the House and might he ask the normal channels for a debate on the Adjournment, so that hon. Members on both sides of the House can give their views on that important report?

My right hon. Friend's characterisation of the position regarding the pension credit is much fairer than that of the hon. Member for Eastbourne (Mr. Waterson). It is true that some people who are entitled to pension credit are not yet receiving it, but it looks as though the total number eligible is rather less than we first thought, which has doubtless had an effect. Of course, some of those entitled to but not receiving pension credit are entitled to rather small amounts. The evidence is that the overwhelming majority of those entitled to substantial amounts are receiving it, which is why it is having such a big impact.

I very much agree with my right hon. Friend that the pension credit has been an extremely effective intervention in addressing the problem of long-term pensioner poverty, effectively making abject poverty a thing of the past. I would welcome a debate along the lines he suggests, as would my right hon. Friend the Secretary of State for Work and Pensions. Such discussions are doubtless under way as we speak.

I thank the Minister for his courtesy in giving us advance sight of the statement, many aspects of which Liberal Democrats welcome. In the light of recent leaks to the press, we particularly welcome the news that the pension credit will continue to be uprated in line with earnings. Does he agree that, whatever the Chancellor may have said in advance of Lord Turner's report, it would be unthinkable for a Labour Government to break the link between the pension credit and earnings? Will he confirm that continued uprating of the credit in line with earnings over the long term is shown by the Treasury to be a reasonable assumption in the table on page 39 of the long-term public finance report published yesterday? Does he therefore agree that Lord Turner's proposals represent an affordable alternative to the progressive expansion of means-testing? As the right hon. Member for Birkenhead (Mr. Field) said a few moments ago, the choice is therefore between a sustainable scheme and one that is unsustainable in the long term. We also welcome the uprating of many other benefits, and I congratulate the Minister on continuing the freezing of non-dependent deductions.

The Minister says that 3.3 million pensioners are in receipt of the pension credit. How many are entitled to it but are not receiving it? The state pension will increase by £2.20 a week, but how much of that will be consumed by council tax rises in the coming year? Does this not highlight the need for a decent state pension for everybody as a guarantee against poverty? We should not be content to celebrate the fact that pensioners are now merely no more likely to be poor than anyone else in society.

I welcome the Minister's decision to look at an industry alternative to the national pension savings scheme suggested by Lord Turner, but does he agree that, to be viable, the cost of such a private sector scheme must be at, or under, the level set by Lord Turner for the state-backed scheme? Although it is important to ensure that benefits are uprated fairly, is it not also important to ensure that they are delivered effectively?

In last year's corresponding statement, the Secretary of State for Work and Pensions said:

"Our reforms through Jobcentre Plus have been remarkable."—[Official Report, 6 December 2004; Vol. 428, c. 912.]

Does the Minister agree that they have indeed been remarkable—for the range of serious problems that claimants now face in getting their money, whether uprated or not? It is now taking an average of 13.5 days to clear a jobseeker's allowance claim, compared with the target of 12 days, and nine centres have returned to manual processing. Will the Minister take steps to ensure that claimants can get their benefit by the time today's uprating comes into effect?

The Minister will also be aware that a very cold winter is forecast, so it is disappointing that no provision has been made for extending the winter fuel payment to severely disabled people, as we proposed in our manifesto. Will he re-examine this proposal, which recognises the additional costs and problems for severely disabled people arising from cold winter weather?

We welcome confirmation that a statement on welfare reform will be made next January, the encouraging signs coming from the pathways to work pilots, and the proposed increase in back-to-work support for lone parents. However, the Minister said nothing about the welfare reform desperately sought by families throughout the land: reform of the failing and discredited Child Support Agency. Will he confirm that a statement will be made on this issue by the end of the year, as previously promised by the Secretary of State for Work and Pensions?

The inclusion of the words "welfare reform" in the title of this statement may have caused a frisson of excitement in some parts of the House that eight years of waiting for serious proposals on welfare reform were perhaps about to be brought to an end this afternoon. I note from the Chancellor's statement yesterday that the money raised from the windfall tax to pay for welfare to work has now all been spent. When welfare reform proposals are made in January, will the Minister ensure that, despite the tightening fiscal position, they are properly funded, so that the 1 million or more incapacity benefit recipients who would like to work again are not once more disappointed by this Government?

I am grateful to the hon. Member for welcoming the freezing of non-dependent deductions, which his predecessors did consistently over the past few years. It is an area on which we have agreed. The earnings link for pension credit has proved an effective tool for reducing pensioner poverty. As he knows, the commitment to maintain that uprating lasts until 2008. Beyond that, the Chancellor will make announcements in due course, although the hon. Gentleman is right that the illustrative figures in the pre-Budget report reflect the uprating continuing. Whether that will happen in practice is a matter for the Chancellor to announce.

I draw the hon. Gentleman's attention—the hon. Member for Eastbourne (Mr. Waterson) may also be interested, given what he said earlier—to what the Turner commission report said about means-testing. Page 188 states:

"A significant improvement in actual and perceived incentives for the majority of people of current working age can be achieved by limiting the future spread of means-testing".

That was the concern in the report, rather than the immediate elimination of or drastic reduction in means-testing. It is important that we recognise that thrust in the report. It is important that proposals for pension reform should be affordable, and that is one of the tests set by my right hon. Friend the Secretary of State in welcoming the Turner commission report last week.

The hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) mentioned the impact of the council tax on pensioners, and it is important that we make further progress in increasing the take-up of council tax benefit. It is important that an alternative, industry-led, low-cost personal account pension scheme should be comparable in terms of cost and in other ways to the national pension saving scheme suggested in the Turner report, and that is the basis on which we will evaluate the proposals. There are two prospects, and I have asked the industry to produce its proposals by February, so there may be others. We will pragmatically evaluate the alternatives, looking at the cost and at other issues, including the impact on business, which will be important.

We are improving the bedding down of the new systems for jobseeker's allowance and we have seen much progress. I can confirm that my right hon. Friend the Secretary of State will make a statement on the Child Support Agency shortly—either later this month or early in the new year.

The hon. Gentleman looks forward to the Green Paper on the new deal, which is due in January. I hope that his party will support the increasing and active role that we envisage for the state in helping people back into work. His party has always pledged to abolish the new deal and remove the extra help that has been so effective. I hope that the tone of his remarks reflects some new thinking in his party and that we will be able to agree on the tremendous attractions of a more active role for the state in helping people back into work.

My hon. Friend said that the best way out of poverty is through jobs—a welcome contrast to the old Tory practice of throwing people on to incapacity benefit to reduce the dole queues. The fall in the number of people claiming IB is welcome, but will my hon. Friend confirm that it has been achieved by incentivising the pathway back into work? Will he therefore reject a proposal from any source that incapacity benefit should be reduced in a punitive attempt to get people back to work, which would reflect the old Tory methodology, not Labour values?

Yes, I agree. That is why there has been so much support for our approach among organisations representing disabled people. The Green Paper will be about giving people extra help to allow them to get into work. As my hon. Friend rightly said, the pathways areas are seeing double the number of recorded job entries compared to other areas. The pilots are working well to help incapacity benefit customers into work. They have been popular in those areas and we want to expand that approach across the country.

Given the Chancellor's welcome but belated U-turn on tax relief to buy second homes for pension funds, will the Minister confirm that in the great pensions debate the whole question of tax relief on pensions, which is unduly weighted towards higher rate taxpayers, will be ruled in, or will it be set aside somehow?

As I said earlier, nothing is being ruled in or out and we shall be interested in any suggestions that the hon. Gentleman or his hon. Friends make, although I draw his attention to the points made in the Turner report about the difficulties involved in radical change. However, if he has some proposals I should be interested in seeing them.

I congratulate the Government and local authorities such as mine in Waltham Forest on their important efforts to improve entitlement take-up, but a huge number of people still do not receive their entitlement. Now that partnership teams have been rolled out in many areas, will my hon. Friend make a change so that they can make allocations to people who are entitled and that each case does not have to go back to a central agency to be worked out? Will he undertake to look at a possible policy change whereby people who are entitled can receive their money whether they claim or not? It is not just that they are stubborn—they may have early dementia or all sorts of other problems. Will my hon. Friend undertake to have a look at that?

Yes. We are doing a lot in exactly the direction advocated by my hon. Friend. There is a good joint team in Waltham Forest, the area that he represents. I have visited the team and had a look at its work; it is a particularly effective example. We are considering delegating a greater role to people other than staff in our Department, including enabling voluntary sector organisations to validate documents and check claims, thereby taking on some of the work that has had to be done in the Department in the past. I agree that it would be helpful to move in that direction. I also agree that we should increasingly be moving towards making payments automatic, if we are able to do so. That, of course, depends on our being able to access data that may not be in the systems that the Department uses, but there is much potential. My hon. Friend is on to something important and we are looking actively at it.

Will the Minister take a look at the fact that people with learning disabilities and autistic spectrum disorder are required to claim incapacity benefit? Before the Government abolished severe disablement allowance and replaced it with incapacity benefit, there was recognition of the fact that such people are born with that condition and will almost certainly die with it. I do not say for one minute that there should not be every opportunity to help them get into work if possible, but at present they have to go to their GP every two or three months just to prove that they still have the condition with which they were born. That is rather cruel and unnecessary. Will the Minister look into it?

Yes, I should be happy to discuss that matter with my right hon. Friend the Secretary of State, although, like the hon. Lady, I want to underline the importance of not writing anybody off, and not assuming that some people will be unable to work. She makes a fair point and I shall certainly discuss it with my right hon. Friend.

I congratulate my hon. Friend on being part of a Government who ended the historic link between poverty and old age—a truly magnificent achievement. May I, in the same vein, ask him to provide us with a few more details on the warm homes grant extensions, particularly for the installation of central heating in the properties of pension credit recipients who do not have such heating? Will applications have to be made, or will attempts be made to reach such properties and ensure a more automatic system?

I welcome what my hon. Friend says and I agree with her. The announcements that my right hon. Friend the Chancellor made yesterday will be taken forward through the existing warm front programme, which, as I am sure my hon. Friend knows, in many areas has been very active in going out to people and encouraging them to take up their entitlements. The scheme will provide free installation of central heating for households on pension credit who do not have it, and for other households not on pension credit there will be a contribution of £300 towards the cost of installing it. I agree about the need to work hard and ensure that people are aware of that opportunity, which represents a major breakthrough and a major improvement in the way we address the problem of heating for those who are above pensionable age.

The hon. Member for Eastbourne (Mr. Waterson) mentioned Liberal Democrats voting against the benefit uprating; he may remember that it was the infamous 75p pension uprating, and we would do the same if the Minister proposed it again.

May I bring the Minister back to a point made by my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander), which I do not think he responded to? My hon. Friend asked whether the Government had considered extending the winter fuel payment to severely disabled people. While the Minister is replying to that, he may also reply to the point about whether the warm front scheme extends to severely disabled people.

First, I can assure the hon. Gentleman that the retirement pension will go up by £2.20 a week on this occasion, which I am sure he will welcome.

We have received a number of representations asking for the availability of winter fuel payments to be extended. We do not propose to do so. Disability living allowance helps to defray the additional costs of disability, which might include heating. The warm front schemes help people other than those above state pension age, but the announcements that my right hon. Friend the Chancellor made yesterday were specifically about people who are above state pension age.

Am I the only one to be astonished at the dismissive way in which the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) brushed aside the statement made by my Friend that pensioners are no more likely to be poor now than any other people in society, which I think is a remarkable achievement?

Council tax can be a very heavy burden for pensioners on modest fixed incomes who do not receive the pension credit. Now that the review of council tax has been abandoned, will my Friend tell me whether there is any fresh thinking within the Government on how pensioners of modest means can cope with above-inflation council tax rises?

I am sure that my hon. Friend will very much welcome the additional payment being made this year to help with council tax. I do not think that it is right to say that the review has been abolished; work is continuing that will contribute to the outcome of the forthcoming spending review. I anticipate that an announcement will be made in the Budget about whether additional payments will be made in future years.

Although I appreciate the Government's noble intentions on the reduction of child poverty, will the Minister confirm the number of children whom he estimates remain in absolute poverty? Has he had a chance to see today's press reports that quote research from Save the Children that, despite their best efforts, the Government are unlikely to meet their target to eliminate child poverty by 2020?

We are on track to hit our first milestone, which was to reduce child poverty by a quarter by last year. We will know the details of that by the spring. That is a welcome step forward, and I am glad the hon. Gentleman supports the aim that we have set out. I agree that it is a very important aim, and we are determined to make further progress. We have already succeeded in arresting and reversing the long-term trend of rising child poverty. By 2003–04, about 500,000 fewer children were in low-income households compared with 1998–99. We are determined to maintain that progress towards our target of abolishing child poverty by 2020.

On a point of order, Mr. Speaker. Obviously, you know that Foreign Affairs questions are due to be answered after the recess, on 10 January. There is a great deal of concern among many people, including hon. Members, about the possibility—indeed, the reports—that the United States is using UK facilities to transport terror suspects around the country. There are also allegations about interrogation centres, or torture centres, in various parts of Europe, although reports do not state that they are located in Britain. It would be useful if, before we break for the Christmas recess, the Foreign Secretary came to the Chamber to make a statement and answer questions.

May I make a final point to you, Mr. Speaker? I am not allowed, as you know, to refer to any internal House of Commons matter, but I thought that, when the procedure changed a few years ago, the wish was that it should be possible broadly to raise topical and urgent matters on the Floor of the House pretty promptly. As matters stand, the Foreign Secretary is not due to answer questions until 10 January. Such things are reported widely in newspapers and on television and radio, yet we cannot discuss them in the House of Commons.

The hon. Gentleman's experience goes back a long way. In fact, he and I first came into the House on the same day. He will know that private notice questions are now called urgent questions, but the granting of such questions remains at the Speaker's discretion. Of course, I will not go into why I refused him an urgent question. Given his vast experience as a parliamentarian, he knows that, if he wishes to bring the Foreign Secretary or an Under-Secretary before the House, he can apply for an Adjournment debate. That would be a nice way of doing things. Again, the Speaker has some discretion in those matters, and there is a very fair ballot indeed.

I beg to move,

That leave be given to bring in a Bill to require all employment vacancies to be advertised with a combined valuation of pay and pension rights; and for connected purposes.

Having been a Member for some time, I appreciate the way in which the ten-minute Bill procedure enables Members to make proposals that do not claim to revolutionise or transform our way of life but merely aim simply and practically to make things a bit better. I make no more claim for this Bill than that—a simple, practical and small change that would make pensions a bit better.

When I first sought a date to introduce the Bill, I did not realise that it would follow so quickly after the excellent Pensions Commission report. I was understandably nervous that my fox might be shot before today arrived. In fact, I am confident that the Bill would work effectively to support the Pensions Commission's recommendations. This is not the time to rehearse the detail of Lord Turner's proposals, but, as everyone now knows, he proposes a sensible balance between tax-funded, state-paid pensions, sufficient to lift most people out of means-testing, and invested pensions.

Even if—or, as I hope, when—the basic framework of the Turner report is implemented, state pension provision will lift most men and women only just above the basic level of pension income means-testing. A comfortable retirement will depend on the size of their second pension. My concern today is to support invested pensions and Turner's aim of encouraging

"the maintenance of existing high quality pension provision"

through which employers provide more generous contributions than those in the proposed soft compulsion scheme.

The first report of the Pensions Commission showed that good quality employer pension provision is on the decline. It estimated that active membership of defined benefit schemes had fallen by 60 per cent. since 1995. It found that although a quarter of private sector employees were still members of salary-related schemes, only 14 per cent. of new employees were in such schemes. The report concluded:

"Rolling these trends forward, and even if the rate of closure now slows considerably,"

defined benefit

"scheme membership is likely to become a primarily public sector phenomenon."

Of course, when defined benefit schemes are closed, they are usually replaced by defined contribution schemes of one sort or another. Overall, Turner's judgment was that membership of employer provision was flat, or perhaps declining. However, it is clear that the average employer contribution to defined schemes is much lower than that to traditional defined benefit or final salary schemes. Employer contributions to defined benefit schemes were estimated at about 11 to 14 per cent. of salary, whereas such contributions to defined contribution schemes were about 4 to 7 per cent. Despite that downward trend, it is clear that employees with any employer contribution to their scheme are general much better placed than those with none.

We could debate the reasons for the decline in the best quality pensions at some length. There are many factors, and as a former Minister with responsibility for pensions I would have to include among them well-meaning regulation passed by Governments of both parties in response to the fears and concerns of our constituents. However, probably the most important factor is simply the changing nature of the competitive economy. The type of larger company that traditionally provided a good pension scheme is in long-term decline. It might be that the best final salary schemes never made hard, bottom-line economic sense, but such schemes were widely seen as part of companies' corporate social responsibility. By having such schemes, those companies made a significant contribution to not only their own success, but the wider economy.

Today's economic environment is much harsher and more globally competitive. Although many employers still understand the mixture of altruistic, paternalistic and self-interested arguments for good pension schemes, they are increasingly likely to be challenged by shareholders and accountants. In a competitive economy, some companies compete for business by cutting pension provision, or not making any provision at all. As always, the worst can drive down the standards of the rest.

We will still need good employer provision, even when Turner is implemented. The Pensions Commission report makes it clear that its proposals for state pensions and the soft compulsion of the national pension savings scheme would give average earners pensions of just under half their salary when they retire—and that would be at the older retirement age. If people want to receive traditional benefits such as those from a final salary scheme, or if they want a pension that is big enough to allow them to take early retirement, or a less pressured or part-time job before they get their state pension, they or their employers will need to make additional contributions.

If we want to retain the best employer provision that we can, we need to examine new ways to encourage and support good employer provision over and above the minimum that all employers should be required to do. We need to look at ways in which employers can see a clear business case—a clear labour market advantage—from a good pension scheme. That is precisely what the Bill is intended to do. It aims to make the value of employer pension contributions explicit to potential employees. By doing so, it will give better employers an edge in the labour market.

Most people simply do not realise how much a good employer's pension scheme can add to the value of a job. As a result, the quality of pension provision appears to play little role in determining the attractiveness of an employer to potential employees. However, it should, and this Bill would help to ensure that it did.

Let us consider a job that would normally be advertised at an average salary of about £24,000 a year. According to Union Pension Services, a good typical final salary scheme is worth an extra £3,400 in employer contributions each year, so the job would be advertised not at £24,000, but at £27,400, which is an increase of 14 per cent. A typical public sector final salary scheme—of course these are now closed to new entrants, but I had to do these calculations on the figures available—is worth about an extra £2,900 in employer contributions, so the job would be advertised at a combined value of £26,900. A typical money purchase scheme is worth an extra £1,200 in employer contributions, so the job would be advertised at a combined value of £25,200. In comparison, a job that paid £24,000 a year where the employee is in the state second pension scheme but receives no additional contribution would be advertised at £24,000. For information purposes, a self-employed person would need to receive about £24,700 a year to gain the same financial benefit as an employee in the state second pension.

The Bill is a small practical step that will reward good employers by helping them to recruit and retain staff. It will make sure that the best employers can easily be identified by potential employees. It will also help to guard against the danger of the 3 per cent. employer contribution to the national pension savings scheme proposed by Turner becoming the standard employer contribution, rather than the baseline or a minimum. Any lasting pension reform will require a good deal of consensus across parties and outside the House, so I am pleased that my Bill has cross-party support. I pleased, too, that it has received the support of the National Association of Pension Funds—the leading voice of workplace pension provision in the UK. There are 10 million working people in NAPF member schemes, and about 5 million pensioners receive retirement income from such schemes. The NAPF chief executive, Christine Farnish, said:

"Millions of people are building up valued pension entitlements through workplace pension schemes. But there remains a lack of understanding among many about just how valuable a good pension scheme can be.

The new Bill would give employers with good pension schemes a deserved advantage in the labour market, and enable prospective employees to get a clear picture, in pounds and pence, of the value of the pension on offer.

People are becoming more aware of the value of a good pension when it comes to making job decisions. This Bill would help in making those decisions easier."

Age Concern, too, has welcomed the Bill and has referred to research from the Labour Research Department showing that more information about company pension schemes was the most common demand from people who have not yet joined a scheme.

Of course, the Bill would not place any additional burden on employers. I envisage that a standard actuarial approach would be agreed across the economy and that guidance to employers on the calculation of benefits would be provided each time the scheme is revalued. This is not a revolutionary Bill but it is a small, practical step that would make some improvement to pensions, so I commend it to the House.

Question put and agreed to.

Bill ordered to be brought in by Mr. John Denham, Ms Sally Keeble, Rob Marris, Dr. Alan Whitehead, Mr. Richard Benyon, Chris Huhne, Mr. Frank Field, Huw Irranca-Davies, Nick Herbert and Mr. Philip Dunne.

Employment (Advertisement of Pay and Pension Rights)

Mr. John Denham accordingly presented a Bill to require all employment vacancies to be advertised with a combined valuation of pay and pension rights; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on 3 March, and to be printed [Bill 93].

I beg to move, That the clause be read a Second time.

With this it will be convenient to discuss Government new schedule 1—Transfer Schemes.

New clause 3 and new schedule 1 are needed to make the transfer of contracts to the Olympic delivery authority a quick and efficient process. In advance of the ODA being set up, the London Development Agency and Transport for London have been driving forward the work to deliver the games. We are grateful for that work, but a complication has developed as those authorities have had to enter into the first major contracts. Once the ODA is set up, those contracts and some of the equipment and people involved will have to be transferred to the ODA—the body that will ultimately deliver the Olympics.

Transferring a large number of individual contracts can be a lengthy and costly process. We want to avoid any unnecessary cost or delay. Where the Secretary of State thinks it necessary, the amendments allow for the creation of transfer schemes, which will ensure that contracts are efficiently moved from authorities such as the London Development Agency or Transport for London to the Olympic delivery authority. The Secretary of State may make a scheme if others have not complied with a direction or if their scheme has not been approved.

Using transfer schemes means that batches of contracts can be moved, requiring a single negotiation process rather than many individual ones. The Secretary of State will not be able to approve or make a scheme unless she has consulted the person who submitted it, or ought to have submitted it, the ODA and anyone who may be affected by it. She will also have to obtain the consent of the Mayor.

Transfer schemes are usual practice when setting up a new public body that takes over specific responsibilities from another public body. For example, the Greater London Authority Act 1999 used a similar process to transfer contracts to the GLA and TFL from predecessor bodies.

As this is the first group of amendments on Report, I begin by thanking the Minister for extending the courtesy of a briefing for myself and the hon. Member for Bath (Mr. Foster) at the Department for Culture, Media and Sport on the amendments tabled since the Committee stage. May I ask the right hon. Gentleman to pass on my thanks to his civil servants who were responsible for that briefing and for other aspects of the Bill?

New clause 3 and new schedule 1 allow for the creation of transfer schemes to move contracts across from the Greater London Authority, the London Development Agency and Transport for London to the Olympic delivery authority. If the Secretary of State believes that it will best serve the ability of the ODA to carry out its functions, he or she may direct any of those bodies to make a transfer scheme.

I wholly accept that a single body is needed to manage public sector investment in staging the games if we are to be best placed to deliver the games on time and to budget. The ODA creates a single point of contact for various public sector organisations involved in the delivery of those games. However, as the new clause has been moved since the Committee stage, will the Minister answer a number of points when he winds up?

First, what safeguards are in place to look after the interests of the originators of those contracts? Secondly, how will accountability be preserved once the transfer is effected from an elected body such as the GLA to the ODA? Finally, how can the House continue to exercise scrutiny? Subject to the Minister's reassurances on those three points, I am happy to signal my party's support.

I join the hon. Member for Faversham and Mid-Kent (Hugh Robertson) in thanking the Minister and his civil servants for the very helpful briefings that we have had in preparation for the moving of these and other amendments. I also thank the Minister and the hon. Gentleman for the close co-operation that there has been in relation to almost all aspects of the Bill, which means that there will be a fairly uncontroversial passage of much of what is to be debated this evening. However, the debate is an opportunity to raise remaining questions with the Minister. In view of the fact that a number of the powers of the GLA will be passed on to other bodies if the new clause and new schedule are agreed, will the Minister answer some further questions, in addition to those asked by the hon. Member for Faversham and Mid-Kent?

First, I seek the right hon. Gentleman's assurance that the GLA will be one of the organisations that are to be consulted on the Olympic transport plan, which is the subject of clause 9. Secondly, will the GLA be able to summons the ODA to public evidence sessions? What assurance can the Minister give that the GLA will be able to use section 61 of the Greater London Authority Act to summon the ODA in the way that I described? Finally, can the Minister provide an assurance that LOCOG—the London organising committee of the Olympic games—the other body being established by the Bill, will also have to comply with any reasonable request to appear before the assembly and to update the assembly on progress? With those assurances from the Minister, I can confirm that my party, too, is willing to support the amendments.

I will pass on the thanks of the two hon. Gentlemen to my staff. Although there have been some disagreements, we have been able to resolve them in a fairly civilised way. I have no doubt that there will be votes on some of the politically contentious issues later this evening, but the Bill's progress shows how the nation has got behind the Olympic bid. We were awarded the Olympics on 6 July, and hopefully we can get the Bill through Parliament by early next year, which shows the strength of cross-party support.

The consultation process will be transparent and it will involve the Mayor's office and the originators. Anyone who wants to raise an objection will be able to do so. On accountability, the elected authority is accountable to the ODA, the ODA is responsible to the Olympic board and the Olympic board is responsible to the Secretary of State and this House. On scrutiny, six Select Committees are currently considering different aspects of the Olympics, and I am appearing before the Scottish Affairs Committee tomorrow. I assure hon. Members that a lot of scrutiny is going on.

The assembly will have a role in deciding the impost on the London council tax payer, but will the Minister reassure us that it can expect the ODA to appear before it, if it has additional questions? Will such an extra layer of scrutiny be allowed?

Yes, it will. I have no doubt that the ODA will want to make sure that its work is in the public domain and that it attracts a consensus.

I think that the answer is yes on the question of a public session with the ODA, but I will probably write to the hon. Member for Bath (Mr. Foster) to clarify the matter.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

New Clause 1 — Limit on Power of Greater London Authority to Raise Money from Council Tax for Expenditure on London Olympics

'The Greater London Authority shall not raise more than £625 million from the council tax for expenditure in connection with the London Olympics.'. —[Hugh Robertson.]

Brought up, and read the First time.

I beg to move, That the clause be read a Second time.

With this it will be convenient to discuss amendment No. 3, in page 23, line 35 [Clause 33], at end insert—

'(2A) The Greater London Authority shall not raise more than £625 million from the council tax for the purpose of exercising the function under subsection (1).'.

The amendment and the new clause were tabled in my name and that of the hon. Member for Bath (Mr. Foster).

Let us be very clear about what is involved here. When a bid was first considered, the Government and the Mayor agreed a funding package of £2.375 billion to help meet the costs of staging the Olympics in London in 2012. That figure was made up of £1.5 billion from the lottery, 50 per cent. of which will come from existing sources and 50 per cent. from the new Olympic lottery games, £250 million from the London Development Agency and £625 million from London council tax payers.

I apologise for interrupting the hon. Gentleman so early in his speech and thank him for indicating that I support the amendment and the new clause. Will he confirm that in the agreement with the Mayor of London, the £625 million to which the hon. Gentleman has referred was made up of £550 million and a further £75 million, which may be drawn on only if it is necessary do so?

The Olympic surcharge will start in April 2006, and Londoners will pay between £13.33 for a band A dwelling and £40 for band H. Some 69 per cent. of Londoners are in bands A to D and they will pay between £13.33 and £20.00, and 31 per cent. will pay between £24.44 and £40.00.

As Conservatives, we entirely support the principle that Londoners should make a contribution to the financing of the games. There are four main reasons for that. London is the host city, so it is likely to benefit most from tourism and promotion; London businesses will undoubtedly benefit enormously; the east end of London will be regenerated; and Londoners will have the world's greatest sporting event on their doorstep. It is therefore perfectly reasonable that they should make a financial contribution over and above the remainder of the United Kingdom. In short, we accept the figure of £625 million and signed up to it at the time of the bid.

The hon. Gentleman is obviously right about his party. He will know that others of us who participated in the same election took the same position. Londoners were very happy to make a contribution over and above that made elsewhere, but they kept asking the question to which the amendment and new clause relate: will it be limited to that amount or open-ended? Unless we made it clear that it should be limited, they were not nearly as enthusiastic.

I thank the hon. Gentleman for those comments. I think that he will reassured by what I am about to say.

It is fair to say that although we accepted the £625 million cost right from the outset, we—and, clearly, the Liberal Democrats—have had concerns about the possible effect on London council tax payers. The new tax will simply take the form of a larger levy on council tax bills, so it is not entirely transparent. There is no automatic cut-off after 2012. The extra money is not specifically ring-fenced for the Olympics, in obvious contrast to the congestion charge, where revenue is ring-fenced for value-for-money transport projects. There is no guarantee that the money will not be used to cross-subsidise funding shortfalls elsewhere—for example, if not enough tickets are sold.

Those initial concerns have been given further impetus by a number of factors that have become apparent in recent months and that have changed the position substantially since the initial plans for London 2012 were drawn up. First, we now know that previous games have substantially overrun their budgets. Local tax payers in Montreal are still paying off debts incurred at the 1976 Olympics. Sydney's budget of £l billion eventually came to £2.8 billion. Athens' budget of £l billion eventually became, as far as we know, £5 billion.

Secondly, security costs are likely to soar post-7 July. There cannot be a single Member of this House here today who genuinely believes that the international security situation will improve in the near future. If anything, it is likely to get worse.

When the Culture, Media and Sport Committee, on which I served, first considered security, everybody was aware not only of the possible threat in Athens, where British security forces and police played an important role in ensuring the security of the games, but of the fact that there was already a heavy underwriting in terms of security measures. I do not think that, of itself, July this year will have made a significant difference. Does the hon. Gentleman have specific arguments on that?

Yes, indeed I do. If one looks around London, it is fairly self-evident that security has been tightened immeasurably since 7 July, and rightly so—every Member would support that. I think that the security allowance in the Bill is £200 million. The Minister will correct me if I am wrong.

It is £213 million.

Given today's security situation, I cannot see how London can be kept entirely secure within that budget.

Thirdly, the Mayor has been commendably honest about the fact that his key aim is to regenerate the east end of London. That is not entirely compatible with the Government's priority of delivering the 2012 Olympics on time and to budget as the best games ever. Those conflicting priorities will inevitably put pressure on the budget. Fourthly, the cost of acquiring land in the lower Lea valley, and therefore of site assembly, has risen substantially since we won the bid on 6 July. Finally, as scrutiny of the financial markets shows, inflation in the construction sector is running at about 7 per cent. as a result of rising energy prices and the increased cost of raw materials. Natural disasters in the USA and Asia, allied to high demand in China, have rendered the original 3 per cent. prediction unworkable.

All Members know of the concern already felt by many of their constituents about rising council tax bills. They affect everyone, but particularly the elderly—who have no way of increasing their income to cope—and the vulnerable. We were happy to accept the original £625 million figure, although we had some worries about the lack of accountability. Since the plans were drawn up, however, the five factors that I have listed have led us to believe that Londoners should not be left with an open-ended commitment. Accordingly, I believe that the time has come to introduce a formal mechanism to ensure that Londoners receive a measure of protection.

Let me end with two pleas. First, I ask all London Members to consider a new clause that simply gives a statutory basis to the Government's own estimate of the cost of the games to council tax payers, and to support it. If they do not do so, they will risk inflicting a considerable extra bill on their constituents.

So far, the hon. Gentleman has told us why London council tax payers should not make a larger contribution. If London council tax payers did not make the contribution, someone else would have to do so. Which of the other funding bodies does the hon. Gentleman think should do it?

The hon. Gentleman is right, but it is difficult for me to give him an answer. Every time we have asked the question, the Minister has said—as I expect him to say in 20 minutes' time; indeed, he told me that he would do so—that the budget for the games was drawn up according to the most advanced formula ever and that there would be no cost overruns. If that is the case, let us flip the argument over—why should there not be a cap?

Mary Reilly, chair of the London Development Agency, said in the Financial Times that the estimate of the cost of cleaning the land on which the games would take place had already doubled, which means an increase of hundreds of millions of pounds.

Indeed; Mary Reilly made that point when she appeared before the Select Committee two weeks ago.

My second plea, on which I have touched already, is to the Minister. Although the new clause has cross-party support, it is perfectly possible that the Bill will be defeated in the other place, which will delay it. We are, after all, simply trying to give the Government's own calculations a statutory basis. Therefore I do not hesitate to urge the Minister and the House to accept the new clause.

Having heard what the hon. Member for Faversham and Mid-Kent (Hugh Robertson) had to say, I have an opportunity to go a little further. I appreciate that many London Members, among others, will have a view on the level of council tax payments to the fund, but, as I said before, if the money does not come from London council tax payers, where is it to come from? The new clause makes no mention of that, which is why I offered the hon. Gentleman a chance to tell us.

I am quite confident about the £2.3 billion package, and I am sure that the Minister will confirm it. The figures that make up the package, which had cross-party support when we went to Singapore, represent a built-in flexibility based on the understanding that projects such as this always involve a cost overrun. The package assumes a potentially large overrun and builds in flexibility at a level that I consider acceptable.

I hope that the new clause will be rejected on the basis that, as I have said, it does not tell us where the rest of the contribution will come from. The hon. Gentleman knows that I am already anxious about the amount that will have to come from existing lottery funds. I should be more anxious if, as a result of the new clause, more money had to come from funds for grass-roots sport or other lottery contributions.

The hon. Gentleman, like me, is worried about the amount that we are raising from the national lottery to fund the Olympics. I suggest, however, that instead of focusing on the new clause, he should focus on the Minister's reassurances that the £625 million is an accurate figure that will not be exceeded.

The Opposition have tabled a new clause and it is only right for us to respond. Indeed, I am delighted to do so.

There are other questions about funding. We know that 50 per cent. of the £1.5 billion from the lottery will come from existing lottery funds, and the other 50 per cent. from the new lottery game. Another £250 million is to come from the London Development Agency. It is bound to be difficult to raise the desired amount. So, if the money is not going to come from the London council tax payer, which other funding body will it come from? It is absolutely necessary that we have that information before we vote on the new clause.

The estimate of the cost of the Olympic games seems to have been made by the Treasury. If the new clause were reworded so that any cost overrun would be spread across the whole nation, or was met in some other way, would the hon. Gentleman be more inclined to support it?

I would be more inclined to support anything that went a bit further than this proposal, to be honest. As a non-London Member of Parliament, it would be dead easy to stand here and say, "It's great. The London council tax payers will pay", but I recognise that we will all benefit from the London Olympics in some way, particularly those of us in Loughborough.

The chances of the London Olympic games coming in on budget are about the same as Scotland's chances of winning the World cup. There will be an overspend, and I share the hon. Gentleman's concerns about how it will be met. Will the Minister assure us that it will not come from the lottery? With £1.5 billion coming out of the lottery in the next 10 years, it will have suffered enough.

Obviously, I cannot give the hon. Gentleman that assurance, but I am sure that the Minister is listening. The hon. Gentleman and I have shared many a debate in the lead-up to the successful Olympic bid, and expressed our concerns about the potential impact on grass-roots sport of the Olympics needing new money from the existing lottery funds. I am sorry that the hon. Gentleman has such a pessimistic view of Scotland's future, although I am not sure whether he meant the football World cup. I am sure that his constituents will be delighted to hear of his pessimism, however. I hope that Scotland does well in future world cup competitions, whatever the sport, but perhaps it will have a rethink in regard to the participation by the Scottish Football Association, which is denying not only its senior men a place in the 2012 competition, but the other teams that would benefit from joining England and possibly Wales as part of a UK team.

I had meant to make a very short contribution to ask for further information, but I seem to have attracted a number of interventions. I cannot support the new clause because it makes no mention of where the additional money would come from in the very unlikely event of costs to the lottery bill and the Olympic bill overrunning.

I am delighted to follow the hon. Member for Loughborough (Mr. Reed), because he has teased the House with his suggestion that, if someone were to tell him where the overrun money would come from, he could support the new clause. Perhaps I can give him an answer to his question in a second, and if that is satisfactory to him, we shall look forward to seeing him in the Division Lobby shortly.

I was grateful to the hon. Member for Faversham and Mid-Kent (Hugh Robertson) for mentioning the Liberal Democrats' support for the new clause. It should have come as no surprise to him that we would support it, however, because my hon. Friend the Member for North Southwark and Bermondsey (Simon Hughes) made it clear, back in the run-up to the June 2004 mayoral election—in which he was an extremely good candidate for the Liberal Democrats—that, while the Liberal Democrats would welcome the contribution of the people of London on account of the fact that they would be among the main beneficiaries of the Olympic and Paralympic games, that contribution should be capped so that Londoners knew where they stood.

The hon. Member for Loughborough shares with me, as the Member for the wonderful city of Bath, the certain knowledge that our constituents will benefit enormously from the games because we—along with Sheffield and other cities—have some of the premier sporting facilities in this country, which will no doubt be used by the visiting and home nation teams in the preparations for the games. That might offer a bit of a clue as to where the contribution might come from, should there be an overrun.

Does not my hon. Friend agree that as Londoners are sharing the risk of overruns, a portion of the revenue gains that eventually come to the Treasury ought to flow back to London to cover Londoners' investment in the games? The Treasury is a winner, but it ought to be willing to share some of that win and cover London's costs, too.

My hon. Friend makes an interesting point, but answering it would be beyond my pay grade. My hon. Friend the Member for Twickenham (Dr. Cable) might have a few comments to make in respect of that proposal, and I suggest that she take the issue up with him, rather than persuading me to risk his ire by responding.

One thing is absolutely clear: London council tax payers still have a mechanism to exert that financial pressure and to keep the costs as low as possible. The Government, who are currently not making a contribution, but will gain considerable revenue as a result of the games, also demonstrate that they, too, will exercise pressure to keep the cost down. That is shown by the welcome decision by the Secretary of State, the London organising committee for the Olympic games and others to reject the proposals for the swimming pool complex. Evidence therefore already shows that measures are being taken to keep the price down.

It would be wrong, however, to put ourselves in a position whereby London council tax payers are left in uncertainty about their financial responsibilities. They are rightly being asked to contribute to the cost of the games because of the significant benefits that London will gain, but it is equally right, as the new clause proposes, to cap the contribution so that London tax payers know what they are paying for and for how long. That should be the end of the matter.

I am pleased to follow the hon. Member for Bath (Mr. Foster). However, I noted that he referred to the hon. Member for North Southwark and Bermondsey (Simon Hughes) as an especially fine former mayoral candidate but did not describe the hon. Member for Richmond Park (Susan Kramer) in the same terms. I do not know whether there is some split in the Liberal Democrat party or whether the hon. Member for Bath is trying to curry favour with his president.

As the hon. Member for Faversham and Mid-Kent (Hugh Robertson) said, the new clause is predicated on the belief that there will a cost overrun. He gave various reasons for that, such as land values and added security, and argued that those factors have not yet been properly costed. The hon. Member for Perth and North Perthshire (Pete Wishart) denounced his nation's sporting prowess in declaring that there would be an overrun.

If one considers every other country in the world that has held the Olympics, one realises that, when Opposition politicians tried to make political capital by starting to talk about overruns, they made them a political inevitability. The Select Committee on Culture, Media and Sport examined all those countries in detail and found that that was the case. I therefore hope that the debate will not perpetuate the canard that the games must necessarily overrun. The bid model was put together on an extremely robust financial basis and tight analysis was made not only of security and land value issues, and how they might change, but—perhaps most significantly—London Transport's financial needs.

At one point, inadequate provision had been made to ensure that public transport needs in London would be met, but, following the first IOC visit, when its members commented on that, substantial and sufficient adjustments were made.

I accept the hon. Gentleman's point, but if there is an overrun, how would he feel if the people of Rhondda were asked to chip in to pay for it?

I was about to deal with that point. I suspect that there would not be much support in the country for taking more money out of lottery funds in the case of an overrun, not least because, if we have no decently funded Olympic athletes, there is not much point in holding the Olympics in this country. I hope that Rhys Jones, the grandson of my predecessor but two, Alec Jones, will be an Olympic athlete in the triathlon in the 2012 Olympics. I hope that there will be a proper funding stream for elite athletes, including those in the Rhondda and the rest of Wales, in Scotland and in Bath. That is why I do not support raiding the lottery.

I do not want a significant extra amount of money to be charged to the taxpayer in the case of an overrun. However, it is wrong to establish a fixed figure as the fair share, which the hon. Member for Bath mentioned, that the London taxpayer should pay as opposed to a share—in other words, a percentage. If there is an overrun, I believe that London taxpayers should pay a fair share of it, rather than a fixed amount, which is proposed in the new clause.

I say to the hon. Member for Faversham and Mid-Kent that it is, I think, the first time that I have heard an amendment spoken to on the basis that the other place will implement it anyway. That is an undemocratic and rather strange way to proceed with our business. It is an important principle that we have our debates in this place first and resolve them, and then subsequently reflect on what the other place decides to do or not to do. We have heard several times since the general election that the Conservative party and the Liberal Democrats say that all the previous conventions on how we do business between this place and the other place have been swept aside. I thought that the hon. Gentleman was slightly more sweeping today.

I was simply making the point that if there is not some movement, and bearing in mind that there is cross-party support, there is a danger that their lordships will overturn that which is proposed. Bearing in mind that there has been cross-party support throughout the Bill's passage, I seek to avoid that opportunity.

I still think that the hon. Gentleman is coming remarkably close to threatening that whatever happens in this democratically elected Chamber, the Opposition will seek to overturn the will of this Chamber in another place. That is unfortunate. The argument has not been made for the new clause and I hope that it will fall.

I endorse the comments of my hon. Friend the Member for Faversham and Mid-Kent (Hugh Robertson) and agree with what he is trying to achieve through the new clause.

Many of us who are sports lovers in London have faced the difficulty of the half-hearted and perhaps lukewarm support for the Olympic bid. I was delighted to see the scenes on 6 July, but I have expressed concerns over many years about the costs of the Olympic games. I have always felt that the Mayor of London, Ken Livingstone, is likely to issue a blank cheque. I put that proposition to the Secretary of State a year or two ago, and it was pooh-poohed, but I fear that that will be the reality.

Overall expenditure is supposed to be £2.375 billion. A robust case was made by the hon. Member for Rhondda (Chris Bryant) that there will not necessarily be an overrun. He is right to say that we should not start in a negative frame of mind, but experience shows that there have been significant overruns. Clearly, we hope that there will be great commercial gains, which will ensure that quite a lot of money comes into central coffers, but we should recall that Sydney's cost overrun increased almost threefold from £1 billion to £2.8 billion. That must be of great concern to us all—Londoners and everyone else in the United Kingdom—because it is in all our interests not to have an overrun.

The big issue is that, in essence, London council tax payers will be subject to a massive multiplier effect. The overall costings of £2.375 billion presume £1.5 billion of lottery funding. I entirely understand what the hon. Member for Perth and North Perthshire (Pete Wishart) said but I do not necessarily share his reluctance to see the cap lifted.

At present, it is suggested that £250 million could come from the London Development Agency and £625 million from the London council tax payer. If the overall cost is not £2.375 billion and is, let us say, £3 billion, that will in essence be equivalent to a 100 per cent. multiplier effect on the London council tax payer. That is how the additional £625 million will be raised. It is to be hoped that we will not have a Sydney-type massive cost overrun of perhaps £2 billion, because that additional £2 billion would fall on London council tax payers to pay. That would be entirely unacceptable. London council tax payers would effectively be paying for the blank cheque to which I referred in the House only about 18 months ago.

May I assist my hon. Friend with his figures? The back of a fag packet calculation that I have done is that an overrun of £0.5 billion would add £140 to the bill for every band D household.

I thank my hon. Friend. I hope that he is not smoking those fags either in this place or anywhere else; perhaps he is still entitled to do so. That is the nub of the problem. In essence, in London, the risk is that we will find ourselves with an enormous burden for many years to come. Already concerns have been expressed by hon. Friends and, I think, Labour Members about the costs that are likely to be imposed upon London taxpayers. As it is the cost is likely to be £20, £30 or £40 a year over 20 years. It could be considerably worse given the multiplier effect to which I have referred.

I notice that my hon. Friend the Member for Croydon, Central (Mr. Pelling) is no longer in his place but he rightly referred to the fact that the chairman of the London Development Agency, Mary Reilly, has admitted that the costs of preparing the Olympic site could double from the planned £478 million to £1 billion. If that became a cost overrun, rather than being dealt with by the budgets that have been agreed, that would, once again, penalise council tax payers in London fairly soon. Those are great concerns.

Anyone who has been to the Lower Lea valley site will have seen that it is greatly contaminated. It is difficult to estimate the likely cost of cleaning that land and ensuring that it is fit for purpose. Inevitably, there is always some optimism in putting forward a strategy and I accept that a robust financial case was made—it was not just a lot of cascading figures—but, very quickly, however robust the financial case, things can go horribly awry. It looks as though the cost of clearing up the site is likely to be significantly more than the £478 million that was mooted at the outset.

Thank you, Mr. Deputy Speaker, for allowing me to make this brief contribution. My hon. Friend the Member for Faversham and Mid-Kent has made a sensible suggestion and I hope that the House will seriously consider it. I am particularly glad that it has cross-party support; the hon. Member for Bath (Mr. Foster) supports it. It is wrong that London taxpayers should suffer from the potentially ruinous multiplier effect to which I have referred. There may be some merit in the comment of the hon. Member for Rhondda (Chris Bryant) that the £625 million should not be the cap if there were to be a massive cost overrun. I am sure that London taxpayers would be happy to pay their share, but the reality is that, with a cost overrun, they will pay 100 per cent. of every pound in excess. That would not be the right way forward.

Curiously, I find myself joining the Minister in opposing the new clause. I find absurd the suggestion that Londoners and London MPs should simply walk away if all this goes financially pear-shaped, which a number of us anticipate, and leave the rest of us in the United Kingdom to pick up the pieces. London has secured the most extraordinary and fantastic regeneration programme for the east end. It is about to receive the most generous, extravagant input of public money through the lottery to pay for the bulk of the games and for that regeneration. Therefore, London cannot simply walk away when those financial shortcomings come home to roost and expect the rest of the nation to pick up the pieces. That would not be fair, right or proper.

Can the hon. Gentleman remind the House how much the Scottish Parliament cost?

I am grateful to the hon. Gentleman for mentioning that. I will refer to the Scottish Parliament in my speech and give him the full figures for the extraordinary increase in its cost. [Interruption.] If the hon. Gentleman will just be patient, I will come to that.

In this debate, I have heard London Members saying that Londoners will continue to pay for the games through the council tax. Londoners are paying for a sizeable proportion of the London Olympic games and that is right and fair because it is London that stands to gain from all the fantastic regeneration. I suggest that £625 million is a snip to pay for what will be the largest regeneration programme in the next 10 years, anywhere in the world. It is cheap at half the price. I will now answer the question from the hon. Member for Croydon, South (Richard Ottaway). The total cost of the Scottish Parliament was £450 million, so now we have compared costs.

I could go on about how the Olympics is part of a general package and general process that always seems, inevitably, to secure large infrastructure projects for London. The rest of the UK continues to pay for that. London is the richest, most prosperous part not just of the UK but of the whole of Europe. I shall spare you from any more of that argument, Mr. Deputy Speaker, because I am sure that you have heard it being kicked around before during debates in this House; indeed, it has been discussed for the past 10, 20 or 30 years.

The benefits for London of this regeneration are fantastic. The regeneration of east London alone will create more than 3,000 jobs, and its local economy will benefit by £70 million. It has been concluded that London could make up to £500 million from the tourism legacy—an extraordinary, incredible figure. Given these fantastic legacies, London should be embarrassed at the suggestion that it should walk away from its responsibilities if things go pear-shaped. If things do go wrong, it will not be the fault of the taxpayer or the lottery player; nor will taxpayers elsewhere in the United Kingdom, or lottery players outwith the metropolitan area, share in this legacy. London alone will benefit.

Does the hon. Gentleman not agree that although the Olympic games will obviously benefit London greatly, his constituency, mine and all other Scottish constituencies will also benefit greatly from the sporting opportunities provided for young people? I also hope that the Scottish Executive and Scotland will make the most of the tourism opportunities, and get people to go north of the border once they have been to the London Olympics.