House of Commons
Monday 16 October 2006
The House met at half-past Two o’clock
Prayers
[Mr. Speaker in the Chair]
Oral Answers to Questions
Work and Pensions
The Secretary of State was asked—
Jobcentre Plus
Since 1997, welfare dependency has fallen by 20 per cent. Claimant unemployment is close to its lowest level for 30 years. There are 2.5 million more people in jobs and 800,000 children have escaped the poverty trap. Jobcentre Plus has made a major contribution in achieving that progress and I would like to place on record my appreciation of the dedication and hard work of its staff.
I thank the Minister for that reply—[Interruption.] Please excuse my breathlessness. [Interruption.] It is not that exciting. [Laughter.]
I thank the Minister for his reply to my constituent Mr. Vialva, who was asked to pay back money from 1998 in 2006. It turns out that his was part of a stockpile of unanswered correspondence on this matter. That speaks to me of a Department that is absolutely chaotic. It turns out that papers were lost and few facts were available. We are talking about the massive sum of £175. Will the Minister tell me whether there are other constituents who are also caught up in the system and who are in a similar position to Mr. Vialva, and does the Minister have a figure on the matter?
I have that effect on people.
I am generally not aware of the constituency case that the hon. Lady has drawn to my attention, but I will happily look into it. I hope that she will accept my assurance that cases such as that are very much the exception and not the norm. In her constituency, for example, because of the hard work of Jobcentre Plus staff in her area, unemployment has fallen by 30 per cent.
Does the Minister think that the performance of Jobcentre Plus might be improved if the call centre numbers were changed from 0845 numbers to freephone 0800 numbers?
We are looking carefully at that important point and we have established a number of pilots on establishing 0800 freephone numbers. I would be happy to share the details with my hon. Friend.
Is not one of the problems for Jobcentre Plus staff that they are not able to advise all claimants that they would be significantly better off in work, because of the effects of means-testing? Was the Minister concerned, over the summer, to read the report by the Joseph Rowntree Foundation, which said that some of Labour’s recent reforms
“have weakened financial work incentives”?
Over the next few months, as he prepares his personal manifesto for the Labour leadership, will he focus on policies that will improve work incentives?
We have always made that an important issue for us. If the hon. Gentleman looks at the effect of tax credits—for example, on the minimum wage—he will see that they have undoubtedly provided a clear incentive for the poorest to get off welfare and into employment. That has been a positive thing to do. We have made sure that work pays. The results of that are clear. There are 2.5 million more people exercising the right to work than in 1997.
I thank the Minister for Employment and Welfare Reform, who, at a point when our local Jobcentre Plus was failing to deal with urgent cases efficiently, intervened and made sure that it did. May I be assured that, when there is a local problem—in our case, I think that it was to do with recruitment of Jobcentre Plus staff—and when Members are made aware of it by their constituents, we can continue to have that kind of service? In our case, constituents had to wait an unacceptably long time, but as soon as my hon. Friend the Member for Reading, West (Martin Salter) and I intervened, they were able to get action straight away.
I am grateful to my hon. Friend. The chief executive of Jobcentre Plus acts to deal with these types of concern when they are brought to our attention. In relation to the question asked by the hon. Member for St. Albans (Anne Main), we have recruited something like an extra 70 staff to deal with some of the backlog of cases. It is important that, when someone applies for benefit, that case is processed in a timely and efficient way. We are committed to improving the service to our customers in all parts of the country.
Economically Inactive Teenagers
At the end of 1998, the figure was 46,000. At the end of 2005, there were 122,000 economically inactive people aged 16 and 17 not in full-time education.
Will the Minister explain why the group of teenagers who are not in work, full-time education or training has, according to his figures, tripled to roughly 30 per cent. of the total, despite the enormous number of Government programmes and despite the fact that that group features a high prevalence of crime, drug use and other forms of antisocial activity?
This is an important point. We introduced the education maintenance allowance to encourage young folk to stay on at school because the priority is for them to remain in education. I am pleased to confirm to the House that both the proportion and number of such people who remain in education is up, although there is much more work to do. I think that the hon. Gentleman would accept that the long-term youth claimant count is down by 60 per cent. nationally and by 50 per cent. in his constituency.
My hon. Friend the Minister joined me at a Save the Children fringe meeting at the Labour party conference in which we met a group of young people from an estate in a rural part of Wales. They flagged up the fact that one of the key issues affecting their ability to get into work was the lack of and the cost of transport. Will he join me in welcoming the End Child Poverty month of action that intends to highlight those problems and tell me a little more about what he plans to do following our meeting with Save the Children?
I was pleased to have the opportunity to meet my hon. Friend and young folk from rural Wales. She is correct that the single biggest problem that they all identified was the availability of transport in rural locations. That showed me that the way of overcoming the multi-dimensional way in which poverty arises is through collective action across all Government Departments. I confirm to my hon. Friend that we remain absolutely committed to halving child poverty by 2010 and abolishing it entirely by 2020, which is remarkably different from the situation a short time ago when we had the highest levels of child poverty of any industrialised nation on the planet.
I am confused. A moment ago, I heard the Minister say that the long-term youth claimant count was down by 60 per cent., but on 5 September, the Prime Minister said:
“We have eradicated long-term youth unemployment.”
Additionally, just the other day I read published Office for National Statistics data showing that long-term youth unemployment stands at 181,000, which is its highest level since October 1997. Will the Minister tell us who has got it right—him, the Prime Minister or the ONS—and which two have got it wrong?
I cannot do much about the hon. Gentleman’s state of confusion, but I can confirm that long-term youth unemployment in his constituency stands at 15. Of course, that is 15 too many, and we will do all that we can, working with everyone else, to ensure that we further reduce long-term youth unemployment in his constituency and elsewhere. However, I am sure that he would be the first to acknowledge that remarkable progress has been made on eradicating long-term youth unemployment, partly through the new deal, which, of course, he described only recently as an “expensive flop”.
One Nottingham
I am pleased to say that One Nottingham was successful in its recent bid to become one of the early pathfinders for our new cities strategy, which will help to play a significant role in improving local employment rates. I would like to thank my hon. Friend for the valuable work that he is doing to support this initiative in Nottingham.
Does the Secretary of State accept that in a place such as Nottingham there is a massive disparity in unemployment rates and attempts to get people back to work that requires incredible flexibility? He and the Prime Minister are already committed to that flexibility. Will the Secretary of State tell us whether it will extend to things such as the 16-hour rule and the earnings rule? Will he consider whether the pathways to work project might in some instances cut across what city strategies are trying to do? Has he thought about ensuring that there is no confusion, not only among Conservative Front Benchers, which occurs a lot, but in a city strategy about the responsibilities between it and pathways?
My hon. Friend, who knows Nottingham much better than I do, will be aware that although Nottingham is one of the richest cities in the United Kingdom, it has some of the greatest pockets of deprivation. The whole purpose of the cities strategy is to unite the public, private and voluntary sectors in a new war on tackling economic inactivity and to mobilise resources across the public sector and into the private sector. As part of that, we will certainly consider any request for flexibility when we think that that can make a difference. Whether it is on the 16-hour rule or elsewhere, we are prepared to work with local city strategies to develop a good response. There has to be proper ownership of pathways in city strategy areas, and I am sure that the local consortium in Nottingham is well placed to take charge of that.
Order. The hon. Gentleman’s constituency is too far away from Nottingham for me to call him.
Child Support Agency
In July, and in response to Sir David Henshaw’s report, I set out the broad direction of reform to the child support system. We intend to publish a White Paper with final, detailed proposals later this autumn.
The Secretary of State will be well aware that many of my constituents have been badly let down by the CSA through its sheer delay, incompetence and constant change of caseworkers, and that many constituents are still caught in the system, trying to seek justice. Given that the Government’s reforms plan to exclude the families at present in the old system, what assurance can the right hon. Gentleman give that those excluded families will not be abandoned or forgotten by the Government?
The hon. Gentleman might need to look at the White Paper again and refresh his memory. We will not exclude old scheme cases from the reforms. We will set out the detailed transitional arrangements in the White Paper, but I have already told the chief executive of the agency that he must prioritise enforcement and debt collection. We are making an additional investment in the CSA to make sure that we improve performance in all these areas, and it is an important part of our plans. I agree—this is why we have set out our plans to replace the Child Support Agency—that it is impossible to make the current system work in the way that we want it to, and to provide the hon. Gentleman’s constituents with the level of service that they are entitled to expect. When we publish our detailed proposals, I hope that he will be the first to support them.
Will my right hon. Friend look into the unfairness caused by a non-resident parent in receipt of child tax credit having that taken into account as income when calculating the maintenance requirement, thus returning that parent to low income, whereas the recipient may also be on child tax credit and therefore may effectively benefit twice?
I am happy to look into that.
One aspect of the reform of the agency was the introduction of a means whereby parents could agree maintenance between themselves. Under the pre-CSA arrangements, as the Minister may know, at least in Scotland, such an agreement, if registered, could be enforceable in the same way as a formal court decree. Can he say whether it is envisaged that the new arrangements will act in the same way, and if so, will he consider measures to enforce them in an overseas jurisdiction where there are reciprocal arrangements relating to court orders?
On the latter point, that is an important issue that we need to explore in relation to how we recover debt from people who are outside the jurisdiction, whether that is in Scotland or in England. That can often be a way round the legislation that the House has enacted, and we cannot tolerate such a situation. On the jurisdiction of a court, the hon. Gentleman will have to wait until the detailed proposals are set out in the White Paper. Sir David Henshaw highlighted that as an issue and we are giving careful consideration to it.
Is the Minister aware that many of us on the Labour Benches are pleased that he is taking steps to get rid of the Child Support Agency as it currently exists? Is he also aware that I am astonished that a Conservative Member of Parliament can voice opposition in the manner that he does, taking into account that in 1992 when the agency was introduced by John Major—the man responsible for the cones on the highways and all the rest of it—some of us voted to scrap it within 12 months of it being passed by the House? If only the Tories had joined us, we would never have had such a calamity.
May I ask the Secretary of State about information technology? He will be aware that many of my constituents, and no doubt many of his, who are parents with care wish to apply for a variation on absent parents who are in receipt of working tax credit. The Government believe that they should be able to do that, but I am told by one of his ministerial colleagues that they cannot do so at present because the computer system cannot be adapted to allow them to do so. That has now been the case for three years. How much longer will they have to wait?
It is not an ideal situation, as I would be the first to acknowledge. The Child Support Agency has a number of routes—not satisfactory in all cases, I agree—to try and find manual overrides and work-arounds for such problems. The difficulties with the IT system have been pretty well documented and I do not want to add to that. In relation to the new agency, the problem will have to be examined carefully because we do not want such problems to continue in the new agency. My hon. Friend the Member for Bolsover (Mr. Skinner) is usually right on all these matters.
We frequently have discussions here about failings of the CSA. However, first, is it not right to emphasise that the starting point in child maintenance is personal responsibility, usually that of absent fathers; and secondly, that in any such discussion the focus must be towards the elimination of child poverty, as it is children who suffer when maintenance is not paid?
I am grateful to my hon. Friend for making those two points, both of which have to be centre stage in the architecture of the new system. We have to promote personal responsibility, which we will be able to do by encouraging more parents to reach voluntary agreements. We also have to be able to say convincingly to the public that in cases where the absent parent does not discharge their financial responsibilities to the child, there will be a better—a more efficient and effective—system for recovering that maintenance. I am afraid that that has been sadly missing from the current arrangements, but Sir David Henshaw, the chief executive of the CSA, and the Department for Work and Pensions are determined to get it right.
Is the Secretary of State in a position to confirm that Sir David Henshaw has reported on the implications of his first report? Is he able to give us a date when he expects to publish his White Paper and when he expects to publish on the internet the responses to his consultation?
As regards applications under the new system by those already claiming child support, has the Secretary of State estimated what the cost to the state will be, as experts have told us that it will be considerable?
On the hon. Lady’s latter point, that would very much depend on the decisions that we make about the length of time over which that process will take place. We will set out all the details in the near future when we publish our White Paper. I am afraid that I do not have a date for its publication because, as she will know, that is not entirely in my hands—it is to do with the business managers and others—but it will certainly be before Christmas.
Occupational Pensions
We have been considering the ombudsman’s report in the light of the Public Administration Committee’s report on this issue and will publish the Government’s response shortly.
That is a very encouraging reply. Members will recall that the parliamentary ombudsman found that information provided by the Government to those taking out occupational pensions was
“inaccurate, incomplete, unclear and inconsistent”,
yet to date the Government have refused to take any responsibility. People outside and inside the Chamber will take great encouragement from my friend’s saying that the Government are now prepared to look at the matter again.
I thank my hon. Friend for that. I am sure that he, along with other Back Benchers, will welcome the fact that the Government have found £2 billion for this. It is in no way fair to say that we have done nothing about it. We recognised the plight of people in this situation and we are helping 40,000 of those affected by it.
Can the Minister confirm that although the 00 series for longevity has recently been published, most actuaries of occupational pension schemes still rely on the 92 series, which is based on statistics gathered between 1989 and 1992? Does he agree that that means that actuaries are very much out of date on longevity and underestimate the amount of pension fund deficits?
The hon. Gentleman is right to say that longevity statistics have traditionally underestimated what the change would be. We said that as part of our state pension reforms we will have regular reviews of longevity trends to ensure that we get the right figures as we move forward to raising the state pension age. However, that is not an issue that goes to the heart of our discussion about the ombudsman.
In a written question on 25 July, I invited the Minister to give an estimate of what partial restoration would involve and the cost incurred in response to the ombudsman’s report. The Minister replied that that could not be done because it was unclear what partial restoration meant. In responding to the ombudsman’s report, will the Government make some attempt at a gradation of what partial restoration may mean and the costs associated with that?
If I understand my hon. Friend’s question correctly, it depends on the number of years and the proportion of core pensions that we would expect to restore. However, we will not prejudge today our response to the Select Committee—we obviously have great respect for it and the ombudsman. We have set out in the past why we disagree with her findings, but the key point for all hon. Members is that £2 billion is in place to help 40,000 people.
The Minister knows that pensioners of British United Shoe Machinery in my constituency and elsewhere in Leicestershire are some of the worst affected by the collapse of the occupational pensions system. Dr. Ros Altmann has described it as one of the worst cases. I hope that the Minister can reassure me that the Government’s response will be relevant to my constituents who have been affected by the collapse and not simply brush off the ombudsman’s findings as some inconvenient piece of bad news.
We disagree that it is one of the worst cases of maladministration. Which bit does the hon. and learned Gentleman say is maladministration—the Conservatives’ implementation of the 1981 insolvency directive, the Pensions Act 1995, which the shadow Foreign Secretary took though the House, or the leaflets and the statements that the ombudsman criticises? We do not believe that it was maladministration. If the hon. and learned Gentleman does, is he saying that the Conservative Government got it wrong?
My hon. Friend knows that the substance of many of the issues that the ombudsman’s report covers could end up involved in some legal action. Although it would be inappropriate for us to discuss the substance of that, is he aware that some of the affected pensioners, who have already lost a great deal of money, would feel it to be unfair if, in the event of a court case that they lost, the Government sought to recover costs from them? Those people have already lost a lot. At least recovering costs should be taken off the agenda.
That is not what we have said. We have held a dialogue with lawyers, which was conducted on terms that were agreed across Government. All we said was that if those affected want to claim that their case fits the principles whereby the Government have agreed to waive costs in the past, they need to present that case. They have not yet done so.
Pensioners
Approximately 1 million women are expected to reach state pension age of 60 between 2007 and 2010.
Given the large number of women who will reach basic state pension age by 2010, does the Minister share my concern that women in the same generation will not all be entitled to the same basic pension rights as the rest of their peer group?
It is obvious what the Conservatives are doing—
Answer the question.
I will answer the question. There is a popular Labour policy and Conservatives want to jump on the back of it—of course, we welcome their support. The Conservative party does not have a policy of introducing changes before 2010. Our policy will increase the proportion of women who get a full state pension from 30 per cent. to 70 per cent. by 2010. If the hon. Gentleman continues to ask about the issue, we will point out to people outside the House that, before 1997, the last thing that had been done to increase coverage for women was Barbara Castle’s introduction of home responsibilities protection in 1978. The policy has been welcomed by the Equal Opportunities Commission and the Fawcett Society. It is a major move forward in coverage for women and the hon. Gentleman should welcome it.
Will the Minister confirm that up to 250,000 people, mostly women, currently pay additional voluntary contributions towards their pensions, but that, under the Government’s proposals, they will receive no benefit by doing that? Should not the Government come clean with those women now and tell them the true position as soon as possible or is the Minister prepared to risk another misinformation scandal and demands for compensation by those affected?
The hon. Gentleman is right to raise that point. When we issue forecasts, we make it clear to people that the policy is changing. On Second Reading of the measure, we want to work with his party on exactly how the information can be made clear to people. However, I do not believe that his party’s policy is to return those contributions to those who made them. It is a traditional principle in the social security system that one makes payments under the rules. If the rules change, people are not reimbursed for that.
Post Office Card Account
Instead of a single replacement for the Post Office card account, there will be a range of alternative banking products. Post Office Ltd has already launched one new product and is developing others, likely to be launched in the near future.
The objective remains to migrate customers onto accounts which will do more for them than the POCA. But for those who, for whatever reason, cannot do that, there will be a new Government-supported product. Discussions are already taking place with a view to tendering for that product.
I am grateful for that answer, and I am sure that Ministers at the Department of Trade and Industry will be grateful for it too, given their frustration—expressed in today’s Financial Times—at the Department for Work and Pensions’ resistance on this issue. Will the Minister assure the House that, whatever products follow the Post Office card account, procedures will be put in place for people to be migrated automatically to those new products, so that they do not have to face Government-induced hurdles to collecting their benefits and pensions at the post office when the change takes place?
Of course we are going to make the migration as smooth as possible. The migration process is the joint responsibility of ourselves and the Post Office, as the hon. Gentleman will know, having seen the preamble to the contract for the Post Office card account. We have done some piloting on the migration, and I have placed the results in the Library. The Post Office will also begin a migration exercise shortly, and it will be a very smooth exercise, just as the hon. Gentleman requests.
It is quite clear that the 4.5 million people who use the Post Office card account thought that they had an agreement with the Government when we introduced the account, at the time when it was first threatened to take away all forms of post office benefit payments. If anything happens to the account and people are not migrated to new accounts, this will cause great problems not only for the elderly who do not have bank accounts but for the small businesses that are our local post offices, run by postmasters and postmistresses throughout the country. Is the Minister willing to give those small businesses a guarantee that their livelihoods and futures are not threatened by the withdrawal of the Post Office card account?
First, it is not a withdrawal of the account. We are simply honouring the contract that was signed in 2003 and which runs until 2010, and we will continue to do so. There is no change whatever on that. My hon. Friend would be right, if it were the case that there was to be no alternative to the existing Post Office card account. However, there will be a range of alternatives. Some are already in place, and some are being brought in by the Post Office. As I have said throughout, there will also be a successor Government-backed account for those who do not take up any of the other, better options that are available now and that will become available in the near future.
I think that the Minister is saying that the 4.5 million people who thought that they had the ability to get their benefits from their post office will still have that ability. Will he make that clear: yes or no? Will he also make it clear that his and other Departments have a commitment to the future of our post office network? One third of the post offices in Ryedale have closed since 1997. If we lose any more, the Post Office will not be able to provide a proper service to a great many people, especially the elderly.
I recall about 3,500 post offices closing under the last Conservative Government, by the way. However, I entirely understand the hon. Gentleman’s point about the importance of being able to collect pensions and benefits from the post office, and we have repeatedly said that we shall continue to honour our undertaking on that. At the moment, one vehicle for achieving that is the Post Office card account, but it is a very limited type of account—the Post Office itself says that. It does nothing to promote financial inclusion, for example. So if we can replace it, as we are now beginning to do, with alternative accounts that are post office-based and that are better and offer greater functionality, that will provide a better deal for our customers receiving their benefits and pensions, and potentially a better deal for the Post Office as well.
My hon. Friend will be aware that, in the poorest communities in many parts of the country, the only way in which people can access cash without paying a fee is through the Post Office card account. I understand what he is saying about successor accounts, but will he give the House an assurance that those accounts will be operated through the existing network? It is okay for someone to have an account, but without a post office, it would be useless.
Yes, I can give my hon. Friend the same answer that I have given to previous questions. The objective is to ensure that those who wish to receive their benefits and pensions at the post office can continue to do so. Even today, 25 bank accounts—with a potential 20 million account holders—have post office accessibility. At the moment, however, only 2 million of those account holders choose to exercise the right to use their local post office as a bank branch. I am having discussions with the Post Office about ways in which we might be able to promote this facility and encourage more people to use their local post office to access their bank account.
People in Bingley in my constituency are at risk of losing their post office altogether, not because the Post Office wants it to close but because it is difficult to find someone to take on the franchise that has just been given up. Is the Minister aware that the dismantling of and uncertainty about the Post Office card account is one of the main reasons preventing someone from taking on the franchise? Can he therefore pull his finger out and sort this out so that people in Bingley can retain the post office that is crucial to them and to the businesses that it supports?
I am sorry if the hon. Gentleman is in doubt, but I assure him that the Post Office is not, and nor is the National Federation of SubPostmasters. Recently, I met its general secretary, Colin Baker, and since then he has published an article commenting on the meeting, which I shall quote for the benefit of the hon. Gentleman and his constituents:
“There is an understanding on behalf of Government to work with both Post Office Limited and ourselves to put together a range of products to offer customers a greater choice.”
It is understood by the Post Office and postmasters, and I hope that it is now understood by the hon. Gentleman.
In Rhondda, 16,300 people draw their benefits through the Post Office card account system every week, and they are bewildered about what will happen in future. If, over the next three years, we are to migrate 16,300 people on to some other system, is it not vital that that system should be simple, easy to transfer to and well publicised? Would it not make a lot of sense if post offices were fully able to advertise all the financial services that they can offer, rather than just some of them?
I agree with my hon. Friend that the process needs to be simple and that transfer needs to be easy. I think that he will find that the migration exercise that the Post Office is about to undertake will confirm that all of that is possible to achieve.
On 8 May, when I asked the Minister what replacement account the Government would offer to POCA holders, he said:
“It is not for me to say what accounts it”—
the Post Office—
“will come up with; that is a matter for the Post Office.”—[Official Report, 8 May 2006; Vol. 446, c. 10.]
The Opposition therefore welcome the Minister’s apparent change of heart today. Can he guarantee, however, that the more vulnerable, unbanked, Post Office card account holders who want to keep their existing POCA will be able to do so?
We have always made it clear—
Is that a yes?
The problem with the hon. Gentleman is not his volume but his vertical hold.
We have always made it clear that Post Office card accounts will have a range of replacements. The hon. Gentleman suggested that I had somehow changed position on the Post Office introducing its own accounts. I have not. The accounts that it has already introduced, and those that it plans to introduce, are its accounts, its design and not a matter for me. Of course, however, we remain in discussion with the Post Office about that. I have also said throughout, as I have repeated today, that a successor product to the Post Office card accounts will be available to those who do not transfer to any of the existing alternatives or other options that will come into being between now and 2010.
Disability Discrimination Acts (Departmental Policy)
The Department’s public information policy contains accessibility guidelines to ensure that the Department meets its obligations under disability discrimination legislation. It produces written information in a number of accessible formats such as Braille, audio and large print.
I thank my hon. Friend for that reply, but will she take a close look at what is happening with the jobcentre in Stoke-on-Trent? People with dyslexia are asking to be kept in touch with the Department either by e-mail or phone, but they are still getting the same letters churned out by the central computer. When the disability equality scheme comes into effect on 4 December, will she make sure that those concerns are fully addressed by Government?
I thank my hon. Friend for her supplementary question. I know that she does a lot of hard work in her constituency on disability issues. The Department is fully committed to being an exemplar, both in the provision of online and telephony services to our disabled customers and as an employer. When we publish our diversity and equality action plans later this year, we will highlight where there is a requirement for review and improvement of our systems.
Pension Credit
In May, more than 2.7 million households—3.3 million individuals—in Great Britain were receiving pension credit. That is nearly 1 million more than received the minimum income guarantee that preceded it.
Because pension credit rises each year in line with average earnings, more and more people are becoming eligible for it. What I find locally is that people do not complain about being caught in a web of means-testing; they are just very pleased to be receiving extra pension. Some previously unsuccessful applicants, however, are not aware that they may now be eligible. What is my hon. Friend doing about that?
The Pension Service is undertaking a thorough exercise. We visit more than 1 million people a year to try to ensure that they are claiming the benefits to which they are entitled. I believe we have written to all pensioner households to ensure that they are aware of their entitlements, and there are significant examples of people receiving, in some cases, thousands of pounds as a result. It is definitely worth while for people to ring the Pension Service, or ask for a home visit, so that they can discuss their benefits and obtain that extra help.
The problem with pension credit is that hundreds of thousands of pensioners are simply not claiming the benefit. To what extent is that hindering the Government’s attempts to take 1.8 million pensioners out of poverty?
Far from hindering our attempts, it has helped us to lift 2 million people out of poverty. I remind the hon. Gentleman that whereas when we came to power pensioners were having to survive on £69 a week, they now have £114 a week. For the first time, pensioners are no more likely to be poor than any other section of the population, which is a remarkable achievement during a period of economic prosperity.
Unemployment Figures
There are more people in work than ever before. The United Kingdom has the highest employment rates and the best combination of employment and unemployment in the G7, according to the assessment of the Organisation for Economic Co-operation and Development.
The Minister will be aware of a report in The Business in August which showed that 5.29 million people were receiving out-of-work benefits. The real unemployment rate stands at 16 per cent. Does the Minister not recognise that, despite the Government’s promise in 1997 to tackle the spiral of escalating welfare costs, we have had nine and a half wasted years from the Prime Minister and the Chancellor of the Exchequer?
The hon. Gentleman would do better to reflect on the fact that in his constituency, long-term employment is down by two thirds.
It is one thing for the Conservatives, while in government, to have fiddled the figures when unemployment hit 3 million twice and incapacity benefit trebled, but it is quite another for them to fix and fiddle the figures while in opposition. What the Conservatives have sought to do today, in the Chamber and elsewhere, is say that everyone—every single person—on incapacity benefit is unemployed, regardless of disability or mental capacity. To lump all those folk together, regardless of their complicated needs and the support that they require, is nothing short of a disgrace, and the Conservatives should be embarrassed by themselves.
I welcome the stunningly successful figures that the Minister has given us, but may I voice my concern about the continued decline in jobs in the textile industry, particularly in the Leicester and east midlands area? While employment is falling everywhere else, in those sectors it continues to rise. What steps can the Minister and his Department take—along with the Department of Trade and Industry—to reverse that decline?
My right hon. Friend is right to observe that, despite the remarkable progress that has been made, there are continuing pockets of difficulty. He will know of the work being done by Sandy Leitch on the skills strategy. He will also know that in a global economy we cannot compete with China, India and others on the basis of low cost, but must compete on the basis of high skills. I will of course happily meet my right hon. Friend to discuss any specific further action that he thinks we could take in Leicester, or in Leicestershire generally.
Despite the Minister’s worrying complacency, is not unemployment currently at a six-year high? In Shropshire, we have seen it rise by 36 per cent. over the past year. What would the Minister say to the 600 people who have lost their jobs at Celestica in the past week, and to the 600 defence workers who have been transferred to Bristol against their will? What message has he for my constituents?
Since Labour came to power, unemployment has fallen in every nation and region of the UK. In terms of specifics, we are happy for Jobcentre Plus and other Government agencies to provide the sort of support that has been so effective in other examples of constituency redundancies. The hon. Gentleman would strengthen his case if he were accurate in his assessment. The truth is that, according to the OECD, there are now more people at work in this country than ever before. That contrasts enormously with the period when unemployment hit 3 million—not once, but twice under the Conservatives.
I join my hon. Friend in reminding Conservative Members of what it was like in my constituency under the Conservative Government when unemployment stood in excess of 20 per cent. High unemployment was not an accident of their policies, but the central plank of them. I worked in primary care psychiatry at that time and I saw doctors prescribing anti-depressants and Valium, but if they could have prescribed a job, people would not have been seen anywhere near the health centre. I am proud to be here today to say that unemployment at 2.5 per cent.—
Order. I call the Minister to reply—briefly.
My hon. Friend is right that there were indeed periods in that dark time when 1 million people went on to incapacity benefit in an individual year. He is also right to make the connection between unemployment, poverty and generational poverty. One in three kids were growing up in poverty; one in five kids were born into a house with no one in work. Yes, we still have further to go, but there has been a remarkable change and improvement as the cycle of disadvantage, previously passed from generation to generation, has been broken.
Disability Living Allowance
The disability living allowance computer system is a modern, efficient and up-to-date system that ensures correct, timely and accurate payments to our customers. The Department continually assesses and makes improvements to its computer system and will continue to seek ways to enhance its systems to support changing business needs into the future.
What measures are the Government taking to improve the computer-based medical form, which is highly complex and has denied many deserving people access to the benefits to which they are entitled? The latest figures suggest that 80,000 people are waiting to have their forms assessed for disability living allowance.
The disability living allowance form is constantly reviewed and updated. As the hon. Gentleman is aware, we are looking into ways of further improving the form and seeking to find different ways to encourage customers to provide us with the information required at the point of decision making. It is vital to secure as much information as possible. Yes, we are reviewing the position; and yes, we are looking to find any way—every way, in fact—to connect with those applying for DLA. As many hon. Members appreciate, it is a sensitive benefit, often applied for at a traumatic time in an individual’s life.
The last constituent I saw at my advice session on Saturday was a mother of six children, one of whom is seriously disabled. The family depends heavily on disability living allowance. On three separate occasions since April the file has been lost and the application form to renew has been lost, so the family has lost much needed income that is crucial for a family teetering on the financial brink. Will the Minister reassure us—she tells us that the computer systems are fine, modern and working—that the systems for handling paperwork and forms can be reviewed and improved as soon as possible?
I am pleased that my hon. Friend has raised that constituency matter and I reassure him that, if he will provide me with further details, I will certainly investigate what happened. It is unacceptable that families under pressure, in the circumstances that my hon. Friend has highlighted, should find that our system is not responsive. If he gives me the details, I will ensure that he receives a suitable and appropriate reply. I continue to underline the fact that our disability living allowance systems are in place and effective. They turn round benefit claims very quickly—not just mainstream claims within a 35-day target. In the case of people with terminal conditions, claims are turned round within four to five days.
Youth Unemployment
Long-term youth unemployment has fallen by almost two thirds. Independent research has found that long-term youth unemployment would have been twice as high without the new deal for young people, which is another reason why we should continue to invest in it, rather than abolishing it.
I have listened with interest to the mutual back-slapping club on the Labour Benches this afternoon. Would Ministers care to explain how it is that almost half of all young people aged between 18 and 24 who go on the new deal are, within 12 months, back on benefits? Is that an example of joined-up government?
Independent research has shown the new deal for young people to be highly effective not only in the hon. Gentleman's constituency but throughout the country. In his constituency, unemployment is down by a third and long-term unemployment is down by two thirds. In Peterborough, the number of people who have been helped by the new deal is greater than his constituency majority.
Leader of the House
The Leader of the House was asked—
Parliamentary Questions
The quality of answers is generally of a high order and my right hon. Friend the Leader of the House receives few complaints. He has raised those with ministerial colleagues and emphasised the need for proper answers to be given at all times
I agree with the second part of that answer, if not the first. Will the Minister recognise honestly that the quality of answers has diminished significantly in the past three or four years? Obfuscations and withholding of information are now regular occurrences. Spurious reasons for exemptions are now far more common. I hope that the Leader of the House, who has a fine record of answering questions straight, deplores that and will look at what can be done about it. When a Member is given a clearly useless and inappropriate answer where information is withheld inappropriately, should not that Member be allowed to ask Mr. Speaker to have the Minister brought here to answer the question orally?
The first half of the hon. Member's question contained a terminological inexactitude. As for the second part, we are always prepared to look at mechanisms for reviewing the position. I see and speak to colleagues from all sides of the House who may from time to time have a complaint about the way a question has been answered. I think that people will acknowledge that I am very willing to listen and to intervene, but very few of them have raised points with me or with the Leader of the House. If they put points now, I think that I would be able to tell whether they are Johnny-come-latelies or have raised that matter in the past.
Does my friend have any idea how many Members are putting in requests under the freedom of information legislation because they are so dissatisfied with the quality of information from Government Departments?
I am not aware of the exact figure but I do not think that it is very many.
In the light of the Minister's first answer, I would like him to look at the answers from the Deputy Prime Minister. I know that the right hon. Gentleman is very important, at least in his own mind, but trying to scrutinise his Department is well nigh impossible. Does not the Deputy Leader of the House agree that a Select Committee should be able to scrutinise the Deputy Prime Minister's Department and any reports from it?
I do not recall the hon. Gentleman’s contacting us about the failure to answer questions. He knows that there is a Select Committee that is able to look at issues regarding answers to questions, and of course departmental Committees can take up the matter as well if they feel that they are not getting information from Ministers, but so far that has not been the case.
House of Commons Commission
The hon. Member for North Devon, representing the House of Commons Commission was asked—
Voters Packs
Since the launch of Voting Times in July, 95,756 copies have been distributed across the UK to new voters, including those in Stoke-on-Trent, North, as they have reached their 18th birthday. Figures are not yet kept on a constituency basis, but if the hon. Lady mails constituents on their 18th birthday she will get some feel for the numbers.
I thank you, Mr. Speaker, and the Commission for looking at ways of engaging with young people. Perhaps we will be looking forward next to your blog. Parliament is now trying to engage with young people, given the fact that it is estimated that, at the general election in 2005, only 37 per cent. of 18 to 24-year-olds who were eligible to vote did so. We have to pay great regard to what we do to ensure that people understand our parliamentary system. I ask each and every hon. Member to engage with the Commission to see how we can flag up this matter even further.
I thank the hon. Lady for her positive remarks, and I agree entirely about the importance of Parliament connecting with young voters. However, the packs are only part of the work that the House is doing. Our parliamentary education unit is expanding its programme of visits to Parliament, which will more than double in the coming year and double again in the year after that. In addition, we have an outreach strategy across the UK involving local education authorities, teachers and schools, and work is under way to build material into the national curriculum. I agree with the hon. Lady that the subject is important, but we are doing a great deal as well providing the packs.
Leader of the House
The Leader of the House was asked—
Political Parties (Funding)
Sir Hayden Phillips is undertaking an independent review of the funding of political parties. He has been asked to produce recommendations that, as far as possible, are agreed between the parties. Sir Hayden will publish an interim assessment on Thursday this week. He has been asked to report to the Prime Minister with his final conclusions before the end of December this year. Once we receive those conclusions we will consult, and we will make decisions in due course.
I thank the Leader of the House for that reply. Does he agree that, if any of the recommendations suggest that funding should be capped, such capping should apply equally to all who donate to political parties, including trade unions, private individuals and businesses, and that there should not be discrimination against individuals or the private sector? The trade unions have to play their full, open and transparent part.
May I point out to the hon. Gentleman that, as the Neill Committee on Standards in Public Life said in 1998, the trade unions are the most regulated of all donors? During the 18 years of the Conservative Government, the trade unions suffered one adverse change after another in their financing regimes, while nothing whatever was done in respect of companies. I am surprised that the hon. Gentleman is leading with his chin on the issue, because there is one unquestionable improvement that we must make in regulation, which is to ensure that the unregulated funding of local parties by unincorporated associations such as the midlands industrial council is brought to an end. I note that although he spent just £11,000 during the four-week election period in 2005, he received a total of £55,000 in the eight months before the election was called from Lord Leonard Steinberg and the midlands industrial council, and I assume that he spent that, too. That shows that there is a glaring loophole continuously exploited by the Conservative party, enabling them to spend large sums of money and not account for them before the election period kicks in.
Does my right hon. Friend agree that there is scope for political parties to spend less before there is any question of further funding, particularly from the state? In addition, is there not a strong case for an immediate inquiry into the midlands industrial council? It is a sinister organisation—it is not accountable in any way, and it makes a mockery of the reforms that the Government have brought about.
I strongly agree with my hon. Friend’s latter comments. I recall that when the Political Parties, Elections and Referendums Act 2000 was considered in the House, there were high-sounding comments from the Opposition, who said that they wished for as much transparency as we and the Liberal Democrats wished for. Such comments have been repeated, but I note, too, that the Conservative party exploited a loophole in the law that allowed unincorporated associations, such as the midlands industrial council, to give thousands and thousands of pounds to local constituency associations without the latter accounting for that or providing any details about who was behind those shady organisations until it was forced out of them.
I do not expect the Leader of the House to pre-empt the report from Sir Hayden Phillips, which is due later in the week, but if we are to achieve consensus, there are three essential ingredients, and he has already touched on some of them. First, there must be proper capping of individual contributions. Secondly, there should be a firm regime to prevent the abuse of enormous spending in constituencies outside the election period particularly, as often happens in marginal constituencies. Thirdly, there should be proper transparency about the way in which all parties are funded, and no more secret clubs and cabals.
I agree strongly with the hon. Gentleman’s second and third points. As far as his first point is concerned, when the Neill Committee on Standards in Public Life reported in 1998, it recited all the changes that had been made in respect of the trade union donations to the Labour party and concluded:
“We have received no evidence to suggest that the legislation is not working satisfactorily, and no case has been made out for any reform…No change should be made in the law”.
There has been no evidence since of any case for change.
The idea of caps on donations sounds interesting, but in the United States it has spawned a vast evasion and avoidance industry. We are more likely to get true transparency if we have controls on spending that apply at all levels of political parties’ spending and in respect of all kinds of donors, including shady organisations such as the midlands industrial council.
My right hon. Friend has touched on the point that I wish to make very strongly. There is a strong body of opinion in our party that there should be much lower limits on spending, which should be much better policed, so that no party becomes the hireling of big business, rich people or, indeed, the state. We should retain our independence by having much lower levels of spending and, therefore, much lower levels of donations.
The truth is that there is effective, or relatively effective, control during the short election period defined in the 2000 Act, but there is no control during the much longer period before elections, notwithstanding the fact that because elections take place almost every year, campaigning is now almost continuous. I hope that we can achieve a consensus between the parties that the issue of control of campaign spending at all times is what most needs to be properly addressed.
I have listened with care to what the Leader of the House has said, and he will know that in the spirit of consensus we have put forward a series of serious proposals for party political funding, prepared by my hon. Friend the Member for Chichester (Mr. Tyrie). Unfortunately, the Leader of the House has already set his face against elements of those proposals. Does he not accept that whatever else the Government might do about the funding of political parties, if they do nothing about the significant contribution to the Labour party by the trade unions, the public will remain rightly sceptical about the influence that continues to be wielded by the unions on this and every other Labour Government?
The Conservative party has always dined out on the fact that the Labour party and the trade union movement are in close association. It can continue to do so for as long as it wishes; that is entirely its right. What is not its right is to seek partisan advantage by forcing through changes in the financing regime, which would have the effect of wholly disadvantaging one political party and forcing changes in our constitution, when no such changes have been forced on the Conservative party—[Interruption.] The right hon. Lady says from a sedentary position that there would be a cap on business donations, too, but she knows very well that her party decided to focus on the trade unions continuously during the 18 years of Conservative government from 1979 to 1997. They changed the law and they changed the law and they changed the law again, but they did nothing whatever in respect of companies, so much so that in 1998 the Neill Committee on Standards in Public Life said that it had received no evidence of any case for further changing the law. I have challenged the right hon. Lady and the hon. Member for Chichester (Mr. Tyrie) as to whether there is a scintilla of evidence of any mischief in the way in which the regime for trade union funding of political parties has altered since then. The answer is that there is absolutely none. What we have had, however—
Order. We have run over by four minutes and we must move on.
Northern Ireland
With permission, I wish to make a statement on political progress in Northern Ireland.
Between 11 and 13 October in St. Andrews, both the British and Irish Governments engaged intensively, late into the night and from early morning, with the Northern Ireland political parties. That we were able to defy the sceptics and cynics, and secure the St. Andrews agreement, opens the way to a new dawn for democracy in Northern Ireland: a new democracy based—for the very first time in Northern Ireland’s tangled history—on the twin foundations of the rule of law and power sharing. Without question, it may come to be seen as a pivotal moment in Irish history.
Those two foundations stand together or fall together: on the one hand, unequivocal support for the police and unequivocal support for the rule of law; on the other an absolute commitment by all the parties to share power in a restored Northern Ireland Executive. Delivery on both those foundations was absent from the Good Friday agreement; now it is in prospect. That is a measure of what was achieved at St. Andrews—arguably the fulfilment of the hopes expressed on Good Friday eight years ago. The agreement has been placed in the Library and is available in the Vote Office.
All the parties at St. Andrews were crystal clear on one point at least: in May, Parliament had legislated for closure, one way or the other, on the political process. Four years since the Executive and Assembly last sat, there had been set in statute a clear end point— 24 November—by which the political parties would agree to locally accountable government for the people they represent, bringing direct rule to an end. The alternative, as I have made clear, is that the Assembly would dissolve. Incidentally, were the parties to unravel St. Andrews at any stage in the coming weeks and months, dissolution would follow as night follows day, and both Governments would move on to formulate plan B. There is not a choice between St. Andrews and something else; there is a choice only between St. Andrews and dissolution.
Since the House set the 24 November deadline in statute, there have been important indicators that the context within which political development can take place has been changing: changing fundamentally, changing for the better and, I personally believe, changing for good. Northern Ireland had the best parading season for four decades, with not a soldier on the streets on 12 July—something unthinkable just a year ago, when 115 live rounds were fired by loyalist paramilitaries at police and soldiers during the Whiterock parade. This year, Whiterock passed off peacefully, following a cross-community dialogue.
Loyalist leaders have given me assurances that, as the IRA has done, they will now work to ensure an end to their paramilitarism and criminality. Last week, for the first time ever, the leader of the Democratic Unionist party, the right hon. Member for North Antrim (Rev. Ian Paisley), met the Catholic Primate of Ireland, Archbishop Brady. The House will want to congratulate the right hon. Gentleman and Baroness Paisley on their 50th anniversary last Friday.
Over the summer, the preparation for government committee, with all the parties face to face in the room, did important and constructive work on a range of issues central to the good governance of Northern Ireland. Above all, there has been further compelling evidence that IRA violence has indeed ended, a judgment confirmed decisively on 4 October in the report of the Independent Monitoring Commission, which also confirmed in paragraph 2.17:
“The leadership has maintained a firm stance against the involvement of members in criminality, although this does not mean that criminal activity by all members has stopped. The leadership’s stance has included public statements and internal directions; investigating incidents of breach of the policy; the expulsion of some members; and emphasising the importance of ensuring that business affairs are conducted in a legitimate manner”.
The Government firmly believe that the circumstances are now right to see a permanent political settlement in Northern Ireland, with the restoration and the full and effective operation of the political institutions. Anyone with experience of the political process in Northern Ireland will know that it is never easy, that the negotiations are always tortuous and tough, and that there is always a danger of things unravelling. St. Andrews, like Good Friday, was no exception; but the harder the negotiations, the more likely it is that any agreement that comes out of them will stick.
There were two main issues to be resolved at St. Andrews if we were to achieve restoration of the power-sharing Executive: the need for support for policing and the rule of law across the whole community, which would enable, in due course, the safe devolution of policing and justice to the Assembly; and changes to the operation of the Good Friday agreement’s institutions.
On support for policing, I want to spell out to the House what that means by referring to paragraph 6 of the St. Andrews agreement. It means fully endorsing the Police Service of Northern Ireland. It means actively encouraging everyone in the community to co-operate fully with the PSNI in tackling crime in all areas. It means playing a full and active role in all the policing and justice institutions, including the Policing Board.
For many years now, all in this House have joined the Government in demanding support for the PSNI from every part of the community. My hon. Friend the Member for Foyle (Mark Durkan) and his Social Democratic and Labour party colleagues—especially John Hume—have shown courageous leadership in making that a reality. With one in five—rising to one in three—PSNI officers now Catholics, and the service deploying with local consent right across Northern Ireland, including south Armagh, policing has been transformed.
But no one present will now underestimate how significant it will be if the republican movement can accept and endorse the agreement drawn up at St. Andrews. Based on last week’s discussions, I am confident that it will do so, and that that will make for a decisive and irrevocable break from a past of violence and criminality. It will give absolute confidence in an authentically new Northern Ireland of hope and peace and the rule of law. I believe that, when that active support for policing and criminal justice is seen to be delivered, there will be sufficient community confidence for the Assembly, in line with the St. Andrews agreement, to request the devolution of justice and policing from the British Government by May 2008.
It is important to acknowledge, however, that devolution of policing is already very substantially down the road. Following the Patten report, direct rule Ministers relinquished matters of real importance. The PSNI has already been accountable for five years to the Policing Board, comprising local elected and independent representatives, to the Police Ombudsman for Northern Ireland, and to district policing partnerships. The remaining devolution of policing and justice is largely institutional, focusing more on the courts and the administration of justice than on operational policing, which in the past has been so controversial to nationalist and republican communities.
Although nationalists and republicans had major concerns over the primacy of national security being vested in the Security Service, the St. Andrews agreement makes it clear in annexe E that there is full accountability for all domestic operational security matters, because they will be exclusively undertaken, not by MI5, but by the PSNI, which is, of course, fully accountable in Northern Ireland—including those of its officers who may be secondees to MI5. We stand ready, moreover, to develop procedures and establish protocols on MI5’s activities, to provide any reassurances necessary on accountability.
Taking Northern Ireland out of a divided past and into a shared future can be done only on the basis of agreement on fundamental principles: the principle of consent; the commitment exclusively to peaceful and democratic means; the sharing of power within a stable, inclusive partnership government; equality and human rights for all; and mutually beneficial relationships developed between north and south and within these islands. Those are the fundamental principles of the Good Friday agreement, and they will always remain the bedrock and foundation of the political settlement in Northern Ireland.
However, the Good Friday agreement allowed for changes to be made to the operation of the institutions to make them more responsive and effective, and, following discussion with all the parties, we have made an assessment of them in annexe A. The Government will introduce legislation to enact appropriate changes and other aspects of the St. Andrews agreement before the statutory November deadline, once the parties have formally endorsed the terms of the agreement and agreed on that basis to restore the power-sharing institutions.
We have now set out a clear timetable for restoration. Tomorrow, a new programme for government committee will begin regular meetings at Stormont to agree priorities for the new Executive. Crucially, parties will, for the first time, together be represented at leadership level on that Committee, as on the existing preparation for government committee.
We have asked the parties to consult on the St. Andrews agreement, and to respond by 10 November to allow time for final drafting of the Bill to be taken through the House. Once that happens, and on the basis that the St. Andrews agreement is endorsed, the Assembly will meet to nominate the First Minister and Deputy First Minister on November 24, the deadline for a deal.
I do not have to spell out to the House the great significance of these nominations, the more so given those who are likely to be nominated: the leader of the DUP and Sinn Fein’s chief negotiator. I pay tribute to the right hon. Member for North Antrim; like anyone who understands something of the history of Northern Ireland, I realise that this is not an easy step for him or for his party.
In January, there will be a report from the Independent Monitoring Commission. In March, the electorate will have the opportunity to endorse the St. Andrews agreement either through an election in Northern Ireland or through a referendum. We will listen to the views of all the parties before making a decision on the most appropriate way of consulting the electorate and legislating accordingly. Either way, the people will speak.
On 14 March, prospective members of the Executive will be named by their party leaders. On 26 March, power will be devolved and d’Hondt will be run. This is an ambitious programme and there is still work to be done, but I do not think that Northern Ireland has been at this point before. It is a tribute to my right hon. Friend the Prime Minister, the Taoiseach and both British and Irish officials, who have worked tirelessly over so many years, that we are at this point. Their energy, time and patient attention to the detail of this issue has been unprecedented. But above all, it is a tribute to all the political parties in Northern Ireland—all of them—which have shown courage and leadership and taken risks for peace and political progress. They have shown that there can be accommodation and agreement without sacrificing either principle or integrity.
Friday 13 October was a good day for Northern Ireland. It has the potential to be greater still—to be the foundation stone of a new Northern Ireland based exclusively on the principles of peace, justice, democracy and equality. Whatever the difficulties that lie ahead, I trust that none of those who took part in the talks at St. Andrews last week will lose sight of that great prize.
I am grateful, as always, to the Secretary of State for his courtesy in giving us early sight of his statement. I welcome the progress made in the negotiations at St. Andrews and the positive approach adopted by each of the parties. Let me be clear that I congratulate the Prime Minister, the Secretary of State and the leaders of all the Northern Ireland parties on what is clearly a major step forward, but we are absolutely clear that, for this initiative to succeed, it is essential for Sinn Fein finally to deliver on policing.
Power sharing in Northern Ireland will not work unless every Minister in the Executive fully supports the police, the courts and the rule of law. In that context, I welcome the press reports over the weekend that the Government are now planning to amend the ministerial pledge of office to make such support a requirement of taking office. May I gently remind the Secretary of State that, when the Opposition sought to do that earlier in the year through amendments to the Northern Ireland (Miscellaneous Provisions) Bill, we were told that it was unnecessary? I am glad that Ministers have changed their minds, and I ask the Secretary of State whether he is able this afternoon to be more specific about the changes that he would like to see.
Of course, the one element of the jigsaw missing from the timetable set out in the St. Andrews document is a date for the special Sinn Fein ard fheis required to change that party’s position on policing. Can the Secretary of State give the House any indication of when that meeting is likely to take place? Will he also agree that it is crucial to the entire process that there be clear movement on the issue of policing before 10 November, when the parties have to give their responses to the St. Andrews document? Will he further agree that support for policing has to be more than just simply taking up places on the Policing Board? It has to include encouraging people in republican communities to report crimes to the police, to co-operate fully with police investigations, and to provide evidence to the police and to the courts that will lead to the conviction of criminals. It also has to involve, as the Secretary of State acknowledged, republicans urging people from their communities to join the police force as a career.
Will the right hon. Gentleman confirm that there will be no toleration whatever of either individuals or parties seeking to use community-based restorative justice schemes as a form of private justice, or as an alternative to the legitimate authority of the Police Service of Northern Ireland? Can he give a specific assurance that the words in the St. Andrews documents about reintegrating ex-prisoners into employment do not mean that the Government have any intention of relaxing the current safeguards against people who have terrorist convictions or who have been involved with paramilitary groups joining the police as officers, or becoming police community support officers?
The Secretary of State spoke about the possible routes for electoral endorsement of the St. Andrews proposals. Does he agree that, whatever route the Republic of Ireland intends to follow in that respect, it would be constitutionally wrong if citizens of the Republic were to vote in a referendum on matters that related solely to the internal governance of the United Kingdom and that a referendum in the Irish Republic should surely be confined to changes in that country’s constitution or system of government?
The Opposition support the institutional changes set out in the St. Andrews document, in particular those relating to ministerial accountability and collective responsibility. Subject, of course, to seeing the text of the new legislation, we hope to be able to offer the Government our support when they introduce the Bill. We also welcome the Government’s changes of policy on capping and additional relief for pensioners when the new rates system is introduced, and their change of heart on the retention of academic selection. Will the Secretary of State introduce a new Order in Council to repeal the complete ban on all academic selection that the Government imposed earlier this year?
I wish the Government well in the course that they have set. The ultimate prize on offer is indeed great: a peaceful, stable and prosperous Northern Ireland, with a shared future for people from all traditions, based on democracy and the rule of law rather than on terrorism and the gun. It is an objective that I believe unites all of us in this House, and success in that endeavour is in the interests of us all.
I thank the hon. Gentleman for his support for what we achieved at St. Andrews. Despite the questions that he is entitled to put to me and the answers that he is entitled to get, cross-party consensus on these matters is important at this critical moment. I also thank him for in-principle support for the Bill when we introduce it—probably in the week starting 20 November, to get it in before the deadline of 24 November. I have discussed with him the fact that the Bill will have to be taken through using emergency procedures and the Opposition’s support will be critical to deliver what we intend.
I agree with what the hon. Gentleman said about full support for the police and all the different elements of that that he described, including co-operating with investigations. That is vital. Any party that aspires to hold ministerial office, let alone any democratically elected party, ought to support the police, full stop, and the policing situation that they are being asked to support has been completely transformed, as I described.
On the pledge of office, the hon. Gentleman will see in annexe A, paragraph 8, that the preparation for government committee is being asked to consider that matter. It is important for at least four of the parties that the issue be addressed. We shall have to see what emerges from that consideration and where we can take it.
The hon. Gentleman asked when an ard fheis will be called. That is a matter for Sinn Fein’s internal procedures, but the agreement contains a reference to the Sinn Fein executive, the ard comhairle, which needs to meet sooner rather than later. He is right to say that we will need to know by 10 November whether we are in business—whether we are in a position to proceed with the emergency Bill with all-party support, or not. That will be crucial.
On community restorative justice, I can give the hon. Gentleman an absolute guarantee that there is no question of it being an alternative to the rule of law or policing. Indeed, any CRJ schemes that are supported and officially recognised—we are consulting further on that—will have to comply with the rule of law and have to have the police almost embedded within them, as happens in a number of cases now. I give the House the pledge that I gave the Policing Board last week: if we do not get the arrangements for community restorative justice schemes right and if we do not satisfy everybody, broadly speaking, we will not do them. It would be better not to have them than to create a climate of uncertainty or ambiguity about what is involved.
On recruitment standards to the PSNI, the Patten report was clear that people with serious paramilitary backgrounds should not join the PSNI, and we have no plans to move away from that. Recruits to the PSNI, whether regular officers or community support officers, will have to have the same rigorous standards of entry applied to them. There is no intention of changing that.
On an election or a referendum, the different parties are thinking about that matter and plan to come back to us. We await the outcome of their deliberations. On academic selection and rate capping, as of now the Government’s policy remains as it was prior to St. Andrews. We need to see the implementation of the agreement and delivery of the legislation in the week beginning 20 November, with all-party support for that, as well as the nomination for the First and Deputy First Minister on 24 November. That being the case, included in the legislation will be the removal of the ban on academic selection. Quite separately, if the agreement is implemented—if not, we will proceed with our policy, as was our original intention, based on long consultation—and signed up to, including those crucial steps to legislation about which the parties need to tell us by 10 November and the nomination of the First and Deputy First Minister on 24 November, we will impose a cap.
I welcome the statement and my early sight of it. Good progress has been made and it can work, particularly because the most recent Independent Monitoring Commission report suggests that the IRA’s activities have been massively reduced, although not to zero, and that many of its structures have been dismantled.
I was also pleased to see annexe B, which shows true progress on a Bill of Rights for Northern Ireland and on a single equality Bill, both of which will be essential if we are to see a truly shared future for the people of Northern Ireland.
My first question relates to the apparent removal of a cross-party vote to confirm the election of the First and Deputy First Ministers. That was a fundamental principle of the Good Friday agreement, under paragraph 5 of strand 1. Why has it been removed?
It seems that some work will be done on generating structures for a department of justice. We fully agree with that intention, but it is not clear whether the matter will be determined by the Executive or by the Assembly as a whole. Will the Secretary of State say whether the department will be established by the Assembly or by the Executive?
It seems that, when a decision is to be taken, the options are an election or a referendum. If the Government choose an election, they need to explain why they proposed in the Northern Ireland Act 2006 to postpone the election from May 2007 to May 2008, specifically to give the Assembly time to bed down and govern Northern Ireland for a year. I am not sure why there is a debate on this matter, given the Government’s robust arguments on the issue at the time. Can we have clarification, given the enormous interference in election dates that we have had?
In the interim period from now until March, there is a danger that the Government will continue using Orders in Council, which cannot be amended, with regard to legislation affecting Northern Ireland. May I have an assurance that, during that period, there will be a moratorium on any significant legislation in order to allow the Assembly to pick up the reins on such decisions?
In the spirit of celebration that may have broken out, my hon. Friend the Member for Argyll and Bute (Mr. Reid) asks for an assurance that the Campbeltown to Ballycastle ferry, which unquestionably would be in greater demand as tourists flock from Scotland to Northern Ireland, will be reinstated.
The Secretary of State will know that the promise of funding was held out and was rudely grabbed away. It is a serious issue, so may we have an assurance that that strategically important service will be revisited and will get the funding that it needs?
Finally, I want to make an observation about deadlines. I predicted that the 24 November deadline would slip. On many occasions, I sought an assurance from the Secretary of State that it would not and he said that it would not, but in reality there has been some slippage. I understand the right hon. Gentleman’s strong rationale for that slippage, but, given that it is very likely—it is obvious, in fact—that he will seek to lift the condition of having a fully established Executive on 24 November and that that decision will slip to March, what assurance can we have that, if there are further roadblocks and difficulties between now and March, the March deadline itself will not slip? The right hon. Gentleman was very robust and has been clear in the documents that have been shared with me that March is an absolute deadline, but, once again, we have seen those deadlines slip. He knows my concern. If deadlines are seen to slip, we could carry on living with slippage and deadlines for the foreseeable future and that will not lead to the lasting peace and the effective devolution that we seek.
I welcome the hon. Gentleman’s support. I am grateful for it, because we need to move forward together.
To take up his last point on slippage, we never expected that implementation would take place on 24 November. What we insisted on was that there had to be a deal, and that we have. There had to be a deal and we have a deal. Indeed, we have the nomination of the First Minister and Deputy First Minister on 24 November, so we have carried out our promise to the House in that respect.
The 26 March deadline—that incorporates the 14 March deadline for the nomination of Ministers by the parties and the 26 March deadline for the running of the d’Hondt system and the restoration of self-government—will not slip. As I said in my statement, if anything unravels, the Assembly will be dissolved and Stormont will be shut down, as it would have been and still could be. If something unravels between now and 24 November, Stormont will shut down—that would mean the end of costs, salaries and the rest of it. That is what we have committed ourselves to, with the hon. Gentleman’s support.
The hon. Gentleman is right about the IRA’s huge change. In particular, I draw his attention to paragraph 2.17 in the Independent Monitoring Commission report of 4 October, which referred in terms to the disbanding of the IRA’s structures that were responsible for the “procurement, engineering and training” of its military operation—in other words, the disbandment of its military capacity.
We have reconsidered the question of a cross-party vote and the appointment of the Executive as a result of inter-party negotiations. It was important for the right hon. Member for North Antrim (Rev. Ian Paisley) and his party to get the Good Friday agreement amended in that respect, and the way in which we have reframed it has been accepted by the Social Democratic and Labour party. We can take that matter forward.
On the department of justice, clearly the provisions are laid out for how that will be decided in terms of the Executive making recommendations and the involvement of the Assembly.
On postponing elections to May 2008, which was in the Northern Ireland Act 2006, which we carried through in May, there is a change in circumstances, because we now have the St. Andrews agreement. Most of the parties felt that there ought to be a fresh mandate for that. There is a new circumstance. The Democratic Unionist party, especially, was elected on a different manifesto and the right hon. Gentleman, its leader, explained to me that he needed a fresh mandate and the endorsement of the people, by whatever route.
On Orders in Council, there are some vital matters still to take forward. Water charges is one. If we do not make progress on that, not only will constituents in Northern Ireland continue to be in a unique situation compared with my constituents, those of the hon. Member for Montgomeryshire (Lembit Öpik) and those in the rest of Great Britain, there will be a great big hole in the budget—which will not do any favours to an incoming Executive—because of the money that would have been raised for investment in water and sewerage and the release of money for extra investment in public services. However, we will certainly look at the controversial orders and, as was promised to all the parties—a promise given in the House of Lords—we will undoubtedly look at how we can seek to consider amendments to them, perhaps at pre-legislative stage.
The Minister of State, my hon. Friend the Member for Delyn (Mr. Hanson), is considering the ferry service from Ballycastle to Scotland, after which no doubt his views will be clear. However, I just say this: it is very expensive.
May I commend my right hon. Friend and the political parties in Northern Ireland on the progress made so far, especially with regard to the fact that all parties in Northern Ireland will have to accept the new policing arrangements? However, I am sure that he agrees that the sooner that direct rule ends, the better for democracy in Northern Ireland. It is entirely incongruous that we have an Assembly in Wales and a Parliament in Scotland, but direct rule in Northern Ireland. Controversial measures might have to be considered between now and—if things go well—March. Does my right hon. Friend agree that new controversial measures should not be introduced, but should be a matter for consultation on a consensual basis with all parties in Northern Ireland?
First, I thank my right hon. Friend for what he says and pay tribute to his distinguished role over three years in getting us to this point. I happened to have occupied the job when things came round in the way in which they did, but he did fantastic work to move Northern Ireland forward. I agree that the sooner that direct rule ends, the better. We want locally established self-government and devolution, and in that respect, I must be the only member of the Cabinet who wants to do himself out of a job.
You are going for another one: Deputy Prime Minister.
I will not rise to that bait.
I understand the points made by my right hon. Friend the Member for Torfaen (Mr. Murphy) about controversial orders, but we need to proceed with much-needed reforms to make savings and change layers of bureaucracy through the review of public administration. We would be doing the incoming Executive a favour by reforming water charges because we would release money that they would otherwise have to find. If we did the job, they could come in and get on with other matters with which they would need to deal.
I thank the Secretary of State for his statement. I accept wholeheartedly that he has given us the categorical assurance that one of the foundation stones on which the future government of Northern Ireland must rest is the full recognition and fullest support of the Police Service of Northern Ireland and the structure of law and order enforcement. Those matters must be kept. We have the promise, but not the delivery. As I have said to him face to face, if they were not delivered, we could not go forward with this matter. I do not accept that for years people have been saying just that, because I have sat in the House and heard arguments against.
I believe that throughout this United Kingdom, there will be relief among all people, who will say, “At long last, in any Government in any part of this United Kingdom, those who are in it must support the police in a way that satisfies the people.” That is crucial, as the Secretary of State very well knows, to what we are speaking about today. I look forward in anticipation that—without ifs, buts, or trying to water things down—that is done. That is the solid foundation on which real democracy can exist in Northern Ireland, but if that foundation stone is dislodged, all the work is over—it will crumble and decay.
I am sorry that I am perhaps not so excited, but I have been through these periods over and over again. I pray, Almighty God, that our country—our little province of this country—will come to a place of peace. I do not want to visit any more homes of bereavement. I do not want to take little orphans on my knee, look at them and say that they will never see their father or mother again. I want that all to finish, but it must be built on that solid foundation.
I have one thing to ask the Secretary of State. If he proceeds with the water charges, will he please consult the parties in Northern Ireland, so that he does not introduce a contentious measure and so that there is some sort of agreement about it? The best thing for Northern Ireland would be for the new Assembly to settle all these little matters. Then the people could say, “We can approach our elected representatives and they can tell us what has happened.” I make that plea to the Secretary of State. Thank you.
I agree with everything the right hon. Gentleman said about policing, and acknowledge to the House his own steadfast role in moving the situation on so that all parties are now within sight of signing up to what he believes in. I agree that promises are not sufficient and that delivery is important. It is significant that no party disagreed with paragraph 6 of the St. Andrews agreement, which expressed those principles.
On water charges, I give the right hon. Gentleman an undertaking to consult all parties, including his own, on their detail. There is no question about that. Perhaps that is the sort of issue that we can consider in the programme for government committee, of which he will be a member. The incoming Executive will have to take the matter forward. There will be a big hole in the budget amounting to some £200 million to £300 million of investment over the years that the water charges are phased in. Until they are fully phased in, there will be an investment gap of between £200 million and £300 million in the water and sewerage system if we do not raise the money as suggested. In addition, the phasing in of water charges would allow about £200 million to be released to fund extra public services, including health, education and housing. It is a difficult decision, but it is necessary if we are to square the budget gap. I hope all the parties, including the right hon. Gentleman’s, will approach the matter in the spirit of getting it right, rather than rejecting it outright. In the meantime, we need to take it forward in the House.
I welcome the statement from the Secretary of State and, most importantly, the progress that it related to the House. Does he recognise that those of us who have always believed in power-sharing in Northern Ireland always believed in a ministerial council north and south in Ireland, and always believed in a new beginning for policing? That belief is vindicated as we see the DUP move to the threshold of accepting the inclusion of power-sharing, and Sinn Fein move to the threshold of accepting policing.
Does the Secretary of State recognise that we are on the right side of the mountain? Yes, there is some way to go and we need to make sure that we optimise the possibilities and minimise the problems, and some problems remain. With reference to what he told us about MI5, we still have a complaints system under which Osama can complain about being got at by MI5, but the Omagh victims cannot complain about being let down by MI5. We need to improve that. In the interests of taking the wider issues forward, will the Secretary of State agree to think again about issues such as water reform and the review of public administration, at least on hearing from the programme for government committee?
On the issues that we still need to cover in the preparation for government committee relating to rule changes and procedures in the Assembly, does the right hon. Gentleman recognise that some of us have concerns about proposals that would invite bad politics and guarantee bad government? If we work through those problems in the spirit that we showed during the summer, we can soon move from a situation where politics has been about counting the casualties of the past to one where politics is about setting the priorities of a shared future.
I greatly welcome my hon. Friend’s comments and acknowledge his own dedicated role in bringing us to this point. He will have seen in great detail—he has been through it with us—annexe E of the St. Andrews agreement, which deals with national security and MI5.
On water charges, I have said what I have to say. There is no way of ducking that issue for the future of Northern Ireland and the health of public finances and investment in the water system.
On the review of public administration, the House has already set the boundaries for seven councils by primary legislation. I remind my hon. Friend that those are coterminous with the basic policing commands. They are also coterminous with health and with the area planning that will be delivered by the new education and skills council. That provides a unique opportunity for joined-up local administration. I agree that we must get the institutional changes absolutely right, because there is a real danger of governmental paralysis if we do not. We need to pay attention to the detail.
The Secretary of State deserves the support of everybody in this House. He was clearly right to say that all political parties in Northern Ireland must unequivocally support the Police Service. He went on to say that he is absolutely confident that Sinn Fein will do so, which is optimistic and welcome. Can he give us the reasons why?
I am grateful to the right hon. Gentleman, who has adopted a particularly critical position, for reasons that I understand, and has given a lot of attention and energy to this matter. I think that Sinn Fein will deliver what its leaders have promised in recent days. It did not disagree at St. Andrews but instead said that it had to consult its members—as, to be fair, the DUP said that it had to consult its members about how a popular mandate is obtained and other issues. I believe that it will deliver. Delivery is important—as the right hon. Member for North Antrim (Rev. Ian Paisley) said, it is not just promises we need.
I welcome the progress made at St. Andrews based on the fundamental principle of all parties accepting the rule of law. I also welcome the ancillary agreements to do with academic selection and rates. On rate capping, exactly what would happen if for some, perhaps technical, reason the ard fheis was not able to be held by 24 November, the date passed, and there was no First Minister or Deputy Minister? Is the Secretary of State really saying that the pensioners of Northern Ireland, who would be helped by his proposed change, would no longer be helped and the rating system would stay as it is?
There is already considerable protection—unique protection compared with Great Britain—for pensioners and others on low incomes. The capping affects no more than several thousand people who have seen their bills go through the roof under the current proposals. If the agreement unravels by 24 November, the Government will proceed with what we think are the best policies—whether on academic selection, rate capping or any other matter—because we will have to dissolve the Assembly. We have declared our support for those best policies. The changes that I announced came out of tough negotiations at St. Andrews. It is a case of stand or fall on several matters in relation to securing and implementing agreement by 24 November.
Will the Secretary of State accept from me that while enormous progress was made at St. Andrews, there is still a considerable workload to be got through, but my party is willing to work through the remaining issues with him?
I have two questions for the Secretary of State. First, in relation to the devolution of policing and justice, can he confirm that it is not an automatic process but entirely the case, under the Northern Ireland (Miscellaneous Provisions) Act 2006 passed by this House, that before such devolution can take place the First Minister has to give his approval and approval is required on a cross-community vote of the Assembly?
Secondly, while I know that the Secretary of State is planning for a smoothly operating Executive, the St. Andrews agreement touches on the possibility of a breach of the terms of the agreement. Can he confirm that the party that defaults will be penalised, not every party as has been the case in the past? Can he also confirm that the Government will not act out of kilter with any recommendation from the IMC in sanctioning defaulting parties?
I can certainly give the hon. Gentleman an assurance on the latter point in line with established practice in legislation and I am grateful for his offer of support.
Devolution of policing and justice is not automatic. All the parties, including Sinn Fein, supported the Northern Ireland (Miscellaneous Provisions) Act, for which the House voted and which received Royal Assent in July. It provides for the nomination of a First Minister, Deputy First Minister and then a cross-community vote for the timing of implementing devolution. However, I hope that people will consider the practicalities, too. As I said in the statement, huge parts of operational policing have already been devolved in practical terms. What remains is important but has more to do with the administration of justice.
First, may I thank the Secretary of State and all the parties for the tremendous advances that they have made, not only at St. Andrews, but in all the years that I have been a Member of Parliament and travelling backwards and forwards to Northern Ireland? Hearing people from Northern Ireland parties arguing about matters such as water and rates would hearten the many trade union members I met when I gathered a trade union meeting in Northern Ireland a few months ago because those issues concern them.
However, as the leader of the DUP said, all must be based on a 100 per cent., unfailing commitment to the rule of the law. When does my right hon. Friend anticipate that the Police Service of Northern Ireland will not fly in and out of south Armagh, as it did when I previously visited that part of the Province, but operate normally by driving in and out of that southern part, in safety and security, knowing that all the communities and parties in the area support it?
Again, I am grateful to my hon. Friend, who takes a keen interest in Northern Ireland affairs and whose advice is valuable. The Police Service of Northern Ireland is increasingly deploying southwards towards the border, across Armagh and south Armagh. Bobby Hunniford, the local commander, is experiencing considerable community support, and so it is simply a matter of continuing that until every square inch of Northern Ireland is covered.
Given the importance that the Secretary of State rightly attached in his statement to the principles of equality and human rights for all, will he take the opportunity to confirm that the Equality Act 2006, together with any associated regulations flowing therefrom, will be applied in the same way in Northern Ireland as in every other part of the United Kingdom?
The answer is yes. Perhaps I could clarify, in response to the hon. Member for Belfast, East (Mr. Robinson), that the commitment of the two Prime Ministers in paragraph 11 of the agreement makes it clear that I do not envisage any circumstances in which the Government would exercise the power to implement Independent Monitoring Commission recommendations in a manner that was inconsistent with those recommendations.
In his statement, the Secretary of State said that the Catholic content of the PSNI is rising to one in three—the House will welcome that. Are we now close to the removal of the discriminatory 50:50 recruitment rule?
I am grateful for the hon. Lady’s welcome for the progress that we have made—it is in everybody’s interests that Catholics are encouraged to join the PSNI and represented in the regular officer ranks and, indeed, in those of community support officers. If we make the progress that we expect, the 50:50 recruitment procedure can be lifted before the date in the Patten recommendations, which is 2011. I expect that to happen.
May I put it to the Secretary of State that his suggestion that legislation will be introduced and enacted in four days—that was the implication of what he said—is a matter of considerable concern? Given that, will he please find a way to outline the Bill’s principal proposals and put them in writing to the House before 20 November? Secondly, will he consider discussions with Mr. Speaker’s Office to ensure that amendments can be tabled in time?
Certainly, I want to consider the matter carefully. Like me, the right hon. and learned Gentleman is keen on parliamentary scrutiny. We must discuss those issues with the Opposition spokesman for Northern Ireland—we want to act by consent. However, we are up against a deadline.
As has previously been the case in Northern Ireland, we will need the co-operation of the House—including, I hope, that of the right hon. and learned Gentleman. If I am able to publish that information early, I will do so, by all means, but that rather depends on the parties sticking to their side of the bargain and telling us where they stand, by 10 November at the latest.
On the important issue of delivery, what timetable has the Secretary of State in mind for the dismantling of terrorist structures, not least the IRA’s security department and intelligence committee? Would 10 November be a good starting point for the IRA to show its good will towards this agreement?
The IMC report of 4 October makes it crystal clear that the IRA is delivering on what it promised. I repeat that it has disbanded the structures that were responsible for procurement, engineering and training in its military capacity. On intelligence, the previous IMC report stated that that was no longer directed at military activity.
Point of Order
On a point of order, Mr. Speaker. You will be aware of the extensive coverage in the newspapers over the weekend and this morning of the new chair of Sport England and his links with senior members of the Government. With the onset of 2012, the chairmanship of Sport England is more important than ever before. Have you received any indication from the Department for Culture, Media and Sport that it wishes to make a statement on this matter to set the record straight?
Order. That is not a matter for me.
Opposition Day
[19th allotted day]
Post Office
I inform the House that I have selected the amendment tabled in the name of the Prime Minister.
I beg to move,
That this House believes the Government is putting the future of the Post Office network and of Royal Mail at risk by their continued failure to take the tough and overdue decisions needed; further believes that many local post offices have closed or are under threat because of the uncertainty over the future of the subsidy to rural post offices after 2008 and the withdrawal of public sector business from the network, including the pension book, the television licence, passports and the decision to withdraw the Post Office card account when the existing contract expires in 2010; shares Postcomm’s concern that over 6,500 remaining rural post office branches are vulnerable and could close over the next few years; further believes that the Post Office network provides significant social and economic benefits and can play a key role in tackling financial exclusion and helping rural and deprived urban communities to survive and thrive; further believes the delays in finalising the investment package for Royal Mail is undermining Royal Mail’s ability to compete in the postal market following liberalisation last January threatening jobs and Royal Mail’s market share; and therefore calls on the Government to end this paralysis in decision-making at the heart of Government so that the Post Office network and Royal Mail can make the investments they need with greater certainty about a sustainable and stable commercial future.
Royal Mail and the Post Office are in crisis. If anyone should doubt that, or ask why we are holding this debate today, they need only read page 2 of today’s Financial Times and last week’s report from Postcomm. The report backs up the warnings that Liberal Democrat Members of Parliament have been giving for at least the past year and, unfortunately, confirms our worst fears. For those hon. Members who have not read the Financial Times today, it contains a piece headed
“Thousands more post offices face axe”.
The article was written following an interview with the Secretary of State for Trade and Industry, so we believe that it is well sourced. It suggests that the Government intend to make a statement before the Christmas recess about that cull.
The Postcomm report was equally alarming. It shows that decisions by the Government, as well as their lack of decision making, have caused the current chaos. In other words, the Government have been getting it wrong and have failed subsequently to put it right. I do not think that I have ever read a report from an independent regulator that contains such stinging criticism; it is probably unprecedented. It talks about the Government’s failure to deliver on tough and overdue decisions, and about the possible cutting of nearly 6,500 post offices in the rural network that are making a loss.
The Liberal Democrats’ argument today is that the problem has been caused by the Government’s decisions over the past few years on pension books, television licences, passports and the Driver and Vehicle Licensing Agency, and by their indecision on the social network payment, the Post Office card account and the future of Royal Mail. These are the factors that have brought this crisis to a head.
Will the hon. Gentleman remind the House how much income the Government have withdrawn from post offices, and how many post offices have already closed? Does he not agree that a lot of this has already happened?
I will deal with those detailed points in a moment. The right hon. Gentleman is absolutely right; the Government have withdrawn hundreds of millions of pounds of business from post offices, which has caused many of the closures.
Does the hon. Gentleman believe that there is still an opportunity for the Government to reverse their short-sighted policy to withdraw public business from post offices? Such a reversal would receive all-party support and benefit all post offices, particularly the new one that I opened in Canvey Island high street this summer.
The hon. Gentleman makes his point well, and I think I can agree with him.
Does the hon. Gentleman think, as his party does, that the solution is to privatise Royal Mail, the most profitable part of the Post Office that, in effect, is a cross-subsidy that helps to keep the rural network going? Surely that is a crazy idea. Will he make clear the Liberal Democrats’ intentions to privatise Royal Mail?
I am grateful for the hon. Lady’s intervention. I shall provide detailed analysis of our policy and advocate it to the House tonight. We do envisage a partial privatisation of the Royal Mail, with 49 per cent. of the shares being sold to the private sector. Her Government, however, are privatising Royal Mail by stealth. They are under-investing in Royal Mail and are not backing it, and as a result private competitors are winning market share and undermining the Royal Mail, its employees’ jobs and services to our constituents. She is therefore backing privatisation by stealth, and she ought to be aware of that.
Will the hon. Gentleman give way?
No, I shall make some progress.
Until the intervention of the hon. Member for Morecambe and Lunesdale (Geraldine Smith), I sensed a consensus in the House. We tabled this motion, which we believe is pretty uncontroversial, to try to create a consensus. We omitted some of our policies that, I think, she does not like. We want the whole House to send a clear message to the Government. There is a huge campaign in this country against what the Government are doing—a groundswell of opposition to their policies. I am looking forward to the lobby, this Wednesday, with the National Federation of SubPostmasters, which will present to Ministers a petition from nearly 4 million citizens, arguing that the Government need to change tack. Hon. Members will have been in their constituencies over the summer, they will have heard the anger from sub-postmasters and sub-postmistresses, and they will want to back us tonight so that we can send a real message to the Government.
Is the hon. Gentleman aware of the latest change in the network of post offices in my constituency, in the neighbourhood of Broadfield, where the post office has just been reopened by a successful businessman, Mr. Limbachia, who sees an opportunity to serve his community and is delighted to offer that service?
I am always delighted to welcome the reopening of a hospital, post office or school that has closed under this Government. However, the hon. Lady ought to talk to her right hon. Friend the Secretary of State for Trade and Industry, who was interviewed by the Financial Times today and is predicting thousands of closures.
The hon. Gentleman has talked about the anger among sub-postmasters. Is not he also aware of the anger among the public? When he talks about reports, has he seen the report from Postwatch Scotland on the importance of rural post offices in Scotland, which shows that 67 per cent. of respondents rate the post office as either “very important” or “important”. Significantly, the percentage rose substantially among the unemployed and those on low incomes. Post offices are vital to that group, and if the Government do not make decisions on funding for the future, it will be a disaster for the unemployed and those on low incomes in rural areas.
The hon. Gentleman is absolutely right. It is our most vulnerable constituents who are most at threat when post offices close. The Government say that they care about social inclusion and that they want to deal with financial exclusion, but, on post offices, they do exactly the reverse.
Does my hon. Friend agree that the problems only just begin when a post office closes. It is not just those using such post offices who find themselves excluded but the many others using neighbouring post offices who find that the queues become so excessive that they also have problems accessing a local service.
My hon. Friend is absolutely right. In my constituency, Post Office Ltd railroaded the closure of six post offices in the borough of Kingston. Queues at Surbiton post office have now lengthened, reducing the quality of service.
Is my hon. Friend aware that this is not just a rural issue? It applies very much to suburban communities. My most deprived ward, Ham, contains a large estate where many elderly people live. It now has not one sub-post office, and the nearest post office—which necessitates a mile-long walk for some 90-year-old people, because it is the only one they can get to—is very likely to close as other services, notably the provision of television licences and Post Office card accounts, are removed. That is genuine deprivation.
My hon. Friend is absolutely right. I think the comments that we have just heard demonstrate the anger of our constituents. Interestingly, a recent poll of sub-postmasters and sub-postmistresses by the national federation showed that 72 per cent. were no longer confident about the long-term future of their businesses. There is real anger out there in our communities.
Although we have tabled a fairly consensual motion, I cannot promise that my comments tonight will produce a consensual alternative. There are some tough decisions to be made, along with some difficult choices. There is no easy solution, whether for Royal Mail or for the post office network.
Our party has looked at the policy in detail and debated it democratically, and we have reached a tough decision. We believe that Royal Mail must be reformed if it is to compete in the liberalised market. We know that if we face up to that harsh decision, we shall be able to secure the cash to invest in the public sector post office network. That proposal will not meet with approval on all sides—it is a tough decision—but we believe that it is a serious and credible proposition, and that if Members want to save the post office network in their constituencies, it is the only option.
Nearly three years ago, when the urban regeneration programme hit Aberdeen and a number of post offices consequently closed, the then Liberal Democrat-controlled council promised to put council services into post offices so that they remained viable. To date, not a single council service has gone into a post office in Aberdeen. I wonder whether this is in fact a tough choice, or just the Liberal Democrats promising what they cannot deliver.
That was a good try, but I am afraid it failed. In many constituencies where local authorities have tried to work with post offices, Post Office Ltd—thanks to restrictions imposed by Royal Mail Group—has got in the way of such partnership deals. I am afraid the hon. Lady has scored an own goal against her own Government.
The post office network faces huge problems. Members throughout the House will know the history. Over the past 20 years 7,500 sub-post offices have closed; last year nearly 150 closed. Even that does not tell the whole story. Many full-time post offices have become part-time as their hours of service have been cut. That is due to years of lack of investment and lack of imagination on the part of successive Governments.
I referred to some of the bad decisions earlier. That is why we are here today, facing—if we listen to the chief executive of Post Office Ltd, Alan Cook—a potential reduction in the post office network to just 4,000 following cuts of 10,000, or—if we listen to Postcomm—a potential cut in the rural network from 8,000 to 1,500. Then there are the leaks from the Secretary of State.
No doubt the Government will say that it is nothing to do with them. They will say that it is all to do with the customers who are not using post offices any more: they are using new technology, and it is all too expensive. The Government have tried terribly hard and invested lots of money, but it is just not working, so they have to cut post offices. That will be the Government’s line, and of course it is absolute tosh.
The Government have been following completely contradictory policies. They are trying to say that they want to save the post office network, while taking business away. Last year they were subsidising, through the social network payment, to the tune of £150 million. In the same year, they took business worth £168 million out of the post office network. According to Adam Crozier, five years ago 60 per cent. of the revenue of the average post office came from Government business; in two years’ time, it will be down to just 10 per cent. That is the size of the cut in post office revenue. It is not the fault of the customers or of technology; it is the fault of those people over there who are making the decisions.
Building on the consensual basis that the hon. Gentleman mentioned, I was accompanied by an Assembly Member when I carried out a tour of all the post offices in my constituency last week. When we called, 25 were open. Surely we would all agree that one of the worst decisions taken in recent months was on television licences. It was a bad decision for two reasons. First, as the hon. Gentleman said, it withdraws business from post offices, but, secondly and even more importantly, it means that an awful lot of people will not get their TV licences and will have to go to court over the next few months. What does the hon. Gentleman suggest the BBC should do about that?
When the hon. Gentleman carries out his next tour, I hope that there are no fewer than 25 post offices open, but if he continues to support his Government I suspect that there are likely to be a lot fewer.
If the hon. Gentleman spoke to BBC managers, he would hear from them that the Government were unable to guarantee the future size of the network, so they were not able to ensure that a network would be in place for TV licence payers to use. That was one of the main reasons the BBC refused to go ahead with a contract with Post Office Ltd. Once again, it was the Government’s failure that led to the problem.
I am not giving way, as I want to make some progress.
A number of reasons can be cited for the failings of the post office network and the lack of confidence among sub-postmasters. The first is the Post Office card account, which represents more than 10 per cent. of annual income for the average post office. For many months, uncertainty about the future has been evident, but we observed at parliamentary questions today—probably thanks to the Liberal Democrat Opposition day—that Department for Work and Pensions Ministers went further than usual to say that there might be a future for the Post Office card account. If that proves to be the case, it will be very welcome, but we want to see more details before we can believe the weasel words of Ministers. We also want to be sure that individuals are able to choose the Government account rather than be pressurised to move their business to a bank.
Does my hon. Friend agree that it is not just the revenue lost to post offices by the withdrawal of the Post Office card account, as the footfall is relevant, too? In common with the hon. Member for Rhondda (Chris Bryant), I toured sub-post offices in my constituency this year and some estimated that 40 per cent. of their footfall came from benefits and POCA. There is the further point that other services within the post office will also be lost if POCA is withdrawn.
My hon. Friend is absolutely right: that is precisely why it is so damaging for the Government to keep withdrawing all these services. It creates uncertainty. Sub-postmasters or sub-postmistresses want to invest in their businesses, but in order to do so they must know that there is a future. They want to know that the contracts will stay with them and that they will be able to secure some return on the investment, but the Government have created a climate of huge uncertainty.
Social network payments are the next issue. We know that they are due to run out in 2008, yet the Government have given no indication whether they will continue or at what level. Sub-postmasters and sub-postmistresses simply will not invest beyond 2008 because they do not know what income they will receive. It might all be to do with the spending review, or perhaps the Secretary of State has been told to find a lot of savings for the Chancellor. If so, our fears are magnified. Failing to support post offices in rural or deprived urban areas creates real problems.
Will the hon. Gentleman give way?
No, I will not.
Another problem with the Government’s handling of post offices is the lack of imagination. Only last year did they establish a set of pilots, looking at new services such as home delivery, mobile post offices, partnerships with pubs, local authorities, police stations, pharmacies and others, and host services with satellite post offices. All those pilots are welcome, but they have come very late. We have been arguing for more innovative approaches for a long time, but the Government have left it late without putting the investment behind the pilots to ensure that they work.
There have been other problems with the Government’s thinking on post offices. A particular concern for the Liberal Democrats are the restrictions that Royal Mail Group forces on Post Office Ltd, which force restrictions on postmasters.
On the restrictions forced on postmasters in respect of the business they can take from other postal providers, is my hon. Friend not concerned that Royal Mail, facing competition, is beginning to get its own employees to look for new business for Royal Mail? In one of its videos, it appears that it is encouraging people to look at who goes into the post office and to steer them away from the post office so that they go direct to Royal Mail. If these people are to have their hands tied behind their back by Royal Mail, it seems a complete betrayal by Royal Mail to take away the business that they can get only from Royal Mail.
My hon. Friend is right. The position is particularly disturbing. Since 1 January, post offices could have been working with 17 other licensed operators to bring in more letters or parcels business, but Post Office Ltd has prevented that from happening. As he suggested, it is working the other way; it is a negative because Royal Mail is trying to take that business away. Therefore, those restrictions need to be removed and we need to have freedom for our sub-post offices.
May I seek clarification about which measures the hon. Gentleman thinks are a solution to which problems? I am following his logic and, by and large, I agree with him. His party’s policy of the part-sale of Royal Mail will address the problems of the lack of investment in Royal Mail and stand to replenish a large part of the pension fund, but does not he accept that we need to segregate that from the problems of the network? That policy is not a solution to its problems and, if his argument is to hold together today, as I think so far it is doing, we need to explore other solutions to those problems.
I cannot agree with the hon. Gentleman. Part of our policy is to have significant new investment in the network and to create an investment fund from the sale of 49 per cent. of the shares in Royal Mail. We believe that that will produce £2 billion that could be invested in the network. Royal Mail would then be free to borrow on the capital markets to invest in the automation that it needs. Our solution will provide money for the Post Office network and freedom to borrow on a commercial basis for the Royal Mail.
This is a grown-up, sensible debate, but the ability of the Royal Mail to borrow or to act like that does not necessarily help all those tiny rural or urban post offices that are privately owned and perhaps linked to a shop. Therefore, the investment that the hon. Gentleman is talking about will not necessarily benefit them one penny.
Of course it will because the investment can come through in terms of extra training, and extra support for business development, marketing, ICT and all the things that are needed for those private entrepreneurs. Moreover, the proposals that I have mentioned to remove restrictions will enable them to develop their business far more with mail operators. I am sure that the hon. Gentleman is aware that the mail business is the most profitable and the biggest business of the average sub-post office. Therefore, allowing that to expand is the best way to ensure the viability of the network.
The Government should have been pressing the banks to enable the Post Office network to join the Link network. If that could be accessed through every sub-post office around the country, so that every sub-post office could be used as an ATM, that would be a great way not only to end financial exclusion but to ensure the footfall that my hon. Friend the Member for East Dunbartonshire (Jo Swinson) mentioned, so that business went into every post office. Therefore, we have made some very attractive proposals for reform and investment that we believe will deal with the problem.
The hon. Gentleman criticised the Government for taking Government work from the Post Office, which he said undermined the network. How much do the Liberal Democrats think needs to be spent, and how much are they pledging to spend, to prop up the network?
I mentioned the figure of £2 billion just a minute ago. I am sorry if I was not clear enough. To be precise, the £2 billion will come from the proceeds of the sale of 49 per cent. of the shares in Royal Mail.
Will the hon. Gentleman give way?
I will not give way because I wish to make some progress.
The post office network has all the problems that I mentioned—the replacement of the Post Office card account, uncertainty over the social network payment, and the Government’s lack of imagination—but what is the solution? The solution that the Government have come up with is to set up a Cabinet Committee chaired by the Deputy Prime Minister. That does not fill me with a great deal of confidence. When we have asked how many times the Committee has met, we have not had any answer, so I wonder whether we will hear—either in the Minister’s summing-up or in his speech—whether the Committee has met, what it is considering, and what proposals it has for dealing with the problem.
Will the hon. Gentleman give way?
No, I will not.
One of my problems with the Deputy Prime Minister is that he has often put forward 10-year plans, including the 10-year plan on transport and the 10-year plan on housing, and none has produced any of the things that were promised, so it does not fill me with confidence to know that the Deputy Prime Minister is now in charge of the future of the post office network.
I am delighted that, in the past year or two, Royal Mail’s performance has improved, but it faces three major challenges, of which the Minister will be aware. First, there is the challenge from competition; secondly, there is the challenge posed by 20 years of under-investment; and, thirdly, there are problems caused by the pension deficit, which mean that it is competing with one arm tied behind its back.
As 17 licensed operators compete with Royal Mail, the competition is fierce and very real. Companies such as Deutsche Post, TNT Post, DHL and Business Post are taking market share from Royal Mail. At the moment, they are taking only 3 to 4 per cent., but most commentators believe that that figure may be set to explode. The 500 big business mailers alone represent 50 per cent. of Royal Mail’s turnover of £6 billion, so those private sector competitors could take a big slice of the cake relatively quickly. That would seriously hit Royal Mail’s finances. There are already some early signs of that, in terms of Royal Mail cutting back services. We are experiencing earlier collections and later deliveries. In some parts of the country, if people do not post their mail before 9 o’clock, it is not collected until the next day. However, their delivery does not come until 3, 4 or 5 o’clock in the afternoon, and that makes a complete mockery of next-day delivery promises. That is a cut in service.
There will be another cut in service, too, because the junk mail that Royal Mail now promises to deliver is set to increase in volume many times over. That is a real concern, and Royal Mail has gone to the ridiculous extent of punishing a postman for explaining to ordinary citizens how they can get the mailing preference service. That is a complete disgrace, but it shows the desperate measures that Royal Mail is taking because of competition. However, if we consider the lack of investment, we can see what is at the root of Royal Mail’s problems.
I have to make a confession: before I came to the House, I was a management consultant, and the industry in which I consulted most of all was the postal services industry. I had the privilege of going to 40 countries and looking at their postal administrations, so I am afraid that I know an optical character reading machine and a remote video encoding unit from my elbow. The automation in Royal Mail is pretty poor compared to that of our competitors. The Germans and the Dutch, for example, can sort 95 per cent. or more of their mail by machine, but in the UK the figure is about 50 per cent. That is how far behind we are. Just imagine the impact that that has on a firm’s cost structure. The estimates of how much investment is needed vary; some people say that £2 billion or more is needed, but the Government have offered less than £1 billion, so the investment crisis in the Royal Mail is very real.
On top of that, there is the pensions deficit. I agree with the Minister that there has been progress on that issue. He has allowed Royal Mail to make good its deficit over 17 years. That is a long time, and it is not the time-line given to private companies, but at least it will enable Royal Mail to make good its deficit. The Government have underwritten that by £850 million, but that still leaves Royal Mail with annual contributions of around £750 million per annum to make. That is a dead-weight cost that Royal Mail has to meet before it can make profits and invest in its business—and when it is fighting competitors, it is a real dead-weight cost.
I do not disagree with much of what the hon. Gentleman has said, but I am confused. If it is his policy to privatise the mail delivery service, given the problems of competition and cost, how would a privatised Royal Mail compete while continuing to fulfil its universal service obligation, which is important to rural areas? Would that obligation not come under pressure from privatisation?
Let me spell it out for the hon. Gentleman. In the public sector—the Government want Royal Mail to remain in the public sector, as does the Conservative party, unless it has changed its policy recently—the Royal Mail cannot go to the private market to obtain the money required to invest for the automation that I have discussed. It relies on Treasury handouts, and the record over many decades shows that the Treasury has not given it the money it requires to invest, so it cannot compete or become efficient. Our proposal enables it to borrow on capital markets, so it can obtain the funds and thus achieve the automation that it requires. It can compete, so we will bring new life to the Royal Mail.
I am concerned that the Government, faced with those three challenges, have not done more. We are waiting with bated breath to hear when they will make an announcement about the future of Royal Mail. Royal Mail management have submitted a modest proposal to the Government, in which they suggest keeping Royal Mail in the public sector, while allowing 20 per cent. of shares to be held by employees. Management agree with us that that will give employees an incentive to perform well and improve productivity, as their future will be tied to that of Royal Mail. The Government balked at that modest proposal, and we must ask why. I think that that is to do with the Communication Workers Union, and the 213 Labour Back Benchers who signed the early-day motion saying that they should not accept the proposal—[Interruption.] Ministers are not prepared to make tough decisions, because they are still in hock to the unions and to their Back Benchers. The Secretary of State is not prepared to make decisions that would put Royal Mail back on its feet, and secure the investment that our post office network needs.
Our party has taken tough decisions. We have submitted proposals that work for Royal Mail and for post offices. That is the way to ensure that we revitalise the Post Office and Royal Mail. I would like to end by asking the Minister some specific questions. First, when will the Government end the uncertainty for Royal Mail and the post office network?
When the hon. Gentleman said that the Government’s policy is determined by Members who signed the early-day motion, did he not hear, as the rest of the House did, the hon. Member for Stroud (Mr. Drew) shout, “Yes”?
Absolutely. I am pleased that I allowed the hon. Member for Rutland and Melton (Mr. Duncan) to intervene, because he has made my point for me. I hope that the Minister will tell us when the uncertainty will end, because the National Federation of Sub-Postmasters needs to know the answer when it comes to the House on Wednesday. Will he pledge to stop his colleagues in the Department for Work and Pensions undermining the Post Office card account, even before the contract is renewed? Will he pledge to stop taking Government business from the network? Will the Government stand up to the CWU, and give Royal Mail employees shares in their future? Will he give post offices freedom from the restrictive practices imposed by the Royal Mail Group? If can give us positive answers to those questions tonight, it will be a real step forward in the debate. I fear, however, that he will not do so, because although we have tabled a reasonable motion, it is clear that he will oppose it. We hope that colleagues on both sides of the House will join Liberal Democrat Members to send a message, because we believe that it is time to save our post office network and Royal Mail. The House should speak for the country, and for 4 million petitioners, and back our motion.
I beg to move, To leave out from “House” to the end of the Question, and to add instead thereof:
“acknowledges the important role that post offices play in local communities, particularly in rural and deprived urban areas; recognises that the business environment in which Royal Mail and the Post Office network are operating is undergoing radical change with more and more people choosing new electronic ways to communicate, pay bills and access government services; applauds the Government’s record of working closely with Royal Mail, Post Office Ltd and sub-postmasters to help them meet these challenges with an unprecedented investment of more than £2 billion made by the Government in supporting the network; acknowledges the important role post offices can play in tackling financial exclusion while recognising that the Government must also take due account of the need to deliver services efficiently; and acknowledges that the Government is committed to bringing forward proposals to help put Royal Mail and the Post Office network onto a sustainable footing.”
As the Minister with responsibility for postal services, I am delighted to join the hon. Member for Kingston and Surbiton (Mr. Davey) and other colleagues and participate in today’s debate on the future of the post office network and of Royal Mail.
Clearly, this is post office week. We have today’s debate, and on Wednesday we have the National Federation of Sub-Postmasters’ rally and lobby of Parliament, together with the presentation of a petition of nearly 4 million signatures to No. 10. Of course, the week began with the publication of Postcomm’s sixth annual report on the post office network, which comprehensively set the scene for many of the issues that I am sure we will cover in the course of today’s debate. On Thursday, of course, we will also have Trade and Industry questions.
The future of the post office network and of Royal Mail is an issue of great relevance to every Member of this House. The hon. Member for Kingston and Surbiton has initiated the debate with some highly emotive remarks and claims, mirroring his recent press release, which referred to
“do-nothing Labour Ministers”
and
“their acts of vandalism against the network”.
I hope to challenge those assertions. As my hon. Friend the Member for Rhondda (Chris Bryant) pointed out, there is certainly a contradiction between them and the hon. Gentleman’s claim that he intended to introduce the debate in a consensual tone.
We need to centre the debate on such important matters in reality rather than in political point scoring, and in the proper context of the problems and challenges that we face. The hon. Gentleman claimed that the Secretary of State said in the Financial Times article that there would be thousands of closures. In fact, my right hon. Friend said that we were determined to provide certainty for the Post Office and put it on a long-term stable footing. He also said that we needed to ensure that we maintained a national network, which was not what the hon. Gentleman reported that he said.
We need to distinguish between myth and reality. This was recently given very clear focus by Sandi Brocklehurst, the sub-postmistress at Crewkerne in Somerset, writing in the Western Daily Press in August when she said:
“People think they need and want a post office but this just is not true these days. Many people now pay their bills by direct debit, do their car tax on the internet or by phone, have their benefits paid into bank accounts—these people do not use the post office, they only think they need one!”
I expect that that view is shared by many of her colleagues.
Only this Government could decide to thin down, instead of fatten up, their asset by taking away much of the money that sustained it. Will the Minister now promise that postal workers will have an opportunity to own shares in their own business, because surely that would be the way to raise morale and provide real incentives?
If the right hon. Gentleman will forgive me, I will come to those issues later in my speech, when I hope to be able to satisfy him as to our general intention.
When my hon. Friend was giving his list of transactions that people do not want to do at the post office, I recalled that I have just received a reminder for my television licence, which said that I could no longer go to the post office to renew it, but I could go to a shop called “Supercigs”, a discount tobacco outlet. I was puzzled by that, because as I understand it, we want to encourage people to go to post offices and dissuade people from going to tobacco shops. However, we have a policy that sends them to tobacco shops, not post offices.
My hon. Friend makes a fair point. The Government are making every effort to try to persuade people not to smoke. I will come to the issue of licences and the Post Office, but the decision was made on commercial grounds by the BBC and was not controlled by the Government. It was in line with the other choices that I will discuss shortly. The world is changing, and people are choosing to operate differently.
The Government are, however, directly involved in the Driver and Vehicle Licensing Agency. It is right that people should be able to get their tax disc on line—there are more insured cars on the road as a result of that successful system—but the form no longer states that they can obtain their disc at a post office. Would it not be a good idea for the Department for Transport to suggest to the DVLA that it should make it clear that tax discs are still available at post offices?
My hon. Friend makes a fair point. I can advise him that it was raised with me when I met the National Federation of Sub-Postmasters executive and I undertook to examine it. I am looking into the matter on the basis that people should have a choice—and do—but it is fair that all the choices should be made available to them.
Will the Minister give way?
If the hon. Gentleman will allow me, I should like to make some headway. Several hon. and right hon. Members want to speak so I do not want to hog the Dispatch Box for too long, although I shall not avoid interventions, because the debate is important.
I want to spend a short time, however, reminding the House about the Government’s record on the network to date. In total since 1999, the Government have committed a funding package of well over £2 billion for the network. The hon. Member for Kingston and Surbiton might not agree with our policies, but I suggest that it stretches credulity to claim that they are “acts of vandalism” against the network or evidence of a “do-nothing” policy.
Our funding package for the network includes the provision of some £750 million over the five years to 2008 to maintain rural post offices—£150 million a year. That funding, backed up by the requirement for Post Office Ltd to prevent all avoidable rural post office closures, has helped to keep open thousands of offices that might otherwise have closed. The policy of no avoidable closures was extended earlier this year and will remain in place while the future strategy for the network is being finalised.
We recognise, however, that not all the initiatives undertaken—whether by the Government or by Post Office Ltd—have been as successful as we would wish. However, whether we like it or not, the truth is that post offices are not being used as once they were, and the trend is accelerating. The business is going through a sustained period of change, and needs to adapt to customers’ changes in lifestyle and habits; for example, 75 per cent. of people have their pensions and benefits paid directly into a bank account, compared with the 23 per cent. who choose a Post Office card account.
Can the Minister answer this simple question? Does he think that the reduced footfall in post offices has anything to do with the Government?
The reduced footfall in post offices has a variety of causes. For example, I was trying to make a point about the Post Office card account: 8.5 million of the 10.5 million pensioners have their pension paid into a bank account, while only 2 million have opted for payment through POCA. As a result of the dramatic advances in technology in recent years, we have seen unprecedented changes in the communications and banking industries. As we all know, for many people text messaging, the internet and e-mail have become part of their everyday lives, virtually replacing traditional written communications. People, young and old alike, increasingly use phone or internet banking, cash-point machines or direct debits to pay their bills.
I agree that people’s habits are changing and that they are having their pensions paid into their bank accounts, and that trend will continue, but the Post Office card account is causing much concern. I received a petition with 1,600 signatures from the sub-postmistress at Bolton-le-Sands in my constituency, so will my hon. Friend look carefully at what can be done to protect the Post Office card account?
With me on the Treasury Bench is the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Warwick and Leamington (Mr. Plaskitt), and although I shall talk about POCA later, I can assure my hon. Friend the Member for Morecambe and Lunesdale (Geraldine Smith) that he is working extremely hard to make sure that there will be a successor to POCA and it will allow people to draw benefits from a post office if that is their choice.
With regard to delivery of written communications, what advice should the Post Office give my constituents in the Gorton, South ward, where a by-election is to take place on Thursday? The Liberal Democrat candidate is on the register at an address outside the ward, but his nomination form has the address of the home of the councillor who has died. How is the Post Office to deliver messages to that candidate—assuming, of course, that anybody wanted to get in touch with him?
Apart from the obvious and predictable message to the constituents to vote Labour, let me say that I cannot believe that the Liberal Democrats are giving two different messages to constituents. Surely that is not usually the case!
rose—
Order. Can we now get back to discussing the motion on the Order Paper?
I am very grateful for your protection, Madam Deputy Speaker, and I shall try to make some progress. I shall give way to my hon. Friends and other colleagues later, if I may.
Cumulatively, the trends that I have mentioned are having a pronounced effect on the levels of demand for social and personal mail services, for bill payments and for licensing transactions at post offices. Motor vehicle licensing is going through a period of rapid change. Last year there were 860,000 renewals online, and this year online renewals are running at an annual rate of about 3 million. There can be no turning back the clock—although that is not to underplay the fact that Royal Mail has moved from losing £1 million a day a few years ago to profitability under the leadership of Mr. Allan Leighton and his board. That has been achieved through the hard work and dedication of its work force throughout the country.
We all have to accept, and work with, the fact that changing lifestyles and modern technology have clearly changed the market in which sub-post offices operate. It is too often forgotten that the post office network operates in a commercial marketplace. The services that the network provides, including lottery tickets, foreign currency, telephony, bill payments and financial services, are in direct competition with other retailers and providers. There have, of course, also been some very notable successes in certain areas, such as foreign currency: the Post Office is now the UK’s number one provider of foreign exchange services, with 12 million transactions last year. It is also the largest independent provider of travel insurance, with 1 million policies sold annually.
I thank the Minister for giving way. He has given us a great list of things that post offices do, but does he not accept that the real problem for post offices began with the removal of benefits payments from them? Does he not also accept that although what he says about automated teller machines is all very well, in many rural areas people cannot get access to an ATM, or when they can, they have to pay to use it? If someone is existing on benefits or pensions, that can mean that a significant proportion of their weekly income is paid just to get access to their money. Does the Minister think that that is fair? Does he not accept that as well as operating in a commercial environment, sub-post offices have a social function, and that that must be recognised?
I totally accept that sub-post offices have a social function to perform, and I will come on to that subject later in my speech. However, I do not accept the entirety of the premise that the hon. Gentleman puts forward; for example, I know that Post Office Ltd will install 1,500 free ATMs in due course.
I thank the Minister for giving way. Does he agree that not only is the way in which people access services changing, but in rural areas the way in which post offices deliver services is changing? There are two excellent examples from my constituency: the post office in Sacriston closed, and there is now a counter in the local mini mart, and in Craghead, another rural village in my constituency, the post office counter is now located in the local village hall, with support from central Government. Does the Minister agree that it is important to look at possible alternative ways of delivering the same service, which people actually want—perhaps not as extensively as previously, but so that they can get access to that service?
My hon. Friend makes a very important point about how Post Office Ltd is trying to develop services, and some of its successes in meeting that aim. I shall come to that later.
Basic transactions remain among the key services. Does the Minister not share my concern that Post Office Ltd seems unable to tender appropriately to retain basic transaction services such as TV licensing? In my area it has lost the water business as well. Those services, if retained, would enable its sub-post office network to maintain footfall. If that does not happen, Post Office Ltd should at least allow sub-post offices to engage with PayPoint to offer that same service. At present, it will not even do that.
My hon. Friend makes an interesting point, and I will respond to some of the issues that he raises shortly.
The network’s strength is its unrivalled size, but the massive cost of supporting it also leaves it vulnerable to leaner organisations. Although the number of post offices has been reducing for decades, there are still 14,300 branches, which is almost more post offices than all the major banks and building societies combined. By way of contrast, Tesco, the most successful retailer in the country, has a total UK-wide network of just under 1,800 outlets—less than a quarter the size of the network that Post Office Ltd supports in rural areas alone. As the Postcomm report recognises, a large part of the network is making a loss and is being supported by the social network payment—it is worth £750 million over the five years to 2008—for uncommercial rural offices.
Maintaining a network of such size is hugely expensive and the cost is rising: Post Office Ltd expects to lose £4 million every week during the current financial year. The reality is that too many offices are chasing too few customers to be viable. The smallest 20 per cent. of rural offices—some 1,600 branches—serve fewer than 100 customers a week and generate an average loss of almost £8 every time one of those customers does business such as buying a stamp. The 800 smallest offices, which have an average of 16 customers a week, lose £17 on each transaction. Over one third of business in the rural network is done in the largest 10 per cent. of branches.
There are some 6,500 rural social branches, which lose around £150 million a year. While these branches represent 45 per cent. of the network in total, they account for less than 7 per cent. of overall income. Having too many branches with too few customers is clearly the root of the problem across much of the network, so we need to strike a balance between meeting and funding the reasonable needs of people who rely on the post office, and making prudent use of taxpayers’ funds, on which there are competing calls.
Adam Crozier, the chief executive, told the all-party group on sub-post offices that he needed 4,000 offices to run a physical mail network. Given what the Minister has just said—that there are 14,300 branches—how big does he predict that the network will be in five years’ and 10 years’ time?
I think that the hon. Gentleman and I had this discussion when I appeared before the Trade and Industry Select Committee. He is not going to tempt me—[Interruption.] Well, if we did not, other colleagues did, and I am afraid that I am not going to be tempted into a numbers game, because we have yet to arrive at such conclusions.
My hon. Friend is rattling out statistics, and sadly, he seems to be imitating the Post Office’s new attitude to its customers: unfeeling, lacking in compassion and fixated only on numbers. When the village of Standburn, in my constituency, lost its post office, it then lost its one shop. The people in that small community now have to make a four to five-mile round trip. There are no buses running directly from the village to other local communities, and they have been left stranded. Are the Government not prepared to recognise that isolated communities must be provided with some form of social service through a local post office? Will they not guarantee that where there are no other shops, post offices will be funded, and not closed?
My hon. Friend takes me to task for being insensitive and for rattling through statistics. I apologise if I am offending anybody, but I have to get on the record the counter to the Liberal Democrats’ challenge by explaining the nature of the problem that we face.
The Minister’s response to the question from my hon. Friend the Member for North Shropshire (Mr. Paterson) was understandable, but given that the rural funding mechanism is not going to last beyond March 2008 on current plans, and that the Post Office card account is due to go in 2010, does the Minister not recognise that the consequence of what he has not said is that every small rural sub-post office in this country faces the threat of closure within the next five years?
What I recognise, and what I and am saying—I shall try to deal with this point when I conclude—is that there is too much uncertainty out there, which has been the case for some time. However, we are trying to address that uncertainty and we are coming to conclusions. I shall explain in detail how we are arriving at those conclusions, but I should point out that in the past 12 months there have been the fewest closures since 1998, and fewer resignations than at any point in the past 12 years. I suspect that that is because sub-postmasters know that we are reaching a conclusion, and they want to see what that is.
rose—
If hon. Members will allow me, I wish to make considerable progress now.
I do not want Liberal Democrat researchers to head for their computers to start drafting press releases about 6,500 closures. That is not what I am saying; it is not the message that I am trying to get across. The key challenge for the future is how best to address the needs of offices both in rural areas and in deprived urban areas where post offices play a key social role. If the network is to survive, it needs to meet the present and future needs of its customers efficiently and effectively so as to establish a long-term sustainable foundation. Both the Government and the Post Office are looking closely at service provision in the context of utilisation levels.
In the past year, Post Office Ltd has been piloting new service delivery channels with particular focus on the loss-making rural segment of the network. The pilot trials are based on a core and outreach principle and aim to provide delivery of value-for-money rural post office services that can be tailored to different situations, as my hon. Friend the Member for North Durham (Mr. Jones) described. In the trials, a core post office provides services to a number of outreach sites using one or more of the four outreach options being tested. In all the pilots, service hours have been set at a level much more commensurate with the level of business generated in that community, to eliminate the wastefulness of long opening hours with little or no custom. However, in many cases, although hours are reduced the range of services available is extended, and many customers in very rural areas have local access to motor vehicle licensing and passport check and send services for the first time. Encouragingly, once people get used to the new means of service delivery, levels of satisfaction with the pilots are, at 93 per cent., very high.
Post Office Ltd has selected the pilot sites to achieve regional and national coverage and broad representation of community and service profiles, while ensuring that they are of a size that can handle the additional work. The pilot sites are also located within a spread of communities covering a variety of sizes and seasonal or holiday destinations, and of varying degrees of remoteness.
We are of course aware that there has been a prolonged period of uncertainty about the future direction of Government policy towards the network. In recent weeks, I have met Colin Baker and members of the executive of the National Federation of Sub-Postmasters. Mr. Baker will be having further discussions with my right hon. Friend the Secretary of State for Trade and Industry later this week, as well as visiting No. 10 with his petition. In addition, and more importantly, a dedicated Cabinet sub-Committee, MISC 33, which was mentioned earlier, has been established specifically to consider the future of the post office network. Since the meeting in July there has been a series of interdepartmental discussions, and a further meeting of the Committee is expected to take place shortly.
Hon. Members will no doubt be aware of the wide range of research and reports published in recent weeks and months by Postcomm, Postwatch, the Commission for Rural Communities, the National Federation of Sub-Postmasters and others. The findings, conclusions and recommendations from that extensive range of work are being taken into account alongside our own analysis and assessment work in informing our thinking on forward strategy. There is an ongoing dialogue and we are not yet in a position where we can say that we have the answers, but people can rest assured that we are listening, and that we shall take account of their concerns in reaching our decisions shortly.
We recognise that we need to take some tough decisions. Because they will be tough, we have to be as sure as we can be that they are right ones, but I want the House to be absolutely clear that the Government’s forward strategy will continue to support the network to ensure that post office services will be maintained in rural or vulnerable communities, where they fulfil a key social and economic role and help to combat financial and social exclusion. We shall also seek to ensure that services are delivered as efficiently as possible and, where appropriate, utilise new and more cost-effective ways of providing them.
I had a rural postal pilot operating in my area, of which I await the outcome. My hon. Friend the Minister mentioned the £2 billion investment made by the Government. Unfortunately, the Liberal Democrat spokesperson did not give enough information in respect of part-privatisation, but strangely, he quoted a similar figure of £2 billion that would be put in to prop up loss-leading sub-post offices. How long does my hon. Friend think that money would last? For ever?
My hon. Friend effectively makes the point that £2 billion does not buy an awful lot in modern business. He equally effectively makes the point that once the money is spent, it is no longer available to support the network, which in five, six or seven years’ time, would be confronting the same problems that we have today.
We have heard again today the concerns about the Post Office card account, but we must recognise that even before the Department for Work and Pensions’ decision to make payment into account the normal way for people to receive their entitlement, almost half of recipients had already made their own choice to have their pension or benefit paid into a bank account.
The Post Office card account is one of 25 different accounts that can be used to access benefit and pension money over the post office counter. Every bank, and the Nationwide building society, has at least a basic bank account that can be accessed in any post office. Some 70 per cent. of Post Office card account customers already have a bank account, and 20 million people could access benefits at a post office. However, only 10 per cent. of those people do so.
The Post Office card account contract runs until 2010, and its successor is still being decided. As Alan Cook, the managing director of Post Office Ltd, said of the Post Office card account at the Treasury Select Committee inquiry into financial inclusion on 9 May 2006:
“You cannot do much with it at all, you go to a post office, you take the cash out. If you take too much out by mistake you cannot put any back in. It literally is an encashment vehicle. I think we can produce a card account that has more capability, which would enable you to access cash in different ways and pay bills. I believe that would be a big step forward for current customers that we regard as socially excluded who do not wish to make, for whatever reason, the bigger step towards taking out a current account. We could produce a successor vehicle.”
Does the Minister recognise that there are people who like to budget through the safe and simple way that the Post Office card account operates? Will he give an assurance that such people will not face charges if they go overdrawn accidentally?
I apologise to the hon. Gentleman, but I shall respond to his point about customers going overdrawn later. I can assure him that we are in the process of devising a successor to the Post Office card account that will allow individuals to access their benefits at a post office.
Accordingly, Post Office Ltd is working on new products with significantly greater flexibility than the Post Office card account that will ensure that customers continue to have a range of choices in how they access their money over post office counters. Post Office Ltd recognises that there is an opportunity to provide simple good-value options for customers. It has already introduced one new savings account and is developing other savings and banking products that will be more suitable for many of its customers than the current Post Office card account.
The Minister kindly wrote to me the other day, and it seems to me that the Post Office is taking a few steps forward, but large steps backwards, including with regard to the point raised by the hon. Member for Cannock Chase (Dr. Wright) on the BBC licence fee. The Minister disavowed any responsibility for that, but what discussions did the Government have with the BBC about a vital matter, the effect of which has been devastating for post offices?
As I think I said before, that was a decision for the BBC, based on its need to protect the licence fee payer and get value for money in respect of the renewal of licences. It was not a matter for the Government to intervene in.
There will also be a new Government-funded product for those who, for particular reasons, are unable to operate any but the most basic form of account. If Post Office card account customers use a bank account or a new Post Office product at the post office instead, Post Office Ltd will still receive a payment. Exactly what accounts will be available after the card account contract ends is not yet settled, but it remains our intention to provide access to benefits in cash at the post office for those who want it.
In addition to benefit payment issues, the future of the Post Office is clearly a significant cross-cutting issue for the Government, with a number of different Departments delivering services through the network. It was, of course, disappointing that the Post Office failed to retain the contract for over-the-counter sales of television licences, but the BBC had a clear duty to act in the interests of licence fee payers and to ensure value for money for the public. It rightly put the process out to competitive tender, and Post Office Ltd was undercut by a significant margin.
I am most grateful to the Minister for giving way a second time. On the point about delivery, what criteria do the Government apply to the quality of the service offered? I had a letter this morning from Mark Thompson, the director-general of the BBC, who states:
“I do appreciate however, that in some circumstances, licence fee payers will find it more difficult to visit a PayPoint outlet than they would a Post Office.”
He freely admits that there will be an inferior service for large numbers of people in isolated areas.
If the hon. Gentleman will forgive me, I am obviously not privy to that correspondence, but the decision was a matter for the BBC, and one would expect that it would have examined the contract in all its aspects before placing it with whichever contractor won the contract, which I believe was PayPoint.
The Government, together with the Post Office, are urgently looking at strengthening the competitive position of the Post Office in ways that remain compatible with its social obligations. What people must recognise is that the huge costs associated with supplying cash, IT, marketing and training to such a large bricks-and-mortar network make it increasingly difficult for Post Office Ltd to compete commercially and effectively for Government and other business when faced with lower-cost competitors. We continue to look for ways in which we can use the network, but it is the duty of a responsible Government to provide services in a way that gives the public a choice of how to access them, and offers value for money.
In closing on the subject of Post Office Ltd, my key message to the House is that the Government recognise the scale of the challenges facing the network. They recognise the important social and economic role that post offices play, particularly in rural and deprived urban communities, and they recognise that where post offices playing that role can never become commercially viable, there will be a continued need for public funding to ensure the provision of Post Office services. We are listening to, and understand, the concerns of sub-postmasters and others.
For the Royal Mail the Government’s ambition, as set out in our manifesto, is to see a publicly owned Royal Mail fully restored to good health, providing customers with excellent services and its employees with rewarding employment. Only a few years ago, as I mentioned earlier, the Royal Mail had annual operating losses of £318 million and the quality of service was poor. The Government put in new management and made available more than £1 billion of finance facilities to help turn the company around. In 2005-06 Royal Mail, as a group, had operating profits of £355 million. The quality of service had been improved, with 94.1 per cent. of first class post being delivered the next day and 10 of its 15 licensed targets being met. Quality of services remains the company’s top priority.
That could not have been achieved without a willing, able and dedicated work force. It is right that employees should be rewarded for their part in that turnaround. They received more than £1,000 each following the successful completion of the renewal plan in 2005 and more than £400 this year. Working conditions for employees have also been improved during this period, with the introduction of a five-day working week and many sorting offices being provided with IT equipment to provide remote learning opportunities for staff. The company’s range of policies and programmes have been redesigned to help and empower female employees, and it has been recognised as among the top 50 places where women want to work.
Royal Mail still has several challenges to face. The postal services market has been fully liberalised since 1 January 2006. Royal Mail has had to become more efficient to enable it to compete in such a market. One of its main rivals is already piloting end-to-end services. Added to that, Royal Mail has had to tackle its pension fund deficit, which stood at £5.6 billion at the end of March 2006.
As someone who was a member of the Committee that considered the Postal Services Act 2000, may I ask whether the Minister accepts that one of our arguments during those proceedings was about the relative unfairness of the Royal Mail alone having to meet the cost of the universal service obligation? Other companies that come into the marketplace should also be required to meet the obligation, especially if they intend to offer a national service. Are the Government examining that matter?
My hon. Friend makes a good point and speaks with his experience of that Committee. As he is probably aware, a live debate about that matter is going on in the industry.
Royal Mail has developed a business strategy that will transform the business over the next five years. It involves the introduction and deployment of new sorting equipment and more efficient ways of working, and the rationalisation of the mail pipeline. That will need investment, and the Government are prepared to put in place the finance required to achieve that transformation. The Secretary of State set out the proposed finance framework that was agreed in principle with Royal Mail in his written statement to the House on 18 May. The measures in the framework allow the company to stabilise the pension deficit and give it the funds that it needs to transform the business.
The detail of the finance framework has not yet been finalised. The documentation is being drawn up, but, most importantly, the company and the Government need to agree on how the work force should be incentivised to deliver the transformation. The Royal Mail board has made it clear that it strongly believes that an employee share scheme is the best way to do that, and has submitted a proposal. The Government are prepared to consider options for incentivising employees in Royal Mail, including an employee share scheme in the context of a publicly owned business, under which shares would be held in a trust for the benefit of employees, and could not be transferred to non-employees.
The motion states that the delay in finalising the finance framework is damaging Royal Mail. In reply, I would say to Liberal Democrat Members that although the finance framework is not yet in place, the company has been preparing for the implementation of its strategy and has made other operational changes to improve its efficiency. It has not been in a state of paralysis. The Government are actively considering Royal Mail’s proposals, but will not be pushed into making decisions without a thorough examination of the proposals that have been put to us. I understand that that is called due diligence in the business world. It would not be right for the Government, who are entrusted with looking after the taxpayers’ shareholding in Royal Mail, not to carry out proper due diligence before making an informed decision.
The Government strongly believe that Royal Mail can compete in a fully liberalised market and meet its obligations to provide a universal postal service. A successful Royal Mail is good for the shareholder, the management, the employees, the taxpayer and the UK as a whole.
In both the post office network and Royal Mail, the endeavours of both the Government and the businesses will ultimately depend for their success, as ever, on the skills, dedication and sheer hard work of sub-postmasters and employees, which we often tend to take for granted, but which should never be underestimated or overlooked. As my right hon. Friend the Secretary of State has made clear, we are determined to give the Post Office the certainty that it needs by putting the network on a long-term stable footing. We are equally determined to continue to help Royal Mail on its way forward. I commend the amendment to the House.
This is an important debate and it would be good if we could find some cross-party agreement. Every single Member of Parliament has a post office in their constituency—at least at the moment. The Post Office is a great national resource, but it is approaching a serious crunch point. Its long-term future will probably be decided in the next three years. As a country, we have to decide whether the network is something that we want to let wither and die or something that we will value and support. Our post offices already offer a great range of services, ranging from stamps to foreign currency and from insurance to passport services.
The hon. Gentleman made an important point about the choice between allowing the network to wither and die or making an investment to sustain it for social reasons. Must we not get across to the Government the message that the sooner that decision is made, the less expensive it will be? To help the network recover from damage through neglect will be far more difficult than to intervene timeously.
I thoroughly agree with the hon. Gentleman. In a way, that is what I shall argue, and it is why we will join his party in the Lobby tonight in support of the motion.
What a surprise.
Everything is a surprise to the hon. Gentleman.
As Adam Crozier has said, Royal Mail could fulfil its legal obligations with just 4,000 branches. When the Labour party came to office, there were almost 20,000 branches, but despite repeated manifesto pledges to keep post offices open, there are now only about 14,000. Under the Labour Government, a quarter of the network has disappeared, and the cuts fall hardest on the most vulnerable in our society.
Of course, the reason that post offices are closing is that many are losing money. Despite the subsidy that the Government hand to Royal Mail each year, the network still loses over £100 million a year. The majority of rural post offices have a very small customer base—1,000 of them have fewer than 50 customers per week. Much of the change from profit to loss in recent years is due, as we have been discussing today, to declining income from transactions that relate directly to Government.
Post offices used to be the only place that a range of services could be accessed, but times have changed and they are changing fast. People now pay their bills online, they have their benefits paid directly into a bank account, TV licences are no longer available from a post office, and people can even print stamps to put directly on the items that they want to post. These developments cannot be reversed. What is missing from the debate is any clear Government strategy for the role that our post offices should fulfil, because the Government do not appear to have one. That is why two post offices have closed every working day under this Government.
One of the things that is keeping post offices open is the Post Office card account. POCA is a very simple form of account, into which only benefit payments can be made. Over 4 million people use such accounts and the average post office branch has 355 customers a week collecting their benefits through the scheme. The Government’s decision to abolish it is one of the greatest threats to the network that remains. Post Office card account transactions are responsible for 10 per cent. of a sub-postmaster’s net pay. The National Federation of Sub-Postmasters has said it believes that this decision
“will close thousands of post offices”.
On Wednesday, as we all know, they will deliver a petition signed by more than 3 million people calling for the Post Office card account to be saved.
Even before the card is officially withdrawn, the Government have been trying to encourage benefit recipients to move from claiming their benefits in person at their local post office, for which the branch receives a payment, to having the benefit paid directly into their bank account. It is clear that the Government’s decision to abolish the account poses a major threat not just to rural post offices, but to urban ones, which in many cases matter just as much. To make matters worse, the Government have not clarified what they intend to do to ensure that benefit recipients continue to receive a decent service at their local post office. If that is confusing for elderly benefit recipients, they should look at the economics of the POCA.
Does the hon. Gentleman accept that the situation is worse than that? In many rural areas the banks moved out many years ago and there is no alternative to a post office, so when people no longer have access to POCA or a post office, they will end up paying more of their money to get their own money out of ATMs, if they exist, or to go into the local town by public transport, if that exists, to get their money.
Yes, there is a problem of rural isolation all over the country—in Scotland, and even to some extent in my own constituency. Essentially, people who do not have a car are stranded. Some might say that people have to go to shop for food, and if they can go to Sainsbury’s they can find their way to a post office. However, that is not always true for the elderly at the time that they need to go to get their money. There are growing problems of rural deprivation. The modern world is leaving in a state of isolation a lot of people who cannot go as fast and as actively as many of us.
The Government claim that it costs £1 to pay into a POCA and only a penny to pay into a bank account, but Ministers have repeatedly refused to answer questions about the financial arrangements behind the scheme, so the real costs of the POCA remain unclear. The card account is hugely important to people who do not have bank accounts and at least 1 million of our most vulnerable people cannot get a bank account. They may have been in prison or do not have the necessary credit rating—there are many reasons. Such people are heavily, if not entirely, dependent on the POCA. Furthermore, the account is a vital source of revenue for post offices. If the Government choose to replace it only with a limited, targeted scheme, that may help those without a bank account. However, the financial cost to post offices will still be great. As the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith) said, this is an urgent matter and decisions need to be taken now. If such a process is already in train by the time that we hope to be in government, the danger is that there will be nothing left for us to reverse. The solution is not to abolish the account—that is why we have been calling on the Government urgently to review their decision.
The Government have created this famous Cabinet committee chaired by the Deputy Prime Minister to look into the post office network, but despite the importance of the issue to local communities, it has not published any recommendations, and it was only this afternoon that we learned that it has met—once. Perhaps doing so on the croquet lawn does not really count, but we shall see. I can only hope, therefore, that the Government are taking the issue seriously and will accept that they have not done enough to protect the future of the post office network.
The Liberal Democrats have a policy document, but it does not mention the Post Office card account. In fact, all they have is a plan to part-privatise the Royal Mail, which is understandable, albeit that one of their own spokesmen described it as
“back of a fag packet stuff”.
To be fair, it is more than that, but their proposal is a short-term answer to a long-term problem. It is a one-off injection of money for perfectly logical causes such as the pension scheme and investment in the sorting system, but it does not—despite the protestations of the hon. Member for Kingston and Surbiton (Mr. Davey)—protect the long-term needs of the post office network.
We need a new direction—a new strategy to protect much-needed post offices. Here, at least, we have a lot of overlap and agreement between the Opposition parties. The solution has to be to reinvigorate the Post Office. We must give it new life by giving it new business. We must secure its future and that of individual post office branches by letting them open up to new markets, and new customers, with new products.
My hon. Friend is making an excellent speech. Does he agree that it is staggering that an organisation that handles £90 billion in cash through its tills every year is in all this trouble? Surely the Government have to accept responsibility for not doing more to support it.
That is the case that I am trying to outline. Indeed, it is why we have been calling on the Government to rewrite sub-postmasters’ contracts to allow them to act as agents for other businesses, including private mail services. Just as many pubs that were tied to one brewery are now free houses, so post offices should be released from their ties and made able to offer a broader range of services. The post office network plays an essential role in combating financial exclusion. If that role is to be preserved, the Government need to take urgent steps to give sub-post offices freedom to gain the new business that they so desperately need.
Conservative Members are prepared to give the business people who run our sub-post offices a chance and a future. We want to give them a framework in which they can develop their businesses and make profits where they are currently constrained and forced into loss. Unlike Labour, we will not limit sub-postmasters. We will give them the tools that they need to ensure that the post office network can thrive and continue to fulfil the important role that it plays in our local communities.
I welcome the Liberal Democrats’ choice of debate for today. Some of us have been urging a debate in Government time for some time. We now have a debate in the main Chamber and that is good. The timing is especially appropriate given the huge lobby on Wednesday by the National Federation of Sub-Postmasters. It will not only take place in the name of the National Federation of Sub-Postmasters, but is supported by Citizens Advice, the National Pensioners Convention, the National Federation of Women’s Institutes, Postwatch, Age Concern, Help the Aged and many people who will find their way to Westminster on Wednesday to tell us, as Members of Parliament, what they feel, especially about the Post Office card account.
The Under-Secretary of State for Trade and Industry, my hon. Friend the Member for Poplar and Canning Town (Jim Fitzpatrick) took some criticism. However, I believe that he genuinely has the interests of all those who use the Post Office card account at heart. He is doing his best within a machinery, which, as any of us who has been in government knows, cannot always do exactly what one would like. He has done his best and he has spoken to the all-party group on sub-post offices. However, I hope that we will get some definitive answers. I blame the Department for Work and Pensions for much of the mess because it devised the method of changing the way in which benefits were paid. The Minister who introduced the change left the Department when it was being implemented and is now in a different guise.
For me, the main issues are choice and the valuable service that the Post Office provides throughout the country. I shall not repeat the figures for the numbers of rural and urban post offices that are closing. Every closure creates a huge hole in the community that the post office serves and the provision of social benefits there. We want to find ways in which to prevent that.
I genuinely cannot understand why the Government allowed the BBC to get away with what it did. I pay my licence fee but I share some of the problems of the right hon. Member for Gordon (Malcolm Bruce)—I am sorry that he has left—with it. The BBC’s behaviour, some of the programmes that it broadcasts and the way in which it has downgraded certain matters often makes me wonder why we have to pay a licence fee. The Government should have been much tougher with the BBC and made it clear that the criteria for the licence fee include its public service ethos. It should have been forced to give the people the choice of using the Post Office service.
Will the hon. Lady give way?
I shall give way to the vice-chairman of the all-party group.
The hon. Lady makes an important point. The all-party group holds endless meetings and we realise that individual units of Government make decisions in isolation, without consideration of the impact on the huge national network that we are discussing. The decision about the BBC was a classic. Action was taken strictly in the interests of the BBC and according to its remit, but there was no co-ordination with the Department of Trade and Industry or the Department for Work and Pensions. We need a Minister—it may be the Under-Secretary—to get a complete grip on the Post Office.
I agree. I presume that the Under-Secretary would claim that that is exactly what “miscellaneous 33”, or whatever it is called, which meets under the chairmanship of the Deputy Prime Minister—I believe that he is still Deputy Prime Minister—is meant to be doing. However, the hon. Gentleman is right. One Department was acting totally against the interests of another. The Department for Culture, Media and Sport should have got more involved.
I urge my hon. Friend to disagree slightly with the hon. Member for North Shropshire (Mr. Paterson). The decision that they have discussed was not in the BBC’s interests. Sub-postmasters and sub-postmistresses have often explained to young people how they can pay £2 this week and £2 the next so that they can cover their licence fee. There are reports that only 30 per cent. of those who had a licence this time last year have one now. Many people in constituencies such as mine and that of my hon. Friend will go to court over the matter.
The BBC will probably regret what it has done. There is a general feeling that it does not care about ordinary people and what they want.
The hon. Lady is my London Member of Parliament and she has been assiduous in pursuing the issue that we are discussing. Does she agree that it is a pity that the Under-Secretary did not answer the question that the hon. Member for Cannock Chase (Dr. Wright) and I posed when we asked what discussions were held with the BBC, what pressure was applied and what information the BBC gave? Surely some dialogue took place between different Departments.
Perhaps I shall leave my hon. Friend the Under-Secretary to send a little note to his colleague who will reply to the debate.
The Driver and Vehicle Licensing Agency is a Government service. Why was not it allowed at least to state on the relevant form that applications can be made in a post office? The Post Office staff in the House are kind, knowledgeable and helpful about where one has not put one’s “x”, ticked a box or got the right picture. It is sad that the DVLA has not told people that they can continue to use the Post Office. Will the Under-Secretary clarify whether licences can still be renewed in post offices? Is it simply a case of people not knowing that they can do that?
Ministers have tried to tell us that the Post Office card account was never meant to last for ever and that the contract was always intended to be short term. The problem is that people simply do not believe that. None of the 400 hon. Members who signed early-day motion 1531 believed that the contract was temporary and that it would end in 2010. When the Secretary of State for Health was Secretary of State for Trade and Industry in 2002, she said:
“We have already stated publicly and clearly that all claimants who want to get their benefit in cash at post offices will be able to do so. I want to stress a point that I have made both in the House and directly to the National Federation of Sub-Postmasters: the decision about what kind of account to use for benefit payments in future will be one for the claimant, but irrespective of whether claimants use their own existing bank accounts, new bank accounts, basic bank accounts, or the new post office card account, they will continue to be able to get their cash over the counter at post offices.” —[Official Report, 11 July 2002; Vol. 388, c. 1020.]
There was not much of a sense in 2002 that the contract would end in 2010.
Does the hon. Lady agree that, regardless of whether a definite decision was made to end the Post Office card account in 2010, all the distress that the announcement of winding up the contract has caused could have been avoided had the Post Office been allowed to develop an alternative solution before we went through the process? Consequently, we are expecting thousands of people to lobby us on Wednesday.
The Post Office can develop however many new solutions and cards that it likes, provided that there is still a card that a pensioner or anyone else on benefit can use to get their cash out. Many people do not want all the extra frills. It was amazing to see a quote from the Government saying that
“the Post Office card account is far less user-friendly than other accounts—for example, you can’t earn interest or pay standing orders out of it.”
Never mind getting interest, many of my constituents cannot even make do with what they are getting out of the account each week. The idea that they should somehow be using it as a bank account that can earn them interest is just nonsense. Most people use the Post Office card account as a way of budgeting the income that they rely on, and we must continue to ensure that they can do that.
The National Federation of Sub-Postmasters is the only body that represents all the sub-postmasters, of whom there are about 14,500 in the United Kingdom. We must ensure that that network is valued and retained.
There is a wider issue attached to this problem. In many rural areas, the local village shop depends for its survival on the income from the post office salary. As that declines, the viability of the shop declines. The hon. Lady will be aware that, in many constituencies, village shops are worth less than private houses. There is therefore a temptation to seek to close the shop and to turn it into a private house.
All of us here realise the value of the rural post office. There are new and interesting methods of delivering those services in rural and urban areas, but it will make a huge difference if the post offices do not have the basic back-up of the Post Office card account. I do not think that this Government, or any other Government, would want to go down in history for taking the decision to destroy huge swathes of the post office network.
Will the Minister give the House a commitment that, whatever happens, there will be a card that can be used by pensioners and other people on benefits to get their cash? It should not be part of a bank account, as many pensioners want nothing to do with bank accounts. They do not want to be involved with anything that might cost them money. For example, some pensioners find it difficult that, to get cheaper telephone bills, they have to pay them by standing order. They do not even want to do that. There are many reasons why older people, in particular, and many others, choose not to have a bank account, and they should not be forced to have one.
Will the Government make a commitment to undertake a thorough assessment of the social and economic roles played by post offices in all our communities, in both rural and urban areas? Will they also make a commitment that, where a post office might not survive through normal commercial means, they will find a way of retaining it through public subsidy?
The hon. Lady and I share a common analysis of the importance of the village post office to the wider community. It would be easy for us to become poetic about that, but does she agree that the ramifications of losing those post offices in the wider rural community would be immense? In Wales, there is a fund that guaranteed 106 post offices, but its future is in jeopardy. We are awaiting an early decision by the Minister on the future of the social network fund. Would the hon. Lady welcome such a decision sooner rather than later?
I am going to come to that point briefly in a moment. Clearly, everyone realises the crucial importance of post offices in rural areas.
Even if they have not done so in the past, will the Government from now on make a statement to all parts of government that, wherever possible, they should give preference to the post office network for the distribution of all information on government services? Will they also encourage all local authorities to offer their council services through that network? We should all encourage our own local authorities in that regard.
I am also pleading for a statement to be made sooner rather than later on exactly what protection is to be given to rural and urban post offices. We cannot afford to wait much longer for such a statement. I appreciate that this debate might be slightly untimely, in that the Minister might be going to make certain decisions fairly soon. However, I hope that, given the scale of the support for the Post Office card account, it will be his No. 1 priority to ensure that it stays, whatever else may happen to the post office network.
I congratulate the hon. Member for Vauxhall (Kate Hoey), who chairs the all-party group on sub-post offices, on making a strong case for an urgent decision by the Government on the social role that they envisage for post offices in urban and rural areas. Post offices still have a vital role to play, and if we lose that network, we will not be able to recreate it.
The hon. Lady also strongly reinforced the point about the Post Office card account and the need to ensure that there is a basic card account that satisfies the wishes of those who only want such an account. We do not need a one-size-fits-all arrangement in which the Government decree, “Thou shalt have a bank account, with all the bells and whistles”, because that would involve accepting all the risks if things went wrong. Some people liked their old giro cheques and did not really want to change to the card account. However, they accepted that account because it at least offered the guarantee that it could not be overdrawn and did not carry the risk of bank charges or any other extra costs.
The hon. Lady mentioned that it might be difficult for the Minister to come up with any concrete answers at this stage, but the Government said that they would have some concrete answers by the autumn. I know that the Minister has been advised that the autumn will carry on until 12 December—or even 21 December—but it would be helpful to get the answers earlier than that. Many people do not realise that most sub-post offices are small businesses run by private individuals making investment decisions, and that they need to know the framework in which they are operating. They therefore need to know the Government’s mind on these matters, when so much now depends on Government decisions. Postcomm has also challenged the Government to recognise that.
Last week, it was a matter of concern to hon. Members when the Leader of the House stated at business questions that the collapse of the postal market was a problem for the Post Office. Actually, the postal market is doing quite well at the moment. He talked about the internet and e-mail, but internet trading is resulting in the postage of a lot more packages and parcels. One of the social inclusion issues that is possibly not being properly addressed is the future role of the Post Office in receiving parcels and handling the postage of items for special delivery. The universal service obligation appears to require only about 4,000 post offices. A great deal of the debate about the future of the rural post office network has been about access to benefits and to the means to pay bills. However, if those other services are not there to support the post office, and the post office closes, the access to the postal network, to commercial transactions and to cash for small businesses will also go. The wider benefits of maintaining the network are therefore extremely important.
The most disappointing aspect of the way in which the BBC made its recent decision is that it did not take all its licence payers into consideration. It has said that PayPoint is a replacement for the post office for those who still want to pay for their television licence in person. However, it has not taken into consideration how sparse the PayPoint network is in rural areas. Its decision has therefore greatly restricted access for licence payers in those areas. The BBC should have used its imagination to work with the Post Office to develop a rural product that would allow people to continue to access the same service in rural areas to which it believes its urban licence payers are entitled. The BBC needs to look again at that decision.
I referred earlier to a letter from the director-general of the BBC. One of the reasons that he gave for the switch was that PayPoint could guarantee 15,000 outlets, rising to 17,000 in 2007. He also said that the Post Office could give no assurances on how many of its branches would remain open. That relates to the hon. Gentleman’s first point: we are in a vicious cycle at the moment, and the longer the uncertainty continues, the more pernicious the decisions will be. People have to make rational decisions and plan ahead.
The outside world needs to know what is going to happen, and that is why we need to know the mind of the Government on this matter. Some hints were given today at Department for Work and Pensions questions that a slightly more flexible approach might be taken towards card accounts. We have been here before, however, and people do not want to have a replacement product dangled in front of them, or to be put under pressure to access that replacement.
Active forces such as changing lifestyles are one thing, but if the Department for Work and Pensions continues to drive people away from the post office, and if the Government actively intervene and accelerate the process, it is far more difficult for people to plan. We therefore need to consider a planning horizon that allows the BBC, for example, to understand that there is a commitment to a rural network. As the hon. Member for Vauxhall also said, if the Government embrace that network, the message must go out about the importance of using it.
I have listened carefully to my hon. Friend’s speech, and have agreed with every word. He has just referred to the rural network, but he referred in his opening comments to the importance of the urban and rural network. Clearly, if a village, which has no shop or bank, loses its post office, it has lost everything. The same, however, applies in many urban areas. In my urban constituency, Chesterfield, whether in a large housing estate or the former pit villages of Poolsbrook and Duckmanton, residents who lose their post office and are told that they can catch the bus to Chesterfield or Staveley town centre might not actually have a good bus service, as privatised bus services often leave such areas stranded. Therefore, the post office network is just as important in urban areas as rural ones.
My hon. Friend makes an important point. As I represent a large rural constituency, I am focusing on the rural network, but my hon. Friend the Member for Kingston and Surbiton (Mr. Davey) made it clear that the urban network also needs to be recognised for its social as well as its commercial role.
On the universal service and Royal Mail, the Minister talked about the importance of delivering such a service and he took an intervention on whether other mail users should subsidise that service. As my hon. Friend the Member for Kingston and Surbiton said, we need to monitor whether, as competition bites, the Royal Mail understands and defines the universal service more carefully and delivers to that basic minimum. We have already talked about how 4,000 sub-post offices would comply with the requirement for access points to the delivery network. Postcomm, the regulator, is now beginning to realise that it must consult on whether the current universal service obligation on collection and delivery is being observed in spirit as well as in practice. As competition bites, and as Royal Mail starts to look at efficiencies, it might start to consider how its product can still meet the universal service obligation even though the collections and deliveries are the wrong way round for the user.
On that point, is the hon. Gentleman aware of the concerns raised by Postwatch in Scotland about the apparent tightening of the exceptions policy with regard to delivery in many rural areas, which could lead to a loss of service for many people?
I am certainly aware of Postwatch’s concerns. Postcomm is consulting on changing the wording of the exceptions policy. In all such processes, it is extremely important that the universal service is not watered down to make the service more cost-effective or, I suppose, more efficient for the majority. The universal service is about what everyone in the country can expect to be delivered to them. Therefore, its protection must be at the heart of how Royal Mail is treated by both the regulator and the Government. I urge the Government to take on board the point about ensuring that that service can be delivered and is not watered down. If collection comes before delivery in a particular area, there is no way to turn mail around on the same day. The protection of that universal service is vital and requires effective funding of Royal Mail and a recognition of how much Royal Mail has done to try to address the challenges of competition, how much the work force have done, and how much the work force deserve to be awarded and recognised for what they have done. A trustee share ownership scheme, in which shares are owned for the benefit of the work force and cannot be distributed outside that scheme, seems an excellent way of thanking the work force for what they have achieved and rewarding them further as the company continues to build and take on competition.
As secretary of the liaison committee for the Communication Workers Union, I am always wary of politicians who tell me what the workers want. The workers tell me that they want decent wages, decent conditions and more guaranteed employment, and they lobbied the Liberal conference to withdraw last year’s conference motion talking about selling off shares, as they know that it is a halfway house to privatisation, just as happened with BT. Why does the hon. Gentleman not listen to the workers in their organised association?
I have listened to some workers who have come to me and said that they would like such a share scheme so that they can take part in the success of the company in which they are working and investing. Individuals are entitled to their views, and it is important that those are taken into account in the debate. It is not necessary to have one collective view; people are entitled to individual views.
At this time of transition, I urge the Government to ensure that decisions made on the future of the Post Office will enable a viable, socially supported rural and urban network to continue to be accessible. It is an empty and hollow promise from the Government that people will still be able to collect their pensions and benefits from a post office if there is no post office that is accessible to them.
I welcome the opportunity to take part in this debate. I have taken careful note of the recent exchange, as I shall no doubt refer to the points made.
The debate is opportune, with the lobby on Wednesday, to which I am sure that some of my sub-postmasters and sub-postmistresses will come to talk to me. We have had the Postcomm document, which is an interesting read—it is rather long on analysis, but not so helpful on how matters can be taken forward. Nevertheless, it is a detailed document containing a lot of useful information, and I hope that the Government will respond to it formally in due course. Other reports have come forward, such as the recent Age Concern report, which highlights the importance of sub-post offices in rural and urban communities. As I represent what I call a semi-rural constituency, I see the implications for both.
The debate is also opportune because I had the good fortune to meet some of my parish councils and sub-postmasters and sub-postmistresses in Bisley in my constituency, and we discussed all the issues that have been raised today. The Minister was saying that sub-postmasters and sub-postmistresses were becoming more optimistic, but, without mentioning any names, that was not necessarily the view that I heard from those who were present, several of whom were either in the process of trying to sell or had already sold their post offices. Later, I shall refer to one glowing example of how things can be turned round. The post office concerned, in a small village community, has shown that it can move forward.
What should we be doing? Certainly, we should not be privatising Royal Mail as the motion suggests. That is the worst possible way forward, and I share with my hon. Friend the Member for Linlithgow and East Falkirk (Michael Connarty) support for the CWU. It is the worst way forward for two clear reasons. First, how will taking away one of the network’s most profitable parts, Royal Mail, help that network? Secondly, how can we then expect the Royal Mail to bail out that network? I do not know much about business and competition, but I would have thought that the one thing that that new organisation would not feel any obligation about would be moving more business towards the post office network, as it would be in direct competition with it.
Some would allege that that has been one of the problems with the business. In recent times, there has never really been an attempt to co-ordinate the three parts of the business. We saw that under the last Government, and sadly my own party has not done enough to bring Parcelforce, Royal Mail and Post Office Ltd together so that a wonderful organisation can be used properly. I remind Members that that organisation is held in the highest esteem, as has been demonstrated by opinion poll after opinion poll. People trust the Post Office. If politicians received some of the ratings that it has received, they might feel a little more confident on returning to their constituencies.
I know that there is a lot going on. I have had meetings with Alan Cook recently, and I am aware that there is a new broom trying to sweep away some of the debris. But although some may want us to think that the financial opportunities of becoming a bank in the community are the answer, it would be helpful if the banking system itself recognised the advantages of the postal network rather than seeing it merely as a competitor.
Time after time, I am told that if only all the banks would use post offices in the rural network as an opportunity for people to obtain money, we would begin to see them acting as I should like them to act—altruistically. Sadly, however, because they have had basic bank accounts foisted on them with their arms forced up their backs, they are taking their revenge by making it clear that they will offer the most limited service possible in post offices. That is wrong, unfair and unsustainable.
I hope that we shall see some new developments. Alan Cook has been quite impressed by the way in which the new savings bank has embarked on its link with the Allied Irish bank, which has begun to take hold and is doing well—again, in the face of stiff competition from the rest of the banking network. Foreign exchange business has been a boon to the Post Office, as has the reselling of premium bonds. It may seem very old-fashioned, but in this day and age it gives people security, and there is nothing wrong with that.
I challenged my hon. Friend the Minister about the universal service obligation, and was pleased to hear his response.
Before my hon. Friend moves on to that subject, may I raise another issue? My hon. Friend talks as though competition were a good thing, and I am sure that others will make the same point. Does he remember when “power cards” were taken away from post offices and—at least in my area—introduced in petrol stations? The service then collapsed. Now PayPoint has taken over the payment of television licences. I believe—because we have not been told the facts—that it is being used as a cost-cutter, to undercut and attack the post office network and ensure that PayPoint becomes the only option in town. What guarantee can we have that once it has won the business from the Post Office, it will continue to deliver it in a suitable fashion that benefits the customer? We have heard about the difficulties in rural areas.
No guarantee whatever. That is the problem. I will not go into the case to which my hon. Friend alludes, but I will say something about the BBC and PayPoint. I do not intend to dwell on this for long, but it has not been mentioned so far. In many places PayPoint does not exist, and, like my hon. Friend the Member for South Derbyshire (Mr. Todd), I have evidence that post offices that have tried to open it have been prevented from doing so. Worse, they have been prevented in the very areas where pensioners in particular need a point of access to television licences. I heard what my hon. Friend the Member for Rhondda (Chris Bryant) said about people having a justifiable reason for not obtaining licences. I will not go down that route, but I will say that unless it is guaranteed that people will be able to obtain television licences in all the areas where they could do so by means of the old service, by definition the service has been degraded and has deteriorated.
I have just taken a travelling surgery around my constituency, visiting many of the villages where PayPoint services are being withdrawn. Although TV Licensing informs people that the nearest service is only a couple of miles away, there is often no bus service to the neighbouring village. A trip to buy a television licence at the nearest PayPoint may therefore involve a significantly longer journey than is being suggested.
That was a helpful intervention. Like my hon. Friend the Member for Vauxhall (Kate Hoey), I have my own problems with the BBC at the moment, although for slightly different reasons; but I issue this challenge. If the BBC cannot prove that it can offer at least the same quality of service, it must take some pretty drastic action in respect of the organisation to which it has offered the contract. That contract is not acceptable: it represents a deterioration, and it will cost the BBC dear because it will accrue less revenue subsequently.
In a sense, I have already poured cold water on the role of banking. I have doubts about the idea that we are recreating a banking network, although I wish that we were. My hon. Friend the Minister mentioned the problems with competition, and, as I have said, the Post Office has made some moves in that direction. But another issue has not been mentioned, although it is very important, particularly to the 2 million Post Office card account holders—a figure given to me by the Post Office—who are unlikely to be able to draw their money in other ways. I think that credit union opportunities should be linked to the savings that we could make. Everyone who would like access to a credit union should be able to do so through the network. Problems are identified too often, and this would be a good solution. After people had drawn their cash by means of whatever follows the Post Office card account—a similar arrangement, I hope—they could save through credit unions. That would provide all the advantages that the socially excluded do not currently have, and we ignore it at our peril.
Let me make a point about the changing nature of the network. When people talk to me about sub-postmasters and sub-postmistresses, I sometimes hear criticism of what they are trying to do. I only wish that more people understood what some of them run their businesses on. It is all well and good for us to say that they run an unprofitable business; at national level that means that millions of pounds are unfortunately going in the wrong direction, but it also means that the people who are trying to run the business are doing so for a very small return. That is the problem with the £150 million so-called rural subsidy. Very little of the money actually reaches the sub-postmasters and sub-postmistresses: it is off the bottom of the accounts, so to speak. Some of it, admittedly—although very little—is intended to help reorientate businesses, and some is intended to encourage people to change the nature of their businesses.
The business that I said I would mention is a very small post office, Oakridge, in my constituency. The idea was to reorientate it by moving it to a different site, investing in an internet café linked to an advice centre and arranging meetings there. Michael and Kim Gorney—Kim is the postmistress—were able to take advantage of rural renaissance funds, but it is interesting to note how many hurdles they have had to negotiate. The project is not yet assured, so I shall not say much about its being a great success story, but it demonstrates that things can be done if the attitude is right.
In many villages, however, there will be no private-enterprise solution. The only solution will be some form of social enterprise. In my view, the organisation that should be key to that in rural areas is the parish or town council. I declare an interest: I am still a town councillor. My town council bought the post office, so we have some expertise in keeping them going. There was a threat that the post office would leave the premises where it had been for many a year. The position is different in other areas, though. When I went to Bisley, I challenged the parish and town councils to have regular meetings with sub-postmasters and sub-postmistresses to establish whether there were services that they could provide jointly through the postal network. Again, that is not the basis of the entire solution, but it should help.
If we are sensible about how the common agricultural policy should be funded under pillar two—with money finding its way into rural service provision, which is a good thing—we have to find similar ways of matching local initiative with available money. Parish and town councils can, through the famous 3p on the rates, find some money, but we also need to lock in national money, as in the case of the CAP and the operations of the central Government.
I finish by emphasising that we need security, so the network must be supported, and also stability in that people must know exactly where their businesses are going. We need to recognise that the role of the state is crucial: there is no alternative.
My particular concern is rural sub-post offices, of which there are many in my constituency. Last week, I was pleased to meet representatives of the National Federation of Sub-Postmasters in Wales. We are, of course, talking about people working in the private sector, but we all acknowledge the importance of their adhering to the highest standards of public service. It was clear from talking to them that they are worried about the uncertainty of their investment decisions and the value of their businesses, which often are their retirement pensions.
The Minister provided something of an answer to those worries when he said implicitly that there were too many branches and too many sub-post offices: what that does for the social functions of the sub-post office, I do not know. Clearly, sub-postmasters and mistresses have their worries. Rural sub-post offices act as focal points for the community in paying pensions and benefits and providing other services. In some places, sub-post offices provide only a limited range of goods, but in others sub-postmasters and mistresses have taken the bull by the horns and provide a surprisingly wide range of vital, if low-key, goods and services. Many of those services would not be viable without the post office element. If that element goes, we face the closure not only of sub-post offices but of vital small businesses in rural areas.
There are multiplier effects, as people using the sub-post office to collect pensions or benefits are more likely to spend locally, and a pound spent locally tends to circulate locally rather than swell the profits of the large supermarket giants. At a time when we are all worried about the effect of supermarkets on small rural communities, here we see the Government going—perhaps by default—in the very opposite direction.
In my constituency, sub-post offices have closed and been replaced by the post office van. The Minister provided us with a long description of the pilot schemes that operate at present—it will be interesting to see how that reads in Hansard tomorrow—but what I see in my constituency is a van that visits for just an hour or two. Before, the sub-post office was open all day, all week, so the effect of the changes can be clearly seen, as the pilot schemes will show when the results are published. The closures have also forced people into their cars, but I am not going to pursue all the green issues this evening, as I want to keep my remarks brief.
I am sure that the hon. Gentleman will pay tribute, as I do, to the Post Office in Wales, which has supported the re-opening of post offices in many rural areas. We have also seen some innovative schemes, using village halls and other facilities. Even with the support that the Government now provide to rural post offices, 1,200 of them have closed in the past six years. That shows the scale of the problem, and many more will close unless the Government continue to provide support on a similar scale.
The hon. Gentleman makes a very good point. As we know that further closures are likely, sub-postmasters and mistresses face that degree of uncertainty, which is corrosive. The hon. Gentleman will also know that while cars are a costly luxury in cities, they are a necessity—sometimes even two to a household—in his and my constituency. The coincidence in Wales of high car ownership and low wages is not surprising, particularly in rural areas such as ours. If local services disappear, we shall face rural depopulation—an issue that fails to secure the attention it requires. What we have seen is a rush towards concentration in the south-east of Wales as well as the south-east of England.
Other hon. Members mentioned TV licences. I met the federation last week and was asked to draw the House’s attention to the Driver and Vehicle Licensing Agency, which advertises the fact that vehicle excise duty may be paid by phone or on the internet. I understand that it is printed on the envelope. It is very convenient for the DVLA, which fails to advertise the fact that the duty can be paid through the Post Office—a method convenient to customers. What comes first here: the customer or the DVLA? Clearly, it is the DVLA. Many people do not want to divulge information over the phone or down the line. It is a small point, but it is symptomatic of the corrosive effect of uncertainty on the morale of sub-postmasters. That was certainly the impression that I gained. People want to provide a good service, but they are worried and their morale is at rock bottom.
Does the hon. Gentleman accept that one of the major causes of the loss of post offices has been precisely that lack of confidence? There is a good example from Witherslack in my constituency, where the postmaster and mistress whose family has provided a service for nearly 100 years want to sell their business on to someone who can run the post office. They are incapable of doing so, because the market is so thin. There is no rural support grant and people lack confidence precisely because of uncertainty about the future.
The hon. Gentleman makes a very good point. I refer him to my early-day motion on the support grant and encourage him and other hon. Members to sign it.
I want to deal briefly with the Post Office card account, which has been mentioned. There are 360,000 customers in Wales and 7,810 in my constituency, 3,960 of whom draw their state pension through the POCA. That is the measure of the impact on my constituency with 3,960 pensioners and 7,810 people in all, as I said. I also have a list to demonstrate the effect on other constituencies in Wales. I noted, for example, that 14,810 people use the POCA in Merthyr Tydfil and Rhymney—probably the poorest constituency in Wales apart from that of my hon. Friend the Member for Blaenau Gwent (Mr. Davies), which also has a high level of card use. If the POCA is to go, we must have a replacement. The Minister referred to one earlier, but if we are to have a proper replacement, it should be possible to use the Link system. I am concerned that the banks are closing out the Post Office, which is anti-competitive.
Finally, will the Minister clarify what Government Departments are doing individually to promote the Post Office in bringing services closer to people in rural areas? There is huge potential for using new technology in such areas. What is being done to support post offices in providing facilities such as face-to-face interviews for passport applications, for example? If we are to proceed in that direction, individual postmasters have to take decisions now. I hope that the Minister will respond to that point in his reply.
We have had an interesting and wide-ranging debate. There has been a great deal of agreement across the House about the state of the crisis. There is, indeed, a threat. In today's Financial Times, there is talk of large-scale branch closures. Adam Crozier has said that, if the £150 million a year subsidy under the social network payment is ended, 10,000 post offices could close. He also said that the Post Office could operate with only 4,000 post offices and that that would be enough for the Post Office to fulfil its obligations, yet the Minister and the Secretary of State say that they want to give the Post Office certainty. How can they possibly give the Post Office certainty when the chief executive himself is making such remarks?
We all know that the role of the Post Office in our constituencies, in the towns and villages, is absolutely vital. It is pivotal in many of the small communities. Often, as I go around my constituency, I see post offices that are at the heart of the village and pivotal in supporting the shops that are attached to them. They are very much part of the social fabric of villages, too.
After all, we have here an organisation with a unique brand. It is a powerful retail network. It has a massive head start with its 28 million customers. It is a huge cash handler—£90 billion a year goes through the tills of the Post Office, which is quite phenomenal. Why has it all gone so badly wrong? How can it be losing so much money? Why can it survive only on subsidy? Why is the rural network losing £3 million a week? Why have 3,200 post offices—17 per cent. of the network—closed since 1997?
The Minister with responsibility for employment relations in postal services wrote to me the other day. He said:
“The decline…is down to the failure of the Post Office to respond to the changes in the market place.”
I put it to him and to the Secretary of State that part of the problem has been the actions, or inaction, of Her Majesty’s Government.
I will not rehearse the saga of automatic credit transfer, for which the Government were responsible. It did save the Department for Work and Pensions many millions of pounds, but think of the extra cost through the subsidy and of the redundancy payments to so many sub-postmasters who suffered as a result of post office closures.
We have heard about the Post Office card account fiasco and about BBC licence applications being moved elsewhere. I asked the Minister what discussions he, the Department of Trade and Industry and the Department for Culture, Media and Sport had had with the BBC. It is largely independent under its charter, but are you telling me, Mr. Deputy Speaker, that Ministers did not have some say or influence in that?
We have heard about the many constraints that the Government have put on the commercial freedom of the Post Office and sub-post offices. We have also heard about the many other things that the Government could be doing to support the network. Why have they not shown a bit more imagination? Why is there not more initiative on the part of the Government? Why, for example, has the Post Office only recently told sub-postmasters that transaction payments, which they receive for automated council tax, gas, water and electricity payments, are being cut from 11.2p to 7p per transaction? What about the DVLA? Surely much more could be done to ensure that its service is firmly entrenched within post offices and sub-post offices. That is vital in terms of supporting businesses in post offices and sub-post offices.
I wonder whether my hon. Friend is aware that the DVLA has recently sent all its customers a card that encourages them not to use the post office, but rather to register online. Surely that is an example of what should not be happening if the Government are properly to support the rural post office network.
I am grateful to my hon. Friend. That is a good example of the Government saying one thing and doing something completely different. The Minister said that his Department was doing all it could to help the Post Office and its branch network to deliver more services, and to have more opportunities to build customer bases, yet the DVLA, which I understand is directly under the responsibility of a particular Minister, is doing exactly the reverse of what the Minister is saying the Government should be doing.
Does my hon. Friend agree that our Post Office service is at tipping point? We need a framework for the future. We want to see joined-up thinking, whether it has to do with the DVLA, television licences or whatever. That is all we are seeking from the Government.
My hon. Friend is right. It beggars belief that, with this organisation, which has a vast network that is the envy of any competitor organisation—it is the largest retail network in Europe—the Government are not able to show a little more imagination, innovation and common sense.
I give way to the hon. Gentleman, who knows a lot about this subject.
I have great respect for the hon. Gentleman, but he cannot surely be suggesting that we turn back time and should not encourage people to use Government services online. It is not only saving the Government money, which is sensible. I have used the service and I assure him that it is very efficient. It is sensible to go online—we all have broadband—to order one’s tax disc, which arrives five days later, without having to find time to pick it up somewhere. I do not have anything against the Post Office—it is just common sense. No one can argue against technology in that way. Are we Luddites?
I hear what the hon. Gentleman says. I have nothing against private organisations using their own money to launch advertising campaigns, but the Government are advertising one service to take business from post offices, which will in turn require more subsidy to keep the branch networks going, and more money for redundancies. The Government have to use a little more common sense. We have to have a bit more co-ordination and a bit more joined-up thinking.
Will my hon. Friend give way?
I will press on, if my hon. Friend will excuse me.
In King’s Lynn and Gaywood, which is the main urban concentration in my constituency, four post offices have closed. They were meant to be part of an urban reinvention programme. Unfortunately, one of them is in the village of North Wootton. It has a village green, sheep and cattle grazing nearby and ponies trotting by, yet the Post Office decided to categorise it as an urban post office. It has now closed completely, which is bad news for people in that community.
In truly rural areas, we have seen numerous closures. We have seen a number of closures and then a welcome reopening. We have seen closures where the potential sub-postmistress or sub-postmaster was to reopen the sub-post office but is in tricky negotiations with the Post Office. I have one case in my constituency where everything is in place and lined up. The previous sub-postmaster was being paid £8,500, but the potential applicant is being offered only £4,000, a cut of more than £4,000 in the payment from the Post Office. Is that any incentive for that small sub-post office to reopen to provide a vital service?
Therefore, there are obstacles in the path of post offices that want to try to reopen. There are some bright spots. In a village called Syderstone in my constituency, there is a rotating sub-postmaster who is operating from the village hall, which shows imagination and initiative. I am all for that. However, the vast majority of those small post offices and their sub-postmasters and sub-postmistresses are hanging on by their fingertips. There is huge uncertainty. I do not believe that the future has ever been more uncertain or more bleak. What we need from the Minister is not empty rhetoric but action today, because not just thousands of sub-post offices are at risk. We are talking about tens of thousands of people who work in sub- post offices. We are talking about hundreds of thousands of people, particularly vulnerable groups such as the elderly and disabled, whose lives are being put at risk. Their quiet enjoyment of village life in constituencies such as mine will be put at risk if post offices close, because they are the centre of those villages.
As we have heard often today, we need proper joined-up government. Is the Minister going to listen? I am not holding my breath, but there is still a chance that he can prove me wrong. We are looking at a very serious situation indeed. I hope that, in his winding-up speech, he will not be complacent, and that we will have not rhetoric but proper answers to the many questions that have been posed today, because there is still a chance to save what is a great network.
I am delighted that we are having a debate on the future of the post office network and Royal Mail, not only because I have tried to secure an Adjournment debate on the future of Chorlton post office, but because the people of south Manchester have seen at first hand the damage that the Government have inflicted on the network.
In recent years, the post office network in Manchester, Withington, has been devastated by the closure of a number of sub-post offices across the constituency, including Beech Road post office in Chorlton, Burton Road post office in west Didsbury, Mauldeth Road West in Withington, Barlow Moor Road in Didsbury, and Parrs Wood Road in east Didsbury. More recently, Chorlton Crown post office was privatised—a decision made by Post Office Ltd without any consultation about the sell-off. It is outrageous that the Post Office can make such a decision to franchise post offices on purely commercial grounds, and that it need consult local people only on what services will be provided, and on at what times the post office will be open. Meanwhile, the Government stand idly by and refuse to intervene.
I draw hon. Members’ attention to early-day motion 2687 in my name, which deals specifically with Chorlton post office, but which makes reference, too, to the future of the Crown post office network. I urge Members on both sides of the House to support it. Post Office Ltd is picking off Crown post offices to privatise, and unless the Government can be forced to intervene and put a stop to that, we will be lucky to have any Crown post offices left. It is worth noting, too, that a number of Crown post offices that have been franchised have quickly closed. We need to ask ourselves why those sub-post offices are closing, and why Crown post offices are being sold off, thereby damaging the future of the network. The answer is fairly straightforward: Government policy is systematically undermining the viability of the post office network. The post office reinvention programme should have been called the post office closure programme, because, effectively, that is all it did. Like the hon. Member for Stroud (Mr. Drew), I do not blame sub-postmasters.
Does the hon. Gentleman not agree that although the Government talk a big game—they talk about financial and social inclusion—their actions support the exact opposite? Many elderly people do not have the opportunity that the hon. Member for Linlithgow and East Falkirk (Michael Connarty) has to go online to buy their licences. We face the challenge of social and financial inclusion, and the Government are not doing anything about that.
I agree that the Government talk a great deal about post offices but do little other than systematically remove business from them. As a result, it is increasingly difficult for sub-post offices to secure a long-term future. Similarly, it has been made more difficult for Crown post offices to be profitable in future. Post Office bosses admitted to me that one reason that they chose to privatise Chorlton post office was that the Government’s decision to end the Post Office card account in 2010 will remove more and more business. Some sub-postmasters have suggested that the end of the Post Office card account will effectively be the final nail in the coffin. In Chorlton in my constituency, Merseybank estate is among the top 5 per cent. most deprived areas. The sub-postmaster there says that he has serious concerns that if the Post Office card account ends in 2010, he will not be able to make a living. It will be a major blow not only to him, but to all the people who collect their money at the post office through the POCA, and who use that money in the few remaining shops in the area. Those shops will face closure if the post office is closed.
If the Government really believe that post offices play an important role in local communities, why have they systematically deprived them of business and jeopardised their future? Surely it is time for the Government to take their head out of the sand and to take the necessary steps to secure the future of the post office network.
It is an extraordinary testament to the way in which the House works that although more than half of hon. Members have signed an early-day motion about the Post Office card account, we could not propose that motion on the Order Paper. It is only because an Opposition day debate has been introduced by my hon. Friend the Member for Kingston and Surbiton (Mr. Davey) that we have an opportunity to discuss these important matters.
I wonder how we have reached this position on rural sub-post offices—and, indeed, urban sub-post offices. We thought that we had won the battle in 2002, and that we had finally decided the future of the post office network for a generation. Certainly, no intimation was given that the Post Office card account was a temporary arrangement that would be removed after the contract had ended. As many hon. Members have said, we are concerned about the uncertainty that the network faces. I shall return to that in a moment, but having heard what the Minister said, I fear that that uncertainty is becoming the certainty that many of our smaller post offices will be lost.
I heard what the Post Office said about closing a very large number of post offices, and I heard, too, what the Minister said today. He cited with approbation a lady from Crewkerne in Somerset—a town not far from my constituency—who said that people think that they want post offices, but in fact they do not. What an insult to the postmasters and postmistresses across the country who know perfectly well how much communities value their post offices, and what an insult to the 3 million, perhaps 4 million, people who signed the national petition. What an insult to the people who put their name to the petition that I presented to the House just before the recess, and which was signed by more than half the residents in the village of Nunney. In addition, the Minister seemed to suggest that the customers were the wrong sort of customers. He suggested that we lived in inconvenient places, and that we persist in living in small villages where there are not enough people to use the post office. I am sorry, but that is the way we live, and that is why we want a service for the people whom we represent in our villages. It will not always be the most efficient arrangement, but it is a social good, and that is what the Government must recognise.
Earlier, the Under-Secretary of State for Work and Pensions, the hon. Member for Warwick and Leamington (Mr. Plaskitt) appeared to make a concession, when he suggested that there would be a range of products, whatever that means, to succeed the Post Office card account. We do not want a range of products—we want the Post Office card account, and we want a simple mechanism to enable people to go to the post office and collect their pension or benefits in cash. Ministers may have forgotten, but that is how many people live their lives in this country. They budget on a weekly basis with cash in hand; they do not want a bank account, and they do not want to go overdrawn. They want the opportunity to carry on as they have done—yet there is the threat of the end of the POCA contract, the loss of business from TV and DVLA licences, and changes in tariff in respect of utilities. In addition, the fact that the social network payment will end in March 2008 has caused uncertainty. The Minister cannot give us certainty on any of those issues. As a result, people cannot make investment decisions about their post offices. They cannot sell them, because no one can go to a bank with an adequate business plan to secure the money that is needed.
Will my hon. Friend give way?
I am sorry, but I do not have the time.
As a consequence, post offices are closing across the country, which is extraordinarily bad news not only for the people who want to use the post offices, but for the communities in which those post offices are situated, because it is not just post office services that are affected. When I presented my petition on behalf of the people of Nunney, they pointed out that their post office not only provides post office services, but offers dry cleaning, sells tickets for the local pantomime, and provides a social service for the elderly and infirm in the village. All those things will be lost if we lose our sub-post offices. We have already lost the Crown post offices, as my hon. Friend the Member for Manchester, Withington (Mr. Leech) said. I have lost a Crown post office in Frome; the postal services are now situated in Martin’s newsagents, and instead of a Crown post office, we have an empty building that is soon to be a wine bar.
We are losing urban sub-post offices, but I have a bigger concern in my constituency. I went to 100 villages over the summer and I heard the same thing in every one. Some 30 people from the small hamlet of Curry Mallet told me their concerns about their post office. The people of Ditcheat are also concerned that they will lose their post office, and they think that the Government do not care about it. I find no reassurance whatever in a Cabinet committee chaired by the Deputy Prime Minister, which is supposed to be bringing things together. All the evidence is that Departments do not talk to each other, and the consequence is that we will lose our post office network. I will not stand for that.
Much has been said in this excellent debate, but I wish to make a few points. The Liberal Democrats believe that two of our greatest national commercial institutions are under threat—the Royal Mail and the post office network. The Royal Mail is under threat from lack of investment, the relaxation of competition rules and overseas competition.
The post office network is being starved. The Government have taken away its business, as many hon. Members have described. With the pension book and benefits, the Government have taken away £400 million of business from post offices. The loss of television licence business is another huge blow, whether or not the BBC has been constrained by the Government’s failure to provide network guarantees. Why has the Post Office not been allowed to bid for the 70 new passport centres? The loss of the Post Office card account is of great concern. Some 4.5 million people still prefer to access their benefits through POCA, including some 5,000 in Solihull.
Some 7,000 post offices have been lost under Conservative and Labour Administrations. Some 6,500 rural post offices are under threat. Why? Well, to borrow a phrase from “The Amazing Mrs. Pritchard”, it is not rocket science. It is because the basic business of post offices has been systematically undermined. However, the solution is not simple.
Post offices and the Royal Mail have to compete in a national market and a global market. They are already exploring new commercial services, such as telephones, the internet, travel, insurance, and even flowers. I am interested in the Minister’s thoughts about why it is not possible to extend vehicle excise duty services, passport checking and Government information services. As the hon. Member for Rutland and Melton (Mr. Duncan) asked, why not allow post offices to offer the many additional services, some of which have been trialled, such as reporting crime and antisocial behaviour, or providing one-stop shops for councils, police, health services, the Government and others? Post offices want to be entrepreneurial. All they want is for the reins to be released so that they are free to provide such services.
I do not want to paint a rosy romantic picture of country post offices and the pensioner coming along with his POCA card. Hard economic decisions have to be made, and that is recognised on both sides of the House.
Does the hon. Lady agree that the Government have a social responsibility? It is not only a question of hard economics. We all understand the importance of ensuring that the Post Office generates a proper economic return, but rural post offices are vital at a social level to the societies they serve. The Government are completely ignoring that.
The hon. Gentleman is right. We need to consider the social costs as well as the economic ones. The Government think that they will make short-term savings by stopping the POCA, but there will be long-term costs that need to be taken into consideration. Postmasters and postmistresses understand the value of their services. They work for long hours, often for little reward. They need support from the Government, which has been promised. We will be all ears listening to the Minister’s reply to find out exactly when the promised £3 billion will actually be forthcoming.
The Liberal Democrats’ proposals have received a mixed reception today, but they would invigorate the Royal Mail and post offices, without burdening the taxpayer. Our suggestions would modernise the Royal Mail and allow it to compete. They would also allow employees and others to have a service of which they can be proud.
This has been a very good debate, which was opened in characteristically robust and persuasive fashion by my hon. Friend the Member for Kingston and Surbiton (Mr. Davey), and with extremely good contributions from my hon. Friends the Members for West Aberdeenshire and Kincardine (Sir Robert Smith), for Manchester, Withington (Mr. Leech), for Somerton and Frome (Mr. Heath), and for Solihull (Lorely Burt). I also wish to single out the contribution by the hon. Member for Vauxhall (Kate Hoey).
Listening to the Minister’s opening contribution, I detected a surprisingly Marxist line of thinking in the Government’s approach to post offices. We are told that an inevitable tide of history is sweeping away the need for a post office network. Factors such as e-mail and lifestyle change mean that the post office network will naturally wither away. As my hon. Friend the Member for Somerton and Frome pointed out, the Minister also quoted with approbation a postmistress who apparently said that people may think that they need post offices but they do not; he also said that we have too many branches with too few customers. In other words, our villages are too small. I have to tell the Minister that the disappearance of the post office network and the closure of thousands of post offices is not inevitable. It is a choice being made by Ministers, and they cannot evade responsibility.
Many hon. Members have discussed the Government’s attitude to the post office network, as exemplified by their actions. The Government say that they support post offices. The Minister confirmed that today. Indeed, it is fair to say that the social network payment is on the credit side of that equation. However, while that subsidy continues for the moment, the progressive withdrawal of Government services is fundamentally undermining the entire post office network. Postcomm reported that Post Office Ltd has lost £168 million of revenue from Government services in the past 12 months. That is more than the social network payment for a year. In other words, the Government are giving with one hand but taking away even more with the other.
The Post Office was told that it could not even apply for the contract for the new passport offices, to allow face-to-face interviews. We know that the Post Office’s revenue from DVLA work is falling, and hon. Members have mentioned the efforts to ensure that people use the internet, not the post office, by failing to mention that option in publicity material.
The contract for the issuing of road fund licences is up for renewal next year. I hope that the Minister can assure the House that he will make every effort, as part of the new joined-up thinking that we are promised, to ensure that the Department for Transport gives that contract to the Post Office again. Many hon. Members have mentioned the Post Office card account, which is worth £1 billion to post offices over the term of the contract. It is used by some 4.5 million people, who now face uncertainty. Some 40 per cent. of benefit recipients who were invited to convert to direct payment when pension books were withdrawn chose to convert to a Post Office card account.
Does the hon. Gentleman agree that the success of the Post Office card account has been despite the Government rather than because of them? He may have received in his constituency—as I have in mine—constant anecdotal evidence of the Government undermining, or trying to undermine, take-up of the card account; in fact, it is the efforts of postmasters and postmistresses that have made POCA such a success.
I am grateful for that intervention.
Does my hon. Friend agree that the Government have pulled the rug from under post offices? Susanne Duncan, the postmistress at Pool in Wharfedale post office said:
“We have all worked so hard to retain as many customers as possible…This news is another nail in the coffin…a scandal, an injustice and betrayal.”
Does my hon. Friend agree with her words?
rose—
Order. The hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) should try to leave some space between interventions—this is beginning to look more like Question Time.
That is something I have not yet had the opportunity to take part in, but I hope that I will one day.
I agree with both interventions. One of the reasons why POCA is so popular is that it is a post office-based product; it is simple and easy to use. We now know from an answer given earlier at Work and Pensions questions that people will face multiple POCA options. In the light of the interventions made during the debate, will the Minister guarantee that pressure will not be applied to current POCA users about the option they should choose when the change is made? There must be a free choice and people should decide which option is best for them. If there is a repeat of what happened when the pension book was taken away, when enormous pressure was exerted through phone calls and mailings to persuade pensioners—against their better judgment in many cases—to move away from use of the post office, it will be a travesty of the sentiments the Government have expressed today.
We have heard about the television licence contract being taken away from post offices, but the Minister’s response is, “It wasnae me.” Apparently it is not his fault but that of the BBC. However, in a letter to me, Ms Pipa Doubtfire, the head of revenue management at the BBC, gave the lie to the idea that Government policy had no influence whatever on the decision. She said that
“the Post Office, which now has fewer than 15,000 branches, could not give us any assurance that its network would not continue to decline”.
In other words, if the Government had made a clear commitment to the long-term viability of the network the BBC’s decision might have been different.
On the hon. Gentleman’s point about the reply from the Post Office, it is clear to members of the Communication Workers Union that those who run the Post Office, Mr. Leighton and Mr. Crozier, have no interest in the sub-postmistresses and sub-postmasters network. The reply to which the hon. Gentleman referred was made on behalf of people who have no interest in that part of the network. They indicated to the BBC that they could not guarantee that the network would not shrink, because they do not actually care about it. Like the hon. Gentleman, I want the Government to care about it.
I, too, want the Government to care about the post office network, but my quotation was not from the Post Office but from a representative of the BBC, which should also care about the future of the post office network.
If the Government had made a long-term commitment, the result might have been different. In the meantime, people in the highlands and islands and other rural areas sometimes face round trips of 50 or even 100 miles to buy a TV licence, whereas before they could have gone to their local village post office. One of my constituents received a letter telling her the location of the nearest PayPoint. She lives in Gorthleck, on one side of Loch Ness, and was told that the nearest place where she could collect her TV licence was “seven miles away” in Drumnadrochit. The letter failed to mention that the body of Loch Ness was between those two locations, and the round trip would actually be about 80 miles.
There is a huge lack of joined-up government. We have heard that a Cabinet Committee under the Deputy Prime Minister has been appointed to look into the problem, and I wish it well. However, there is no real appreciation of the value of post offices, especially those that serve rural and deprived urban areas. In many such places, the post office is the only access point for public services, where people can get access to cash and other basic financial services and, indeed, experience basic community interaction. The people who need those services locally—the elderly, the disabled and those without access to transport—will suffer most. It is no surprise that Age Concern found that 99 per cent. of older people in rural areas consider their local post office to be a lifeline service.
The Government make the point that it is not worth continuing to support post offices serving only a few people—but in many cases those are the people who need the service most. Like many Members, I too conducted a tour of villages in my constituency during the summer, and an old lady in the village of Tomatin, whose post office had closed three months before, said that she was now expected to travel 15 miles to Inverness to collect her pension. That may work when public transport is running, or in the summer months when there is no snow and ice on the roads, but in the winter it is almost impossible for her to collect her pension using her POCA.
Before Ministers kill off the so-called loss-making parts of the post office network, they should reflect on research that shows that every pound spent on rural post offices delivers £4 in measurable social and economic benefit to the communities that they serve. About £3.7 billion-worth of expenditure in rural communities is directly facilitated by having a local post office as its anchor. Closing post offices means closing local shops, increasing transport costs for vulnerable groups and, in some cases, threatening the long-term sustainability of the community as a whole.
The Government’s policy seems to be to allow the life of the post office network to drain away rather than to kill it with a direct blow. Perhaps it is a Blairite conspiracy to make the first decision on Prime Minister Brown’s desk the elimination of much of the post office network—[Interruption.] Or Prime Minister Hutton.
Today, the Financial Times said that the Government’s plans, when they are finally announced, will involve the closure of thousands of post offices. When the Minister responds, will he confirm that? In his earlier remarks, he said that the figure would not be 6,500 post offices. As he knows what the figure will not be, will he tell us whether the actual number will be, more or less? What will be the import of his policy—when it is finally announced?
Either way, the British public deserve better. They deserve a full and open debate, where the Government put their plans openly on the table and people have a chance to comment on them. More than that, the British people, 4 million of whom have signed petitions, want a positive vision for the future of the post office network. As my hon. Friend the Member for Kingston and Surbiton said when he opened the debate, the Liberal Democrats have set out a clear, coherent and sensible plan for getting investment into post offices and the Royal Mail. We are the only party to have done so today; for example, we have not heard from the Conservatives what their policy would be.
We need the Government to see the broader social and economic value in a network of post offices across the country; the post office is often the only official presence in rural and deprived urban settings. We need to be willing to direct more Government services through those outlets, not fewer. Post Offices can help to decentralise services and allow direct engagement. They can help promote financial inclusion and they can be the hub of their communities. We need to end the spiral of decline in the post office network in which this and previous Governments have connived. We must provide investment to give hope to hard-pressed sub-postmasters and postmistresses and to the communities they serve. By supporting the motion the House will make it clear that thousands of post office closures cannot, will not and must not be tolerated.
With the leave of the House, I will try to respond to some of the points made during the debate and make some concluding remarks.
The hon. Member for Rutland and Melton (Mr. Duncan), among others, asked about people who cannot use a bank account, or even open one. We have said that there will be a new Government-funded product for people who cannot pay into a bank account. There will be a successor to POCA and the Department for Work and Pensions is negotiating about it. I hope that also covers the point raised by my hon. Friend the Member for Vauxhall (Kate Hoey).
The hon. Member for Rutland and Melton asked about the costs of POCA. He asked why every payment made into a bank account costs the taxpayer 1p but every payment into a POCA costs £1. The difference is because it costs only 1p to move money electronically from DWP systems to customers’ bank accounts, while the POCA cost is £1 because it includes payments to sub-postmasters, Post Office central costs, marketing, call handling and call centres.
The hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith) pointed out that customers were worried that they might become overdrawn. The 17 basic bank accounts that can be used in post offices in the same way as POCA do not have overdraft facilities. If that does not answer his point exactly, I shall be happy to write to him if he wants to drop me a note.
The hon. Gentleman also asked about the universal service provision being watered down. I can assure the House that the provision of the universal postal service order remains at the heart of the Government’s policy. The Government enshrined it in legislation for the first time that Postcomm’s primary duty is to ensure the provision of the universal postal service. It has defined the USO, and where it proposes changes it is obliged to consult to ensure that the views of all interested parties are taken fully into account. As the hon. Gentleman might know, at present it is consulting on the concerns expressed on collection times, particularly in rural areas.
My hon. Friend the Member for Stroud (Mr. Drew) claimed that sub-postmasters are prevented from having a PayPoint terminal in the retail side of their business. There is no restriction on sub-postmasters having a PayPoint terminal. I will drop him a line as he does not appear to be in his place. He also asked about whether there is a restriction on sub-postmasters providing a PayPoint terminal at sub-post offices. There is no restriction on sub-postmasters having a terminal, provided that the terminal is not used for transactions categorised as key products and services. BBC licensing work has not, and never has been, covered by that restriction.
My hon. Friend also asked about credit unions. Benefits and pensions can be paid into credit union accounts. I think that he is aware that the Government are investing £36 million through the growth fund to help credit unions grow, and I am sure that he supports that.
The hon. Member for Manchester, Withington (Mr. Leech) raised the question of a directly managed, or Crown, network. Let me clarify that there are fewer than 500 directly managed, or Crown, branches in a network of more than 14,000. The rest—some 97 per cent.—are sub-post offices that are already operated as franchises. Directly managed post offices represent only 3 per cent. of the network, yet they made a loss of some £50 million last year alone, and losses are predicted to rise to £70 million this year. That is money that could be better used for the benefit of customers, and it is absolutely right that Post Office Ltd take action to find a more cost-effective way of providing the main post office service.
The hon. Member for Solihull (Lorely Burt) claimed that Post Office Ltd was prevented from bidding for the 70 passport authentication-by-interview offices. The Post Office was not prevented from bidding. Having reviewed what it could offer, the Post Office made the commercial decision to withdraw from the tender process. However, the planned interview offices will not take any existing business away from post offices or offer any alternatives to the passport check-and-send service available from selected post offices.
The hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) said that I rejected the figure of 6,500 post offices in my earlier comments. What I said—I think the record will show this—is that I was not going to be tempted to make a comment on any number, and 6,500 was one of those that I was not going to comment on.
The post office network as it presently stands is unsustainable, and it must change to meet today’s needs. People are choosing to access services in new ways, and to ignore that would be foolish. The Government recognise the important role that post offices play in rural and deprived urban communities, and, in drawing up our plans, we will take full account of their needs.
In response to Members who accused the Government of abandoning or neglecting the Post Office, the figures are clear and contradict that: £2 billion has been invested since 1999, including £550 million invested in the Horizon project, bringing modern computers into every office, and also including the £150 million spent per annum in 2003 to 2008 to protect the rural network. However, notwithstanding that investment, Post Office Ltd lost £2 million every week in 2005-06, and this year the loss is expected to rise to £4 million per week.
Sub-postmasters know the situation better than anyone, but even they recognise that things have to change. We are working closely with them to deliver the certainty that they are asking for: a long-term strategy that equips the Post Office for the future. The post offices run a number of experimental pilots. We discussed them earlier and I will not repeat what was said. But the results are positive and they are being examined.
Changing technology means that people are not using post offices as they once did: 8.5 million pensioners—out of 10.5 million—now get their state pensions paid into a bank account, and 98 per cent. of people making new state pension claims have chosen to have that paid directly into their bank, building society or post office account. An increasing number of people choose to renew their tax disc online––more than 3 million people have done that so far this year, compared with 860,000 in 2005. Nevertheless, the Post Office still provides one of a number of ways in which the Government can deliver services, and it still has an important role to play.
Members have raised questions about the Post Office card account. The Department for Work and Pensions is in discussions with the Post Office about what should happen after 2010, which is the year earmarked for the phasing out of POCA. The aim is to ensure that people have a range of choices about how they can access money at the post office. Labour recognises the important social role that the Post Office plays, and the Government will take that into account.
The Opposition parties have no credible alternatives. The Conservative party briefing for this debate is markedly light, as the hon. Member for Inverness, Nairn, Badenoch and Strathspey mentioned. The Tories’ statement of aims and values, “Built to last”, has nothing to say about Royal Mail or the post office network. The only idea that their leader has apparently had was confided to the East Anglian Daily Times during the Tory party conference. He is quoted as saying:
“Rural Post Offices could be saved under a future Conservative government by giving them lottery terminals”.
There we have it. There are, in fact, no limits on sub-postmasters asking to have lottery terminals in their store.
At their spring conference, the Liberal Democrats voted in a brand new policy for Royal Mail and the post office network. They would separate Royal Mail from the post office network in order to privatise it. They say that they would use the proceeds of the privatisation to fund a string of additional programmes. That is the classic Liberal Democrat policy of assuming they can fund ongoing spending commitments from a one-off receipt. That is fairyland economics from the Liberal Democrats, and I think that they know that. They appear to have made no credible attempt to work out how much their programme would cost, and they are making an open-ended commitment to maintain, or even increase, the size of the network, irrespective of the changing world in which we live. The problems that we are trying to solve now would return in the years ahead—and not too far ahead either.
It is frequently stated that the network plays an important social role, and we agree. But rapid improvements in technology and wider changes in society have had a heavy impact on the many services traditionally seen as being the preserve of the Post Office. We have to accept that the Post Office operates in a commercial marketplace. The service that the network provides, including lottery tickets, foreign currency, telephony, bill payments and financial services, are all in direct competition with other retailers and providers. We have a strong management team in place at the Post Office and we have tasked it with turning the business around. The company is continuing to develop and introduce new services and business activities.
Members from all parts of the House have made clear their concerns for the future of the network. We recognise the calls for urgent decisions, and we are aware that there has been a prolonged period of uncertainty about the future direction of Government policy in respect of the network. I can assure Members that a funding support package of £150 million a year is in place to maintain the network until 2008, and we are carefully considering the options for the network beyond 2008.
There has been substantial activity behind the scenes in obtaining and assessing data on the network, and on how that feeds into possible options for future shape and size. We are not yet in a position where we can say that we have the answers, but I can tell Members that they should rest assured that we are listening and that their concerns will be reflected in our decisions.
The Government have an unprecedented track record of investing in the post office network and supporting Royal Mail, so we are not about to turn our back on them. Let me quote my Secretary of State, from a Financial Times article today. He said that we
“are determined to give the Post Office certainty”—
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, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments), and agreed to.
Mr. Deputy Speaker forthwith declared the main Question, as amended, to be agreed to.
Resolved,
That this House acknowledges the important role that post offices play in local communities, particularly in rural and deprived urban areas; recognises that the business environment in which Royal Mail and the Post Office network are operating is undergoing radical change with more and more people choosing new electronic ways to communicate, pay bills and access government services; applauds the Government’s record of working closely with Royal Mail, Post Office Ltd and sub-postmasters to help them meet these challenges with an unprecedented investment of more than £2 billion made by the Government in supporting the network; acknowledges the important role post offices can play in tackling financial exclusion while recognising that the Government must also take due account of the need to deliver services efficiently; and acknowledges that the Government is committed to bringing forward proposals to help put Royal Mail and the Post Office network onto a sustainable footing.
Green Taxes
We now come to the debate on the green tax switch. Mr. Speaker has selected the amendment in the name of the Prime Minister.
I beg to move,
That this House notes with alarm the rise in carbon emissions since the Government took office in 1997; believes that this record is in part due to the steady fall in taxation derived from green taxes from 3.6 per cent. of gross domestic product in 1999 down to 2.9 per cent. last year; notes opinion poll support for a green tax switch from people onto pollution; urges the Government to move from rhetorical assent on the need for action on climate change to serious policy proposals which will set annual targets to cut carbon emissions, allowing for natural variations from year to year, and establish an independent monitoring body to report on progress; and therefore calls on the Government to increase green taxes on new high-emission cars and on aviation while using revenue generated to cut direct taxes, particularly on low earners, so that there is no overall rise in the burden of taxation.
The motion is about green tax and a green tax switch, a fundamental principle of which is that we should as a society be taxing pollution rather than people and we should be taxing bad things rather than work, risk and effort. On that basis, if we were to engineer a change in the structure of taxation towards green taxation by raising, as the Liberal Democrats have proposed, £8 billion a year extra in green taxes, we would be able substantially to reduce taxation on incomes, in particular by lifting 2 million people out of income tax altogether; abolishing the 10p first rate of income tax; cutting tuppence from the basic rate of income tax; and, by raising the threshold at which the higher rate applies from £38,000 to £50,000, taking out of the higher rate of taxation more than 1 million people, which is broadly the number who have been brought into the higher rate during the period of Labour Government.
The key reason for the green tax switch is as part of a comprehensive package—not the whole of it, but a part—to tackle British carbon emissions.
Before the hon. Gentleman goes any further, will he confirm that the switch will work only if the green taxes that he proposes fail to work and therefore fail to reduce the tax base on which they are levied?
No, I do not concede that. As the right hon. Gentleman, whose knowledge of economics is extensive, knows well, an ongoing price change is needed to engineer an ongoing change in behaviour. I shall return to that theme later in my speech, and if he wishes to intervene at that point, I shall be happy to give way to him.
The overwhelming reason to implement green taxes is the extreme urgency of tackling climate change and global warming. Nine of the hottest 10 years on record have occurred since 1990. In Britain alone, this summer was the hottest since records began in 1659; in 2002, we suffered two floods that were supposed to occur only every 30 years; we have had the wettest six months since records began in the 18th century; and the incidence of storm surges, flood damage and droughts is increasing.
Globally, the evidence is also compelling. In the past 10 years alone we have suffered the most powerful el Niño effect ever recorded in 1997-98; the most devastating hurricane in 200 years in Hurricane Mitch in 1998; the hottest European summer on record, in which 26,000 more people than usual died in June and July 2003; the first south Atlantic hurricane ever in 2002; the collapse of the Larsen B ice shelf in Antarctica in 2002; and Hurricanes Rita and Katrina in the gulf of Mexico and the destruction of New Orleans.
The science has become more alarming, not less so. It is based on ever more diverse evidence: on land temperature measured by thermometers; on temperature measured by balloons and satellites; on ice cover and ice thickness; on melting permafrost; on sea temperature and sea flow; on the height of waves; and on the incidence of storms, cyclones and typhoons.
At the level of rhetoric and targets, there is now a clear consensus among those on the Front Benches of the three main parties in this House, but there is not a consensus on the level of action or of delivery. We see the reality when we look at the Government’s record on climate change: our carbon emissions have increased by more than 3 per cent. since 1997, and we are meeting the Kyoto targets to which we have signed up only by accident, because of the reduction of emissions from the electricity generating sector thanks to the switch from coal to gas. We need to do much more if we are to sustain our efforts and establish a position from which we can argue for others also to take action.
Economic instruments are clearly crucial and valuable and the EU emissions trading scheme is the best system, because the incentives go deep and accumulate as behaviour changes. Companies can make even more by selling allocations when they save carbon emissions, unlike merely saving a tax. However, the scheme covers less than half of total emissions and it should be tougher, both at EU level, with national plans, and by adding in sectors such as aviation, shipping and freight, and by auctioning more and allocating less.
The reality is that the scheme will not cover the gaping hole in the UK’s climate change efforts, which is the transport sector. As the Select Committee on Environmental Audit reported in July, transport is the only sector where emissions have consistently increased since 1990. It is the key problem in the Government’s emissions plan.
The Select Committee report on reducing carbon emissions from transport pointed out that with the addition of international aviation and shipping, total carbon dioxide emissions from the UK transport sector have increased by 18 per cent. since 1990. That is in contrast with every other sector of the economy, including farming, the public sector, business and the domestic sector, where the reductions in carbon emissions from 1990 to 2004 have been respectively 53 per cent., 28 per cent. 12 per cent. and 2 per cent.
Transport stands out, and there is no mystery as to why that is the case. The truth is that the Chancellor beat a retreat in the face of the fuel duty protests and since then green taxes, largely taxes on fossil fuels, as a share of national income have been falling steadily; down from 3.6 per cent. of national income in 1999 to 2.9 per cent. last year.
The problem is brought into even sharper relief by an analysis of recent trends in the relative costs within the transport sector. The real costs of motoring have declined in the past six years while the average real cost of airline tickets is around the same as it was in 1996.
I accept much of what the hon. Gentleman says, but I noticed that in the Press and Journal on 19 September—after the Liberal Democrats adopted their new policy on aviation—the hon. Member for Orkney and Shetland (Mr. Carmichael), the party’s transport spokesman, said that he promised to ensure that Aberdeen and Inverness would not be disadvantaged by the party’s plans to curb cheap domestic air travel. He went on to say that Inverness airport would not be included because it was on a peripheral area and nor would Aberdeen because it was a long way from the centre. It seems to me that that argument could be made for a lot of airports in the UK. Is the hon. Gentleman going to tackle short-haul business flights, or is he only looking at cheap holiday flights?
As the hon. Gentleman knows, when the air passenger duty was introduced, an exemption was given to lifeline routes which exempted a large number of the smaller airports that are necessary to local communities in the north of Scotland and in peripheral areas. I shall return to that point later. It is important to maintain air routes that are crucial to smaller and sparsely populated communities.
I was heartened to see the Liberal Democrats’ green tax document, which said that Ken Livingstone’s congestion charge was a “successful environmental tax.” However, it goes on to say that the congestion charge had to be increased to maintain the reduction in the level of congestion that it first brought about. When she was chair of the London Assembly Transport Committee, the hon. Member for Hornsey and Wood Green (Lynne Featherstone)—I assume that the hon. Gentleman knows her well, given that she was his campaign manager—said that rise in the congestion charge was “a price hike” that had nothing to do with reducing congestion and everything to do with “raising a bob or two.” Which is it? Was the congestion charge raised in order to be more effective or to raise money? Can I offer the hon. Gentleman a third way—
Order. I can offer the hon. Lady the opportunity to retake her seat. That intervention was far too long, as indeed the first one tended to be too long. There is a limited amount of time available for this debate and I ask hon. Members to be sharp and concise.
The hon. Lady has enormous faith in my powers, but my powers to read the mind of Ken Livingstone do not extend to my being able to tell his precise motivations for raising the congestion charge. Both of the factors she mentioned are relevant.
The aviation industry has created a tax-free zone of which Al Capone would be proud. Will the hon. Gentleman acknowledge, given his experience of labouring in the vineyards of Strasbourg and Brussels, that to implement an aviation fuel tax would be a substantial challenge, not least because it needs to be implemented on a regional level? If not, it could easily be evaded or avoided.
The hon. Gentleman raises a good point and I entirely agree with the principle. I will return to what we can do at a national and at an EU level later.
Given that disposable income has increased appreciably—I was making a point about the real cost of motoring declining substantially—it has made driving and flying considerably more affordable than before. Meanwhile the real costs of bus and rail fares have increased sharply, by 31 per cent. and 16 per cent. respectively.
There are two potential policy instruments that could in time help us to resolve the problem. The first would be road user charging, based both on congestion and on emissions; the second would be personal carbon allowances, recently floated by the Secretary of State for Environment and Rural Affairs. However, both are some way off technologically and the key objective, faced with the urgency of climate change, is to move quickly. We have maybe no more than 10 years to reduce carbon emissions substantially and an honest policy should be based on existing technologies.
The experience of voluntarism in, for example, the car sector has not been a happy one. The voluntary agreement signed up to by the car makers to reduce average carbon emissions to 140g per kilometre by 2008 is, frankly, for the birds. At the current rate of progress, the UK would not achieve that until 2022. We have broken promises in the vehicle sector from manufacturers and the case for going beyond voluntarism is a strong one.
That is why we have added the proposal for changing the rates of vehicle excise duty on new cars, with an eye-catching and mouth-watering £2,000 a year on those gas-guzzlers that are emitting more than 220g of carbon per kilometre. The object of that policy is to change the cars that people buy so that we have a change in behaviour and a change in the effect of the system.
The Select Committee pointed out that, in particular, the new band G introduced by the Chancellor is ineffective and the rate charged needs to be much higher. As things stand, the VED paid by the owners of the highest emitting 4x4s and luxury saloons in band G represents a lower percentage of their sales price and works out at half the cost per gram of CO2 emitted than lower emitting hatchbacks in band C.
I am trying to follow the arguments carefully. If green taxes are introduced and met, it will mean that people are still not changing their lifestyles to influence the climate change challenges. If people do change their lifestyles, that will mean that they do not pay those taxes, in which case will there not be a huge hole in the budget of the Liberal Democrats?
I do not know how many times I will have to reply to this point. I thought that I had dealt with it in relation to a previous intervention. There is a section of my speech where I will attempt to spell things out in even greater detail. The hon. Gentleman might be on sounder ground in criticising the proposals of others if his party were able to bring forward a single specific measure to deal with what it says is the greatest policy challenge of our time.
I am going to make more progress. The hon. Gentleman can come back to me when I reach that section of my speech if he wants to intervene again.
The higher £45 rate of the new band G is so feeble a deterrent to the purchase of the average gas guzzler that it typically represents the cost of half a tank of petrol or, in the case of an upmarket 4x4 such as the Porsche Cayenne, one replacement wiper blade. That is precisely what the reputation of the Chancellor as a green Chancellor hangs on. Our proposal is for a far sharper rise at the top end to deal with what the Department for Transport identified as the trend towards higher emitting cars outweighing the technological improvement in fuel efficiency. Otherwise our proposal is closely modelled on the proposals put forward by the Energy Saving Trust and the Sustainable Development Commission. The Department for Transport itself commissioned some work from MORI, the opinion polling organisation, to check on the likely impact of the different price bands for vehicle excise duty of the sort that we are putting forward. That study suggested that 72 per cent. of new car purchasers would alter their behaviour faced with the sort of rise in VED bands that we propose. That is a clear set of proposals for dealing with one rapidly growing element of carbon emissions in the transport sector.
Will the hon. Gentleman tell us how many fewer Porsche Cayenne Turbos will be sold as a result of that £2,000?
I realise that the hon. Gentleman drives a substantial 4x4 himself—
A hybrid, but nevertheless such a vast hybrid that it emits more than all 10 of the best-selling cars in the United Kingdom. I am afraid that I did not come prepared for the average car buyer inquiring into exactly what the effect on sales of the Porsche Cayenne would be—of enormous interest though that would clearly be to those on the Conservative Benches.
No, the hon. Gentleman has already intervened once. He can intervene later.
On aviation, we have seen extraordinarily rapid growth in carbon emissions. According to the International Civil Aviation Organisation, average annual growth over the past 10 years has been 4 per cent. In the UK, the growth in passenger numbers has been even higher: 6 per cent. a year over the past 10 years. Aviation emissions are growing so rapidly that at current growth rates aviation would use up the entirety of the UK’s carbon allocation by 2050, allowing nothing whatsoever for domestic heating, transport by car or bus, or any other use. That is why it is essential to curb aviation growth—not necessarily to cut it back, but merely to slow its pace of growth. If people want to fly rather than carry out other carbon-emitting activities, it is not, in any Liberal Democrat view, the business of Government to tell them not to do so. However, people need to take those decisions on the basis of a level playing field.
At present, aviation is highly favoured. It is lightly taxed by comparison with other areas of spending and it is not clear, given the undoubted damage caused by carbon emissions, why that should be so. There is no kerosene tax and no VAT on airline tickets, although that would be possible both nationally and at an EU level. Aviation is not included in the emissions trading scheme and we are some way off that happening. The reality is that we need to work a little harder at a national level. I agree that, as has been pointed out, there are substantial constraints if we are not to make ourselves wholly uncompetitive. However, as we have seen before, when the Conservatives were in government and introduced air passenger duty, we can act at a national level.
The existing air passenger duty is an extremely weak reed in the context of this problem. Since 2000, for example, there has been a reduction in the revenue from air passenger duty of 35 per cent., even though there has been an 8 per cent. increase in passengers. The charge of £5 for short haul and £20 for long haul, at the lowest rate, needs to be replaced by an emissions charge based on the emissions of the aircraft over the flight. Although we aim to tax aviation as a whole more heavily—that is what would limit its growth—the extra burden on passenger flights would be mitigated by the extension of the emissions tax to freight. In each individual case, the charge would depend on the fuel efficiency of the aircraft and on its load factor. It is noticeable, for example, that the budget airlines tend to have younger, more fuel efficient aircraft in their fleet and they also fly with substantially higher load factors that the scheduled airlines.
We suggest that those two big changes would bring in about £8 billion of proposed revenue. The idea is to raise the rate at which green taxes are levied in the economy back up to the peak that existed in 1999, within the space of one Parliament.
How much of that £8 billion will be re-funnelled into investment in the infrastructure to provide an attractive alternative to flying or driving?
I am grateful to the hon. Gentleman for his question. Judging from the experience of other countries that have gone down the road of the green tax switch, it is crucial that we make a firm commitment to the electorate that the money that is raised from green taxes is handed back to them and that the green tax switch is not about raising money for the state. There are other means by which one can handle infrastructure spending. I agree that there is a real problem, but the whole idea of the green tax switch is to guarantee that every penny piece raised in extra green taxes goes back into reductions in taxes on income, in particular. That pattern of policies, as I mentioned, has been applied in other countries that firmly believe in tackling carbon emissions to influence climate change—notably in the Nordic countries.
The hon. Gentleman is making points about the taxation of aviation with which I greatly sympathise, but I wonder whether he is clear in his own mind about what he wants to raise the money from his new aviation tax for. The Liberal Democrat tax documents states:
“We will increase the revenue from the new Aircraft Tax to approximately £3 billion above that of the current APD”.
However, the Liberal Democrat website today states:
“The new duty would be set to raise the same amount of money as the old.”
There appears to be a £3 billion hole there somewhere.
I do not know what the hon. Gentleman was quoting from, but the document that we voted on at our conference and the accompanying figures made it clear that there would be a substantial increase. We would be looking at getting roughly four times as much revenue out of the aviation sector as is currently the case. He may be confusing that with the fact that there are particular flights where, because of load factors and fuel efficiency, one would not necessarily expect anything like that increase—if any increase—in taxation. The burden of taxation will be different.
The most thorough report commissioned by the Nordic Council from the Danish National Environmental Research Institute in Copenhagen pointed out that Sweden, most notably, is undertaking an overall tax shift, replacing income taxes with taxes on energy, transport and pollution that amount to several billion Swedish kronor. The report says:
“The Nordic countries pioneered the introduction of carbon and energy taxes and recent studies have addressed their impacts on CO2 emissions. Despite different methodological approaches, the general result which emerges is that such taxes have made an important difference to emission levels. In Finland, CO2 emissions would have been 7 per cent. higher at the end of 1990s had the taxes not been introduced, while in Demark the tax-subsidy scheme on industrial CO2 emissions caused emissions to decline by 23 per cent. in just seven years, to a level 31 per cent. lower than would be the case under a business-as-usual scenario.”
Let me deal with possible adverse side effects. Inevitably, those of us of a progressive disposition worry about the impact of indirect taxes on income distribution. Of course, indirect taxes may prove to be regressive if, as is normally the case, expenditure on necessities represents a higher proportion of the income of the poor than that of the well-off. That is why Liberal Democrats have been careful not to propose the extension of the climate change levy, or a climate tax on households, before we have a far more successful scheme to improve energy efficiency.
The taxes that we propose are not regressive, and one can see that in the case of the vehicle excise duty. Poorer households do not own cars. Some 28 per cent. of British households are without access to any car. Moreover, even among those who have a car, it is rare to find families that buy new cars. However, the VED rates would apply to new cars. On aviation, too, the average income of leisure travellers from UK airports, which was surveyed recently by the Civil Aviation Authority, was nearly £50,000 a year, or more than double the national average. Labour Members might be especially interested to know that nearly 80 per cent. of leisure flights are taken by people in the top half of the income distribution, with only 20 per cent. taken by those in the bottom half. There is also further evidence from the Nordic Council report:
“Another main result is that while energy taxes tend to be distributionally regressive, taxes on transport, fuels and pollution are, respectively, progressive and neutral.”
It is clear, however, as has been suggested, that such a policy might adversely affect those in rural areas if special considerations were not made. That was why we proposed during proceedings on the Finance Bill that there should be a 50 per cent. discount on a household’s first car in sparsely populated rural areas and why we believe that we should consider reducing excise duty rates on fuel to offset some of the disadvantages of remoteness for rural communities that rely on cars.
Overall, the package would aim to raise the yield from green taxes back to the share of national income at the peak of 1999. It thus represents a rise of 0.7 per cent. of gross domestic product. It would be a sensible first step, after which we should assess its effects and other measures that might be necessary to achieve the goals. I reiterate that the key promise of the package is that the revenue raised from green taxes should go back in cuts in taxes on good things, such as effort, risk and work.
I will now address precisely the point raised by the hon. Member for Bournemouth, East (Mr. Ellwood): will the revenue disappear? Certainly not any more than it does in the case of other sin taxes, such as those on alcohol and tobacco, or the congestion charge. There would be behavioural effects, which is what we would want, but we would not be trying to get rid of the behaviour altogether because the appropriate instrument to achieve that would be not a green tax, but a regulation to ban the activity entirely. I hope that Conservative Members will thus be sympathetic to a proposal that is a market-oriented measure designed to ensure that our carbon emissions are sustainable.
The hon. Gentleman is speaking with a lot of passion, which is important. I think that the whole House agrees on the direction in which we are trying to move. However, as other Conservative Members have pointed out, there is a problem. If the taxes were to work in the way in which the hon. Gentleman suggests, we would not have the impact on the environment that we want, so we would still be faced with the same levels of carbon, rising sea levels and the challenges that we are trying to address.
I do not want my response to the hon. Gentleman to become too technical. However, on aviation, for example, a lot of work has been done on the responsiveness of quantities to changes in price. The price elasticity of demand is shown to be about 1.1, which effectively means that a price increase of 1 per cent. leads to a 1.1 per cent. fall in activity, if other things are equal—obviously, one must take account of the growth trend. I am rather surprised that the hon. Gentleman questions this clear point. There is a very small selection of goods and services for which demand increases if the price is raised. If one raises the price of something, demand for it generally goes down. The measure would thus be effective.
I welcome the Conservative promise of raising green taxes as a share of taxes as far as it goes, but it does not go far enough for my taste because if taxes fell overall, green taxes could rise as a share of taxes without any increase whatsoever in pressure on people’s behaviour. That is why countries that use green taxes, which are all those that are pioneering efforts to deal with climate change, think of green taxes as a share of national income.
Green taxes can play a key part in changing our behaviour and ensuring that we can meet this extraordinary challenge. I am not a Private Frazer doomsayer on climate change. We had success before with the Montreal protocol of 1987 that banned chlorofluorocarbons. The hole in the ozone layer has since stopped deteriorating and environmental catastrophe from that source has been averted. I agree that weaning us off fossil fuels is a bigger challenge, but I am convinced that we can do it again. We need to ensure that we are making progress and that we can see that the best is not the enemy of the good.
Overall, the problem that we face is not the failure to recognise the instrument, but the failure of political will. Labour Members were afraid when faced with the fuel duty protests. They ran and they have gone on running. The time has come to change course, to take our courage in our hands and to begin to deal with the problem in the way in which we know that it can be dealt with: through the application of green taxes, especially on the aspects of transport that have formed such an important part of the UK’s increased carbon emissions.
I beg to move, To leave out from “House” to the end of the Question, and to add instead thereof:
“welcomes the UK’s climate change programme which has already put the UK on course to exceed its Kyoto target of a 12.5 per cent. cut in 1990 levels of greenhouse gas emissions by 2008-12 and make further progress towards the Government’s ambitious target to cut carbon dioxide emissions by 20 per cent. by 2010; recognises the vital contribution of the Climate Change Levy, which has already saved 28 million tonnes of carbon emissions and by 2010 will be reducing carbon emissions by over seven million tonnes per year; congratulates the Government on exceeding its recycling target supported by the Landfill Tax and Landfill Allowance Trading Scheme and contributing to reductions in greenhouse gas emissions; commends introduction in the UK of the world’s first international emissions trading scheme capping emissions from power stations and energy-intensive industries; further welcomes the Government’s proposals for the second phase of the scheme in the UK; further welcomes the Government’s energy review, which proposes measures to save up to a further 25 million tonnes of carbon emissions per year by 2020 and to put the UK economy on a path to a 60 per cent. cut in carbon dioxide emissions by 2050; congratulates the Government on its commitment to delivering a strong economy based on high and stable levels of growth and employment as well as high standards of environmental care; and calls upon the Government to continue to put environmental protection, locally, nationally and globally at the heart of its policies.”
There is no bigger challenge in politics today than the way in which we respond to the rapidly growing body of scientific evidence that our climate is warming and that the human race is responsible for this increase in temperature. Climate change is not just an environmental issue; it is an economic issue, a social issue, a security issue and, above all, a moral issue. The way in which we respond as a nation—the Government, business and citizens together—will determine our legacy for future generations. It is a test of character and, overwhelmingly, of political will.
As the world’s first industrial nation, we have a moral responsibility to provide international leadership. Nothing, apart from alleviating starvation and avoidable disease, is more important and urgent in the world today than securing international agreement on a long-term framework and the actions that are necessary to avoid dangerous climate change.
The central fact about today’s debate is that the Treasury said in 1997—in what would have been a consensus among all the parties in the Chamber if it had stuck to its promise, but which excludes Labour because it has not acted on it—that the Government would move to take taxes off goods and put them on bads, and that they would increase environmental taxation in order to combat climate change. That was the promise in 1997. As the hon. Member for Eastleigh (Chris Huhne) said, you have moved in exactly the wrong direction, and your warm words at the Dispatch Box will do nothing for people out there who can see that emissions are up and that your taxation has gone in the wrong direction. Will you please answer that?
Order. May I remind hon. Members of the correct parliamentary language to use, in case it happens again?
If the hon. Gentleman will be patient, I will answer those questions about the appropriate mix of policy instruments to tackle climate change.
Stabilising the amount of carbon dioxide and other greenhouse gases in the atmosphere will take enormous effort. There is widespread recognition that we will have to move substantially beyond the agreements reached at Kyoto. Our ambitions must be far greater and all key emitting nations must play a full part. Around the world the UK is recognised as a leading voice on climate change. Last year we made climate change and Africa top priorities during our presidency of the G8. We moved the debate forward, and we are still doing so with the Gleneagles dialogue process and in the UN and other forums. But we can credibly provide leadership internationally only if we continue to show by our actions at home that we are fully committed to tackling climate change.
I welcome the opportunity today, therefore, to discuss the Government’s domestic agenda and our judgments on the right balance of policy instruments to meet our climate change objectives. I strongly welcome, too, the fact that climate change is now at the top of the agenda of all three main political parties in the UK. This reflects the mood of the British people, who care so passionately about making poverty history and protecting the world from what we are doing to it through our actions.
I put on record the important fact that we are on course to meet our Kyoto protocol target. Greenhouse gas emissions are projected to fall to around 23 per cent. below 1990 levels by 2010, nearly double our Kyoto commitment. The Government introduced a wide range of measures that helped us to achieve that, and fiscal measures have played a key role. For instance, the climate change levy package, which combines fiscal and non-fiscal measures, has delivered emissions savings of over 28 million tonnes of carbon since they were introduced in 2001.
I fully accept that we need to do more, and I shall explain some of the steps that we are taking to strengthen our domestic programme on climate change and put us on a path to reduce CO2 emissions by at least 60 per cent. by 2050. Before I do so, I shall address the core argument in the Liberal Democrat motion. It is right for the Opposition to question why we have taken some steps and not others. Taxation, public spending, regulation and encouragement of voluntary public action all have the potential to contribute to our objectives in this field. The question is what is the appropriate mix of policy instruments.
I can agree with the general proposition that we should tax environmental bads and encourage environmental goods. The “polluter pays” principle is a long-established Government policy. We have programmes to support the growth of clean technology. However, I fundamentally disagree with the Liberal Democrats’ contention that environmental tax as a proportion of gross domestic product is somehow an accurate indicator of success or failure in tackling climate change. It is not. A decline in environmental tax revenue can be the consequence of policy being effective and delivering behavioural change. Climate change agreements have delivered 10 million tonnes of carbon savings by giving an incentive to companies to pay less tax through a reduced climate change levy.
The fuel differential for biofuels also involves the surrender of tax revenue. It is simplistic and wrong to judge policy by reference to the proportion of green taxes as a percentage of GDP. The link between growth and carbon emissions, strong for most of our industrial history, has been substantially broken. It is equally fallacious to measure the effectiveness of the Government’s commitment to tackling climate change by how much the Government spend in this area. Adding up a few DEFRA budget lines and comparing that with the amount spent on Trident or the Iraq war may produce a news story, but it gives a false picture of what is being done by Government to tackle climate change across a range of different policy instruments. I shall focus on four areas where we are taking action, and then offer some concluding remarks.
Before the Minister moves on to those points, which I am sure are important, will he clarify where the Government stand on the 1997 proportion of green taxes, compared with current levels?
If the hon. Gentleman was listening, he would have heard me explain that green taxes as a proportion of GDP are not an accurate or fair reflection of the Government’s attitude to tackling climate change. He needs to recognise that a range of other policy instruments, such as regulation and public spending, are also important. Let me explain by dealing with the first of the four points that I want to make—the European Union emissions trading scheme.
This summer we submitted our proposals for the second phase of the EU emissions trading scheme in the UK. The scheme is a market mechanism to reduce carbon emissions, not a taxation measure. It will be expanded to cover additional activities at 160 installations in the UK, responsible for 9.5 million tonnes of carbon dioxide that are not covered in the current phase of the scheme. Alongside this we are pressing for reforms to the EU emissions trading scheme to extend its coverage and secure its long-term future, which I am sure we all agree is extremely important.
The Minister is right that in theory it is perfectly possible to construct a climate change policy that does not rely on green taxes, but, in practice, international comparisons show that there is not a single European country that has achieved a good record on climate change without a greater reliance than ours on green taxes as a share of GDP. Will the Minister name one, if he can?
The UK has a good record on climate change. As a Government, though, we want it to be even better. That is why we are introducing measures to strengthen our domestic climate change programme.
One of the areas that the UK is working to have included in the EU emissions trading scheme is emissions from aviation. This would enable the industry to meet the full costs of its environmental impacts through a mixture of emissions reductions within the sector and purchase of reductions that can be produced more cheaply by other sectors. I know the Liberal Democrats also want that, and I believe the Conservative party does too, so we are united in wanting to tackle the issue.
On the Minister’s point that tax is not a particularly relevant instrument in dealing with climate change, is he conscious that in its own publication DFID upbraids developing countries because it says that their
“tax regimes often offer inadequate incentives for environmental stability”?
This is a case of the goose and the gander choosing very different words to preach.
Not at all. I did not say that taxation was not a relevant policy instrument. I said that it was not the only policy instrument. In government one has to reach a judgment about the right mix of policy instruments to achieve one’s objectives. That is what we are doing, and it is why—the second point that I want to make—in July we published the results of our energy policy review, a central theme of which was further action to deliver annual reductions of up to 25 million tonnes of carbon and put us on track to meet our 2050 target.
Measures announced in the energy review include giving people accurate information about their energy use through smart metering, phasing out inefficient consumer goods, moving towards our long-term ambition of carbon-neutral housing development, and a revolutionary change in the basis of energy supply regulation, so that companies have an incentive to conserve energy rather than supply more of it. We also plan to consult on a possible energy performance commitment, which will target emissions from large commercial and public sector organisations that are currently not covered by the EU emissions trading scheme and climate change agreements. This could effectively save 1.2 million tonnes of carbon a year by 2020.
I am interested in the Minister’s remarks about the EU trading scheme. The Trade and Industry Committee has been taking evidence on the energy review. All energy generators have expressed their fear about the long-term price of carbon. Following the recent difficulties with the scheme, the price of carbon fell dramatically. Are the Government’s proposals aimed at stabilising a long-term price for carbon? The German Government have offered some of their generators.
The key point is to ensure the continuation of the EU emissions trading scheme beyond 2012 to provide certainty for businesses that are making long-term investment decisions. I am sure that that is what the hon. Gentleman was referring to, and I would be interested to hear what the Trade and Industry Committee has to say about it.
We aim to increase the level of the renewable transport fuel obligation to above 5 per cent. after 2011 and to develop strong successor arrangements to the current voluntary agreements on new car fuel efficiency. With transport accounting for around 25 per cent. of UK carbon emissions, I agree that we need to take action in that area. The carbon savings from those measures alone will be some 2 to 3 million tonnes. We are also increasing our commitment to renewable energy by strengthening the renewables obligation, with higher levels of support so that the newer technologies receive the support that they need. That is in addition to existing measures to incentivise renewables, including £500 million of funding for a range of support programmes for emerging technologies.
Thirdly, we are doing more to reduce the carbon footprint of Government. We have made a pledge that the Government office estate will go carbon neutral by 2012. That will save approximately 160,000 tonnes of carbon—the equivalent of taking some 150,000 cars off the road. We are offsetting all official air travel, which will mitigate an estimated 300,000 tonnes of carbon dioxide by 2009. New sustainable operation targets have been introduced for each Government Department. We will shortly respond positively to the sustainable procurement task force report.
Fourthly, the Budget presented by my right hon. Friend the Chancellor set out a range of important measures: changes to car taxation; an incentive package for biofuels; and measures to encourage greater energy efficiency in households, including an extra 250,000 homes to be insulated over the next two years. That builds on the £320 million of investment this year through the Warm Front programme, which will help more than 100,000 households, and the energy efficiency commitment, which has delivered net benefits to households of more than £3 billion over the past three years.
Does the Minister recognise that the Chancellor’s Budget package on vehicle excise duty will raise £10 million less in cash terms in the current financial year than in the previous one? How does that make any substantial difference to the pattern of car purchases or to carbon emissions from personal transport?
At least the Chancellor’s Budget figures add up, which is more than can be said for the Liberal Democrats’ plans. I am sure that my right hon. Friend the Chief Secretary will have something to say about that in his closing speech. Additional support will fund 25,000 micro-generation installations in public buildings such as schools and hospitals over the next two years. My right hon. Friend the Secretary of State recently announced a switch of £10 million from energy efficiency into a new partnership for renewables, which will mobilise up to £500 million of investment to catalyse the expansion of the public sector renewables, potentially producing an additional 500 MW of renewable electricity.
In his Budget, the Chancellor introduced a new zero-rate road tax for environmentally friendly cars. How many cars are eligible for that and have signed up for it? I hope that the Minister can answer that question, as he did not answer my previous one.
I do not have the figures to hand, but if we cannot get them before the end of the debate I, or the relevant Treasury Minister, will be happy to write to the hon. Gentleman.
I appreciate that many hon. Members are interested in legislation on climate change, with some 398 having signed early-day motion 178. The Government have said in the UK climate change programme, and more recently in the energy review, that we are carefully considering the merits of introducing a carbon budget as a means of helping to deliver our goals. The only issue for the Government is whether legislation would help in the battle against climate change, support the efforts to join individual activity with business and Government leadership, and link domestic and international action. Legislating for targets is not the same as legislating the means to achieve them, and it is the latter on which we will all be judged. Consensus on goals is important, but without effective policy there is no effective response. The challenge for us as legislators is to ensure that we have the right mix of policy actions to achieve our ambitious goals.
Climate change requires change right across society—from central and local government, from individuals and from business—if we are to move towards one-planet living. I am proud that we were the world’s first Government to set a long-term target for carbon reduction consistent with the science of climate change, the world’s first Government to legislate for a climate change levy, the world’s first Government to introduce an emissions trading scheme, and the world’s first Government to meet and tighten its caps under the European emissions trading scheme. All those changes were met with scepticism, and some with opposition, but they were the right course of action. Now we need to go further. We will do so. We must put the world first, and I look forward to support from right across the House as we do just that.
World scientific opinion no longer seriously debates whether climate change is happening, but merely how fast it is happening. The effects of global warming are all around us on every continent. However, they are as yet but a foretaste of the extreme changes and severe shifts in weather patterns that will be the fate of successive generations unless our generation, in our time, finds the will to act. Our planet is fast approaching what scientists call the tipping point—the point in the next decade at which, if we can limit and begin to substantially reduce the amount of carbon we pump into the atmosphere, we may stand a chance of abating the worst of the climate change scenarios. If we do not, the long-term consequences will be severe indeed. Against that background—and recognising the need, where possible, for concerted cross-party consensus on this issue—there is a lot in the motion with which we can agree.
It is an undeniable truth that carbon emissions have risen since Labour took office in 1997, while at the same time there has been a steady fall in taxation derived from green taxes. There simply is no excuse for that. While environmental taxes as a percentage of total taxes and social contributions stood at 9 per cent. in 1993 and rose successively during every year of the final term of the last Conservative Government to stand at 9.7 per cent. in 1998, they have fallen, with one very minor exception, in every single year since 1999. In 2005, environmental taxes fell to just 7.7 per cent., down from 8.3 per cent. in 2004. We are committed to reversing that trend.
That lack of focus from the Chancellor is all the more extraordinary because, as the amount of tax on environmental bads as a percentage of total taxes has steadily fallen in recent years, our knowledge and understanding of the impact of global warming has greatly increased. Since Margaret Thatcher became the first global leader to warn the world of the dangers of climate change in the late 1980s, our comprehension of the science of man-made global warming and our appreciation of the need to take concerted, urgent action has grown immeasurably.
The Government have not been blind to that science. Many Ministers, including the Department for Environment, Food and Rural Affairs team, have a personal commitment to the climate change agenda. Indeed, on the international stage, the Government have endeavoured to continue to play a leadership role. Abroad, Ministers’ efforts have met with significant success, but at home Labour’s record is far more depressing.
It is all the more surprising to Conservative Members, who have gasped and widened their eyes at the succession of Budgets from the Chancellor in which new and ingenious stealth taxes have been unveiled and taxes have risen year after year, to witness complete indifference to the one matter about which he would have been much more certain of finding consensus on the need to increase taxation—environmental bads. Under Labour, the Treasury has been unimaginative, unambitious and unbelievably complacent.
An explicit example of a well-intentioned but unambitious policy, complacently implemented, is the enhanced capital allowance scheme, which the Chancellor introduced in the 1999 pre-Budget report. The building industry has enjoyed the benefits of the ECA scheme for using emergent, efficient technology, yet that incentive, which is now seven years old, has fallen behind the latest round of building regulations and acts as a barrier to applications of new and emerging technologies such as thermal mass and natural ventilation. Individual elements of plant and machinery capital expenditure are included in the scheme, yet holistic and efficient building design, as encouraged in the new building regulations, is not taken into account. All attempts to include additional sorts of holistic technology outside the narrow definition of plant and machinery have been successfully rebuffed. The Government have no vision and no ambition.
When the industry has contacted DEFRA about the inclusion of new technology in the scheme, including technology that would dramatically reduce a building’s carbon footprint, it has been referred to the Carbon Trust as technical adviser to the scheme. However, when the Carbon Trust has been contacted, the industry is referred back to DEFRA and Revenue and Customs, which is responsible for the scope of the scheme. Perhaps the Chief Secretary could deal with that point in his winding-up speech.
Perhaps the greatest element of underperformance is the Government’s much vaunted climate change levy. It is a good idea and a terrific brand, but its detailed application is profoundly inefficient. It is not focused on CO2. The climate change levy is a tax on the energy that business uses. It should be reformed so that it is based on CO2 emissions from different fuels, and the rates should be increased towards the estimated social costs of greenhouse gas emissions. The increased revenue should be earmarked for “climate change mitigation measures”. Those are not my words but those of Mr. Tony Grayling, the Secretary of State’s special adviser. Let me make it clear: under the next Conservative Government, the climate change levy will be replaced by a more effective method of reducing carbon emissions, as part of an overall framework of carbon pricing throughout the economy.
Another perverse impact of that inefficient environment tax is its application to UK agriculture and horticulture, which have exceeded their climate change levy targets. Despite that good record, the targets have been increased to unattainable levels, while other sectors, such as aviation, remain uncontrolled. The perverse outcome is that there is now a serious prospect of UK-produced horticulture and UK poultry and pig production ending and being replaced by imported produce, which will be sucked into Britain using untaxed aviation fuel. How good can that be for global climate change, let alone British farming? What is the DEFRA team doing to sort out that mess?
However, my main criticism of the Government is that, rather than concern themselves with clear, ambitious, accountable policy-based instruments, predicated on either tax incentives for environmental goods or green taxes on environmental bads, they have a peculiar fascination with short-term initiatives, stop-go grant funding, tiny pots of money here and tiny pots of taxpayers’ money there.
One of the most extraordinary examples of Treasury micro-dabbling in the private sector with taxpayers’ money is its current participation in the 21st century sustainable technology growth fund, which is currently making its debut on the stock market. One fund manager who had received a presentation contacted me, totally unable to understand the Government’s willingness to use taxpayers’ money to put up two thirds of the money for that small, private sector venture capital fund, while agreeing to take only 12 per cent. of the profits. Is that really a prudent use of the taxpayer’s money? What would the Treasury Minister have to say about that?
We wholeheartedly agree with the broad thrust of the motion before us, but there is a problem, in that it gives the impression that if we can clobber the Chelsea tractor, all will be well with the world. The Lib Dems’ myopic obsession with a small number of 4x4 motorists entirely misses the larger point.
Will the hon. Gentleman give way?
I will in a moment.
I do not for a moment deny that we need to take a more responsible approach to transport emissions. However, it is somewhat bizarre to criticise the Government for their whole record since 1997, then just to deduce from that a failure to tax Range Rovers and Porsche Cayennes—particularly, I presume, the turbo variety that was scurrying around the Leicester by-election, full of Lib Dem campaign strategists. There is, however, a clear role for the Government to ensure environmentally friendly transport systems. The Government are intricately involved in the transport infrastructure, and more than a quarter of our carbon emissions come from transport. Without action on transport, action on emissions will be limited. The Conservatives have already announced an ambitious policy to reduce average emissions from cars to under 100 g per kilometre for all new cars by 2022 and for all cars by 2030. We propose to work hand in hand with the most progressive companies to make that vision a reality.
So why are the Lib Dems so preoccupied with 4x4s? Perhaps it is because they have failed to think through their climate change strategy with the same depth and breadth that the official Opposition are employing. Both our parties have elected a new leader in the past 12 months, albeit in rather different circumstances. My party, embracing the need for change and renewal, took a great leap forward and skipped a generation. The Lib Dems, perhaps noticing how effective this had been, also decided to skip a generation. With a novel Lib Dem twist, however, they went in the opposite direction.
I am pleased that the hon. Gentleman is going to be dealing in depth with the Conservatives’ policy, as that approach has been a little lacking in his speech so far. I am a little confused, however. He supported the broad thrust of our motion and our proposal for green taxation, yet he seems to have an obsession with the line about 4x4s. Will he clarify whether he would support an increase in vehicle excise duty for the worst offending vehicles, including 4x4s?
There is a clear case for looking at the whole of transport, and our policy review committee is doing that. As soon as its findings are announced, I will send the hon. Gentleman a minute. I am not going to prejudge those findings now, but transport is clearly going to have to be addressed.
For the sake of the record, I should like to point out to the hon. Gentleman that there are 4x4s that fall below the top vehicle excise duty band involving 220 g per kilometre, including, I think, the one that he drives himself. Many other cars in that top band are not 4x4s. Our proposal is to take the band as it has been set out by the Chancellor and to add some bite and incentives, rather than merely adding a £45 increase, as the Chancellor proposed in the Budget.
I would pay slightly more attention to that if the hon. Gentleman had the foggiest idea of the impact that his proposed policy would have on the sale of 4x4s. Perhaps, when his colleagues wind up the debate later, they could tell us why, during our debate on the Finance Bill, the Liberal Democrats proposed to reduce the rate of vehicle excise duty for the most polluting vehicles registered before 23 March this year for households with a postcode in a rural area. What is the environmental argument for doing that? I shall be happy to give way if someone would like to answer that question.
Perhaps the hon. Gentleman is aware that some 4x4s are important for getting about and doing business in rural areas. It is important to take that into account in our proposals.
I am sure that all the mums who drive to school in their 4x4s in my part of East Sussex will be very glad to hear that. Likewise, the 23 March cut-off date will also intrigue a lot of car salesmen.
Will the hon. Gentleman give way?
I really must make some progress.
It was Disraeli who said of Gladstone that he was an old man in a hurry. I would certainly not presume so to label the new Lib Dem leader, but a budget written for three years hence, whipped out in less than six weeks after taking the reins, does have a slight whiff of the back of a fag packet about it. My party makes no apologies for having commissioned the most extensive policy review process since that undertaken by Margaret Thatcher and Keith Joseph in the 1970s, or for throwing out preconceived notions and looking afresh at the challenges of the new century with the help of today’s experts and tomorrow’s leaders. The policy review process is drawing in not just committed Conservative party members but experts from across the country who are keen to participate in the intellectual renewal of a great political party and a Government in waiting. We will not make the mistake that Labour made of entering its first term of government without having undertaken hard thinking about policy in opposition.
When one considers the failure of Labour to reduce our output of carbon emissions, the Liberal Democrat notion that that would be reversed by slapping more vehicle excise duty on a few gas guzzlers is frivolous. Yes, the true cost of such cars should be more accurately reflected in the price, and I look forward to the considered opinions of our policy review commission. The CO2 from those large cars, however, is dwarfed by that emitted by the UK energy sector or from UK homes. Nothing in the motion provides an answer to that.
The Conservatives, under my right hon. Friend the Member for Witney (Mr. Cameron), are far more ambitious. We want to see far more policy focused on really sustainable green growth, and far greater efforts to promote renewable energy, especially that generated and consumed close to the point of use. We want that ambitious big-picture thinking converted into real measures to create a decentralised energy revolution. That degree of ambition was sadly lacking in the Government’s recent energy review.
We also want far more progress on reducing the CO2 emissions from Britain’s buildings—new and old, residential, commercial and industrial. Again, little in the Government’s record points to a really ambitious programme, and certainly not to a dramatic reduction in CO2 emissions from the built environment. The news last week that DEFRA is slashing funding to the Energy Saving Trust to give Ministers something new to say is disgraceful. Although the Treasury is the worst offender, Labour’s strategy right across Whitehall lacks ambition. Even relatively modest non-fiscal proposals to allow progressive local councils to go further than Whitehall by insisting on renewable energy and eco-building standards in local new developments, which were put forward by Conservatives during the passage of the recent Climate Change and Sustainable Energy Act 2006, were frustrated by the Government.
To return to the motion, we can wholeheartedly agree with the Liberal Democrats’ call for annual targets to cut carbon emissions and an independent monitoring board to report on progress to Parliament. In fact, the Leader of the Opposition, my right hon. Friend the Member for Witney, got there first. He joined Friends of the Earth and a host of other green NGOs in early September to call for a climate change Bill in the Queen’s Speech. He reiterated that call in his speech at the Conservative party conference in Bournemouth, and it was echoed in my speech in the Government debate on climate change last Thursday.
Can the hon. Gentleman therefore explain why the last Conservative manifesto, which was apparently co-authored by the right hon. Member for Witney, included only two lines about climate change?
I cannot explain that, but I can explain about the future. This Conservative party is changing radically and significantly under my right hon. Friend the Member for Witney, as everyone is witnessing. Now that he is in charge, and not just editing the manifesto, we will see his commitment to the environment, of which a climate change Bill is a key part.
I have listened carefully to what the hon. Gentleman has said about the Conservatives’ ambitious proposals for the environment, which, in many ways, everyone in the Chamber shares. But will he explain how one can have ambitions if one does not know what those ambitions are about?
I am sorry, but I do not quite follow that tautology. We are ambitious and have set about an ambitious policy review process. At the end of that process, in June, we shall announce the findings. I know that the Labour party is in turmoil, so if the hon. Gentleman is expecting a general election sooner than next June, perhaps he can tell me afterwards. I can then have a word with my right hon. Friend the Member for Witney and we might be able to fast-forward our policy review process. Unless that is the case, I think that we are safe in anticipating that we can allow the experts to do some serious thinking, not the back-of-a-fag-packet stuff in which the Liberal Democrats engage, and come up with some credible, long-term, well-thought- out proposals How can we tell the British public with conviction that we have changed if we just have a knee-jerk response and our policies appear the next day? I think that they will give us credit for having thought the issues through seriously and consulted widely.
Will the hon. Gentleman give way?
Not yet.
I often think that policy development is a bit like maths O-level: you get two points for the answer, but three points for showing the working. I am afraid that the Liberal Democrats will get only two points, but we will get five out of five, because we will show the working.
Is it not a shame that the Government have refused to join a coalition with the other parties to build a consensus on climate change, in order to depoliticise the issue and allow the necessary tough decisions to be made? Perhaps my hon. Friend will comment on why, under their current leadership, the Liberal Democrats also chose to withdraw from a united front on the subject.
I do think it is a shame, but I am not so concerned about the Government, because it would be rather more unprecedented for the governing party to join such a coalition. I think it particularly sad that, as well as announcing a knee-jerk budget for 2009, the first thing the Liberal Democrats did after their new leader took over was jettison all the good work done by the hon. Member for Lewes (Norman Baker) in bringing together the Conservative party, the Liberal Democrats and the other minority parties, and throw away the emerging consensus.
Will the hon. Gentleman give way?
In a minute.
I do not for a moment suggest—
Order. I hesitate to interrupt the hon. Gentleman, but may I remind him of the importance of addressing the Chair during debates?
Absolutely, Madam Deputy Speaker. I apologise.
As I was saying, I regret the fact that the Liberal Democrats threw away all the work done by the hon. Member for Lewes in consultation with my Conservative colleagues. We were informed in a most abrupt way, through a press release. There was no real effort to keep the consensus alive. This had very little to do with the Liberal Democrats’ belief in consensus, and much more to do with their frustration at the fact that their environmental message was not getting through and they were being put in the shade by my right hon. Friend the Member for Witney. If we consider the calibre of the respective spokesmen, we see why that is.
Will the hon. Gentleman give way?
No. I am going to wind up my speech now.
I have tried to intervene three times.
I give way.
First, let me cite a third-party assessment of the relative positions of the hon. Gentleman’s party and the Liberal Democrats. The director of Greenpeace said that the Liberal Democrats had set the gold standard with their policy on green taxes. Despite the somewhat ribald terms in which the hon. Gentleman is describing our policy, I think it worth considering the words of an impartial judge with no partisan axes to grind.
Secondly, I would point out—[Hon. Members: “This is a speech.”] I have made three attempts to intervene. Now I am catching up with my second point.
The reality is that the agreement called for specific policies—
Order. I think the hon. Gentleman has had ample opportunity to make his point in what is supposed to have been a short intervention.
I am sure that that was the hon. Gentleman’s point, although I did not quite follow all of it. I would describe the policy as more Marlboro Light than gold standard, but given that the hon. Gentleman’s is the only Opposition party to come forward with a full array, he certainly has first-mover advantage.
For too long the Government have talked a good game on climate change, raised expectations and failed to deliver. A climate change Bill alone will not deliver solutions to the United Kingdom, but it will establish a transparent long-term framework and a clear and demanding criterion against which this Government and successive Governments of whatever party can be held to account here in Parliament.
If one strong message emerges from this debate, I hope it will not be the carping about large cars driven by a tiny minority of the population, although that problem will need to be addressed. I hope it will be the altogether more serious message that this Prime Minister, so desperately in search of a legacy, still has a chance to make his mark in a profoundly positive way that will command support across the House: he has the chance to include a climate change Bill in the forthcoming Queen’s Speech. I very much hope that the Minister will acknowledge the support for such a Bill this evening, not just on the Conservative Benches but throughout the House, and convey it to No. 10 in no uncertain terms.
We have had an interesting debate on a serious issue. I welcome the fact that the Liberal Democrats chose the subject for an Opposition day debate, but am disappointed about their preoccupation with gross domestic product, which provides a weak assessment of the performance of green taxes.
Apart from the examples provided by the Minister for Climate Change and the Environment, the Government have introduced a range of measures that will not feature in the calculation at all—tradeable landfill allowances, for example, which have a tremendous effect in boosting recycling. In turn, that provides more efficient energy use, which reduces CO2 .
My hon. Friend the Minister will correct me if I am wrong, but another big change that would not necessarily be calculated in green tax schemes is the Treasury’s policy on company car taxation. Companies buy the most new cars—they account for the bulk of new car sales—and the changes that the Chancellor introduced to company car taxation have made a real difference to marketing and emissions in respect of manufacturers. I am inclined to agree that green taxes represent a low proportion of physical activity and there is a case for expanding a whole range of green fiscal measures. I know that the Treasury has not been afraid to look into them. There have been some shifts on that issue and the climate change levy provides one example.
I listened carefully to what the hon. Member for Bexhill and Battle (Gregory Barker) said, but as my hon. Friend the Member for Southampton, Test (Dr. Whitehead) said, we heard no indication of any kind of policy. I understand that a policy review is taking place, but that argument can be run only for so long. It is time-limited. The Conservatives cannot go on saying that the answer to everything is to have a policy review. It is already damaging the right hon. Member for Witney (Mr. Cameron), because people are beginning to get tired of the fact that the Conservatives have no policies, as everything is subject to a review.
There may well be a case for having a carbon tax as opposed to a climate change levy. We should be open-minded about that and any proposals should be examined, but we have to see what the proposals are, how they are going to work, how they will be applied and whether they will prove more effective than the climate change levy. If the hon. Member for Bexhill and Battle looked at independent analysis of the climate change levy, he would find that it has been very effective in reducing emissions.
Does the hon. Gentleman believe that a carbon tax would be a better idea in principle than the current levy?
I repeat that I am perfectly willing to consider the case for a carbon tax as opposed to the climate change levy, but the key issue is outcomes and what range of measures will have the best outcomes. I emphasise the term “range of measures”, as taxation is but one, albeit an important one. The need to implement a range of measures is the main point that I want to focus on—briefly, as I know that others wish to speak and time is limited.
On carbon markets, it is right to note that this country pioneered national carbon trading. We were the first country in the world to do so and we greatly influenced the shape of the European emissions trading scheme, which I greatly welcome. It must, however, be built on: it is a developing market.
Of all environmental issues, I certainly put climate change at the top and it is right to highlight growing evidence of the urgency of the problem and the need for a major culture shift within societies in respect of both developed and developing economies, on tackling this issue. Carbon markets and carbon accounting provide a highly efficient way of proceeding, so I greatly welcome the fact that the Treasury has confirmed that it is interested in the whole concept of carbon accounting. It shows the way forward.
Carbon markets and the caps that go with them are among the most powerful drivers and they deal with some of the more difficult issues—aviation, for example, on which I shall touch. We need to extend our existing carbon markets and once again I welcome the Treasury’s willingness to consider the extension of the UK scheme, over which we have control, to include domestic buildings and the retail sector, for example.
I also ask Ministers to consider a more radical approach to carbon markets. I particularly welcome the speech made recently by my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs in which he raised the concept of personal tradeable carbon allowances. That moves us into a completely new area. I accept that a network of administration would be needed in this country, and that they would pose an awful lot of challenges, but it is the kind of major cultural shift that we need. We could make a start on the idea in the area of transport.
There is the technology now. Loyalty cards at filling stations and credit card technology are well established and could be adapted for carbon allowances. People could have an allowance on a credit card and when they bought fuel, the allowance could be deducted. If they needed more, they could buy the carbon allowance at the garage. If they did not use much carbon, they could sell that into a central pool and people with gas guzzlers would have to buy the additional carbon to cover that. That approach may be more efficient than simply applying tax, although I am not arguing that tax does not have a role. I strongly urge Ministers to think about it. We have to do the analysis, and sooner rather than later. I strongly encourage them to do that.
I particularly like the idea of carbon allowances when it comes to aviation. Aviation is a problem—there are no two ways about it. It is not paying its fair share nationally or internationally, and, of course, it is an international activity. One could apply the same concept to the issue of tickets.
This Government led the argument under our presidency to include aviation in the European Union emissions trading scheme. That was achieved. It was a great success to get political agreement. There is going to be an argument about the detail, but I hope that the UK sticks to the principle of applying carbon trading to all take-offs and landings in the EU, not simply intra-EU take-offs and landings. I do not think that that is enough; it has to apply to every plane that takes off and lands in the UK. I know that the Commission has got nervous because of international pressure over the issue. I hope that the Government will take steps to support the Commission and not back down on those points.
People can be priced off planes. I am not sure it is the most socially equitable way of doing it. It allows people who can pay to pollute. That is why I would much rather have a cap on the emissions of the aviation sector, and the activity could then be based on buying and selling the allowances.
I accept that that may take some time. Because of the urgency of the situation, there may be an argument for various interim fiscal measures. Again, I would like any fiscal measure that is applied to aviation to have an outcome. For example, some form of carbon offset levy on tickets or on the airline companies is worth considering. I do not believe that carbon offsets are an answer to the issue of climate change, or that offsets should be a substitute for reducing emissions. That has to be the priority, but there is a role for carbon offsets because we need to take action and it is one way of raising funds internationally to invest in clean energy in developing countries. I welcome what the Government have done to make all their flights carbon-neutral by offsetting. It is something to commend.
Some of these measures could be included in a climate change Bill. There is an argument for such a Bill. I support the concept. I accept that such a Bill is not simply about legislating for targets. Targets have their place, but there is a debate about how to apply targets and structures. The important thing is to have a framework for action and a climate change Bill could be an important part of that framework. It is worth considering.
I accept some of the arguments made about road pricing, which has a role to play, but it needs to be structured to achieve environmental as well as fiscal outcomes. However, the overriding issue is climate change. We must take an integrated approach across Government, because there are issues with the pricing of water and of waste collection. There is an argument for moving towards pricing waste by weight, and removing that charge from the council tax. Housing regulations and transport policy, too, are considerations. We must look at the way in which we can provide incentives, so that, as well as trying to tax bad practice, we encourage good practice.
It is a pity that my hon. Friend the Financial Secretary has left the Chamber, because on a number of occasions he and I have discussed how we could use reductions in stamp duty on new build to encourage the building of low-carbon houses. He used an eloquent argument to explain why the Treasury did not favour that general approach, but there is a strong argument for an incentive to encourage zero emissions homes, of which only a few thousand are being built. The Treasury might like to consider an exemption from stamp duty, or a lower rate of stamp duty, for houses that meet the highest standards as part of the incentives needed in an integrated approach across Government.
Of course, we should not forget the international dimension. The hon. Member for Bexhill and Battle discussed the Prime Minister’s legacy, but if he travels around Europe and internationally, he will find that the Prime Minister is held in the highest regard for what he has done on climate change, and for the way in which he has pushed it to the top of the political agenda internationally; for example, it was on the G8 agenda. He has made it a big issue, and he stood with Governor Schwarzenegger in California to argue for the type of changes that are taking place in the US, despite the stance of the present Administration, because there is bottom-up pressure for them. The hon. Gentleman should accept the lead that the Prime Minister has given, and the respect in which he is held.
Nevertheless, there are big international challenges for us. For example, should there be a measure drawing a distinction between food produced in this country and distributed locally, and food that is flown many thousands of miles across the world to reach the UK? Should there be a mechanism or levy that reflects that? Those are difficult subjects, and we are straying into World Trade Organisation territory, but climate change is such an urgent and important issue that we as an industrial country—indeed, the first industrial country—have a responsibility to lead by example. We must think the unthinkable and not hold back from the more radical approaches that we need to take if we are to achieve our aim of stabilising global emissions. There is much that our country can be proud of having achieved, but there is a lot more that can be done on green fiscal measures. I know that my hon. Friends in the Treasury are thinking about that, and I urge them to be bold in the policies that they apply.
I am grateful to the hon. Member for Scunthorpe (Mr. Morley) for his comments. When he was a Minister, I briefly shadowed him, and I was immediately impressed by the way in which he tried to take the Government down many of the right roads. He should take credit for many of the policy initiatives that the Government have taken, but he will be the first to admit that there is still a long way to go. He rightly emphasised the urgency of the issue for the UK because climate change science is becoming increasingly scary. More and more of the statistics and data from scientists suggest that the changes are beginning to happen even faster than was predicted. Scientists studying the rate of thaw of the Arctic perennial ice have found that it is 30 times faster than it was only a few years ago, so clearly there is a risk that we are approaching a tipping point, or at least that the rate of climate change is much faster than first thought.
Does my hon. Friend accept that, although the UK and the developed world are vulnerable, as he has begun to describe, the developing world and the world’s poorest people are most vulnerable to climate change? For example, in Zimbabwe, more than 55 per cent. of people are dependent on environmental resources. The crisis that they face is far more extreme than that in the UK.
My hon. Friend is right. There are many other examples from the developing world of the seriousness of this issue. In Bangladesh, millions face dispossession and homelessness through rising sea levels, while desertification in Africa may also displace millions of people and add to the economic chaos and disruption worldwide. Even in the UK, we face the prospect of more flooding, more extreme weather, more droughts, and even rising sea levels threatening major cities and coastal towns. If the north Atlantic currents that drive the gulf stream are disrupted, we may end up in the short term with a much colder climate, comparable to that of Canada, which is on the same latitude.
The issues are very urgent and the Conservatives’ approach displays some complacency. They seem to think that we can sit back for a year or two and gather more information, but there is a wealth of information and policy advice available for them to read and consider.
I remind the hon. Gentleman that the Conservatives are not in government yet. It is the responsibility of this Government to make decisions. We will make our announcements shortly, but it would be unwise, three years before a general election, to roll out policies today.
At least the Government have a policy. We may quibble with the detail and the pace, as I am about to do, but the hon. Member for Bexhill and Battle (Gregory Barker) mentioned Margaret Thatcher, who first said that the Conservatives were the real friends of the earth some 20 years ago. It has taken them some time to get their green act together.
I referred to the wealth of policy advice available and some reports were produced in the summer, notably the Tyndall Centre for Climate Change Research report, which mapped out a path to a low-carbon economy with reductions of 90 per cent. by 2050. I was pleased that the Minister mentioned the need to go well beyond the Kyoto targets. A consensus is emerging that those targets will not be sufficient to deliver the kind of change that is needed. That is a positive step. The Tyndall centre has also made it clear that a drastic change in the policy framework and much more deliberate actions than we have had so far from the Government are needed.
Another report was from the New Economics Foundation, which published something called the happy planet index. That sounds like something that the right hon. Member for Witney (Mr. Cameron) might have dreamed up in one of his sunshine moments, but it is a quality of life index that balances indicators of quality of life and life expectancy against the ecological footprint of the country. The UK comes 108th in that index, just behind Libya, although we are ahead of Laos. The reason is our heavy ecological footprint, which is the 18th largest in the world, despite our relatively small population.
The Chancellor put a few measures in the budget and my hon. Friend the Member for Eastleigh (Chris Huhne) elaborated on the weakness of some of them. We need to find measures that will change behaviour. Some of the measures on vehicle excise duty, and the freezing of aircraft passenger duty in recent years, have not been enough to shift behaviour substantially. Other opportunities have also been missed. We have talked about energy efficiency, but why is not the code for sustainable buildings compulsory? Why does it not include an element of microgeneration in every new build house or at least, at community level, for every new development? Those are missed opportunities that we need to seize. Action is needed at individual level, by companies and by Government.
We need to consider what will work to change behaviour. Government regulation, bans on the worst offending products and Government guidelines will play their part, but they can be clumsy tools. Despite my background in the voluntary sector—I worked with Oxfam for many years—I am well aware that many of the grant-based initiatives and projects can seem a drop in the ocean compared with the changes effected by changing markets and the way in which economies work. That is the beauty of using fiscal measures as one of the tools in the policy armoury. My hon. Friend the Member for Eastleigh noted that the initial carbon dioxide targets had been met almost by accident, due to a structural change in the energy market—the dash for gas. With gas prices rising, we may not find that that price advantage works to the benefit of carbon emissions in future, so more methods will have to be used.
A smaller example relates to the washing machine market, which may seem mundane, but there has been an astonishing change in recent years, as the Energy Saving Trust pointed out: 90 per cent. of the washing machines bought in the UK are now energy rating A. The introduction of the labelling scheme itself has helped not only to shift consumer behaviour—obviously when price was equal consumers looked for the most energy-efficient machine—but has also changed the behaviour of the manufacturers, because there was no market advantage in producing anything other than the most energy-efficient model possible.
We have many surprising allies in the arguments about climate change. The Association of British Insurers has become a strong advocate of more urgent action to tackle climate change because it can see the commercial realities. That in turn influences manufacturers and the economic landscape. We need to change the economic landscape of this country and move much more towards a low-carbon economy, whereas we have a Chancellor who, far from changing the landscape, is merely pottering around in the flower beds in many respects.
The Minister mentioned the energy review as a contributor to change. He may be interested in the comments of the Tyndall Centre about the review. It said:
“The absence of specific policy measures, as well as detailed quantitative analysis, does not permit a comprehensive evaluation of the likelihood of achieving the UK’s carbon dioxide targets. There is a significant risk that the good intentions outlined in the White Paper will not be translated into action that shifts a growing UK economy onto a sustainable energy path within the short to medium term.”
Because the Government are not doing as much as they should, the message is not getting through to some parts of industry, notably the boss of Ryanair. On 22 June, he dismissed other air carriers, who were trying to form a sustainable aviation group, as lemmings. He said:
“The sustainable aviation group, God help us, is another bunch of lemmings shuffling towards a cliff edge.”
I know which cliff edge we are shuffling towards and it is not the one that Michael O’Leary was describing.
There has been progress on the labelling of low-carbon cars, on which the Low Carbon Vehicle Partnership has been doing some work. It found that:
“40% of people who have recently bought—or are about to buy—a new car are aware of the new colour-coded fuel economy label.”
Labelling obviously provides some incentive, but only to 40 per cent; 60 per cent. of people ignore it. The partnership also found that
“in showrooms for ‘value’, low-margin brands—which also tend to be smaller and more fuel efficient—only 29% of cars were correctly labelled”.
Labelling has its limitations. As the hon. Member for Scunthorpe said, we need to tackle climate change on a range of policy levels; we need to look at education, labelling, regulation, grants and cap and trade mechanisms, but tax must play its part.
I thoroughly commend what the hon. Gentleman says about the need to work across a range of areas of activity to tackle climate change. So does he think the statement that the
“Lib Dems will cut income tax and switch to green taxes on pollution instead. Then the more you choose to switch to greener living the more money you will save”
is somewhat over-simplistic?
I know well the hon. Gentleman’s credentials on green issues, but I am surprised by his comment. It may be simplistic, but it is true that if people change their behaviour—for instance, by choosing one of the most fuel-efficient models of car—they will have more money at their disposal. The beauty of the fiscal approach to green issues is that sometimes we can deliver a win-win situation. The same is true of microgeneration in the long term: the more we invest in it, by providing it for low-income households, for example, the more we shall tackle fuel poverty and save people money. Although in respect of this debate there are lots of hair shirts, sometimes it is possible to deliver a win-win situation, and that is exactly what our green tax switch proposals are designed to do.
We should not apologise for concentrating on transport as one of the main areas. As has been pointed out, 25 per cent. of carbon emissions still derive from transport. The Tyndall centre report graphically points out that, while both industrial and domestic carbon emissions have in general been in decline since the 1970s, transport is the only major sector that has been increasing its emissions since those years. As part of its policy framework, the Tyndall centre report suggests how we might approach aviation. The hon. Member for Bexhill and Battle accused us of knee-jerk reactions and fag-packet calculations, but he might be interested in the conclusions that the Tyndall centre came to, with the wealth of policy reviews, commissions and experts that it has at its disposal. It stated:
“The research demonstrates that aviation is a problem sector that we must get to grips with. It is the fastest-growing source of emissions and there are fewer technological options for cutting carbon dioxide than in other sectors.”
It adds that its report
“does say current rates of growth are unsustainable, and that Government intervention—such as increased taxes and a cap on airport expansion—is required to curb that growth.”
I do not know whether the hon. Gentleman cares to intervene. Does he disagree with either of those points?
The hon. Gentleman might be aware of the comment of our transport spokesman today, in which we said that the Government’s expected growth in aviation does not appear very sustainable. We have to look carefully at this matter, and we note what the Tyndall centre says.
I am grateful to the hon. Gentleman for that, and we still wait with bated breath for any actual policy proposals.
I am interested in the hon. Gentleman’s remarks and agree with much of what he says, but can he tell me about aviation? One of the greatest contributions to the problem is short-haul business flights between United Kingdom airports. Will his proposal tackle that, as opposed to holiday flights? I got the impression from the hon. Member for Eastleigh (Chris Huhne) that the Liberal Democrats were talking about holiday flights, rather than short-haul business flights, which are, perhaps, a bigger problem.
I am grateful to the hon. Gentleman for giving me the opportunity to clarify that. Our proposal is simply to shift the burden of taxation away from individual passengers and on to aircraft, thereby providing a direct incentive to the airlines to make their aircraft more efficient and to make their flights more economical by making them full, so that we see an end to half-empty aircraft flying with only a few people that pay little in aircraft passenger duty. That would shift the burden on to fuel efficiency and energy efficiency.
Earlier, Liberal Democrat Front-Benchers could not give me an answer as to how the Liberal Democrat tax on 4x4 vehicles would impact on sales—
No, the hon. Gentleman asked about the Porsche Cayenne.
Or 4x4 vehicles.
Order. Does the hon. Member for Eastleigh wish to make a second intervention?
Thank you, Madam Deputy Speaker. Can the hon. Member for Cheltenham (Martin Horwood) tell me how many fewer short-haul flights he expects will be made as a result of the implementation of the policy? The hon. Member for Eastleigh (Chris Huhne) failed to answer that question last Thursday, when it was put in a very straightforward way. Perhaps the hon. Member for Cheltenham could have a go now.
The wonder of market and fiscal mechanisms is that it is not for Governments—or even Oppositions—to plan exactly how many flights there will be and how the prices will be changed, but it is for them to set the fiscal framework, and to watch the market respond. We have got an economic projection.
It might assist my hon. Friend and the House to know that the Department for Transport says that the price elasticity of demand for aviation is 1, and the Canadian Government’s estimated price elasticity of demand for aviation is 1.15. The hon. Member for Bexhill and Battle (Gregory Barker) could work out the figures for himself from those statistics.
As ever, I am grateful for my hon. Friend’s intervention; he is extremely learned in matters of price elasticity of demand, and I am sure that he will communicate them at length to the hon. Member for Bexhill and Battle, should he wish to have more detail. The hon. Gentleman said that we were behaving frivolously and that we were in a hurry. I plead guilty to the latter—we are certainly in more of a hurry than the Conservatives are to elucidate our policies. He said that he supports the broad thrust of our motion, yet he opposed all the specifics. I am beginning to have some sympathy with the Government. In their debates on the NHS, the official Opposition proclaim support for the NHS—[Interruption.] The relevance of my point is shown by the Conservatives’ reluctance to give us any policy detail on anything whatsoever. They have promised depth and delivered green fluff—presumably inspired by their new logo.
The truth is that, for 30 years, the Liberals and then the Liberal Democrats have been the greenest party in Parliament. For many years, we were berated by members of the Conservative party and described as sandal-wearing bearded loonies for saying such things, but the truth is that we were simply—[Interruption.] I wear no sandals and I have no beard. The truth is that we were simply ahead of our time, and we remain so today.
I want to congratulate the Liberal Democrats on at least putting a raft of policy proposals on the table—even if half of them are wrong and misguided, and others are unworkable. However, others are extremely useful. That is in sad contrast with the Conservatives, who have called for a policy review committee to redesign a bus, but would not know how to find a bus stop to save their lives.
Let me turn to the most important starting-point that the Liberal Democrats have provided. Scientists are telling us that we have very little time—a 10-year window of opportunity in which not only to come up with nice ideas, but to make fundamental changes to the way that our economy is structured, in order to meet the three major challenges of climate change. For us and for everyone else on the planet, those challenges will be in the areas of food security, energy management and water management. In examining policies, we need to shift our whole thinking about the nature of markets, so that we can address those challenges.
It is right to say that taxation is only one of the mechanisms that should be used. We have to be very careful because, as was pointed out earlier, there is a paradox in green taxation. We cannot use the size of the green taxation slice as a percentage of gross domestic product as a measure of our green policies because, in order to be effective, that proportion needs to be as low as possible. We want to change behaviour; we do not want existing behaviour to continue.
Will the hon. Gentleman give way?
No, I will not, because I want to let the winding-up speeches begin in eight minutes time. People have been round the houses and the 4x4s to the point of doing them to death. I am happy to expand on this issue on another occasion, but I should point out that in my view, we need to focus much more on changing behaviour than on the ability to raise taxation.
Carbon emissions are also used as a proxy for climate change policies, but the reality is that, like most people in this country, most Members of this House would not know a tonne of carbon if we fell over it. It is extremely helpful that people have translated the concept into accessible terms. Roughly speaking, a hot air balloon 10 metres in diameter is the equivalent of 1 tonne of carbon. Let us transpose that into aviation terms. Aviation in the UK is currently responsible for 35 million tonnes of carbon per annum, so let us picture 35 million hot air balloons cluttering the skies. On the most conservative assumption, the figure of 35 million tonnes will rise to 60 million tonnes by 2030. Sixty million hot air balloons in the skies would obliterate daylight from large sections of the UK. That is the scale of the issue that we have to tackle.
I doubt whether including aviation fuel in the emissions trading scheme makes a ha’p’orth of sense, and it is important that someone puts down a marker in this debate that such schemes are a complete scam. If one begins from the premise that in order to tackle pollution, one has to create a fictional good, against which one then unleashes speculation, only in doing so to deter long-term investment because it is impossible to predict the price of that good, one should not be surprised to end up in the mess that the European emissions trading scheme ended up in at the end of its first year of operation. People cheat. They make even more crass mistakes by giving away quotas to the most polluting, rather than to the least polluting.
I would like to believe that things would be better if we gave quotas to individuals, but I know that that is not true. As my hon. Friend the Member for Scunthorpe (Mr. Morley) knows, it is not the fishermen who own fishing quotas now; it is the banks. The outcome is a trading circle between the wealthy that does not address issues of sustainability.
I urge hon. Members to look at the work of one of the foremost authorities on this subject: William Nordhaus of Yale university. He urges us to move from quotas to taxes and tariffs. If we make that transition, we should not presume that the taxes come to us as a Government. Let us look at the German model, where the authorities have used, with incredible creativity, two pieces of legislation in combination: the 1991 electricity feed Act, which dealt with people’s right to sell energy back into the system, and the 2000 renewable energy sources Act.
The German authorities told their energy industry, “Right, we’re going to set different tariffs—you sort out the payments yourselves. ” They required the industry to pay people a much higher rate for energy that they supplied to the system than the industry charged for energy that it supplied to people. The rate paid in Germany for renewable energies is currently about 35p per KWh. I have just completed the construction of my own eco-house, which generates more energy than it consumes, but what do I discover but that in this country those who generate energy are paid next to nothing for it. Many companies pay nothing; others pay up to about 3.5p per KWh. Ten times as much is paid to those who supply energy in Germany as is paid in the UK. Furthermore, the authorities in Germany have told the industry to pay for all this—there is no Government subsidy. Everything must be internally financed by the industry. As a result, Germany is pulling away from the rest of us in terms of investment and trade in renewable energies, as well as in terms of the skills and training that deliver a different type of sustainable economy. We lag behind because, instead, we are obsessed with the idea of a market in mythical goods.
We should apply the notion of duties to a series of measures that are within our own remit. Of course, we could do that by regulation, but we seem to have turned our back on the process of regulation. We could have created a requirement that all new housing should meet the minimum standard of a SAP—standard assessment of performance—65 energy efficient rating. That requirement is already in place in large parts of Europe. Did we do it? No—we turned our back on that in the Housing Act 2004, which we passed in the last Parliament. We could have said to owners of houses in multiple occupation—the most inefficient properties in the UK’s property portfolio—that, as a condition of their obtaining an HMO licence, those properties, too, would have to meet the minimum standard of SAP 65. We could have given a stamp duty rebate on properties that had been turned into energy generating properties, but we declined to do that in the Budget.
We could have introduced building and planning regulations to empower local authorities to require that all new buildings generate a proportion of their own energy and recycle water resources. I visited a school just outside Nottingham that recycles 50 per cent. of the water that falls on its roof and has thereby halved its water bill. I was impressed, but I was told that doing that was an obligation in some German states. The Germans understood that they had problems of flash flooding that needed to be tackled, so they told local authorities that such recycling had to be a duty. We retreat from such action. In the name of light-touch regulation, we abrogate our responsibilities to the future and to the planet.
If we are serious about transforming our economy into one in which we can live sustainably, within a single footprint of our ecological entitlements, we have to have the courage to transform markets radically. We must not be anti-market; we must become pro-ethical markets and pro-sustainable markets. In the process of doing that, we will discover that there will be markets that we own collectively. That would be a wonderful legacy for this Prime Minister; to be remembered for restoring clause IV and the principles of common ownership in the interests of a sustainable planet.
We have had a short but valuable debate. This is the second parliamentary day in succession that we have debated climate change and related issues, which is a sign of the importance that we now all attach to it.
I would like to acknowledge the speeches of the hon. Member for Scunthorpe (Mr. Morley), who we all recognise was a knowledgeable Minister who did his best to advance climate change policy when in office, the hon. Member for Nottingham, South (Alan Simpson) who, like us, was well ahead of his time in pressing for a radical environmental agenda and my hon. Friend the Member for Cheltenham (Martin Horwood), who has spoken eloquently and effectively on environmental issues. My hon. Friend emphasised the point that several others made, which is that environmental taxation is part of the solution, but only a part; we must consider a mixture of measures.
Labour and Conservative Front Benchers endeavoured to introduce an element of Punch and Judy into the debate, but there is a fairly substantial degree of consensus on the subject. That was well summarised in the Treasury paper issued in 2002 under the Chancellor’s name, which said:
“For both consumers and businesses alike, economic instruments such as tax can enable environmental goals to be achieved at the lowest cost and in the most efficient way.”
The paper went on to make an important point that both Conservative and Labour Members misunderstand; it said that the revenue raised by environmental taxes could also be used to reduce the level of other taxes. Some Members appear not to appreciate that it is possible to raise revenue and to change behaviour at the same time within a wide range of elasticities. Several hon. Members struggled to get their heads around this point. The hon. Member for Islington, South and Finsbury (Emily Thornberry) raised this issue several times before disappearing. Perhaps the Treasury can arrange a private seminar to clear up some of the misunderstandings.
The one element of controversy that the Minister for Climate Change and the Environment, the hon. Member for Dudley, South (Ian Pearson), tried to introduce related to whether it was a sensible objective to try to increase the share of taxation or of the national economy raised by environmental taxes. He described this as simplistic and wrong. Perhaps I can encourage him to read an excellent speech written by the Financial Secretary to the Treasury, the hon. Member for Wentworth (John Healey), two years ago in which he said precisely the opposite. He said that the Government’s aim
“in the broadest sense, was to move the burden of tax over time from good to bad.”
In practice, the opposite has happened. We have had an increasing share of taxation on good activities such as work and a declining share of taxation raised from environmental pollution. I thought it might be a bit imprudent for departmental Ministers to talk about Treasury language as simplistic and wrong, but no doubt the Minister has his reasons for doing so.
The Minister, however, was a model of constructive argument compared with the Conservative spokesman, who I calculated spoke for 25 minutes and did not tell us a word about the Conservatives’ rebalancing of the tax system, which they have been promising.
The hon. Gentleman complains that the Conservatives have not given information. I have requested on three occasions information on the Liberal Democrat position on green taxes. Will the hon. Gentleman put a note in the Library to say, were the Liberal Democrats to win the next election and were such taxes to have an impact and change lifestyles, by how much carbon emissions would change year by year and how much taxation would be raised in each year?
We have set out these figures in considerable detail in a report that is available on our website. I have a copy here. It is a question of basic economics.
Perhaps the hon. Member for Bexhill and Battle (Gregory Barker) should have shown a little more humility in his speech. If the leader of the Democratic Unionist party were here, I am sure that he would furnish us with a biblical reference about the benefits of sinners who repenteth, but we did not get much repentance. I do not think that the hon. Member for Bexhill and Battle was in the House at the time, but I remember when the Conservatives supported civil disobedience against increased petrol duties. I have sat on the Committee that considers the Finance Bill for many years, ever since the climate change levy was introduced. Conservatives opposed the levy in principle, and not on the grounds of the current, rather subtle arguments about the balance of carbon taxation—that is, of course, a perfectly sensible comment, but it is not what they said for many years.
The hon. Gentleman endeavoured to rubbish our policies by referring to Friends of the Earth, which he now claims has endorsed Conservative environmental policy. A few weeks ago, Friends of the Earth said:
“The Liberal Democrats have thrown down a green gauntlet to Labour and the Conservatives with their new green taxation plans. They are very progressive measures to make doing the right thing for the environment also the right thing for your pocket…The Conservatives and Labour need to follow through with equally progressive tax plans”.
Perhaps he should check his support in Friends of the Earth.
Many of the things that we are advancing from these Benches are not specifically Liberal Democrat ideas. The Conservative spokesman, in particular, seemed to overlook the work of the Environmental Audit Committee, which has a Conservative Chair and a majority of Labour Members. What he called the obsession with gas guzzling Chelsea tractors is almost identical to the policy that that all-party group put forward. The numbers were checked out with the Department of Trade and Industry. We did not manufacture the calculations.
The same Committee described the current taxation policy in relation to aviation as “scandalous”, because of the Government’s failure to adopt higher aviation taxes. That did not come specifically from Members on the Liberal Democrat Benches; it was an all-party consensus. For a variety of reasons, it is right to say that the Government’s policy on aviation, in particular, is scandalous. Aviation is the sector in which the growth of emissions is most rapid and the damage is disproportionate. A typical flight from London to Glasgow or Edinburgh produces 10 times as much carbon dioxide per passenger as a rail journey or, for that matter, a coach journey—it is roughly equivalent. There have been repeated studies—some of them are very good—from the Department for Transport about the environmental externalities generated by the aviation sector that are not currently captured. For many years, the aviation sector has been grossly undertaxed. The landing charges are hopelessly below what would be a realistic economic rate. Landing rights are not auctioned. There is no taxation of fuel and the current system of taxing tickets is exceedingly inefficient.
One of the main significances of our policy is that it is designed to make taxation of the aviation sector much more environmentally friendly, encouraging airlines—particularly low-cost airlines—to use their capacity much more effectively. That is why we have placed such emphasis on aviation taxation. I find the Conservatives’ comments on this matter incomprehensible because the approach has been endorsed by so many people on their side.
In conclusion—I want to give the Minister a chance to respond—it may be useful to go back to the basic areas of consensus and the 2002 paper that establishes the framework within which we should be debating the subject. The Green Alliance commented positively on that paper, describing it as a
“significant driver of policy over the years to come”.
It also restates the argument that environmental taxes can be offset against other taxes, as the Liberal Democrats are now demonstrating, in quantitative and specific ways. It describes the paper in positive terms as
“the way for significant steps forward in the use of economic instruments—if the Treasury is brave enough”.
The problem is that the Treasury has not been brave enough, which is why we are having this debate.
We have had a useful debate in which we have heard interesting ideas from hon. Members on both sides of the House. I applaud the Liberal Democrats’ commitment to tackling carbon emissions, but I warn them of the danger of becoming a one-club golfer. Over the past nine years, we have successfully tackled emissions in a range of ways: certainly through taxation, but also through emissions trading—I do not agree with my hon. Friend the Member for Nottingham, South (Alan Simpson) about its potential—obligation regimes and regulation.
It is certainly the case that tax measures can tackle environmental externalities. Taxes on broad aspects of economic activity, such as energy use, waste and transport, can deliver real behavioural change. My hon. Friend the Member for Scunthorpe (Mr. Morley) reminded us in his characteristically thoughtful speech of the huge savings delivered by the climate change levy. Like others, I pay tribute to his contribution to policy in this area over a long period.
The hon. Member for Twickenham (Dr. Cable) was right that the levy was introduced in the teeth of virulent opposition from the Tory party, which I recall vividly because I was the Minister with responsibility for the matter for two years from 1999. I welcome the Tories’ change of heart and tone, and it will be good to see exactly what they are proposing. The levy has saved more than 16 million tonnes of carbon so far and will save 4 million tonnes this year. However, it would be a mistake to focus only on tax.
I am glad that the Minister has noticed the change among Conservatives—there will be more to come. Does he agree with Tony Grayling, the special adviser of the Secretary of State for Environment, Food and Rural Affairs, that the climate change levy is a tax on energy that should be reformed?
It is a tax on the business use of energy, and it is entirely appropriate because it creates a big incentive for better energy efficiency in the business sector—that is why it has been so effective.
The Liberal Democrat motion is wrong to fasten on the take from environmental taxation as the measure of environmental commitment because, as others have pointed out, if revenues from environmental tax go down, it probably shows that the tax is working, which is a good thing, rather than a bad thing. Of course, the take from environmental tax could be increased if environmental pollution were increased, which would be a bad thing. No one should be surprised that the Liberal Democrat metric is measuring the wrong thing.
The yield from air passenger duty has certainly gone down. Does the Minister regard that as a sign of success?
I draw the hon. Gentleman’s attention to the climate change levy. It is a good example of switching the focus of taxation from goods to bads—from labour to pollution in this case. There are several examples of how we have done such a good thing successfully. However, we need a range of measures, so it is misleading and wrong to consider simply the take from environmental taxation.
The Liberal Democrat proposals have left a huge gap. I understand that the package of changes in income tax spelled out by the hon. Member for Eastleigh (Chris Huhne) will cost £20 billion—I think that the hon. Member for Twickenham is nodding in assent—but although £8 billion will come from the package that we are talking about, we do not know where the other £12 billion will come from. At this stage, I am afraid that the numbers simply do not add up. As we have heard about gaps in policy, it is right to draw attention to that gap.
We need the right mix of tax measures, trading, obligations and regulations, so that is what we have been developing. We especially need to deliver the promise of emissions trading. In June, we announced a national allocation plan that will reduce UK emissions by 8 million tonnes of carbon, over business as usual, between 2008 and 2012. That amount is far in excess of our Kyoto obligations and demonstrates our commitment to the scheme. The scheme will be a way of tackling carbon emissions Europe wide that will be much more effective than a UK-only tax. We will be working with the Commission and our European partners to ensure that we have an effective scheme in place. We want aircraft fuel to be included in the scheme as soon as possible so that we can have the pan-European solution on aircraft fuel that we need.
My hon. Friend the Member for Scunthorpe drew attention to the fact that my right hon. Friend the Prime Minister met the governor of California over the summer to discuss US interest in participating in emissions trading. Since that visit, and to some extent encouraged by that visit, California has legislated for state-wide carbon reductions, which the governor has said will require a carbon emissions trading scheme. At the governor’s request, UK Government officials are soon to advise the Californians on how to set that up. That is the right way to go, aiming for a worldwide approach that can deliver a change in worldwide behaviour. Such is the scale of ambition that we need, by contrast with the rather parochial tone of what we heard from the Liberal Democrats this evening.
The Government need to use the most effective range of instruments to achieve our environmental aims. We have introduced a series of good tax examples, such as the climate change levy. We have reformed vehicle excise duty, company car tax, introduced differentials in fuel duties, reduced VAT rates for professionally installed energy-saving materials and for microgeneration—another point that was raised in the debate—and have introduced the landlords energy saving allowance. We have introduced a host of effective non-tax measures too—emissions trading, climate change agreements, the renewables obligation, the forthcoming renewable fuel transport obligation, the energy efficiency commitment, new building regulations, and support for the work of the Carbon Trust and the Energy Saving Trust. That is the rich mix that the challenge of climate change demands.
The Minister mentioned the renewables obligation. Does he intend to carry out the threat contained in the energy review to remove onshore wind from the renewables obligation?
We are continually reviewing the renewables obligation to make sure that it continues to be effective. Opening the debate, my hon. Friend the Minister for Climate Change and the Environment spoke about one of the changes that we are making.
We need to maintain our ambition for environmental protection, alongside our aims for high and sustainable levels of growth and employment, macro-economic stability, business competitiveness and social inclusion. We reject the arguments of those who claim that we need to choose between them. We must achieve them all. The sustainable way to protect the environment is with a strong platform for long-term economic growth. We need to continue to deliver progress towards our environmental aims, alongside strong growth in the economy.
Since 1997 we have demonstrated in the UK, as my hon. Friend the Member for Scunthorpe said, consistent leadership in tackling climate change, starting with the Kyoto protocol in December 1997. We are on course to deliver nearly double our Kyoto target for greenhouse gas reductions. Last year, through our presidency of the G8 and the EU, we achieved the Gleneagles communiqué in which all the member countries of the G8 recognised that climate change is happening and that human activity is contributing to it, and the plan of action securing agreement on a range of key issues. We are working to extend that discussion—for example, through the G20. UK Ministers made further progress in the Gleneagles dialogue in Mexico a fortnight ago, and it will be on the agenda when I attend the meeting of G20 Finance Ministers next month.
With publication of the Stern review on the economics of climate change, we will provide significant new substance to the evidence base on the matter, helping to build the international consensus on how best to act. We are making good progress with our proposal for an energy investment framework led by the World Bank to promote energy efficiency and low carbon energy sources in developing and emerging economies. Today the Prime Minister met the Prime Minister of Norway to open the new Langeled gas pipeline, whose construction I negotiated as Energy Minister in 2003, to bring gas to the UK from Norway. That has capacity for 20 per cent. of our gas needs and will ensure a more reliable gas supply and more predictable prices. That supports the aims of the energy review last July, setting out our intention to secure more reliable energy supplies while also protecting the environment.
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, 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 welcomes the UK’s climate change programme which has already put the UK on course to exceed its Kyoto target of a 12.5 per cent. cut in 1990 levels of greenhouse gas emissions by 2008-12 and make further progress towards the Government’s ambitious target to cut carbon dioxide emissions by 20 per cent. by 2010; recognises the vital contribution of the Climate Change Levy, which has already saved 28 million tonnes of carbon emissions and by 2010 will be reducing carbon emissions by over seven million tonnes per year; congratulates the Government on exceeding its recycling target supported by the Landfill Tax and Landfill Allowance Trading Scheme and contributing to reductions in greenhouse gas emissions; commends introduction in the UK of the world’s first international emissions trading scheme capping emissions from power stations and energy-intensive industries; further welcomes the Government’s proposals for the second phase of the scheme in the UK; further welcomes the Government’s energy review, which proposes measures to save up to a further 25 million tonnes of carbon emissions per year by 2020 and to put the UK economy on a path to a 60 per cent. cut in carbon dioxide emissions by 2050; congratulates the Government on its commitment to delivering a strong economy based on high and stable levels of growth and employment as well as high standards of environmental care; and calls upon the Government to continue to put environmental protection, locally, nationally and globally at the heart of its policies.
northern ireland
Ordered,
That Gordon Banks and Meg Hillier be discharged from the Northern Ireland Affairs Committee and John Battle and Mr. Denis Murphy be added.—[Rosemary McKenna, on behalf of the Committee of Selection.]
petition
Park Chase Development
Castle Point is becoming grotesquely over-developed. Worst of all is the proliferation of ugly blocks of flats with little or no space for amenities. They ruin the environment for neighbours and put terminal stress on our already overburdened infrastructure. The petition that I present tonight deals with just such a case. It was compiled by residents of Hadleigh, who live around the proposed site.
The petition:
Declares that the petitioners are deeply concerned about planned development at Park Chase where it is proposed to knock down four buildings and replace them with 29 flats, which would put the local infrastructure and community under unacceptable strain, and leads to a number of substantial planning objections including the lack of provision of amenity space, insufficient parking or on site turning, is detrimental to the street scene and will be overbearing on neighbouring houses, not least because of the unacceptable four storey height of the development… the petitioners note the efforts of the local press and MP to fight overdevelopment and inappropriate back garden development and the imposition of flat land development which are damaging our community.
The Petitioners therefore request that the House of Commons call upon the Government to bring to Castle Point Borough Councillors’ attention the need to decide this application at full council and to reject the application on behalf of local residents and in respect for the quality of life of Hadleigh people.
And the Petitioners remain, etc.
To Lie upon the Table.
Planning (Community Involvement)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Heppell.]
This debate is prompted by concerns arising from the interim report on the land use planning process produced by Kate Barker. My fear, and the fear of many of my constituents, is that it will effectively lead to calls for a reduction in opportunities for community involvement. In fact, I contend that there is too little community involvement in the planning process and that what we have should be made to work better and even enhanced. It should not be diluted or removed.
In my experience, and mine is no exception, there are few areas where there are not tensions between developments—usually housing, but not always—and the local community. Without touching the heights of hyperbole, I submit that in my experience of 25 years as both councillor and MP, the planning process has been the single most significant vehicle for local people's engagement in the local democratic process.
Shortly after being granted this debate, I was contacted by a faith community in my constituency. Its comments and experience of the system demonstrate that, while the present approach has many potential components for community participation, those are very limited in practice. It is at this point that I regret not wearing my reading spectacles because my office has supplied me with a rather poor photocopy. Basically, my constituents point with some approbation to a number of Government documents. Those include the UK sustainable development strategy and the sustainable communities plan, the sentiments of which they welcome. They have also raised the issue of the contents of the “Diversity and Equality in Planning” document, which was produced by the Office of the Deputy Prime Minister in January 2004.
If I may, I will allow my constituents to speak for themselves for a short time by reading what they have written to me:
“This document”—
the “Diversity and Equality in Planning” document—
“is not well known by Planning Officers in our experience, for whom a ‘one size fits all’ attitude is deeply entrenched, arising from complacency but effectively resulting in widespread discrimination against significant parts of society, especially ‘hard to reach’ groups, including many faith communities.
We are therefore concerned that the current Regional Spatial Strategy reviews and Local Development Framework preparation are accompanied by effective and widespread community involvement. ‘Statements of community involvement’ are required as an integral part of the new style LDF. Time will tell whether these SCIs will deliver more effective consultation both with policy and major planning applications. Much will depend on individual authorities' willingness to engage in genuine consultation and take note of responses from the community.”
While those are the views of just one group in my constituency, I believe from experience that they are very representative of the concerns regarding involvement in the planning process, and that involvement is under threat.
Streamlining the planning process is a bit like trying to streamline democracy. As Winston Churchill once said—it is not usually my habit to quote Conservative politicians in aid of my arguments—democracy is the worst form of government, apart from all the rest. In other words, you win some and you lose some. There is rough and smooth for all parties, and the planning process is no exception.
Communities in my constituency are in continual conflict with planners and developers over excessive and overbearing housing and office developments. We are not talking about nimbyism. It really disappoints me when civil servants and sometimes even Ministers caricature local opposition to planning applications as nimbyism. My constituents often recognise the case for development, especially on derelict and redundant industrial sites. They do not want to see decaying eyesores on their doorsteps, but they want to ensure that there is some semblance of sustainability and sensitivity to their needs and to the problems and character of their neighbourhood. Such key considerations often get lost in the pursuit of profit.
All too often, we see planning applications submitted at densities of up to 80 or 90 properties per hectare. In most cases, local opposition, in which I have been proud to be involved regularly, has reduced that to 50 or less.
If one asks businesses and developers, as Ms Barker did in her review, whether the planning process is an obstacle to enterprise, they are bound to say that it is. All regulations, whether health and safety measures, the minimum wage, anti-discrimination legislation or environmental protection requirements, to name but a few, are unpopular in certain quarters, but they need to be weighed in the balance. We certainly do not want community involvement in planning to be offered as a glib sacrifice to the cutting of red tape or even to globalisation. Businesses are answerable to their shareholders, and the bottom line of their balance sheet matters. There is nothing inherently wrong in that approach, but community involvement in the planning process, including resistance to demands for overbearing development or inappropriate planning permission is very much regarded as a debit on their balance sheets.
From a community point of view, however, the planning process is already skewed in favour of the developer. Applicants have a right of appeal against refusal, but communities do not. The argument is that the elected council that determines the planning application represents the community interest, but sometimes councils give themselves planning permission. Occasionally, they simply get it wrong, as the wool is pulled over their eyes. My hon. Friend the Minister may have heard of Silver Cross prams, whose factory was based in my constituency for most of the last century. Some years ago, consultants were appointed to “rescue” the company, and said that half the site had to be redesignated for housing to subsidise its recovery. Having held a gun at the council’s head, they received planning permission, and departed with cash for the sale of the land, leaving the company’s recovery to someone else. That was all legitimate, but quite wrong in the eyes of the local community. A third-party right of appeal would at least have allowed a challenge to that travesty, with which the community must now live in perpetuity.
The UDP—unitary development plan—process demonstrates the way in which the community must play catch-up. Only objectors can be represented at inquiries, but the UDP has been overridden on scores of industrial brownfield sites in my area that have been redesignated for housing. Given the omission of the community from the key inquiry stage, it is vital that it retain the right to challenge each departure from the UDP. At this point, it is appropriate to refer to the regional spatial strategy. Despite its importance, the RSS is regarded very much as a top-down, inaccessible part of the planning process. For example, housing targets set at that undemocratic level often result in the die being cast before planning applications are made at local level, which is when they can be challenged by communities.
Those planning issues affect my whole constituency. Applications for over-intensive and inappropriate development have been made, and continue to be made in Pudsey, Yeadon, Horsforth, Rodley and Farsley, but I wish to concentrate on the experience of the town of Guiseley. Planning permissions over the past six or seven years have given the go-ahead for about 1,200 extra homes—a 30 per cent. increase, I estimate, in the size of the town, without a commensurate increase in local infrastructure to support it. In my area, developers, as I said, invariably submit plans for housing with a density of 70 to 90 properties per hectare on brownfield sites, which is well above the 30 to 50 properties per hectare indicated by PPG 3. They argue that the sites fulfil PPG requirements for greater density, because of transport links and other factors. In almost all cases, community involvement and pressure has led to the rejection of initial planning applications, and subsequent ones are reduced to about 50 properties per hectare—in some cases, that is almost half the figure in the original application.
Developers or even planning officers point to a local station, for example, or the existence of a major road corridor with bus services, as evidence of good public transport links. The community, however, points to a station at which trains do not stop, because they are full as a result of lack of capacity and overcrowding at peak times. They point out that bus services have been reduced and become far less reliable in the 20 years since deregulation was introduced. Section 106 agreements can be used to derive a contribution from developers towards infrastructure, including crossings, road improvements, open space, public transport and school buildings.
However, it is often the cumulative effect of developments, rather than a single development, that creates the pressures and it is difficult, therefore, to apportion section 106 contributions to individual developments over time to address those cumulative effects. Many local authorities do not have a coherent strategic approach to the negotiation and use of 106 moneys. Certainly, in my experience, there is little community involvement in determining how it is used. All too often, it is used in a very ad hoc way.
No one can deny the need for affordable housing, but developers will often come up with reasons for having less affordable housing than is needed. The cost of decontaminating land is a favourite excuse, or developers offer to build at lower densities if they do not have to include a full quota of affordable homes. Councils’ role as the “people’s champion” in the planning process can be, and often is, overstated. They are not always on the ball when it comes to promoting community involvement.
Statements of community involvement, required by the Planning and Compulsory Purchase Act 2004, often pay lip service to community requirements. There is a crying need—so far unmet—for an action plan in areas such as Guiseley and other parts of my constituency, such as Horsforth and Pudsey, to be drawn up with the local community to address how the area can cope with substantial growth in new house building. The 2004 Act allows for those action plans, but we have yet to see them emerge in the communities that I represent.
All that adds up to one inescapable conclusion: the present system for community involvement in planning is limited. Even as it stands, it is not being used to its full potential, but to move away from what we have got—which may be what Barker recommends—would be a retrograde step that must be resisted. While I welcome the Government’s commitments in the policy document “Public Involvement: the Government’s Objectives”, there is a wide gap between the aspirations and the experience of people on the ground. I have listed some of the challenges to greater participation, but there are others, which are also undermining the credibility of the system.
A significant challenge relates to the poor implementation of existing regulations, such as statements of community involvement. Many—57 out of 168—SCIs have been sent back by the planning inspectorate because of basic procedural flaws, including the failure to consult parish councils and other important community organisations. That seems to indicate that some local authorities are not prioritising the basic requirements of SCIs, let alone including new ways of having dialogue with their communities.
The ambition of the 2004 Act for greater participation is not being met, largely because of a lack of resources and a culture in the profession that continues to believe that “We know best”. While planning aid has made some difference, many individuals and communities get little or no support with the technical language and procedures of the planning process. Developers often have access to professional expertise to make their case, while important community voices are not heard.
The second and greatest challenge—as I have already suggested—comes from Kate Barker’s interim report. That report, along with annex A of the energy review—a preserve of the Department of Trade and Industry—has raised questions about the merits of public involvement in everything from major infrastructure projects to the details of local development frameworks. My concern—shared by many people in my constituency—is that those two documents constitute an assault on local constitutional arrangements, based on a very narrow economic analysis of the benefits of the planning system. At the very least, it sends the wrong message to the profession and the public.
The interim Barker report does not provide any analysis of the very significant barriers to public participation that exist in the system now. Nor is there any discussion of the wide range of institutionalised advantages that the development industry currently enjoys. On only one occasion does the report touch on the unequal distribution of rights of redress. Paragraph 4.32 states:
“It is also the case that not all the processes work against development: the lack of a third party right of appeal can work to favour economic growth, for example, as applicants can appeal a rejected decision while opponents of development are not able to appeal a successful application.”
That celebration of the absence of basic rights of redress in planning for communities illustrates the review team’s inability to consider the wider importance of planning in local government.
I am also particularly concerned about proposals to abolish the right to be heard in the preparation of statements of community involvement. The interim report raises further concerns about existing levels of consultation in the planning process. Paragraph 3.36 describes the requirement for statements of community involvement as
“overly prescriptive about consultation, and process driven”.
It alleges that:
“complexity is compounded by the large range of statutory consultees, local groups and other stakeholders who are engaged in the decision-making process”.
There appears to be a growing view that the right to be heard in testing the statements of community involvement established by the 2004 Act may be under threat.
I accept that although SCIs can and should be made more effective, the withdrawal of that right would send entirely the wrong message to planning professionals and communities. It implies that participation is to be cut back and that the Government believe that participation has gone too far, when precisely the opposite is true. Great care is needed to ensure that that message does not further compromise effective community participation.
The Barker report also appears to question the established plan-led system. For example, paragraph 4.30 states:
“The nature of the plan led system may also be causing a sub-optimal supply of development, partly as plans may reflect some of the structural problems identified above and in part because investment opportunities that arise after the plan has been agreed may have more difficulty gaining approval if not in accordance with the plan.”
One can only assume that correcting the problem will lead to the final report softening the emphasis on a plan-led system. That would have a huge effect on the participation debate, because there is little or no point in having robust community rights of participation if the final plan has only a limited impact on the way decisions are reached. Many communities would simply ask, “What’s the point in participating?”
Where do we go from here? As the final Barker report is due out in December, can my hon. Friend the Minister give some assurance that public participation will be carefully considered in any reform package? In particular, we need a more balanced analysis of planning that does not focus solely on the needs of business; it is public legitimacy that requires support if we are to deliver the integration of sustainable development objectives. From my reading of the interim report, it is difficult to see how Barker’s analysis of the “problem” of community involvement can be squared with existing Government policy, which aims to enhance it. I hope that my hon. Friend can reassure me on each of the points I have raised.
I congratulate my hon. Friend the Member for Pudsey (Mr. Truswell) on securing the debate. He has a long record of advocacy on this issue and continues to raise his concerns on behalf of his constituents.
One of the key aims of the Government’s reform of the planning system centres on community engagement. We want both more and better-quality community engagement. Our aims were first set out in “Community Involvement in Planning: the Government’s Objectives”, published in February 2004. They were confirmed in the cornerstone of Government planning policy, to which my hon. Friend referred, planning policy statement 1, “Delivering Sustainable Development”, published in February 2005.
In its key principles, planning policy statement 1 states:
“Community involvement is an essential element in delivering sustainable development and creating sustainable and safe communities. In developing the vision for their areas, planning authorities should ensure that communities are able to contribute to ideas about how that vision can be achieved, have the opportunity to participate in the process of drawing up the vision, strategy and specific plan policies, and to be involved in development proposals.”
The statement goes on to note that community involvement in planning should not be a reactive, tick-box process, but enable the local community to say what sort of place they want to live in at a stage when it can make a difference. Effective community involvement requires an approach that tells communities about emerging policies and proposals in good time, and it must enable them to put forward ideas and suggestions and participate in developing proposals and options. It is not sufficient simply to invite them to comment once the proposals have been worked up. Consultation on formal proposals is required, and such an approach must ensure that consultation takes place in locations that are widely accessible, and it must provide and seek feedback. Involvement is clearly more effective the earlier it takes place in the process.
Through the Planning and Compulsory Purchase Act 2004, there is a statutory requirement for local authorities to consult the local community on local development frameworks via the statement of community involvement, to which my hon. Friend rightly referred at length. This ensures that groups are involved in development plan processes. The statement of community involvement also has to set out the local authority’s policy on involving its community in consulting on planning applications.
Regional planning bodies are also required to prepare, publish and keep under review a statement of public participation on regional spatial strategies, to which my hon. Friend referred. The regional planning body, in preparing the RSS, should work in partnership with regional organisations and encourage community involvement, so that key organisations and the wider community can be involved and inform the strategy’s content.
My Department has produced material to help local authorities in preparing their statements of community involvement. Our good practice guide, “Creating Local Development Frameworks”, contains a chapter on producing statements of community involvement, and we undertook a comprehensive roll-out programme in the autumn of 2004, including seminars in each region on statement of community involvement production. We are taking every opportunity to encourage good practice, including close liaison between planning and local government group officials within the Department, to ensure that local authorities take an approach that will enable the best use of their sometimes scarce resources, and to avoid the danger of consultation fatigue.
Statements of community involvement have played an important role in getting the message across to local planning authorities, developers and the public that effective community involvement is a central and underlying principle of the “new” planning system. Some 300 statements of community involvement have been submitted to the Planning Inspectorate for scrutiny. Nearly 120 have been adopted, and a further 88 have received a binding inspector’s report. Out of this total, one statement has been found to be “unsound” by the Planning Inspectorate.
My hon. Friend referred to the inspectorate returning a large number statements of community involvement because of procedural flaws. There was a specific problem with a small number of the first statements to be submitted, in that authorities had failed to consult parish councils adjoining their area. That matter has been resolved and authorities are clear about the regulatory requirements. I trust that my hon. Friend accepts that this is a developing process and that, as people become more skilled in it, they should get better.
At the other end of the spectrum, we already have, I am pleased to say, a number of very good statements of community involvement, such as those developed by Plymouth council, among others. They state their council’s aim to go further than the minimum requirements to ensure more innovative, effective and wide-ranging community involvement. Importantly, they also include comprehensive coverage of how the council will engage with hard-to-reach groups—another issue to which my hon. Friend referred.
The Government are committed to ensuring that planning policies and practice take account of the communities that they serve and reflect the lives that people live today. Widespread social and demographic changes over the last three decades mean that equality and diversity issues are no longer minority considerations. Local planning authorities need to keep up with that change. It is very important that the views of the widest community are canvassed when local planning issues are considered.
Statements of community involvement should be aligned with other work done by councils and their local strategic partnerships to ensure that documents within the local development framework effectively reflect the sustainable community strategies—strategies that are the vision statements setting out the plans for improving the economic, social and environmental well-being of each council’s area. My Department will publish revised draft guidance on local strategic partnerships and sustainable community strategies later this year, and we have also commissioned the Royal Town Planning Institute to write guidance providing practical advice on how to improve the relationship between local strategic partnerships and spatial planning. That guidance will be issued alongside local strategic partnership guidance later this year. We are working closely with a range of departments and practitioners to make it as useful as possible.
My hon. Friend identified the need to address issues around housing growth. I assure him that we are aware of the matter and we are examining how best to do that. It is already my Department's policy to encourage developers to enter into more consultation with local communities on large sites prior to the submission of planning applications.
My hon. Friend raised the subject of section 106 agreements. In August 2006, we published “Planning Obligations: Practice Guidance” and a model section 106 agreement, the aims of which are to improve the development, negotiation and implementation of planning obligations. The Government are also considering responses to their proposal for a planning gain supplement as a means to provide additional funding for the infrastructure necessary to support growth. There will be further announcements on that by the end of the year.
My hon. Friend mentioned his desire for third parties to have a right of appeal—a matter that he has raised on several occasions. Third parties do not have a right of appeal in the way that applicants do because it is the responsibility of local planning authorities to act in the general public interest when determining planning applications. Local authorities must determine planning applications in accordance with the development plan for the area unless material considerations indicate otherwise; those can include views expressed by local residents and other parties.
The Government do not propose to change that position, because in our view it goes straight to the heart of the democratic process. I am sorry to have to disappoint my hon. Friend. Elected members must be allowed to reject their officers’ advice, because it is the councillors, not the officers, who are answerable to their electorate. A third party right of appeal could be used to delay or effectively veto many otherwise acceptable developments, which would bring benefits to local communities in terms of homes, jobs and regeneration of neighbourhoods.
I am sure that my hon. Friend shares my desire to see more people get the chance of a step on the housing ladder, as well as better choice and quality for those who rent. In the Yorkshire and Humber region—an area that he and I both represent—the current target for provision of homes is nearly 15,000 a year for the next 10 years. The Yorkshire and Humber plan is being revised and it will need to set a new target for the provision of homes that is high enough to deliver sustainable communities with high quality, affordable housing for future generations.
My hon. Friend referred to people having difficulty accessing the planning process. Both individuals and community groups rightly complain that they cannot afford professional advice on planning issues compared to big developers or local authorities. As he said, it is for that reason that the Planning Aid organisation exists. It provides free expert planning advice to people and communities who could not otherwise afford it. My Department is providing £5.3 million over five years to Planning Aid to expand its services on a national basis. We have also supported the expansion of so-called e-planning services, which enable people to access more information online, and 95 per cent. of local authorities are now rated good or excellent in provision of such services.
Following Kate Barker’s report on housing supply, the Government accepted the case for a significant increase in supply. We accept that proper community involvement is necessary if we are to realise our aim to increase house building in England to 200,000 units per year in the medium term. As my hon. Friend mentioned, Kate Barker’s interim report on her review of land use planning was issued in July. It provided a helpful analysis of how the planning system currently impacts on economic development. Although I acknowledge my hon. Friend’s concern about some aspects of the report’s analysis, it is important to remember that it was an interim report. Kate Barker has made it clear that it is vital that her final recommendations do not advance business interests above environmental and social interests.
I assure my hon. Friend that, wherever possible, we want communities and individuals themselves to have control over the decisions that affect their lives and that, when they have a contribution to make and where they are part of the solution to problems, they are not held back. Better community involvement requires a change in the culture of planning. I hope that what I have said today provides some reassurance to my hon. Friend.
Will my hon. Friend give way?
Certainly—
The motion having been made after Ten o'clock, and the debate having continued for half an hour, Mr. Speaker adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at Eleven o'clock.