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House of Commons

Thursday 29 November 2007

The House met at half-past Ten o’clock


[Mr. Speaker in the Chair]

Oral Answers to Questions


The Chancellor of the Exchequer was asked—

Local Government Finance

1. Mr. Greg Hands (Hammersmith and Fulham) (Con): What recent discussions he has had with the Secretary of State for Communities and Local Government on the system of local government finance in 2007-08. [169063]

The Chief Secretary to the Treasury (Andy Burnham): Treasury Ministers meet regularly with ministerial colleagues in the Department for Communities and Local Government to discuss a wide variety of issues, including local government finance. The local government settlement for 2007-08 was set out to the House in December 2006. The Secretary of State will announce the next provisional finance settlement very shortly.

Mr. Hands: I am the only Member of the House whose constituents have lower council tax bills this year than last year, thanks to the new Conservative council in Hammersmith and Fulham. Across the UK, council tax has almost doubled under Labour in the past 10 years, but despite that, the Government claim to want lower bills. How can hard-pressed councils deliver lower bills, faced as they are with the worst financial settlement in 10 years under the Government?

Andy Burnham: May I point out to the hon. Gentleman that there have been real-terms increases for councils in every year of this Government? That was not the case in the last four years of the Conservative Government. Councils have seen real-terms increases of 39 per cent. in their resources. The hon. Gentleman did not mention that his local authority is also pursuing an extremely aggressive programme of cuts in services locally. Given that his council received a 3.4 per cent. increase from the Government last year, we would argue strongly that that was sufficient both to keep council tax down in Hammersmith and Fulham and to maintain good services for vulnerable people in his community.

Mr. Andy Slaughter (Ealing, Acton and Shepherd’s Bush) (Lab): When my right hon. Friend is considering the settlement, particularly in the case of Hammersmith
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and Fulham council, will he look at the £34 million of cuts aimed at vulnerable people in that borough, which are being made to achieve a 50p a week cut in council tax? Those cuts are embarrassing to many Conservative councils, which are wondering how they will convince the Government that they are short of money when Hammersmith and Fulham appears to be able to come up with sums of money simply by attacking vulnerable people in the borough.

Andy Burnham: We gave a generous increase to the council last year, which should be sufficient to keep council tax down and provide good services to vulnerable people. I am aware that there have been some changes to the provision of social services in Hammersmith and Fulham, and other changes too. We believe that the funding given was enough to keep council tax down and provide the services that my hon. Friend’s constituents depend upon.

Sir Nicholas Winterton (Macclesfield) (Con): Is it right, given the additional responsibilities that are placed upon local government by central Government, that, on the one hand, the resources allocated—certainly to my own council—are inadequate, while, on the other, if councils wish to raise the council tax locally in order to provide the level of service that they believe people deserve and expect, they are not able to do so because they are capped?

Andy Burnham: There is a legitimate criticism to be made about the level of burden that is placed on local authorities by central Government—I hear the hon. Gentleman on that point. That is why, working together, the Secretary of State for Communities and Local Government and I, in order to inform the spending review, have conducted a rigorous exercise cutting the number of targets that we place on local government. There will be a significant reduction in those targets, down to a total of 198 from well over 1,000. I understand the message delivered by the hon. Gentleman, but we are clear that the settlement that we have provided in the comprehensive spending review enables councils to keep council tax rises to substantially below 5 per cent. and also to improve services and maintain good quality services that people depend upon.

Mr. Clive Betts (Sheffield, Attercliffe) (Lab): Does my right hon. Friend think it interesting that when the Conservative chairman of the Local Government Association recently commented that this was the worst settlement for local government in the past 10 years, he made no comparison with settlements of 15, 20 or 25 years ago?

Andy Burnham: My hon. Friend raises an incredibly important point: so often the context is missing. I have those figures—11, 12, 13 and 14 years ago, there were real-terms cuts every year in the funding provided from central Government to local government. In 1995-96, for instance, there was a 4.6 per cent. cut. As my hon. Friend will remember from his background in local government in Sheffield, that caused deep and devastating cuts in the services that his constituents at that time greatly depended upon. That is the difference between our record and the record of the Conservatives, and they should show a little more humility when commenting on such matters.

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Bank Charges

2. Mr. Brian Binley (Northampton, South) (Con): What assessment the Government have made of the time taken by the Office of Fair Trading to investigate bank charges. [169064]

The Economic Secretary to the Treasury (Kitty Ussher): The Government have made no such assessment. The OFT began its formal investigation into whether the charges levied by banks breach the unfairness test in the Unfair Terms in Consumer Contracts Regulations 1999 in April 2007. Until recently, there had been no High Court cases on that subject, but it soon became clear that a wider test case was needed to resolve the issue and to provide legal certainty. That process is now under way, and it is initially focused on clarifying whether the regulations apply or not.

Mr. Binley: I thank the Economic Secretary for that full answer, for which I am most appreciative. Millions of families could face additional bank charges, because data files containing their banking details are God knows where. [Hon. Members: “Reading.”] Will the Government assure me that they have spoken to the banks to ensure that, if the loss of data leads to identity fraud that causes accounts to be overdrawn through no fault of the families themselves, the Government will underwrite the resulting charges, ensuring that individuals do not suffer for the deplorable error of Her Majesty’s Revenue and Customs?

Mr. Speaker: Order. I remind the House that the reading of supplementary questions is not desirable.

Kitty Ussher: The Government are, of course, in continual dialogue with the banks, but as the banks have reported to us that there is no evidence of fraudulent activity, I consider the hon. Gentleman’s question to be hypothetical.

Jessica Morden (Newport, East) (Lab): It is a frustrating time for many of my constituents who are caught up in the waiver as they wait for the test case to come to court in January. Will the waiver be revoked if the case does not make progress or if it is delayed?

Kitty Ussher: I understand the frustration faced by my hon. Friend’s constituents and, indeed, the constituents of all hon. Members. However, the decision on the waiver is entirely for the Financial Services Authority, which recently completed a review of it, and concluded that on the whole, although there are some issues to be looked at, the waiver is operating satisfactorily. It is inappropriate for me to say more while a legal case is ongoing.

Adam Price (Carmarthen, East and Dinefwr) (PC): One of the conditions of the waiver was that the banks did not make materially adverse changes to their charges, which is precisely what they are doing. Most recently, the Co-op bank lifted its daily overdraft rate, which particularly affects low-income customers. Because the condition of the waiver is now being breached, surely the Economic Secretary should be calling for the FSA to raise it.

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Kitty Ussher: The waiver is a matter for the FSA. As I have said to my hon. Friend the Member for Newport, East (Jessica Morden), the FSA recently completed a review of the waiver consulting both consumer groups and banks. The findings suggest that the waiver is working satisfactorily. If the hon. Gentleman has evidence to the contrary, I would be happy to pass it on to the FSA.

HMRC (Personal Data)

3. Gregory Barker (Bexhill and Battle) (Con): What recent assessment he has made of the implications of the loss by Her Majesty’s Revenue and Customs of personal data. [169065]

The Chancellor of the Exchequer (Mr. Alistair Darling): I refer the hon. Gentleman to the statement that I made in the House on 20 November and to what I said in yesterday’s debate.

Gregory Barker: It is clear that the matter goes much wider. On 31 October, my constituent, Mr. King of Bexhill, received a letter from HMRC, in which he was advised that a CD that had been sent to his pension provider, Standard Life, containing his surname, national insurance number, date of birth and plan reference number, had gone missing. He wants to know how many other CDs went missing before the CD that was sent to Standard Life, as well as the one that was sent out by HMRC with 25 million names on it. How many CDs went missing? How many of them have been accounted for? How many of them are still missing? And why, when CDs have gone missing in the past, did Ministers not act beforehand?

Mr. Darling: On the discs that went missing from the Standard Life, the hon. Gentleman will recall that I referred to that matter specifically in my statement on 20 November. As a result of that incident, HMRC wrote to all those affected, including the hon. Gentleman’s constituent. The circumstances relating to the losses of that material, and in relation to the much larger loss of child benefit records, are currently the subject of investigation by Kieran Poynter, the senior partner at PricewaterhouseCoopers. We will have his interim report in three weeks’ time, and, as I said yesterday—I do not think that the hon. Gentleman was here for yesterday’s debate—I intend to report to the House when I get that report.

John Hemming (Birmingham, Yardley) (LD): In yesterday’s debate, the Government said that HMRC is still sending out CDs from time to time and encrypting them only when necessary. Why is it necessary to send out any CDs, and why, if CDs must be sent out, which is obviously the worst possible method, is it not always necessary to encrypt them?

Mr. Darling: It is necessary from time to time for information to be sent between offices, which is normal. We have ensured that procedures have been tightened, particularly in relation to bulk transfer. The transfer of information by HMRC will be the subject of the report that I have commissioned. I agree with the hon. Gentleman, many hon. Members and many people outside this House that we need thoroughly to
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examine how information is transferred and to ask ourselves whether it needs to leave a particular building in the first place. If information needs to be transferred, we need to consider the necessary security such as encryption or another appropriate measure. I have given Kieran Poynter wide-ranging terms of reference, so that he can cover all those matters. We will receive his interim report fairly shortly, and we will get a wider report in the spring, which will allow us to take whatever action is appropriate.

Mr. Graham Stuart (Beverley and Holderness) (Con): Does the Chancellor now regret that both he and the Prime Minister specifically allocated initial responsibility to a junior official? Does the Chancellor regret that that individual has been hounded and forced into hiding?

Mr. Darling: As I said yesterday, what I said in my statement on 20 November was absolutely correct in accordance with the information that I had then and that I have now. I covered all such matters in yesterday’s debate. As I say, we will have the interim report from Kieran Poynter very shortly; that will allow us to draw conclusions and take the necessary action as a result of what happened.

Mr. David Gauke (South-West Hertfordshire) (Con): After the Chancellor was informed of the loss of the data, why did it take him six days to inform the banks? Why does it appear from the e-mails released by the National Audit Office that it took seven days before HMRC searched the offices of the NAO?

Mr. Darling: Again, I explained that when I gave my statement on 20 November. When I was told what had happened, I asked HMRC to carry out a thorough search, using its Customs investigations officers. When it was clear that that had not found anything, the Metropolitan police were called in and they carried out various searches. The position is that various buildings belonging to Revenue and Customs and the NAO were searched at various times as it became clear that the discs had gone missing. However, I covered all those points, both in my statement and in the debate yesterday. As I say, not only is the Metropolitan police investigation continuing, but we will have the results of Mr. Poynter’s review fairly shortly. We can then discuss the matters further.

Northern Rock

4. Mr. Robert Goodwill (Scarborough and Whitby) (Con): If he will publish the letter of advice that he received from the Governor of the Bank of England on support for Northern Rock. [169066]

The Chancellor of the Exchequer (Mr. Alistair Darling): As I said to the Treasury Committee on 25 October and in my statement to the House on 19 November, I do not believe that it would be in the public interest to publish the letters at this time. But I will keep the position under review, as I said then.

Mr. Goodwill: How, precisely, are the Government funding the £25 billion support package for Northern Rock? If that support is, as we are told, coming from the “contingency fund”, how much is left in that fund?

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Mr. Darling: The money provided by the Bank of England comes directly from it, but of course the Government stand behind the Bank of England to provide the necessary support. However, I say this to the hon. Gentleman: when I authorised the Bank of England to provide support for the Northern Rock bank, that was widely welcomed; indeed, the Leader of the Opposition said that he wholeheartedly supported it. I am sorry that many Conservatives are now trying to run away from that decision. I believe that it was absolutely right then and it remains the right thing to do now.

Mr. Dennis Skinner (Bolsover) (Lab): Does the Chancellor of the Exchequer recall that way back in February 1974, the Government had to intervene on another giant, Burmah Oil? They had to take it over because otherwise it might have caused a run in various other areas. The result was that Burmah Oil’s price rise was enormous in the following months, when Margaret Thatcher’s husband decided to sue the Government because he wanted the elevated price rather than the price when Burmah Oil collapsed and—

Mr. Speaker: Order.

Miss Julie Kirkbride (Bromsgrove) (Con): He should retire.

Hon. Members: Oh!

Mr. Darling: I do remember Burmah Oil, but not in sufficient detail to be able to comment on what my hon. Friend has said. As I said a few moments ago, it was absolutely right to support Northern Rock when it got into difficulties because of the wider interests of maintaining financial stability in the system.

Mr. Mark Field (Cities of London and Westminster) (Con): Does the Chancellor not appreciate that his lack of transparency on all these issues gives further rise to the suspicion that his actions in mid-September were driven more by keeping his own heartlands in the north-east happy and by his having an eye towards what was going to be an early election? Does he not realise that transparency is now of key importance if there is to be general confidence in his actions on Northern Rock, going forward?

Mr. Darling: The hon. Gentleman makes light of the importance of Northern Rock to the north-east of England. It is a very important company that employs more than 60,000 people. It was decided that we should intervene to support Northern Rock because of the threat to the wider banking system if it had gone down. I repeat that I was absolutely right to authorise that support and, having authorised it, we need to see it through. A lot of Opposition Members are now trying to run away from that decision, which they initially supported. It was the right thing to do because it was important that we maintained confidence and stability in the banking system. That is why we will continue to do whatever is necessary to ensure that that happens.

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