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Early-day motion 1616 asks the Chancellor of the Exchequer to do away with the proposed 2p increase in the fuel price to be introduced in the autumn. We know that, as a result of the huge increase in oil prices recently, he has a windfall of more than £500 million to date. It has been estimated that if the Chancellor were to postpone the 2p increase further, it would cost him roughly £500 million. It is not as if the idea is uncosted. He did not expect to get that money in the first place, and surely we need some protection. Inflation is
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already dramatically on the rise, and with petrol at such high prices—£1.20 a litre—we cannot say when it is going to stop. Surely the Chancellor should not be adding to the woes of ordinary families in this country by clobbering them with another 2p increase.

In business questions, I mentioned the plight of public phone boxes, which are now rapidly disappearing throughout the country. I had the privilege of going to Dunsop Bridge in my constituency several years ago when BT unveiled the 100,000th public telephone box in the country. It was opened by Sir Ranulph Fiennes. BT chose Dunsop Bridge because Ordnance Survey says that that is where the centre of the United Kingdom would be if we squashed it all together. All the local school children were there, and they were excited by the opening of the phone box.

I just happened to be in my constituency one Sunday morning when a man turned up asking where certain villages were. We asked him what he was doing. He said, “I’ve come to check your telephone box because it’s due to be taken away.” I had a look at the list of public telephone boxes that are going to be removed from Ribble Valley, and there it was: Dunsop Bridge. The 100,000th telephone box is going to be taken away. [Interruption.] There is no sense of history. I said that it was sad when BT removed the red telephone boxes. I ran a bit of a campaign to get them retained. They are as important to the British character as red buses, and we look forward to the bendy ones going and the traditional ones coming back. Thank you, Boris—and Boris gets another name-check.

There is an important aspect to telephone boxes. Even though a lot of people have mobile phones, they do not work in many rural areas. The life of the batteries is still relatively short, and if a battery is dead, what are we supposed to do in an emergency? It is important that we get at least a proper network of public telephone boxes even if they do not make money. BT has a good community programme and supports a lot of community projects. I would have thought that that would be a tremendous community project. I would not mind if it put in the boxes a message saying: “This telephone box does not make any money. It is part of a community project, sponsored by British Telecom.” I hope that BT will think again, look at the network that currently exists and not take these emergency facilities away from our country.

We have a rather thin House today. I suspect that had we held the debate in Crewe and Nantwich, more Members would have been present. However, I want to raise one more issue. We have discussed a good many taxes recently, but I want to talk about aviation duty, with which the Government propose to replace air passenger duty. It will be calculated on the basis of a combination of an aircraft’s maximum take-off weight and a distance factor determined by the geographical band to which the aircraft flies. Aircraft weighing more than 5.7 tonnes and freight-only flights will be subject to the duty. It will be the first time that freight-only flights have been taxed. The duty will be applied to the aeroplane regardless of the type or number of passengers. Aeroplanes carry out phantom flights now and again, and that clearly needs to be addressed.

Aviation duty will have unintended consequences. This brings us back to the abolition of the 10p rate. The present Prime Minister—the then Chancellor—did
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not quite realise the consequences of the abolition of the 10p rate and the alterations higher up the band scale. I am sure that he did not sit down with his Cabinet colleagues and ask them “How can we hit the poorest hardest?”, although had he done so, he would of course have ended up with the system that he introduced. What resulted from it was an unintended consequence, however; let us be generous to him in that regard at least.

I believe that aviation duty, as currently planned, with unduly penalise United Kingdom aviation, and will have significant perverse consequences for regional airports in particular. While taxing freight aircraft may seem attractive from an environmental point of view, it seems likely that the economic consequences will be entirely disproportionate. We know why the Government are doing this—it is for environmental reasons—but the unintended consequences will hit the British economy. A balance needs to be struck.

The Secretary of State for Transport has stated that changes to air passenger duty should

I am sure we would all agree with that. However, in the 2003 White Paper “The Future of Air Transport”, the Government acknowledged that

That is the balance that must be considered in the introduction of any aviation tax: how to make aviation as efficient as possible without damaging the UK’s national and regional economy.

In its response to the White Paper, South West of England Regional Development Agency said:

It added:

In that context, Members may be interested to know that airports in the south-west employ about 3,500 people, and generate a further 5,600 jobs in the region.

I recently met representatives from Manchester airport, which many of my constituents use to fly either directly to another country or in transit through to London. From that meeting I gained the distinct impression that aviation duty would distort the international level playing field for UK freight. It is a logical conclusion that if freight departing from the UK attracts a tax that does not apply anywhere else in the world, businesses will go elsewhere. Manchester Airports Group estimates that aviation duty would damage UK competitiveness on a third of goods traded.

It is one thing for aviation duty to be paid on goods coming into and going out of the country, but many companies will be very intelligent about the countries to which they fly. For instance, if they have to fly to Charles de Gaulle airport in France or Schiphol in Amsterdam, they will do exactly that. The freight will then be taken off, and will travel by road. It has been estimated that that would result in thousands more
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lorries on the roads, transporting goods that would otherwise have gone to a regional airport somewhere or other. At Manchester airport alone, at least 1,144 scheduled cargo flights would become commercially unviable or at risk. That equates to about 220 jobs in the north-west region. I have also been informed that for East Midlands airport, which is the UK’s largest pure freight hub, that figure is likely to exceed 850 jobs.

It must be considered that aviation duty has the potential to seriously undermine long-haul development from UK airports, because both freight customers and airlines can reduce their tax liability by taking an indirect route via another hub. That is exactly what air passengers would do, too. Whereas now many people would fly directly from a regional airport to, for instance, the United States of America or the middle east, if the duty for long-haul flights becomes prohibitive they will look to go via Schiphol or Charles de Gaulle to connect with Air France or KLM to fly the long-haul sector from there as that would reduce their tax liability. For a family of four, that liability could amount to a lot of money.

I am asking the Government to take on board the unintended consequences of this tax. Manchester airport also says that it will be turned into an enormous tax collector for the Government. Current air passenger duty costs are about 9p per £100 collected. Manchester airport estimates that with the new tax it would have to collect about £400 million a year on behalf of the Government and that it would cost it many thousands of pounds to start to collect that money. There could be a huge cost to the regional airports, and that could even damage the prospects of remaining in business for those that are marginally viable.

I also want the Minister to take the message back to the Secretary of State for Transport and the Chancellor that another unintended consequence could be that the new tax raises less money than the current air passenger duty as customers—both passengers and freight—will more intelligently work out how to complete their journeys. I understand the environmental reasons why the Government want to introduce this tax, but it is logical if we are to go down this route not to do it alone. Neighbouring countries would benefit from that—as indeed would the rest of the world, because if we start on this course alone the problems will start shifting around the world and people across the globe will act intelligently and start making different choices in air travel. We need to get everyone sitting down to work out how to have a proper aviation fuel tax that everybody throughout the world will implement, so that we can encourage airlines to be more fuel-efficient and do away with all the phantom flights made just to keep slots open. We would also not be penalising the freight industry in this country; doing so would lead to the loss of a number of jobs, as they would simply move to Holland and France.

Now is the time to do as I suggest. The consultation has just finished, and the Treasury and the Secretary of State for Transport should sit down and take a look at all the representations. Would it not be far better if they were more intelligent about this and came up with a policy that everybody could endorse and that would not have all these unintended consequences, rather than not listen, not learn, introduce this tax, lose all the jobs, lose a lot of taxation as well—they would not
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even get that tax revenue—and then afterwards have to change the policy simply to ensure that British industry was not damaged? Now is the time to do this. If the Government really are listening and learning, we will hear a change of policy from them forthwith.

3.8 pm

Mr. Richard Bacon (South Norfolk) (Con): I am pleased to have the opportunity to speak in this debate. I want to raise concerns about management practices at Manchester College of Arts and Technology—better known as MANCAT—and in particular to highlight concerns raised by former members of staff. MANCAT is one of the country’s largest further education colleges, and from August it will merge with its neighbour, City College Manchester, and become even bigger. I am concerned that investigations into management practices at MANCAT have been hampered because MANCAT destroyed auditable documents—the National Audit Office is aware of that—and also reached financial settlements with certain ex-members of staff on condition that those former employees signed confidentiality clauses in their settlement agreements.

I have seen several documents, including some in which staff stated that they were under pressure from the college to falsify student attendance registers and other funding-related forms so that MANCAT could claim extra public money from the Learning and Skills Council. One key witness was planning to explain the extent of malpractice at an employment tribunal where she had been in the process of seeking redress for constructive dismissal. Instead, she was offered a financial settlement, to which she ultimately agreed, that was conditional on her signing a gagging clause. She was an administration manager who had blown the whistle in a letter to MANCAT’s governing body. In that letter, she described in detail the active role she had played over three years in systematically falsifying paperwork at the request of MANCAT’s senior management.

I am aware of three investigations into MANCAT’s affairs, including ones by the National Audit Office and the Learning and Skills Council. None uncovered evidence of systematic fraud. But while the college denies any wrongdoing, it is hard to see how the public can have confidence in such exercises when potentially crucial paperwork has been destroyed and important witnesses have been gagged through confidentiality clauses in settlement agreements paid for with public money.

I fear that such gagging clauses are an all too common feature of employment arrangements when things go wrong. It is something that the Public Accounts Committee has deplored. We are talking about public money and it should not be used to shut people up. Moreover, I question whether such confidentiality clauses are legally valid if fraud, which is a criminal matter, has been alleged. Under the Public Interest Disclosure Act 1998, in the provision covering contractual duties of confidentiality, it states at section 43J:

The destruction of auditable documents came to light when the Learning and Skills Council’s own investigator referred to it. In an e-mail, he wrote that an
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internal inquiry into allegations about paperwork relating to individual learners proved inconclusive because

that is the individual learner record audit—

He went on to point out that such conduct is contrary to the financial memorandum, which stipulates that such records should be kept for six years. Then, significantly, he added:

This would appear to be untrue.

The National Audit Office was aware that records had been destroyed, as I discovered on raising the matter in a session of the Public Accounts Committee on 18 April 2007, when the value for money director covering education and skills, Ms Angela Hands, said:

Mr. Mark Haysom of the Learning and Skills Council added:

At one stage MANCAT’s external auditors, PricewaterhouseCoopers, were called in after another member of staff, a lecturer at the college, raised concerns about the manipulation of registers in the ESOL department—English for speakers of other languages—which teaches basic English to foreigners. He was sacked by MANCAT, but after starting employment tribunal proceedings for unfair dismissal was paid off on condition that he signed a confidentiality agreement, which he did. PricewaterhouseCoopers discovered something that greatly disturbs me, which was that MANCAT’s funding claim to the Learning and Skills Council was based on a centralised set of student registers that had not been produced or signed by tutors. Someone else had created them. And in no fewer than 36 out of 39 cases which PricewaterhouseCoopers examined in the ESOL department, more attendances were recorded on this secondary system than on the originals. It would defy all rules of probability if that were simply down to pure inaccuracy. It sounds much more likely to have been deliberate manipulation to achieve an apparently higher attendance than took place.

In all, the PricewaterhouseCoopers review of documents found 304 discrepancies. Although PricewaterhouseCoopers chose its words carefully, saying that

none the less, it became clear that PricewaterhouseCoopers’s dealings with the college were extremely fraught. Indeed, six months later the company resigned as external auditors to MANCAT. The PWC partner involved, Lee Childs, wrote to MANCAT’s principal, Peter Tavernor, telling of strained relationships with senior staff, and stating that

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I have already raised these matters verbally with the Learning and Skills Council’s chief executive, Mark Haysom. In my view, the Learning and Skills Council and, indeed, the National Audit Office should examine the matter further. They should not be content not to challenge gagging orders in the face of such serious allegations. I also suggest that they have taken too lenient a view of the destruction of auditable documents. They could be far more rigorous in examining the affairs of MANCAT. It is important that public bodies do not believe that such behaviour will go unexamined.

In November 2003, the Learning and Skills Council had the opportunity to interview the principal witness after she first blew the whistle in her letter to governors. It knew of its contents long before she was paid off and gagged. Moreover, further details could still be tracked down by the Learning and Skills Council in a detailed statement that would have comprised her evidence at the employment tribunal, much of it corroborated in a statement from an ex-colleague.

Interestingly, the chairman of MANCAT’s audit committee would have liked an external inquiry but he was overruled by the principal of the college and resigned as a result. It is unfortunate that the Learning and Skills Council allowed MANCAT to conduct an internal inquiry into such serious matters, bearing in mind that senior management were said to be involved. During the inquiry process, the whistleblower said she had learned that the original handwritten documents that she had used to create the falsified records had been “lost”. However, I have seen copies.

Among the documents that I showed Mr. Haysom were a bundle of allegedly falsified student registers that appear to confirm the extent of the operation. They were all in one person’s handwriting and covered a broad sweep of curriculum areas. That suggests that fraud was taking place on an industrial scale. Despite previous inquiries, I believe the public interest has been denied the rigorous investigation at MANCAT that it deserves. The events remain highly relevant both because of their seriousness and because the college’s senior management team has remained more or less intact. Moreover, Peter Tavernor has recently been appointed principal of the new merged super college in Manchester, which will have an annual budget of about £130 million.

I am concerned about the ways in which MANCAT has handled taxpayers’ money in the past. It would be in the public interest to know how much MANCAT has spent on legal costs and financial settlements involving all the ex-staff who made allegations of irregularities. Moreover, it would be helpful to know what MANCAT’s bill was for legal fees and costs in another hugely expensive employment tribunal that stretched over 16 days. That case, which MANCAT lost, involved all five staff of the trade union education department, whom the tribunal ruled were unfairly dismissed for union activity. In my view, running a college on such costly and adversarial lines hardly equates to good value for money.

In conclusion, I believe there should be a thorough investigation of what appears to be institutionalised fraud at Manchester College of Arts and Technology.

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