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House of Commons

Wednesday 12 January 2011

The House met at half-past Eleven o'clock


[Mr Speaker in the Chair]

Oral Answers to Questions

International Development

The Secretary of State was asked-


1. Stephen Mosley (City of Chester) (Con): What funding his Department plans to provide for aid to north and south Sudan in 2011-12. [32712]

5. Sajid Javid (Bromsgrove) (Con): What funding his Department plans to provide for aid to north and south Sudan in 2011-12. [32716]

The Secretary of State for International Development (Mr Andrew Mitchell): Our future support to Sudan will be determined by the bilateral aid review, which is on schedule to report by the end of February. Whatever the outcome of the referendum, there will continue to be significant humanitarian and development needs in both north and south Sudan.

Stephen Mosley: According to Transparency International's measures, Sudan rates as the 176th most corrupt nation in the world. What assistance will the Department be offering to help to establish the rule of law and build democratic structures in Sudan, whatever the results of the current referendum?

Mr Mitchell: My hon. Friend is right. Corruption has a devastating impact on the lives of poor people and, indeed, on the confidence of taxpayers in donor countries. It is for that reason that no British taxpayer funds go through the Government of Sudan, but I assure my hon. Friend that we will be working in both north and southern Sudan, whatever the result of the referendum, to increase access to justice and to ensure that in the north, for example, there is much greater transparency in the operation and accountability of local government, and in the south to seek to embed anti-corruption mechanisms from day one, were the referendum to decide that there should be a southern Sudan.

Sajid Javid: I welcome my right hon. Friend's efforts in Sudan. Although attention is rightly focused on the referendum in southern Sudan, the violence in the west means that the situation is still fragile, particularly in the region of Darfur. Can my right hon. Friend reassure the House that his Department is able to help both regions-the south and the west-simultaneously?

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Mr Mitchell: Again, my hon. Friend is right. Although things are going extremely well so far with regard to the referendum, and people respect the agreements made under the comprehensive peace agreement, affairs in Darfur have deteriorated. Indeed, in the last week we have been told that 40,000 people were displaced as a result of fighting there. The British Government are absolutely committed to our humanitarian work in Darfur as well as in south Sudan, and through the common humanitarian programme we provide that support throughout the whole of Sudan.

Hugh Bayley (York Central) (Lab): Sudan has been beset by conflict for decades, and I pay tribute to the work of DFID officers in bringing about the peace accord. Can the Secretary of State spell out, whatever the outcome of the referendum, how joined up his policy will be with the policies of the Ministry of Defence and the Foreign Office, to make sure that violence does not erupt again in the south?

Mr Mitchell: The hon. Gentleman rightly points to the importance of the UK Government platform being seamless. That is why, when I was in Sudan in November, I opened a new British Government office in Juba. Last weekend, it was elevated to a consulate generalship and will provide state-of-the-art support for the work that the British Government are doing in southern Sudan.

Ms Margaret Ritchie (South Down) (SDLP): Can the Secretary of State update the House on the progress of any agreed settlement regarding the distribution of Sudanese oil reserves between north and south Sudan?

Mr Mitchell: This is one of the issues that former President Mbeki is particularly addressing in the discussions about Abyei. As the hon. Lady implies, the largest amounts of oil are in southern Sudan but the mechanisms for extracting it and getting it out are pipelines through northern Sudan. The negotiations are continuing and are likely to continue for some time yet.

Malcolm Bruce (Gordon) (LD): The Secretary of State will be aware that oil wealth has not always transformed countries in Africa, or indeed relieved the poverty of those in question. What steps will DFID take to ensure that southern Sudan will have the infrastructure and diversification support it needs so that it does not become another country suffering the Dutch disease because of oil?

Mr Mitchell: The Chairman of the Select Committee draws attention to the resource curse that has afflicted so many countries in that part of the world. The point he makes is being directly addressed. I discussed the matter with President Salva Kiir when I was in Sudan in November. Sudan is one of the most underdeveloped countries in the world, with illiteracy of more than 82% and only 24 km of tarmacked road in the entire country. There is a huge development issue to be addressed, but there is also the ability, through oil wealth, to make real progress over the last five years of the millennium development goals until 2015.

Ms Harriet Harman (Camberwell and Peckham) (Lab): Last year, almost half the people in southern Sudan needed help just to get enough to eat. Southern Sudan has enormous agricultural potential but, as the Secretary of State has just said, there are scarcely any roads or
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systems to support food production. We help with emergency food aid, quite rightly, but what more can DFID do to ensure that the people of southern Sudan can get off food aid and develop their own agriculture?

Mr Mitchell: The right hon. and learned Lady is right to suggest that 4.5 million people directly benefit from British food aid in southern Sudan, but that is not a long-term solution. As we have learned in eastern Africa, by contrast with western Africa, it is crucial to try to ensure that food is grown as closely as possible to the people it supplies and that local markets are stimulated close to where there is food and security. That will be one of the key objectives that we will pursue in conjunction with the authorities in southern Sudan.


2. Miss Anne McIntosh (Thirsk and Malton) (Con): What recent assessment he has made of the effectiveness of the delivery of humanitarian aid in Afghanistan; and if he will make a statement. [32713]

The Minister of State, Department for International Development (Mr Alan Duncan): In 2010, international humanitarian aid to Afghanistan fed 3.5 million people, helped 100,000 refugees and built 22,000 emergency shelters. DFID provides support to the International Committee of the Red Cross, to assist families affected by conflict and to provide medical care. As for potential problems this year, we are closely monitoring rain and snowfall levels and would work with the international community to respond to any problem caused by water shortages.

Miss McIntosh: I congratulate the Department on that achievement. Does humanitarian aid extend to the possibility of finding crops to substitute for poppies, to enable Afghanistan to have a proper income and become completely self-sufficient?

Mr Duncan: The answer is yes. DFID's programmes seek to establish sustainable long-term solutions to poppy growing by promoting access to agricultural credit, releasing uncultivated land for productive use and strengthening access to markets for local producers. We are also trying to encourage farmers to grow different crops with a higher market value, including, for instance, pomegranates.

Anas Sarwar (Glasgow Central) (Lab): The Government announced in the strategic defence review and in the comprehensive spending review that 30% of aid will go to fragile states. What proportion of aid will go to Afghanistan?

Mr Duncan: The amounts going to Afghanistan will be significantly increased, but the exact amounts will be announced in due course, when we have completed the multilateral and bilateral review process, which should be announced in the next few months.

Women's Education

3. Chi Onwurah (Newcastle upon Tyne Central) (Lab): What programmes funded by his Department support the education of women in developing countries. [32714]

The Secretary of State for International Development (Mr Andrew Mitchell): All my Department's education
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programmes will have a focus on girls and young women. We will concentrate on enabling girls to progress through to secondary school, where the largest benefits accrue.

Chi Onwurah: I am glad to hear that the Secretary of State is continuing Labour's excellent work in this area. Education is important for developing economies, as it is for our own, but can he confirm that he will not drop Labour's pledge to double support for global education?

Mr Mitchell: We will set out in due course precisely what the results of taxpayer spending will be in respect of education. I hope that we will carry the whole House in focusing directly on the results that we are achieving and spelling out the commitments that we are making not only to British taxpayers but to those we seek directly to help in poor countries.

Richard Harrington (Watford) (Con): Can the Secretary of State assure the House that aid money transferred via the European development fund for women's education or any other project will carry the same transparency and accountability as DFID-related projects?

Mr Mitchell: As my hon. Friend suggests, the EDF is one of the vehicles for achieving that. Along with other members of the European Union, we are leading a drive to increase transparency in the EDF-so far, that message is being reasonably well received. I must point out that although Britain contributes 17% of the EDF's funding, 40% of that funding is spent in Commonwealth countries.

Rushanara Ali (Bethnal Green and Bow) (Lab): Will the Secretary of State turn his attention to women in Haiti? One year on from the earthquake, people continue to suffer and an alarmingly high number of women and girls are subjected to rape and sexual violence every day: 250 women were raped in just 150 days after the earthquake. What is he doing to ensure that the British Government, the EU, the UN and the Haitian authorities are doing everything possible to bring an end to that appalling violence?

Mr Mitchell: The hon. Lady is right to target the current position in Haiti, including the great difficulties that the international community has experienced in making its aid effective and the failures of governance and justice that she graphically identified. Britain is not leading on Haiti-the lead is taken much more by the Americans, Canadians and, indeed, the French, but we were extremely supportive in the initial stages in the aftermath of the earthquake that struck Haiti a year ago, and we continue to help, not least in December, with specific interventions to stop the spread of cholera.

Poverty Reduction (Africa)

4. Richard Ottaway (Croydon South) (Con): What his Department's policy is on reducing poverty in Africa. [32715]

The Parliamentary Under-Secretary of State for International Development (Mr Stephen O'Brien): DFID's policy for reducing poverty in Africa focuses, alongside country Governments, on achieving the millennium development goals, including through wealth creation, strengthening governance and security, improving the
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lives of women and girls, and tackling climate change. We will implement this policy in a cost-effective and transparent way.

Richard Ottaway: The Minister and I agree that no country has got itself out of poverty without first addressing population growth, and I congratulate the Department on what it is doing in that area. Does he agree, however, that much aid in Africa comes through non-governmental organisations? To what extent are they taking on the need to address population policies?

Mr O'Brien: I thank my hon. Friend for his observations. Last month, my right hon. Friend the Secretary of State launched the framework for results for improving reproductive, maternal and newborn health. It was developed in consultation with NGOs, and it has been widely disseminated and welcomed. Work is under way with NGOs at an international, regional and, indeed, country level to ensure that women have reproductive health choices and to improve the quality and accessibility of services such as those in Malawi, which demonstrates that real progress has been made in ensuring that we tackle the priority of population effects.

Mr Russell Brown (Dumfries and Galloway) (Lab): What assessment have the Minister and the Secretary of State made of the humanitarian situation in Côte d'Ivoire, and what support has his Department provided?

Mr O'Brien: We are giving support primarily through the Red Cross, and we support the measures taken by the EU and the African Union to bring about a peaceful transfer of power in Ivory Coast, which will have the greatest effect on humanitarian interests, including the EU visa ban on Laurent Gbagbo and his closest advisers. We certainly support the UN's position in declaring the presidential election valid, and in insisting that Mr Ouattara is the legitimate winner. The UK stands ready to help through our trusted partners if the humanitarian situation deteriorates.

Mr Gary Streeter (South West Devon) (Con): Access to sanitation is one of the millennium development goals, and will sadly be missed by a mile, but it is hugely relevant to almost every country in Africa. What extra assistance can the Minister's excellent Department give over the next 12 months to try to improve access to water and sanitation for the people of that continent?

Mr O'Brien: My hon. Friend makes an excellent point, and I can certainly assure him that the way in which work will be implemented to achieve access to clean water and better sanitation is central to the programmes developed under the bilateral and multilateral aid reviews, and will be announced in the relatively near future.

Development Assistance Target

6. Paul Blomfield (Sheffield Central) (Lab): If he will bring forward legislative proposals to make binding the 0.7% target for official development assistance as a proportion of gross national income. [32717]

The Secretary of State for International Development (Mr Andrew Mitchell): The Government are fully committed
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to meeting the United Nations target of spending 0.7% of national income on aid from 2013, and will enshrine this commitment in law.

Paul Blomfield: I thank the Secretary of State for his reply, but may I ask him whether he intends to change the definition of what the UK reports as official development assistance, and specifically whether the Government intend to include expenditure on overseas students and refugees within that 0.7% target?

Mr Mitchell: The Government's position is absolutely clear. Aid is defined by the OECD development assistance committee, and those rules are very clear indeed and strictly laid down. The Government have made it clear, as previous Governments have done, that our aid spending will be defined in that way, and only in that way.

Mark Pritchard (The Wrekin) (Con): The Secretary of State will know that a significant part of the existing aid budget goes to the Government of Tanzania. Does he share my concern about the recent actions of that Government and of President Kikwete, who have arrested Opposition leaders who currently reside in prison? Will he call for their early release?

Mr Speaker: Order. It is not entirely clear what that has got to do with the UN 0.7% target for official development assistance, but if the Secretary of State can find a way briefly to demonstrate that, I shall be happy to listen.

Mr Mitchell: Well, my hon. Friend, who takes a close interest in these matters, is right to identify the element within the 0.7% that is spent by Britain in Tanzania. We are in close contact with the authorities about the recent events and are of course reinforcing the importance of the rule of law being followed.

Mr Gregory Campbell (East Londonderry) (DUP): In maintaining the target of 0.7%, will the Secretary of State ensure that the issue of corruption, which keeps coming to the fore in relation to overseas aid, will be at the forefront of his mind as we go forward?

Mr Mitchell: The hon. Gentleman is right to reinforce the point made by my hon. Friend the Member for City of Chester (Stephen Mosley) in the first question today, which was about the importance of bearing down on corruption. Corruption not only deprives poor people of the services to which they should be entitled, but undermines and saps the confidence in donor countries of taxpayers who see their money being wasted.

Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op): Following the two-year freeze in the overseas aid percentage which was announced in the spending review, there will have to be a sharp increase in 2013 to reach the 0.7% target. Can the Secretary of State tell the House what percentage increase in the overseas aid budget in 2013 will be needed to fulfil that commitment?

Mr Mitchell: As the hon. Gentleman knows, next year we are spending 0.56% of gross national income on development. Over the four-year spending period the figures will be 0.56, 0.56, 0.7 and 0.7%. Many in the House would wish to advance further on this important
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cause, but the public finances are inevitably constrained by the appalling economic position that the coalition inherited.

Green Climate Fund

7. Fiona O'Donnell (East Lothian) (Lab): What discussions he has had with the Secretary of State for Energy and Climate Change on financial contributions to support climate change mitigation for developing countries through the green climate fund. [32718]

The Parliamentary Under-Secretary of State for International Development (Mr Stephen O'Brien): My right hon. Friend the Secretary of State regularly discusses international climate issues with the Secretary of State for Energy and Climate Change and his ministerial colleagues. We welcome the agreement at Cancun to establish a green climate fund, but no decisions have yet been taken on a financial contribution. [Interruption.]

Mr Speaker: Order. There are far too many noisy private conversations taking place in the Chamber. I want to hear Fiona O'Donnell.

Fiona O'Donnell: Thank you, Mr Speaker. I welcome the reaffirmation of the need to support developing countries in responding to climate change, as agreed at Cancun last year, but we still do not have the detail of where the money will come from. Will the Minister reassure the House that money will not be diverted from the aid budget, but that his Government will make additional funds available by doing as we did in government, and setting a cap on the amount of money that can be transferred from the aid budget to respond to climate change?

Mr O'Brien: The clear answer is that the £2.9 billion of international climate finance announced in the spending review is being met out of a rising overseas development assistance budget and will continue to account for less than 10% of ODA, as indeed set by the previous Government.

Paul Maynard (Blackpool North and Cleveleys) (Con): Will the Minister join me in congratulating students at St Mary's college in my constituency who have been campaigning with the Catholic Fund for Overseas Development to lobby for greater Government aid to developing nations to help to mitigate climate change? Will he assure the House, however, that any money that goes to those developing nations will be subject to robust oversight to make sure that it is spent properly and accountably?

Mr O'Brien: I am pleased to join in congratulating my hon. Friend's local college on its efforts and support. I can assure him that at all times the expenditure made in relation to these and other development issues is being subjected to the new transparency and accountability programmes and rules that we are introducing. That is live as we speak, so he can assure his college that that is in place.

Tax Collection

8. Catherine McKinnell (Newcastle upon Tyne North) (Lab): What steps his Department is taking to support
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the work of Governments in developing countries to increase the size of their tax base. [32719]

11. Julie Hilling (Bolton West) (Lab): What efforts his Department has made to support good governance in the field of tax collection in developing countries. [32723]

The Minister of State, Department for International Development (Mr Alan Duncan): Any country requires some level of taxation to fund the basic services that it needs. DFID advises and assists Governments in the development of fair, equitable and efficient systems of collecting tax.

Catherine McKinnell: The Minister will be aware of the Dodd-Frank Act in the United States, which requires companies registered on Wall street to disclose all payments on a country-by-country basis, including tax payments. Will he meet me and representatives of the Publish What You Pay campaign, including NGOs such as CAFOD and Oxfam, to discuss how we can introduce similar legislation in the UK, thereby improving transparency and access to development?

Mr Duncan: It will always be a pleasure to meet the hon. Lady, and I am very happy to do so. The Act requires companies to disclose payments to foreign Governments. We should await the outcome of ongoing work, such as the development of rules on how the Act will operate, before deciding whether UK action is needed.

Julie Hilling: The OECD recognises that poor countries are likely to lose more money through tax dodging than they gain in aid. The coalition agreement promised to clamp down on tax avoidance, so will the Minister set out today what action his Government have taken to push for the introduction of country-by-country accounting? It will cost the Government nothing but make a huge difference to people in developing countries.

Mr Duncan: The OECD and the International Accounting Standards Board are both doing work related to that issue, and we hope that it will help to identify the best way forward. Action to tackle tax evasion through more transparency and the exchange of information, instigated by the G20 and led by the Global Forum on Transparency and Exchange of Information for Tax Purposes, has already produced good results, such as a big increase in the number of bilateral tax information exchange agreements. [ Interruption. ]

Mr Speaker: Order. There is far too much noise in the Chamber. It is very unfair on Members who want to take part in questions to the Secretary of State for International Development. Let us have a bit of order.

Fertility and Reproductive Health

9. Katy Clark (North Ayrshire and Arran) (Lab): What recent discussions he has had with his international counterparts on the work of the UN Commission on Population and Development on fertility, reproductive health and development in 2011; and if he will make a statement. [32720]

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The Parliamentary Under-Secretary of State for International Development (Mr Stephen O'Brien): The Government regularly discuss with international counterparts the work of the UN Commission on Population and Development to ensure that sexual and reproductive health and rights are included in international strategies. The commission's theme for 2011 is fertility, reproductive health and development.

Katy Clark: I thank the Minister for that answer. He will be aware that we now have the largest ever number of people-1.2 billion-of reproductive age, but we are not spending the money that we set ourselves internationally as targets on reproductive health and family planning. Does he agree that there needs to be greater emphasis on that area, and will he commit his Government to ensuring that more money is provided for it?

Mr O'Brien: I congratulate the hon. Lady on her very accurate observations, which are absolutely fundamental to good development. I assure her that, in the reproductive, maternal health and neo-natal document that we published on 31 December, that is precisely the emphasis on, and increased access to, family planning that is both proposed and in which we intend to take a lead, through the design of our programmes, as we roll out their announcement following the bilateral aid reviews.

Emergency Humanitarian Response Capability

10. John Howell (Henley) (Con): What recent progress he has made on his review of emergency humanitarian response capability. [32722]

12. Christopher Pincher (Tamworth) (Con): What recent progress he has made on his review of emergency humanitarian response capability. [32725]

The Minister of State, Department for International Development (Mr Alan Duncan): The humanitarian emergency response review is an independent review of the UK Government's emergency humanitarian assistance, led by Lord Ashdown. The review team will complete its consultations this month and issue its final report by the end of April.

John Howell: Given the significance of the review, will the Minister explain its remit?

Mr Duncan: The review has a specific focus on rapid onset humanitarian emergencies, which can either be natural disasters or sudden outbreaks of conflict. The urgent international response to disasters is often confused and unco-ordinated. Today is the first anniversary of the devastating earthquake in Haiti, and what happened there will play an essential part in our review. [ Interruption. ]

Mr Speaker: Order. The House must come to order again.

Christopher Pincher: Will my right hon. Friend consider asking the emergency response review team to look at the situation in Tindouf in Algeria, where thousands of Sahrawis have been virtually imprisoned in camps for almost 25 years? Can he increase the profile of that issue?

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Mr Duncan: As I explained, the humanitarian review is primarily focused on rapid onset emergencies, and it has therefore not looked at a protracted crisis such as that of the Sahrawi refugee camps in Algeria. We support them, however, through our 13% share in the budget of the European Community's humanitarian aid office, which in this financial year has committed €10 million to support Sahrawi refugees.

Paul Flynn (Newport West) (Lab): What percentage of emergency aid does the Minister believe was included in the £52 million that the Vice-President of Afghanistan, Ahmad Zia Massoud, took from his country to his bolthole in Dubai? Is there any point in pouring money into those funds before we end the corruption that is endemic in the Afghanistan Government?

Mr Duncan: We do everything to make sure that such moneys are paid only through a trust fund and paid only after proven action with proper receipts. We do everything possible to overcome the challenges posed by corruption in any such country.

Ms Gisela Stuart (Birmingham, Edgbaston) (Lab): The Minister mentioned Haiti. It is clear that some NGOs were not working very effectively together and were actually operating in their own interest. Will the review also consider the better co-ordination of NGOs, both from this country and those under UN supervision?

Mr Duncan: Yes, is the answer. However, I repeat that the review's remit is concentrated and focused on rapid onset humanitarian response-in other words, it is a review of emergency humanitarian response, not of the entire area of all humanitarian action.

Prime Minister

The Prime Minister was asked-


Q1. [32727] Mr David Hanson (Delyn) (Lab): If he will list his official engagements for Wednesday 12 January.

The Prime Minister (Mr David Cameron): I am sure that the whole House would wish to join me in paying tribute to Corporal Steven Dunn from 216 Parachute Signal Squadron who died on 21 December, to Warrant Officer Class 2 Charles Wood from 23 Pioneer Regiment Royal Logistic Corps who died on 28 December, and to Private Joseva Vatubua from the Argyll and Sutherland Highlanders, 5th Battalion The Royal Regiment of Scotland who died on 1 January. These were courageous and selfless servicemen who have made the ultimate sacrifice in the fight to make our country a safer place. We send our deepest condolences to their families, their friends and their colleagues.

This morning, I spoke to the Australian Prime Minister Julia Gillard to send the condolences of everyone in this House and everyone in the country for the appalling floods and damage that has been done in Queensland, and to say that we are all thinking of her and the Australian people at this very difficult time.

In addition to my duties in the House, I shall have further such meetings later today.

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Mr Hanson: I endorse the Prime Minister's condolences to the families of the troops and the Australian people.

The Prime Minister will recall his solemn pledge at the election not to raise VAT. He will also recall his solemn pledge in the coalition document to take robust action on bankers' bonuses. Given that he has broken his first promise and is now reneging on his second, why should we trust anything that he says again?

The Prime Minister: The reason that we have had to put up value added tax is the complete and utter mess we were left by the Government whom the right hon. Gentleman supported. I know that they are now in denial about this, but the fact is that we had one of the biggest budget deficits in the G8 and one of the worst records on debt anywhere that one could mention. We had to take action. The reason we can now discuss calmly taxes and bankers' bonuses and we are not queuing up behind Greece and Ireland for a bail-out is the action that this Government took.

Q15. [32741] Richard Graham (Gloucester) (Con): The Prime Minister will know of the good progress made in the regeneration of my constituency. The next phase is the regeneration of city centre assets currently owned by the regional development agency. Does the Prime Minister agree that, in line with our localism agenda, the best thing is to transfer those assets as soon as possible to the city council, for development for the benefit of the city, and can I highlight how much support that has within Gloucester?

The Prime Minister: I pay tribute to my hon. Friend and what he does to help drive the regeneration agenda in Gloucester. There are real opportunities now that the regional development agencies, which were unloved in so many parts of the country, are going and we are having stronger local enterprise partnerships. There is much more room for good local development, including in Gloucester.

Edward Miliband (Doncaster North) (Lab): I join the Prime Minister in paying tribute to Corporal Steven Dunn from 216 Parachute Signal Squadron, Warrant Officer Class 2 Charles Wood from 23 Pioneer Regiment Royal Logistic Corps and Private Joseva Vatubua from the Argyll and Sutherland Highlanders, 5th Battalion The Royal Regiment of Scotland. We pay tribute to them for their heroism, commitment and dedication, and our hearts go out to their families and friends. I also join the Prime Minister in sending condolences to the Australian people for the floods that are affecting them.

In opposition, the Prime Minister said:

Can the Prime Minister update us on the progress in implementing that promise?

The Prime Minister: What I would say is this- [ Interruption. ] It was the last Government who bailed out the banks and asked for nothing in return. That is what happened. The reason we have difficulties with Royal Bank of Scotland this year is the completely inadequate contract that was negotiated by the Government whom the right hon. Gentleman supported. What we
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all want to see is the banks paying more in tax, and we will see that; we want to see the banks doing more lending, and we will see that; and we want to see bonuses cut, and we will see that. Perhaps he would now make a constructive suggestion.

Edward Miliband: The country is getting fed up with the Prime Minister's pathetic excuses on the banks. He made a clear promise: no bank bonus over £2,000; it is still on the Conservative website. It is a promise broken.

The Prime Minister cannot answer the question on bankers' bonuses: let us try him on the bankers' tax. Can he explain to the British people why he thinks it is fair and reasonable, at a time when he is raising taxes on everyone else, to be cutting taxes this year on the banks?

The Prime Minister: We are not, is the simple answer. I know that the shadow Chancellor cannot really do the numbers, so there is no point Wallace asking Gromit about that one. Let me give the right hon. Gentleman the figures. Last year, the banks paid £18 billion in tax; this year, they are going to be paying £20 billion in tax. Their taxes are going up.

Edward Miliband: The Prime Minister just needs to look at page 91 of the Office for Budget Responsibility book, published in November, to see that Labour's payroll tax on the banks raised £3.5 billion in addition to the corporation tax that they pay. His banking levy is raising just £1.2 billion. In anyone's language, that is a tax cut for the banks. Why does the Prime Minister not just admit it?

The Prime Minister: I have given the right hon. Gentleman the numbers showing that the taxes are going up from £18 billion to £20 billion-now let me explain the numbers in terms of his bank bonus tax and our bank levy. Obviously he cannot get the numbers from the man sitting next to him, so let me give him the numbers. The bank bonus tax raised a net £2.3 billion, and the author of that tax, the former Chancellor, the right hon. Member for Edinburgh South West (Mr Darling), who is sitting on the Back Benches, says that you cannot go on introducing this tax year after year, and very sensible that is too. The bank levy will raise £2.5 billion each year once it is fully up and running- [ Interruption. ] Yes, £2.5 billion; even the shadow Chancellor can tell the right hon. Gentleman that £2.5 billion is more than £2.3 billion. And with the magic of addition and a bank levy every year, which we supported and he opposed-they said "Don't do it", remember that?-we will raise £9 billion compared with his £2.3 billion. Even the shadow Chancellor can work out that 9 is bigger than 2.3.

Edward Miliband: That is as close as we get to an admission from the Prime Minister that he is cutting taxes on the banks this year. The OBR is very clear that Labour's bank bonus tax raised £3.5 billion; he will be raising £1.2 billion from the bankers' levy.

The Prime Minister cannot answer on bonuses and he cannot answer on taxes: now let us talk about transparency. On this, I think he should listen to the Business Secretary. We know that the Business Secretary is not a man to mess with; he told his surgery before
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Christmas that he had a nuclear weapon in his pocket and he was not afraid to use it, so we should listen to him. He said:

On this occasion, he was not talking about the Chancellor of the Exchequer-he was talking about the bankers. Why does the Prime Minister not listen to his Business Secretary and implement our proposal for the disclosure of all bonuses over £1 million? It is on the statute book and ready to go-why does he not just get on with it?

The Prime Minister: That was such a long question that I think it is the right hon. Gentleman who should be thinking about the television career, and he should get his brother to run the Labour party-that is probably a better way round. [ Interruption. ] Look, we want greater transparency, but let me put this to him: he had 13 years to put these rules in place-why did he never get round to it?

Edward Miliband: We know that the Prime Minister has no answer when he starts asking me the questions. Why does he not answer the question on transparency? Let me tell the Prime Minister, he is now in the absurd position of being more of a defender of the banks than even the banks themselves. Stephen Hester, the chief executive of the Royal Bank of Scotland, went to the Treasury Select Committee before Christmas and said,

-a report that the Labour Government commissioned, which made the recommendation-

The Prime Minister has had eight months to hold the banks to account- [ Interruption. ] He has had eight months to hold them to account. When is he going to start?

The Prime Minister: I will take a lecture from a lot of people on how to regulate banks, but I will not take one from the Opposition, who let them get away with absolute murder. Who set up the bank regulation that completely failed? Who bailed out the banks and got nothing in return? Who agreed a Royal Bank of Scotland contract with nothing in it about bonuses for this year? By the way, the right hon. Gentleman was at the Treasury all the way through that. He was there when the previous Government knighted Fred Goodwin. [Hon. Members: "Ah!"] Yes-wait for it-they knighted him for services to banking and sent him away with a £70 million pay-off. That is why no one will ever trust Labour on banking or on the economy again.

Edward Miliband: What was the right hon. Gentleman saying when all that was going on? He was saying, "Deregulate the banks more." He even put the Vulcan in charge of his policy on the banks-planet Redwood and planet Cameron. That is the truth; there we have it. Life in 2011 on planet Cameron: one rule for the banks, another for everybody else. Is it any wonder, as we now know, what his Ministers say in private? In the privacy of his surgery, his Health Minister said:

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The Health Minister knows that the Prime Minister is out of touch, the House knows that he is out of touch and now, because of his failure on the banks, the whole country knows that he is out of touch.

The Prime Minister: I think the right hon. Gentleman knows that this just is not working. We have ended up with a shadow Chancellor who cannot count, and a Labour leader who does not count. When the right hon. Gentleman was in the Treasury, what did he do when the Government set up the regulatory system that failed? He did nothing. What did he do when they paid out £11 billion in bonuses to bankers? He did nothing. What did he do when they said that they had abolished boom and bust? He did nothing. He was the nothing man at the Treasury and he is the nothing man now that he is trying to run the Labour party.

Dr Sarah Wollaston (Totnes) (Con): Brixham coastguard in my constituency has helped more than 2,000 people in the past year. It is earmarked for closure. Will the Prime Minister meet a delegation from Brixham coastguard to hear about the importance of their local knowledge and skills, and to hear how we can avoid a fiasco similar to that of the regionalisation of fire services?

The Prime Minister: I am grateful for my hon. Friend's question. I looked carefully at the time of the announcement at exactly what was proposed for the coastguard. There are proposals to try to put more people on the front line by sharing back-office services and through the way in which the coastguard is co-ordinated. I know that there are very strong local feelings, and I will arrange for her to meet the Transport Secretary to discuss the matter. What is essential is that we have really good coastguard coverage for all of our country.

Q2. [32728] Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op): The Prime Minister has just confirmed to everybody listening that he is not taking any action on bankers' bonuses, yet at the very same time his Government are removing the mobility element of disability living allowance for thousands of people who live in residential care. Is that the influence of the Liberal Democrats, or the unfinished business of the son of Thatcher?

The Prime Minister: First, I actually said no such thing. The hon. Gentleman obviously was not listening to our interesting exchanges. Let us be clear: we want a settlement in which the banks' taxes go up, their lending goes up and their bonuses come down. Instead of posturing and posing, we are actually doing something about it. Disability living allowance is an important issue, and our intention is very clear: there should be a similar approach for people who are in hospital and for people who are in residential care homes. That is what we intend to do, and I will make sure that it happens.

Stephen Metcalfe (South Basildon and East Thurrock) (Con): Please may I ask the Prime Minister to encourage local councils to look favourably and flexibly on community groups that wish to have roads closed to hold street parties to celebrate the forthcoming royal wedding?

The Prime Minister: I will certainly do that. I know that, outside some of the large trade unions that fund the Opposition, everyone wants to have a real celebration
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for the Olympics, the diamond jubilee and the royal wedding, and I think we should certainly make it easier for people to close streets and have street parties.

Q3. [32729] Alex Cunningham (Stockton North) (Lab): I also associate myself with the tributes paid to our soldiers who have recently died in the service of our country, including our own Teesside man, Warrant Officer Charlie Wood, a fine soldier and proud Boro football supporter. Our thoughts and prayers are with his family and all the families.The Prime Minister's Business Secretary compromised himself over the BSkyB takeover bid and his Culture Secretary is a declared admirer of the Murdoch empire. Will the Prime Minister now do the right thing and order the Culture Secretary to refer the takeover bid to the Competition Commission?

The Prime Minister: The hon. Gentleman is entirely right to pay tribute to the soldier from Teesside, and he spoke about him very movingly.

On the issue of the responsibility for media mergers, there is a proper process that needs to be followed. Ministers have a quasi-judicial role in doing that, and I am confident that the arrangements that we have put in place will ensure that that happens.

Mr Bernard Jenkin (Harwich and North Essex) (Con): As chairman of the all-party homeland security group, may I commend the Prime Minister and the Government for having a proper internal discussion about the future of control orders? Given that President Obama himself has been unable to deliver his pledge to close Guantanamo Bay, would it not be ludicrous to suggest that there is some kind of simple answer to the problem? We look forward to seeing the Prime Minister's proposals.

The Prime Minister: I thank my hon. Friend for what he says. There are no simple answers. We face an enormously dangerous terrorist threat, and it is a threat that the British judicial system has struggled to meet. I think that all parties-including the Labour party, funnily enough-have the same goal. The reason we have all talked about reviewing control orders is that we want to ensure that the answer that we come up with is good for liberty and good for security.

Ed Balls (Morley and Outwood) (Lab/Co-op) indicated assent .

The Prime Minister: I can see the shadow Home Secretary nodding, and I hope that we can reach all-party agreement on this important issue.

Q4. [32730] Nic Dakin (Scunthorpe) (Lab): Does the Prime Minister think that it is fair or reasonable that a 16-year-old in the first year of their training or course should have their education maintenance allowance support withdrawn for the second year? Is that not a case of breaking our promises to those young people and letting them down?

The Prime Minister: The point about EMA is that we will be replacing it, and we want to look carefully at how best to do so, but there are two very important facts that we have to bear in mind. The first is that researchers found that 90% of recipients of EMA would
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be staying on at school in any event, and the second is that, again with all-party support, we are raising the participation age in education to 18. For those two reasons, I think it is right to look for a replacement that is more tailored and more targeted and that will help to ensure that those children who really need it get that extra money to stay on at school.

Q5. [32731] Caroline Dinenage (Gosport) (Con): I know that the Prime Minister understands that there is a huge amount of support for the Arctic convoy veterans of world war two to receive a medal, but does he appreciate that in order for the remaining representatives of that incredibly brave group of men to receive that recognition in their lifetime, the time to act is now?

The Prime Minister: I do; I have considerable sympathy with what my hon. Friend says, and I have put a number of questions to the Ministry of Defence and will go on doing that. [Interruption.] Yes, we govern by consent. We have to have proper rules, but it seems to me that the important fact is that people on the Arctic convoys served under incredibly harsh conditions and were not allowed to serve for very long periods, so there is a case for saying that they have missed out. Many of them are coming to the end of their lives, and it would be good if we could do something more to recognise what they have done.

Angus Robertson (Moray) (SNP): Which does the Prime Minister consider to be a worse political betrayal, a Liberal Democrat Deputy Prime Minister who promised not to introduce tuition fees and then did, or a Conservative Prime Minister who promised to introduce a fuel duty stabiliser and did not?

The Prime Minister: You can top all those with a Scottish National party that said it was going to have a referendum on independence and never did. As a predecessor of mine once said, "Frit!"

Q6. [32732] Stephen Mosley (City of Chester) (Con): Cheshire West and Chester, my local Conservative-run council, has announced a council tax freeze while protecting essential public services. Many in the country, and indeed some in this Chamber, deny that that is possible. What message would the Prime Minister send to those who deny that it is possible for Government to deliver more for less?

The Prime Minister: I absolutely commend what my hon. Friend says. The fact is that of course we are making reductions in local government grant, although when we look at the figures, we see that what local government will get in 2013 is equivalent to what it got in 2007, so we should keep these reductions in perspective. However, I would urge every local council to look at what it can do by sharing services, sharing chief executives and trying to reduce back-office costs, and by taking the extra money that is there for a council tax freeze, so that they can deliver more for less.

Q7. [32733] Ian Lucas (Wrexham) (Lab): With the Government cutting 20,000 front-line police officers, will the Prime Minister give me a commitment that recorded crime will not rise on his watch?

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The Prime Minister: I want to see crime come down, because I want to see us get the police out on the beat. The fact is that only 11% of police officers at any one time are out on the beat. I have the figures for North Wales police, and yes, of course there are some spending reductions being made-[Hon. Members: "Answer the question!"] I am answering it. When it comes to the funding, in 2011-12 it will be the same as the funding that the police had in 2007-08, so it is perfectly possible to have effective crime fighting and to get police out on the streets in north Wales.

Q8. [32734] Miss Anne McIntosh (Thirsk and Malton) (Con): Given the rural nature of North Yorkshire and the impact of record prices both at the pumps and for household fuel, will the Prime Minister look again at the Chancellor's undertaking in June to introduce a fuel stabiliser and, more especially, at a rebate for remote rural areas such as North Yorkshire?

The Prime Minister: We have looked at a rebate for rural areas, and some progress was made in the Budget on that issue. On the fair fuel stabiliser, yes, the Treasury is looking at it, because clearly there is a case for saying that if it can be shown that the Treasury benefits from extra revenue as the oil price rises, there should be a way of sharing that with the motorist who is suffering from high prices. [ Interruption. ] While we hear all the chuntering in the world from the Opposition, the fact is that the last four fuel duty increases were all in their Budgets.

Paul Flynn (Newport West) (Lab): The proposed closure of the Newport passport office will have a devastating effect on the 250 families involved and a crippling effect on the economy of Newport. Can the Prime Minister give me an assurance that no final decision will be taken until the economic assessment is published and considered?

The Prime Minister: I know how important the passport office has been to Newport and how many jobs it has provided. Obviously we want to see diverse economies right across our country. That is what the regional growth fund is there to help to achieve in areas that are threatened with public sector job reductions, but I will certainly look at the specific question that the hon. Gentleman asks and ensure that he gets an answer.

Q9. [32735] Nick de Bois (Enfield North) (Con): The Prime Minister will recall his visit to my constituency hospital, Chase Farm, in support of the campaign to prevent the then forced closure of the A and E and consultant-led maternity services. Does he agree that we should keep to our policy of no forced closures, particularly given the fact that our local GPs-our Enfield GPs-are opposed to them, as indeed are residents to the Barnet, Enfield and Haringey strategy?

The Prime Minister: My hon. Friend makes a very good point. Any local changes to the NHS have to meet four tests: they have to have the support of local GPs; they have to have strong public and patient engagement; they have to be backed by sound clinical evidence; and they have to provide support for patient choice. There were no tests like that under the last Government, who had all these top-down reconstructions. There are now tests, and they will be adhered to by this Government.

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Mrs Jenny Chapman (Darlington) (Lab): The Business Secretary wants to move jobs in his Department from Darlington down to Whitehall. What will the Prime Minister do to stop it?

The Prime Minister: We agree with the programme-which was started not by the last Government, but by several previous Governments-of trying to diversify and spread jobs out of Whitehall and into the regions, and we should continue with that. [ Interruption. ]

Mr Speaker: Order. [ Interruption. ] The House must come to order. I want to hear Brandon Lewis.

Q10. [32736] Brandon Lewis (Great Yarmouth) (Con): Great Yarmouth has been approved as one of the pathfinder schemes for GP practitioners. The local health teams are excited by the prospects that that offers. What support can the Government give to ensure that we deliver successfully on this project?

The Prime Minister: I am delighted that my hon. Friend's constituency is taking part in the pathfinder project. Those people who say that somehow NHS reform is being introduced in one big start are completely wrong: 25% of GPs are going forward to make this work. There is huge enthusiasm among GPs to get this moving, and I think that it will show real benefits in patient choice. What I would say to everyone in this House is this. The idea that somehow there is a choice of a simple life-where we do not reform the NHS, and when we have rising drug and treatment bills and, frankly, a record in this country of not being ahead in Europe on cancer, stroke and heart outcomes-is not sensible. It is right to go ahead with this modernisation. It will be this coalition driving it forward and the Opposition just digging in and defending an unacceptable status quo.

Jim Shannon (Strangford) (DUP): The Prime Minister will be well aware of the proposed changes to the air-sea rescue and coastguard services, particularly of the proposed closure of the coastguard station in Bangor in Northern Ireland and the exchange of responsibilities to Scotland. Will he assure the House today that the coastguard station at Bangor will be retained and that the responsibility for air-sea rescue will remain in Northern Ireland, so that the people of Northern Ireland and those who use the seas around it will be safe and secure?

The Prime Minister: I have been lobbied extensively about air-sea rescue, including by people from all walks of life, if I may put it that way. I totally understand the need for good air-sea rescue. I think what matters is not necessarily who carries out the service, but whether they are fully qualified, whether it is a good service and whether it is value for money. That is what we have to make sure happens, as in other areas.

Q11. [32737] Oliver Colvile (Plymouth, Sutton and Devonport) (Con): In reviewing anti-terrorist laws, will my right hon. Friend ensure that there is a balance between the police having the powers of detention and arrest that they need and ensuring that there is a return to the rule of law, as it is understood?

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The Prime Minister: My hon. Friend is absolutely right that we should not depart from normal procedures and practices in British law and justice unless it is absolutely necessary. Every change has to be defended in that way. As I said earlier, we face a terrorist threat that is materially different from what we faced from the IRA. We face a threat where people are quite prepared to murder themselves and as many as they can on any occasion. It is difficult to meet this point by using all the existing methods. That is why control orders were put in place and that is why their replacement must be good both for our liberty and for our security. I am absolutely convinced that we will do that, and in a way that has the support of the police, the security services and all those to whom I pay tribute from this Dispatch Box today for all their work, including over the Christmas period, in keeping us safe.

Q12. [32738] Jim Sheridan (Paisley and Renfrewshire North) (Lab): This House recognises the valuable work of the armed forces in promoting and protecting democracy in some of the most dangerous parts of the world. Yet these same armed forces see that the Prime Minister in their own country is sacrificing democracy to a foreign-based media mogul-hear no evil; see no evil. Will the Prime Minister explain why?

The Prime Minister: I am afraid I did not quite get the gist of that question. The point is that media regulation is properly carried out in this country and by this Government, and it will be done in a way that is fair and transparent. That is what needs to happen; that is what will happen.

Q13. [32739] Richard Ottaway (Croydon South) (Con): The right to strike is an important one and the hallmark of a free society, but with rights come responsibilities. Does the Prime Minister agree that any union ballot that leads to industrial action should have the majority support of those entitled to vote?

The Prime Minister: I know that a strong case is being made, not least by my colleague, the Mayor of London, for this sort of change. I am very happy to look at the arguments for it, because I want to make sure that we have a fair body of union law in this country. I think the laws put in place in the 1980s are working well. We do
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not currently have proposals to amend them, but I am happy to look at this argument, because I do not want to see a wave of irresponsible strikes, not least when they are not supported by a majority of people taking part.

Q14. [32740] Lindsay Roy (Glenrothes) (Lab): Nye Bevan, a man of great vision and remarkable foresight, once said:

Is this Prime Minister's so-called bonfire of the quangos one such example, because it has turned out to be a damp squib?

The Prime Minister: I do not accept that for a moment. The bonfire of the quangos is going to make sure that we rationalise all the non-governmental bodies and it will save billions of pounds in the process. It is a very sensible process of asking what should be part of Government, which should be properly accountable to this House, and what does not need to be done and therefore can be taken away. As I say, it will save billions of pounds-and a very good thing, too.

Henry Smith (Crawley) (Con): Will the Prime Minister join me in congratulating the Crawley hospital league of friends on helping to secure a new mammogram machine for that hospital? Can the Prime Minister explain other ways in which we can develop better cancer services in this country?

The Prime Minister: I am grateful for my hon. Friend's question. I know that Members in all parts of the House support the efforts of leagues of friends in their constituencies in raising money for their hospitals and doing extraordinary things in terms of equipment and better services. This is a good moment at which to pay tribute to all who take part.

Today we are announcing a new cancer plan that aims to save another 5,000 lives every year by the end of the current Parliament. This is all about the early diagnosis that we need in the NHS, but I must tell the hon. Gentleman that we would not be able to do it if we had not, as a coalition Government, made the right decision to protect NHS spending-a decision completely opposed by the Labour party.

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Points of Order

12.30 pm

Ed Balls (Morley and Outwood) (Lab/Co-op): On a point of order, Mr. Speaker. The House has been waiting for the conclusions of the counter-terrorism review since the end of the summer. It now seems that we will not have a statement this week, and that we may not have one next week either. It appears, however, that the full details of the review were leaked to a BBC television station last night. Is that not a shambolic and contemptuous way in which to treat the House in respect of an issue of such vital national importance when, as the Prime Minister said today, consensus is the right way forward? Have you any information, Mr. Speaker, on when we are likely to have a statement, and should that not happen tomorrow or as soon as possible?

Mr Speaker: The short answer to the right hon. Gentleman's question is that I have no knowledge of when a statement is to be made, and I do not want to become involved in hypothetical questions. I am not aware of the disclosure to which the right hon. Gentleman has referred, but as the whole House-including Ministers-is aware, when decisions have been made they must first be announced to the House.

Mr Kevin Barron (Rother Valley) (Lab): On a point of order, Mr Speaker. You will be aware that there is a huge amount of speculation in the press today following yesterday's court hearing involving the hon. Member for Barnsley Central (Mr Illsley) and whether he could now be expelled from the House. May I ask you to clarify whether the matter remains sub judice-

Mr Speaker: Order. I have got the gist of what the right hon. Gentleman is seeking to raise. I can advise him and the House that the matter in question is sub judice until the point at which the judicial process as a whole has been completed. That is established, and there are precedents for it. I hope that what I have said to the right hon. Gentleman and to the House is helpful.

Mr Barron: Further to that point of order, Mr. Speaker-

Mr Speaker: Order. There is no "further to that point of order".

Mr Barron: No motion will be accepted.

Mr Speaker: Order. There is no further point to be made. The right hon. Gentleman has raised the matter and I make no complaint about that, but I feel that I have given a clear indication to the House of what the position is.

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Dairy Farming

Motion for leave to bring in a Bill (Standing Order No. 23)

12.33 pm

Stephen Phillips (Sleaford and North Hykeham) (Con): I beg to move,

I am grateful for the opportunity to further the debate on an issue that is fundamental to the way of life of many in my constituency and, indeed, people in rural areas throughout the country. That issue is, of course, the future of the British dairy farming industry, which, as hon. Members in all parts of the House will know, has been in crisis for well over a decade-partly because central Government previously showed no real interest in either the dairy farming industry or the farming industry generally, but also because of the huge power of supermarkets and other bulk purchasers to drive down the prices of not just milk but many of the staples of our diet, a power that they have used vigorously and persistently for far too long without having their wings clipped by the House. The power of the supermarkets and other large purchasers may have been good for consumers in the short term, but it has not been good for farmers, and I suspect that it will be beneficial in the longer term neither for consumers nor for those purchasers themselves. The simple fact of the matter is that what has gone on has driven down the price of milk and other commodities to levels where it has become extremely difficult for British farmers to make an acceptable living.

Dairy farming has been part of this country's agricultural economy for many hundreds of years, and it is also part of our rural heritage. That is, or at least was, particularly so in rural areas such as the one that I represent, and it is partly why the reduction in the number of British dairy farmers is of such concern to so many of us. I alluded to the numbers in an earlier Westminster Hall debate, and they are alarming. In 2000, there were 23,286 registered dairy production holdings in England and Wales. Today, that number stands at 11,233.

The factors that I have identified have led directly to the other issue with which this Bill seeks to grapple, which is that we are now beginning to see proposals for the sort of dairy farming industry that I know fills many ordinary people in this country and in my constituency-and, indeed, many traditional dairy farmers-with horror. As many hon. Members will be aware, developers in my constituency are currently seeking planning permission for a so-called super-dairy-in reality, an industrialised milk production facility-at Nocton fen, a beautiful site in the heart of a number of long-established rural communities, which, I must inform the House, are almost universally united in their opposition to the development.

The combination of the downturn in the economy and continued pressure on prices is forcing the farming community to consider intensive production mechanisms like those proposed at Nocton. Those mechanisms give rise to real concerns for animal welfare, and there is real opposition in respect of their effect on local communities and the environment more generally.

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It is often said by those who live in towns who have no real knowledge of how we live our lives in rural Britain that farmers do not care about the environment or their animals. That argument is as wrong as it is offensive. In my experience, farmers care more about the environment and their animals than any other section of society, but they also have families for whom they have to provide and whom they need to support, and we therefore need to recognise that, whatever measures are introduced in this House and whatever decisions are taken, farmers have to be paid a proper price for the food they produce. If that were already happening in the dairy industry, I would not be introducing this Bill because there would be no need for it. If consumers paid just a few extra pence for their milk, the British dairy industry would not need to consider undergoing the form of fundamental change that proposals such as those for the super-dairy at Nocton involve. This Bill is not primarily about the specific proposals for Nocton, but one aspect of it does deal with intensive dairy farming, which will always affect local communities in various ways.

As I have implied, the contents of my postbag show me that the ongoing application at Nocton is almost universally opposed by the communities in which the development would be sited, and the opposition comes from those who live in settled farming communities and have done so all their lives. This is not nimbyism, therefore; instead, it is a legitimate and entirely understandable desire to maintain a recognisable rural way of life away from the hurly-burly of the industrial practices that have come to be associated with much of the modern world.

Opposition to these types of super-dairies is grounded on a number of rational bases, and I shall mention just two of them. First, there is the question of slurry. I must inform hon. Members that cows produce slurry, which must then be disposed of. Technology can, of course, provide part of the answer, but significant quantities of dirty water will always remain to be disposed of, either through environmentally unfriendly tankering operations or through discharge, which, unless carefully managed, runs the risk of polluting aquifers. This issue is not just about odour-an odour which many of us who live in
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the countryside are used to, and, indeed, are rather fond of. The fact of the matter is that effluent contains pathogens and other harmful substances, including residues of pesticides and veterinary medicines. The use of anaerobic digestion to process slurry cannot mitigate the entire problem, particularly when dealing with waste from a large numbers of cows.

A second reason for opposition, and another reason why local communities are right to be concerned about proposals for these large-scale dairy operations, is the issue associated with traffic, which comes with any form of industrialised process, whether in farming or any other industry. Large numbers of cows milked for high yields produce naturally large quantities of milk, which needs to be transported, and they also require deliveries of all manner of feed and other products associated with their maintenance and support. In areas where traffic is already an issue, such as Nocton, the strain placed on the existing infrastructure would be, at best, undesirable. In areas where traffic is sometimes thought not to be an issue, perhaps because of their rural nature, the position is worse. Additional movements of heavy and slow-moving vehicles contribute to accidents. Not only are communities in rural areas not used to this type of traffic, but they lack the infrastructure to deal with it. That is certainly the position at Nocton, where such issues have rightly been raised with me by a large number of local people.

Those issues and the others associated with these super-dairies-if they are indeed the route down which the British dairy industry is to go-can be solved by introducing a required minimum distance between such operations and the nearest settlements, as is already the case in many other jurisdictions, including many states in the United States. For that reason, and for all the others that I have given, I respectfully submit that this Bill is timely and I commend it to the House accordingly.

Question put and agreed to .


That Stephen Phillips, Mr Roger Gale, Martin Horwood and Robert Flello present the Bill.

Stephen Phillips accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 10 June, and to be printed (Bill 131).

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Postal Services Bill

[Relevant document: The First Report from the Scottish Affairs Committee, Postal Services in Scotland , HC 66 9-I and -II . ]

Consideration of Bill, as amended in the Public Bill Committee

New Clause 2

Guarantee of inter-business agreement

'Prior to any sale or transfer of a post office company an agreement must be secured to guarantee the inter-business agreement between Post Office Limited and Royal Mail for a period of at least 10 years.'.- (Bob Russell.)

Brought up, and read the First time.

12.42 pm

Bob Russell (Colchester) (LD): I beg to move, That the clause be read a Second time.

When social historians come to study the Post Office/Royal Mail between 1980 and 2010, they will wonder how a great British institution, which was exported around the world and was copied by other nations, was allowed to go downhill so quickly. Successive Governments during those 30 years have to share equal blame. The number of post office closures was considerably greater under the previous Labour Government than in the years of the previous Conservative Government. In my constituency-I am sure that this was repeated around the country-the number of sub-post offices was almost halved under Labour Government policies that were both deliberate and had unintended consequences. For example, no joined-up government was involved when that Government's Department for Work and Pensions put the delivery of Government mail out to the private sector. What makes the situation even worse is that the final journey of every privatised letter and package delivered in this country makes the Post Office/Royal Mail a loss; every private package and private letter is subsidised by the public purse.

Sir Alan Beith (Berwick-upon-Tweed) (LD): Does my hon. Friend know that when I went to meet postmen, as I always do at Christmas, I found that what bothered them more than anything about the Bill was not so much the privatisation element-although they did not particularly welcome that-but that they were walking up drives, delivering letters at a loss? That suggests that the kind of inter-business agreement that led to that regulatory requirement showed a serious deficiency in Post Office management.

Bob Russell: I endorse that. I, too, like many right hon. and hon. Members, visited my local sorting office. It is safe to say, without any contradiction, that morale is not high.

Mr Mike Weir (Angus) (SNP): I have listened carefully to what the hon. Gentleman has said. The inter-business agreement is an agreement between post offices and Royal Mail about the use of post office services. I think the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith) was referring to the headroom agreement, which relates to the "last mile". That is a different thing and is not related to the agreement between the two arms of Post Office Ltd.

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Bob Russell: The hon. Gentleman has taken a keen interest in this Bill and will know the ins and outs of it far better than I do. I am making the general point that the incompetence of the last Government and of Royal Mail and the Post Office under the jurisdiction of the last Government mean that every time a private package is delivered by the friendly postie, it is at a loss to the public purse. That was my general point. Indeed, I could refer to Postman Pat and his black and white cat. Some hon. Members might have seen the adaptation of Postman Pat by Specsavers, and the agreement that the last Labour Government allowed is like that Specsavers advert-Postman Pat is not on the road, he is driving over the fields and knocking down signposts.

Mr Russell Brown (Dumfries and Galloway) (Lab): I can understand that the hon. Gentleman is unhappy with what happened under the previous Government, but would he care to elaborate on his anxiety and the role of the regulator in constantly squeezing prices, which led to some of the losses?

Bob Russell: The hon. Gentleman may well be right. I might come on to the point about pressing down prices in the future.

I am not a fan of privatisation, either of Royal Mail and the Post Office or of any other aspect of a public utility. My record is proof of that. I did not agree with the proposals that came out under the previous Labour Government to privatise or part-privatise Royal Mail and the Post Office. Although my heart is against the Bill, my head tells me that it will happen. We must be pragmatic and we must accept the inevitable. I am still hoping that a mutualised company will emerge, as many of our sub-post offices are already run by mutuals through the co-operative movement. That is one way. Another way would be if shares were issued to the work force.

Sir Robert Smith (West Aberdeenshire and Kincardine) (LD): On the issue of downstream access that my hon. Friend has been addressing, one thing that the Bill does is to give the regulation to a regulator with more robust experience of regulating markets. The most important thing that the regulator will have to do is to ensure that the access arrangements are fair and balanced so that Royal Mail can survive to deliver that crucial universal service.

Bob Russell: As ever, my hon. Friend makes an important and valid point. Those who inherit this Bill, when it becomes an Act, will need to take that on board.

I think I am one of the few people in the House who was once employed by the Post Office. I joined the company in 1973, when it was Post Office Telecommunications. It then became British Telecommunications-that was the first significant split-and it was then privatised. The rest is history, as they say. Many people still refer to that great British institution as the General Post Office, even though it must be 40 or 50 years since the GPO ceased to exist-I am not sure exactly when it was-in the same way that they still refer to the boy scouts, even though they have not been boy scouts for decades.

Returning to the point that the hon. Member for Dumfries and Galloway (Mr Brown) made, I am grateful for this trip down memory lane because when the
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previous Postal Services Bill came before the House, the shadow Chancellor was the responsible Minister and he had some harsh words to say about the previous Administration. He said:

It is fair to say that we are now back to the modern Postman Pat and the Specsavers advert.

There are 11,905 post offices in the UK, the vast majority of which are sub-post offices run as franchises by sub-postmasters.

Jim Shannon (Strangford) (DUP): Does the hon. Gentleman agree that a 10-year agreement would be a better system for securing the future of the Post Office, especially given that the future of perhaps as many as 1,500 post offices across the United Kingdom might be in question?

Bob Russell: I am grateful for that intervention because the thrust and purpose of my new clause is exactly to enable the new, privatised Royal Mail to ensure that business continues to go to the Post Office and our sub-post offices. There is a general perception of the Post Office and Royal Mail as being one organisation, and I acknowledge that I regard it in that way. I know that they operate as two separate business entities, but just as when British Telecom moved away from the Post Office, it takes time for people to come to terms with the fact that they are two different animals.

Mr Weir: Is that not the crux of the problem? The Post Office does a lot more than simply service the mail delivery system and by privatising Royal Mail the Government are breaking that link. A Royal Mail focused primarily or solely on mail delivery will not need the other services offered by post offices.

Bob Russell: The hon. Gentleman makes my point for me, so I hope that if we go to a vote he and his colleagues will join me in the Aye Lobby.

We have the network and the operating company, Post Office Ltd, and post offices provide a vital service to communities around the UK, especially, but not only, in rural areas. As I have said, about 10 neighbourhood, suburban community post offices have already shut in my urban constituency.

Mr Mike Hancock (Portsmouth South) (LD): Unlike my hon. Friend, I am not an enthusiastic supporter of the legislation. What will his position be if his new clause is not passed, because he is saying that the Bill will be effective in protecting the things he is interested in only if his new clause is carried?

Bob Russell: I am bound to say that that was not a very helpful intervention from my hon. Friend, particularly as I share a flat with him. At the very least, he could have raised those concerns over the breakfast table.

I think I have made it clear that I am not a fan of the privatisation. I accept the reality of what is going to happen and I am suggesting to the Minister what I
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think would be in the best interest of our communities. I think that I am making an overwhelming case and it would be great if he accepted my new clause. The previous Government brought in measures on sustainable communities and we are now talking about localism, which is right. To say that the previous Government decimated the system would be wrong: they did more than that because decimation is only 10% and I would have settled for 10%.

Mr Brian Binley (Northampton South) (Con): Would not this measure make the whole transfer or sale deal much more viable and do much more to guarantee the viable retention of a post office network? If it is not accepted, that will all be in danger.

Bob Russell: I am grateful to my hon. Friend for that extremely helpful intervention. Regardless of what we think of the Bill, we all want to retain as many of our sub-post offices as we can.

Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op): Does the hon. Gentleman agree that, for post offices to be sustained, they need regular work? Is he concerned by what postmasters have pointed out-that there has not yet been a guarantee of additional work from the Government? Indeed, post offices might not even win some of the contracts that they have already bid for.

Bob Russell: The hon. Lady is correct and it is a pity that she was not here during the terms of previous Labour Governments to argue that case because they withdrew business from our sub-post offices. That is all on the record and there is no point in anyone seeking to deny it. The deliberate policies of the previous Labour Government are one reason why so many post offices have shut.

Tony Lloyd (Manchester Central) (Lab): The hon. Gentleman is being very generous in giving way. He began to touch on the importance of the post office network in urban as well as rural areas, but was not able to develop the point. I represent a very urban, inner-city area and the post office network is vital to keeping the business community together. Quite simply, other businesses depend on post offices, which are coming under intense pressure from the supermarkets, for example, so we need to build in protection for the urban as well as the rural areas.

Bob Russell: I am also grateful for that intervention; every intervention so far, with the possible exception of that by my hon. Friend the Member for Portsmouth South (Mr Hancock), has been helpful to my argument. I referred to the rural post offices and I mentioned urban post offices following a series of interventions. The intervention of the hon. Member for Manchester Central (Tony Lloyd) bears that point out. The difference between rural and urban sub-post offices is that at least in urban areas there is a sporting chance that there might be one two miles or so away, but in some urban areas one might have to add a zero to that distance.

Jim Fitzpatrick (Poplar and Limehouse) (Lab): I do not challenge the hon. Gentleman's recording of history in that certain Government Departments that tendered
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their postal arrangements went outside Royal Mail. That is a matter of fact, as he says, but in defence of Labour's record, my right hon. Friend the Member for Edinburgh South West (Mr Darling) secured £1.7 billion to try to keep the network as large as possible. Has the hon. Gentleman made any estimate of how many post offices and sub-post offices his right hon. and hon. Friends will close if his new clause is unsuccessful?

Bob Russell: No, I have not, but I am sure that the Minister, whom I have not yet won over to my argument, will point out that the coalition Government are investing a substantial sum of money in the sub-post office network. That will happen irrespective of what happens to my new clause.

Jonathan Edwards (Carmarthen East and Dinefwr) (PC): May I help the hon. Gentleman? Over the weekend, Consumer Focus said that unless there is any progress on this agreement, up to 4,000 post offices could be closed. Does he agree with that assessment?

Bob Russell: I am not in a position to challenge research that other organisations have undertaken. If that is the case, based on the number of closures under the previous Government, I would probably lose at least a third of the remaining sub-post offices in my constituency, which I would not welcome. Indeed, I would be distraught if that happened as a result of the Bill, but I hope that the money that the coalition Government are placing into the network will mean that the losses will not be of that magnitude.

1 pm

Mr Russell Brown: The hon. Gentleman mentioned the amount of Government work that was taken away from post offices by the Labour Government. For the record, would he care to list what Government work was actually taken away? Not just the House, but the wider public would then be able to understand exactly what that means.

Bob Russell: The hon. Gentleman tempts me to rush to the Library to see whether that information would fill one or two sides of A4. We are not talking about one or two things, otherwise sub-postmasters would not have been telling me over the years that they lost business because of the actions of the previous Government-for example, on TV licences.

Mr Brown: I am sure the hon. Gentleman recognises that TV Licensing is not controlled by Government. The authority made a decision to save £100 million, so I have to say to the hon. Gentleman in good faith that it is wrong to make that statement, because TV Licensing is not Government-controlled.

Bob Russell: I am not sure whether I am grateful for that intervention, but if the hon. Gentleman is saying that the previous Government were impotent, I accept his observation.

Richard Fuller (Bedford) (Con): The hon. Gentleman has been so gracious in giving way that I need to go back about four interventions to what he was saying about what the current Government are doing, rather
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than going into the history. When he acknowledges that the coalition Government have put substantial amounts of money into defending the post office network, does he accept that there really is a commitment behind the Bill to maintain the viability of the post office network, and there must be good reasons why his proposal is not permissible? Would he care to comment on the implications at European Union level?

Bob Russell: I suggest that the hon. Gentleman discusses that last point with the hon. Member for Stone (Mr Cash), who can enlighten him far better than I can. I thank him for the intervention, but the short answer is that I do not know what impact my new clause would have on EU legislation. I am sure that if there would be an impact we will hear about it from one of the Front-Bench speakers at some point.

Michael Connarty (Linlithgow and East Falkirk) (Lab): If the hon. Gentleman looks at the record, he will see that the amount spent by the previous Government in paying out for closures of post offices-in other words, to people who left their post offices and took the King's shilling-came to much more than the sum proposed by the current Government over a four-year period. How much impact does the hon. Gentleman think there will be on post offices from losing the arrangement to do business for Royal Mail, in terms of closures, compared with the paltry sum that is being offered? It may in fact be spent on redundancies and closing post offices, as it has been in the past.

Bob Russell: I need to move on, as my hon. Friend the Member for Bedford (Richard Fuller) suggested. However, in view of that intervention, I must respond by pointing out that the money the previous Government put in was to pay for closures, whereas the money this Government plan to put in will be to keep sub-post offices open. There is a significant difference between the two.

Mr Mike Hancock: Will my hon. Friend give way?

Bob Russell: No.

As the interventions have indicated, the post office network is still fragile. Some 9,000 sub-post offices have closed over the past 20 years. I am advised that 900 are for sale at the moment and that more than 150 are designated as "long-term temporarily closed". That is not a phrase I understand, because I am not sure in which order the words should go.

The sub-postmasters who run those businesses have retired, are about to retire or want to sell their business because it makes no money. That is an important point, because in calculating the number of post offices that are open, Post Office Ltd includes those that are euphemistically described as "temporarily closed". It is clear that many post offices find it hard to survive and sustain business. I am pleased that the Business Secretary recognises the difficulties that face the network. His announcement of a £1.3 billion subsidy will bring much comfort and will help the network to continue to operate for the next four years.

All of us want post offices to operate without subsidy. It is certainly unique that a high street retailer should be financed by the taxpayer; no other retail outlet would be allowed such support and nor would any Government
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want to provide it. The subsidy to the post office network reflects the unique nature of the business and the services post offices offer. When the social historians look back, they will acknowledge that just as the telegram has gone, so modern technology means that the business has to adapt. What should have happened in 1997 was a recognition of the potential use of modern technology through that wonderful network of outlets across the country-in towns, cities and villages. The Government should have asked what else that unique network could provide. They did not, and the result was that business continued to go down, which is why we are in the mess we are in now.

The relationship between Royal Mail and Post Office Ltd is governed by the inter-business agreement, or IBA, which sets out in detail the commercial relationship between the two companies. Typically it will include the goods and services that Royal Mail offers exclusively-or not-through the post office network. The IBA is essential to those post offices, as well as their commercial retail activity. I had the privilege of opening a fish and chip shop in a post office so that the owner could, it was hoped, keep the post office going. I believe it was the only fish and chip shop post office in the country. Sadly the post office has gone, but the Myland chippy is still there.

Royal Mail provides the post office business with a significant proportion of its income through transactions in respect of the postage of letters, packets and parcels. As we all know, historically, the combined businesses were known as the General Post Office-the GPO for those of us of a certain age-and then the Post Office. Integrated businesses operated together to handle mail and provide post office services. Over time, the businesses have become increasingly separate and the Bill breaks the company link between Royal Mail and Post Office Ltd entirely-exactly as British Telecom broke away from the Post Office.

There was a time when working for the post office was a family thing; it was generational. There was pride and security of employment, but now, as we have already heard, morale is on the floor. My new clause seeks to ensure that before the sale of Royal Mail, the two businesses have a copper-bottomed inter-business agreement in place and that it stays in place unmolested for 10 years.

Ministers may ask why it is necessary for such an agreement to be in the Bill. No doubt, they will point to the current IBA and, of course, the subsidy the Government, or rather taxpayers, are generously providing. They will point to evidence given in Committee by Royal Mail that it has no intention of breaking its commercial relationship with Post Office Ltd. There should thus be no problem with the new clause because it will put in writing what the Committee was assured would be the case.

Jim McGovern (Dundee West) (Lab): May I ask the hon. Gentleman about the 10-year period? Why not one year, or an indefinite period? How did he arrive at 10 years?

Bob Russell: That is a good question. The number could be nine or 11. Those with whom I have discussed this point-including the Communication Workers Union
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and others-are of the view that the period cannot be open-ended. There is general acknowledgement that the provision cannot last for ever. The number of years could be five, eight or 10-it is just a figure. I do not think it was scientifically arrived at-if that is what the hon. Gentleman is asking; it was really a question of trying to cement an existing operational mechanism on a formal legal footing for at least 10 years, in the hope that it would continue way beyond that. It would be a guarantee for 10 years, but the hope is that it would continue.

Mr Mike Hancock: I will try to be helpful to my hon. Friend. I do not support the Bill, but I support the new clause in trying to bring about a significant improvement. In his discussions with the Government, have they given him any explanation of why they would want to resist such a straightforward and sensible measure as the one he proposes?

Bob Russell: If my hon. Friend thinks that I have been spending hours and hours trawling around meeting Ministers-

Mr Hancock: You have been getting up early.

Bob Russell: I was up early-true-but the new clause stands in my name, and I am sure that the Minister is aware of my thinking. I have not persuaded him so far, although I have been speaking for half an hour. I hoped that he might intervene to say that he accepts the argument and my new clause. Until such time as he does, I will keep going and hope I can win him over.

Mr Weir: I thank the hon. Gentleman for giving way; he has been very generous with interventions. He mentioned what the Minister said in Committee, but I can assure him that many of us who served on the Committee were not convinced by the Minister's argument. It seems to me and to many others that the fundamental difference is that Royal Mail and Post Office Ltd are part of the same group and will obviously stick together, but when Royal Mail is privatised we will have a large Royal Mail company and a relatively small Post Office Ltd negotiating an agreement. Does the hon. Gentleman think that Post Office Ltd will come out well from such an agreement?

Bob Russell: I cannot comment on the body language in Committee because I was not there. I tabled the new clause, which, if passed, will deal with the hon. Gentleman's fears. It is as simple as that.

The new clause would protect the post office network from the IBA's possible erosion by a privatised Royal Mail. Ministers might feel differently, but we must ask ourselves why Royal Mail is being privatised. Indeed, successive Governments have argued the same points over the past 30 years.

Damian Collins (Folkestone and Hythe) (Con): Is the hon. Gentleman concerned that, given the nature of change, a 10-year restriction on the inter-business agreement might end up being bad for the Post Office? Under the Bill, new providers may come in, so it might welcome the flexibility to renegotiate the agreement.

Bob Russell: That is certainly a valid argument, although I do not agree with it. I understand what the hon. Gentleman is saying: 10 years could be too restrictive and a shorter period-or, indeed, no period at all-might be beneficial.

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John Thurso (Caithness, Sutherland and Easter Ross) (LD): Is my hon. Friend aware that there are many examples of private sector companies splitting to become separate entities and that, in almost every case, a shareholders' agreement between them has set the terms until they have been able to operate independently? Is that not precisely what the new clause would do, and is it not simply commercial good practice, which should be commended to the Minister?

Bob Russell: I am extremely grateful to my hon. Friend. If he is called to speak in the debate, I hope he will elaborate on that important and valuable point, of which I was not aware. I am sure he is correct-he would not have said it otherwise-so if it is acceptable for private sector companies to split but still have a legally binding agreement, why cannot we have that in this case? I thank him for making that point.

Royal Mail needs to be free from Government interference. It must become more dynamic-I think that that reinforces my point-and more competitive, as the market for postal services has liberalised. Mr Richard Hooper, who has reported to this Government and the previous Government, has said that Royal Mail's profit is considerably lower than that of other national postal authorities and a lot lower than that of the private carriers. Of course, one reason for that is the subsidised delivery of private mail. Whether or not that is an accurate assessment, the argument in favour of privatising Royal Mail has at its core the desire for the business to grow and become more profitable. As with all private businesses that operate in strongly competitive markets, Royal Mail will undoubtedly want to use the new commercial freedoms it has been given. Indeed, a dynamic Canadian business woman was appointed as chief executive precisely to ensure that Royal Mail can get the best of starts as a wholly commercial entity.

1.15 pm

Chief executives of large private companies have a primary goal: to maximise shareholder value by running their businesses as profitably as they can. Of course, that involves driving down cost, ensuring that distribution channels are as efficient as possible and selling products wherever and however possible. What would a dynamic chief executive make of an inter-business agreement that restricts the ability of the principal business to sell its goods or services? What would Sir Terry Leahy say to a supplier who told him, "You cannot negotiate with me on the price of the goods or services I provide for you."? Tesco-I shop at the Co-op-did not become what it is by being anything other than determined to drive down costs.

We may not always feel comfortable with the relationship that supermarkets have with their suppliers, but they will always say that the No. 1 customer motivation is price and that costs must be controlled. If a chief executive of a large company somehow neglected their obligations to cut costs or gave unfair favour to a supplier, they would have a board, including non-executive directors, and shareholders breathing down their necks. In a few years' time, we face the prospect of a privatised Royal Mail, free from the clutches of my right hon. Friend the Secretary of State for Business, Innovation and Skills, free to innovate and free to do all the things that only privatisation will allow it to do.

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Jim McGovern: The hon. Gentleman said that the Communication Workers Union supports the 10-year period. I am part of the Select Committee on Scottish Affairs, and when we visited the sorting office in Glasgow the manager told us that he favours privatisation-the very first Royal Mail employee to say so. Is the hon. Gentleman aware that the CWU has made it clear that it is against privatisation? Does he support the CWU's position?

Bob Russell: I am sorry if the hon. Gentleman is not aware of my views on the Bill. I thought that I had made it quite clear that I do not favour privatisation, but I accept the reality that it will happen, and I am trying to make things the best I can. Of course I know the CWU's views. I have met CWU people both nationally and locally, and I have told them, "I do not like it, but it's going happen-accept the reality." I do not like lots of things, but we have to accept the reality.

The new clause is designed to try to assist the post office network-our neighbourhood post offices. It is also designed to try to ensure that Post Office workers-the people who deliver our mail-have a sustainable business. That is what it is all about. I have encouraged my local CWU people in Colchester to understand that the concept of mutualisation and employees having shares are positive things-they seem to work for John Lewis, as one model, and for the co-operative movement, as another model-and to embrace, not deny what will happen.

Mr David Anderson (Blaydon) (Lab): I thank the hon. Gentleman for giving way; he is being very generous. Does he agree that neither the Co-op nor John Lewis had arrangements foisted on them by a Government against the will of the work force and the British people?

Bob Russell: I need to reflect on what the Labour Government, particularly Lord Mandelson, had in mind, and how that may or may not differ from the proposals.

I am critical of the Labour Government, but I am also critical of the Government who preceded them. This is the third time that I am going to say this: for the past 30 years, this great British institution has been run down by successive Governments. It was the envy of the world-it no longer is-and ultimately the blame must rest with Government and, it must be said, the somewhat mediocre management for many of those years.

Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab): The problem for Labour Members is that when the Government discuss mutuals or co-operatives, we do not know whether they are proposing a workers' co-operative or a mutual co-operative. We received some indications in Committee, but we do not know for certain what model they are proposing. As has been said, 97% of post offices are independently owned, and we assume that those owners will go into a mutual model.

Bob Russell: I thank the hon. Gentleman for his intervention, and in so doing I return to the confusion about post offices and Royal Mail. If we get confused in this debate, we can understand why the general public are confused too. He is absolutely right that 97% of sub-post offices are not owned by the Government. We are not talking about them-we are talking about Royal
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Mail and how privatisation and whatever measures and aspects of the Bill are introduced will assist post offices and Royal Mail and its workers.

Ian Murray (Edinburgh South) (Lab): The hon. Gentleman has been generous in accepting interventions. You talked in response to my hon. Friend the Member for Blaydon (Mr Anderson) about successive Governments running down Royal Mail, which, to use your words, is a national treasure and national institution. Would you therefore agree that it will be your Government who could put the final nail in the coffin?

Mr Speaker: Order. I have not talked about anything and I am not giving any commitments on anything, but Mr Russell might.

Bob Russell: Thank you, Mr Speaker. Which Government did what when will be in the history books, so the hon. Gentleman will have his moment of glory and can say, "It was the dastardly Conservatives and Liberal Democrats wot done it." That is how he would wish to present it, but I am not sure how history would record the demise of Royal Mail and the Post Office if Lord Mandelson's proposals had been introduced, whatever they may have been.

I want to gaze into the future and imagine the agenda of the first board meeting of the newly privatised Royal Mail plc. After a report from the remuneration committee, perhaps the main item of business will be listed as the sponsorship of Sunderland football club. Afterwards, the agenda will no doubt turn to the issue of cost savings to be achieved. Like any other dynamic FTSE 100 company, which Royal Mail, I understand, will become, the board will want to see how it can reduce the cost of its contracts with suppliers. It happens every day in the world of commerce, notwithstanding the helpful contribution from my hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso). In that private world, the agreements that I propose in my new clause exist.

A principal supplier to Royal Mail is Post Office Ltd. The board will confer and I have no doubt it will quickly decide two things: first, the cost of the contractual relationship with Post Office Ltd is too expensive and, secondly, limiting the distribution of products and services through the post office network does not work in the best interests of Royal Mail. That is where the analogy with the supermarkets comes in, because the criticism is that they are all-powerful. They determine the contracts with suppliers, they set the price, and if suppliers do not like it, they know what they can do.

Damian Collins: In the scenario that the hon. Gentleman paints, might it not be possible for the Post Office to say to Royal Mail, "Well, if you are going to do this to us, we will look at taking postal services from providers from whom we do not currently accept them, and run them in competition with your service. Would you like us to do that?" It would be an honest negotiation.

Bob Russell: Again, it is a good argument, and the hon. Gentleman may be proved right as time moves on. I hope that that will not be the case, but he makes his point.

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Why would it be any different with Royal Mail? It may operate an agreement with Post Office Ltd, but there would be nothing on this earth to stop Royal Mail renegotiating it. In fact, Royal Mail would be obliged to change the terms of the inter-business agreement. It would, under any commercial logic, seek a wider set of outlets for a broader range of its services, including supermarkets, petrol stations and retail outlets. That will take vital revenue away from those post offices that currently have exclusive rights. Royal Mail will seek to chip away at the transactional costs that it pays to Post Office Ltd. It will want to revisit the IBA, renegotiate terms, and demand changes. As they say, it is nothing personal, only business, but every little counts.

What can we do to protect the UK's network of post offices from the predatory actions of a privatised Royal Mail? If we leave the whole issue to be resolved in the commercial arena, there will be only one winner and one big loser. Even more of our neighbourhood and community post offices, both urban and rural, would go.

Jim McGovern: May I take the hon. Gentleman back to proposals to reduce costs, and what he said about there being one loser? Does he agree that probably the biggest cost to Royal Mail is paying its work force, and that the way to reduce costs is probably to drive down terms and conditions, so the biggest loser of all will be the work force?

Bob Russell: I am sure that the hon. Gentleman is right, which is why the new clause is important, not only for the retention of the sub-post office network but for the interests of employees whose morale, as I have said, is exceptionally low.

The new clause seeks to bring certainty, and ensure that the post office network will not face an immediate onslaught from Royal Mail. It places the IBA in legislation and ensures that it cannot be broken for 10 years. I accept that in order to help the process of privatisation along, Royal Mail managers have pledged undying love for their supplier. However, it could be argued that directors of a dynamic, privatised Royal Mail would be negligent in their duties if they did not try to cut the cost of doing business through Post Office Ltd.

The new clause can absolve them of that responsibility. It would enable all sides to point to the legislation and walk away from having to renegotiate the inter-business agreement. It would manage the expectations of institutional shareholders, who would not be able to exert pressure on Royal Mail to cut those costs. I am sure that my right hon. Friend the Secretary of State for Business, Innovation and Skills will recognise that together we are protecting the post office network. The omission of the inter-business agreement from the Bill can now be rectified.

Michael Connarty (Linlithgow and East Falkirk) (Lab): Unfortunately, I have to leave the debate early, because I have to attend the European Scrutiny Committee at 2 o'clock.

First, the new clause attempts to ameliorate the impact on Royal Mail and particularly the post office network of what is probably one of the nastiest things that the Government will ever do to the people of the UK. The terrible act of putting up tuition fees up to £9,000 will damage a number of people, and will probably bring
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about the demise of the Liberal Democrat party, but the Bill attacks the fundamental structures of society, because it will bring about the closure of a vast number of post offices. Strong arguments were made-and I made them-every time that the previous Government went through another retooling of the post office network at huge cost. The hon. Member for Colchester (Bob Russell) tried to say that Government money set aside for the post office network over the next four years will be somehow be used to keep post offices open. If we look at the amount of money spent by the previous Government paying postmasters and paying for redundancies in the Royal Mail and the post office network when it closed in many of the communities that I and all of us represent, it is clear that the money will go in that direction. One reason why it will go in that direction is that the inter-business agreement will not be sustained in a privatised environment.

1.30 pm

Let us look at former privatisations and see what happened to those who supplied services to BT. Let us look at what is happening now, when everyone is screaming about the cost of domestic fuel being charged by the six large energy providers-a cartel by any other name, although the providers say that it is just imperfect competition. It is the market. People are told, "Sorry, it is the market that is causing you to be unable to heat your homes." It is the market that will cause post offices and sub-post offices to close.

It is clear that although Royal Mail management says that it is proud of the present Royal Mail/Post Office arrangement, the market will drive the management to look for cheaper ways of doing things. The example that I always use is what happened in the case of TV licensing. When the television licensing authority wanted to continue to use the post office and sub-post office network to sell its products, the Post Office said, "That's fine. First, you'll pay us a million pounds. In addition to that, you will obviously pay for every transaction." That is what killed the deal-the £1 million that Royal Mail, through Post Office Ltd, wanted to get into its coffers, not the cost of transactions at sub-post offices, and the contract went to PayPoint.

That will happen again and again, because Royal Mail will look at what it gets for its money and will ask whether anyone else will offer the same service. PayPoint is publicly saying that it wants to take over the monopoly of the Post Office for delivering the services that the Post Office delivers now for Royal Mail and for Government Departments, and it will win because it will undercut. It will loss-lead to do so, as it has said so in its business plan. That will threaten what is at present one third of the revenue-£343 million per annum-going to the post office network from Royal Mail. Of that, £240 million is paid to the sub-postmasters. If they are not getting paid their money, they will not run the service.

Mr Russell Brown: I support my hon. Friend. There is no doubt that any of us who speak to our local sub-postmasters and postmistresses will be told clearly that private utility companies have over recent years negotiated prices that have driven down incomes for sub-postmasters. If we do not get the new clause written into the Bill, we will see such ongoing negotiation driving prices down. The Government say that they are
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providing £1.3 billion, with no closure programme in place. We will see sub-post offices withering on the vine as the years roll forward.

Michael Connarty: My hon. Friend echoes sentiments that are expressed in every post office and sub-post office when any of us take the trouble to ask.

Bob Russell: Will the hon. Gentleman be gracious enough to acknowledge that over the past 13 years his Government's policies, inactivity and general performance created the situation that we are in today? If he wishes to move on with his argument for the future, he should have the good grace, please, to acknowledge past failings.

Michael Connarty: I have no problem doing that. I do not know whether the hon. Gentleman has been in the House when I have spoken about the Post Office in the past. I am the organiser and secretary of the communications workers liaison group in this place. I have opposed every attempt by any Government to bring in schemes to downsize the post office network-every single one of them.

My Government was criticised by me and by the Communication Workers Union. That Government put in a director, Crozier, who walked off with millions of pounds in bonuses for sacking people-for downsizing the number of people at the sharp end and failing entirely to do the one thing that he was tasked to do, which was to bring in the technology to modernise the process of distribution and introduce letter-bundling by street, as is done in any sensible country. He failed and was paid millions of pounds. That sounds like what happened with the banks so it seems as though we did a lot of that under the previous Government.

I am happy to say that the Labour Government got it wrong, because they did get it wrong. I say to the hon. Member for Colchester (Bob Russell) that his party will be judged on how it acts in government, not on how he is acting from the liberal wing of the Liberal Democrats. The orange book Liberals have joined the Tories and will become Tories if they want to stand at the next election. They are sitting opposite me at this moment. They are the people who are destroying the post office network, just as the delusional people in my party cost us millions of votes by doing what is about to be carried to its final conclusion-that is, attacking the structure of our communities.

When a Crown office goes and a sub-post office is put into a sweet shop at the end of the high street, we see the change. We see people queuing outside in the rain because the shop is too small to handle the business. When a sub-post office is put into the back of a small supermarket, as one has in Bathgate, or into a sweet shop, as one has in Linlithgow in my constituency, people in wheelchairs cannot get into the post office when staff create a barrier as they stock the shelves with quick-sale goods. All that happened under our Government, and the measures proposed in the Bill will be worse than any of that.

Mr Mike Weir (Angus) (SNP): The hon. Gentleman is making a good point. He speaks of a post office being put into a sweet shop. Does that not underline the need for the agreement? There is much talk about post offices delivering government business. After the closure
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programme and the relocation to paper shops and sweet shops, how many post offices in his constituency will realistically be able to do such business immediately?

Michael Connarty: As I said, the new clause is intended to ameliorate the impact, not to negate it. I would prefer a permanent agreement that the Royal Mail and the Post Office were not sundered by the Bill. It is an illusion that the market will allow things to become more efficient. I do not believe that.

David Mowat (Warrington South) (Con): Will the hon. Gentleman explain how the Bill, which gives each of the 7,000 currently unviable post offices approximately £200,000 over the next four years to keep going, is an attack on their communities?

Michael Connarty: It might be useful to read the Bill. That is not in the Bill. It is an under-the-counter promise by the Government that they have set aside a sum of money. That is no different from the sum set aside in the past by the Government every time they carried out a reorganisation to sustain the unsustainable. It is clear that those post offices are not viable in the market. If those post offices and sub-post offices lose another £343 million, which is the cost per year if the business arrangement is broken, that is where the money will go. It will replace the money that should have come from the agreement. The money will be required to pay the people. At present 900 post offices are up for sale, apart from those that are temporarily closed, as the hon. Member for Colchester said.

It is important that we realise that, in this process, the Conservative-led Government, supported by the Liberals against their pledges in their own manifesto, are trying to move the Post Office and Royal Mail into a market and away from a controlled situation. There is talk now of the inter-business agreement. There will be talk later of the universal service obligation, which will also be destroyed by the Bill. In the USA, the arch-capitalist country, the postal service is permanently in the public sector. It will not be taken out of the public sector because it is seen as a public institution. We will follow a route that will cause us to destroy part of our institutions.

I do not believe that Members are kidding themselves. I am sure they have talked to their communities when a sub-post office has been closed and heard the anger when that happens. I am sure that they have talked to people when they lose their Crown office and get a second-rate service from a post office put into the back of a supermarket. People do not like it because it destroys the structures of their communities.

The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey): The hon. Gentleman mentions the United States Postal Service. Is he aware that it made an $8 billion loss last year?

Michael Connarty: What I am aware of is that the public purse supports an institution in the USA. If the Liberal Democrats in the Government are saying that they believe it best not to subsidise but to let the market rip, why do they talk about subsidising those 700 post offices that do not make any money? Is the Minister arguing for the withdrawal of the subsidy in the USA but not here? It does not make sense, and he knows it.

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Mr Anderson: Has not the Minister just let the cat out of the bag-that the Liberal Democrats, at least those in the Government, just like the rest of the Government, know the cost of everything but the value of nothing?

Michael Connarty: Tomorrow, the Liberal Democrats will find out the value of making various pledges to the public and then breaking them. Even the proposal to privatise 50% of the Post Office, which was very similar to the proposal that a certain Minister in the Lords made on behalf of the previous Government, has been betrayed by the Liberal Democrats. I shall support the new clause, because it is a cross-party proposal that would ameliorate some damage for a short term. The most important thing, however, is to vote against the Bill and to let people know that what is being done is a dirty deal by the Liberals to let the Conservatives privatise and smash the post office network.

Mr Binley: I congratulate the hon. Member for Linlithgow and East Falkirk (Michael Connarty)-he must have trouble pronouncing that; I have trouble with Northampton South-on a robust speech, and I pay tribute to his defence of the Post Office over a very long period. His colours have been clearly nailed to the mast, and that we must accept.

I say to the Minister that I support the general thrust of the Bill, with which I have no problems. I have been a critic of Post Office management for a sizeable time and believe that the organisation's senior staff should be ashamed of the results of their management. It is true that they produced a bottom line that looks slightly healthier, but they left an immensely demoralised work force whom they bullied most unacceptably for years. I might tell those managers that if they had worked for the company of which I am chairman, I would have sought their dismissal.

Let us be absolutely clear that the Post Office and the Royal Mail have not been well served by senior management over recent years, and that makes the difficulty that the Government face even greater. I understand that point, and it is one reason why I have argued consistently for a massive injection of good-quality, creative management in the upper levels of the Post Office's management structure. We have not seen that; we have seen City hatchet men, just at the time when it was necessary to bring in creative, technological management. But this House shares a sizeable amount of the blame for that outcome. I would have wanted things differently, as indeed would the hon. Member for Linlithgow and East Falkirk. We have argued for that jointly. We might disagree on a number of things, but on that we have been as one.

I genuinely share the Government's ambition to create in the Post Office a new management structure that can come to terms with a quickly and massively changing technological marketplace. That particular attempt is absolutely vital, and it means a sizeable commercial injection from the private sector. I have no doubt about that, or that the Post Office was one of those organisations that had almost immured itself from the necessary quality of management. I have equally no doubt, however, and I shall say it again, that bringing in City hatchet men was not the way to deal with the problem.

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1.45 pm

Mr Davey: It is not appropriate for me to comment on the previous management, but I invite my hon. Friend to contact the new chief executive of Royal Mail, Moya Greene, and the new managing director of Post Office Ltd, Paula Vennells. If he seeks to meet them and to listen to them, he will find that the management in Royal Mail and in Post Office Ltd are of the highest calibre.

Mr Binley: I, of course, welcome the Minister's intervention in that respect. I have no wish to vilify the current management; I just make a statement about why we are in our current position with the Post Office. We have to be realistic if this debate is to have any meaning at all. I have outlined an important reason for being in the position we are in, and I have no fear in doing so.

Michael Connarty: Will my hon. Friend-on this issue-take from me a factual statement? In front of witnesses, we met the previous Minister with responsibility for the matter, Lord Mandelson, and put it to him that the manager, Crozier, who by the way comes from Falkirk, had been an absolute disaster and failed. One of my party's Whips asked why he was still in post, and Lord Mandelson's civil service leader said, "He was the best we could get at the time."

Mr Binley: I am grateful for the interjection. What an awful statement for somebody concerned with a business to make, but then I have never been very keen on the gentleman's boss: I would not have appointed Lord Mandelson, either.

Richard Fuller: To echo the Minister's comments about the observations of the current management by Members on the Public Bill Committee, I note that there has been a substantial improvement on the legacy management. The current management really shine a torch forward for Royal Mail Group. Does my hon. Friend the Member for Northampton South (Mr Binley) echo my sentiment that, in the sight of ineffective, hostile management over many years, there was an excellent outcome when the Communication Workers Union and other unions put together a modernisation programme and commitment for our postal services, privatised or otherwise, for the long term? That was a substantial triumph by the unions against hostile management.

Mr Binley: I accept that interjection and support that point, too, because I was one of those who consistently said that we should be proud of our Royal Mail work force. I am sure that my hon. Friend visits his local sorting offices, as the hon. Member for Linlithgow and East Falkirk and I do. We visit our sorting offices and post offices regularly and we know the quality of people we are dealing with. I would be proud to have them in any organisation with which I was associated, so paying tribute to the work force at this stage has real value. I accept that and thank my hon. Friend for his intervention.

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