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Westminster Hall

Wednesday 12 January 2011

[Mr Gary Streeter in the Chair]

Biotechnology and Food Security

Motion made, and Question proposed, That the sitting be now adjourned.-(Mr Goodwill.)

9.30 am

Mr Mark Spencer (Sherwood) (Con): I am grateful for the opportunity to debate this important issue. I want the debate to be fact-based and to be about the science. I want it to be an unemotional and genuinely open debate about the future of this country's food security and how we ensure that the people of the United Kingdom are well fed into the next generation. I acknowledge that this issue is not the responsibility of the UK Government or the Minister, but a European Union issue. It is for the EU to decide whether it uses genetic modification and biotechnology to solve such problems. This debate is an appeal to the Minister to push for and facilitate discussion, so that others can join in and we can have an open discussion about how to ensure that this great nation of ours is fed.

I am no historian, but following the second world war Winston Churchill said that this country should never again allow itself to be exposed to the food security issues we faced during that war. We have had two or three generations of consumers who have no concept of what food security is, or what it is like to go to the supermarket and find that a product is not on the shelf. My wife will go to the shop and if the product she requires is not on the shelf, she will storm down to customer services, bang on the desk and say, "What do you mean you haven't got any paprika?"-or some other wonderful product. My grandmother, however, would go to the butchers and say, "I'd like lamb chops" and the butcher would say, "You can't have lamb chops. You can have beef dripping because that's all I've got", and she would have to take it. Consumers now have no concept of what food security is, and it will be a big shock if we find ourselves in those circumstances again.

I turn to where we as a country have come to. My right hon. Friend the Member for Arundel and South Downs (Nick Herbert) said last year that since 1997, the UK dairy herd is down by 22%, which is 500,000 fewer dairy cows. Fresh vegetable production is down by 36,000 hectares; the pig herd is down by 40%, which is 3 million fewer pigs; fresh fruit is down by 9,000 hectares; and the lamb flock is down by 25%, which is 10 million fewer lambs. Despite the fact that self-sufficiency in food production had dropped from 72% in 1996 to 60% in 2008, the Labour Government said in that year that the

It is true that this country is still able to source and import food very easily, and nobody would stand here today and say that we will ever be 100% efficient in producing our own food. I, like many hon. Members, enjoy bananas, oranges and fruit from all over the world. However, the figures paint the picture of our
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diminishing ability to feed ourselves, and if that pipeline-the amount of food flowing into the country-were cut off for any reason, it would have dramatic effects on our ability to do so.

There are four factors in the world today that will have enormous consequences for this country's ability to feed ourselves: climate change, the global population, the global economy, and energy prices and our ability to supply energy to the world. I shall take them separately.

There is little debate over whether the climate is changing, and frankly, it is irrelevant whether we agree that that change is man-made or carbon-based. There is extreme weather: we need only look at Russia, which has suffered drought, and at Australia, which is suffering terrible floods at the moment, or at the terrible snow and frost in our country this year and the impact that had on vegetable producers. Trying to harvest carrots and parsnips from frozen ground was an enormous challenge for British farmers, who were trying to put those vegetables on to our plates for Christmas. Extreme weather brings huge challenges and will have a big impact on the cost of food.

Hon. Members who are familiar with commodity prices will know what this summer's drought in Russia did to the value of wheat. Almost overnight, the value went from £90 a tonne to £160 a tonne for next September's wheat, simply because the Russian Government said that they will not export any wheat but will retain it within Russia. That pushed world commodity prices up dramatically, which has affected general consumers. When they go to the supermarket to buy a loaf of bread, they find that quite a cost has been added to it.

In 2003 Europe experienced a long, hot summer, which reduced the EU's agricultural output in that year by 20%. There is a fine line between over-supply and under-supply. We need only be 2% under-supplied for the market to react and push up prices; we will feel that more in future. Farmers need to find new technologies to assist them, so they can cope with the changes in climate.

Secondly, global population will impact dramatically on our ability to feed ourselves. It is predicted that there will be 9 billion people on the planet by 2050. Where is the food to feed that number of people going to come from?

Julian Sturdy (York Outer) (Con): I thank my hon. Friend for giving way and congratulate him on securing the debate. He is right about the huge increase in world population and its impact on food security for the UK and Europe. Does he agree that the only way to tackle this is through new technology and science-for example, research to improve disease resistance and drought tolerance of staple crops, not only in the UK but across the world? We must not close the door on science and new technology.

Mr Spencer: I thank my hon. Friend for that intervention. He is correct, in that we need to harness new technologies if we are to solve the problem. I will talk about that a little more later.

We have clearly been effective since the second world war in harnessing such technologies and in scientific advancement. The common agricultural policy, which came out of the post-war period, is often ridiculed as an
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enormous monster of a policy, but it was probably the most single most effective policy ever devised by politicians. It was designed to feed Europe and was enormously successful-so successful that by the 1980s, we had grain mountains and milk lakes. We all remember those stories in the media.

We have an enormous and growing world population, and we will have to try to feed all those people. It is important to recognise that the amount of land on the earth is not expanding, and we are using land for other things, not only food production. "They have stopped making land", as they say.

At the same time, the issue is absolutely linked to the global economy. There have always been hungry people on this earth, but all of a sudden, we have countries with people who are not only hungry, but wealthy. On the other side of the globe, the economies of countries such as India and China are expanding, and diets are becoming western. The impact on the European Union will be enormous. In 1985, the average Chinese consumer ate 20 kg of meat a year, but it is now said that they eat 50 kg a year. Across the globe, economies are expanding-in India, the far east, south America and many African countries. Countries are moving in a similar direction to China, which will have a really large effect on our ability to keep ourselves fed.

The third relevant issue is world energy prices and our ability to ensure that we have enough energy. As economies expand, so, too, does their desire to consume energy-a country's GDP is almost directly linked to the amount of energy it consumes. How will we produce enough energy and how will we do that sustainably? Sustainability is the key. It is all very well saying that we have enough gas and coal to keep ourselves going, but the impact of that carbon will be quite dramatic.

Jim Shannon (Strangford) (DUP): Obviously, the hon. Gentleman's discussions with constituents will, like mine, have indicated that there is particular concern about the price of fuel-the fuel prices that the farmer pays to run his tractors in the fields. Those prices have also affected the price of fertiliser, which has risen from £100 to £300 a tonne. Does the hon. Gentleman feel, as many of us do, that concern about food prices will rise and that the days of cheap food are perhaps disappearing? We once sourced cheap food from south America, but demand from China, India and elsewhere may mean that our markets for cheap food will disappear. Does the hon. Gentleman share those concerns?

Mr Spencer: I thank you for that intervention. Those are exactly the concerns that I am expressing. You sum up very neatly what will happen to global markets. We have been importing from south America, Africa and many other places. When the almighty dollar takes hold, and China tells countries, "Don't export your meat products to the United Kingdom. Export them to China and we'll pay you a dollar a kilo more," producers will naturally say, "Thank you very much, United Kingdom, but we'll sell to China. We'll export to you if you pay £1.50 a kilo extra." That is exactly where the problem materialises.

Energy is very much linked to this issue. As you indicated, the cost of agricultural fertiliser-

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Mr Gary Streeter (in the Chair): Order. I am sorry to interrupt the hon. Gentleman, who is making an impressive speech, but there are too many references to "you". Members should always refer to each other as hon. Members or hon. Friends.

Mr Spencer: I am grateful to you for your intervention, Mr Streeter.

World energy prices are very much linked to the issues that we face. The simple fact is that the price of petroleum directly affects the price of agricultural fertilisers and pesticides and has a knock-on effect on them.

Energy production itself requires land usage. Erecting a wind turbine takes out land that could be used for agricultural food production. The erection of a refinery takes land out of agricultural food production and uses it for industrial purposes. More importantly, as we move towards sustainable energy sources, such as bioethanol and biodiesel produced from rape seed, we will be using agricultural crops to produce those biofuels, taking land out of food production and putting it into energy production. That might seem like a wonderful, modern technology and a wonderful, modern thing to do, but when my grandfather started farming in the 1930s, 30% of his land was used to produce oats, which were the energy source for the horses that he used to pull the ploughs. There is, therefore, nothing new in farmers using land for energy production. What has changed, however, is the number of people we have to feed and produce for. The changes will be quite dramatic, and we need to make sure that we have technologies available to assist us.

The Government's chief scientific adviser, Sir John Beddington, said:

Those are dramatic statistics. If we are to solve such problems, we really will have to set our stall out and meet those challenges. I hope that we all recognise that there are enormous challenges out there.

Simon Hart (Carmarthen West and South Pembrokeshire) (Con): I, too, congratulate my hon. Friend on the way in which he is putting the case. One area of influence that has not been touched on is the UK media's attitude to some of the topics he has discussed. Does he have a view on whether their attitude, particularly to developing technologies, has been a hindrance and has impacted negatively on our farmers' ability to meet the challenges he has set out?

Mr Spencer: I thank my hon. Friend for that intervention. What he says is true, and the purpose of today's debate is to have a much more mature, science-based, focused discussion, which looks at the facts rather than the hysteria. My hon. Friend will recall headlines such as "Frankenstein foods", which do nothing to inform people, and only make them scared of new technologies. To a certain extent, that is human nature. I stand here today unsure myself as to whether these new technologies will assist us. My point, however, is that we need to have the debate, to look at the facts and to explore the opportunities to see whether they offer a solution to the problems we face.

The human race has always been scared of new technologies. If we went back in history to the first time a surgeon suggested doing a heart transplant, we would
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see the furore that that caused. It was very dramatic to take a heart from one human being and transplant it into another human being. That was quite scary at the time, but it is now run of the mill. As a Member of Parliament, I am lobbied by people who say that we need to improve organ donation and to make sure that we are all informed about it. The technology is accepted and warmly embraced.

To an extent, we are going through the same debate with stem cells, because people are concerned about them and about whether they can assist us. Of course the human race is sometimes scared of change, but we have always been quite adaptable. In the end, we get there, we embrace technologies and we make use of them. That is why we have been so successful as a species at looking after ourselves.

I want to draw attention to Sir Norman Borlaug, who won a Nobel peace prize for his work in changing wheat varieties and improving the way in which we feed ourselves. Many Members have mentioned the fact that we have been able to feed ourselves since the second world war, and we have done a very good job of that. Sir Norman Borlaug was the lead figure in the field. After the second world war, wheat yields were very low. As part of a long and painful process, Sir Norman used a paintbrush to cross-pollinate different varieties of wheat. He was able to take the correct strains from one variety and put them into another. That made the wheat yield vastly more per acre. It also made varieties shorter so that they did not fall over. As I said, we were able to feed Europe; we were able to keep what is now the European Union well fed. That process took a long time. We are talking about tens of years to make advancements in the science.

I am led to believe that genetic modification can speed up that process of genetic change. We have been doing such things for a long time. We have been changing the genetic make-up of those varieties through the long and laborious process of cross-pollination. Genetic modification can speed up that process and lead to advances that will reduce the disease susceptibility of those varieties and make them easier to grow and more drought-resistant. That has to be a good thing. At this stage, it is worth recognising that the genie is out of the bottle. Countries such as the USA, Canada and Brazil are using these technologies. Those crops are being grown in other parts of the world, where technological advancement is starting to move faster than it is here.

It is suggested that yields could increase between 6% and 30% using the same amount of land. If we were able to harness that technology, we could increase yields by 30%. Given the figures and the global changes that we are experiencing, even that degree of advancement might not be enough to keep us all fed to our accustomed level. The hon. Member for Strangford (Jim Shannon) mentioned fertilisers, a subject that will prove important as we move forward. Imagine a technology able to produce a wheat variety that had the same root structure as lucerne, which is nitrogen-fixing. Lucerne-and clover, which is very similar-takes nitrogen from the atmosphere, absorbs it into its leaves and produces nitrates in its root structure.

Mr Gregory Campbell (East Londonderry) (DUP): I congratulate the hon. Gentleman on securing the debate. It is fitting that a debate on food security should be
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initiated by a Member with the name Mark Spencer. He stresses the importance of new technologies. Does he agree that is fundamentally important that the Government invest in them, to ensure that the farming community can avail itself of the technologies so that the prospect of feeding the population is more easily achieved?

Mr Spencer: The hon. Gentleman is correct that we need to invest. We are actually reducing the amount that we are putting into research and development in the industry. We have not been very good at that. This Government are assisting a little bit, but it is a small step back in the right direction. We have not put enough into research and development. The amount that we spend is dwarfed by the amount being spent by other countries around the globe. We are going to lose our reputation and position at the forefront, the cutting edge of those developments and technologies. This country has always succeeded by leading the way. We were the leaders during the industrial revolution, which gave this small nation a global position, making it the Great Britain that it is.

Globally, farmers have earned an extra €34 billion since the introduction of biotechnologies, 44% of which resulted from yield gains and 56% from the reduction of production costs. I mentioned the benefits of nitrogen-fixing wheat. Improving the root structure of wheat would enable it to be grown in other countries, such as central and northern Africa-places where at the moment it is too dry. The benefits would include not only the ability of this country to feed itself, but the chance for African countries to feed their populations and improve their lifestyle. It could also have massive implications for the environment. The amount of nitrates we use could be dramatically reduced, which would assist in the management and protection of the environment. The amount of pesticides that we use could be reduced. I have never met a farmer who likes using pesticides-they are very expensive. Finding a technology that would enable us to spray fewer pesticides on to crops-which themselves could be more disease-resistant-would benefit farmers and consumers.

In the UK, yields of oilseed rape since 1995 have risen approximately 0.5% year on year. In Canada, they are rising 3% year on year, simply because it is making use of those new technologies. Its farmers' ability to produce more from the same amount will make them more competitive than ours.

It is exciting to see technologies open up. Imagine producing an apple that reduced cholesterol or a tomato that prevented bowel or breast cancer. All of a sudden the media perception of "Frankenstein foods" and something to be feared and avoided would be turned on its head. Consumers would be clamouring to make the most of the new technologies and these "wonder foods" that were cures and were helpful. There is a lot of work to be done and there is a lot of speculation; I acknowledge that, but the technologies are there to be explored and could be of great benefit.

There are clearly concerns. The consumer is concerned about these products. We referred to the fact that people worry about change. We need to recognise that and ensure that we take people along with us in an open debate. It is also worth recognising that technologies used in the past have occasionally broken down. There
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have been mistakes. Those involved in agricultural industries will remember a wheat variety called "Moulin", which was marketed, but when it came to the point where it should pollinate it did not work. That was disastrous: farmers had zero yields, having grown the crop for a year. We need to ensure that we do this properly, that the scientific evidence is correct and that we explore the technologies in the right manner. The only way to do that is to do the research and the trials. I ask the Minister to assist in facilitating those trials in the UK, so that we can test the water and try out some of the technologies under controlled circumstances, to see if they have anything to offer to solve the problems that we shall face globally.

The organic sector often expresses concern that there will be cross-contamination-that bees will fly from GM crops to organic crops. In the US there is a thriving organic movement and both systems sit side by side. Consumers have the choice of new technology, traditional or organic food, and it seems to work well.

Who is leading the way? I have mentioned the US and Canada, but China is doubling the amount it is spending on agricultural biotech research and development in the next five years. It is currently spending $400 million on research and development-20% of world investment. The European Union will be left behind if we do not step up to the mark, get stuck in and try to keep pace. Genetic modification technology is currently being used by more than 14 million farmers around the world. That is a landmass equivalent to the whole of France, Germany the United Kingdom and Ireland. It is no small trial. It is happening on the other side of the globe as we speak. More than 2 trillion meals containing GM ingredients have been consumed over the past 13 years without a single substantiated case of ill health.

Given the fuss that we make about peanuts because every now and again someone has an allergic reaction to them, it seems unbelievable that we are not out there in white suits and little masks tearing up peanut fields because of the impact that peanuts have on people's diets. However, whenever somebody mentions new technology people with placards want to wreck the trials and research.

I appeal to those who feel the need to wreck those trials not to do so, because we need to find evidence that they work and to establish the technology. If those people are correct in thinking that the technology will not work, we need to do the trials to establish the fact so that the technology can be stopped. My appeal to all involved is to engage in the debate; supermarkets, growers, retailers and producers should come to the table to talk it through, to do the research and development and to settle the argument once and for all. If the technology is available to assist us, we need to enhance it.

What is the implication for UK producers and consumers? Clearly, GM is in production and in circulation. Soya, maize and tomatoes are intrinsic to our diet. I put it to Members that at some point we will all have consumed a GM product without realising it-probably as a soya-based product, perhaps in a pizza or in processed food. The country has a choice. Should we go down the same route as the Austrians and be completely GM-free, not having GM and labelling all our food to
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ensure that we protect ourselves from the perceived problem; or do we embrace GM and label our food so that people can make a clear choice?

If we go down the GM-free route, our farmers and producers may be able to attract a small premium. However, I believe that commodity prices will continue to rise, and that the global economy and the increase in the global population will have an impact.

Jim Shannon: Is the hon. Gentleman aware of the work that has been done by universities across the United Kingdom on GM foods, particularly by Queen's university? They have been in contact with companies and businesses to perfect GM foods and move forward. The advantage that Queen's university has for those businesses is that everyone gains. Is he aware of that, and if so will he comment on it?

Mr Spencer: I am aware that a number of universities are participating in research, and I appeal to those institutions to give the universities the support that they require to continue with it. It emphasises the fact that the United Kingdom has the scientific brains to do this. We have the willingness and the intellectual power. What we need now is a fair crack of the whip-a bit of financial support and some understanding among the population of the technology. We need to debate the matter so that people can understand it and embrace it-or, if it is not the correct route, to say that it has been considered but that it is not the direction to go. The only way to achieve that is through good scientific research, and I am grateful that Queen's university is involved in that great work.

I return to my scenario. We have a choice. We either go down the GM-free route or we embrace the technology. If we choose to go down the non-GM route, however, it will be difficult to ensure that our borders are GM-free. For example, meat products will be important but we will have no means of testing whether those animals have been fed on a diet of genetically modified feed. UK producers will be producing free-range chickens for the supermarkets, but those birds could be sat on the shelf next to Brazilian chickens that had been fed on cheaper GM wheat and were being sold for £2 less. Will the British consumer know why the Brazilian chicken is £2 cheaper, or be aware that the other chicken is more expensive because it is GM-free? It will be almost impossible to police. As commodity prices start to increase, the consumer's unwillingness to tolerate or accept new technologies that give them good, healthy, quality food at the right price will diminish over time. That is why we need to push forward and ensure that we are competitive.

Enormous global changes are afoot that are out of our control. The United Kingdom has no control over global population. We have no control over world energy prices. We have no control over the climate; we should acknowledge that the human race cannot control what happens to the weather. However, we are in control of our ability to use the available technologies. We should embrace those technologies, consider them, discuss them and ensure that we are at the cutting edge as we move forward. If we are going to be sustainable, and if we are going to keep ourselves fed, we need to use all the tools that are available to us. I believe that we should explore the prospect of biotechnology being one of the tools that we should be using.

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10.7 am

George Freeman (Mid Norfolk) (Con): I apologise for being a few moments late, Mr Streeter, and I thank you for calling me to speak and giving me the chance to contribute to this important debate. I congratulate my hon. Friend the Member for Sherwood (Mr Spencer) on securing the debate. Like my hon. Friend and others here today, I believe that the subject is rather more important than is suggested by the coverage that it receives in the Chamber. Perhaps this debate is a precursor to a bigger one on the Floor of the House.

I speak as a new Member who had a career in biotechnology. I dealt mainly in biomedical technology venture capital, but come from a farming background and once, many years ago, worked for the National Farmers Union in policy development. I have long taken an interest in the subject, and I believe that there would be substantial public interest in it if enough of us were prepared to talk about it in the right way, as my hon. Friend did so eloquently this morning.

To that end, Mr Streeter, I declare an interest. I worked in biotechnology for 14 years, and I have a number of small shareholdings in small companies which are all declared in the Register of Members' Financial Interests. I serve as a non-executive adviser to Elsoms seeds, Britain's last independent family-owned seeds business, and to the Norwich research park where some of our leading agricultural science is being carried out.

My hon. Friend the Member for Sherwood spoke eloquently about the huge opportunities of biotechnology and the huge challenges faced by the Government, Parliament and the country in the years ahead, given the pace of globalisation and population growth and the enormous pressure on farmers around the world to grow more from less. He mentioned projections for explosive population growth and the huge pressure to reduce inputs, particularly energy and water that will result-and, I might add, the potential for those problems to lead to serious geopolitical tensions. If we look around the world today, we see that underlying some of the most acute regional conflicts are issues to do with poverty and with tensions around resources. Therefore, this is about not just science and agriculture but geopolitics and major issues around international security.

Like my hon. Friend, I feel strongly that agricultural biotechnology holds enormous potential to help us solve some of the biggest issues that face our generation. Moreover, it is a matter that transcends party boundaries, and I suspect that we shall hear much of that from the Opposition Benches this morning.

Let me highlight three personal experiences that endorse my hon. Friend's comments. I have recently had the great privilege to visit the John Innes centre and to see the work that is going on to develop a blight-resistant potato. If we were to explain properly that stunning piece of technology to the public and to the people who do their weekly shop in the supermarkets, they would quickly understand the benefits. The technology would enable us to grow blight-resistant potatoes without having to use the 14 different applications of pesticide that are currently required. There would be huge environmental benefits with massive reductions in energy input into agriculture in the field. That is British technology, developed in this country, and it has enormous global potential. We should be proud of it; we should be talking more about it and celebrating it.

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I also had a chance last summer to see another wonderful piece of work at the John Innes centre. Scientists are looking back through historical wheat varieties and cross-breeding varieties of wheat from different parts of the world. In one case, they have taken traditional Afghan breeds with short stems that are well adapted to grow in the Afghan climate and genetically manipulated them-others would describe it as cross-breeding them, which is what people have been doing in agriculture for thousands of years. They have been trying to produce a short-stemmed wheat crop that is well adapted to grow in Afghan conditions but with a much higher yield. Imagine the geopolitical implication that that would have for helping our development and military objectives in Afghanistan. Such a project provides a very good example of the technologies that we are developing in this country.

In my capacity as chairman of the all-party parliamentary group on science and technology in agriculture, I met two delegations from Brazil and Uganda. The Ugandan delegation was led by a gentleman who is pioneering the use of biotechnology in the banana industry in Uganda. In Brazil, the delegation comprised a huge consortium of soya bean farmers. It was pioneering not just the application but the science and research of genetic technology in the soya bean sector, with huge environmental and economic advantages. I confess to having been taken aback by the scale, professionalism and the commercial application of these technologies in countries that we sometimes refer to in this House as the developing world. Such countries are more than developing, they are very developed, and they are trading with each other very fast and growing into a position of global leadership. Although we should be proud of the science that we have in this country, we are in danger of lagging behind in the application, commercialisation and international roll-out of such technologies. I know that the Minister feels strongly, and has talked eloquently, about that.

Biotechnology sits right at the heart of this coalition Government's programme in so many ways. First, on the environmental agenda, the Prime Minister has spoken eloquently about this Government being the greenest Government ever, and agriculture biotechnology sits at the heart of that. Secondly, the Government have set out a radical programme for growth, rebalancing the economy and reducing our dependence on financial arbitrage in the City. I argue that investing in and backing British science and technology companies would give our City financiers more substantial things to invest in and to back and it would do wonders for our growth potential.

Thirdly, biotechnology sits at the heart of the health agenda. If we are to develop the healthy society that we all crave and to get into health prevention, we need to explore some of the enormous benefits and economic opportunities that come from functional foods and nutraceuticals. If we put our traditional strength in food-retailing, manufacturing and processing-and combine it with our science, this country could lead the world in what I believe is a coming revolution in functional foods and nutraceuticals.

Fourthly, the Government have, rightly, put overseas development at the heart of their programme. Biotechnology can help the developing world to move away from its dependence on aid and to strengthen its
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development through trade. This is a vital agenda that sits right at the heart of the coalition Government's programme in so many ways.

Given the economic potential and the political and international importance of biotechnology, it is odd that the debate in this country is so skewed by a very noisy, cynical and, at times, hysterical anti-science lobby that is given too much air time. All of us who understand the power of this technology need to speak up, as we are today, and explain the benefits. There has been quite a lot of public concern about some of these technologies-my hon. Friend referred to stem cells, with which I am familiar. My own experience in biomedical science is that once the benefits are clear-and nothing focuses the mind like the prospect of having one's life doubled in length by heart surgery-and, crucially, the public are satisfied that an appropriate regulatory framework is in place, which means trust in this House and trust in the process and regulation of science, there is the potential to unlock public support for this revolution. We must concentrate on the benefits of such technologies and have a cross-party commitment to transparent regulation. It is crucial that we are science led and evidence based. We must take scientific evidence properly and create a framework for policy making that is science led, on which, I know, the Minister is strong.

I enjoy knocking on doors and saying to voters in my own constituency, "Aren't you excited by the technology that is being developed just across the boundary in Norwich at the research park? Imagine, madam, what a blight-free potato would do for the environment, the bird life in our hedgerows in Norfolk, productivity, Norfolk's farmers, the quality of the food you eat and for the world potential for trade and development." Unless we say such things, the consumers are not aware of the benefits. If we speak up, we will find that there is huge popular support and that the sometimes hysterical media coverage does not adequately or correctly reflect public opinion.

I will finish there because I know that Members are waiting for the Minister's comments.

10.17 am

Mr William Bain (Glasgow North East) (Lab): It is a pleasure to serve under your chairmanship, Mr Streeter. I congratulate the hon. Member for Sherwood (Mr Spencer) on securing this debate. He made an extremely wide-ranging, comprehensive and thoughtful speech. I also commend the remarks made by the hon. Member for Mid Norfolk (George Freeman), who gave the House the benefit of his expertise in this area.

This debate is particularly timely because of the recent spike in global food prices. Yesterday, the Financial Times reported:

Although rising food prices may be a great inconvenience for consumers in the United Kingdom, they are particularly worrying for the poorer economies, such as Brazil and India. In India and China, food costs account for almost 50% of household outgoings, so the impact of rising global food prices will be particularly badly felt in those countries.

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I commend the remarks made by Professor John Beddington about 18 months ago at the sustainable development conference. He said that if we do not take much more intensive action to increase global food production, we face "a perfect storm" of problems by 2030. He said:

It seems clear that the use of biotechnology and policy across the EU and G20 must focus on producing more hardy crops, less wastage in terms of crop yields and better use of existing water supplies.

In responding to the debate, there are three areas that I want to touch on. The first is biofuels, which the hon. Member for Sherwood referred to. Through my role in a previous life-my first Front-Bench responsibility, as shadow Minister for Transport-I know that the Minister's colleagues in the Department for Transport are engaged in a consultation on the renewable transport fuels obligation. There is no question but that sustainable biofuel production has a great deal to offer, both to our economic output and to reducing CO2 emissions. However, we must be careful about which biofuels we support and invest in. The Government have already taken very welcome action on palm oil; however, there are concerns about some biofuel production, including some bioethanol production, which the Institute for European Environmental Policy has expressed. The IEEP has calculated that the indirect effect of the switch from food production to biofuel production could be to take between 4.1 million and 6.9 million hectares out of food production across the EU. As a result, that could lead to between 26 million and 56 million tonnes of CO2 emissions being put into the atmosphere.

When the Minister responds, it would be useful if he told us what efforts the Government are making to shift investment and support in research and development and other incentives away from first-generation biofuels and into second-generation biofuels, such as cellulosic ethanol, the use of biofuels from algae and the use of woodchip, all of which are much more sustainable means of biofuel production than simple bioethanol production. It is clear that we must do nothing to put small-scale bioethanol producers in difficulty, but we need a real analysis of what large-scale bioethanol production is going to contribute, in order to establish whether it might be damaging overall in our fight against CO2 emissions. I hope the Government will be able to conduct that analysis in the next few months.

The second crucial point is the importance of increasing investment in agricultural research and development. Work has recently been done by the academic community on this subject. The two authors, one of whom is based at the university of Bournemouth, of a paper I have been reviewing this morning entitled "Agricultural R&D, technology and productivity" make an excellent point about the benefits-in a sense, the disproportionate benefits-that accrue from investing in agricultural research and development by boosting both global food production and the overall investment in science. Since the second world war, increasing agricultural productivity has allowed food output to keep pace with demand, but that link will perhaps not be evident in the next few years.

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It would therefore be useful if the Minister told us today what representations the Government have made at EU level about how the EU can boost R and D investment. Such investment must be boosted in the public sector. It is an aim shared absolutely by Members across the House that we want the EU to spend less on direct subsidies and more on investment in science and agricultural R and D. However, the Government must also consider how to improve the levels of private R and D. For example, what discussions is the Minister having with his Treasury colleagues ahead of the Budget to develop new initiatives that will strengthen private companies' ability to invest in R and D, building on measures such as the R and D tax credit that the previous Government introduced? Also, can he give the House an assurance that levels of agricultural R and D will be higher at the end of this period of government than when the coalition took office?

The scale of the investment that will be needed is staggering. The paper that I referred to says clearly:

the hon. Member for Sherwood referred to those changes, including the immense growth in meat consumption in China-

for the increase in agricultural R and D investment-

That would be a massive step change in the magnitude of investment from current levels.

The Government must address this issue here in Westminster, but frankly, they must also address it at EU level and at the G20. Has the Minister discussed with the Prime Minister the latter's raising the issue of biotechnology in discussions at the G20 this year? It is clear that if we do not start to increase the levels of agricultural R and D spend now, it will be very hard to meet the targets for increased food production and innovation that will be required by 2050.

The third area that it is important to address is, of course, genetic modification. The hon. Member for Mid Norfolk was absolutely right that the debate about genetic modification must be rational and based on science. However, I depart slightly from the hon. Member for Sherwood's analysis, in that my understanding is that last year, the EU decided to devolve down to member states the issue of determining whether genetically modified technology should be used. Therefore, GM technology will be an issue for the UK Government to decide on by assessing the best available science, the level of commitment to such technology, and whether they will permit its large-scale roll-out.

Clearly, there is an important national debate that we need to have. Many people in the food production industry and many academics who have looked at the problems we will face have said that there are clear benefits from investing in GM technology, for precisely the reasons, including innovation, that we heard about from the hon. Members for Sherwood and for Mid Norfolk. However, there are also concerns-very reasonable ones-that we must all address about the potential health issues that may arise decades down the line. It is important that we continue to invest in the science in
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order to gather the best possible data we can get, so can the Minister tell us what levels of investment in research in GM technology the Government will provide by the end of this Parliament?

The title of this debate is "Biotechnology and Food Security", and it is clear that conventional biotechnologies such as breeding techniques, use of tissue culture, cultivation practices and fermentation have been readily used and accepted. Between 1950 and 1980, before the development of genetically modified organisms, modern varieties of wheat increased yields by up to 33%, even in the absence of fertiliser. Modern biotechnologies used in containment have been widely adopted. For example, the industrial enzyme market in the US reached $1.5 billion in 2000.

However, we now need a step change if we are to produce higher crop yields, make better use of water and increase sustainable food production-without increasing our overall emissions of CO2 or other greenhouse gases-such that we can meet the competing but necessary objectives of reducing and alleviating climate change, and achieving greater levels of food production.

I hope the Minister can address those points. There is a consensus on the Front Benches about the need to increase food production. I hope the Minister can reassure us that the Government are committed to increasing R and D levels, particularly agricultural R and D, in both the public and private sectors, and that we can move forward together to tackle this issue, which is of enormous interest to our constituents and to people in many other countries across the world.

10.29 am

The Minister of State, Department for Environment, Food and Rural Affairs (Mr James Paice): Good morning, Mr Streeter. It is good to serve under your chairmanship. I welcome this debate and congratulate my hon. Friend the Member for Sherwood (Mr Spencer) on securing it and raising the issue of food security. He highlighted, as did my hon. Friend the Member for Mid Norfolk (George Freeman) and the hon. Member for Glasgow North East (Mr Bain), the challenges that the world will face during the next few decades.

I was going to refer to Professor Beddington's comments about the perfect storm, but as the hon. Member for Glasgow North East has already done so, I will not repeat them. It is clear from this debate and many others that there is a growing recognition that many issues are coming together: climate change, population increase, population prosperity, and the consequent demand for more and better-quality food and the problem that due to climate change, some arable land may cease to be suitable for arable production. The coming together of those issues creates a huge challenge that affects many areas: the European situation, the single market, the competitiveness of our production and the interface between food science and our approach to innovation and technology, on which much of this debate has focused.

This is an important debate. I was impressed by the opening comments of my hon. Friend the Member for Sherwood about the desire to have a serious debate that eliminates much of the emotion, and indeed the emotional nonsense, that we sometimes hear, avoids the over-generalisation and simplification incorporated in many comments and addresses the issue seriously.
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The Government's overall policy is to enhance the competitiveness and resilience of our food chain and, as I have said repeatedly, to reverse the decline in UK production.

However, we seem to be in an invidious position. The hon. Member for Glasgow North East referred to global food prices, specifically the spike of two years ago and the current all-time high. Obviously, one concern is the impact that that is having on the ability of consumers, particularly poorer consumers, to sustain a reasonable diet. Back home, Finance Ministers and Chancellors around the world are concerned about its inflationary impact. Yet at the same time, the rise in global food prices is in many ways a direct consequence of moving agricultural policy, not just in Europe but elsewhere, closer to the world market situation rather than maintaining the sorts of protectionist arrangement used in the past. Many have always argued that consumers overpay for food under the common agricultural policy, but now that we are not subsidising food production, they pay even more. Some of the simplistic arguments used in the past are not very accurate.

Some people argue that what we do in the UK is of little consequence as agriculture is not a big industry, and that in global terms we do not need to worry very much about it. I emphasise that that is not the Government's view. The whole food chain contributes some £85 billion per annum to our economy, or 7% of gross domestic product, as well as 3 million jobs. Food manufacturing is the biggest individual manufacturing sector. It plays a major role in delivering our economic growth and, obviously, in the environmental impact of our food industry, so we want to support it in any way we can.

The long-term challenges that we have been discussing also offer great market and productivity opportunities for our agriculture. Achieving our food security objectives sustainably is also important to achieving the biodiversity outcomes that we all want to achieve, such as the convention on biological diversity to which we signed up in Nagoya a few weeks ago and, closer to home, our climate change objectives and millennium development goals.

As most Members have said, there is obviously a great EU angle on the issue, and I will return to that in a few moments in the context of genetically modified foods. As my hon. Friends have said, we have already achieved a tremendous amount in the 50 or 60 years since the second world war and the food shortages that caused countries in different parts of the world to develop their own forms of policy. Our guaranteed price system was introduced in 1947, and the EU intervention system was introduced when the common market was first formed.

The varieties of our major crop plants have improved massively. Initially, they improved predominantly in yield, then in disease resistance and, as my hon. Friend the Member for Mid Norfolk said, in suitability for different climates, pest resistance and other aspects. That has all been achieved, but biotechnology opens up a whole new range of possibilities. The term "biotechnology", as he also said, covers a multiplicity of different techniques. GM is often described, but biotechnology also includes genomics, cloning, the use
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of enzymes, marker-assisted selection and gene sequencing. As with all science, it is moving faster and faster. In the 1990s, the characterisation of the human genome took 10 years; our current technology could do it in two days. That is the rate of acceleration in scientific development.

There is no doubt that biotechnology has huge potential to provide quicker and more efficient developments in plant breeding. Biochemical or DNA testing can identify specific genes responsible for different traits, and biotechnologies such as marker-assisted selection or genetic modification offer further tools for ensuring that such genes can be used. However, it is important to emphasise that whatever aspect of biotechnology we consider, Government policy must be science-led and science-based. There should be no other basis for it.

The different technologies that I have listed pose different challenges. Some, like marker-assisted selection, do not seem to pose any risks and create little public concern. Others, such as GM, have raised concerns. Obviously, health and environmental safety must be absolute priorities when we consider GM technology. I believe that the combination of EU and UK risk assessment and regulatory regimes demonstrate that, and that we will proceed on that basis using the latest available evidence.

Much of this debate and many of the understandable challenges posed to me by the hon. Member for Glasgow North East relate to research. He knows full well the answers to some of the questions that he has asked me. I do not criticise him for that; it is a traditional form of opposition, as he knows that I cannot answer some of them. However, I will try to respond to all the points made.

I emphasise that the Government are spending about £400 million a year on agriculture and food research and are working directly with industry to support competitiveness and innovation in food through the Technology Strategy Board's sustainable agriculture and food innovation platform, which the Labour Government introduced. That was a good idea and a good innovation. Funded jointly by the Department for Environment, Food and Rural Affairs and the Biotechnology and Biological Sciences Research Council, the Technology Strategy Board is investing up to £90 million over five years to provide match funding to industry for technological research and development. I cannot narrow down precisely how much of that is spent on GM, but it is part of the totality of spending.

On the wider issue of research spending, as the hon. Gentleman knows, clearly research could not be immune to the pressures of reducing the public deficit, but the fact that the Government have maintained spending in cash terms over the whole spending review demonstrates the importance that we attach to it commensurate with all the other demands for public spending.

The hon. Gentleman rightly referred to the private sector. Obviously, what the TSB is doing with match funding is important, but the role of the private sector must continue to increase. In fact, a large proportion of the development of GM technology has occurred in the private sector. That is the reality of where it has come from. We can be pretty critical of how at least one major plant breeder has handled the public relations aspect, which has caused some of the problems with public opinion on GM.

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My hon. Friend the Member for Mid Norfolk mentioned the John Innes centre in Norwich, and the National Institute of Agricultural Botany is based in my constituency. Both are freestanding research organisations that are doing a tremendous amount of work. Some of their project work is funded by the Government, but much of it is funded by outside organisations.

George Freeman: On the question of funding for science, I endorse the Minister's point about the relative protection for science funding provided in the recent settlement. My experience of talking with science research institutes is that they recognise that in a time when Government funding is severely constrained, the Government have done as much as could be expected to protect the core research budget. The point I want to make relates to the technology innovation centres, which are part of the Government's policy for promoting integration between research and the private sector. Does the Minister agree that there might be a case for having a food science-related TIC to try to pull together our strengths in places such as Norwich, Reading, Liverpool and other centres that might otherwise fall between the stools?

Mr Paice: My hon. Friend puts his finger on an important point. As he knows well, there is already a huge amount of collaboration between the organisations I have mentioned and other important plant science centres, but it is an area where one can never do too much. I entirely share his overall approach, which is that we need to do all we can to ensure that we deliver the maximum benefit and that there is no risk of duplication.

Before speaking specifically on GM, I wish to pick up on a couple of points that the hon. Member for Glasgow North East made on bioethanol, biofuels and their sustainability. I appreciate his point about the measures that we have already taken on palm oil. I am afraid that I cannot give him a figure off the top of my head for research into second generation ethanol and biofuels, but I will be happy to write to him on that, and on EU spend, with all the information I can give.

That obviously leads to the question of CAP reform and where we go from here. I entirely share the hon. Gentleman's view that we must concentrate CAP resources on moving agriculture forward, rather than on our current direct payment system-there is a degree of unanimity across the Benches on that-although in no way do we propose that the direct payment system should go in the short term, as that would destroy agriculture as we know it in this country. Clearly, however, we want to see a gradual shift away from that to more clearly identifiable public benefits, and in our view R and D is a key part of that. We definitely want to see more CAP expenditure spent on R and D, and I can assure him that that is part of our approach to reform, although it is terribly early days-we probably have a two or three-year programme of debate and discussion.

I will now turn specifically to genetic modification, an area of huge emotion and oversimplification. GM involves the insertion of foreign genes carrying a specific trait into an existing plant. It is the only technique-I differ slightly with my hon. Friend the Member for Sherwood on his description of this point-that allows
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one to cross-breed genetic material from unrelated organisms, which means overcoming a specific barrier. It is not just a case of speeding up what would happen anyway, but involves doing things that could happen in nature only by a completely unpredictable mutation. The insect resistance that has been bred into maize, which has been of huge economic value to the industry, was achieved by taking a gene from a completely unrelated plant. The same was the case with the early work that made oilseed rape and soya resistant to the chemical glyphosate, thus allowing the overall crop to be sprayed. That required a gene from a plant that was resistant to be inserted into a plant that was not, so that it became resistant.

There is a great risk of over-generalising, and those who call for a moratorium or freeze on all GM work are missing the point. Every individual trait must be separately assessed and tested, and my hon. Friend the Member for Sherwood is right about the importance of field testing before deciding whether to allow commercial production to proceed, because each is a unique development and one cannot make those generalisations.

I am afraid, Mr Streeter, that I am taking advantage of the fact that I have a little more time than is normally available, but I think that these are key issues. It is important to recognise that the traits that are the subject of GM are moving themselves. Critics saw the early tests as a way of simply putting more money into the hands of chemical companies or farmers, but we are now beginning to see traits in GM that are more relevant to the consumer and the wider community, such as the work on genes that encourage high omega fats in oilseed rape and other plants. Drought resistance and the ability of plants to grow with much less water have been referred to. That will be of huge benefit to the developing world in the short term, but because of climate change it could also become far more relevant in this country. As my hon. Friend the Member for Sherwood suggested, the holy grail in such research is to breed a grain that is leguminous. That brings us back to sustainability, which must be a cornerstone of agricultural development in coming years.

The Government are close to finalising our overall policy on GM. It is a sensitive issue and obviously there are many views. We want to get it right, so the debate and the speeches that have been made this morning are timely. It is not desperately urgent, although we need to move on quickly. No commercial GM crops are being grown in this country at present. We had two research trials last year, one by the Sainsbury laboratory on blight-resistant potatoes and one by Leeds university on nematode-resistant potatoes. The issue of vandalism was raised in the debate, and I am pleased to say that those trials were not attacked-security for them was paid by BBSRC, and a little was paid by DEFRA. I share my hon. Friend's view that if we want to know whether there is a risk with those crops we need to test them, rather than rip them up in the first place. I want to assure the House that if we decide to approve the planting of GM crops, it will be based not only on science, but on strict criteria for crop segregation, both in the field and post-harvest, together with effective rules and protocols on the liability that comes from that, and my hon. Friend referred rightly to organic farm production in that context.

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One issue is particularly topical: imported animal feed. The world price of grain and soya has rocketed in recent months, meaning that our livestock producers are facing immense problems in obtaining sufficient volumes of GM-free soya, which is what they have to use. That is partly because the current EU rules for the import of soya do not allow for any contamination by an unapproved GM product, which means that most shippers are unwilling to take the risk because the detection of even the slightest amount of GM product would mean that the whole consignment was rejected. The EU has tabled a proposal that would effectively set a 0.1% tolerance level in grain imports for certain GM materials that were not yet approved in the EU, but that were in the approval process. That seems to be a common-sense way of proceeding that would reduce the risks posed to grain imports by the present rules. No decision has been made and we are looking at the detail of the proposal before the vote in February. As I have said, we think it is eminently sensible.

Insect-resistant maize and starch potatoes are being grown commercially elsewhere and other crops are in the regulatory pipeline. Overall, as my hon. Friend the Member for Sherwood said, Europe grows far fewer GM crops than most of the rest of the world. Those crops now cover more than 9% of the world's arable land-an area five times the size of the UK-and involve 25 countries. We cannot ignore those facts. That has all happened in about 10 years, and production is rocketing year on year.

It is clear that many farmers see the advantages of using GM, and many experts such as those at the Royal Society believe that it could provide benefits if it is used safely and responsibly. However, it is not a panacea. We should not kid ourselves that GM will be the answer to all our problems-the answer to Professor Beddington's perfect storm-but it could well be one of the tools that we need to address the longer-term challenges of global food security, climate change and making agriculture more sustainable.

That is why the Government are determined to move forward with these issues. We do not believe that we can put our hand up and say "stop" to science at any point. We have to see what scientific development is producing,
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and ensure that it is safe for humans and the environment and that we have the necessary robust evidence on which to make decisions. We believe that GM has a potential benefit in the context of food security, and we are looking hard at developing a final policy to enable it to be realised.

Few people have referred to the role of the consumer, which is critical in all of this. The law already states that any foodstuff that contains genetically modified material has to declare it if the GM in a particular ingredient exceeds 0.9%. My hon. Friend the Member for Sherwood mentioned pizza. If more than 0.9% of the soya-not the pizza but the soya in the pizza-is GM, it has to be declared.

Consumers have information with which to make their choices. Sadly, as my hon. Friend and others have said, those choices are often influenced by emotion based on some rather hysterical press notices. I hope that this fairly short but important discussion will enable us to move the debate on. It is more the format in which it ought to be carried on, and I hope that the more serious parts of our media will engage in genuine discussion and debate about the benefits of using and potential concerns about GM products.

Sir John Beddington will be publishing the foresight study, "Global Food and Farming Futures", in two or three weeks' time. I cannot say much about it as I do not want to pre-empt what he will say, but I know that the report will have a great deal to say about the role of GM in future food production.

Mr Streeter, I am sorry for usurping the opportunity to speak longer than is normal in these debates, but this is an important issue. GM has an important role to play in our future food security, for all the reasons that colleagues on both sides of the Chamber have given, but we have to take precautions. We must ensure that individual elements are properly assessed and measured before we take risks with either our food safety or our environment. As I said, my Government hope to introduce our own overall proposals in the near future. I am grateful to you for chairing this debate and to my hon. Friend the Member for Sherwood for raising it.

10.53 am

Sitting suspended.

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Flooding (Steart)

11 am

Mr Ian Liddell-Grainger (Bridgwater and West Somerset) (Con): I am very grateful that I have the chance to debate the issue of flooding on the Steart peninsula in the Bridgwater and West Somerset constituency. If hon. Members fail to recognise the name, they should fear not: Steart is a small, flat place at the mouth of the River Parrett, where the river trickles into the Bristol channel. They should remember the name; I promise that at the close of this short debate, Steart will be engraved indelibly on all our hearts.

We are talking about 1,000 hectares of land, much of which is below high-water level at spring tide. That is, and always has been, the nature of this extreme corner of the Somerset levels. The village of Steart is near the tip of the peninsula, less than a mile and a half east of the villages of Stockland Bristol, Combwich and Otterhampton. The seaward fringe is generally higher than it is inland, and has a gravel and sand formation, which is possibly the old barrier beach. The Romans, believe it or not, did a pretty good job of preventing the sea from stealing the land.

Records show that the Steart coastline and the River Parrett have often changed position. Nature has been playing a muddy game of musical chairs for hundreds of years, and in the 1700s the Steart peninsula was cut off from the mainland altogether. Even today, the Parrett's low water channel regularly shifts. Steart's defences now rely on what was built back in the 1950s. A lot of money was spent and the system creaks, but it works. The defences still, of course, need maintaining, and this is where the story comes of age.

The people now paid to maintain flood defences for Steart are in that all-singing, all-dancing quango: the Environment Agency. Hon. Members will gather that I am not a great fan of the body. It employs thoroughly decent and talented people locally, with whom I believe I have a good relationship, but the top tiers at head office have begun to believe their own glowing publicity, and all too often come across as a bunch of cocksure know-it-alls.

With permission, I shall read the opening statement of a consultation document on the Steart peninsula that the agency published last year. I am sure that the Minister would like to hear this-it sounds like a glossy TV advert. It ought to be read by an oily-voiced actor, with uplifting music in the background, but I am afraid that hon. Members will just have to use their imagination:

pause for a drum roll, followed by close-up shots of smiling families gazing up at the agency's queasy green logo-

In case this is all too emotional, I shall of course pass tissues around to the ladies.

Someone must have been paid to write this patronising drivel-I do not know who.

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Terrifying. They could have fooled the people of Steart, and me!

The Environment Agency's name is, literally, mud in my neck of the woods. Just before Christmas, it bunged in a planning application to build an experimental flood bank on the Steart peninsula. Putting in a planning application just before Christmas is rather reminiscent of a Chancellor publishing his Budget by means of a written question on a Friday afternoon-we have had experience of that. The Environment Agency was trying to slip something nasty under the radar. Apparently, it wants to test a long-term idea for a huge permanent structure to see if it would work. One would think that, with all its boasts of making the world a better place, it would have actually done some scientific work, and at least calculated the risks in a laboratory. Bridge builders do not build experimental bridges across rivers just to see if they will work. But, we should never forget that the Environment Agency loves spending money-our money.

The agency's long-term dream is to spend £28 million of taxpayers' money, sinking it all into a scheme that will not protect Steart from the sea at all. That amount would buy the new hospital that we desperately need, and have been waiting for, in Bridgwater, or could be used to complete the two schools in my constituency on which the Government have pulled the plug. But the Environment Agency wants us to earmark that sort of big money to sink the Steart peninsula for ever, and for an extravagant, cockeyed reason it now wants to indulge in a trial run.

I must quote what the agency wrote in support of its application-it is absolutely marvellous:


It has been looking at this for only 20 years. It wants to build an embankment 150 metres long, four metres high and 53 metres wide, just to check whether it works. Either that is lunacy, or those responsible come from Essex. Hon. Members will appreciate my constituents' fury. My constituents know the place and actually live there, unlike most of those in the Environment Agency. They understand the challenge of farming the land and, I am afraid, the real hazards of the incoming sea. This so-called temporary embankment will actually increase the risk of flooding, but I reckon that that is what the Environment Agency wants anyway. The truth about the agency's real ambition is buried in its consultation document, some sickly bits of which I have quoted. Wading through the twaddle, we get to the nub:

"Coastal squeeze" is a great phrase-it sounds like a dodgy woman.

A bit of the document is not in plain English, so I will try to make it easier for everyone to understand-my apologies, of course, to hon. Members. The Environment
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Agency is running scared of Europe; I hope that the Minister is not. One does not have to be a geographer to know that Brussels is a long way from the briny. But, surprise surprise, the busy bureaucrats have come up with a plan to interfere with everyone who lives by the sea. The Commissioners are also extremely partial to sea birds. They have invented a policy that basically says, "Let nature do its worst. It doesn't matter. Come on, Noah-where are you? Every flood is good news for the buff-breasted sandpiper." I have severe doubts about the sanity of this so-called European obligation. I am also slightly dubious about this love affair with sea birds. It is extremely rare to see any sort of bird in Europe. Europeans tend to shoot everything that flies, and then eat it. It is much better for them if a long-billed dowitcher turns up in a pâté served in Brussels at €150 a plate. However, these days even the most craven Eurocrat bird-killer has to pretend that they love birds, and to watch them fly.

So, we have now been lumbered with a law, and the Minister will, no doubt, have carefully worded responses that say what a good thing it is-that the law is marvellous and right. Given, dare I say it, the Minister's Eurosceptic credentials-I know him well-I will raise my eyebrows in disbelief if that is what happens during his speech, as, I suspect, might his colleagues. The wretched rules make it almost impossible for the Environment Agency to defend our country from floods-so what is the point of it? If the agency decides to build new defences in one part of the country, it has to take them away from another. Guess what? The agency has identified the Steart peninsula as just the sort of place where no one will notice. Well, they might have not noticed so far, but they jolly well will now.

The whole proposal is complete nonsense. The agency is trying to convince us that spending £28 million on a bird sanctuary will be cheaper and more effective than maintaining the existing flood defences. It did not do economics. That fatuous argument is plain wrong and totally dishonest. The agency's consultation document offers three alternatives: first, do nothing and wait for the tide to come in-like a civil servant; secondly, do the bare minimum and hope that the tide does not come in; and thirdly, do something drastic and flood the whole place deliberately. The agency really gets excited when it comes to "drastic" action-it loves that word. There are pages and pages in its consultation document about the alleged advantages of letting the sea take over:

Those who wrote those last words obviously went to a very dodgy secondary school. We do not have to read between the lines to be sure of one thing: the Environment Agency is absolutely determined to flood Steart and, disgracefully, it has held that view for years. It conducted costly consultation back in 2002, before the Minister was even elected to Parliament. Guess what, it came up with a scheme to create an elaborate wetland habitat. Does that ring any bells? I am sure it does. But one thing stood in its way-it could not raise the readies.

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Six years later the pathetic plan was back on the agenda, this time because the Bristol Port Company-this gets better-wanted to extend the Avonmouth container terminal so that even bigger ships can crash into it. One might think that that had nothing to do with Steart down the road, except for those inflexible European rules, which put birds above people. Suddenly, abracadabra, the Bristol Port Company remembered its mates at the Environment Agency, and settled on Steart.

Charlotte Leslie (Bristol North West) (Con): I thank my hon. Friend for bringing this matter to the Chamber on behalf of his constituents and the habitat. He has concerns about the plans for Steart, but does he appreciate that Bristol Port Company's plans for deep sea containers will provide 500 direct jobs and over 1,000 indirect jobs in transport and logistics, and will put the UK on a completely different footing when it comes to imports and exports? The port has said that it will work specifically with local people, and that its plans are separate from those of the Environment Agency.

Mr Liddell-Grainger: That is the most weaselly thing I have ever heard from a port company-not from my hon. Friend who speaks with the best direction from her constituents. Fine. I am speaking for mine. Why do I care if a company claims a benefit for Bristol? What difference does that make to me? Some weaselly woman turned up to tell me what is happening, saying, "Don't worry. Your little people will be okay. We are going to flood your area. We won't give you anything for it, but it will be good, although we won't allow visitors." Come on. Bristol Port Company is dodgy. It is much better at complaining about pylons in front of the chief executive's house than about container ports. I do not need a lecture.

We all thought that we had got rid of it, but next week it will be back in earnest. The Bristol Port Company will roll into the village of Otterhampton a week today with the first of a series of public meetings to tell the locals about its exciting plans or-dare I say it?-push them to accept its exciting plans, whatever form they may take. It is in league with the Royal Society for the Protection of Birds and, guess what, another totally useless quango, Natural England, our friends. I am delighted to say-I thank the Minister for this-that the Government will clip its ridiculous wings as soon as possible.

Unfortunately, wing clipping may be too late for Steart. The Environment Agency has submitted its planning application for that huge tidal flood bank. The Bristol Port Company intends to apply for planning permission to flood an enormous chunk of land on the other side of the road near Steart later this year. All that Steart will get out of that is a pile of bird droppings and an invasion of twitchers.

Anne Marie Morris (Newton Abbot) (Con): I am listening to my hon. Friend with interest. Across the south-west we have huge problems. I have a similar issue with coastal erosion in Dawlish, and I share my hon. Friend's concern that we need some conclusion on what is right and what is not. I agree that people are certainly more important than birds. Above all, we need some certainty, and I hope that my hon. Friend agrees that we need the Minister to agree what plans will be approved and what will not, particularly in Teignmouth where we
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want a flood defence scheme, which we really need, as opposed to the scheme in my hon. Friend's constituency which sounds as though it is not needed.

Mr Liddell-Grainger: My hon. Friend has encompassed the problem in a nutshell. The organisation is out of control, and does not care about people or anything, except its little friends who live in Essex and who will do whatever they want to do. It is up to people like us to stop that, and to make companies such as the Bristol Port Company realise that we are not a load of hicks that live in the country. I totally agree with my hon. Friend, who does her constituents a great service in bringing the matter to the attention of the House.

It is about time the Minister and Bristol Port Company considered compensation. A big infrastructure plan such as this requires a generous kick-back for those on the ground. How about some planning gain? Even Bristol Port Company is not talking about that. Unfortunately there are not enough people on the Steart peninsula to kick up sufficient fuss, but a fuss really needs to be made, and I am sorry to say to the Minister and my hon. Friend the Member for Bristol North West (Charlotte Leslie) that I am going to put my boots on and start kicking.

The Environment Agency's latest consultation exercise has burned up about £60,000 of public money. The Minister may be about to tell us how popular the scheme is, but I warn him to consider his words carefully-I know that they have been drafted for him. Bodies such as the Environment Agency are, of course, obliged by law to consult, and rightly so, but the fact that few people respond to a consultation does not mean that the plans are popular. We all know how that has been got round in the past. Perhaps the Minister would like to know how many people answered the Environment Agency's consultation questionnaire. This is important stuff, even for Bristol Port Company. Five thousand consultees would have cost a tenner a head. A bargain. But if there were only 500 responses, the cost would have been about £150. But there were not 500, 50 or even five replies. The Environment Agency had replies from-wait for it-three people. Why? People do not trust the Environment Agency and, as my hon. Friend the Member for Newton Abbot (Anne Marie Morris) said, they do not think it worth the effort to reply as the proposal will be steamrollered through by Europe.

The cost works out at £20,000 per respondent-£20,000. It is cheaper having the Bristol ports up the road. Why do people not bother to participate? I have an idea-they do not trust those involved. They see an overgrown jungle of interfering regulators who have been trying to do this for 10 years, who squander their money, and who do not listen. Everyone knows-this is not rocket science-that these are hard times for Great Britain plc. Around the country, we are bracing ourselves for cutbacks, job losses and austerity. They have started. We are supposed to be in this together, not individually, but the Environment Agency seems to assume that it has some special exemption. It has come to believe in fairy gold. The estimated cost of its plan to flood a corner of my constituency is £28 million of our money, and that is a disgrace, never mind what Bristol Port Company will spend. Our nation cannot afford that. There are more important priorities, and the Minister-he really needs to listen-should stop the project dead in its tracks before we have a real disaster.

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11.16 am

The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Richard Benyon): It is a pleasure to serve under your chairmanship, Mr Streeter. I congratulate my hon. Friend the Member for Bridgwater and West Somerset (Mr Liddell-Grainger) on securing this debate, and other hon. Friends who have contributed. I will try to address their points also.

My hon. Friend the Member for Bridgwater and West Somerset spoke with passion on behalf of his constituency, but I must consider the wider issues, not just the national budgets that we provide to the Environment Agency and other organisations, but also the Severn estuary. The scheme has many positive points. It is the only viable way that the Government can continue to provide defences and secure access to the village of Steart while meeting our environmental objective for the estuary.

The Severn estuary is one of our most important wildlife areas, as well as a great economic asset. It has more than 200 km of coastal defences, which will provide in excess of £5 billion of benefits over time to more than 100,000 residential and commercial properties. The shoreline management plan highlights the need to maintain and improve most of those defences. However, a consequence is that there will be a substantial loss of internationally designated intertidal habitat. Our investment prioritisation process is focused principally on protecting people and property and that is where the vast majority of our money is spent. However, we must acknowledge that what we do to protect people and property has an impact on the natural environment, and that must be taken into account.

My hon. Friend keeps referring to £28 million, but the figure I have is £20 million. That may have an element of semantics, but it is a considerable sum. I assure him that I do not easily agree to spending £20 million in this or any climate. Every penny should count, and I have looked carefully into the matter. We will continue to invest in defence in the Severn estuary, despite the impact on the natural environment, because of the imperative reasons for doing so. That is permitted under the EC habitats directive as long as appropriate compensatory habitat is secured. Our plans to manage and improve the defences therefore depend on sufficient compensatory habitat being secured before the protected habitat is lost due to the flood defence construction work.

There has already been a loss in the Severn estuary, and without the Steart scheme we would fail to maintain the integrity of that protected Natura 2000 site. My hon. Friend may rail against Europe, but frankly, whether we are in Europe or not, I and the Government value what is set out in the Natura 2000 directive, and my hon. Friend should value it if he minds about the valuable asset that is the natural environment in the Severn estuary.

The EU habitats directive, together with the birds directive, forms the cornerstone of Europe's nature conservation policy to maintain or restore natural habitats and the population of species of wild fauna and flora at a favourable conservation status, and is a key element in the EU's commitment to halt the loss of biodiversity within the EU by 2020. That is also a firm priority of the Government. With that in mind, I now turn to the
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Steart scheme. Steart village and peninsula are currently protected by more than 12 km of flood defences. Beyond the short term it will not be economically viable or sustainable to maintain existing defences. To do so would cost in the region of £1 million per property.

The issue has been considered in the shoreline management plan, which highlighted the peninsula as a place where the managed realignment of the defence provides the best option for continuing to protect the village and its access as well as creating habitat to offset the impact of crucial work elsewhere in the area. Indeed, Steart has been identified as the most cost-effective place in the estuary for habitat creation without geomorphic side effects such as adjacent erosion. The twin objectives of the project are therefore to create the habitat we need and protect the village and its access. It forms a vital part of an integrated and sustainable coastal management solution for the Severn estuary. It will provide the only foreseeable opportunity to improve flood protection to Steart drove, the only access route to Steart village. It will help to maintain the existing standard of protection and the new defences can be expected to last longer than the current defences. If my hon. Friend claims that what is happening is just about the habitats directive and just about providing wetland for birds, that is not correct. It is about providing flood protection for his constituents and access to a community that would otherwise be cut off at high tides, or because of further erosion.

As my hon. Friend said, the Environment Agency has carried out extensive consultations, and I understand that the majority of the local residents strongly support the proposals and recognise the flood risk management benefits that the scheme would bring. I hear what my hon. Friend says about the response to the Environment Agency consultation, and I am always happy to consider how consultations are carried out and why there is such a low response rate. One reason could be that people are quite in favour of the scheme. I received a copy of a letter to my hon. Friend from the parish council, which seems to be very supportive of the scheme. There is an organisation called the Steart residents group, headed by Dr Phillip Edwards, who wrote a letter to the local paper. He said that

He goes on to talk about the value of the scheme, and the group's opposition to my hon. Friend's opposition.

I cannot second-guess the exact level of support or otherwise for the scheme, but I assure my hon. Friend that we do not feel that we are trampling on the views of local people. I understand that a number of people want it.

Mr Liddell-Grainger: I want to suggest that the Minister's Department should let me have the information about who has replied. Secondly, the gentleman that he mentioned-I was going to mention this myself-spends most of the year with the UN; and he is one person, who has set something up with no one else. I must gently tell the Minister that what he read out is not the
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case. If he would let me have the relevant information, I am more than happy to discuss it with him, and with the people concerned.

Richard Benyon: One of the two references I made was to the local paper, so presumably the hon. Gentleman can get access to that: I am happy to give him the copy I received. The second reference was to a letter to my hon. Friend from the parish council, which was copied to Otterhampton parish council. I cannot second-guess how many members the Steart residents group has, but the fact is I get a different impression of opinion from the hon. Gentleman's.

Perhaps I may touch on points made by other hon. Members. My hon. Friend the Member for Newton Abbot (Anne Marie Morris) is a redoubtable campaigner on behalf of her constituents for flood alleviation in her constituency. I can barely move in this building without having my collar felt by her, in her determination to raise that issue. I can only assure her that we shall make available all the information about what schemes will go ahead in the near future and, under the payment for outcomes scheme, what options are left to her constituents to gear in other funding if theirs is not in the top flight of schemes. That will give clarity to her constituents about what is required for the schemes to go ahead. I cannot give her any information, because I do not have any about that scheme.

I have considerable sympathy with my hon. Friend the Member for Bristol North West (Charlotte Leslie), because I recognise the importance of Bristol docks. I do not dismiss them, as they are an important local employer and a major hub of activity that is vital to us as an importing and exporting country and to the wider benefit of the Bristol area. I recognise that we are dealing with something that relates to the Severn estuary, its entire ecosystem and habitats and, importantly, the people and jobs that come from that part of the country.

In conclusion, the proposed scheme is not only the most cost-effective habitat compensation to enable the Severn estuary flood risk management strategy to move forward; it also offers improved flood protection to the local area. I thank my hon. Friend the Member for Bridgwater and West Somerset for raising the matter. He has made me much better educated about it because I have spent a considerable time preparing for the debate, and I listened with interest to his enjoyable remarks.

I hope that what I have said has helped to highlight to my hon. Friend the need to manage flood risk in ways that protect people and property and deliver good value for money to the taxpayer, but also meet our environmental obligations. If we do not do that, we cannot legally improve flood protection elsewhere in the estuary. If we did it without compensatory works, that would leave the taxpayer liable to fines from Europe. That is not something that I have the power to avoid, and no hon. Member should be happy for it to happen, because we are in strapped financial circumstances. If we did nothing we would also lose valuable habitat and all that that offers to us as a society. Our emphasis is always on working with nature, wherever possible, to reduce the risks to people while also meeting social and environmental objectives.

11.27 am

Sitting suspended.

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Local Government Budgets

2.30 pm

Mr Jim Cunningham (Coventry South) (Lab): May I take this opportunity to thank Mr Speaker for granting this debate on an important subject? I notice that the Minister is looking serious, to say the least. I want to start by mentioning the world economic situation that existed before the current Government came to power. It is worth reminding people that the economic difficulties were worldwide and started in America with Lehman Brothers. As hon. Members will recall, the then American President could have taken action to bail out Lehman Brothers, but chose not to. That obviously had a knock-on effect on the banking system, particularly in this country.

Hon. Members will also remember looking at news bulletins that showed people queuing up to withdraw money from banks such as Northern Rock. Had the then Government not taken action across the whole economic fabric of this country, that bank may well have collapsed. Despite all their faults, the previous Government introduced a number of measures to address the situation, such as the car scrappage scheme. Last week's figures from the motor car industry show that sales have gone up by 2 million this year, which demonstrates that the measures taken by the previous Government to address the problem have paid off. It is worth reminding ourselves that in 1997 when Labour took office, 50p from every £1 of taxpayers' money was used to pay off the national debt. During their first two years, the previous Government spent a lot of time doing exactly that-paying off the national debt.

Measures implemented by the present Government will certainly have an effect on places such as Coventry, and on a number of local authorities up and down the country. A number of west midlands MPs are present in the Chamber, and they will want to talk about how the Government's policies for local government will affect their particular situations. The details in the provisional local government settlement have created a lot of problems for many local authorities, and brought further bad news as far as Coventry is concerned. The £19 million cut in the formula grant is most worrying, as are cuts to other specific grants of £17 million. Incredibly, at this late stage we still await the details of some grant funding streams from the Government that have not yet been clarified.

At present, Coventry city council is trying to manage the massive and inequitable reduction in resources announced on 13 December. In fairness, it has tried to take sensible steps to anticipate part of that reduction, and to its credit it has redesigned its services and introduced modern procurement practices. The Minister has praised Coventry for its efforts to look for value for money; nevertheless, I want to highlight the scale of the grant reductions facing the city. Because of the cuts, the council has been forced by the Tory-led Government possibly to cut more than 500 posts over the next 18 months. The amount of money the council spends on the local economy will also reduce dramatically, and if we add to that the capital proposals for the Building Schools for the Future programme, that is another £300 million that could leave Coventry's economy. We are not yet clear what the capital allocation will be for repairs to school buildings and the rebuilding of schools.
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We should have received information on that this month, but we are still waiting for the Secretary of State for Education to provide it. That has an impact on staff in Coventry city council. The front-loading of cuts means that staff losses will be required at an early stage of the spending cuts, which will affect not only staff but families across Coventry. The overall impact of the measures means that Coventry council is expected to lose about £45 million.

Let me turn to the impact on the west midlands economy. The cuts will have a significant knock-on effect on local businesses and employment in the region, and we can see what is happening in other sectors as cuts and reforms begin to bite. In the health sector, for example, possible cuts were announced last Monday in the local press-in Coventry and Warwickshire, some 450 jobs could go in the national health service. Cuts of over 20% are projected for the West Midlands police force, which will have an impact on the fight against crime. As I have indicated, we do not know what will happen with the Building Schools for the Future programme.

The public and private sectors will not be able to invest in the regeneration and infrastructure of the region. We are still awaiting a decision on the Knuckle project, which could help the employment situation in Coventry. Over the years, Coventry MPs have lobbied various Governments in order to get that project off the ground. I will not go into great detail about that, but I hope the Minister will tell his colleagues that we need a decision that can help to mitigate unemployment in Coventry.

The abolition of funding from regional development agencies has meant that there is little funding to lever in private sector investment for large-scale redevelopment projects. There are two parts to local government cuts for Coventry city council. First, the formula grant will lose in excess of £19 million, and secondly, specific grants will lose in excess of £17 million. There will be a 27% cut to local government funding over four years, which in real terms equates to a cut of 8% per annum to the formula grant.

As I said earlier, there will be further cuts to specific grants, but-unbelievably-we will not know the final grant settlement until the end of January 2011. That puts Coventry city council under further financial pressure and it will not be able to continue providing services at the same level. There will be far fewer grants and they will have a lower overall value. It is a great concern that many grant streams will end. That will have a significant impact on Coventry-some 58% of the council's gross expenditure for 2010-11 is resourced through specific grants, and £19 million of grant funding is likely to fall out, including a large number of former area-based grants such as local enterprise growth initiatives and a number of children-related grants. The future is unclear for Connexions and adult education.

Some grants that will end immediately include various education grants aimed at raising school standards; employment activities that help people back to work and, as a consequence, strengthen the local economy; community services; one-off grants to the homeless; sporting futures and football foundations; youth crime action; dealing with fly-tipping; and environmental grants for safer communities. We must consider other measures that will affect the disadvantaged. The front-loaded
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cuts proposed by the Government, combined with the impact of the VAT increase, will mean fewer services, of a lower quality, although people will be expected to pay more for them. That will be this Government's legacy.

Emma Reynolds (Wolverhampton North East) (Lab): I could not agree more with my hon. Friend that it is the poorest who will be hit hardest. In Wolverhampton, the 28th most deprived local authority in the country, we are expecting cuts to the city council budget of 24%. Does my hon. Friend agree that such cuts are too fast and too deep and will hit the poorest hardest?

Mr Cunningham: Obviously, I have to agree with my hon. Friend. As she will know, the Building Schools for the Future programme certainly affects her constituency, and there will be an economic impact on it in that regard. The Government, although there was an economic problem, have gone over the top in addressing it. That has become apparent as they have rushed into all these local government cuts.

Capital funding has all but dried up. We are seeing the abolition of Building Schools for the Future where money has been lost, there is no replacement work and schools are in desperate need of repair. Notwithstanding the cuts to housing benefit and council tax administration costs, in real terms central Government will be cutting 5% of support at the time when administration is most needed. There are more claimants than ever before. The unavoidable conclusion of those actions is that many of the poorest will be affected disproportionately. That includes the proposals relating to legal aid, which is not part of this debate.

We were preparing a four-year plan to deal with the situation, and obviously there would have been a certain amount of rationalisation as far as we were concerned, but we certainly would not have been rushing in all directions, as the present Government have been doing over the past seven or eight months, to inflict cuts on people.

There is a new word for cuts these days: I am talking about the thing called "damping". No doubt the Minister will enlighten us on that one. The coalition's damping methodology throws up a number of concerns for the people of Coventry, which I shall briefly discuss. Once again, Coventry has lost resources. We did so in the 1980s under the previous Conservative Government. Our capital programmes were capped in those days. People have short memories. What the present Government are doing is not new; the then Government were doing it way back in the '80s. For the period of 2011-12, Coventry is set to lose £8 million through that process alone. That leaves the authority with a reduction in resources of 6%, which is 1% worse than the national average. The coalition has tried to defend the damping process by saying that the money is being given to the more needy authorities. However, that is simply not happening in many instances.

Let us consider the main problems with damping as many authorities see it. On closer inspection of the actual effects, the damping in the provisional settlement considers only authorities' formula grant; it does not consider the authorities' change in overall resources. Relative spending power combines the impacts of formula grant, council tax and other revenue grants.

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Although the average is a 5% reduction, there is wide variation in the outcomes for individuals. The Government have tried to disguise how deep the cuts are by including in their calculations money that councils raise themselves. Their own statistics reveal that councils will lose on average 12.1% of their core central Government funding this year. Perversely, six of the most affluent local authorities will gain a joint total of £130 million from the damping process. For example, West Sussex gains £6 million, with a reduction of less than 1%. Richmond upon Thames gains £15 million, with a reduction of less than 1%. Alarmingly, Surrey will gain £62 million from the damping process. Clearly, this damping is not fit for purpose-to coin a phrase from a former Home Secretary and colleague of ours-and should not be used to allocate formula grant.

We suggest a change to the damping system. Many councils raise far more from council tax than they receive from the Government. Therefore, a comprehensive assessment of each authority's overall resource position should be examined. The current unfairness is taking money and jobs out of Coventry and 77 other authorities across the country. I urge the Minister to consider changing over to that approach, which, as I understand it, has been suggested to civil servants by officers from Coventry city council.

There is an overwhelming lack of clarity from the coalition Government about the time frame. Councils across the west midlands and beyond are being forced to make rushed decisions, with no time to plan for the consequences. That could end up costing more than it saves. There is a lack of information. Councillors and officers are in no way information-rich as they go into this unfamiliar process. There is little guidance from the Department and there is great uncertainty. The Secretary of State for Education's capital spending review is not expected until later this year. We thought that it would be January and, as I have said, I am not clear now on when we shall know what the settlement will be.

For all the coalition's talk of localism, it has dumped its cuts on local councils. The coalition's plans for local government do not include growth or jobs: it is merely a deficit reduction policy. The coalition must make up its mind. Is it dealing with a new economic situation, which was the original argument, or is it rebalancing the economy, which is the new one? The solution is the same, but the approach and the reasons are different.

2.45 pm

Mr Marcus Jones (Nuneaton) (Con): Thank you for allowing me to speak today, Mrs Brooke. I congratulate the hon. Member for Coventry South (Mr Cunningham) on securing this important debate, although some of his opinions on the overall situation in local government in Coventry and the west midlands may well differ from mine. Despite what the hon. Gentleman said and the synthetic rage from Opposition Members, local government had known for some time that whichever party formed a Government following the last general election, budgets for councils in the west midlands and for most councils across the country would reduce dramatically. That is not a hidden fact and not something that we should forget. Nor should we forget that the public know that the country has a massive deficit. We can talk about how that was caused. Obviously, the bankers are very much at fault, but the previous Government were also
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very much at fault for not having a proper system of regulation in place for the banks. The banks failed on their watch. They cannot get away from that point.

Mr Cunningham: Obviously, the hon. Gentleman is entitled to his point of view, but he certainly was not in the House, although I and my colleagues were, when the issue of Northern Rock arose. The then Opposition-the hon. Gentleman's party-had no solution to that. In fairness, the Liberal Democrats said that we should nationalise Northern Rock. We said that we would have a look at that. Equally, if we look at the record of the last Parliament, we see that the hon. Gentleman's colleagues always argued against regulation. Whether we were talking about banks or the private sector, they argued against regulation, and the only regulations that they are talking about abolishing now are those on health and safety.

Mr Jones: I thank the hon. Gentleman for his comments, but we cannot get away from the fact that his party were in government; the banks failed on his party's watch. We saw the first run on a bank for more than 100 years. That happened on his party's watch. His party, not my party, was responsible for regulating the banks and it failed. The public know that and know that we must deal with the deficit. It is running at such a level that we are paying £120 million a day in debt interest alone. If we do not deal with that, not only will public services and the amount of money that we have for public services be vastly reduced, but the point also needs to be made that we risk putting this country in a situation like that which we have seen in Ireland, Greece, Spain and, probably, Portugal.

Let me return to the Government settlement in relation to councils. The better councils, including those across the west midlands, have been planning for several years for how they would deal with the inevitable cuts in local government funding. We should acknowledge that there have been reductions in formula grants for many councils over a number of years. The public have been looking to councils to show some leadership and show how they can deal with the very difficult situation that we all know we are in.

The previous Conservative administration at one of my local councils, Nuneaton and Bedworth borough council, did an enormous amount of work before the elections in May with Rugby borough council. That was about saving money through merging back-office functions, reducing the amount of management and sharing management. They were on course to save in excess of £2 to £3 million. Unfortunately, the current-now Labour-administration in Nuneaton and Bedworth has politically abandoned that work and decided not to pursue saving money by reducing back-office functions. I am surprised by that because the previous Labour Government advocated it as a way for councils to save money in what they knew would be difficult times, and the current Government also advocate it.

I fear that Nuneaton and Bedworth council will look to make up its budget through massive rises in parking charges, as it has already shown by implementing a 25% rise in charges in the past couple of weeks. Inevitably, it will also make large increases in fees and charges elsewhere and, I am sure, huge cuts to front-line services through lack of foresight and forward planning.

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On the grant settlement and the formula grant, I would like to discuss the disparity in settlements across the country that the hon. Member for Coventry South mentioned. Disparity is nothing unusual, because under the Labour Government, Warwickshire county council, for example, was particularly disadvantaged by its grant settlement year after year when compared with councils in areas such as the north-east. They received huge increases in grant funding while Warwickshire's funding decreased and was continually behind the curve.

Looking beyond the grant settlements, we have seen some positives from the Government recently, which I welcome, such as allowing councils more freedom to deal with the issues that they face. Performance indicators have been the bane of many councils over a number of years-the comprehensive area assessment and the local area agreement. In reality, performance indicators have done very little either to improve the quality of local services to the people or to increase and improve outcomes, and particularly to reduce the gap between rich and poor. We now know that during the Labour Government, inequalities between rich and poor increased-they got worse, not better. Millions of pounds, even in very small authorities, have been wasted. Hopefully, authorities can put that into front-line services, rather than into writing a ridiculous number of plans or strategies, which have little or no effect.

The formula grant is a complex animal. It offers no transparency to local people over how local services are provided. People in local government, and possibly people in the Department, do not have a great understanding of the formula grant and how it is arrived at. What can be done to simplify the minefield of local government finance to make things more transparent for local people, so that they understand fully how taxes are raised to pay for local government and how its finance is allocated?

One area of concern within the current grant settlement is the transfer of concessionary travel from borough and district councils to county councils. That affects us in the west midlands in two-tier authorities, and particularly affects the two local councils in my constituency-Nuneaton and Bedworth and North Warwickshire borough councils-which is obviously of great concern to my constituents. With the recalculation of the grant, Nuneaton and Bedworth is likely to be disadvantaged by the loss of about £200,000 and North Warwickshire by about £300,000. I would like to know what the Minister can do to mitigate the effect that the transfer of the responsibility will, potentially, have on local services in Nuneaton.

I conclude by reiterating that this is a tough settlement. We all know that we have a tough settlement and it is incumbent on local authorities to work with local people and to ensure that they deliver on the priorities for those people. There are also certain anomalies that the Government need to mitigate, particularly the transfer of responsibility for concessionary travel. I look forward to hearing the Minister's response.

2.55 pm

Richard Burden (Birmingham, Northfield) (Lab): It is a pleasure to follow the hon. Member for Nuneaton (Mr Jones). I could, perhaps, characterise his speech as a bit of an each-way bet, but he will have to answer to his constituents over how he actually feels about large amounts of cash being trimmed off the local budget.

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I congratulate my hon. Friend the Member for Coventry South (Mr Cunningham) on securing this debate and a number of debates since the election on matters pertinent to the west midlands. Understandably, he has majored on the situation in Coventry, although the title of today's debate covers the broader west midlands, which we heard about in the hon. Member for Nuneaton's speech.

The previous debate that my hon. Friend secured on this matter was on 16 November 2009 on cuts to the police service. Those cuts had a serious impact in all parts of country, but in the debate a succession of hon. Members from the west midlands drew Ministers' attention to the disproportionate effect of the police cuts on our region due to how Government grants interrelate with the precept. In that debate, we were told that Ministers were listening, but when the announcement came just before Christmas of the settlement for police authorities, we found out that listening had not been matched by action. As a result, a number running into the hundreds of experienced officers will lose their jobs and the back-up support that is vital. In that debate, I said that not only were the cuts to the police service serious, but that we will only see their impact in the round if we relate them to cuts taking place to other public services and, most particularly, to local government.

On 13 December, we heard what the provisional local government settlement would be, and it confirmed all our worst fears. I asked the Secretary of State for Communities and Local Government about Birmingham when he made his statement in the House. His response was significant:

I think he meant 8.3% next year and 4.3% the year after, but we will allow him that slip of the tongue-I know that Government Members are fond of quoting slips of the tongue at the moment, which can happen from various quarters. The Secretary of State said that he was "delighted" that there would be an 8.3% cut in spending in Birmingham, but there is no delight in Birmingham about an 8.3% cut in spending. According to figures from Core Cities Group, the cuts required to balance the budget in Birmingham in the 2011-12 financial year will be £139 million, with a further £53 million the year after. As with the police cuts, the impact will be much greater in Birmingham, and in other core cities and urban areas, than-surprise, surprise-in more affluent areas, particularly the south-east.

According to the Core Cities Group, Wokingham faces a loss in formula grant of 14.3%, which is a higher percentage than Birmingham. The real impact on real people on the ground in Wokingham is a cut per person of £20.83. In Birmingham that is a cut per person of £75.19. We can then transfer that figure to the spending power per person, which my hon. Friend the Member for Coventry South mentioned. In Wokingham the cut is £4.46 and in Birmingham it is £101. That £101 equates to 8.3%, the precise figure about which the Secretary of State expressed delight in his 13 December statement.

Emma Reynolds (Wolverhampton North East) (Lab): Does my hon. Friend feel that the delight in the quote from the Secretary of State for Local Government is
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due to an ideological commitment to make the state at both central and local government level smaller, because that is what Conservatives have always believed and continue to do so? If they were frank and open about that, we would obviously still have a problem with it, but why should they not come out and say so?

Richard Burden: My hon. Friend makes a valid point. I also think we need to question when they talk about making the state smaller. What they really want to make smaller is the benefit that the state can provide to the citizen; the support the state provides; and the way the state can enable the citizen to improve his or her quality of life. I do not get the impression either from this or the previous Conservative Government-if we go back that far-that there was actually much of an attempt to shrink the state in terms of central control. An interesting thing about what they are doing in practice-not the rhetoric-is the increase in central control, not only over local government but also over local communities. I will give a couple of examples of that in a minute.

I chaired the West Midlands Regional Committee before it was scrapped by the Government. Clearly, they found it uncomfortable to have a Committee of this House focusing on our region. That is something that in due course they will have to answer: why they thought it was so much of a problem to have a Committee looking at the strategic issues of our region. The reports we produced on that Committee looked at the impact of the recession on the region and the fragility of the recovery in the west midlands. When cuts come in local government and in other areas of the public services, that is serious. It is really serious for the west midlands, so serious that it makes it even more important that the targeted funds that the previous Labour Government made available to our region are employed effectively.

Birmingham city council's ruling Conservative-Liberal Democrat coalition was criticised before the election about its use of targeted funding, in particular the working neighbourhoods fund. With the needs of a city such as Birmingham, it was surprising that the Conservative-Liberal Democrat coalition managed to underspend in the 2009-10 financial year to the tune of £28 million on its working neighbourhoods fund spending. It has a lot of questions to answer about that. The council still received from the Labour Government an additional allocation of £41 million under the working neighbourhoods fund for the 2010-11 financial year. It could use the underspend from the year before and the extra £41 million provided by the Labour Government to help those affected by the cuts that the current Government are implementing. It could be doing that, using it to tackle worklessness and to ensure that the resilience of the region is maximised after the recession. That is not happening. In July, the city council froze initiatives for using that underspend from 2009-10, and it cut £7 million from the 2010-11 budget.

I raised that with Ministers at the time and I was told that it was a good thing, because there was now a new-found freedom for local government, ring-fencing was going and local authorities were free to use area-based grants according to local circumstances. The result in Birmingham has been this. In the week before the Localism Bill receives its Second Reading and at a time when the Government talks about the big society-we may hear of it from the Minister-and empowering
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local communities and giving them a say, on Friday in Birmingham city council, neighbourhood managers and neighbourhood co-ordinators throughout the city, including my Northfield constituency, were issued with redundancy notices and will no longer have jobs from April.

One of the most positive and creative responses to the MG Rover crisis of six years ago was the setting up of a one-stop advice shop in Northfield town centre. That not only provided much-needed advice for local people but brought together in a real partnership, local businesses, residents and the local authority, to improve the suburban shopping centre of Northfield. Key to that, the glue that held it together, was a town centre manager, initially funded by Advantage West Midlands, which is also being scrapped. Now that town centre manager post is being scrapped under the cuts brought in by Birmingham city council. Those neighbourhood managers and neighbourhood co-ordinators were engaged in incredibly creative work in building local resilience and community self-reliance. Getting those redundancy notices on Friday was a slap in the face for them. It undermines the resilience and self-confidence in communities that-if the verbiage of the big society is to be believed-we should be trying to build.

It will also sap confidence in that local suburban shopping centre at the very time we should be trying to attract investment to it, trying to build confidence, and trying to cut crime and the fear of crime. When I say it is a slap in the face for those local neighbourhood managers and co-ordinators and the town centre manager, it is not just a slap in the face for them. It is a slap in the face for the people of Northfield and Birmingham. It is also a slap in the face for the ideology of the big society.

It will be said-as it was by the hon. Member for Nuneaton-that the cuts are inevitable and that savings would have had to be made anyway. To some extent, that is true: some savings would have had to be made. He says it is all Labour's fault. Maybe he should listen not just to what comes out of central office but to what Conservative councillors say. At the start of last year, when Labour was in power in central Government, Birmingham city council, despite having had year-on-year increases in grant, was already facing a massive overspend, even though the Conservatives and Liberal Democrats had been in power there since 2004.

When a number of people questioned the council with some force about whether that said something about its financial management, it said, "Absolutely not. The trouble is we do not get enough money from the Government. Labour starves us of money." It is time for the Government to ask whether it was right or wrong to say that. If those Tory councillors were right that Labour was starving them of money, despite the year-on-year increases, how can the Government justify the extra swingeing cuts to financing Birmingham city council? If they are wrong about that, are they saying that Birmingham city council, run by their friends -a Conservative-Liberal Democrat coalition-was mismanaging the finances of the council? They cannot have it both ways. They have to say in fairness to the people of Birmingham which of those positions is right. The people of Birmingham need to know these things if their neighbourhood co-ordinators are to be cut and when they see rubbish piling up in the streets of Birmingham because the city council is trying to cut the pay of refuse collectors by between £4,000 and £6,000.
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They need answers from the Government about what they are going to do about listening to the real concerns of real people in Birmingham.

There are things that the Government could do to make matters a little better. They could structure the transitional grant to local authorities differently. They could ensure that transitional grant is available to local authorities that face a cut in their revenue spending power of 7.5%, rather than the 8.9%, which is proposed in the provisional settlement. They could change the resource equalisation formula, so that it does not take money away from poorer areas and give it to richer ones, as is happening at the moment. A number of other suggestions have been made by the Core Cities Group.

When the Minister responds, will he say whether he is considering what Core Cities is saying and, if so, what the response will be? Could he give me a bit more comfort than I received in the debate about police cuts, when I was told that the Government are listening, only to find that listening led to absolutely no action in the final announcement? Will the Government listen this time and match their listening with action when we have their final figures?

One thing is clear. Whatever the Government do, is it not true that people in Birmingham and the west midlands as a whole, including Coventry, deserve just a little better from the Secretary of State for Communities and Local Government than a pat, off-the-cuff remark expressing delight at the fact that spending power in their area will be cut by more than £100 for every citizen or by 8.3%?

3.10 pm

Mr Geoffrey Robinson (Coventry North West) (Lab): May I, through you, Mrs Brooke, thank Mr Speaker for selecting this subject for debate? I congratulate my hon. Friend the Member for Coventry South (Mr Cunningham) on securing the debate, which gives us an opportunity to discuss these issues, albeit a sad one, given the continued relative decline of the west midlands, which was once the industrial powerhouse of the whole country but has been badly affected by successive Governments' progressive neglect of the manufacturing sector. Now, the Government are making specific attempts to cut local and regional expenditure in all its forms, and we must, sadly, discuss the impact that that is having on the west midlands as a whole and on Coventry and my constituency in particular.

I am sure that all Members have, rightly, been lobbied by their local authorities. I am pleased that all three Coventry MPs are here-I hope all three of us will have caught your eye by the end of the debate, Mrs Brooke-and our authority has been no exception, because it has given us a very full briefing for the debate. I would like to ask the Minister about one point in particular; indeed, if he has time, he could even tell us during the debate whether anything has come of it. The damping process is having a deleterious effect on relatively less well-off councils, to the benefit of those that are manifestly much better off. We have written to the Minister on that, and some officials from the authority in Coventry who have written to me have been to see officials at the Department for Communities and Local Government. They have put forward an alternative, much fairer proposal for the Department's serious consideration, and I believe
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that the Department's officials have promised to give it such consideration. If we are indeed all in this together, and fairness is the essence of what the so-called coalition-it is really a Tory-led Government-is out to achieve, the damping methodology could be simply changed in a way that made it evidently much fairer. I will come to that in a moment, because I do not want to anticipate too much of what I have to say, but I would like to hear whether the Minister and officials at the Department have had time to consider the objective, fair criteria that Coventry local government officers have put forward in good faith.

Even at this late stage, as we consider the cuts in Coventry, we do not know some of the details of the grant funding streams from the Government. The provisional settlement was sent out on 13 December, and two months have gone by but we still do not know the details. However, it is pretty clear that Coventry will face a massive reduction, and so, too, will Birmingham, as my hon. Friend the Member for Birmingham, Northfield (Richard Burden) made clear a moment ago. Over the next year or so, it seems inevitable that we will have to make 500 compulsory redundancies in Coventry. That might seem like a small proportion of the tens, and perhaps hundreds, of thousands of dedicated civil servants in local government who will be made redundant in the next couple of years, but for us in Coventry, those redundancies will follow hard on the cuts we have already felt in the manufacturing sector. More specifically, since the coalition came into being, Ministers have culled two distinguished Government organisations in Coventry in the most abusive and disdainful manner. The Qualifications and Curriculum Authority and the body concerned with purchasing computers were cut-just like that, without any discussion or reason. Now, of course, we will have the overall impact of the local government cuts announced in the provisional settlement.

That will all have a significant knock-on impact on local businesses and employment. It is also being mirrored in the health centre and NHS reforms in the west midlands and in Coventry in particular. Above all, the police will feel a terrible impact. The figure mooted for job losses in the police is much higher than my hon. Friend the Member for Birmingham, Northfield indicated-as many as 1,000 police officers could be made redundant in the west midlands. That, of course, is why the Prime Minister, when challenged at Question Time earlier today, could not give a commitment that there will be no increase in the overall level of crime. We are clearly running a very big risk in making these cuts to the police force. It is all right to talk about back offices and the rest of it, but the simple fact is that these cuts are bound to have a significant and direct impact on policemen in the front line. The Government are preparing to cut-or to redesign, as it is called-control orders, and I hope they have reserve powers and are planning to use them in the event that the new version of control orders does not work. I also hope they have plans to rectify the cuts to the police force in the sad event-we all hope this will not happen-that those cuts lead to an upsurge in crime.

The detail of the local government settlement makes it clear that Coventry will lose £8 million in 2011-12, just as a result of the Government's damping methodology.
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The Government's justification for that loss is that the money will be given to other, more needy authorities, which would otherwise suffer too badly. Taken at face value, that sounds reasonable, but the authority in Coventry has written to me to say that closer inspection shows that the damping proposed in the provisional settlement is simply not having that effect in many instances. There are many examples where damping leads to perverse outcomes. The central problem with the damping procedure and the methodology that determines its outcome is that they consider only an authority's formula grant position and not the change in their overall resources.

As a result of damping alone, Coventry faces a 5% reduction in funding. It is worth mentioning other authorities, as my hon. Friend the Member for Coventry South has, in all fairness, already done. Some £130 million is being reallocated through the damping process to such needy authorities as Wokingham, Richmond upon Thames, Buckinghamshire, Hampshire and West Sussex. They are all fine authorities and belong to the great body of English local authorities, but it is perverse to pretend that they need money while Coventry, the west midlands, Northfield and all the other areas represented on the Opposition Benches in the debate today do not. It is perverse to concede money to them.

I can scarcely imagine that the Minister will seek to defend that arrangement, when he has such an easy, fair and more objective alternative that he could follow. That alternative has been explained to him by officials from Coventry-in all fairness, it is not difficult to understand. I do not know why Ministers do not seize it with both hands. Actually, I do know why: it would mean that they would have to go to their friends in the counties of the south-east to ask them to contribute. Those counties constitute the most successful part of the whole English-indeed, British-economy, and we should welcome that, because they are better able to contribute to the whole. If the idea of contributing was put to them reasonably, in terms of fairness and of those with the broadest shoulders bearing the biggest burdens, I am sure they would contribute. However, we do not do that; instead, we seek to compensate them further and allow them, under the Government's formula, to take more from less well-off constituencies.

Very simply, we are saying that the unfairness that has been built into the system as a result of the application and methodology of the damping procedure is taking money and jobs out of Coventry and 77 other authorities throughout the country. A damping approach based on overall resources would be far simpler and fairer than the approach proposed in the provisional settlement. That is the essential point that I want to keep repeating to the Minister. It has been put to him, but can we have a reply today? If not, does he intend that the Department will reply to our proposals? Our approach would avoid any of the perverse outcomes that have been illustrated. To repeat, the local authorities getting the additional £130 million, as well as hardly any cut at all in their funds, include West Sussex, Wokingham, Richmond, Buckinghamshire, Hampshire and Surrey. Indeed, Surrey is benefiting more than any other authority. I think Surrey was recently considered the most affluent of all areas in the UK-and one of the most affluent, thank goodness, in the whole of Europe.

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Officers at Coventry city council carried out an analysis of such an alternative damping methodology, whereby the total funds available would be taken into account. I understand that that has recently been shared with civil servants. We recommend that they strongly consider changing over to that; and if they do not, we should like to know why they will not accept it.

3.20 pm

Mr Bob Ainsworth (Coventry North East) (Lab): I thank my hon. Friend the Member for Coventry South (Mr Cunningham) for getting the debate and for allowing me to speak. I want to talk about two issues-localism and fairness. I have been most struck by one phrase so far in the debate: the one used by the hon. Member for Nuneaton (Mr Jones) when he accused my hon. Friend of synthetic rage. I am certain that there are huge differences in political outlook between the hon. Gentleman and my hon. Friend, but I will tell the hon. Gentleman one thing: he will find out in time that there is little that is synthetic about my hon. Friend's feelings on local government. They are genuine and heartfelt. There are people in all parties in this House who genuinely believe in local government and localism. My hon. Friend is one of them, and he has a record of many years of defending the rights and autonomies of local government. I hope that the hon. Member for Nuneaton will come to regret the accusation of synthetic rage as he gets to know my hon. Friend better over the years.

The claim of synthetic rage echoes what we heard from Conservative councillors in the council chamber in Coventry, who, when the redundancy notices were being dished out, accused Labour councillors of scaremongering. We are going to lose hundreds of jobs because of the grant settlement in Coventry, and that loss will come on top of the fact that we shall have 1,000 fewer policemen in the west midlands and 1,200 or thereabouts fewer back office staff serving the police. People think that they do not do anything, but the police are under-resourced in their back-up, not over-resourced, as anyone who ever has to deal with them will recognise. The job losses will also come on top of the losses that have been inflicted on the city by the closure of organisations such as the learning and skills councils and by the demolition of our bid for Building Schools for the Future. They will be a very heavy blow. The words of those who say that people are scaremongering about the consequences or indulging in synthetic rage will come back to bite them as the consequences of the decisions-not yet felt, but soon to be so-become apparent to the electorate in many areas.

The other thing that the hon. Member for Nuneaton said-I am sure the Minister is about to say it as well-is that all that is happening would have happened in any case: the cuts were inevitable. This is where I want to move on to my second theme, fairness. My hon. Friend the Member for Coventry North West (Mr Robinson) has just been touching on exactly that. It does not matter what kind of organisation we talk about-a business, a Department, the Government overall or the nation-when there are difficult times, it is surely important that those who address the difficulties should be seen to do it fairly and properly. If people feel, as the Prime Minister tries to tell them, that we are all in this together and we all have to take our share of the pain, that pain becomes a lot more acceptable. People pull
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together and try to get the organisation in question through its difficulties. However, as my hon. Friend has just graphically exposed, that is not what is happening with the local government settlement grant-and nor was it with the police formula funding. Coventry is losing £19 million in formula grant and £17 million in other grant. It has lost in its entirety the area grant funding, and we are going to lose an additional £8 million due to the damping mechanism being introduced as a result of the Government's formula.

Damping, in principle, as has been said, is of course right. When shocks are delivered to the system it is right that they should be damped and spread, and that for a period those who are less affected should help those more affected. Who could argue with that? However, the people who are to gain from the damping mechanism appear to be in areas of the country that are a lot better off and better able to face the situation than communities such as the ones I and my hon. Friends represent. West Sussex, Wokingham, Richmond and Buckinghamshire all gain from the damping mechanism. While Coventry loses 7.2% of its formula grant, Dorset-I love Dorset and do not want to do anything to it; I hasten to say, with you in the Chair, Mrs Brooke, that it is a marvellous part of the country where I would spend more time, given the opportunity-gains 0.25%. Surrey, that underprivileged part of Britain, loses 0.31%. Coventry-not the most deprived part of the country, but certainly a lot poorer than those areas-loses 7.21%.

I fear that we are being invited to participate in a pretty cynical exercise. My hon. Friend the Member for Birmingham, Northfield (Richard Burden) touched on that matter. The Government's rhetoric about localism is convincing many people and organisations that they genuinely believe in a devolution of power. There are people in the Conservative party who do believe in it, as do people in the Liberal and Labour parties. I hope I am one of them. I have always believed in more power for local government and local areas, as against central Government. Wherever it is sensible to take decisions at a local level, that is where they should be taken. However, I fear that local government is being set up and that we are announcing more powers and freedoms for local government, so that we can blame it for the massive cuts in its ability to serve the communities it is elected to represent, which the Government have brought in at the same time. That is a cynical manoeuvre. It will take people some time to see through it, but I am certain they will, as they see through claims of scaremongering from Tory councillors on Coventry city council, and of synthetic anger, from the hon. Member for Nuneaton.

3.28 pm

Jack Dromey (Birmingham, Erdington) (Lab): It is a pleasure to serve under your chairmanship, Mrs Brooke. I, too, congratulate my hon. Friend the Member for Coventry South (Mr Cunningham) on securing this important debate on the impact of what the Government are doing to local government in the west midlands.

I start with an overview. The Government have made choices about the speed, extent and distribution of the cuts, but the cuts are too fast and too deep, and are targeted at deprived communities and vulnerable people. There is a consensus across the House on the need to reduce the deficit, but there are alternatives to these unfair and unreasonable cuts.

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The coalition Government have made their choice. They have chosen to hit local government with bigger cuts than Government Departments, and they have chosen to front-load them so that the heaviest cuts fall in the first year rather than being spread more evenly over the next four years. They have also chosen to impose the cuts on the most deprived areas and on lower and middle-income communities, rather than distributing them more fairly. My right hon. and hon. Friends were therefore right to highlight the impact that the cuts will have on the great cities of Coventry and Birmingham.

Before proceeding to examine the impact of the cuts on local government in the west midlands, it is important to tackle the economic mythology that lies behind what is proposed. It is vital that that economic mythology, which has been propagated in defence of what the Government propose, is understood for what it is-mythology. We have heard, and will doubtless hear once again, that the cuts are unavoidable. We have heard, and will doubtless hear once again, that these deeply damaging cuts to local government are all Labour's fault. However, that is part of the Tory-led coalition Government's approach of rewriting history in order to justify their ideological vision.

Let us be clear: it was irresponsible bankers that caused the credit crunch and the deficits across the world that followed. We have seen recession on all continents and in all countries. My hon. Friend the Member for Coventry South was right to say that it was decisive action taken by the Labour Government that saw growth return and borrowing fall, and that saw jobs being protected. However, that action was opposed at every stage by the Conservative party.

Borrowing has risen in the UK and throughout the world as we tackle the global financial crisis. It must be brought down with a clear deficit reduction plan that has growth at its heart. It is a deceit for the Conservatives to claim that irresponsible spending is the reason why borrowing is high. Before the global financial crisis, Labour had paid down some of the debt. In 2007-08, as the crisis hit, the UK had the second lowest debt of the G7 countries at 36.5% of GDP. It was low because we had chosen to pay off the debt, reducing it from the 42.5% that we inherited from the previous Conservative Government. Borrowing rose because of the global financial crisis, and the deficit was unavoidable-but the Tory-led coalition's austerity programme is not.

Mr Jim Cunningham: It is worth pointing out that when we were in government and dealing with the crisis, we had a triple A credit rating. We had 14 years to pay off any borrowing. I note that the Government have totally ignored that. I also note that although George W. Bush refused to bail out Lehman Brothers, in the last month of his presidency he allocated billions of dollars to help the banking system in America. The Tories conveniently forget about that; they are on planet Cameron.

Jack Dromey: My hon. Friend is right. The leadership given by the Labour Government was followed worldwide. Had it not been for that leadership, we would have seen not recession but a prolonged slump over a decade and more.

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