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"If the City is doing well, the country is doing well. When it prospers, we all prosper".
They are not my words but those of the shadow Chancellor. Did my right hon. Friend take any advice from him?
Mr Osborne: No, instead I learned from the example of all the things that went wrong when the shadow Chancellor was City Minister. As one does on these occasions, I came into the Chamber armed with many of his quotes about what a golden legacy he was leaving in the City, how bonuses were at the appropriate level, and how he was going to resist all calls in Parliament to toughen up regulation. It would take a couple of hours to read them all out, but no doubt over the next few years we will have plenty of opportunities to remind him that he is a man with a past.
Ms Margaret Ritchie (South Down) (SDLP): I understand that the business growth fund will have a network of regional offices throughout the UK. Will there be such an office in Northern Ireland to work with the banking sector, the business community and the Northern Ireland Executive?
Mr Osborne: Yes, I will ensure that there will be a presence in Northern Ireland. We are seeking to ensure that there is co-ordination between the business growth fund and the Government's regional fund. As I have said on many occasions to Members from Northern Ireland, we are acutely aware of the challenges in Northern Ireland. The Secretary of State for Northern Ireland has produced a paper on how we might revive the Northern Ireland economy, which is now with the devolved Government. I am taking a close personal interest in that and I hope shortly to come forward, with my right hon. Friend, with some concrete proposals.
David Rutley (Macclesfield) (Con): I welcome the announcement on the increase in funding for the business growth fund and the new lending agreements. Does my right hon. Friend agree that those steps will help to establish a new generation of wealth creators, which is an urgent priority in regions such as the north-west, where private sector growth has to be the focus?
Mr Osborne: My hon. Friend is right, which is good as he is my local MP. One of the weaknesses in the British economy over recent years has been that small and medium-sized businesses have not had access to venture capital and other sources of funding, as they have had in countries such as the United States and Germany, so that they can become larger companies. The regional business growth fund that I have spoken about will provide more access to such funding. I will also return to this issue in the Budget.
John McDonnell (Hayes and Harlington) (Lab): I believe that I was the first MP to raise the issue of bankers' bonuses in this House five years ago, and I was critical of the previous Government. I say to the Chancellor directly that referring pay to remuneration committees, which is a largely toothless and ineffective rubber-stamping exercise, and allowing bankers at RBS to convert their shares into cash bonuses within two years will not assuage the anger of the British people.
Mr Osborne: First, I respect the hon. Gentleman's consistency on this issue. Secondly, I said explicitly that I did not think that the anger would disappear any time soon; memories will be long of what has gone wrong in recent years. It will help that bank boards will at least be aware of the some of the salaries that are being paid in their organisations, which they simply were not under the previous regime. That is one thing that clearly went wrong at the Royal Bank of Scotland.
Mr Aidan Burley (Cannock Chase) (Con): A man named Tom Bell set up a charity in my constituency to improve the quality of life for tens of thousands of disabled and disadvantaged kids. He was awarded the OBE for his efforts. In assessing the rewards given to bankers, what does the Chancellor make of the five peerages, eight knighthoods, seven CBEs, four OBEs and four MBEs that were given to bankers by the Labour Government?
Mr Osborne: The statistics speak for themselves. Of course, the shadow Chancellor used to be the chief economic adviser and, given that almost everything at the Treasury was signed off by him, he presumably signed off the knighthood for Sir Fred Goodwin. Perhaps in one of our future encounters we will hear the truth about that.
Mr Ronnie Campbell (Blyth Valley) (Lab): Some £125 billion was put into the banks by the last Labour Government to bail them out in the crisis. Will the Chancellor tell us when the taxpayer will get that money back?
Mr Osborne:
Unfortunately, if we sold those shares today, we would lose money as a country. Of course we want to return those banks to the private sector. That is clearly an objective of this Government, and I suspect
that it will be an important issue in this Chamber during this Parliament. The hon. Gentleman makes a very good point: a huge sum of money was put in to bail out the banks and no conditions were attached. With all the things that I have talked about today and all the things that the shadow Chancellor asked about, such as pay and transparency, when the previous Government had the leverage, they did not use it. Unfortunately, we have to deal with that inheritance.
Matthew Hancock (West Suffolk) (Con): Yesterday, before the Public Accounts Committee, Treasury civil servants explained that the previous Government had the opportunity to seek to put constraints on this year's bonuses at the partly state-owned banks, but that they chose not to. Is the Chancellor disappointed by that?
Mr Osborne: I am not only disappointed by it; it has been a constraint in what we have been dealing with. It is very explicit- [ Interruption. ] The shadow Chancellor says this is rubbish, but that was the agreement that he and his colleagues signed up to. That is the problem on this issue, and I think that that is beginning to dawn on them. They have a past-they have a record. It is a record of letting the City get away with murder, and of the rest of us having to pick up the pieces.
Mr Andrew Love (Edmonton) (Lab/Co-op): Following the statement on bankers' bonuses, how would the Chancellor respond to the one in ten of my constituents who are unemployed and looking for work; the many low-paid workers who face real reductions in their living standards over the next few years; and the many public sector workers who face the possibility of redundancy? Please do not respond by saying, "We're all in this together."
Mr Osborne: To repeat what I said in my statement, I completely understand the anger and resentment felt by the many people who have lost their job or faced their income being squeezed because of the mess that was created in the British economy by the banking system and those who were regulating it. That is the situation we are dealing with. My priority today has been to put the economic recovery first and to ensure that we get banks to lend to small and medium-sized businesses, so that they can take on the people the hon. Gentleman is talking about. Small and medium-sized businesses are the engine of job creation in the British economy and they are crucial to our revival. It is also crucial that we rebalance the economy so that we are not as dependent as we were on the success of the financial services sector.
Mr Marcus Jones (Nuneaton) (Con): I congratulate the Chancellor on securing the banks' commitment to increased lending to small and medium-sized enterprises. However, the banks' aggressive treatment of SMEs, many of which are almost being bullied into accepting new lending terms, fees and charges, is still an issue that is damaging the potential for growth in our economy. Has the Chancellor discussed that issue with the banks during this process, and what do the banks intend to do about it?
Mr Osborne: I assure my hon. Friend that that issue has been at the heart of the discussions. As I have said, that is why we have put such an emphasis on getting a commitment to increased lending to small and medium-sized businesses. There will be a new code for banks, under which they will have to treat their customers much more fairly, be more reasonable and transparent about the terms that they offer, and engage with customers long before overdrafts and the like need to be renewed.
Naomi Long (Belfast East) (Alliance): I thank the Chancellor for the reassurance he gave to the hon. Member for South Down (Ms Ritchie). As he knows, Northern Ireland has a very discrete banking sector, which has been heavily affected by the Irish banking crisis, as well as by the UK banking crisis. Will he ensure that businesses and individuals in Northern Ireland benefit from the announcement he has made today with regard to both lending and regulation?
Mr Osborne: As I said to the hon. Lady's colleague from Northern Ireland, I am paying particular attention to the Northern Ireland economy, partly because of what has happened in the Republic of Ireland. I am also paying particular attention to the Northern Ireland banking system, because there is the potential for a knock-on effect from what has happened in southern Ireland. As I said, I am working closely with the Secretary of State for Northern Ireland on what we can do to stimulate growth in Northern Ireland. Finally, despite their questions, I welcome the support I have received from some Opposition parties in the House. That reflects on the fact that although the statement does not contain everything that people want, it is a positive step forward. It also shows how opportunistic the opposition of the former Labour Government is.
Amber Rudd (Hastings and Rye) (Con): Does the Chancellor welcome, as I do, the assessment of the Centre for Economics and Business Research that for the first time ever, bankers will pay more in tax than they take home from their bonuses?
Mr Osborne: I do welcome that research. We need to ensure that we get the tax revenues up. We have introduced the permanent bank levy, which was opposed by the Labour party. We have forced the banks to sign up to the code of practice, which Labour announced in a fanfare from this Dispatch Box, but managed to get only two banks to sign up to-we have got all the banks to sign up. We are looking at the tax avoidance measures that have been used, such as disguised remuneration, which the previous Government had 13 years to address, but failed to do.
Kate Green (Stretford and Urmston) (Lab): Not every worker in a bank is on a multi-million salary. Clerical, back office and counter staff frequently earn well under £20,000 a year. Is the Chancellor confident that these measures will begin to reduce pay inequality in the banking sector, and will he have discussions with senior bankers about worker representation on remuneration committees?
Mr Osborne:
I am certainly happy to raise the issue about representation that the hon. Lady mentions, but- [Interruption.] These people seem to forget that they
were running the country for 13 years and had every chance to do the things that they complain about now, and they completely failed.
To return to what the hon. Lady said, I will raise the specific issue of the representation of workers within the banks. As I have said, most people, including myself, find some of the levels of pay in the financial services sector extraordinary. We are seeking to start to constrain them, although we obviously have greater control over the semi-nationalised banks. I hope that we are also ensuring that we get the tax revenues required to help pay off the nation's credit card, the budget deficit.
Neil Parish (Tiverton and Honiton) (Con): Like many hon. Members, I welcome the Chancellor's getting greater lending from the banks for small businesses, but can he assure us that there is proper competition within the banking sector, so that money is lent at competitive rates? That is one of the problems that businesses in my constituency are having: they cannot get the money at the proper rate.
Mr Osborne: My hon. Friend is right that competition in the banking industry is very important. In the past two or three years we have seen a massive consolidation of the banking industry, with many of the building societies being folded into the larger banks. HBOS disappeared, for understandable reasons, Northern Rock had to be nationalised and so on. One of the remits of the Vickers commission, the Independent Commission on Banking, is to examine competition in the sector, and of course John Vickers himself has personal experience of competition issues. That was one reason why I asked him to take up the post. The commission is examining the specific issue that my hon. Friend raises.
Gordon Banks (Ochil and South Perthshire) (Lab): On the Chancellor's aspiration to have an extra £10 billion lent by the banks to UK SMEs, may I ask him how that figure was arrived at? Is it what he considers is lacking in the economy, or is it all he could prise from his friends? Is it gross or net?
Mr Osborne: The number is gross, like the lending targets agreed by the previous Government for the nationalised banks, but this is, of course, an agreement across the banking sector. The number was part of the hard negotiations that we had in order to get the amount up. The banks were anticipating reducing lending in the British economy over the coming year, and we have reversed that and got a 15% increase in small and medium-sized business lending.
Christopher Pincher (Tamworth) (Con): In the light of his statement and what he has heard from the Opposition Front Bench, will my right hon. Friend give any further consideration to the warning offered by a certain soi-disant financial journalist who said that nothing must be done to endanger a light-touch, risk-based regulatory regime? [Interruption.]
Mr Speaker: Order. I must just say to the hon. Member for Vale of Clwyd (Chris Ruane) that I do not know what he has for breakfast, but I think I am going to avoid it.
Mr Osborne: I must say that it is a slightly depressing thought that the appointment of the hon. Member for Vale of Clwyd (Chris Ruane) as shadow Parliamentary Private Secretary means that this will be a constant feature of the encounters in the House between me and the shadow Chancellor, but there we go.
My hon. Friend the Member for Tamworth (Christopher Pincher) makes a very good point. There are, of course, legions of quotes from former Labour Ministers including the shadow Chancellor about the light-touch regime, how they were resisting calls in Parliament to strengthen it and all of that. Quite a few of them, of course, have gone off to work in the banking sector since leaving Parliament.
Mark Durkan (Foyle) (SDLP): Does the Chancellor not accept that he may be overselling as transparency something that is really just temporary and limited translucency on bonuses, credit and lending to business? What guarantees are there that the Bank of England will not just report on the aggregate of the money available but will examine the prices and conditions involved? Will he also guarantee that if businesses are relieved by credit granted, they will not be floored by tax demanded?
Mr Osborne: First, on transparency, at the moment we have a voluntary commitment by the largest British banks, and we are going to turn that into a legislative requirement on all the major banks operating in the UK. We will bring forward proposals over the coming year to consult on that, as we have to do under the statutory procedures, but my intention has been made clear.
Bank charges and so on are properly not a responsibility of the Bank of England at the moment. It is going to focus on collecting the numbers. However, we are creating a strong consumer protection and markets authority-there will be legislation before the House on that, and a very good chief executive-designate has been hired. He will ensure that the customer gets a fair deal as well.
Geraint Davies (Swansea West) (Lab/Co-op): Will the Chancellor put a cap on the value of the shares that bank executives give themselves as bonuses, or will shares now be seen as a Trojan horse for bankers to give themselves still greater bonuses in future?
Mr Osborne: As I have explained, bonuses are actually going to be lower this year than they were in the last year of the Labour Government, who had an opportunity to do something about them.
Yes, bonuses will increasingly be paid in shares, and for a very good reason-so that when the bank goes bust, people will not walk away with a huge payment. We remember not just Fred Goodwin's knighthood but the pension that the Labour party awarded him. It was completely unable to deal with the fact that the bankers in the banks that went bust walked away with their money. One of the reasons for paying bonuses in shares, and why we have introduced the code, is so that the bankers, too, will pay a price if the bank in which they are involved fails.
Alex Cunningham (Stockton North) (Lab): The education maintenance allowance costs £580 million a year, a fraction of the cash that the Chancellor could be raising from the banks. Why is he taking more money from young people's EMA and other things affecting their lives than he is taking from the banks?
Mr Osborne: First, we are taking £2.5 billion from the banks each year, which is more in each year than in any of the Labour Government's 13 years. Of course, the context of all this is the enormous budget deficit. It is worth reminding Opposition Members that in eight weeks' time, the Darling plan would have started to take effect-the halving of the budget deficit in four years, which they kept repeating in the election and which the shadow Chancellor was apparently forced to sign up to. In eight weeks' time the big cuts would have come, which would have been £2 billion less than the cuts being undertaken by the coalition Government. We have eight weeks to hear Labour's plan for where the cuts would fall.
Trade and Investment for Growth White Paper
1.57 pm
The Secretary of State for Business, Innovation and Skills (Vince Cable): Today I turn to one of the main building blocks of economic recovery-achieving growth through international trade and by attracting inward investment. Britain makes up just 4% of the global economy, and without aligning ourselves to faster growth elsewhere, we cannot hope to prosper. But to do that, we have to do better than in the past. In the past few decades, we have consumed too much and exported too little. While our competitors were sending manufactures across the globe, we were building a property bubble. Now, with Germany exporting more than three times as much as the UK, it is vital to turn the situation round.
We have done better in attracting inward investment. We are one of the top three recipients of foreign investment in the world, and we are home to more European headquarters of overseas companies than all other European countries put together. Inward investors provide not just jobs but 30% of our research and development, but there is no room for complacency in an environment that is increasingly competitive.
The trade and investment for growth White Paper therefore sets out a strategy for creating opportunities, providing the conditions for the private sector growth through trade and investment that will help to rebalance our economy, and securing the benefits of trade and investment openness for the world's poorest people.
The Government want to focus on small and medium-sized enterprises, which are much less engaged in trade than bigger companies. They have told us that they want to take advantage of the opportunities that exist especially in emerging markets but cannot always access the trade credit insurance or finance needed to take the risk. They have also told us that since the economic crisis, they feel that it has become much harder to get cover from private credit insurers at reasonable rates. The Government will therefore create several new schemes and extend one existing scheme, which will be launched in the coming months.
First, the Department for Business, Innovation and Skills will launch an export enterprise finance guarantee scheme offering export finance valued at up to £1 million for SMEs. The Export Credits Guarantee Department will launch several schemes, including: an export working capital scheme for those who are ineligible for the EEFG scheme, offering export finance of more than £1 million; a bond support scheme under which the Government will share risk with lending banks on the issue of contract bonds; and a foreign exchange credit support scheme, which will support banks offering foreign exchange hedging contracts to SMEs by sharing credit risk. The ECGD will also extend its short-term credit insurance scheme to cover a broader range of exporters, including SMEs. In addition, UK Trade & Investment will increase its focus on emerging markets and on helping SMEs, and launch a new online service offering access to sales leads around the world.
All Ministers have been asked to support our trade diplomacy. I have led, or supported the Prime Minister in, high-level delegations to Brazil, India, China and Russia with business representatives, promoting exports and seeking inward investment. We will be doing more of the same this year and beyond.
However, half our exports are to the EU, and consequently we have a strong interest in ensuring that the EU grows. That makes the completion of the European single market even more vital. Recent analysis suggests that trade between the UK and other EU member states could be as much as 45% below potential, largely because of significant non-tariff barriers. Completion of the single market could translate into 7% additional income per head per UK household. We therefore strongly support efforts to remove barriers to trade, particularly for SMEs, in fields such as e-commerce and low carbon products, and in professional and business services, for which there are currently an estimated 3,000 regulatory requirements. We will also press for energy and agriculture liberalisation.
At the international level, completing the Doha round is one of our top objectives. Finishing those trade negotiations could deliver a £110 billion boost per year to the global economy. We have spent 10 years negotiating and now need urgent action to agree the key elements of the Doha deal this year, so I am glad that momentum towards a deal seems to be building again. Britain will do its utmost to get the World Trade Organisation past the finishing line this year. Doha is the top priority, but we will also pursue an ambitious programme of EU free trade agreements with our main trading partners, including India, Canada, Singapore and the South American Mercosur countries and, I hope, with Japan following the recent agreement with South Korea.
Finally, the UK is committed to assisting poor countries to take advantage of the opportunities presented by an open global trading system. International trade is one of the most important tools in the fight against poverty and research evidence shows that per capita incomes grow three times faster in countries without trade barriers than in other developing countries. We will therefore ensure that trade is a central theme across our bilateral aid programme, and promote regional integration, notably in Africa through our Africa free trade initiative. Helping the developing world in that way is the right thing to do on moral grounds, and it is in Britain's economic national interest.
This White Paper sets out an ambitious direction for the UK and will guide the Government's work on trade and investment. We will implement it vigorously and actively, and I urge British business to seize the opportunities that it will present. In that way, we will all benefit from the vision it sets out: an open trading system and a competitive British economy, driving jobs and growth.
Mr John Denham (Southampton, Itchen) (Lab): I thank the Secretary of State for sending me a copy of the White Paper earlier today and for notice of his statement. I welcome the broad thrust of the statement so far as it goes, but may I remind him that exports alone will not deliver without a credible plan for growth across our economy? Putting new tyres on the car will not make it perform better if the engine has not been fixed.
We welcome the importance given to exports and export support, and support the increased focus on the major emerging markets such as Brazil, China and India, without neglecting our longer-established markets. We also welcome the commitment to opposing protectionism and promoting free trade. Subject to the detail, we will support the particular measures that the Secretary of State proposes to develop export support for SMEs,
although I hope he can give us a timetable for their implementation. I hope the Secretary of State acknowledges that all those measures build on work done by the previous Labour Government.
Like the previous Government, this Government are committed to the completion of the Doha round of global free trade talks. Given the difficulties that those talks have had in the past, can the Secretary of State tell the House what specific new initiatives he will take in the coming year to ensure that talks are completed successfully? His predecessor and my right hon. Friend the former Prime Minister played an active and engaged role in trying to move the WTO towards agreement. What personal role has the Secretary of State played and what commitment has he gained from the Prime Minister about his personal involvement in securing an agreement this year?
Does the Secretary of State accept that the Doha round must foster development, and will he respect and build on the work of his Department and the Department for International Development under the previous Government to ensure that trade agreements support poorer, developing countries?
The White Paper recognises the potential benefits of completing European free trade agreements. What specific new initiatives will the Secretary of State take within the Council of Ministers to get things moving forward? Finally on Europe, what specific measures will he take to broaden and deepen the single market, as the White Paper puts it?
There appear to be some significant problems underlying the White Paper. Can the Secretary of State assure me that the cap of £25 million does not create a gap in export support for mid-range companies? Will he confirm that the UKTI budget will be cut by 19.5% in real terms? Given the expansion of activities in the White Paper, where and how will cuts be made without damaging support for exporters? What role will the science and innovation network play in supporting the export strategy?
Does the Secretary of State recognise that a successful export drive depends fundamentally on having goods and services to sell, and on having the companies that can provide and sell those goods and services? Does he therefore also recognise that the Government's reckless approach to deficit reduction is damaging the prospects for growth and jobs? Can he tell the House why the strategy for growth has still not been published when he promised it in October? Does he acknowledge that the new director-general of the CBI has now joined the previous director-general in criticising the Government for having no plan for growth? Without a clear vision for the economy and a plan for growth, we will not have enough companies to export or the products to sell.
Will the Secretary of State confirm that pharmaceuticals and the life sciences are one of the knowledge-based industries by which we can hope to earn our way in the world? Last week, Pfizer announced the closure of its Sandwich plant. Is it not a chilling message that one of the world's leading pharmaceutical companies looked at its global activities and decided that it no longer needed to be in the UK, and that it could afford to the leave the UK outside its global research strategy? How much more investment will we lose before this complacent Government produce a credible plan for growth?
The White Paper says that the Government will invest in UK infrastructure. Will the Secretary of State confirm that the introduction of universal broadband has been delayed by three years, and that there is no credible plan for fast broadband? Does he accept that those failings make the UK a less attractive place for investment by companies that support the digital economy?
Does the Secretary of State recognise that a recent report by Experian and the National Endowment for Science, Technology and the Arts concluded that there are companies with the potential to grow and export in every region of the country and in many different sectors of the economy? Does he recognise that regional development agencies often worked with UKTI to support exporters? He has abolished RDAs, but can he explain why the White Paper contains only one passing mention of regional support for exporters and support for exporters in the regions? How will he ensure that potential exporters get the right support in every part of the country?
The White Paper praises higher education as a gross export earner of £5.3 billion, so why has the Secretary of State supported changes to student visa policies that will do real harm to the country's seventh biggest export earner and undermine our long-term trade and development interests? The White Paper speaks of investing in science, but does the Secretary of State recognise that with science investment cut in real terms and other countries increasing their science investment, we are in danger of losing world leadership in this area?
I welcome the recent performance of manufacturing exports, which have taken advantage of a competitive pound. Will the Secretary of State confirm that the strength of the manufacturing sector has been supported by the previous Government's support for science, research and development tax credits and capital allowances, and that-in the worst of the global recession-the scrappage scheme, time to pay and flexible tax credits all helped manufacturers to retain more of their work force? Does he recognise that we now have a unique opportunity to use manufacturing exports to strengthen the supply chain companies and develop the next generation of world-beating export products? What is he doing to ensure that we take advantage of that opportunity?
There is much common sense and continuity in the White Paper and no need for artificial arguments about it, but the Secretary of State must recognise that its impact will be limited without a credible plan for growth.
Vince Cable: First, may I respond to the right hon. Gentleman's positive comments? He is right that, compared with, say, the United States or France, there is a significant degree of consensus about trade policy. Probably one of the best statements on the relationship between trade and globalisation was set out by Clare Short, a few years ago when she was Secretary of State. There is a lot of common ground.
The right hon. Gentleman asked about Pfizer. As it happens, I chaired the task force this morning, which-with the leader of Kent county council and the Minister for Universities and Science-is seeking actively to try to save as many jobs as we can on that site and to mobilise other pharmaceutical companies. Its work is coming along well, but these are early days.
The right hon. Gentleman asked specifically what I have been doing in relation to international trade initiatives. In each of the major BRIC-Brazil, Russia, India and China-countries that I have visited, I have engaged with the Trade Ministers, especially the key ones in India and China, which are critical to the success of the Doha round, and tried to persuade them of the importance of making good offers. We have had useful discussions about that. I have had several meetings with Mr Barnier about how we can progress the single market, and only a week ago I was in extensive discussions with my opposite number from India about the European Union free trade agreement. These are works in progress, but progress is undoubtedly being made.
The right hon. Gentleman asked about some of the concrete measures on trade promotion and resources. He appreciates that export credit guarantees are underwriting bank lending-they are not a cash contribution and there is no resource implication. He asked about timetables, and these schemes will be introduced in the next two to three months on a pilot basis. They are, in fact, imminent.
The right hon. Gentleman rightly mentioned the fact that there is some reduction in the UKTI budget, but he should recall that, under the RDA system that he extols, there was a ludicrous duplication of resources. We had British trade ambassadors from each of the RDAs posted in overseas countries, competing with each other and wasting resources. We will get more from less when it comes to trade promotion.
On the wider issue of the state of the economy, we earlier had an extraordinary display of amnesia from the shadow Chancellor, who forgot his role in the last Government. The shadow Secretary of State now tells us about the decline in manufacturing. He may have forgotten the debate last week when we had to point out to him that the decline in the manufacturing sector in the UK economy from 20% to 12% of GDP was far in excess of any other developed country, and that is the rebalancing problem that we are now trying to address. Of course, trade by itself will not solve the problem-it is 30% of GDP-but it is important, especially for some areas such as the north-east of England. Rebalancing is about manufacturing, exports and private sector investment.
Mr Brian Binley (Northampton South) (Con): Now that the Secretary of State has been in situ for some time, does he recognise-as we on the Business, Innovation and Skills Committee recognise-that UKTI is a bureaucrat's vision, not a business man's vision, evaluates itself on process and not on outcomes, and has a variable performance dependent on the quality of personnel in post? Does he also recognise that not one trade ambassador comes from the entertainment or music industry, which are among the major earners for Britain in the world at large? Will he have a root and branch review of UKTI, using business input, to ensure those outcomes?
Vince Cable: The business people whom I meet-and I meet a great many-frequently make a positive assessment of the support that UKTI gives them. There are some criticisms, but not many. To answer the hon. Gentleman's final point, he will know that Lord Green is now the Trade Minister. He has a business background and is applying precisely the disciplines that the hon. Gentleman feels-and I agree with him-are necessary.
Joan Walley (Stoke-on-Trent North) (Lab): Nothing is more important than creating jobs, in the part of north Staffordshire that I represent. Because so many jobs are at risk because of public sector cuts in that area, the statement that the Secretary of State has just made is perhaps the most important statement that we will receive from this Government. Will the right hon. Gentleman work with us to ensure that that trade diplomacy that he mentioned will embrace making the case for investment at every level, including in the new environmental technologies, and the support needed for SMEs? The chamber of commerce in north Staffordshire tells me that the business initiative does not have the funding that it needs.
Vince Cable: The hon. Lady is right to say that trade is crucial in her part of the country, and I have had discussions with her and her neighbours about the ceramics industry, which is clearly one of our success stories, and we should promote it. I also met the chairman of her local enterprise partnership, who was a good deal more sanguine about its prospects than she is.
Lorely Burt (Solihull) (LD): I warmly welcome this statement, particularly the measures for SMEs. The previous Government were very good at helping with weapons and the aerospace industry, but this is one sector that really needed some help. What can my right hon. Friend do to publicise the scheme to ensure that all SMEs that are thinking of exporting can benefit fully from the measures that we are taking today?
Vince Cable: I would not completely deprecate efforts to promote the aerospace industry-I am doing the same-but my hon. Friend is right to say that the key message of the statement is about SMEs. Compared with countries such as Germany, the number of our small businesses that export is relatively small, and we have to publicise that help through bodies such as the Federation of Small Businesses and the chambers of commerce, as well as through our website. We will be active in doing that.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op): As Chair of the Business, Innovation and Skills Committee, I wish to make it clear that previous reports from the Committee are slightly less critical of UKTI than may have been suggested by a Member earlier. I broadly welcome the thrust of the White Paper, especially in connection with export credit finance, which is obviously of crucial importance. It is good that that is being seen to be addressed. The White Paper and the Secretary of State both refer to the potential for further trade with the EU, and the removal of non-tariff barriers will have the potential to boost this country's export income. Can the Secretary of State be more specific about what policies he will pursue in that area and give us assurances that those will have the support of the European Scrutiny Committee?
Mr Deputy Speaker (Mr Lindsay Hoyle): Can we have very short questions? There are many Members who wish to contribute, and I want to try to fit everyone in.
Vince Cable:
As far as the single market is concerned, I meet Mr Barnier regularly, and there is now a real momentum behind trying to implement the Monti report,
which sets out how the single market can be deepened. There are key areas where Britain can do well-such as low-carbon products and services in general, where there are enormous obstacles to trade-and we will focus on those.
Nadhim Zahawi (Stratford-on-Avon) (Con): May I thank my right hon. Friend, on behalf of small and medium-sized enterprises in Stratford-on-Avon, for the White Paper? His focus on exports and tackling some of the problems with the ECGD is absolutely right. I would like to bring to his attention the fact that export finance through banks is under threat from gold-plating by the Financial Services Authority and parts of Basel III. Such finance is a safe way of financing exports for our SMEs, and indeed all our businesses. The failure rate is 0.002%, yet it is in danger of being put in the same bracket as long-term finance, which would act as a disincentive for banks to fund export finance.
Vince Cable: As far as the ECGD is concerned, one of the things that we discovered when we investigated this matter is that Britain is far behind countries such as France-which has COFACE and other such agencies-in providing trade finance. That is the gap-the market failure-that we are trying to fill. I hear my hon. Friend's point about banks in general-a point that the Chancellor dealt with a few moments ago. There is clearly an issue about the extent to which the FSA has overreacted in its interpretation of international rules.
Mr Pat McFadden (Wolverhampton South East) (Lab): I am sure that the whole House will welcome measures to help small and medium-sized businesses to export more, but how are small businesses helped to export by the abolition of the grants for business investment scheme? The figures from the Secretary of State's own Department show that this money produced £10 of private sector investment for every £1 of public money spent. The money was directed overwhelmingly at small and medium-sized businesses, and overwhelmingly at manufacturing companies, and it was available only in the assisted areas that the Government say they want to help. Does not the abolition of the scheme show that there is now a widening gulf between the rhetoric about rebalancing the economy and the reality of the policies that the Government are pursuing?
Vince Cable: We want to help small businesses, but we intend to do so in a more cost-effective way, and in a more effective way overall. The support for trade finance that I have described is specifically directed at small enterprises. As for the other schemes, such as mentoring, which the right hon. Gentleman will know about through my colleague the Minister of State, Lord Green, we are putting in place a whole series of measures that are focused specifically on the SME community.
Margot James (Stourbridge) (Con): I congratulate the Secretary of State on extending the remit of the Export Credits Guarantee Department into small business support, but will he review the department's performance and structure further? I refer in particular to the fact that 90% of the support that it provides goes to the aerospace industry. That shows a real imbalance, and there are other problems with the functioning of that department too.
Vince Cable: I accept the general argument. We accept that the ECGD is an agency of Government that needs reform. It has been heavily constrained in recent years by judicial reviews of some of its export activities. Of course we have to respect the courts, but the ECGD clearly needs to do more and perform a wider range of functions. What we are announcing today for small-scale enterprises is a key step forward.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC): The latest figures from Her Majesty's Revenue and Customs indicate that Welsh exports fell by 6.3% in the previous four quarters. Considering that UKTI has no presence in Wales, what is the Secretary of State doing to ensure that my country, traditionally an exporting nation, is at the heart of this strategy?
Vince Cable: I did not totally follow the hon. Gentleman's point about the statistics. Just to go over what the most recent statistics from a couple of days ago tell us, exports actually grew by 6% in the last quarter of last year, compared with the previous quarter. We should not read too much into that, because we are in abnormal conditions, but exports, along with business investment and manufacturing, are now growing. Wales, as a manufacturing and export centre, as he says, should be benefitting from that, and I hope that it will.
Stephen Mosley (City of Chester) (Con): The Secretary of State's statement was strong on specific measures for encouraging trade and exports. However, it was less detailed when it came to inward investment, which is equally important when it comes to creating jobs and growth in the UK. What specific measures is he proposing to boost inward investment into the UK?
Vince Cable: It is right to say that inward investment is enormously important. We start from a position of strength, as a major host country for inward investment. One of the specific actions that we are taking is giving the Trade Minister, Lord Green, personal responsibility for developing close relations with our major inward investors, in order to build up the flow of capital into this country.
Catherine McKinnell (Newcastle upon Tyne North) (Lab): One way to make our businesses, both large and small, more internationally competitive is to ensure that we have the skilled work force that we need for growth. Does the right hon. Gentleman agree that a vital tool in that is using public procurement, at both local authority and Government level, to increase the number of apprenticeships available? That tool was widely used by the Labour Government, and is successfully used by our European counterparts. Given that my Bill-the Apprenticeships and Skills (Public Procurement Contracts) Bill, which is due to receive its Second Reading this Friday-is supported by the Federation of Small Businesses and the British Chambers of Commerce, will the Secretary of State now lend his support to it?
Vince Cable:
As it happens, I launched apprenticeship week on Monday, and visited several parts of the country to promote apprenticeships and raise their status. Indeed, Government support has increased, as the hon. Lady knows, with 75,000 new apprenticeships this year. There are good elements in her Bill, and I know that she is
talking to the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for Kingston and Surbiton (Mr Davey), who is sitting beside me now, about how we can take those positive elements forward.
Richard Harrington (Watford) (Con): I commend the Secretary of State for today's statement on the White Paper. Last week I visited a company called Davin Optronics in Watford, which employs about 50 people. The company is really keen to expand into exports, yet it does not have the resources to fund a major campaign abroad. Can he assure me, first, that the measures in the White Paper for small businesses will assist them through UKTI, and secondly, that he, one of his colleagues or an official from UKTI will visit the company, help it, and get the publicity that this drive deserves?
Vince Cable: I hear many stories of that kind; indeed, I have small businesses in my constituency that are in exactly the same position. If I can meet the company I shall be happy to do so, and certainly one of my colleagues will. With the additional support that we have given, along with our additional competitiveness through the exchange rate, for example, my hon. Friend will find that large numbers of SMEs will move forward over the next year, and he has identified one such company.
Dr Alasdair McDonnell (Belfast South) (SDLP): Is the Secretary of State aware that SMEs and exports are the lifeblood of the Northern Ireland economy? Can he tell us whether he has had any discussions with the devolved Governments and the regions? Will there be easy access for companies? We have had a particular difficulty in the past with exports from the food and meat industries. There is also a need to deal with cross-border trade with the Irish Republic, which could be boosted considerably. Will he pay special attention to those issues?
Vince Cable: My colleague the Trade Minister, Lord Green, was in Northern Ireland only a few days ago, meeting Bombardier and other key investors. The hon. Gentleman is quite right to stress the importance of trade with the Irish Republic; somebody pointed out to me recently that our trade with Ireland is worth more than our trade with the BRIC countries-Brazil, Russia, India and China-put together. Clearly we must not forget that.
Mr Marcus Jones (Nuneaton) (Con): There are many SMEs, particularly manufacturers, in my constituency that are capable of taking on the export opportunities that my right hon. Friend mentions. Often they do not readily receive the relevant information on how to take up those opportunities. How will the information about those opportunities be disseminated to grass-roots SMEs in constituencies such as mine?
Vince Cable: My colleague the Minister of State, Lord Green, is developing a support package for SMEs that involves a much more accessible website that I hope will give the information that such companies require. I totally accept the basic point that, because of a lack of information, there is often a gap between what is available and what is accessed.
Mr Denis MacShane (Rotherham) (Lab): Does the Secretary of State share my concern-and, I am sure, that of the right hon. Member for Sheffield, Hallam (Mr Clegg)-at the letter that I received this week from the vice-chancellors of Sheffield university and Sheffield Hallam university that said that the cut in permits for foreign students will cost Sheffield £25 million in the next year? The Secretary of State has been involved in international education; he is an internationalist; he is intellectual. We are putting up the shutters to foreign students in Britain, which is slowing us down and will cost South Yorkshire a lot of money. Can he talk to the monoculturalists in the Tory party and get some more sense on this issue?
Vince Cable: I am certainly talking to my colleagues in the Home Office and making exactly the case that the right hon. Gentleman has just made. [Hon. Members: "Oh!"] This is a major export industry-worth over £5 billion, quite apart from the other benefits that we derive from having overseas students-and in the universities there is almost no problem. As he knows, there is an issue with some English language schools, but those schools are also a feeder for students going to university here. It is important that we remain as open as possible, while dealing with the undoubted abuses that occur in some cases.
Julian Smith (Skipton and Ripon) (Con): In this transition year between regional development agencies and local enterprise partnerships, will the Secretary of State ensure that the regions, especially Yorkshire, fully benefit from this excellent White Paper?
Vince Cable: Yes; my hon. Friend has raised the wider point about ensuring that the LEPs are as effective as possible. As he will know, the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford (Mr Prisk) has announced that most of Britain, including all our major conurbations, is now covered. I now expect them to get to work, and to address the kind of problems that my hon. Friend has brought to our attention.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op): Before the statement, I attended an event here in the Commons organised by Heriot-Watt university to highlight the university's very successful international strategy. The principal pointed out in his speech, however, that the biggest obstacle was the proposed changes in student visas and work permits, which will affect Edinburgh university as well. Those universities, and others, hope that the Secretary of State will be successful in the battle that he is apparently having with the Home Office. This is not just a question of the effect that the changes will have on universities here and now; it is also about the image that this country will have if it sends out an unwelcoming message, as well as the possibility of undermining of our export potential. I hope that the Secretary of State will take all these points to the Home Secretary when he has his discussions with her in Cabinet.
Vince Cable: The hon. Gentleman makes the same point as his colleague the right hon. Member for Rotherham (Mr MacShane), and I do not think that I need to reply again at length. I totally accept the importance of having a liberal system for the admission of students-subject to the need to deal with abuses.
Elizabeth Truss (South West Norfolk) (Con): Food and farming is now the UK's largest manufacturing sector, and enterprising companies such as Heygates flour in Downham Market are exporting their products to the middle east. I am concerned about the level of regulation, and about whether BIS sees food and farming as a mainstream industry. The industry is often caught up in regulations both from Europe and from the Department for Environment, Food and Rural Affairs. I have worked in international business, selling overseas, and I received a lot of support at that time from embassies and high commissions, under the auspices of the Foreign Office. What is BIS doing to link up with those people who can provide valuable assistance on the ground to people wanting to sell into those markets?
Vince Cable: My colleague is right to emphasise the importance of that industry. Food and drink represents more than 10% of the manufacturing sector. On the various trade missions that I have been on, companies in the sector are often at the top of the list in pushing for better access. In the European Union there are many obstacles to trade, both within the Union and across borders. It has a very illiberal and unsatisfactory system for dealing with agriculture, and we want to open it up.
Mr Andrew Love (Edmonton) (Lab/Co-op): Will the Secretary of State confirm press reports earlier this week that his flagship policy of a national insurance holiday for new start-up businesses outside the south-east is failing? According to the figures only 1,500 businesses have come forward, yet the Government expect 400,000 to do so over the next three years. Does he not consider that a flop?
Vince Cable: I do not recognise the hon. Gentleman's numbers. I get a great deal of feedback, particularly from small companies outside London, telling me that they are benefiting from taking advantage of the national insurance contribution relief. The Chancellor will announce the progress of the scheme in the Budget, and tell the House how he is going to develop it.
Mr Rob Wilson (Reading East) (Con): May I add my welcome for the focus on SMEs? The Secretary of State is making absolutely the right judgment on this, because they will be the engine of growth and jobs in the economy. Last Friday I visited Moog, a first-class company in my constituency that is involved in advanced manufacturing and a strong exporter of components. As the Secretary of State knows, that is a very important sector. What more can he do to support advanced manufacturing and companies like that?
Vince Cable: My diary would be seriously oversubscribed if I offered to visit all the companies that have been mentioned this afternoon, but I am happy to talk to my hon. Friend about the specifics. Indeed, a key element of the growth strategy that the Government are working through relates specifically to the development of advanced manufacturing, and key support for that will be provided by the technology centres, for which we have obtained additional funding, and which will be rolled out over this year.
Mr William Bain (Glasgow North East) (Lab):
On a day when the Office for National Statistics has revealed that the UK's trade deficit widened in December to its
highest level since August 2005, and the chief economist of the British Chambers of Commerce has said that
"Britain's trading position is not improving",
will the Secretary of State concede that it was a big mistake to slash investment in capital allowances, which help manufacturing exporters?
Vince Cable: I do not think that the hon. Gentleman has studied the figures carefully. If he does, he will see that the trade deficit narrowed slightly in the last quarter of last year, as against that quarter in previous years. The figures are not good, and they have not been good for many years. We have had very poor trade performance; that is what I said at the start of my statement. We have a massive legacy of underperformance in exports, and particularly in manufactures, that we have to overcome, and the White Paper represents a clear step in the direction of remedying that problem.
James Morris (Halesowen and Rowley Regis) (Con): I welcome the Secretary of State's statement. Does he agree that it is important for UKTI to develop co-ordinated relationships with the new local enterprise partnerships, especially in the black country, in order to ensure that local businesses have proper access to export markets?
Vince Cable: Yes, indeed, and that is the case. UKTI will continue to delegate people to work in the regional areas. In the past there has been an enormous amount of duplication and waste, and those people will continue to work in exactly the way that my hon. Friend describes, but more effectively than in the past.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op): We have just heard that the Secretary of State supports efforts to remove barriers to trade, particularly for commodities such as low-carbon products. Will he therefore update us on when his Department plans to release details of the green investment bank, and how much money will be made available for it?
Vince Cable:
I gave evidence to the Environmental Audit Committee about 10 days ago on the timing of
the green investment bank. As I explained then, the business plan will be available in May. We assume that staff will be hired by the end of this year, and that loans will be made next year. I set out the programme and the road map when I was interrogated by the hon. Lady's colleagues.
Neil Carmichael (Stroud) (Con): I certainly welcome this statement, but I would like to probe the Secretary of State on the question of the European single market in connection with the ability of small businesses to form alliances and joint ventures with other small businesses in Europe. In addition, I would simply observe that SMEs in my constituency have a more than passing interest in capital allowances.
Vince Cable: I continue to hear strong representations about the value of capital allowances from, among others, the Engineering Employers Federation. That is clearly one of the things that the Chancellor will be mulling over before the Budget.
Tristram Hunt (Stoke-on-Trent Central) (Lab): In Stoke-on-Trent we welcome the emphasis on small and medium-sized enterprises and manufacturing exporters, but as my right hon. Friend the Member for Wolverhampton South East (Mr McFadden) said, there seems to be a dissonance between the rhetoric and the reality. Business Link has announced that it is no longer funding two enterprise agencies in north Staffordshire, Business Initiative and Stafford Enterprise. The local chamber of commerce is very worried about the effect that that will have on local start-ups and their ability to export. There does not seem to be very much joined-up thinking here.
Vince Cable: As many people on this side of the House who have run small businesses will know, the problem with Business Link was that it was a very ineffective system of business support. It has now been replaced, and in future small businesses will have access, through mentoring, to other business people, rather than to those who serviced Business Link, which was not a successful scheme.
Point of Order
2.38 pm
Grahame M. Morris (Easington) (Lab): On a point of order, Mr Deputy Speaker. May I seek your guidance on what recourse is available when a ministerial answer to a written question is not only incorrect but directly contradicts the Government's own impact assessment of the Health and Social Care Bill? When asked about the cost distortions involved in the private sector providing health care services, compared with an NHS provider, the Minister of State, Department of Health, the hon. Member for Sutton and Cheam (Paul Burstow) said in his written answer:
"it has not been possible to determine, on balance, whether NHS bodies or private providers of NHS services are systematically advantaged or disadvantaged relative to the other."-[ Official Report, 4 February 2011; Vol. 522, c. 1007W.]
Mr Deputy Speaker (Mr Lindsay Hoyle): Order. That is not a point of order, or a matter for me. I would advise the hon. Gentleman that the Table Office is the place to take this matter up, and I am sure that it will be very helpful in trying to put it right. If he takes the matter to the Table Office, I am sure that it can be sorted out quickly.
Former Metal Mines
Motion for leave to bring in a Bill (Standing Order No. 23 )
2.39 pm
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab): I beg to move,
That leave be given to bring in a Bill to give the Coal Authority responsibility for preventing adverse environmental impacts from former metal mines; and for connected purposes.
At present, 9% of rivers in England and Wales are impacted by contaminated water discharging from orphan metal mines. These impacts represent one of the greatest obstacles in achieving water framework directive objectives, along with the problem of gaining back the loss of amenity and areas of ecological value. Metal mines are excluded from the Coal Authority's duty to remediate similar water pollution emanating from coal mines-a position established under the memorandum of understanding with the Environment Agency in 1999. I propose that orphan metal mines should come under the same supervised expertise of the Coal Authority.
At present there is no legal responsibility for any party to maintain a disused orphan metal mine. This state of affairs is largely down to historical timing, because mining of iron ore largely stopped in the '60s, as it did in other metal mines-yet coal mining persisted, in the main, into the early '90s. Work in Wales, the south-west and Northumbria has identified more than 3,700 sites, although not all are causing serious pollution. No metal mines are still in use; the largest tin mine in Cornwall closed in 1998. Deep mines are still working, especially in my constituency at Boulby, where the tradition of mining is kept alive at the Cleveland Potash mine.
I came into contact with the issue of abandoned metal mines through the Saltburn Gill action group. Saltburn Gill is a narrow wooded stream valley leading directly off Saltburn's famous surfing beach to the historic pier, hydraulic cliff lift and other tourist attractions of that popular Victorian resort town. Much of the Gill is a nature reserve and is designated as a site of special scientific interest as a relic of post-glacial native woodland. It is a popular walking area, and local wildlife attractions include kingfishers and visiting otters. It is also situated near the 82 shafts that access the historic networks of iron ore.
Mining in Teesside began in the 1850s, following the discovery by John Vaughan and John Marley of the main seam outcrop in Cleveland, thereby beginning a 150-year history of iron and steel making on Teesside. The iron ore from those hills, forged on the river Tees, was integral to the Victorian obsession with cast iron, the construction of the Tyne bridge and the building of Sydney harbour bridge.
Unfortunately, both Saltburn Gill and Skelton Beck began to see significant impacts from ochreous mine water appearing overnight on 18 May 1999. That quickly turned this otherwise high-quality watercourse bright orange, devastating the downstream ecology. Saltburn Gill and Skelton Beck are perfect examples of how a local river or stream can be severely impacted by mine water discharging from disused orphaned ironstone mines.
As a result, Saltburn Gill and Skelton Beck are classified as moderate and poor respectively under the water framework directive. Over 330 kg of iron ochre is deposited on the stream bed every day, contributing to
100 tonnes of iron hydroxide ochre delivered straight into the North sea each year. The pollution reduces oxygen in the stream, stops sunlight and smothers the bed, with a devastating effect on the ecology. A biological impact survey of the stream showed that the pollution had reduced the quality of the beck from grade B, which is good, to grade F, which is bad, in the 1.5 km stretch from the discharge to the sea.
Nationally, abandoned mines are the second biggest diffuse water pollutant, after agriculture. In 1992, one of the UK's biggest pollution incidents took place when 45 million litres of heavily contaminated water burst from the recently closed tin mine at Wheal Jane in Cornwall. The mine water, loaded with cadmium, arsenic, zinc and iron, flooded into the Carnon river, causing a vast plume of polluting orange water in Falmouth bay. In the end, it was decided that a chemical treatment plant was needed to deal with the scale of the problem, allow treated water to flow to the river and block pollution.
That was all achieved by direct Government action at the time after a major incident-not via legislation giving powers to an agency to take preventive measures to avoid such incidents occurring in the first place. For Saltburn Gill action group, assistance was given by the Environment Agency, Teesside university, the local wildlife trust, Saltburn, Marske and New Marske parish council and others, to try to find a solution to the problem.
In 2009, in partnership with the Coal Authority and with funding from the Department for Environment, Food and Rural Affairs, the Environment Agency undertook a number of investigations to establish the feasibility of building a treatment plant for the mine water at Saltburn. Three boreholes were drilled into the workings and a pumping test was run for three months to help the Environment Agency and Coal Authority to design a treatment plant.
One of the first things discovered was that the mine water level was 10 metres higher than the discharge point. This has raised concerns that there is a risk of a significant outbreak. The pumping test also demonstrated to the Environment Agency and the Coal Authority that the recharge area for the mine was much larger than expected. Laboratory and field-scale tests have shown that up to 99% of the iron could be removed in a treatment plant. Furthermore, there are also industrial economic benefits to be gained from existing coal mine water treatment plants, which could be expanded if metal mines were adopted by the Coal Authority.
About 50,000 tonnes of ochre are collected every year from existing coal mine water treatment plants. The vast majority of this ochre is transported for landfill, despite the fact that it could be used for phosphate removal in sewage treatment works, could provide a pigment in the dye and paint industry, and could be used as a bulking agent and dye in the cement industry, or as feedstock for the iron and steel industry. The UK currently imports 250,000 tonnes of ochre from Australia, while sending to landfill the vast bulk of the 50,000 tonnes that it collects via the Coal Authority. Indeed, some mine waters contain significant quantities of valuable metals, and the potential for extracting them, and other chemicals, both from the mine water and from the ochre is a subject that requires further research.
There are also heritage issues to be considered in the maintenance of abandoned metal mines. A great many mines are protected as scheduled ancient monuments, and some, such as the tin and copper mining areas of Cornwall and west Devon, have UNESCO world heritage site status. Although protection of the heritage of certain sites means some treatment methods are not suitable, it can be a driver for remediation. A good example is at Parys mountain, Anglesey, where remediation activities are led as much by the local industrial heritage trust as by the Environment Agency. Another good example is at the National Coal Mining Museum for England at Caphouse colliery near Wakefield. Rising mine water posed a threat to the underground workings that were open to visitors, as well as to the river Dearne. Through work with the Coal Authority, the mine water was controlled by pumping and treated at the surface. The treatment plant is now part of the visitor attraction, with hides for birdwatching built into wetlands.
Of course, the impact of climate change could make the problem of abandoned mine pollution worse. Increased and heavier rainfall intensity will increase the erosion of contaminated spoil heap material, and sediments and deposition on agricultural land in downstream floodplains.
Legally, the Water Resources Act 1991 is the most important piece of pollution legislation in England and Wales. It outlines the principal offence that a person contravenes the Act if he or she
"causes or knowingly permits any poisonous, noxious or polluting matter or any solid waste matter to enter any controlled waters."
Until 31 December 1999, section 89(3) of the same Act contained a defence:
"A person shall not be guilty under Section 85 by reason only of his permitting water from an abandoned mine to enter into controlled waters."
Consequently, there has only ever been one successful prosecution. Even for the Wheal Jane tin mine, and in other high-profile cases, prosecutions were not brought, following legal advice that "causing" could not be proven because of the long and complicated history. That defence was removed in 1999, but the removal could not be applied retrospectively. This presents difficulties, as the European mining waste directive will mean a new regulatory regime to control waste facilities at working mines and quarries. Crucially, it has implications for abandoned mines. By 2012, member states have to
"ensure that an inventory of closed waste facilities, including abandoned waste facilities...which cause serious negative environmental impacts or have the potential of becoming in the medium or short term a serious threat to human health or the environment is drawn up and periodically updated."
For all these reasons-litigious, historical, ecological and economic-I move that the Coal Authority be given the legal go-ahead to take over such abandoned metal mines, so that rivers and streams like Saltburn Gill, Saltburn Beck and Skelton Beck are returned to their former glory.
That Tom Blenkinsop, Ian Swales, Mr Iain Wright, Alex Cunningham, Ian Lavery and Mrs Jenny Chapman present the Bill.
Tom Blenkinsop accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 4 November 2011, and to be printed (Bill 145).
Police
2.48 pm
The Minister for Policing and Criminal Justice (Nick Herbert): I beg to move,
That the Police Grant Report (England and Wales) for 2011-12 (House of Commons Paper No. 771), which was laid before this House on 31 January, be approved.
As well as seeking the House's approval for the grant, I want to explain why this settlement for the police is necessary, challenging but manageable, and how the Government are helping the service to meet the challenge.
On 13 December, I laid before the House the Government's proposed allocations of grants to police authorities in England and Wales. Following that, the Government held a six-week consultation on the proposed allocation of funding, during which 34 representations were received from across 20 force areas. I would like to thank hon. Members, members of police forces, police authorities and other policing organisations across the country for taking the time to share their views on the provisional settlement. Their comments have been considered carefully and fully.
Having inherited the largest peacetime deficit in Britain's history, the Government had no option but to reduce public spending, and a police service that spends more than £13 billion a year cannot be exempt from a requirement to save public money. The October spending review set the overall cut in funding at 20% in real terms over four years, and it set the profile of the reduction. I accept that the settlement is challenging, but the Government believe that it is manageable, and that if savings are made in the right areas the service to the public can be maintained and, indeed, improved.
Stephen Twigg (Liverpool, West Derby) (Lab/Co-op): The Minister says that the settlement is challenging. Does he accept that it is more challenging for some forces than for others, and that a force in Merseyside depends far more on central Government grant than a force in Surrey, which raises half its funds locally? Will he consider, for the purpose of future years, looking again at an issue that is causing great concern in my constituency?
Nick Herbert: I absolutely understand the hon. Gentleman's observation that different forces raise different amounts from local taxpayers, and I shall deal with it shortly. I remain open-minded about the issue, given that the report relates to allocations for the next two years.
Robert Halfon (Harlow) (Con): Is my right hon. Friend aware that over the past few years Essex police have made efficiency savings of 25%? Helicopter, payroll and legal services are now being shared, but Harlow police station remains open 24 hours a day, and our front-line services have been protected.
Nick Herbert: I welcome my hon. Friend's comments. There are examples throughout the country-and I intend to provide some-of police forces that are making significant efficiency savings, and working in a smarter way that improves the service to the public even when funds have been reduced. It is clearly possible to achieve that.
It has been said that the profile of the cuts is front-loaded so that forces must find the biggest savings at an early stage. The profile reflects the need to make early progress on reducing the deficit, and it is set, but we must view the grant reductions in context. The biggest cut does not fall in the first year. The average cash reduction in grant is 4% in the first year, 5% in the second, 2% in the third, and 1% in the fourth.
It is also important to remember that a 20% reduction in Government funding in real terms does not mean a 20% reduction in force spending power. Forces do not receive all their funding from central Government; on average they receive about a quarter of it from the council tax component of precept, which is determined locally. If police authorities and, thereafter, elected police and crime commissioners choose to increase precept at the level forecast by the Office for Budget Responsibility, the settlement represents a 14% real-terms reduction in overall funding over four years. Of course I recognise that the local contribution to police spending varies considerably between forces, and I shall deal with that aspect shortly.
Helen Jones (Warrington North) (Lab): Why does the Minister think that a force such as that in Cheshire should lose 200 front-line police officers while the Government are spending money on an unnecessary switch to political police commissioners? My constituents would much prefer that money to be spent on putting officers on the beat.
Nick Herbert: I have explained this to the House before, but I am happy to do so again for the benefit of the hon. Lady. If she looks at the allocations that we have made, she will see that the additional cost of holding an election for police and crime commissioners will not come from force budgets, but has been provided separately by the Chancellor of the Exchequer.
The argument that, because a cost is involved in the holding of an election, that election should not take place is a very foolish one, and a particularly odd one for an elected Member of Parliament to advance. When the Labour party proposed five different referendums in its manifesto, I did not notice its advancing the argument that a cost would be involved. I should also point out that it is now Labour's policy for police authority chairs to be directly elected, and that the cost of holding those elections would arise every four years. Perhaps the hon. Lady should remonstrate with those on her party's Front Bench if she considers that that is not money well spent. There is now agreement on both sides that there should be direct elections, and a cost is involved in that policy. If the Opposition did not believe that a cost was involved, they should not have advanced the policy and voted for it, as they did in Committee just a few weeks ago.
Let me return to the real effect of the funding reductions on forces. Humberside's force raises the average 25% of its revenue through precept. If we assume that it chooses to adopt the freeze in council tax next year, its total funding will then fall by £5.5 million, or 2.9% of its total income of some £190 million. That is challenging, but it is not unmanageable. As Opposition Members have pointed out, the reductions in years three and four will be smaller.
Some forces, and some Members, have argued that the amount that each force raises in precept should be taken into account in the determination of funding reductions. I understand their argument, because forces that raise very little from precept will face a larger cut than those that raise a great deal. After careful consideration, however, I decided that there would be a number of objections to such an adjustment. First, it would be said that we were penalising council tax payers in other areas who already pay far more for their policing services, and who have experienced a big increase in council tax in previous years. That would certainly be unfair. Secondly, by subsidising forces in that way-including large forces with greater capacity-we would be asking others to take a larger cut in central grant than 20%, and that too would have been regarded as unfair. The fair solution, and the one that was expected by forces and authorities, was to treat all forces the same by making equal cuts in grant.
Hazel Blears (Salford and Eccles) (Lab): The Minister appears to have borrowed that very doubtful concept of spending power from his right hon. Friend the Secretary of State for Communities and Local Government, and I am afraid that it is no more reputable in his hands than it was in those of his right hon. Friend. The truth is that there will be a 20% cut in grant, and the truth is that Her Majesty's inspectorate of constabulary has said that a cut of more than 12% will affect police availability. Why does the Minister disagree with HMIC-which has said that a cut of 12% is possible, but that anything beyond that will cut into the front line-and with the chief constable of Greater Manchester, who has said that there will be an effect on front-line policing?
Nick Herbert: There are two answers to that. First, forces on average receive a quarter of their funding from local taxpayers, so it does not make sense to consider only the amount that they receive from central Government. What matters to a force is its total spending power, and it is hardly disreputable to take that into account. Secondly, although I do not disagree with the conclusions of the important report of the inspectorate of constabulary-with which I will deal shortly-I think it possible, as I will explain, to make savings that were beyond the remit of its report.
I am pleased that Opposition Members apparently agree with the policy of the inspectorate of constabulary that forces can save more than £1 billion a year without affecting the front line and while protecting visibility, because that is very important.
Stephen Twigg: I understand the Minister's explanation, which, in a sense, constitutes a fuller response to my earlier point, but may I urge him to reconsider in future years? The main reason for the contrast between the sources of funding for forces in, say, Merseyside and Surrey is the fact that Merseyside has a higher level of social and economic deprivation. In recent years, council tax payers in my constituency have paid more for the police and have not experienced a freeze, but in practice they will experience a much bigger cut than those in Surrey.
Nick Herbert: I said to the hon. Gentleman earlier that we must remain open-minded about the impact in future years, and we will. I think that this is the fairest approach, and it is the approach that I am taking in relation to the cut in central Government funding. Most of the funding that a force receives through the grant will result from the application of a formula that recognises local need. I know that this raises issues, but ultimately I decided that the right approach to the cut in central Government funding was to treat each force fairly. That is why I decided to apply damping at the level of the average cut.
Mr Brian Binley (Northampton South) (Con): May I remind the Minister that Northamptonshire police's grant funding will decrease by 5.1% next year, when it should have decreased by only 0.9%? That is due to the damping formula, under which Northamptonshire police will lose £3.4 million in 2011-12 and a further £3.7 million in 2012-13. They are subsidising forces throughout the country. Will the Minister promise to look at this matter for next year's grant?
Mr Deputy Speaker (Mr Lindsay Hoyle): May we have shorter inventions too, please? Will the hon. Gentleman give me that promise for the future?
Nick Herbert: I have met my hon. Friend and his local chief constable. He knows that I consider this matter very carefully, and he made his points very well on behalf of his constituents. I will discuss damping in a moment, but my hon. Friend's comments reflect the fact that there will always be differences of view in this House between Members whose police forces benefit from damping and who therefore do not wish to see any change in its application, and Members whose forces have, effectively, paid out under damping and who desperately wish there to be a change. It is therefore not possible for the Government to satisfy everybody. We have had to take decisions in the round, and in accordance with what we consider to be the best and fairest way to address the totality of policing in this country.
As I have said, I decided to apply damping at the level of the average cut. As a result, each force will face an equal percentage reduction in core Government funding in 2011-12 and 2012-13, thereby ensuring that no one force will face an unacceptably large reduction in its budget. This mirrors the approach we took in the in-year savings following the emergency Budget and, importantly, it is what police forces were expecting and planning upon.
I appreciate that different forces have different views on this decision, as do hon. Members, and I understand why forces such as the West Midlands and Dorset-and, indeed, Northamptonshire-are keen to see damping phased out or removed entirely, while others such as Cumbria and Cheshire welcome its retention. As I have said, in making decisions such as these I must, of course, think about policing as a whole. I also appreciate the wider case against damping, and there is a strong argument for moving at the right time to a full application of the formula, recognising the policing needs of each area, but doing so now would have created real difficulty. I should also point out that the vast majority of funding that forces receive is allocated according to the formula. Therefore, force level allocations will remain as I announced in December.
Historically, there have been a number of ring-fenced grants to police forces. The Government's general approach has been to remove ring-fencing and to roll funding into the main grant so that forces have greater local flexibility in determining how resources are spent. That has been the case for the rural policing fund. From 2006-07, it had already been amalgamated with four other specific grants to create what is known as rule 2 grant, but we are now rolling that into the police main grant. I want to emphasise, especially to Members representing rural constituencies, that as result of my decision on damping levels the decision on rolling this grant into the main grant means that no force will be worse off.
In some instances, I believe the case for ring-fencing grants remains strong. Outside London, the neighbourhood policing fund will be ring-fenced for the next two years to ensure the continuing funding of police community support officers, who play a valuable role in community policing. When police and crime commissioners are introduced, it will be up to them to make decisions over funding. In London, where the Mayor can already exercise this local determination, the ring fence is being lifted now, but the fund is being maintained at £340 million next year and £338 million the following year. When some Members make their allegations about cuts in front-line policing, they might like to note that that ring-fenced fund has been maintained.
The counter-terrorism specific grant has been relatively protected with a 10% cut in real terms over four years. This is a cut of just 1% in cash terms, and must be seen against a very rapid increase in resource and capital spending-some 49% in the last four years. The Government and the police service are confident that there will be no reduction in police effectiveness in this crucial area, where savings can be made but where well over £500 million will continue to be spent each year.
Keith Vaz (Leicester East) (Lab): The Minister has rightly put the emphasis on the local areas, because it is their budget in the end. Does he not agree, however, that there is a responsibility on the Home Office to show leadership in respect of local forces? That is especially the case for procurement; the Home Office should encourage local forces to collaborate and pool resources in order to procure.
Nick Herbert: I strongly agree with the right hon. Gentleman, who chairs the Select Committee on Home Affairs, and I will address that issue later, as I intend to set out the savings that I believe can be made. The Home Office has a role to play in driving that, and in asking for the leadership of forces to share services and collaborate so that we can realise the considerable savings that are possible in procurement.
I was talking about funding to ensure national security. Similarly, funding for Olympic security has been prioritised. Up to £600 million will remain available if required for the safety and security programme, as originally pledged, although we expect that that should be delivered for rather less, at £475 million.
Steve McCabe (Birmingham, Selly Oak) (Lab): If it transpires that the Minister can pay for Olympic security at the lower figure as he hopes, what will he do with the extra money? Will it be reinvested to make up for some of the police cuts?
Nick Herbert: Well, I think it is important that up until the Olympics the pledged sum remains in place in order to ensure security. Such decisions can be taken afterwards.
The Metropolitan police will continue to receive a national, international and capital city grant, recognising the unique duties they perform. It will be worth £200 million next year, although it will be reduced in subsequent years on the same basis as the police main grant.
The Government's absolute priority is to ensure that the England and Wales police service retains and enhances its ability to protect and serve the public. Understandably, there has been much focus on the impact of the settlement on police numbers. Given the need to reduce public spending, we cannot guarantee the number of police and staff, which had reached record levels-almost 250,000 people-and neither, of course, could the previous Government.
Yasmin Qureshi (Bolton South East) (Lab): The Minister says that the number of police officers will be reduced. Recently, he is supposed to have said that there is no link between the commission of crime and the number of police. Does he still stand by that statement?
Nick Herbert: I did not say that; I said there was no simple link, and there is not.
All parties agree with Her Majesty's inspectorate of constabulary that police forces can make savings of over £1 billion a year while maintaining police availability. However, that will mean smaller police work forces in order to support the £1 billion a year of savings HMIC says can be made, which I do not think the Opposition have understood. That is why I regard it as so unacceptable that the Opposition should campaign on the issue of police numbers when they are committed to cutting spending by over £1 billion a year, which will lead to a reduction in police numbers.
The challenge for the service is to improve efficiency, drive out waste and increase productivity so that front-line policing is prioritised and the service to the public is maintained or improved.
Philip Davies (Shipley) (Con): I agree that the police can save money, and they might start to do so by addressing some of the equality and diversity politically correct drivel on which they waste millions of pounds each year. If the Government were simply cutting the police budget and savings could be found, that would be fine. However, the problem with the Government's argument is that they are doing this against the backdrop of restricting the police's ability to use the DNA database to catch criminals and trying to restrict further the use of CCTV cameras which also help the police catch criminals, and they are releasing people from prison and having fewer criminals in prison. They cannot do all those things with fewer police.
Mr Deputy Speaker (Mr Lindsay Hoyle): As I have already said, we must have much shorter interventions.
Nick Herbert:
I always know it is a mistake to take interventions from my hon. Friend, but no doubt it is a mistake I will continue to make. I enjoy his interventions, but I note that, although it seemed to me that Opposition Front-Bench Members were giving lots of nods to what
he said, they have still not understood the importance of ensuring a proper balance between security and liberty in this country. In spite of everything the new leader of their party has said, they have still not understood that.
There are also areas beyond the HMIC's report-this comes directly to the point made by the right hon. Member for Salford and Eccles (Hazel Blears)-where savings can be made by forces working together. There are 2,000 different IT systems across the 43 police forces, and some 5,000 staff. We estimate that savings of some £330 million could be found through joint procurement of goods, services and IT. The vast bulk of these savings -around a third of a billion pounds or more-will be additional to the savings identified by HMIC.
The time for just talking about IT convergence, collective procurement, collaboration, sharing and outsourcing services is over. We cannot afford not to do these things, and we cannot afford to delay, so, where necessary, the Government will mandate the changes required. That is why I am about to lay regulations before Parliament to require the police service to buy certain IT vehicles, and so on, through specified national framework arrangements.
Keith Vaz: I am most grateful to the Minister for giving way a second time. I welcome very much what he has just said. This issue has been the subject of much discussion in the Home Affairs Select Committee, driven by its former member, the hon. Member for Cannock Chase (Mr Burley). There is a need for central procurement: a list, a book, a catalogue-not quite like Argos, but something that can be used as a template for various police forces to choose from.
Nick Herbert: I am grateful for the right hon. Gentleman's support and I hope this approach will command support across the whole House, because it does make sense for the 43 forces to procure together where that will make savings; and the savings are quite considerable.
Tom Brake (Carshalton and Wallington) (LD): Pursuing that point, if there is some rationalisation among the 2,000 IT systems, would that not also lead to significantly more effective policing and a reduced risk, for instance, of systems being out of synch and data getting lost between different systems?
Nick Herbert: I agree with my hon. Friend that making these efficiencies and improvements in business processes is about not just saving money, but improving the quality of the service. Those two things are not incompatible, and it is time we stopped talking as though they were.
Robert Halfon: Will my right hon. Friend give way?
Nick Herbert: I want to make a little more progress, if my hon. Friend will forgive me.
The inspectorate's report focuses on reducing police force costs to average levels, but why should forces not be able to go further by matching the performance of the best, rather than merely the average? If forces improve productivity and adjust to the level of spend typical of
the more efficient forces, that could add another £350 million to the savings calculated in HMIC's report.
Pay, too, was outside the scope of the report. It accounts for the bulk of total police spending-some £11 billion last year. Any organisation in which the majority of the cost is pay, and which is facing tough times, has to look at its pay bill. The Government have announced a policy for a two-year pay freeze across the public sector. Subject to any recommendations from the police negotiating board and agreement on staff pay, this might save some £350 million. We have asked Tom Winsor to review the remuneration and conditions of service of police officers and staff. The Government have asked the review to make recommendations that are fair to, and reasonable for, both the taxpayer and police officers and staff. I want to emphasise the importance of fairness to police officers, who cannot strike and who often do a difficult and dangerous job on the public's behalf. Tom Winsor's first report is due to be published in February, with the second part due in June. Taken together, we believe there are potential savings of some £2.2 billion a year by 2014-15, which is greater than the real reduction in central grant.
These changes require a fundamental redesign of policing, with far greater collaboration, shared services and the potential use of outsourcing. However, this does not mean a worse service to the public. Savings must be driven in the back and middle-offices of police forces-areas where functions are important, even if invisible to the public, but could be done more efficiently. These functions have grown disproportionately as the money rolled in and bureaucracy predominated. As Peter Fahy, chief constable of Greater Manchester police, told the Home Affairs Select Committee earlier this month,
"some of our headquarters operations had got too big."
Mark Tami (Alyn and Deeside) (Lab): Does the Minister not accept that there is a danger that if forces cut back such staff-for instance, North Wales police is cutting one in four back-room staff-all that happens is that front-line officers have to be pulled off the beat to do that job?
Nick Herbert: No, I do not accept that at all. The challenge is to ensure that those functions are done more efficiently; it is not simply a question of handing the function to someone else. No one is saying that back and middle-office functions can or should be abolished, but they can become much leaner.
Furthermore, protecting the front-line service does not mean setting it in aspic. Productivity at the front line can be improved, too, so that resources are better deployed in order to maintain or improve the service to the public. For example, West Yorkshire police have significantly reduced the time taken to investigate a crime. Improving the standard of initial investigation, they reduced the average time taken to investigate low-level crime by 85%. Wiltshire police have significantly reduced the time neighbourhood and response officers spend in custody centres, and off the streets, from an average of 27 minutes to an average of 10 minutes. That is worth 3,000 extra hours of street policing.
In Brighton, Sussex police have put in place a dedicated team for secondary investigations, reducing the amount of paperwork that response officers have to complete
and allowing them to return quickly to the streets after answering a call. This saved nearly £1 million, improved response times and sped up the time it takes to complete an investigation.
Surrey police have changed their arrangements in order to co-locate some officers in council buildings, rather than their remaining in little-used police buildings, thereby saving money. That has helped to fund the recruitment of additional constables.
Hazel Blears: The Minister will be aware that the area-based grants that many deprived local authorities have received to date have been used, as with my own council in Salford, to tackle antisocial behaviour in exactly that way-by having co-located teams dealing with the same families. That area-based grant has now been completely abolished-by his right hon. Friend the Secretary of State for Communities and Local Government. If there is any thought of joined-up government, clearly, this is not it.
Nick Herbert: I simply do not accept the right hon. Lady's contention that it is somehow not possible for services to work together because they are receiving less money; that is a strong incentive for them to work together and to save resources.
Robert Halfon: I thank my right hon. Friend for giving way to me for a second time. Given what I said earlier about Essex police collaborating successfully with police forces in the south-east, such as Kent, on payroll services and on procuring helicopters and other vehicles, and given what he said about passing regulation for those who do not collaborate, will he look favourably on forces that are collaborating in future funding formulas?
Nick Herbert: Of course we will continue to look at all these issues, and I welcome the collaboration that has taken place in my hon. Friend's force. HMIC was clear that collaboration has to proceed at a faster pace, and we will look at all the potential incentives to ensure that that is the case.
Mr David Ruffley (Bury St Edmunds) (Con): My right hon. Friend said something terribly important about mandating collaboration, which I have long argued for, particularly through the Policing and Crime Bill in 2009. He talked about collaboration in the context of procurement. What about mandated collaboration in the context of protective services?
Nick Herbert: There is strong potential for forces to collaborate on protective services, and again, we want to see such things happen. We have ensured in the Police Reform and Social Responsibility Bill, which is currently in Committee, that strong duties will be placed on police and crime commissioners to collaborate. It is very important that forces do that. Indeed, in a speech I gave a couple of weeks ago, I said that the age of police fiefdoms is over. There is a need for police forces to work together more effectively. The Government do not believe in forced mergers of police forces, but we cannot have 43 forces doing things all on their own when there are great savings and efficiencies to be made in exactly the sort of area that my hon. Friend represents by working together.
Henry Smith (Crawley) (Con): I am glad that the Minister mentioned some of the collaboration taking place between the Sussex and Surrey forces, and the better working with local authorities, which relates to an earlier point. He will know that from 1 April West Sussex is to have one division, which is a way for police administration to be more efficient, and it also leads to better front-line services.
Nick Herbert: I strongly agree with my hon. Friend. I also gave the example of Surrey, where co-location has proved possible despite the funding reductions that have taken place. It shows that with innovation it is possible to think afresh about how these services are delivered to the public.
The key to the changes that I have outlined is service improvement from the same or less resource. As Derbyshire's chief constable said last month:
"People won't really see much difference in terms of neighbourhood policing, emergency response and uniformed patrols-we'll still have a huge amount of people in the front line."
We must also tackle the bureaucracy, which has tied up police time. It is no use focusing only on police numbers if too much police time is spent on inefficient or unnecessary tasks. Every hour of police time we save by cutting red tape is an hour's more potential time spent on front-line duties. Scrapping the stop form and reducing the stop and search form, which officers have to complete, could save up to 800,000 hours of officer time.
I recognise the challenge facing policing. I also appreciate that many in the police work force are worried about their remuneration and indeed their jobs. I certainly do not belittle that concern, but my first priority must be to ensure that the best service is provided to the public within the financial constraints that we all face. Every chief constable I have met has impressed upon me his or her determination to do everything possible to protect front-line services while dealing with the reduction in funding. The Government are determined to work with the police service to ensure that that is the case.
3.22 pm
Yvette Cooper (Normanton, Pontefract and Castleford) (Lab): Today the House is being asked to approve a 20% cut in Government funding for the police force in England and Wales. The deputy chief constable of Devon and Somerset, Shaun Sawyer, has said that these are
"the biggest...cuts for a generation".
The deputy chief constable of Cambridgeshire has said that the cuts are "unprecedented" and will have a
"real impact on people's lives and families."
The House is being asked to vote for 20% cuts, a reduction of more than 10,000 police officers, and substantial cuts to police community support officers and critical support staff. The choice for MPs today is whether to back those cuts to the police in their own constituencies or to stand up, defend their communities and tell the Government to think again.
Yvette Cooper: I will give way to the hon. Gentleman if he will tell me whether he is prepared to support the cuts to the police in his constituency.
Henry Smith: May I ask the right hon. Lady whether she supports the Darling deficit reduction plan, which I understand the new shadow Chancellor also supports and which would have seen £9 of every £10 of the Government's proposed cuts to the police service going ahead?
Yvette Cooper: The hon. Gentleman is simply wrong, and I just say to him that he will be voting today to support 500 police officers being cut from the Sussex police force. I wonder whether he will put that on his leaflet when he campaigns at the next election-it will certainly be on ours.
Chief constables across the country are being put in an impossible position. Of course they are working hard to reassure the public, to do everything they can to improve policing, to manage with the budgets that the Minister has given them, and to deliver the best possible service and keep reducing the level of crime, but they are having the rug pulled from beneath them by the crazy scale and pace of these cuts. He can try all the smoke and mirrors he wants-he talks about cash cuts and hypothetical council tax increases-but the facts are very clear: there are to be more than 7% of real cuts in the police grant for next year and more than 8% the following year. The total cut is more than 20% in real terms, which is more than £2 billion, as the Minister has admitted.
What are the consequence of that? They are: 100 fewer police officers in Cumbria; 258 fewer police officers in Cheshire; 256 fewer police officers in South Wales; 114 fewer police officers in the Thames Valley; more than 1,000 fewer officers in the West Midlands; and more than 1,000 fewer police officers in London. The result is more than 10,000 fewer police officers in England and Wales. They are not our figures, but the figures from the chief constables and police authorities across the country. This means 10,000 police officers gone, which is the equivalent of every police officer in Hampshire, Kent and Sussex put together, or every police officer in the entire east midlands. That is the reduction that these areas are having to face and that is just the start.
Mr Aidan Burley (Cannock Chase) (Con) rose-
Yvette Cooper: I will give way if the hon. Gentleman can say whether he will be putting the police cuts in his area on his leaflet at the next election.
Mr Burley: The right hon. Lady cited a figure of 10,000 police officers, but can she tell the House how many of them are front-line beat officers?
Yvette Cooper: Perhaps I should ask the hon. Gentleman what he means by the "front-line". He may think that trained police officers can just be got rid off without that having any impact on the communities they serve, but that is not what his constituents think and it is not what the people of Staffordshire will think when 70 police officers are cut as part of the planned cuts that his Government are introducing.
Nick Herbert: The right hon. Lady is committed to cutting police funding by more than £1 billion a year. Is she saying that that can be done without reducing the size of the work force? How many of the 10,000 police officers that she has said are to go are front-line officers?
Yvette Cooper: I will come back to the point that the Minister raises about what Labour's plans would be, because that is important, but first let me address the issue about the front line. The Prime Minister promised to protect the front line and he promised to carpet any Minister putting forward front-line cuts. The Home Secretary said that it is possible for the police to make significant reductions in their budgets "without affecting front-line policing." But officers are being lost from the front line every single day-their number has reduced by 2,000 since the election alone. London is losing 300 sergeants from the safer neighbourhood teams, Birmingham has already lost police from its community teams, and the plans of the Hertfordshire and Bedfordshire forces have already troubled residents. Thanks to budget cuts, those forces have told gun owners that they will not be doing home visits and people can renew their gun licence by phone. The police have said in response:
"Unfortunately in the current climate policing is having 20% removed from its budgets we have to make the best use of that money and we are adopting a risk based approach."
Those police have been put in an impossible position. What is more front line than keeping neighbourhoods safe or preventing gun crime? What is more front line than 10,000 trained police officers?
We have asked the Government what they mean by protecting the front line. In the other place in December, they were asked for their definition of the front-line policing that the Home Secretary said she would protect. It took more than two months for Baroness Neville-Jones to reply:
"There is no formally agreed definition of frontline police services."-[ Official Report, House of Lords, 8 February 2011; Vol. 725, c. WA50.]
Now we know why they will not protect those services-they do not even know what they are. But crime victims and communities across the country know exactly what front-line services are and they can see that they are under threat every day from this Government.
Yvette Cooper: If the Minister can define them now, I will give way to him.
Nick Herbert: I am grateful to the right hon. Lady for giving way. If she cannot define front-line services, how does she know that officers are going from the front line? Will she answer the question I asked? As she is committed to cutting police funding by more than a £1 billion a year, will she admit that that would mean a smaller police work force?
Yvette Cooper:
The Minister has tried to claim that police officer jobs would go under Labour's plans. Let us be clear: our view is that we should be giving the police enough money to protect police officers and police community support officers across the country because we believe they are doing a good job. My right hon. Friend the Member for Kingston upon Hull West and Hessle (Alan Johnson), the former Home Secretary, did indeed announce plans for just more than £1 billion to be made in efficiency savings over this Parliament and yes, we have made it clear that we would have cut the police budget in line with those efficiency plans. He set out measures through which that could be done, such as greater collaboration, procurement savings and better management of staff and shifts to save money on
overtime. We agree that the police service should continue to do more of what it has already been doing to improve efficiency. However, the Minister is cutting not £1 billion but £2 billion. Her Majesty's inspectorate of constabulary identified 12% of efficiency savings, not 20%, and it said:
"A cut beyond 12% would almost certainly reduce police availability".
Mr Burley: Will the right hon. Lady give way?
Yvette Cooper: I will give way if the hon. Gentleman will say whether those 70 officers will now be on his leaflet.
Mr Burley: The right hon. Lady mentioned Staffordshire police: perhaps I can explain to her what their front line might be. Staffordshire police have committed to retaining every police officer in their neighbourhood police teams, but they are still cutting 250 back-office staff. Will she join me in congratulating Staffordshire police on keeping all the front-line officers in their neighbourhood police teams?
Yvette Cooper: Staffordshire police, like other police forces across the country, are having to work immensely hard to keep the police working to do everything they possibly can to fight crime while they are faced with massive cuts. Staffordshire police are faced with a 7.5% cut in their budget next year alone, followed by an 8.7% cut the following year. Those steep cuts in the first year will have consequences in relation to the 70 police officers being lost, specialist teams and the work being done across the police force.
The Government are cutting more from police budgets in two years than the former Home Secretary proposed over a Parliament. If the Home Secretary and the Minister think that can all be done through efficiency savings, what do they have to say to the chief constables across the country who are cutting officers? Are they all wrong? Are they all profligate? Are they all inadequate in meeting efficiency challenges? Or is the truth that they are doing their best to manage in the face of very difficult cuts? Is not the truth that the Home Secretary and the Minister have broken with more than a century of Tory tradition? They are not looking for efficiency savings as an alternative to police officer cuts-they think that efficiency savings are the police officer cuts. They think that the best way to improve police productivity is to cut the number of police working across Britain.
Mark Tami: We could probably take the Government more seriously if the Minister had not, when in opposition, attacked Labour for not putting enough money into policing.
Yvette Cooper: My hon. Friend is right about the huge difference between the claims that those on the Government side made before the election and the reality of what they are doing now.
We now have the first Home Secretary and Policing Minister in Tory party history to want fewer police working to fight crime across Britain. The Minister is the first Policing Minister in Tory party history to believe there is no link between the number of police and the level of crime, ignoring the evidence of recent history-the 43% drop in crime in the Labour years alongside the 17,000 extra police and the 16,000 PCSOs.
Mr Jim Cunningham (Coventry South) (Lab): Is my right hon. Friend aware that more than 2,000 police officers will go in the west midlands under the proposals?
Yvette Cooper: My hon. Friend is right: the West Midlands police are being heavily affected and are set to lose a large number of police officers. That is already having an effect on communities across the area, with some police officers reporting considerable difficulties as a result of the recruitment freeze that has had to be implemented and the consequences that is having on their ability to go to neighbourhood meetings and to respond to concerns that are raised with them.
Steve McCabe: Is not one of the problems that the West Midlands police suffer from the gearing effect? Although the Minister has given the impression that the cuts were modest-I think he quoted £5 million in Hull-the gearing effect in the West Midlands police means they are losing 17.2% of their total resources. That is nearly £100 million, and they cannot lose that without cutting front-line staff.
Yvette Cooper: The situation in the west midlands is clear. The number of police officers is being cut and that is having an impact on the area.
The latest research on the links between police and crime from Civitas, which the Minister presumably regards as a bastion of left-wing profligacy-he shakes his head to indicate that he disagrees with Civitas-shows that there is a
"strong relationship between the size of police forces and national crime rates".
"A nation with a larger proportion of police officers is somewhat more likely to have a lower crime rate. A nation with fewer police is more likely to have a higher crime rate."
More importantly, perhaps, those on the Government Benches are ignoring the public. Today's poll shows that two thirds of people believe that crime will rise as a result of the Home Secretary's cuts. People do not want the cuts to the police that the Government are introducing.
The Minister often resorts to the claim that it is Labour's red tape which is responsible for the fact that only 11%-to quote the figure that he uses-of force strength is visible and available. He fails to point out, in a misrepresentation of the HMIC analysis, that that figure for a 24 hours a day, seven days a week service does not take account of the officers on late shift, night shift or rest day, or of the officers working on serious investigations, counter-terrorism, drugs, cyber crime or child protection.
The right hon. Gentleman should consider for a moment what would happen if his own efficiency were measured in the same way. Let us imagine that the test of Ministers' efficiency was the amount of time in a 24/7 period that they spent speaking in the House of Commons. The amount of time that the Policing Minister spends sleeping, eating and working on knife crime, counter-terrorism or long-term planning would not be counted, as the Government do not count comparable time for the police.
On the basis of the Minister's week in the Chamber for debate and in the Bill Committee-he has been busy -he gets to an average visibility 24/7 of not 11%, which
the police manage, but 3.27%, and that includes the radio time that he was forced to do on Sunday. His visibility is not as good as that of the police, but I am sure he has some efficiency plans to share his red boxes across Departments. His boss, the Home Secretary, is at 0%. Where, by the way, is the Home Secretary?
Keith Vaz (Leicester East) (Lab): I commend my right hon. Friend for her great interest in what the Minister has been doing. It is a fascinating study. I know that she is making a powerful point, but perhaps she could be a little charitable to the Minister. It may be that the Home Office did not envisage the kind of cuts that she has been talking about. Does she agree that Ministers should go back to the Treasury to explain that the effects of the cuts are very severe indeed, and that an additional special grant ought to be given to the Home Office to deal with that?
Yvette Cooper: My right hon. Friend makes an important point. It may well be that Ministers believed the figures they were given by the Treasury and believed that front-line services would not be hit. However, the pace and the scale of the cuts are indeed hitting front-line services. They are having an impact on police forces across the country. Ministers ought to go back to the Treasury to discuss that again.
Hazel Blears: As my right hon. Friend knows, a consultation was launched this week on tackling antisocial behaviour. Whatever the Government do to rename the orders and introduce some kind of cosmetic change, is it not the truth that in order to reduce antisocial behaviour, we need PCSOs and police officers on the front line in our communities, where it matters?
Yvette Cooper: My right hon. Friend is exactly right. She worked to tackle antisocial behaviour over many years and initiated some extremely important work. She is right that all the powers in the world will make no difference if we do not have the police in place to work closely with communities in local areas to implement those powers in practice.
Mark Tami: What is my right hon. Friend's view of the idea that five people should have to phone the police? That sounds a bit like red tape to me. It sounds like bureaucracy that we do not need. How much will that cost?
Yvette Cooper: My hon. Friend raises an interesting point. If four people ring up and then one rings a second time, does that person count as a fifth person? Presumably the Home Office will set out guidance and red tape for local communities and police to follow.
Where is the Home Secretary today? That is an important question, because I understand that she has been sighted in the building. I know that such debates are normally attended by Ministers of State, but normally Home Secretaries do not cut the police grant by 20%. The Secretary of State for Communities and Local Government is coming here to defend his cuts, so why will she not defend hers? Could it be because she knows that she got stitched up in the spending review and so will not defend it? She left the Minister out on his own-a very thin blue line-and will not join the police cuts front line.
The Government are taking a gamble with crime and policing, just as they are taking a gamble with the economy.
Nick Herbert: The right hon. Lady is being generous in giving way, which I thank her for. Will she please answer my question, which I will now ask a third time? Will she admit that the cuts of more than £1 billion in policing to which she has committed could only be achieved by making the police work force smaller?
Yvette Cooper: We have said very clearly that we believe that the police should have the money to protect the number of police officers and police community support officers. Those are the numbers of staff that we believe ought to be protected across the country, in contrast to the cut of 10,000 in police officers. We think that we should have 10,000 more than the number the Minister is now pursuing right across the country. It is wrong for Britain and wrong for communities, and the public know it. No matter how many games he plays with smoke and mirrors, the public know it and want the extra police officers.
We will support those extra 10,000 police officers and would provide the funding to support them, because we think that that is the right thing to do. The Government are taking a gamble with crime and policing, just as they taking a gamble with the economy. They are cutting too far and too fast. They are risking economic growth and jobs and now are risking public safety and the fight against crime. Their Back Benchers should think again.
The Liberal Democrats are voting for a cut of 10,000 police officers, instead of the increase of 3,000 that they promised, and the Conservatives are ripping up hundreds of years of supporting the police in order to cut the front line. I say to Members of both parties that if they vote for these cuts today, they are badly out of touch with what their constituents want and are turning their backs on the fight against crime. Britain was not broken, but the Government are doing their best to break it now. Those Members should join us in telling the Government to go back, think again and come back with a better plan.
3.42 pm
Tom Brake (Carshalton and Wallington) (LD): I have a sense of déjà vu in this debate, partly because we had a dry run of it a few weeks ago, and partly because I heard an excellent opening speech from the Minister during that debate. I am afraid that mine will suffer because other Members may have the same sense of déjà vu when they hear some of my points.
My starting point for the debate is the same as the Minister's, which is that there are some inconvenient facts: we have the worst deficit in the G20 and the largest peacetime deficit since the second world war, and we are spending £120 million a day on the interest alone on our debt. Those are inconvenient facts, but they are givens, or known knowns, as Donald Rumsfeld might say.
Mark Tami: I seem to remember that the Lib Dem manifesto promised 3,000 extra police officers on the streets, so the cut equates to 13,000 fewer than they promised. Does that indicate how we should treat Lib Dem manifestos?
Tom Brake: I thank the hon. Gentleman for his rather predictable intervention, but immediately before it I was explaining-he clearly was not listening-why the Government are having to take these decisions. He and the former Ministers on the Opposition Front Bench must accept responsibility for that.
I listened carefully to the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper), because we expect the Opposition to come forward with some solutions, but during her speech I detected only one sentence in which she referred to the £1 billion of cuts that they would make and said that they would do something about back-office functions and procurement. So that is the Opposition's solution. That is the one sentence that the Opposition's spokesperson provided, stating how they, if in government, would have resolved the problems that we face.
Stephen Twigg: Will the hon. Gentleman not acknowledge that, in that one sentence-I think it was more than one sentence-of my right hon. Friend's speech, she referred specifically to the report of Her Majesty's inspectorate of constabulary? The figure is not one that we have plucked off the top of our heads; it is based on the HMIC's view of the savings that can be made without damaging front-line services.
Tom Brake: I thank the hon. Gentleman for that intervention. Of course he is right, and the Government have based their measures on the HMIC report as well, but people who read and listen to this debate will want to hear exactly what impact HMIC's recommendations, if implemented, will have on, for example, staff numbers, a point to which the official Opposition's spokesperson did not respond. She ducked and dived on that point.
The Opposition can pretend that the £40 billion of cuts that they intended making, including 20% cuts throughout Departments, would have gone unnoticed, would have had no impact on front-line services and would have left police forces throughout the country unscathed, but we know, they know and people outside know that that is completely untrue.
There is no point disguising the fact that the settlement is tough. That is true, and it impacts on police budgets. As the Minister said, in 2011-12 there is a 4% reduction in cash terms. In 2012-13, there is a 5% reduction, but, thanks to the HMIC report and the measures that police forces are already taking throughout the country, much of the reduction can be made through greater efficiency.
Police forces are already delivering many examples of such efficiency. In one local example, Sutton and Merton police forces are looking at sharing a custody suite, and if successful in those two force areas, the idea might be rolled out across the whole Met police force area and in others further afield. That is exactly the sort of measure that police forces and police authorities should pursue.
The Minister quite rightly identified what is possible through IT systems savings and, as I said in an intervention, we can derive not only cash savings from that source, but great improvements in efficiency and the likelihood of resolving cases, as the communications problems between different systems are addressed.
One issue that I raised in the previous debate, and on which I hope the Minister has had time to do some work, is training for senior officers. The HMIC report
identifies that there was no commonly held belief that those officers needed a detailed understanding of how to ensure that the efficiency savings-the mergers-took place effectively. The Government, HMIC or others might be able to assist with training to ensure that officers are equipped to take such tough decisions, because there are real differences between forces' proposals.
Some forces are coming forward with a headline figure for the number of officers they are going to cut, while others are coming forward with a range of options-particularly on back-office and procurement-that could identify significant savings without the need to cut staff numbers, which some forces seem to have gone for as the first rather than the last resort.
I want to raise some specific Met issues. The Minister will be aware that the force has not yet taken a decision to cut sergeant numbers by 300; it is considering the idea, but it says it
"will be directed by final analysis and must reflect operational delivery."
I urge the Met to maintain those officer numbers, but if that is not possible, to look at some of the proposals that I mentioned, particularly on sharing back-office functions, joint custody suites and the like to ensure that the number of police officers in the safer neighbourhood teams is maintained at the level at which it is currently set.
Equally, as I said earlier, safer neighbourhood teams may be undertaking tasks that are not their responsibility. I mentioned the example of drive-outs from petrol stations, which are taking up an inordinate amount of time in the case of at least one of my safer neighbourhood teams. After I raised that case, the local force have asked to meet me to discuss it as a wider issue, so it clearly affects not just one safer neighbourhood team but several in the borough. If a large proportion of their time is spent trying to deal with a problem that the petrol companies should be able to resolve technologically, we should look at the issue carefully to try to free up officer time to concentrate on things that really do need police intervention.
Mr Burley: If we want to help the police with their finances, does the hon. Gentleman agree that perhaps now is the time for premiership football clubs to start thinking about making a greater contribution to the costs of policing their football matches instead of all those police being deployed purely at taxpayers' expense?
Tom Brake: I entirely agree. Given the stringent financial circumstances in which the Government are operating, that is exactly the sort of thing that needs to be considered.
The Minister referred to the review of staffing and overtime arrangements. Although I agree that very high levels of overtime are costly, and that needs to be looked at, such overtime often allows the police to undertake special tasks that they could not do otherwise and can do without the need to grow the number of full-time police officers. This requires some flexibility. Simply saying "No more overtime" would severely constrain some of the activities that the police are undertaking and that people clearly welcome and want to happen.
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