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Sir George Young: I believe that yesterday’s announcement in the Budget of more resources for apprenticeships and work experience was warmly received. In a few moments my right hon. Friend the Business Secretary will be in his place. Today’s debate will provide a good opportunity for the House to discuss the value of apprenticeships to the community, and in particular, their reinforcement of our manufacturing and engineering capability, which has such a high profile in my hon. Friend’s constituency.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab): My hon. Friend the Member for Easington (Grahame M. Morris) drew attention to the possible publication of 900 million medical prescription records online. Given that banks, lenders, insurers, private health care employers, neighbours, foreign agencies and Governments would be able to gain access to those records, may we have a debate on the Floor of the House on how the proposal relates to the Data Protection Act, employment law and other legislation?
Sir George Young: I repeat the undertaking that I gave a few moments ago—and on Tuesday the Health Secretary will be answering questions in the House, when the hon. Gentleman may have an opportunity to raise the matter in either a direct or a topical question.
Andrew Stephenson (Pendle) (Con): Will the Leader of the House find time for a debate on the good news announced yesterday about the Government’s council tax freeze initiative? Both Pendle borough council and Lancashire county council have agreed not to increase the tax, but the initiative was not covered in recent debates on the local government finance settlement.
Sir George Young: My hon. Friend has drawn a contrast between the doubling of council tax under the Labour Government and the freeze introduced by the current Government. He may also know that we have abandoned plans for a council tax revaluation that would have meant soaring bills for millions of homes.
Steve Rotheram (Liverpool, Walton) (Lab): The Leader of the House turned down my previous request, but will he now find time for a debate on pay structures in banks, following the revelation that last year RBS paid 323 staff more than £1 million each, Barclays paid 231 staff more than £1 million each, and HSBC paid 280 staff more than £1 million each? Does he agree that that requires an urgent debate, given that yesterday’s Budget failed to tackle such excess?
Sir George Young: If that requires an urgent debate, which I concede may well be the case, that urgent debate can take place over the next three days. My right hon. Friend the Chancellor has announced an increase in the bank levy. However, it would be perfectly in order for the hon. Gentleman to catch your eye, Mr Speaker, today or on Monday or Tuesday, and to receive a response from one of my Treasury colleagues.
Karl McCartney (Lincoln) (Con):
Will my right hon. Friend find time for a debate on the role of the Electoral Commission? It is no longer offering guidance and advice to election officers, most of whom have a wealth of experience of running elections very well for many
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years, and has taken to bullying and imposing expensive and excessively bureaucratic top-down diktats ahead of the local elections and referendum that will take place in six weeks’ time.
Sir George Young: I will draw my hon. Friend’s comments to the attention of the chair of the Electoral Commission. There is the opportunity to cross-examine my hon. Friend the Member for South West Devon (Mr Streeter), who speaks for the Electoral Commission, on the Floor of the House, and my hon. Friend the Member for Lincoln (Karl McCartney) could also raise the matter with him informally outside the Chamber.
Ian Lavery (Wansbeck) (Lab): Many MPs are very unhappy about the lack of clarity and content in departmental written answers. The responses to many questions are fudged, and many are answered as “unknown”. Will the Leader of the House make time for a debate on this?
Sir George Young: The hon. Gentleman is entitled to receive enlightened and informed answers to written questions. It might help if he could be slightly more specific about which answers have caused concern, and if he does so I will raise the matter with the appropriate colleague.
Pauline Latham (Mid Derbyshire) (Con): Will my right hon. Friend the Leader of the House outline how business leaders in my constituency and Derbyshire in general can put their ideas to the Chancellor in respect of his announcement yesterday on establishing more enterprise zones?
Sir George Young: As my hon. Friend will know, the Cabinet recently met in Derby in her county. We met wealth creators in Derby, and they pressed the case for more investment in the town and the county. Members will have an opportunity in today’s debate on the Budget and subsequent debates to make the case for an enterprise zone in their constituency, and I note that my hon. Friend has made an early bid.
Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab): The last Government put in place the victims of overseas terrorism compensation scheme. May we have a debate in Government time to ascertain when British victims of overseas terrorism will begin to receive compensation?
Sir George Young: The hon. Gentleman raises a serious issue that has already been raised on a number of occasions. As he knows, the Ministry of Justice is carrying out a review. I hope it will be completed shortly, because I understand the concern that is felt on both sides of House about the delay.
Bob Blackman (Harrow East) (Con):
Seven schools in Harrow are currently consulting on becoming academies. They are doing so in the teeth of a campaign of misinformation by Labour-run Harrow council and outright hostility from the teaching unions. May we have an urgent statement from the Secretary of State for Education on what he is going to do to stop councils
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giving misinformation to schools that are trying to break free of the dead hand of the local education authority?
Sir George Young: I welcome that initiative in my hon. Friend’s constituency, which shows that parents want to use the freedoms given to them under this Government’s legislation. I will draw his concern to the attention of my right hon. Friend the Secretary of State for Education, so we can see whether further steps need to be taken to make sure that those who want to establish free schools or academies are not intimidated as a result of misinformation.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op): Further to the request made by my hon. Friend the Member for Westminster North (Ms Buck), I draw the Leader of the House’s attention to early-day motion 1640, tabled yesterday, which seeks to save BBC Radio Merseyside.
[ That this House believes BBC Radio Merseyside is a loved and valuable institution within Merseyside, providing local news and entertainment to over 300,000 listeners; notes that BBC local radio offers exceptional value for money at a cost of 3.2 pence per listener hour, in comparison with other stations such as BBC Parliament (14.1 pence) and Radio 3 (6.3 pence); further notes that BBC Radio Merseyside is the most listened to BBC local radio station outside London; further notes that for a third of its listeners, 100,000 people, it is the only BBC radio station that they choose to listen to; is highly concerned at proposals that would end daytime programming; and calls on the BBC to protect its proud history of broadcasting on Merseyside with a commitment to fund BBC Radio Merseyside.
There are no fewer than 40 BBC local radio stations throughout the UK, all of which are cherished by their communities and provide excellent value for money at 3.2p per listener hour, but the news that local programming may be scaled back to “drive time” and breakfast time is extremely worrying. Please may we have an urgent debate on the future of BBC local radio programming?
Sir George Young: I understand the hon. Lady’s concern. It strikes me that this would be an appropriate subject for a Backbench Business Committee debate or an intervention during the pre-Easter recess Adjournment debate, but she has just made her case very effectively.
Mr Peter Bone (Wellingborough) (Con):
If passed, motion 7 on the Order Paper would have the effect of
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cancelling all currently scheduled private Members’ sitting days and replacing them with four new days. Instead of getting the additional 13 days we should have because this is a two-year parliamentary Session, we would finish up with only four days. I think that is more cock-up than conspiracy, but may we have a debate on the matter next week?
Sir George Young: I am not sure that my hon. Friend has interpreted the motion correctly. The Government want to provide four more days to debate private Members’ Bills. My hon. Friend has blocked that by tabling an amendment which means that, as of today, that extra time will not be given. I very much hope we can resolve the matter. We have a bit of time, because we have announced the dates up to the end of the summer. I hope that between now and then we can find a satisfactory solution, and that my hon. Friend will not stand in the way of what the Government are trying to do, which is to give more time for private Members’ Bills.
Nadhim Zahawi (Stratford-on-Avon) (Con): People have welcomed the council tax freeze nationally, but may we have a debate on what people in my constituency and elsewhere can do if their council puts through large council tax rises in future?
Sir George Young: Help is on the way, because the Localism Bill contains a provision for local people to have a referendum if their local authority proposes high council tax increases.
Mr Speaker: I call Mr Pincher.
Christopher Pincher (Tamworth) (Con): Thank you, Mr Speaker; I know my place.
Many of my constituents have raised concerns about clinical services in local hospitals, notably Good Hope hospital. May we have a debate on NHS staffing levels, so that we may learn about the progress being made in increasing the number of doctors and nurses and reducing the number of bureaucrats so beloved of the last Government?
Sir George Young: Since we took office, the number of managers has fallen by some 3,000, I think, and the number of doctors has increased by some 2,000, so help is on the way.
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North Africa and the Middle East
12.36 pm
The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague): With permission, Mr Speaker, I should like to make a statement updating the House on the actions we are taking to protect civilians in Libya and other issues of concern in the middle east.
First, I must confirm the sad news that a British national was killed in a bus-bombing in Jerusalem yesterday, which injured over 30 Israelis, eight of them seriously. Her family was informed last night. Our embassy in Tel Aviv and consulate-general in Jerusalem are doing everything possible to assist her family and those who were travelling with her. I know the House will join me in sending our deepest condolences to her family at this tragic time, as well as in expressing our solidarity with the people of Israel in the face of such a shocking and despicable act of terrorism. I condemn this attack in the strongest terms and call for those responsible to be held to account.
I am also gravely concerned about renewed rocket attacks on Israel from Gaza and the deaths of Palestinian civilians in Gaza. I urge all parties to restore calm and to work to achieve the two states that are the only lasting hope for peace.
On Libya, we continue to take robust action to implement UN Security Council resolution 1973, which authorised military action to put in place a no-fly zone to prevent air attacks on Libyan people and take all necessary measures to stop attacks on civilians while ruling out an occupation force. The case for this action remains utterly compelling. Appalling violence against Libyan citizens continues to take place, exposing the regime’s claims to have ordered a ceasefire to be an utter sham.
Misrata has been under siege for days by regime ground forces, although coalition air strikes are helping to relieve the pressure on its citizens, many of whom have been trapped in their homes without electricity or communications, with dwindling supplies of food and water, and facing sniper fire if they venture into the streets, while the local hospital is swamped with casualties. Ajdabiya continues to be under attack, with reports of civilian deaths from tank shells. This underlines the appalling danger its inhabitants would be in without coalition action, as do continued threats by Gaddafi forces to “massacre” residents in areas under bombardment.
There is universal condemnation of what the Libyan regime is doing from the United Nations, the Arab League, the African Union and from Europe. The regime’s actions strengthen our resolve to continue our current operations and our support for the work of the International Criminal Court. Our action is saving lives and protecting hundreds of thousands of civilians in Benghazi and Misrata from the fate that otherwise awaited them. That is what UN Security Council resolution 1973 was for, and that is why we are implementing it.
We are taking the utmost care to minimise the risk of civilian casualties. The only forces acting indiscriminately or deliberately inflicting casualties are the forces of the Gaddafi regime. UK forces have undertaken a total of 59 aerial missions over Libya, in addition to missile strikes. Last night, our forces again participated in a co-ordinated strike against Libyan air defence systems. A no-fly zone has now been established and the
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regime’s integrated air defence system has been comprehensively degraded. There are no Libyan military aircraft flying.
Over 150 coalition planes have been involved in military operations, including Typhoon and Tornado aircraft from the Royal Air Force. Thirteen nations have currently deployed aircraft to the region. A number of additional nations have made offers of aircraft and other military support, which are in the process of being agreed. Royal Navy vessels are in the region supporting the arms embargo. Those coalition operations are currently under United States command, but we want them to transition to NATO command and control as quickly as possible. NATO has already launched its operation to enforce the arms embargo, its planning is complete for the no-fly zone and we are making progress on NATO taking on all measures under resolution 1973 needed to protect civilians from Gaddafi’s attacks. We need agreement to unified command and control for it to be robust, and we expect to get that agreement soon.
Resolution 1973 lays out very clear conditions that must be met, including an immediate ceasefire, a halt to all attacks on civilians and full humanitarian access to those in need. We will continue our efforts until these conditions are fulfilled, and the Libyan regime will be judged by its actions not its words. Our message to the Gaddafi regime is that the international community will not stand by and watch it kill civilians—that is a view that this House overwhelmingly endorsed last week. To his forces we say that if they continue to take part in Gaddafi’s war against his own people, they will continue to face the military force of the coalition, and if they commit crimes against Libyan people, they will be held to account.
I announced yesterday that Britain will host an international conference next Tuesday to take forward the implementation of UN Security Council resolution 1973. We are inviting NATO allies, key international organisations, including the UN, the Arab League and the African Union, and many Arab nations. We continue to engage in intensive diplomatic activity to increase the multilateral pressure on the Libyan regime. Further UN and European Union sanctions have been agreed targeting Gaddafi and his associates, and those Libyan organisations responsible for funding his regime. As of today, the EU has designated the National Oil Corporation of Libya, thus cutting the regime off from future oil revenues.
We are gravely concerned about the well-being of up to 80,000 internally displaced people. The Secretary of State for International Development is in close communication with his counterparts in international organisations about immediate and longer-term support to the Libyan people. The United Kingdom is beginning preliminary consultations with international partners and organisations on an internationally led stabilisation effort to get Libya back on its feet in the longer term.
It is not for us to choose the Government of Libya. That is for the Libyan people themselves, but they have a far greater chance of making that choice now than seemed likely on Saturday, when the opposition forces were on the verge of defeat and the lives of so many were in danger. We continue to deepen our contacts with the Libyan opposition, including the interim national council based in Benghazi. I spoke to Mahmoud Jabril, the special envoy of the council, on Tuesday to discuss the situation on the ground and to invite him to visit
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London. In the words of the Arab League resolution, the current regime has completely lost its legitimacy. We call on all those, including the interim national council, who believe that Colonel Gaddafi has led the people of Libya into an impasse to begin to organise a transition process.
In Syria, there are reports of many deaths and the use of live rounds after security forces cleared a mosque in Deraa. We call on the Government of Syria to respect their people’s right to peaceful protest and to take action about their legitimate grievances. We also call for the utmost restraint on all sides, including by the Syrian security forces, during the further protests that have been called for tomorrow in Syria. In Bahrain, we support a process of dialogue leading to political reform that can address the legitimate aspirations of all the people of Bahrain, and I urge all parties to join, without preconditions, the proposed national dialogue.
In Yemen, a state of emergency has been declared by the Government and a day of marches is planned in Sana’a tomorrow. There has been looting and disorder in that city and in other cities, and more than 50 protesters died in Sana’a last Friday. We call even now on the opposition, the Government and the various factions of the Government to engage in dialogue. There are still some British nationals who have chosen to remain in Yemen. Since October, we have been unable to provide consular assistance in Yemen because of the significant terrorist threat. There are many parts of Yemen that the ambassador and his staff are unable to reach. In the light of the rapidly deteriorating security situation and the protests tomorrow, I have temporarily withdrawn part of the British embassy team in Sana’a, leaving a small core of staff in place. Commercial flights to and from Yemen are still operating, although that could clearly change. Should there be further violence in Yemen, normal means of leaving, particularly through the commercial airport in Sana’a, could be blocked, and the ability to travel around Yemen will be severely restricted. On 12 March, we advised all British nationals to leave Yemen as soon as they could. As the situation has deteriorated further since, I want to make it absolutely clear today that all British nationals remaining in Yemen should leave without delay.
The United Kingdom believes that the people of all these countries must be able to determine their own futures. That is why in all of them we argue for reform not repression, and why in Libya, supported by the full authority of the United Nations, we have acted to save many lives threatened by one of the most repressive regimes of them all. This will continue to be our approach as change continues to gather pace in the middle east.
Mr Douglas Alexander (Paisley and Renfrewshire South) (Lab): I thank the right hon. Gentleman for his statement and for allowing me advance sight of it this morning. May I join him in condemning the act of murder witnessed on the streets of Jerusalem yesterday, where a British national lost her life? This atrocity should be unequivocally condemned across the world, and our condolences are with the people of Israel and the families of those affected, including those in this country.
The right hon. Gentleman talked about the situation in Yemen, which the House will know is deeply concerning. Amid the worrying developments, Britain must be consistent
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in urging the embrace of more democratic government by countries in the region. The Government are therefore right to urge progress on national dialogue with opposition parties and democratic reforms. Now that our embassy team has been withdrawn, for reasons that I fully appreciate, will he tell the House how and through what mechanisms Britain will continue to urge restraint and reform on the Yemini authorities? He explicitly urged UK nationals to leave Yemen, but can he also assure the House that all appropriate contingency plans are in place for any remaining UK nationals?
The BBC reports that at least 10 people have been killed and dozens wounded after Syrian police opened fire on people protesting in Deraa. Given the Foreign Secretary’s very recent visit to Damascus, will he update the House on his views as to whether any further protests are likely to be met with reform or with further repression? Will he also take this opportunity to update the House on any recent discussions the British Government have had with the King of Bahrain about the recent unrest in that country? Will he also inform the House what steps the Government have taken to get a clear picture from the authorities in Saudi Arabia of their intentions towards Bahrain? He will of course understand the risk not only that the legitimate demands of the people of Bahrain are suppressed, but that the country becomes a fulcrum of violence in the region.
I shall now address the pressing situation in Libya. May I associate myself and all Labour Members with the Foreign Secretary’s words of support and admiration for the role our armed forces are playing in this action? Last Monday, the Prime Minister and the Foreign Secretary made the case in this House for enforcing UN resolution 1973. My right hon. Friend the Leader of the Opposition made it clear that we support the Government in this action to protect the Libyan people, but it is the Opposition’s responsibility in offering this support also to scrutinise the Government’s actions in implementing the mission.
Many hon. Members on both sides of the House made it clear in Monday’s debate how important it was for this mission to have and to retain broad international and regional support, and therefore welcomed the endorsement of the Arab League. I have been calling for more than a fortnight for a joint meeting of representatives of the Arab League and the European Union, so I welcome today’s news that London will host a meeting next to help to bring together nations involved in this effort. The Prime Minister indicated at the Dispatch Box on Monday that coalition meetings would be a regular occurrence. How regular will they be? Will they be at foreign ministerial or Heads of Government level?
Will the Foreign Secretary update the House on the details of the Arab military involvement that has materialised so far and on what has been promised for the immediate future? He updated the House by saying that the UK has undertaken a total of 59 aerial missions, but House how many missions including planes from Arab countries have been undertaken? Will he also be clearer about the UK Government’s position on the NATO command and control structure for this mission? In particular, will he let us know whether he would wish the operations degrading Gaddafi’s assets to be overseen by an ad hoc group of Ministers or to be answerable to the full North Atlantic Council? Does he agree that although the focus at the moment is
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understandably on the military pressure, it is vital that we maintain and increase pressure on the regime in other ways?
Given the importance placed by resolution 1973 on the prevention of mercenaries arriving in Libya from other countries, will the Foreign Secretary assess the accuracy of reports that mercenaries are still arriving in Libya? What action is being taken against those countries providing mercenaries and will he tell the House what progress has been made on investigating at least the possibility of an escrow account for Libyan oil money that could contribute to a fund to address post-conflict reconstruction in Libya?
Does the Foreign Secretary believe that a lead individual of international standing should be appointed to take charge of co-ordinating post-conflict planning? The whole House and the public will want to know what work is under way on contingency planning. I heard his remarks about an international stabilisation effort and the work of the International Development Secretary. What, in the British Government’s view, are the structures equal to this immense task, who will lead the work and how will the House be assured that this vital work is being done?
Let me ask one final question. Will the Foreign Secretary assure Members that in the light of the coming recess the Government will ensure that Members are kept updated and, if necessary, that the House will be recalled if circumstances merit that course of action? We continue to support the Government and our armed forces as they act to protect the Libyan people and we will continue with that support and with detailed scrutiny of the Government’s decisions in the days ahead.
Mr Hague: I am very grateful to the right hon. Gentleman and for the continued strong unity across the Floor of the House on so many of these issues—on all of them, at the moment. Of course, he joined me in condemning the bomb attack in Israel.
In answer to the right hon. Gentleman’s questions about Yemen, not all the embassy team has been removed. A core of staff remains, including the ambassador, but as I saw for myself when I was in Yemen last month it is not easy for our staff to move around. Last year, there were two separate attempts to kill our ambassador and the embassy staff, and moving around even in the capital is a very difficult process. To move around more broadly in the country is dramatically more difficult and that is why it is so difficult to give consular assistance to British nationals who might be scattered in different parts of Yemen.
I can assure the right hon. Gentleman that there are detailed contingency plans that can go into operation at very short notice for the evacuation of the British nationals who remain, but if we had to trigger them it would have to be a military-only evacuation, possibly in very difficult circumstances. It would therefore be difficult to be assured that we would be able to bring out everybody from remote parts of Yemen. That is the importance of stressing now that British nationals should leave. There are reports that oil companies are withdrawing their staff from Yemen. I want to emphasise that we will give every assistance we can and that we have contingency plans ready to go at any time, but that does not guarantee that we could get everybody out.
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The right hon. Gentleman asked whether further protests in Syria are likely to be met with repression. The evidence is that yes, they would be. Of course, we will use all our diplomatic efforts with the Syrian authorities to say that they should not do so, but that is what has happened and there are reports this morning that up to 25 people have been killed in the protests over the last couple of days.
We are in regular touch with the Government in Bahrain. I think I mentioned a few days ago that the Prime Minister spoke to the King of Bahrain and I spoke to the Foreign Minister a week ago. I hope to speak to the Crown Prince of Bahrain again shortly about the status of the national dialogue that he attempted to launch. Clearly, there have been difficulties on both sides of the argument in Bahrain as regards participating in that national dialogue and it is important that they are all ready to enter into it. The forces that have entered Bahrain from Saudi Arabia, the United Arab Emirates and other Gulf states are there legitimately at the invitation of Bahrain. They are not engaged in crowd control or in dealing with the protests, but are safeguarding installations. I discussed this at length with Prince Saud, the Saudi Foreign Minister, who was here with us two days ago. The British Government are encouraging dialogue in Bahrain and we look to Saudi Arabia to encourage that as well, and we look to all the Gulf states to play a constructive role, which I believe they wish to do.
On the right hon. Gentleman’s questions about Libya, the work of our armed forces continues to enjoy strong international and regional support. I think we should be clear about that. There were some doubts when the House debated the matter on Monday about the position of the Arab League, but it has subsequently made statements giving robust support for the implementation of UN resolution 1973.
We are still working out some of the questions about command and control. The simplest and most effective solution is for all the operations conducted within NATO to come under the North Atlantic Council and for other countries to plug into that and to work with it. We have made a great deal of progress, as I said in my statement. We should understand that this is a new coalition, put together last week and very quickly, for obvious reasons. There are bound to be issues to sort out in its management, but we are getting through them pretty well. I will discuss the remaining issues with Secretary Clinton and with my French and Turkish counterparts later this afternoon to try to iron out the remaining difficulties with future NATO command and control. I should stress that representatives of the nations involved in this operation can meet in Brussels on a regular basis, so the regularity of the meetings is established.
On Arab involvement, the forces of Qatar are taking part in the missions to enforce the no-fly zone. Other Arab nations have not yet sent a military contribution, although they remain strongly supportive of the mission. We are still in discussions with some of them about sending further military contributions to those operations. The right hon. Gentleman is quite right to draw attention to reports of mercenaries entering Libya. Given the danger they might pose to civilians, they do so at their peril and they should be aware of that.
I mentioned how the designation of the National Oil Corporation of Libya means that future oil revenues are stopped. Oil has not been lifted from Libya over the
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past few weeks, so the flow of oil cash to the regime has stopped for the moment in any case. We are still discussing the idea raised by the right hon. Gentleman about an escrow account.
My right hon. Friend the International Development Secretary is working hard on the post-conflict situation. In our view, this must be a unilateral and UN-led effort and we will be able to have discussions about that with other nations at the conference next week. Of course, we will want to keep the House updated. I and my right hon. Friends the Secretaries of State for Defence and for International Development will make further statements as necessary. The Leader of the House has announced a debate just before the House rises for the recess in the week after next. It is probably too early to speculate about the recall of Parliament two weeks before the recess, but we will of course do whatever is necessary to keep the House informed.
Mr Speaker: Order. Many colleagues are seeking to catch my eye, but the House might like to know that no fewer than 35 hon. and right hon. Members are seeking to contribute to the Budget debate, so economy is of the essence if I am to be able to accommodate the level of interest.
Richard Ottaway (Croydon South) (Con): I welcome the Foreign Secretary’s statement and, in particular, his point about sanctions being strengthened and the National Oil Corporation being listed. That should focus minds. He was quizzed quite hard last week about the arms embargo. Has he reviewed the position and is there any way that support in some form or another can be given to the rebels, who are facing a fairly unequal battle?
Mr Hague: We are continuing to review the position and I do not have a new announcement to make to the House or to my hon. Friend about that. There are a variety of legal opinions about the relevant paragraph of the UN resolution. Whatever we do, on this and all the issues involved, must be in strict accordance with the UN resolution and we must maintain the legal, moral and international authority that comes from that. We will not do anything that we think would transgress that resolution. We are looking at it in that light and I will update the House when we have come to any conclusions about it.
Mike Gapes (Ilford South) (Lab/Co-op): The Foreign Secretary mentioned the meeting to be held in London and said that the African Union will be involved in it. The African Union is specifically mentioned in Security Council resolution 1973 as having a mission that is engaged in the area. Will he update us as to whether there is potential for the African Union to play a positive role in getting a peaceful resolution to the conflict in the near future?
Mr Hague:
Yes, there is a role, but a peaceful resolution would require the Gaddafi regime to observe resolution 1973. If that happened, all concerned could be in discussions with the African Union, but that requires a ceasefire, an end to violence and an end to attacks on civilians. There is certainly a role for the African Union and I hope we will be able to discuss that with it. I do not yet have
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confirmation of who will attend the conference in London, but it has been invited to attend and this is exactly the sort of thing we want to discuss with it.
Sir Menzies Campbell (North East Fife) (LD): I hope that my right hon. Friend will excuse me if I press him a little further on the issue of command, which has both military and political implications. While it is clear that the present arrangements have not impaired in any way the military effectiveness of the operations, it is equally clear that they are not sustainable in the long term. Will he tell us what undertakings, if any, he has received from Secretary of State Clinton to the effect that any transition will not be hurried and will be both effective and smooth?
Mr Hague: My right hon. and learned Friend is absolutely right to point out that the discussions about this issue have in no way impaired the military operations that have taken place so far. All the nations concerned have that very much in our minds during our discussions and our absolute priority is to implement the resolution and get these organisational questions sorted out while we are getting on with that. I have already mentioned in my response to the shadow Foreign Secretary that I will discuss these issues with Secretary Clinton later today. I think there is a common determination among all the nations involved to sort this out. We are in the business of seeking not that kind of undertaking but a solution regarding the command and control of operations going forward, and I hope that we are close to achieving that.
Mr Ben Bradshaw (Exeter) (Lab): Is it not clear, given the brutal suppression of protests in Bahrain, that most Gulf countries do not recognise the need for the sort of political reform that the Secretary of State has spoken about? In order to maintain support for what we are doing in Libya, which I strongly endorse, do we not need to be wholly consistent in our approach to democracy and human rights in the middle east?
Mr Hague: We do need to be consistent, but we also need to recognise where countries make reform efforts. If I may say so, it is something of a generalisation to say that the Gulf countries do not recognise the need for reform because many of them have embarked on such reform in recent times. Kuwait has introduced considerable reforms, including the election of its Parliament, the Sultan of Oman has made very substantial reforms, including major changes in his Government in the past few weeks, and Prince Saud was describing to me, when he was here on Tuesday, some of the reforms being contemplated in Saudi Arabia. I think there is a recognition, including in the Gulf states, that it is necessary across the Arab world for reform to take place. That reform will be at a different pace and of a different nature according to the culture of each country, but I think they are seized of that fact. My right hon. Friend the Prime Minister gave a powerful speech about this in the Kuwaiti Parliament last month and there has been a strong measure of support for that among the Gulf states. In addition, other countries, such as Morocco, are adopting very serious reforms. That kind of peaceful evolutionary reform is what we have to encourage, rather than the violence we have seen in so many countries.
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Mr James Arbuthnot (North East Hampshire) (Con): Will my right hon. Friend say something about the relationship between the action we are taking in Libya and the strategic defence and security review? Might we need to reconsider some of the decisions taken in that review, such as the scrapping of some reconnaissance aircraft and even some ships?
Mr Hague: The Prime Minister has made the position on this clear. It was precisely in order to be able to deal with more than one situation or conflict at a time that we came to the conclusions we did in the review, and that means we are able to continue our operations in Afghanistan while also conducting this operation. That is also why we chose to adopt the adaptable posture in the defence review, as my right hon. Friend the Defence Secretary has often explained, and why we chose to retain such a wide spectrum of military capabilities, so that many of them could be expanded in future if necessary. We must continue to work in the framework of our defence review. We are able to bring the necessary equipment into this operation with the forces we have now, so the issues that my right hon. Friend the Member for North East Hampshire (Mr Arbuthnot) raises are really for the longer term.
Keith Vaz (Leicester East) (Lab): Both the Foreign Secretary and the shadow Foreign Secretary have spoken about the critical situation in Yemen and we know that it is going to get worse with the declaration of a state of emergency. We appreciate the efforts being taken by the Foreign Secretary, but is it not necessary to try to bring sides together? May I urge him or the Prime Minister to make that call to the President of Yemen to see whether we can get both sides together? We are hugely respected there and this is our time to act.
Mr Hague: Yes, I will absolutely respond to the right hon. Gentleman’s urging. As he well knows, there has been no shortage of effort on the part of this country to do that urging. That is why I went there myself last month and met not only the President but opposition groups and urged them all to be generous to each other in their dealings. I cannot say that our urging has yet been heeded, but we will continue it over the coming days, doing exactly as he says.
Mr John Baron (Basildon and Billericay) (Con): With unrest spreading throughout the region and civilian casualties rising at the hands of autocratic leaders, what circumstances would need to exist, if any, for Britain to instigate or consider instigating a no-fly zone in other countries?
Mr Hague:
I must again stress something that the Prime Minister has explained: just because we cannot do everything does not mean that we should not do something where there is a particularly grave situation that particularly offends our belief in human rights, especially the right to live. That has been the situation in Libya. Whatever we do in any other country, we will always be guided by the criteria we established before the passing of the UN resolution, which are that there must be a demonstrable need and a clear legal basis for any British involvement and that there must be strong support from within the region. The establishment of
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those principles has put us in a very strong position in relation to the crisis in Libya and those principles would guide us elsewhere.
Sir Gerald Kaufman (Manchester, Gorton) (Lab): In condemning utterly the barbarous attack on the bus stop in Jerusalem, with the consequent loss of innocent life, and the Israeli attacks in Gaza that have resulted in the deaths of many civilians, including a grandfather who was playing football with his teenage grandchildren, will the right hon. Gentleman make it clear to the Government of Israel that Israel cannot be exempted from the wave of yearning for emancipation that is sweeping the middle east? Will he also make it clear that unless the Israeli Government respond, there will be no peace for Israel and the country’s future existence will be placed in jeopardy?
Mr Hague: As the right hon. Gentleman will have heard in my statement, I condemn all those attacks and the deaths on both sides—of Palestinians in Gaza and of those who died in the terrible terrorist attacks on Israel in recent days. In the middle of the important developments and dramatic change in the middle east, I have underlined and will continue to underline that those events add to the urgency of the peace process. It is important that both Israeli and Palestinian leaders understand that and that they are prepared to make the necessary compromises to get direct talks towards a two-state solution going again. I have put that in my own way, but what I have said is strongly in accordance with the sentiments the right hon. Gentleman has expressed.
Dr Julian Lewis (New Forest East) (Con): When the Government decided to withdraw the last of our carriers and the Harrier force with it, they did so at the last minute and for financial reasons. Now that both the Prime Minister and the Chancellor have confirmed what I sought to establish previously—that these operations will receive extra funding from the Treasury reserve—will the Foreign Secretary have urgent discussions with the Secretary of State for Defence on reactivating HMS Ark Royal and some of the Harriers, because, I assure him, people who know about these matters know how versatile and valuable such a capacity would be?
Mr Hague: No. I have urgent discussions every hour or so with my right hon. Friend the Secretary of State for Defence, but it is important to implement the strategic defence and security review and to bear in mind that fundamental to our national security is the restoration of our national finances. Yes, we have had to do some things that in an ideal world we would not have done, and the defence budget has had to be controlled, but we have been able to do, and continue to do, what is necessary in Libya without the equipment to which my hon. Friend refers. Our operations are conducted by Typhoon aircraft and, for ground attacks, by Tornado aircraft. These are flying from land bases in the Mediterranean and are able to conduct the operations very easily without, in this case, the need for an aircraft carrier.
Mr David Winnick (Walsall North) (Lab):
Like everyone else, I deplore Gaddafi’s continued military offensive, which undoubtedly is costing the lives of many civilians. Will the Foreign Secretary tell us whether any diplomatic
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efforts are being made by countries such as Russia, China, and particularly Turkey, to see what can be done to persuade Gaddafi to stop the fighting?
Mr Hague: I think that the whole world is pretty much united on urging Gaddafi not only to stop the fighting, but to leave the scene. That is the view even of countries that did not support the UN Security Council resolution. This is a worldwide view. However, Colonel Gaddafi is clearly not easily persuaded to engage in a dialogue to reach out to the opposition. We hope he will see that the situation is such that it is necessary for him to go, and that is the only way forward for the Libyan people. The countries to which the hon. Gentleman refers are certainly of that opinion as well and certainly do not want the Gaddafi regime to continue.
Mr Edward Leigh (Gainsborough) (Con): On that very point about the Gaddafi regime continuing, some of us were briefed this week by the BBC journalist who had been detained in horrendous circumstances in Tripoli. He is clearly no apologist for the regime, but he said that it was remarkable how quiet Tripoli was, with demonstrations confined to one suburb and engaging only 200 or 300 people. Clearly the people there are cowed and massive subsidies are being poured at them. As some of us have asked constantly, what will happen if Gaddafi simply beds down in Tripoli? What is the game plan? What are we trying to achieve? Will the Foreign Secretary confirm that we are only on a humanitarian operation to protect the people of Benghazi and no more?
Mr Hague: Almost, as it is not just the people of Benghazi we need to protect. Although UN resolution 1973 specifically mentions Benghazi, it also calls for the taking of all necessary measures to protect the civilian population and populated areas in other parts of Libya. That is our mission. Our military mission is defined as clearly as any military mission has ever been by a UN resolution, and we will stick to that resolution. Clearly it is highly desirable for Gaddafi to go, as we have said for many weeks, but in military terms what we have set out to do is enforce the resolution. That means protecting Libya’s civilian population, attempting to bring about a ceasefire and not putting any occupation force on to any part of Libyan soil. We will stick strictly to the resolution.
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab): Since Turkey has said it would supply ships and submarines to enforce the arms embargo, that leaves Germany as the only major NATO member state that is not contributing to the actions in Libya. Will Germany be invited to the conference next Tuesday?
Mr Hague: Yes, Germany will be invited. It is a crucial partner of this country in the European Union and in NATO. The different countries in NATO have of course taken varying decisions about their level of participation, and indeed on whether to participate, but Germany has not been unhelpful or obstructive and has not attempted to block the work we need to do in NATO. It set out its position at the UN Security Council and did not vote for the resolution, which we must respect, but it has not been unhelpful in so many other ways. I hope that it will attend the conference in London.
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Martin Horwood (Cheltenham) (LD): I welcome the Foreign Secretary’s statement, particularly the positive news of contact with the interim national council in Libya. I know that a review and revocation of arms export licences to Libya has already taken place, but will all arms export licences to the Governments of Yemen, Syria and Bahrain now urgently be cancelled if they have not been already?
Mr Hague: My hon. Friend will be aware that more than 100 licences have been revoked in the case of Libya, that many have been revoked in the case of Bahrain and that successive Governments have been extremely careful about the licences granted in the case of other countries, such as Syria. We constantly review these licences in the light of changing developments in the middle east. I do not have a new announcement to make about that today. If we think it necessary to revoke other licences for the countries he mentioned, we will certainly do so, and I will keep the House updated on that.
Mr Geoffrey Robinson (Coventry North West) (Lab): May I thank the Foreign Secretary for the promptness and fullness of his briefing to the House? We look forward to the conference next Tuesday, for which we expect a similar briefing. Will he take that opportunity to make it quite clear that, in so far as we know what the end game will be for this complex situation, the commitment of British ground troops will not be part of it?
Mr Hague: As I said in answer to my hon. Friend the Member for Gainsborough (Mr Leigh), we will stick very strictly to the terms of the UN resolution. As the hon. Gentleman is aware, that rules out any occupation force in any part of Libya. He can be absolutely assured that there will be no invasion of Libya. To give a fuller answer, there have already been occasions on which we have sent special forces into Libya, for instance to rescue the oil workers in the desert three weekends ago. We can neither exclude such necessary, small-scale things, nor anticipate what might come up, but we are not preparing for a ground invasion of Libya and will not be doing so.
Tony Baldry (Banbury) (Con): My right hon. Friend was right to underscore the Government’s support for the work of the International Criminal Court, but will he expand a little on his understanding of what the ICC is doing to ensure that those close to and around Gaddafi appreciate and understand that if they are responsible for directing attacks that inflict civilian casualties, they too stand liable to be indicted for war crimes and crimes against humanity?
Mr Hague:
My hon. Friend makes an important point, and every time we make that point we are doing what he is calling for, which is stressing to the people involved that they may well have to answer in future to the ICC. The prosecutor of the Court has begun the necessary investigations, so material can now be gathered and sent to it. The best way to communicate that is through the media, which is why my right hon. and hon. Friends and I, and our colleagues in other countries, have stressed very strongly in the international media, including al-Jazeera and other channels, that this is
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what is now set in train and that people must remember when they contemplate any crime or atrocity in Libya that the reach of international justice can be very long.
Natascha Engel (North East Derbyshire) (Lab): What, to the Foreign Secretary, does operational success in Libya actually look like? Further to that, what then will be his exit strategy?
Mr Hague: It means the implementation of the UN resolution. I cannot stress this strongly enough—that we operate within international law and under the mandate of UN resolution 1973. So success requires a real ceasefire, not the fake ceasefires announced by the Gaddafi regime in recent days, and a real ceasefire means disengaging from areas of conflict, ceasing attacks on civilians, an end to violence and harassing and menacing civilians, and the full establishment, which we have now achieved, of a no-fly zone over Libya. Those are the requirements of the resolution, and that is the mission that we are embarked on. It is too early to say what will happen when that point has been achieved, because we are still working hard to achieve the protection of civilians and the bringing about of a ceasefire, but that is as far as our military mission in Libya goes.
Robert Halfon (Harlow) (Con): The country will welcome my right hon. Friend’s remarks about the tragic loss of the innocent British citizen to Palestinian terrorists in Jerusalem yesterday, but on his remarks about Syria, and given that the Syrian Government attacked a funeral in recent days, what steps can the British Government take to make sure that we do not see a repeat of the tragic massacre in 1982 of thousands and thousands—up to 40,000—Syrians by the Assad regime?
Mr Hague: The steps that we can take at the moment are diplomatic steps to make it clear to the Syrian Government that the forcible suppression of protest and the killing of protesters is wrong, morally and legally, and also very unwise, because experience throughout the middle east is showing that violence on the part of the authorities does not bring about a solution to such issues or to disorder in various parts of the region. We will of course continue to stress that to the Syrian authorities and redouble our efforts to do so.
Graham Stringer (Blackley and Broughton) (Lab): I have received strong representations from the Shi’a community in Cheetham Hill and Crumpsall in my constituency. It is extremely concerned about a possible deterioration of the situation in Bahrain and worried about the protection of the Shi’a community there. Can the Foreign Secretary give any assurances, beyond supporting increased dialogue, about how the British Government could protect the Shi’a community in Bahrain?
Mr Hague:
The sectarian aspect of the problems in Bahrain is deeply worrying, particularly if the stand-off continues and tensions are raised on both sides of that sectarian divide—there are clearly concerns on the Shi’a and Sunni sides of it. It is in the interests of the Shi’a community in Bahrain for a dialogue to be successful, because when we think about it we find that there is no other way forward for Bahrain, other than a constitutional
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settlement between the two sides of that sectarian divide. It is a country with a Shi’a majority, but it has a Sunni minority of about 40% of the population, so they have to find an agreed way forward if the country is to function.
That is why we stress the need for dialogue, but we do not just stress the need for it here: we urge it on the leaders of the Government in Bahrain, through our regular contacts with them, and our ambassador has also urged it through all our contacts—and we have good contacts—with the opposition groups and human rights organisations in Bahrain. We are one of the countries with the strongest such contacts, so we are taking practical action on both sides to encourage dialogue.
Mr Deputy Speaker (Mr Lindsay Hoyle): Order. We have quite a few Members standing, so could we have shorter questions and shorter answers? Then we will hopefully get everybody in.
Jo Swinson (East Dunbartonshire) (LD): The scale of the foreign policy challenge in the middle east and in north Africa is immense, with the UN action in Libya and the situation in any one of Bahrain, Syria and Yemen having the potential to become a major crisis. Despite that, will the Foreign Secretary assure the House that he will not take his eye off the ball elsewhere, particularly in providing vital support to the democracy building in Tunisia and in Egypt which is crucial to the future stability of the whole region?
Mr Hague: Yes. My hon. Friend is quite right, because overarching all that we have discussed in today’s statement is what I referred to in the House on Monday: the need for a bold, ambitious and historic programme on the part of the United Kingdom and the European Union to provide a magnet for positive change to the countries of north Africa and the middle east. Although today we are discussing the detail of what is happening in individual countries, that is all under the umbrella of a European policy towards the region that has to be drastically revised to come up with solutions and offers that match the unprecedented—in this century—challenge that we all now face.
Mr Andy Slaughter (Hammersmith) (Lab): With so much international attention focused on Libya for obvious reasons, other regimes in the region appear to think that they can use military force against civilians with impunity. The Foreign Secretary has commented on the matter already, but what specific steps will he take with Syria, which is killing its civilians in Deraa, and with Israel, which is almost daily killing civilians in the Gaza strip?
Mr Hague:
In answer to earlier questions, I have made clear the position on Israelis and on Palestinians, and the need for them all to make the necessary compromises. We have also discussed Syria and the strong messages that we have sent to the Syrian regime, but the hon. Gentleman does not provide an exhaustive list. At this time, Iran has imprisoned opposition leaders and become one of the most oppressive regimes in the
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world. It also has one of the worst human rights records in the world. We will of course vigorously continue to raise those issues as well.
Mr Andrew Tyrie (Chichester) (Con): The Foreign Secretary said that it was desirable for Gaddafi to go. Given what we know about Gaddafi, is it plausible to imply that we can fulfil our humanitarian objectives while he stays?
Mr Hague: I cannot see—so many Government throughout the world have said this so many times over the past few weeks—any peaceful or viable future for the people of Libya if Gaddafi is still there. It is more than desirable; I put that in its politest form. It is essential that he gets out; it is essential that he goes. I hope my hon. Friend will not mistake in any way the strength of our message and the international community’s message on that. Let me also stress, however, as I did in answer to the hon. Member for North East Derbyshire (Natascha Engel), that our military mission is to implement the United Nations resolution, and that we will stick strictly to its implementation.
Mr Dave Watts (St Helens North) (Lab): Given the responses to earlier questions, how would the Government deal with a situation where it became clear that Gaddafi was going to stay in power for the foreseeable future? Would we leave our forces and sanctions in place indefinitely?
Mr Hague: I am not sure that in this situation it is helpful to get into all the hypothetical scenarios of what may come. Clearly, we are planning for scenarios, particularly on the humanitarian and stabilisation side, as I said, but we have to concentrate on the implementation of the resolution and on taking such work forward. A whole variety of scenarios could be foreseen, but to get into providing a commentary and speculating on each of them would be helpful neither to our forces involved at the moment nor in achieving our immediate objectives.
Alec Shelbrooke (Elmet and Rothwell) (Con): May I congratulate the Foreign Secretary on the work that he not just did, but continues to do, with the UN in making sure that the action is wholly legal? It restores faith in this place after the years that have gone by. Has he considered, or has an assessment been made of, the potential situation in Lebanon, and is the diplomatic service in high-level talks with Israel to ensure that that border situation does not exacerbate the situation crossing the region?
Mr Hague: My hon. Friend draws attention to another point of tension in the middle east, one that I discussed intensively with President Assad when I visited Syria at the end of January. Of course, we want to see stability in Lebanon. In particular, we want to see the special tribunal for Lebanon continue to conduct its work, so that it is clear that crimes cannot be committed with impunity there; and of course, we want to see stability on that border. It underlines the importance and urgency of taking forward the middle east peace process, as several other hon. Members have said, because that is one way to bring about a greater assurance of stability between Israel and Lebanon.
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Mark Durkan (Foyle) (SDLP): I join the Foreign Secretary in condemning the terrorist murder in Jerusalem, and equally the deadly attacks on civilians on Gaza.
The Foreign Secretary has said that the conference on Tuesday will be very much aimed at looking at the whole of the UN resolution. The second item of that refers not only to the high delegation from the African Union but to the UN special envoy. It is also the part that refers to a peaceful and sustainable solution. Will he ensure that that is given due consideration on Tuesday, because there needs to be greater understanding about its meaning and its prospects, and we need to ensure that any pursuit of it is not undermined by any military measures undertaken through other mandates in the resolution?
Mr Hague: Yes—basically. It is important to have regard to all elements of the resolution and to ensure that all the international organisations to which the hon. Gentleman refers are involved. I would stress that the creation of a ceasefire and bringing about an end to violence, which is what we are engaged in now—the protection of civilians and implementing those aspects of the resolution—are essential to the kind of work to which he refers, because at the moment there is not the right atmosphere for any of that other work to take place. We will have regard to the whole of the resolution at the meeting in London.
Mr Peter Bone (Wellingborough) (Con): Would the House be correct in interpreting the Foreign Secretary as saying, in effect, that if there was a ceasefire—a real ceasefire—and attacks on civilians ceased and there was no danger to them, a divided Libya would be a successful outcome of the operation?
Mr Hague: No. Of course, we support the territorial integrity of Libya; I stress, though, that it is our military mission that is laid down in the resolution. That is because we will always stay within international law, with international support and with regional support—and that very much continues to be the case. We are not looking for a divided or a partitioned Libya. We want the people of Libya to be able to determine their own future, and it is only in the event of an end to violence, and the ceasefire that the resolution calls for, that they will be able to do that.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op): With specific reference to the Foreign Secretary’s update on the involvement of the Arab League, will he clarify whether the Qataris have been involved in flying over Libya?
Mr Hague: Qatari forces are taking part in the enforcement of the no-fly zone.
Duncan Hames (Chippenham) (LD): In these troubled times, Governments are swift to announce asset freezes for these astonishingly wealthy ruling elites. When a regime ultimately falls, as may turn out to be the case in Libya, what then happens to those assets?
Mr Hague:
These assets belong to the people of Libya, and so in all normal circumstances—if we can describe any of these circumstances as normal—they
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would be available to a future Government of Libya. They are frozen, not confiscated. In this case, of course, they are very substantial. In the UK, we have frozen £12 billion of assets; in the United States, I think there were $30 billion of assets. That just shows that the Libyan people could have a much more prosperous future if they had a more economically open and politically free approach. Those assets are held for them.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC): Now that the no-fly zone is operational, does the Secretary of State agree that there is little justification for the continuation of bombing of Libyan infrastructure and idle assets, and that offensive enforcement of a no-fly zone should be targeted only at mobilised Libyan Government military forces?
Mr Hague: Operations have been directed against military forces or against the command and control of those forces. As my right hon. Friend the Defence Secretary always stresses in our meetings, we take the greatest care to avoid civilian casualties, and there have been no confirmed civilian casualties caused by coalition activities so far. We do everything we can to minimise the risks of that. Certainly, the air strikes and missile strikes that we have authorised are on military targets—on air defence systems, on forces that are threatening the civilian population of Libya, or on the command and control of those systems. Those are all wholly legitimate targets.
Thomas Docherty (Dunfermline and West Fife) (Lab): Given the vital nature of sustaining the coalition, may I press the Foreign Secretary to clarify for the House how often meetings of the coalition will take place, and at what level?
Mr Hague:
As I mentioned earlier, there is a regular meeting in Brussels between contributing nations—representatives of the countries involved. Many of those are, for instance, permanent representatives to NATO. That takes place all the time. We are also, at a ministerial level, in daily touch across the coalition through telephone calls and visits from one country to another. The conference that we will host in London on Tuesday is at the broadest level—the highest strategic level—to look at
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future stabilisation and humanitarian questions, as well as at what is going on in Libya now. I assure the hon. Gentleman that all those things together form a mass of consultation and involvement—with daily conversations with the Arab League, for instance. The Under-Secretary of State for Foreign and Commonwealth Affairs, my hon. Friend the Member for North East Bedfordshire (Alistair Burt), and I speak to Amr Moussa, the secretary-general of the Arab League, pretty much every day. There is extensive consultation.
Dan Jarvis (Barnsley Central) (Lab): May I push the Foreign Secretary a little further on any international stabilisation force? What is the Government’s thinking on which UN agency should lead any post-conflict work, and which individual would lead such a potentially huge task?
Mr Hague: Those are perfectly legitimate questions, but slightly in advance of where we have got to. My right hon. Friend the International Development Secretary is engaged in discussions about that. There are a variety of agencies and a variety of individuals who can lead it. That is one of the things that we will be able to discuss with our partners at the conference next week.
Ann Clwyd (Cynon Valley) (Lab): Next week the Government intend to change the law on universal jurisdiction, making it more difficult to get an arrest warrant in this country for those accused of war crimes. Where is the logic in that?
Mr Hague: The logic is that it will still be possible to get an arrest warrant if there is a reasonable chance of prosecution. It makes this country rather ridiculous if people can get an arrest warrant for people from other countries where there is no realistic chance of prosecution. It is therefore important to change that law. The law as it stands has been abused in relation to visitors from several other countries. It was abused, in my view, when there was a threat to the proposed visit of Mrs Livni to the United Kingdom. She is an Israeli politician of great importance, and a strong advocate of the peace process, but she feels unable to visit the United Kingdom because of that law. If we want, as we do, to be able to engage in pushing forward the peace process, we need such people to be able to visit the United Kingdom.
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Points of Order
1.38 pm
Helen Jones (Warrington North) (Lab): On a point of order, Mr Deputy Speaker. On Tuesday, a member of the trade union USDAW who was attending an event in this House was not allowed to enter because security officials objected to one of the slogans on the board he was bringing in. They did not object to his bringing in a board per se, but merely to the slogan, which said: “Child Benefit Frozen by the Tories”. The USDAW One was kept in a room near the security entrance until I went down to free him, when he was allowed to come through. Will you investigate this matter, Mr Deputy Speaker, and can it be made clear that entrance to this House should be denied only on the grounds of security, and not on the grounds of the views that people wish to express?
Mr Deputy Speaker (Mr Lindsay Hoyle): I am grateful to the hon. Lady for giving me notice of her point of order. This is not a matter on which I can readily comment. I invite her to discuss it with the Serjeant at Arms. As the hon. Lady knows, we do not discuss security arrangements on the Floor of the House, but I hope that some arrangement may be come to.
Ben Gummer (Ipswich) (Con): On a point of order, Mr Deputy Speaker. Following comments made by a senior member of the Opposition Front Bench on the “Today” programme this morning, I wonder whether you could clarify a point of order for me, as a new Member of this House unsure of all its rules. I know that it is not in order to accuse an hon. Member of lying following comments made inside the Chamber, but I wonder whether it is in order to accuse an hon. Member of lying on the basis of comments made outside the Chamber.
Mr Deputy Speaker: I thank the hon. Gentleman for letting me know about that point of order. The position on reflections made on Members of the House, and others, is set out on pages 438 and 439 of “Erskine May”. Reflections on Members’ conduct cannot be made in debate unless based on a substantive motion. That applies to reflections made on conduct either inside or outside the Chamber.
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Bills Presented
European Convention on Human Rights (Withdrawal) Bill
Presentation and First Reading (Standing Order No. 57)
Mr Peter Bone, supported by Mr Philip Hollobone, Mr Christopher Chope, Mr Nigel Dodds, Mr Douglas Carswell, Mark Reckless, Richard Drax, Philip Davies and Dr Julian Lewis, presented a Bill to make provision for the withdrawal of the United Kingdom from the European Convention on Human Rights.
Bill read the First time; to be read a Second time on Friday 9 September, and to be printed (Bill 172).
Common Fisheries Policy (Withdrawal) Bill
Presentation and First Reading (Standing Order No. 57)
Mr Peter Bone, supported by Mr Philip Hollobone, Steve Baker, Mr Christopher Chope, Mr Nigel Dodds, Mr Douglas Carswell, Mark Reckless, Richard Drax, Philip Davies, Andrew Percy and Dr Julian Lewis, presented a Bill to make provision for the withdrawal of the United Kingdom from the Common Fisheries Policy.
Bill read the First time; to be read a Second time on Friday 21 October, and to be printed (Bill 171).
European Union (Freedom of Movement) (Amendment) Bill
Presentation and First Reading (Standing Order No. 57)
Mr Peter Bone, supported by Mr Philip Hollobone, Mr Christopher Chope, Mr Nigel Dodds, Mr Douglas Carswell, Mark Reckless, Richard Drax, Philip Davies, Zac Goldsmith and Andrew Percy, presented a Bill to make provision for the United Kingdom to establish immigration controls for European Union nationals independent of the European Union.
Bill read the First time; to be read a Second time on Friday 25 November, and to be printed (Bill 170).
European Union (Exemption from Value Added Tax Regulation) Bill
Presentation and First Reading (Standing Order No. 57)
Mr Peter Bone, supported by Mr Philip Hollobone, Steve Baker, Mr Christopher Chope, Mr Nigel Dodds, Mr Douglas Carswell, Mark Reckless, Richard Drax, Philip Davies and Zac Goldsmith, presented a Bill to make provision for the United Kingdom to set Value Added Tax rates without regard to the rules set by the European Union.
Bill read the First time; to be read a Second time on Friday 20 January 2012, and to be printed (Bill 169).
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Ways and Means
Budget Resolutions and Economic Situation
Amendment of the Law
Debate resumed (Order, 23 March).
(1) That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance.
(2) This Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—
(a) for zero-rating or exempting a supply, acquisition or importation,
(b) for refunding an amount of tax,
(c) for any relief, other than a relief that—
(i) so far as it is applicable to goods, applies to goods of every description, and
(ii) so far as it is applicable to services, applies to services of every description.—[Mr George Osborne]
1.41 pm
Ed Balls (Morley and Outwood) (Lab/Co-op): For a fleeting moment, I thought that I was in the wrong debate. It is always interesting to hear proposals put before the House by the hon. Member for Wellingborough (Mr Bone).
Twelve months ago, at the time of last year’s Budget, unemployment was falling, growth was rising, inflation was low and stable, and we were on track to halve the deficit in four years. Indeed, because more people were in work, paying taxes and not receiving benefits, borrowing ended up £12 billion lower last year than was forecast the autumn before. However, there was still a long way to go. Following the biggest global financial crisis of the past century, we were getting back on the right track to get the deficit down and to restore our economy to sustainable growth.
One year on, the economic context for this Budget is radically different. Inflation is up to 4.4%, increasing prices for everyone and threatening a rise in mortgage rates. Unemployment, which was falling, is now rising to its highest level for 17 years. Consumer confidence has seen its biggest fall for nearly 20 years. Our economy, which was growing, has ground to a halt according to the latest figures. Just a few months ago in the autumn, we were told by the Prime Minister, among others, that the economy was out of the danger zone. However, on growth, inflation and unemployment, it appears that we are now re-entering the danger zone.
The question that families and businesses up and down the country will be asking is what changed over the past 12 months. Let me set out for the House what did change over the past 12 months. Yes, commodity prices have gone up. Yes, world oil prices are higher. Yes, we had a bad winter. However, other countries such as America, Germany and France have been similarly affected by higher oil and commodity prices and by bad weather, and their economies are still growing, unlike the British economy. Germany had worse snow than Britain, there was a big freeze in France and the US had the worst blizzards for decades, but their economies grew in the fourth quarter of last year. While our
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growth forecasts have worsened, theirs have improved. The German economy is forecast to grow more strongly than it was last year, as is the American economy. Growth in the world economy has been revised up. Which is the major economy that is now downgrading its growth forecasts? It is the United Kingdom.
Matthew Hancock (West Suffolk) (Con): Will the right hon. Gentleman accept and welcome the fact that the British economy is growing faster than the EU average, or will he continue to talk down the economy?
Ed Balls: On the latest figures, the British economy was not growing at all—in fact, it had contracted by 0.6%.
I see the hon. Gentleman’s press releases regularly. They come across my desk two or three times a day. I want to give him some support. [ Interruption. ] I want to give him some support. The hon. Gentleman has a campaign to reverse the cancellation of funding for a dilapidated school in his constituency following the cancellation of Building Schools for the Future. I am right behind him. He has called for a new pedestrian crossing and to unblock the money for it, which is being blocked by a Tory council. I am with him. He has campaigned to keep his local library open. I am right behind him on that one. He wants to keep Thetford forest safe. Yes, I am with him on that one. He asks how we can deal with the pressures on the voluntary sector. I have to say, I think that he is in the wrong party.
Under Labour’s plan, the economy was set to grow strongly. [ Interruption. ] I have just given the hon. Gentleman more publicity than he had in three months from all those press releases.
Ben Gummer (Ipswich) (Con): On the Labour plan, the right hon. Gentleman said this morning on the “Today” programme that we went into the recession with a low deficit. Is an average deficit of 2.9% low in his mind, or was that a mis-speak?
Ed Balls: I do not want to give the hon. Gentleman an economics lesson, but he needs to be able to differentiate his deficits from his debts. The fact is that we went into the downturn with a low deficit. We were borrowing to invest. Our national debt was lower than that of America, Germany, France and Italy, and lower than the national debt that we inherited from the Conservatives. We will not take any lectures from them on fiscal profligacy. Who was it who raised taxes 22 times in the 1990s?
Under Labour’s plan, the economy was set to grow strongly, unemployment was falling, and we were on track to halve the deficit in four years. Everything has now changed. But what changed? The change was the arrival of a new Conservative Chancellor who was determined not to halve the deficit in a Parliament, but to eliminate it entirely with an immediate hike to VAT, the deepest spending cuts our country has experienced in 70 years and the largest spending cuts of any major country in the world. America has a big deficit, but it is cutting it at a steadier pace and keeping its jobs programme in place. Its economy is now growing strongly and unemployment is falling.
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Mr Peter Bone (Wellingborough) (Con): Will the right hon. Gentleman give way?
Ed Balls: In a second, but I certainly will.
In Britain, we have to make some tough choices to get the deficit down. That means fair tax rises and spending cuts, but the Chancellor’s policy is going too far and too fast, and we are paying the price in lost jobs and slower growth.
Jesse Norman (Hereford and South Herefordshire) (Con): I am not sure quite which hallucinogenic substances are being ingested on the Opposition Benches, but if I may ask a question—
Mr Deputy Speaker (Mr Lindsay Hoyle): Order. I think that we will reconsider the suggestion about drug taking.
Jesse Norman: I am happy to withdraw the suggestion and to make it clear that the substances in question were not hallucinogenic. May I simply ask the shadow Chancellor—
Mr Deputy Speaker: Order. Is there a suggestion that my ruling was wrong?
Jesse Norman indicated dissent.
Mr Deputy Speaker: I take it that you have withdrawn the suggestion, Mr Norman. I accept that. Are you now going to pose a very quick question?
Jesse Norman: Will the shadow Chancellor enlighten us on why WPP left this country under the last Administration, and why it has now returned, as has been announced in the news today?
Ed Balls: I am very pleased that WPP has returned to this country, and I am very disappointed about the 3,500 jobs lost at Pfizer in Kent. That is why we need to be careful about how we proceed.
I have to say that I have never in my life taken a hallucinogenic substance. I am happy to take any intervention from Government Front Benchers on that subject.
Mr Bone: I am grateful to the shadow Chancellor for giving way; he is being extremely generous, as always.
Why should we take any lectures from Labour on unemployment, when every single Labour Government have been kicked out with a higher level of unemployment than when they got into power, and when the last Government doubled unemployment in Wellingborough?
Ed Balls: It is a bit rich to have a lecture from the hon. Gentleman, who used to say that the national minimum wage would cost millions of jobs. We, unlike Members on the Government Benches, do not think unemployment is a price worth paying.
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The Chancellor is going too far and too fast, and we are paying the price in lost jobs and lost growth. That is because a vicious circle is now taking hold in our economy. If the economy is not growing and hundreds of thousands of people lose their jobs, then fewer people pay tax, more people claim benefits and it is harder to get the deficit down. By cutting too far and too fast, the Chancellor is not solving the problem, he is making it worse. That was why yesterday, we heard from the OBR that growth had been downgraded for last year, this year and next year; that unemployment was forecast to be higher in every year of the forecast period; and that up to 200,000 more people would be unemployed than the Chancellor said last summer. Our borrowing was coming in £20 billion lower, but the Chancellor has now been forced to revise up his borrowing over the next four years by £45 billion.
The Chancellor said yesterday that he would put fuel in the tank of the British economy. Is not the truth that, as a result of his Budget, it is confidence in the British economy that is now tanking, and he who is running out of fuel?
Mr Brian Binley (Northampton South) (Con): May I remind the right hon. Gentleman that in the mid-1990s my constituency was 440th in the jobseeker’s allowance list, but that by 2010 it was 132nd? Why should my constituents believe him having seen that record of unemployment under Labour?
Ed Balls: Because a year ago unemployment was falling, and now it is rising. [Interruption.] The Chancellor sits on the Front Bench and says, “This is so bad.” Does he mean growth being downgraded? Unemployment going up? I will take his intervention at any point he wants, but if he does not want to make interventions from the Dispatch Box, maybe he should not be doing it from a sedentary position. [Interruption.] If he wants to intervene, I will allow him. I have made my pledge.
None of what I am saying will come as any surprise to the Secretary of State for Business, Innovation and Skills. He warned of it a year ago. In fact, I remember standing with him on the green on Budget day a year ago, and he said:
“We must not cut Government spending too soon and risk plunging a fragile recovery back into recession. Cuts without economic growth will not deal with the deficit”.
Wise words, and how right he has proved to be. Even after the election, and even after his colleagues decided to bury their worries and go along with immediate spending cuts and a VAT rise, the Business Secretary was still warning of the risks to come. He said on “Newsnight” last May, after the general election, that the speed of the cuts had to be based on the condition of the economy. He said:
“These things will have to be judged at the time of the Budget, and of course I don’t present the Budget personally but I’ll make an input into it.”
“Over the course of this Parliament judgments about the speed of cuts have got to take account of the changing conditions that are coming, and that is basic economic policy based on evidence, which is what I’m in favour of…We don’t know what the impact of these cuts will be on employment.”
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Wise words again, and he was right. The cuts are too fast and too deep, confidence is tanking and unemployment is up. This Budget was the time to change course, before it was too late. Sadly, the Business Secretary has not been heard.
Dr Thérèse Coffey (Suffolk Coastal) (Con): Does the right hon. Gentleman not accept that public spending is not actually falling but continuing to rise? The sad thing is that we all have to take our share in bearing more than £120 million a day in interest payments on the debt left behind by the last Government.
Ed Balls: The hon. Lady is right—deficits went up. They went up in Britain, Germany, France, America and all around the world. They did not go up because spending or the national debt was too high in Britain. That is a Conservative myth put about to try to justify the Government’s cuts to police, the national health service and schools. The reason deficits became big was that we had the biggest global financial crisis in 100 years. If we had not let the deficits go up when the tax revenues went down, it would have been not a world recession but a world depression. It was only our actions—here in Britain and around the world—that saved our financial system from disaster. We nationalised the banks, let the deficit go up and got unemployment down—all of which was opposed by the present Chancellor.
Michael Fallon (Sevenoaks) (Con): If all that is true, can the shadow Chancellor explain why the deficit here was the worst in the G20?
Ed Balls: The hon. Gentleman knows the answer. We went into the downturn with a deficit that was low and covered our borrowing for investment. [Interruption.] It was low. We had low national debt—lower than France, Germany or Japan. We then had a global financial crisis, which hit the American and British economies hard. Our economy had a larger financial services sector than others—that was precisely why we did not join the single currency in 2003—so of course America and Britain were harder hit than other countries by the financially driven recession.
If we had not let the deficit go up, which some hon. Members now seem to think we should not have done, the result would have been unemployment above 3 million rather than it peaking at 2.5 million. The economy would have gone from recession into depression. That is the economics of the situation. The question is, who did a good job of getting the deficit down? We had the deficit coming down, unemployment coming down and growth going up, but a year later we have unemployment going up, inflation going up and the economy ground to a halt. As a result, borrowing will be £45 billion higher, not lower.
John Mann (Bassetlaw) (Lab):
My right hon. Friend may be able to assist me with some statistics that are missing from the Government’s document “The Plan for Growth”. I can see nothing in it about what has happened in the past 15 years. The chart showing growth under the last Government is missing. Similarly,
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there are no international comparisons showing what is happening to our growth compared with other countries, and what was happening under the last Government.
Ed Balls: The reality was that we had a long period of sustained growth and low inflation, and we reversed the high unemployment of the 1980s and 1990s. We put behind us the instability of the Tory years by making—[Interruption.] If the Chancellor wants to make an intervention, we are still waiting.
The Chancellor of the Exchequer (Mr George Osborne): Is the shadow Chancellor saying that the last Government abolished boom and bust?
Ed Balls: I noticed that the Chancellor did not choose to intervene with the answer that I was hoping for, but there we are. The fact is, when we came into government in 1997, we made the Bank of England independent and he opposed it.
We had a period of sustained growth and rising employment. The Conservatives said that the national minimum wage would cost jobs, but employment went up. Under the Conservatives child poverty doubled; under Labour it came down.
We had the longest sustained period of investment in the NHS since the second world war, but there was a global financial recession, which affected countries around the world. Who dealt with that? The British people should be thankful that it was not the Chancellor and his friends, because opposing nationalisation of the Royal Bank of Scotland and Northern Rock would have been a catastrophe for the British economy.
Mr Mark Field (Cities of London and Westminster) (Con): Although the right hon. Gentleman is right to say that there was global downturn, and he also rightly points out that there had been continued growth between 2000 and 2007, in each and every one of those years a deficit was being run up. That is our point—an unsustainable deficit was run up in the good times, before the global crisis began.
Ed Balls: I have studied the Chancellor’s new fiscal mandate. He says that he wants to get the national debt on a downward trend by the end of the Parliament. We had national debt on a downward trend in 1997, 1998, 1999, 2000 and 2001. Before the financial crisis hit, our national debt was lower than the debt we inherited from the Conservatives. [Interruption.] Hon. Members are barracking—but let me answer the hon. Gentleman, because at least he asked a serious question, unlike some of the nonsense we have heard from other hon. Members on the Government side of the House. The second part of the fiscal mandate is to get the budget, excluding investment—the current balance—back into balance by 2015. Yet that is the golden rule.
The golden rule is getting, over the cycle, the current budget, excluding investment, into balance. That never happened in the 1980s and the 1990s, but it happened for a sustained period under Labour. However, it is true that, throughout that period, we borrowed to invest. Of course we did. Our infrastructure—our schools and hospitals—had not been invested in for 20 or 30 years.
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Throughout the period before the financial crisis, national debt was below the level that we inherited from the previous Conservative Government.
Elizabeth Truss (South West Norfolk) (Con): Is not it the case that in 1997 Labour cancelled the road-building programme, which would have been an investment in infrastructure?
Ed Balls: If I remember rightly, our mistake was not to reverse the cancellation of the road-building programme that we inherited from the previous Government. We inherited an environment Department that did not want to build roads and a transport Department that had given up asking for transport investment. When we came into government it took time to build schools, because in the previous 18 years so few new schools had been built that local authorities had lost the capacity and the ability to build them. That is the reality.
Ed Balls: I will make a bit more progress before giving way.
Let me return to the Business Secretary, because he was wise to say that those matters should be judged at the time of the Budget, based on the economic conditions. That is why we have argued that the Budget was an opportunity to change course from the reckless cuts. The problem is that the Business Secretary has not been heard. The blinkered Chancellor is ploughing on regardless, oblivious to what happens around him.
The Business Secretary needs to change tack. “Newsnight” is clearly not the way to get his message out. It does not get him on to the front pages; it does not make people listen to him. Why does he not do what he did last time? Perhaps he needs to call in some more young constituents for another candid conversation, another avuncular chat. It worked last time. The Chancellor certainly knew about his views on media ownership and News International. It is a pity he did not also share his thoughts on the risk to growth and jobs from the Chancellor’s reckless cuts.
The Business Secretary knows that the Chancellor is taking a massive and reckless gamble. He knows that it is the wrong thing to do, just as he knows that scrapping the future jobs fund and education maintenance allowances, hiking up tuition fees, raising VAT and cutting benefits for disabled people is wrong. It is one thing to want to be in power, but sacrificing one’s principles and beliefs for power is quite another. They used to call him Saint Vince, the wise economist. He had a reputation for telling it like it is. Why does he not tell us what he really thinks today? He knows that the economic strategy of the Government of which he is now a part is deeply flawed, misguided and unfair.
Lorely Burt (Solihull) (LD): The right hon. Gentleman is right—the Business Secretary is very wise. He warned the right hon. Gentleman when he was a business Minister with responsibility for the City that there was far too little regulation for the banks. Does he now regret the fact that he said at the time that we should have light-touch regulation for the banks, which eventually proved so disastrous?
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Ed Balls: We all look back and say that we should have been tougher on the banks. Of course we should have been. The irony is that the Business Secretary is in government, sitting next to a Chancellor who criticised us in 2005 and 2006 for being too heavy-handed in our regulation of the banks. We were told that too much heavy-handed regulation from Europe was stifling the competitiveness of the City of London. The Conservative party called for light-touch regulation: that was the reality at the time.
As for the Business Secretary’s other regular critique, that we allow too much household debt in our economy, it was interesting to note from looking at the OBR Budget Book last night that household debt as a percentage of income is now forecast to rise next year, the following year, the subsequent year, the year after that and the year after that—five years of household debt as a percentage of income rising every year, while the savings ratio stays low and stable. He is part of a Government that are certainly not delivering what he said was the prospectus for the future.
Mr Edward Timpson (Crewe and Nantwich) (Con): The shadow Chancellor is keen to tell us what happened to the national debt between 1997 and 2001, but is silent about what happened to it after that. Perhaps he could enlighten us about what happened to the national debt between 2001 and when he left office?
Ed Balls: I have not been silent at all. I said that there was a global financial crisis, which meant that our deficit and our debt rose, as it did in America, France, Germany and Japan. It is a good job that we went into the crisis with a lower national debt than we inherited, and a lower level of national debt than France, Germany, America and Japan. It is a good job that we did not listen to the Conservative party, or our debt would have been higher, our unemployment would have risen and we would still be in a depression.
Jacob Rees-Mogg (North East Somerset) (Con) rose—
Jacob Rees-Mogg: Thank you. I am grateful for such widespread support.
May I draw the shadow Chancellor’s attention to page 8 of the Red Book? He referred to private sector debt, which rose from 200% of GDP to 450% of GDP when the Labour Government were in office. That fundamental instability led to our troubles. It was great while debt was rising—it led to full Government coffers—but it got out of control and that is the root cause of the problem.
Ed Balls: As I said, the OBR says that subdued consumption outlook requires households to dip into their savings again in 2011, so the savings ratio continues to fall back from its post-recession peak. It also says that the savings ratio is now forecast to be historically low. Household debt as a percentage of income rises every year from 2010, even though it fell in 2009-10. Those are the facts.
Yesterday we needed a plan from the Chancellor to help hard-pressed families facing the squeeze, to get people back into work and to get our economy growing
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again. That is what we needed, and that is what we did not get. There was no change to a deficit reduction plan that is faster than that of any other major economy in the world. It pushes growth down and unemployment up. The Chancellor fails to realise that cutting too deep and too fast will make it harder to get our deficit down. He also failed to understand that while he gives the banks a tax cut this year, ordinary families are being hit hard now. It was a smoke-and-mirrors Budget.
Rory Stewart (Penrith and The Border) (Con): Will the right hon. Gentleman please share his plan and growth strategy with us?
Ed Balls: I will gladly share our plan. First, the economy was strengthening and unemployment was falling—[Interruption.] The Chancellor’s Parliamentary Private Secretary shouts too loudly. Why does he not calm down a little? That may be how they do things in Chelsea and Fulham, but we do not do that in the House of Commons.
Unemployment was falling and growth was rising because we were halving the deficit over the four years. The Chancellor has gone from halving the deficit to trying to get rid of it entirely in four years, by implementing the largest cuts to spending and tax rises of any economy in the world. It is not working. In fact, we heard today that Moody’s, the credit rating agency, is looking at whether it needs to downgrade the British economy because of the threats to growth following yesterday’s Budget.
Secondly, Labour would repeat the bank bonus tax now, raise £2 billion for a second year, and use that to build 25,000 more homes and create 110,000 more jobs for young people who are now not going to get help from the future jobs fund. That was our second plan—and that option was entirely open to the Chancellor, but he chose not to repeat the bank bonus tax, but instead to give a tax cut to the banks.
Thirdly, we would have reversed the rise in VAT on fuel, because the Chancellor’s 1p cut in the Budget—there is still doubt whether that will actually get to motorists—is outweighed by the 3p a litre rise in fuel prices because of the VAT increase that he introduced just a few weeks ago. We cannot blame the Chancellor for the rise in world oil prices resulting from the middle east crisis. He made the right decision not to go ahead with the duty rise, and we would have done the same, given the level of world oil prices. However, the rise in VAT was a complete own goal. It pushed up inflation and prices and cut family budgets. It was a mistake. It was the wrong tax at the wrong time. The Chancellor should just admit that he got it wrong, go to his European partners and say, “Can I reverse this mistake before it’s too late?”
That is our plan, and the Chancellor—[
Interruption.
] Government Members shout, “Is that it?” but they do not understand the economics of this and the previous Budget. Halving the deficit over four years was ambitious but deliverable. Eliminating the budget deficit in four years means a massive fiscal contraction. Unless we suspend all the laws of economics, assume that no international evidence counts, and believe that fiscal multipliers do not count in our kind of economy, that kind of contraction in fiscal policy and its impact on
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the public and private sectors is crushing. Only Greece is trying to go faster. We have already seen the biggest fall in consumer confidence for 20 years, and unemployment is up before the cuts have really started to bite.
People are looking to the future and are worried, and the Chancellor is not listening. In his world, that is not a concern. He does not worry about what is happening out there in the real economy but for businesses and families up and down the country, the prospect of rising unemployment year by year, of slow growth last year, this year and next year, and of falling confidence, is a real concern. My advice to the Chancellor is this: take the blinkers off and look at what is actually happening in our economy. It is hurting, but it is not working.
Stephen Hammond (Wimbledon) (Con): We just heard that the shadow Chancellor’s plan is to halve the deficit over the lifetime of this Parliament. For clarity’s sake, will he tell us what the implications of that would be for the cost of borrowing? What advice has he taken on the yields on 10-year gilts, which would clearly move if we cut borrowing?
Ed Balls: The hon. Gentleman needs to look at what is actually happening to the yield curve, the term structure and long-term interest rates. He will know that before the election, when the previous Government had a plan to halve the deficit over four years, the long-term interest rate level was pretty much identical to the rate now. That is the fact. Our debt maturity is long, our long-term interest rates are low, and there has been no problem getting our gilt auctions away at any point in the last two or three years. The idea that there was some big impending crisis is a myth invented by the Chancellor of the Exchequer and the leader of the Liberal Democrats to justify the biggest and most unfair U-turn on a manifesto that we have seen in the last 100 years of British political history.
Duncan Hames (Chippenham) (LD) rose—
Ed Balls: I will take an intervention from the hon. Member for Chippenham (Duncan Hames) now, but I will come back to the hon. Member for West Suffolk (Matthew Hancock)—definitely.
Duncan Hames: The shadow Chancellor wants to slow the pace of spending cuts, so will he tell us what spending cuts he wants in the coming year?
Ed Balls:
I think the rise in VAT was a mistake, and I think the hon. Gentleman used to agree. I think that spending cuts this year are a mistake, and I think he used to agree with that too. I would halve the deficit over four years, and borrowing would have come in £20 billion lower—[
Interruption.
] I will answer the question. I set out more detailed spending cuts—in schools—than any other Cabinet Minister at that time. We said we would cut £1 billion from policing, and, for example, that we would go ahead with the disability living allowance gateway reforms. However, the scale and pace of the Government’s cuts are too deep and too fast, which is destabilising our economy. We were right to say, “Don’t make the cuts until the recovery is secure.
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If you make cuts on this scale before the recovery is secure, what do you end up with? No recovery at all.” That is the situation today.
Ed Balls: Let me turn to the detail of the Budget for a second more, but I look forward to hearing from the hon. Gentleman. I only read out five of his Labour campaigns, but maybe he will enlighten us on a sixth in a moment.
Albert Owen (Ynys Môn) (Lab): The shadow Chancellor was right to remind the Liberal Democrats that they once thought that a VAT increase would be a bombshell, but does he also remember the Prime Minister, when he was Leader of the Opposition, saying that VAT was a regressive tax that would hit the poor the hardest, and that he had no intention of increasing it?
Ed Balls: I also remember the Chancellor saying that the Budget was progressive, and it turned out to be regressive, but my hon. Friend is being unfair to Liberal Democrat colleagues. They were not against a VAT rise; they were against a Tory VAT rise. Nick Clegg’s general election leaflets said, “Stop the Tory VAT bombshell,” and he never said, “Stop the Tory-Liberal Democrat VAT bombshell,” so my hon. Friend is being a little harsh on colleagues.
Matthew Hancock: The right hon. Gentleman talks about international evidence, but why should we listen to him rather than to the OECD, the International Monetary Fund, the European Commission and all major business organisations, which support the concept of dealing with our debt?
Ed Balls: The hon. Gentleman needs to be careful with boastful interventions. Let me read out a quotation:
“The measures we have taken have been commended by international bodies such as the European Central Bank, the European Commission, the IMF and the OECD. They have also won the approval of the international markets.”
That is the financial statement of 9 December 2009 from the Irish Finance Minister. He is no longer in office, because he had OECD and IMF approval for a policy that drove unemployment up, growth down, confidence down and the deficit up. Does that not sound somewhat familiar? [ Interruption. ] If the hon. Gentleman wants to make a third intervention, I shall happily take it, but perhaps he should reflect a little further before he puts out his next press release.
The Chancellor said yesterday that this was not a tax-raising Budget and he did not need to ask for a penny more. However, when we study the details of the Red Book—in table 2.1 on personal tax, the tax cuts from the personal allowance and the tax increases from the switch to the consumer prices index, and changes to national insurance contributions—we find that the tax increases are bigger than the tax cuts. That is the fact. The increase in the personal allowance, which the Liberal Democrats boasted about with such enthusiasm yesterday, is completely crushed by the CPI increase: that is there in the Red Book. The Chancellor said that he would not come along and mislead the House in his Budget, but that is exactly what he did.
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We also found out that because the Government changed the indexation of national insurance and the personal allowance, and because many people in our country—disproportionately women—are in part-time work and on low wages, and pay national insurance but not income tax, yesterday was a tax rise for 400,000 of the lowest-paid workers in our country, disproportionately women and part-time workers. That never made it into the Chancellor’s speech, nor did he say that the personal allowance changes were worth £48 a year, but the VAT rise will cost the average family with children £450; that never cropped up in the speech either. Nor did he point out that the upgrading of the GDP deflator—the inflation measure—means that despite the Prime Minister’s promises last year that NHS spending would rise in real terms year by year, it will actually fall year by year. That is another broken promise from the Prime Minister.
Many business people will be asking, “Why didn’t we have a Budget that did a bit more for growth?” It looks as if I was right in Treasury questions on Tuesday when I suggested to the Chancellor that his growth strategy was so flimsy he needed to beef it up, because he has now cut corporation tax by 1p, which is welcome, and is paying for it through measures on tax avoidance, which is also welcome. However, paragraph B.13 of the OBR’s Budget document reads:
“The OBR was notified of the change to corporation tax and the 1p cut in fuel duty…too late to incorporate any indirect effect of these measures in the economy forecast.”
I do not think he told the OBR until the afternoon before. However, it was able to give some clarity. It said that it believed that
“any such effects would have been minimal.”
This growth strategy has been produced with fanfare and much delay, but since publication his own independent auditor, the OBR, has said that it will have no impact on growth and jobs in our economy. Is that not the reality?
An alternative was open to the Chancellor, and it was one that I have set down. He could have decided to follow the American example and cut the deficit at a steadier pace in order to strengthen growth and lower unemployment.
Angela Smith (Penistone and Stocksbridge) (Lab): Moody’s credit rating agency warned today that the UK’s triple A credit rating could be affected by slower growth. Does that not undermine entirely the Conservative party’s too-fast, too-deep cuts strategy and show that growth is the important aspect of this country’s economic policy?
Ed Balls: I accept my hon. Friend’s point. I was tempted earlier to go down that road, because the fact is that in 2006, 2007 and 2008, the credit rating agencies entirely failed to spot the financial crisis in the first place. The Conservative party and the Liberal Democrats are keen to quote credit agencies when they support their case, but not when they do not support their case. The truth is that the credit agencies failed in the crisis, and quoting them at all is very risky indeed.
As I said, the Chancellor should have adopted our plan for deficit reduction, growth and jobs. He also ought to have adopted our plan to repeat the bank bonus tax for a second year, and used it to give immediate
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help to young people and jobs, rather than cancelling—in fact abolishing—the future jobs fund. As I have also argued, he should have cut VAT on fuel. That would have been a fairer and more substantial approach. However, the fact is that this year, as a result of the Chancellor’s tax decisions in the Budget, fuel tax will not fall; it will rise by 2p per litre. That is the reality.
The Chancellor should have reversed the VAT rise. That was a big mistake. Two years ago, when we proposed a cut in VAT, which got growth moving and unemployment down, he said, “People won’t notice the VAT cuts.” I am sure that he did not notice them himself, and he probably thinks that people will not notice the VAT rise either. The fact is, however, that with consumer confidence and growth down, and unemployment up, people are noticing what is happening and what he is doing. That is why they are so worried.
Mr Dave Watts (St Helens North) (Lab): Does my right hon. Friend agree that the Government are yet to spell out how they will ensure that the increases for fuel companies are not passed on to motorists?
Ed Balls: There has been some confusion on this over the past 24 hours. We know from the OBR that it was told of the 1p cut in fuel duty so late that it could not even get it into its economic forecast. The Chancellor realised at the weekend that he was behind the curve, that he was not setting the agenda, that living standards were a rising issue and that Labour was making the case for fuel tax cuts, so he jumped in late with his 1p cut, but he did not have the courage to reverse his 3p rise. That is the reality. Had the Chancellor done things properly—I can give him some advice on this, because I know how to do things properly on North sea oil tax—he would have consulted the oil companies in plenty of time, explained what was happening, made the case, got their agreement, and then announced the policy in the Budget. I think that many of the oil companies did not find out about it until it was announced in the Budget. That was the problem.
Yesterday afternoon the Chief Secretary to the Treasury—as always, he is not here—was on a television programme about the Budget. He was asked, “How will you stop the oil companies simply passing on the cost in consumer prices?” He said that he did not know, but that he would monitor the oil companies closely. That was the problem. The Government did not do the work, and this was cobbled together at the last minute. That is why it has caused so much confusion and consternation in the past 24 hours. He needed a headline and a flourish to his speech, but he did not want to announce that they were cutting the winter fuel allowance—an announcement we would never have had at the end of a Labour Budget—so instead he announced a cobbled-together, last-minute 1p cut in petrol tax.
The Chancellor is not listening.
Mr George Osborne: I can see that the right hon. Gentleman wants to get this point on the winter fuel payment going. Will he confirm, therefore, that I am only following the plan set out in the last Labour Budget on the winter fuel payment?
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Ed Balls: A plan was set out in the last Labour Budget for a 1p rise in petrol tax, but the Chancellor reversed it. If he could reverse it on petrol tax, why could he not reverse it on the windfall tax? The fact is that it was not his priority. When we entered government in 1997, what did pensioners get? They got £10 in a Christmas bonus. What did they get from Labour? They got £200, and the poorest pensioners got £300. What did we do? We confirmed in Budgets that we could carry on with the £300 in a sensible and proper way for a period of years. It would have been for the Chancellor to decide in this Budget what then to do, but I can tell hon. Members that a Labour Chancellor would have extended it. Instead, a Tory Chancellor cuts it. That is the truth.
The Chancellor is not listening. He just does not get it. He does not get how hard people are being hit by higher VAT and cuts in local services. He does not get what it means to face the fear or reality of unemployment. For the sake of our country’s future, he needs to think again and start putting jobs first—and he needs to start doing that right now.
2.27 pm
The Secretary of State for Business, Innovation and Skills (Vince Cable): I want to talk about how we progress from the painful but very necessary deficit cuts to achieving growth that is balanced and sustainable. However, I shall start by addressing the shadow Chancellor’s attack. His starting point seems to be that the past is another country, and that 2010 was year zero. I am afraid, however, that all his rather bumptious self-confidence cannot conceal his massive legacy: the biggest deficit in the G20, an overweight and damaged banking system, and an economy that was hopelessly unbalanced.
The right hon. Gentleman’s criticism is built around the downgrading of the growth forecast, but before we get any more of this “Growth is down! Growth is down!”, let us remember what happened to growth in the last two years of the Labour Government—it was down to minus 4%. By the last quarter of the Labour Government, GDP was back where it was in 2006. Indeed, if we look at growth on a per capita basis—that is, living standards—we find that five years of Labour Government produced a decline in per capita incomes in Britain. The only time in history that this had happened previously was shortly after the first world war, so we do not need any lessons on growth. As the Chancellor pointed out yesterday, the European Union and the IMF has Britain’s projected growth comparing favourably with that of France—the shadow Chancellor’s favourite country—Italy, Spain, the eurozone and the whole of the European Union of 27. Our projection is better than any of those.
Mr Chuka Umunna (Streatham) (Lab): This morning at the Treasury Committee, the former chief economist in the Cabinet Office, Jonathan Portes, remarked that—as my hon. Friend the Member for Bassetlaw (John Mann) has also pointed out—“The Plan for Growth” that the Business Secretary has published does not show the average growth from 2000 to 2010. Why is that? Presumably the Business Secretary knows the numbers, so does he agree that the performance was not terribly bad, which is precisely what Jonathan Portes said?
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Vince Cable: For six of those 10 years, we were dealing with an artificial boom based on a property bubble, an overweight banking system and, as the shadow Chancellor has acknowledged, gross levels of personal debt. That was why there was rapid growth in the early part of that period. However, if we look at that period as a whole, including the last period of Labour Government, we see a decline in per capita income that was unprecedented even in 20th-century history. That is the record that we are dealing with.
Let me deal with the shadow Chancellor’s pessimism about employment. We are all rightly concerned about unemployment—we have to be—but let us remember that last year growth was 1.3%, which is lower than the projected growth for the coming year. In that time, there were 428,000 new private sector jobs—300,000 were in the second half of last year—which by a long way more than offset the 132,000 job losses in the public sector, many of which, incidentally, were a result of the cuts that the last Government were starting to introduce. Our responsibility—this was the purpose of the Budget—was to ensure that we have sufficient private sector confidence so that companies hire people and invest.
Mr Watts: If the economy delivers lower growth, as is likely, and if unemployment continues to increase, does the right hon. Gentleman believe that the Government need to adopt a plan B?
Vince Cable: We are sticking very firmly with plan A, because plan A is right. The hon. Gentleman will know that flexibility is built into economic management, primarily through monetary policy, and that is the mix that we will continue.
The shadow Chancellor is right. There is of course concern about a squeeze on people’s living standards, and we are concerned about that no less than he is. The Chancellor has tried to alleviate the problem through action on fuel duty and by lifting the income tax threshold. I would like to spend a few moments looking at the two proposals that the shadow Chancellor has made—he has repeated them today—to deal with the problem. The first proposal turned out to be illegal under European Union law. Like me, he is a good European—we would both like to observe European Union law—and to change that law would have taken roughly five years, which will not provide much relief.
After the fiasco of the shadow Chancellor’s “VAT relief on petrol” idea, his other big idea, which he elaborated on today, was to finance jobs through the tax on bank bonuses. I remind him that he and I have some form on this issue. When the last Government were in power, I was critical of the idea of taxing bank bonuses as I did not think it would work. It is to the credit of the former Chancellor that, through his ingenuity, he made it work. In the year in which the measure operated, he raised £2.5 billion—not the £3.5 billion that is often cited, because that takes no account of the offset in corporation tax. Because of his skill in making the bonus tax work, we have to listen to his advice when he says:
“I think it will be a one-off thing because, frankly, the very people you are after here are very good at getting out of these things and…find all sorts of imaginative ways of avoiding it in…future”.
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He has counselled very strongly against a repeat of the bonus tax. He was—to use the word—wise.
There is another reason why I am surprised that the shadow Chancellor has returned to the bonus tax issue. He may remember that back in 2006, when he was the City Minister, a big debate opened in the Labour party when Bob Diamond was having one of his early years of extremely generous bonuses. The deputy leader of the Labour party declared “war” on “fat City bonuses”. She was promptly slapped down by the then City Minister, who reminded us that such pay-outs were good for tax revenues and for job creation. In that particular Labour party debate, I was very much on the side of the deputy leader.
If the previous Government are serious about taxing banks, why did they allow a situation to arise in which only two of the 15 major banks had in place an agreement to stop large-scale tax avoidance? We have now stopped it. Every single bank is now covered by the HMRC code on tax avoidance. Additionally, we have put in place the levy on banks’ balance sheets, raising £10 billion, which is four times as much as the one-off bonus tax would have raised.
Ed Balls: I am concerned by that comment, and I am not sure whether the Chancellor would agree with it. The fact is that hundreds of thousands of people in our country work in financial services, often on low or average earnings of around £20,000 to £25,000 a year. Is the Business Secretary really saying that those jobs are not important, and that job creation in financial services can be dismissed? He is not one of those people who says, “Let the financial sector go to Switzerland”, is he? He is supposed to be the Business Secretary.
Vince Cable: I really do not know what the right hon. Gentleman is talking about. We started by talking about excessive bonuses in one very large investment bank, and he has now extended that to the whole of the financial services sector. Of course that sector is valuable. Of course the jobs and the tax revenue are valuable, but that is not what he was talking about in his ideological dispute with his deputy leader.
Let me return to the right hon. Gentleman’s central message that the Government should abandon, or substantially modify, their fiscal strategy. I shared a platform last week at the London School of Economics with Angel Gurría of the OECD. He was asked what the Government should do. He had a simple message, which was that we should “stick with it”. He is not some pro-coalition politician or right-wing ideologue; he is the head of an organisation representing 25 Governments. Opposition Members should ask themselves—the shadow Chancellor was asked this but he neatly evaded the question—why all the major international institutions, including the International Monetary Fund, the European Commission and the G20, support the strategy that we have adopted. The reason is that they are all painfully aware that we are in an economically dangerous world in which crises of sovereign debt are not very far away.
Ian Murray (Edinburgh South) (Lab):
The Business Secretary is going through a list of international organisations that evidently support his plan. However, as a result of the plan, the UK will have the smallest public sector in the G7 by 2015—smaller even than that
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of America. Does not that tell the right hon. Gentleman, who was on our side of the argument before the election, that this is an ideological attack on public services in this country?
Vince Cable: I cannot see how it can be ideological to have a public sector that, by the end of this Parliament, will have a share of GDP comparable to what it was when the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) became Prime Minister. Whatever criticisms the Opposition might want to make, ideology has absolutely nothing to do with this.
The comments of the international organisations are reflected in those of the business community. The former head of the CBI has often been quoted on this, because he was critical of the Government. He had some strong criticisms, which we have taken to heart. However, it is worth remembering how he started the speech that is now so frequently quoted. He said:
“This coalition Government has been single-minded—some might even say ruthless—in its approach to spending cuts…That policy is strongly supported by business, on the grounds that sound public finances are an essential foundation for a sound economy.”
I want to deal more specifically with the suggestion that we are cutting too much too soon. The shadow Chancellor has quoted me on this, and he is quite right. I said on “Newsnight”, and I will continue to say, that there is a serious economic debate that we must constantly have on striking the right balance between not choking off recovery and not risking a financial crisis. That is the calculation that we are having to make. Our approach has been vindicated by the evidence, and the evidence is the response of the financial markets. The bond yields, which are important not just as an indicator but because they set the cost of capital for business and investment, are 3.5% for 10-year bonds, which is close to the rates in France, Germany, the Netherlands and Sweden, compared with 5.2% in Spain, 7.5% in Portugal, 9% in Ireland and 12% in Greece. That is a fair comparison with what they were a year ago when the Labour party was in power. Since then, the differential has widened by 1.5% in respect of Spain, 3.5% for Portugal and 5% for Greece and Ireland. In real terms, the cost of capital—long-term capital in this country—is now zero. The reason why that matters was summarised many years ago by John Maynard Keynes. Labour Members may revere his memory, as do some of us. During the crisis of the 1930s, Keynes wrote to Roosevelt:
“The turn of the tide in Great Britain is largely attributable to the reduction in the long-term rate of interest.”
That is the basis on which we have to take account of interest rates.
Mr Umunna:
Of course Keynes also said that if the facts changed, he changed his mind. Does the Business Secretary agree with the Energy Secretary who said that the Government should not be “lashed to the mast” of their economic policy? On 29 November, the Chancellor said that he would stick to his fiscal mandate to allow the Monetary Policy Committee maximum flexibility to loosen monetary policy. If inflation remains as per the central prediction at the moment, I see no real prospect of the MPC being able to loosen monetary policy
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further. That means that if growth is sluggish, the Government will surely have to look to a contingency plan. That seems to be what the Energy Secretary was suggesting. Does the right hon. Gentleman agree?
Vince Cable: I am not sure that what Keynes said was a matter of changing his mind in response to a change in fact. He was stating one of the basic principles of Keynesian economics—that the cost of capital has to be kept low.
Mr Pat McFadden (Wolverhampton South East) (Lab): The Secretary of State said that the evidence had borne out his decision to change his mind on the scale and pace of deficit reduction, but what evidence does he need? Since he made that decision, the unemployment forecasts have risen, the inflation forecasts have risen, the growth forecasts have fallen, the debt repayment forecasts have risen, and as for bond yields he has no evidence that at the time of the election they were causing any problem for the UK’s financing of its debt under the last Government. What evidence is there to suggest that he was right to change his mind?
Vince Cable: I do not know when the right hon. Gentleman last opened a financial newspaper. If he had done so recently, he would know that all the countries on the periphery of Europe that have been hit by the rising cost of capital are in very acute financial crisis, which we have avoided. We have German interest rates, and at the same time we are carrying a deficit on the scale of the most debt-ridden economies such as Ireland and Portugal.
Mr Geoffrey Robinson (Coventry North West) (Lab): One thing the Opposition can claim is that there was stability in the bond market, which we have been able to continue this year in order to borrow at reasonable rates. As the Business Secretary knows, directly and indirectly, although we have long-term rates in the bond markets, the main problem is that if small companies can borrow at all—very few of the small and medium sector singled out by the Chancellor and the Government as the key area of expansion are able to do so—it is only at exorbitant rates. What are the Government going to do about it?
Vince Cable: In the earlier part of his comments, the hon. Gentleman was right to acknowledge how important interest rates are. He is also right to say that because of the badly damaged banking system, small companies have an extreme problem with lending. That is why the Chancellor and I have been dealing with the banks to try to get them to reach an agreement, which they now have, to extend considerably the amount of lending to small and medium-sized enterprises. That was one of the earliest decisions we had to make—to focus on access to capital.
While we are dealing with the issue of what has to be cut, I would like to ask the Opposition what they would do. The right hon. Member for Wolverhampton South East (Mr McFadden) wants us to run a bigger deficit. What would the Opposition cut? It is a question I often pose to my opposite numbers in the BIS team. They had planned a 25% cut in departmental spending, which is what I am doing. We are cutting a lot of things—very
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painfully—so I ask the Opposition what they would do, but we have not yet had a single suggestion about what they would do instead.
Government Members often raise that sort of question, but it is becoming obvious that the natives opposite are also getting restless. I noticed that the right hon. Member for Salford and Eccles (Hazel Blears)recently said that the Labour party needs to be
“explicit about cuts… The public expects us to at least give a broad direction—but I think they are worried that we haven’t been as clear as we ought to be”.
Another senior Labour Member of Parliament—who, perhaps wisely, remained anonymous—told the Financial Times: