Difficult though the matter is, I welcome the Foreign Secretary’s reassurance that—as we all now accept—ground troops have no role to play, and his continued resistance to a deeper, heavier NATO involvement than that described by him and allowed by the United Nations resolution.

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I believe that this is the only way forward, and that, if pursued with sufficient patience and perseverance, it can achieve our objectives.

Mr Hague: I am grateful to the hon. Gentleman. We do operate under certain constraints. The United Nations resolutions are clear and comprehensive—they authorise “all necessary measures”—but they are not qualified in certain important ways, and we are clear about what those mean. It is more important to stick to the resolutions, and to achieve success within their constraints, than to expect a lack of support among the nations of the coalition for our action in continuing these operations as necessary, along with our other diplomatic and economic efforts. I think that we must indeed have the persistence and the patience to continue with that strategy.

Richard Ottaway (Croydon South) (Con): The Foreign Secretary is working with our international partners to persuade the Syrian authorities to stop the violence, which he rightly condemns. Does he recall that the intervention in Libya came only after a request for intervention from the Arab League? Is there any sign of a further request from the Arab League for intervention in Syria?

Mr Hague: No. The work with international partners is very important—particularly the work with Turkey, as I mentioned in response to the shadow Foreign Secretary—but my hon. Friend is right: in the case of Libya there was a clear call from the Arab League for the United Nations to take action. That was a transformative intervention, in that it gave legitimacy and broad international support to our work at the United Nations Security Council. We should hesitate to draw direct comparisons between what we may do in Libya and what we may do in other countries in the region.

Joan Ruddock (Lewisham, Deptford) (Lab): The reported use of cluster bombs against civilians by the Gaddafi regime has been rightly condemned. Equally worthy of condemnation would be the use of depleted uranium. Has the Foreign Secretary sought any assurances from his United States counterparts that depleted uranium weapons have not been, and will not be, used in this conflict?

Mr Hague: The right hon. Lady is absolutely right about cluster munitions—and we might add land mines as well; there are reports of the Gaddafi forces laying them in the vicinity of Misrata. I am certainly not aware of any use of depleted uranium weapons. I would be very surprised if any such weapons were being used, and I think I can give her the assurance she seeks.

Mr David Davis (Haltemprice and Howden) (Con): It has been reported that NATO intelligence believes that some 450 of Gaddafi’s mercenary army are in fact Algerian-backed Polisario guerrillas paid for to the tune of some millions of dollars. Has the Foreign Secretary taken this matter up with the Algerian Government, and can he tell the House what we have done, beyond the freezing of British, European and American bank accounts, to deny access to the money that enables this sort of action to take place?

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Mr Hague: Yes, there are many such reports. My right hon. Friend mentions reports concerning Algeria, and there are also reports of fighters for the Gaddafi regime coming from other countries in north Africa. We are taking these reports up; we have taken them up at the diplomatic level with some of the countries concerned. We need more specific evidence than usual in these situations, in order to be able to say squarely to the countries involved that they are in breach of UN Security Council resolutions, but whenever we have that evidence we will act on it, and at the ministerial level as well.

On the question of denying Gaddafi the ability to pay for such fighters, we have done two sets of things. One of them is the asset freeze, to which my right hon. Friend referred. Tens of billions of dollars of the regime’s assets have been frozen, particularly in the United States and our country, although that measure is also widely observed across the world. Secondly, the sanctions that we are implementing also deny a great deal of income to the regime. That is why I say that there is no future for this regime. Time is not on the side of Gaddafi. It will be very difficult for the regime to amass the resources required for it to be able to continue with this effort for the longer term. We will seek the rigorous implementation of those measures, and, of course, if any nation appears to have sanctioned the employment of people from its own country as mercenaries in Libya, we will pursue that matter with it.

Mike Gapes (Ilford South) (Lab/Co-op): This morning, the BBC was reporting that four European Union countries were working up a new resolution for the Security Council. The Foreign Secretary did not refer to that in his statement. Is that because of the reluctance on this issue of the Arab League, to which he previously alluded? Is there not also a danger, however, that many people in the Arab world will perceive double standards if the UN Security Council does not at least adopt a strong resolution condemning the Ba’athist repression in Syria?

Mr Hague: I think the report in question was about the possibility of a presidential statement, rather than a resolution of the UN Security Council. Certainly, France, Germany, Portugal and the United Kingdom are working together at the Security Council to raise the issue of the situation in Syria. The hon. Gentleman asks about double standards. Different countries will have their own opinions on this subject, and I sounded a note of caution about the attitude of some of the other permanent members of the Security Council. Particularly on Syria, they will be very cautious about adopting statements, and especially about adopting resolutions. The position of the Arab League is a matter for its members. It is, of course, up to them to decide whether to be consistent in their statements or to regard the situation in different countries as requiring different responses. We have certainly had no call or clear message from the Arab League on the situation in Syria in the way that developed in respect of Libya.

Mr James Arbuthnot (North East Hampshire) (Con): If, as my right hon. Friend suggests, there is such general international agreement that Gaddafi should go, is any work being done in the United Nations to

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change the resolutions to reflect that, because otherwise we will continue with a military objective that is at odds with the political objective?

Mr Hague: I have had no indication that it would be possible to pass a new and—what one might call—stronger resolution in the UN Security Council than the ones that have already been passed: resolutions 1970 and 1973. I think there would be a good deal of opposition to that. I think it is unlikely at this juncture that such a resolution could be adopted in the UN Security Council, which is why, as I have said in answer to earlier questions, we must work within the resolutions we have and maximise the diplomatic, economic and military pressure, consistent with those resolutions.

Keith Vaz (Leicester East) (Lab): May I welcome what the Foreign Secretary has said about developments in Yemen, and commend his efforts and those of the GCC? If the President signs the agreement tomorrow, there could be a new Government in 28 days. Are our Government ready to assist that new Government? What matters then is the stability of Yemen.

Mr Hague: Yes, we absolutely are ready to do that. At that point we will, of course, want to revive, with some vigour, the Friends of Yemen process, which was started under the previous Government—we have continued it, but the group has not been able to have meaningful meetings in recent weeks, given the situation. We will very much look to revive that, working closely with Saudi Arabia as co-chairs of the Friends of Yemen. There is a great deal we can do to encourage stability and peace in Yemen, and we will be highly active in doing so.

Jo Swinson (East Dunbartonshire) (LD): May I ask the Foreign Secretary about Saudi Arabia, as there have also been reports of protests—albeit on a smaller scale—met with repression there and as its contribution to finding a peaceful solution to the unrest in Bahrain was to send in its troops? Does he think that the Arab spring could have a positive influence on human rights improvements in that oppressive regime? How can it be encouraged to take a positive attitude to the dialogue towards democracy that is so needed in Bahrain?

Mr Hague: Given the previous question, it is important to recognise in this context the strong and, it seems, successful efforts of Saudi Arabia to bring mediation to Yemen. The hon. Lady is right to say that Saudi forces are in Bahrain—at the request of the Bahraini Government—but I think that Saudi Arabia, like other states in the region, is very anxious that there is a successful national dialogue in Bahrain. I have no reason to doubt that at all, having discussed the situation at some length with Prince Saud, the Saudi Foreign Minister, over recent weeks. Of course, we do ask all Governments in the region to respect the right to peaceful protest and freedom of expression.

Mr David Winnick (Walsall North) (Lab): No one disputes the brutality of the Gaddafi regime, which of course we were selling arms to, along with other western powers, right up to recent events, but may I urge the

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Foreign Secretary to resist the calls that we have heard today from what I would describe as the “war party”, which wants to escalate the conflict? Some of us believe that what is really required is a genuine effort to bring about a ceasefire. I am aware of all the difficulties—I know that Gaddafi cannot be trusted—but if there is a chance of stopping the bloodshed on both sides in the civil war, that opportunity should certainly be grasped.

Mr Hague: Of course we all want a ceasefire. One of the stated goals of resolution 1973 is a ceasefire—a genuine end to violence—but it would have to be a genuine ceasefire in which the regime’s forces pulled back from the populated areas they were attacking and really ended the violence and stopped the suppression of all opposition in the areas that they controlled. Although it is important, as the hon. Gentleman says, to resist calls to change the nature of this conflict and go beyond the resolutions, it is also important to resist any temptation to weaken in our implementation of the resolutions. That is why we must continue carefully and persistently with the strategy we have set out.

Robert Halfon (Harlow) (Con): Given that there are now 300 dead in Syria and hundreds more imprisoned, is it not time for Britain to lead the way with a United Nations resolution to try to stop what Syria is doing?

Mr Hague: As I mentioned in answer to earlier questions, it is not a simple matter to pass a United Nations Security Council resolution on Syria—of course that may change as the situation in Syria develops. The important thing for today is to emphasise that, as I said in my statement, the Syrians are at a fork in the road and are coming to the last point at which they can say, “We are going to embrace the reform that is necessary in our country and that will be supported nationally and internationally.” If they continue down the alternative route of ever more violent repressions, our concerns will of course be shared more widely at the UN Security Council and the situation there may change.

Chris Bryant (Rhondda) (Lab): I sympathise with the Foreign Secretary, but I am afraid I agree—I do not often say this—with my hon. Friend the Member for Islington North (Jeremy Corbyn) in that the arguments that the Foreign Secretary is using increasingly sound casuistical, especially when he tries to draw a distinction between why we are engaged in Libya but not in Syria or anywhere else and, in particular, when he says that although we are providing equipment, that is all right because it is non-lethal, or that although we are providing military personnel, that is all right because they are not instructors. Surely we are coming to a fork in the road: either we want rid of Gaddafi and we should get rid of him, or we should get out of there.

Mr Hague: Sympathy from the hon. Gentleman is entirely unnecessary in my case; I can assure him that I will be fine without it. Anyway, I suppose I am grateful for it. Let us think about the alternatives for which he seems to be calling. One is to weaken in what we are doing, to say that we do not really care what happens in Libya, and to allow Colonel Gaddafi to run amok in murdering thousands of his own people, destabilising everything else in north Africa. I reject that alternative. The other alternative to our policy is to say that we are

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not really going to abide by the UN resolutions and that we will do whatever we are urged to do, because we think that our public’s patience is too limited in any matter of international relations and so we will be panicked into doing other things. I reject that alternative, too. For too many years, we have been accused of not having the necessary legality or moral support for, or an international coalition behind, what we are doing. We are going to maintain those things in what we do in Libya and that requires persistence in the policy we have adopted.

Mr William Cash (Stone) (Con): The Foreign Secretary and I have had a number of exchanges on this subject. I have a great deal of sympathy with what the hon. Member for Islington North (Jeremy Corbyn) said, because the Prime Minister has written to me today saying that

“we do not rule out supplying lethal equipment, but we have not taken the decision to do so, and there remain legal and practical questions which need to be carefully considered.”

That is the Government’s policy, the legal basis of which seems to be as clear as mud. The problem, very simply, is that we want to relieve the pressure on civilians and to ensure that the people in Libya are properly protected. Unless they are given arms and the right kind of equipment under the resolutions—including paragraph 9(c) of resolution 1970, which I have mentioned before—there will be hand-to-hand fighting and they will not have the ability to deliver. That is where the problem lies and the policy must be made clearer. Why does not the Foreign Secretary go back to the sanctions committee and find out?

Mr Hague: I hope the policy as I have set it out is very clear about the Government’s understanding of what is legal under the UN resolutions and about what we are doing, which is different from going the whole way under the resolutions towards arming civilians and the opposition in certain circumstances. We have not taken the decision to do that, as my right hon. Friend the Prime Minister said in his letter to my hon. Friend. We are giving a great deal of other assistance. We should remember that what the United Kingdom is doing as regards the deployment of the Royal Air Force and its military action over the past five weeks, which has potentially saved the lives of hundreds or thousands of people, is a greater help to the civilians of Libya than we can provide to them in any other way.

John McDonnell (Hayes and Harlington) (Lab): As we have seen in the House today, to many outside this House Britain’s intervention in Libya looks like a blood-soaked political shambles. As we have moved from the protection of civilians to regime change, promises of no boots on the ground have been undermined by the presence of advisers’ boots on the ground. Now a limited intervention has moved to being a long-haul engagement. Have the Government given any consideration whatsoever to conflict resolution and taking up the offers from other countries of mediation to secure a peaceful settlement?

Mr Hague: Attempts at mediation by other countries so far have run into the problem of Colonel Gaddafi’s refusal to depart. Without that departure, it is hard to see a solution being arrived at in Libya. That is the

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difficulty. We have agreed in the contact group that it is primarily for the UN special envoy, Mr Khatib, to take forward the work of trying to search for a political settlement—that is absolutely what the UN special envoy is for. We have in no way lost sight of that aim, but it will require a genuine ceasefire, which seems also to require the departure of Colonel Gaddafi. The hon. Gentleman speaks of a blood-soaked result to what we have been doing, but there really would have been a blood-soaked result had we done nothing five weeks ago, allowing Benghazi to be overrun, thousands of people to be killed and tens of thousands to be driven towards the border. That would have been a blood-soaked result, and I think that was the policy that the hon. Gentleman favoured.

Mr John Baron (Basildon and Billericay) (Con): The debate and vote on Libya was couched very much in terms of humanitarian aid, but it has since become clear, from the rejection of the African Union peace proposals and from the joint statement, that Britain, the US and France will accept nothing less than Gaddafi’s removal. Will the Foreign Secretary sanction a further debate and vote on this issue in Government time?

Mr Hague: No. Of course, I will make statements to the House whenever possible and I am in no way resistant to long debates about the matter, but I do not think the Government’s policy has changed in any material way that requires a fresh vote in the House of Commons. We are absolutely within the United Nations resolutions and within the policy we expressed at the outset.

Stewart Hosie (Dundee East) (SNP): Could the Foreign Secretary explain how it is that the Italians are now providing strike aircraft and the Americans unmanned Predators? He described how the 1,500 strike sorties have seriously degraded Gaddafi’s military capacity and he described the severity of the UN sanctions, but those are all actions undertaken by external bodies—the UN, NATO and Arab allies. Will he tell us whether there is a plan—not a time scale, but a plan—so that the House can know how the national transitional council might be in a position to offer Libyan political and military leadership, which would bring an end to the problem?

Mr Hague: The national transitional council has organised itself over the past five weeks. It has a president in Mr Jalil and an executive prime minister figure in Mr Jabril, and it is seeking other adherents and allies in Libya—and not just in the east, where it is based, in Benghazi. In recent days, towns in the west—on the western border—have also declared their adherence to the national transitional council. It is making a genuine effort to include people in its work beyond its current base and operations. It believes in the territorial integrity of Libya and in being able to bring the Libyan people together in future. I think it does have a political plan and a plan for a political transition, but the behaviour of the regime’s forces at the moment prevents it from carrying that out.

Dr Andrew Murrison (South West Wiltshire) (Con): It seems fairly clear that the western Sahara and the Tindouf refugee camps are being used as a recruiting

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ground by General Gaddafi, yet the Polisario Front maintains an office in many western capitals, including London. What pressure can we put on the Polisario formally or informally to make it very clear that any co-operation with Gaddafi is unacceptable and highly unlikely to help its cause?

Mr Hague: If we have clear evidence of what my hon. Friend raises, we will make that very clear and there will certainly be consequences, but we would have to have clear evidence.

Mrs Madeleine Moon (Bridgend) (Lab): The Foreign Secretary might well have the agreement of the Libya contact group, but does he have the support of the British public for what is happening? When we had a debate only weeks ago in the House we were assured from the Government Benches that there would be no mission creep and no targeting of Colonel Gaddafi. We were assured that regime change was not our objective and that there would be no boots on the ground, but we now have quite a strategic change. How will the right hon. Gentleman assure the British public that there will not be further mission creep when those military liaison officers advise that further support is needed on the ground?

Mr Hague: I hope that I have made it clear in the House today—indeed, on all days—that there will be no ground invasion of Libya and that we are not planning to send troops in any large numbers into Libya. I have made clear the terms on which the military liaison advisory team has gone into Benghazi. I think that what people would worry about with mission creep is a ground invasion—a protracted ground battle involving British troops in Libya—and that is not on the cards. It has no part in our plans and it is not consistent with the UN resolutions, so I can reassure people about that and I hope that the hon. Lady will join me in doing so.

Laura Sandys (South Thanet) (Con): From contacts of mine in Libya it is clear that morale among the opposition fighters, whether they be in the east or the west, differs greatly depending on their military successes and on what the international community does and how it acts. One thing that many people are calling for is the British Government's recognition of the TNC as the legitimate Government, albeit a transitional one. Are we considering that measure?

Mr Hague: The wording that we agreed for the whole contact group at Doha and the wording that I used in my statement earlier is that in contrast to Gaddafi, whom we do not regard as having legitimacy any more in leading the Libyan people, we regard the transitional national council as a legitimate interlocutor representing the aspirations of the Libyan people. I think that is the right way to put it. My hon. Friend will say that that is not formal recognition of the council, and it is not, because we recognise states rather than Governments within states and there are very good reasons to continue that policy, but it means that our diplomatic mission in Libya is in Benghazi, not in Tripoli. Our active daily work is with the transitional national council, so for all

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intents and purposes our approach, and that of France and Italy, for instance, which have formally recognised it, is identical in practical terms.

Caroline Lucas (Brighton, Pavilion) (Green): Does the Foreign Secretary accept that our activities in Libya have now gone well beyond the terms of a no-fly zone to protect civilians? Is he not concerned that we will be giving the impression that we are taking sides with the intention of regime change, rather than protecting civilians? Is that impression not being strengthened by the fact that we are not even calling for sanctions in Bahrain and Syria, in spite of the atrocities being carried out there?

Mr Hague: Well, no. It will be evident that I do not agree with that. I think we are operating within the UN resolutions and so do the vast majority of other nations—so does the whole of NATO and the vast majority of the Arab world, including the Arab League. I stress again the importance of the legitimacy of our actions internationally, which means that where the Arab League has called for assistance, as it did in the case of Libya, we are in a different situation from other countries and regarded as such at the United Nations Security Council. We are operating in response to the calls from the Arab League and with the authority of the United Nations Security Council, and we will continue to operate within those constraints.

Several hon. Members rose

Mr Speaker: Order. A very large number of colleagues are still seeking to catch my eye. As right hon. and hon. Members know, I always seek to accommodate as many as possible. I know that the Foreign Secretary regards occasions such as this as the political and intellectual equivalent of one of his judo routines, and I am sure he makes no objection, but I need a degree of economy if we are to accommodate the interest of colleagues.

Nadhim Zahawi (Stratford-on-Avon) (Con): At the end of February, I and a number of colleagues visited Syria. It was obvious to us then that that country was at a tipping point. Two things were obvious: first, young people wanted economic and social reform; and secondly, the reformers and the hard-liners were locked in battle inside the Government. We now have a report that Iran has been invited in to crush the reformers. What robust message can we send that aligning itself with Iran is in the long term a losing game for Syria?

Mr Hague: Since it is possible to make quick, deadly judo moves, I will try to give quick answers. We have consistently given the message to Syria, including when I saw President Assad in January, that aligning Syria with Iran is a great mistake, and it would be a great mistake to intensify that in the current crisis.

Mr Barry Sheerman (Huddersfield) (Lab/Co-op): May I remind the Foreign Secretary that with a heavy heart I voted in favour of the intervention in Libya? I and many colleagues did so because we believed that it was imperative to stop the death of innocent civilians—men, women and children. That was the reason that I voted for it. I am very concerned about some of the right hon. Gentleman’s remarks today, which did not address the

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report that many of us heard on Radio 4 this morning from a respected British journalist about the 1,000 deaths in Libya in recent days. We are not doing enough to stop that. I do not want ground troops; I am not a warmonger; but what has happened to the American intervention that seemed to be more effective in the early days?

Mr Hague: Just because we cannot do everything does not mean that we should not do something. It has of course not been possible to save every life in Libya—this is an extremely messy and difficult situation—but the hon. Gentleman should be proud of the fact that, although he voted with a heavy heart, the vote in this House, and that in other Parliaments, to support military action has probably saved thousands of lives and saved tens or hundreds of thousands of people from a desperately difficult humanitarian situation. It is better to vote with a heavy heart than to be a faint heart about this situation.

Duncan Hames (Chippenham) (LD): The Foreign Secretary carefully draws the distinction that the equipment supplied by Britain to the Libyan transitional national council is of a non-lethal nature, but in an era of improvised explosive devices how confident can we be that even telecoms equipment might not ultimately have a lethal use?

Mr Hague: We can be fairly confident that the transitional national council very much wants to use the telecommunications equipment that we have given it as telecommunications equipment, as it is doing. It would not be productive to divert that into other things. The other equipment that we have given is body armour, and it is quite difficult to use that in any way other than to save life.

Barry Gardiner (Brent North) (Lab): On 18 March the Prime Minister said:

“The resolution helps to enforce the arms embargo, and our legal understanding is that that arms embargo applies to the whole of Libya.”—[Official Report, 18 March 2011; Vol. 525, c. 623.]

That has been reinforced by the Foreign Secretary today. Can he therefore tell us what active measures NATO forces are taking to stop the supply of any arms to the rebel forces from outside Libya, or is it in fact the truth that NATO is the military wing of the rebel forces in a civil war?

Mr Hague: The NATO operations, in which ships of many nations are involved, including those of our own Royal Navy, are dedicated to enforcing an arms embargo on the whole of Libya. They are positioned in order to do that, so the hon. Gentleman can be confident that they are doing that.

Mr Matthew Offord (Hendon) (Con): Given the permeable nature of the Libyan border, particularly around the Sarra triangle, will the Foreign Secretary please advise us on what actions he has sought from the countries surrounding Libya to prevent foreign mercenaries from entering the country and assisting the Gaddafi regime?

Mr Hague: We have made that point to neighbouring countries and have been particularly active with the Government of Tunisia in trying to stop any flows into

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Libya of matériel or arms that would be used by the Gaddafi regime and that would enter the country in contravention of the Security Council resolutions.

Luciana Berger (Liverpool, Wavertree) (Lab/Co-op): Over the weekend I met a number of constituents who are very concerned about their families and the situation in Yemen. Yesterday, two protesters were killed there and hundreds were injured. The Foreign Secretary spoke about the Gulf Co-operation Council’s efforts to break the political deadlock and a revival of the Friends of Yemen group, but what specific representations are the British Government making to call on President Saleh to end the violence?

Mr Hague: We have made those representations all the time. I went to Yemen and saw President Saleh at the beginning of February to urge him to come to an agreement with the opposition parties, which he seems to have done in the past 24 hours, thanks to the mediation of the GCC countries, so we have been very heavily involved in that. Our ambassador in Sana’a has been particularly heavily involved on a daily basis for many weeks with both the Government there and the opposition, and the British Government have been heavily involved.

Geoffrey Clifton-Brown (The Cotswolds) (Con): Will my right hon. Friend take this opportunity to remind the Assad regime that ordering the army’s tanks to slaughter its own people is completely unacceptable, that it will have repercussions for Syria’s international relations for years to come, that it may well be a war crime, and that it will undoubtedly lead to sanctions?

Mr Hague: Yes, I will. On top of that, such actions will not even bring longer-term security to the regime itself, so it is a thoroughly bad idea.

Ms Gisela Stuart (Birmingham, Edgbaston) (Lab): We have sent in a small team of military advisers, as have the French and, for all I know, some other countries. What co-ordination is there between those various teams of military advisers in order to provide coherent, rather than contradictory, advice?

Mr Hague: As ever, that was a very perceptive question from the hon. Lady. That is a very important issue. A French team is going, and there may well be a team from another European country. They are working very closely together, and the effectiveness and experience of the British team is helping to ensure that everyone there works together.

Kris Hopkins (Keighley) (Con): Does the Foreign Secretary agree that it is important to communicate to the critics—in this country and abroad—of previous military conflicts that the intervention in Libya is not just another western intervention? Can I ask the Foreign Secretary, therefore, how many Muslim countries are contributing to the implementation of UN resolution 1973?

Mr Hague: My hon. Friend makes a very powerful point. The coalition includes countries from the Arab League, and the specific answer is that two Arab nations are involved in enforcing the no-strike zone, and in one case in ground strikes as well. Several other nations are

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providing logistical, humanitarian and, indeed, financial support. I have already mentioned the case of Kuwait, and Turkey is of course heavily involved in enforcing the arms embargo and in giving humanitarian support, so a wide range of Muslim nations is involved.

Graham Stringer (Blackley and Broughton) (Lab): The Foreign Secretary sounds increasingly like Dr Pangloss —that this is the best possible policy of all possible policies—but in tone and content his statement is very different from the speech that the Prime Minister made here last month. There has been a clear defining of objectives on regime change and on taking one particular side in a civil war. I regret that the Foreign Secretary has already said that he will not organise a debate in the House on a voteable motion, and I hope he will reconsider that, because it is better done on a Government motion than on a Back-Bench one.

Mr Hague: Those are of course matters for the House anyway, but my point is that I do not regard the Government’s policy on the issue as having changed. I have said today that Colonel Gaddafi must go, and the Prime Minister said that in the debate on 21 March. I have said also that we will continue to take all necessary measures to protect civilians, although the nature of those measures may change from week to week, and that is what we said in the debate of 21 March that we would do, so we have not changed our approach.

David Rutley (Macclesfield) (Con): Given the Gaddafi regime’s constrained refining capability, what assessment has my right hon. Friend made of the merits of strengthening the restrictions on supplies of petrol and diesel to the regime’s forces?

Mr Hague: It is very important to enforce the existing sanctions on the regime. We are doing a lot of work to make sure that they are rigorously enforced by other countries, and that takes in my hon. Friend’s point. So we are looking at that at the moment.

Thomas Docherty (Dunfermline and West Fife) (Lab): May I press the Foreign Secretary on the subject of the contact group? What discussions has it had about the need for humanitarian troops to go in and provide aid, and specifically what discussions has he had with Turkey and other Muslim nations about that role?

Mr Hague: The contact group has not discussed troops going in for humanitarian purposes. It did of course discuss in Doha the need for effective humanitarian relief, particularly for people in Misrata, and we have been successful in providing a good deal of that over the past couple of weeks, but the group has not had discussions about military provision to assist the humanitarian effort. We would be guided by the United Nations and, in particular, by the Office for the Co-ordination of Humanitarian Affairs on requesting any military support for humanitarian needs, but no such request has been made.

Christopher Pincher (Tamworth) (Con): I welcome my right hon. Friend’s announcement of a proper financial structure to provide short-term finance to the Libyan

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national transitional council, but he will be aware that one of the many challenges facing the rebels is the need for cash to fight Gaddafi as well as to provide important public services, so will my right hon. Friend consider releasing to the rebels the many hundreds of millions of Libyan dinars that are printed or held in this country in order to help to finance their fight?

Mr Hague: Those Libyan banknotes are held in this country as part of the asset freeze, and since they are held as part of the asset freeze they remain frozen. [ Interruption. ] Indeed, that is not surprising. The Government have not so far seen any legal way of releasing those banknotes from the asset freeze.

Fiona Mactaggart (Slough) (Lab): May I add my voice to those on both sides of the House who have called for a further debatable resolution of the House about the future of this action? Does not this whole issue illustrate the importance of the International Criminal Court’s being able to take effective action against despots before their people rise up against them, and what is the Foreign Secretary doing to make that more possible?

Mr Hague: Of course it would be helpful if the ICC were able to do that. As the hon. Lady knows, there are cases such as that of the President of Sudan where we have all supported the ICC’s being able to come to its indictments. There is then the problem of the people of those countries not being able to turn over those despots to the ICC. However, we certainly support the ICC’s being able to make investigations in circumstances short of what we are seeing in Libya now.

Bob Blackman (Harrow East) (Con): In the weeks leading up to the most recent major religious festivals, Jerusalem suffered the first suicide bombing for nearly three years and ordinary Israeli citizens experienced an escalation of rocket attacks from the Gaza strip. What has my right hon. Friend done to apply pressure to Islamic Jihad and Hamas to cease their terrorist activities and return to the negotiating table?

Mr Hague: The UK is very clear: we have expressed our outrage at those attacks. We have also called on Israel to exercise restraint in responding to those attacks, because we believe that there is an overriding need to put new life into the middle east peace process and for Israeli and Palestinian leaders to make the necessary compromises—compromises which Hamas leaders have never yet shown that they are prepared to make. It is necessary to do that in order to bring long-term security to the middle east and an end to the kind of appalling incidents that my hon. Friend mentions.

Jim Shannon (Strangford) (DUP): I thank the Minister for his statement. Right across the whole of Libya a great many new battles are starting—for example, on the Libya-Tunisia border. Is NATO and the western alliance aware of all these battlefronts in places where people are fighting for freedom, and what help is it able to give them?

Mr Hague: Yes, I believe that the NATO command—NATO plus the Arab allies, I should stress—are aware of these situations, some of which are difficult to help for the reasons of close-quarters fighting that were

26 Apr 2011 : Column 57

described earlier. NATO air strikes have been used in recent days to relieve the pressure not only on Misrata but on towns in the west of Libya, with some effect. That will continue and, if necessary, intensify.

Stephen Phillips (Sleaford and North Hykeham) (Con): It was plain from my right hon. Friend’s answer to my right hon. and learned Friend the Member for Kensington (Sir Malcolm Rifkind) and to my hon. Friend the Member for Stone (Mr Cash) that the Government have received very clear legal advice on the action that has been announced while the House has not been sitting. The Government made a great advance in publishing a summary of the legal advice on Libya before the last debate. Will my right hon. Friend undertake to update that advice by placing a copy of the Attorney-General’s advice in the Library?

Mr Hague: We provided the note on the legal advice in order for the House to have a debate and for it to take a very important decision. History showed that the House really did want to know more about the legal advice in such circumstances, but I am not going to commit the Government to doing so on a case-by-case or continuous basis.

David Morris (Morecambe and Lunesdale) (Con): Should Colonel Gaddafi be deposed, or go by whatever means, would he be subject to the 1970 human rights Act—I am sorry, not human rights—[ Interruption. ] If I may carry on, would he be subject to the war crimes part of UN resolution 1970?

Mr Hague: That depends on what Colonel Gaddafi has done. The International Criminal Court is looking into that at the moment. As I said, we expect a report from the prosecutor of the ICC to the United Nations next Wednesday, 4 May. That will be the next development in this subject and it is the ICC that will come to a view about it.

Andrew Bridgen (North West Leicestershire) (Con): Does my right hon. Friend agree that over the last few weeks, not only have the eyes of much of the world been on Libya, but, unfortunately, so have the eyes of the leaders of many of the most brutal and oppressive regimes in the world? If Colonel Gaddafi manages to cling to any form of power having turned heavy weapons on his own people, it will make such behaviour far more likely in other countries across the region, costing many tens of thousands of innocent lives and potentially putting back the cause of democracy for decades. Is it not for that reason that Gaddafi must go, by one means or another?

Mr Hague: That is one of the reasons. Certainly, if Gaddafi had been able to do what he intended to do, the Arab spring, as many have called it, and the desire for democracy and greater freedom in the Arab world would have suffered an enormous setback, with potentially damaging consequences for this country.

Mr Speaker: I am grateful to the Foreign Secretary and colleagues for their co-operation in what were very full exchanges.

26 Apr 2011 : Column 58

Points of Order

5.26 pm

John Hemming (Birmingham, Yardley) (LD): On a point of order, Mr Speaker. Vicky Haigh, a horse trainer and former jockey, was the subject of an attempt by Doncaster council to imprison her for speaking at a meeting in Parliament. There was discussion earlier today as to whether that case was sub judice. An application was made to the court, a copy of which I have provided to your office. Additionally, I have provided to your office a copy of the court order in which it was deemed that she would not be jailed. I assume, therefore, that the case is not sub judice, in accordance with sub-paragraph (b)(ii) of the relevant resolution:

“Any application made in or for the purposes of any civil proceedings shall be treated as a distinct proceeding.”

Mr Speaker: I am grateful to the hon. Gentleman for his attempted point of order and for notice that he was to raise the matter this afternoon. I do not intend to have a discussion on the Floor of the House, notwithstanding what he said about documents that have been deposited, on whether a particular case is or is not sub judice. One of my duties is to uphold the resolution of the House with respect to sub judice issues. As far as this particular matter is concerned, I am perfectly prepared to discuss it privately with the hon. Gentleman. I will not take any further points of order on this matter today, and I feel sure that he will take his cue from the clear response that I have given.

John Hemming: On a separate point of order, Mr Speaker.

Mr Speaker: The hon. Gentleman may have a separate point of order, but it is a bit greedy to have two in one go. We will have someone else first so that he can save his vocal cords and we will revert to him in due course.

Mr Nigel Dodds (Belfast North) (DUP): On a point of order, Mr Speaker. Have you had notice from the Secretary of State for Defence that he will come to the House to make a statement on the decision to refuse the invitation of Belfast city council for a homecoming parade for the men and women of the Royal Irish Regiment and the Irish Guards, who have recently completed tours of duty in Afghanistan? That decision has been greeted with incredulity and anger across Northern Ireland. Given that there was a parade the last time they returned and tens of thousands of people turned out in the streets of the capital city of Northern Ireland, which the troops appreciated greatly, surely the Secretary of State owes it to this House to come and at least explain the decision, if not to announce its reversal and allow these brave men and women their moment of appreciation in the capital city of Northern Ireland.

Mr Speaker: I fully understand the strength of feeling of the right hon. Gentleman, and I know that the House will respect the sincerity and experience with which he registered his concerns. I hope that he, as an experienced parliamentarian, will readily understand that I cannot join the argument. However, he has put his point forcefully on the record in the presence of Ministers. In particular, it has been heard with courtesy

26 Apr 2011 : Column 59

by the Deputy Leader of the House. If the right hon. Gentleman wants to pursue the matter in other ways, he can. I have not as yet had any indication that a Minister wishes to make a statement on the subject.

John Healey (Wentworth and Dearne) (Lab): On a point of order, Mr Speaker. This afternoon in Health questions, the Health Secretary told the House that waiting times were stable in the NHS. In fact, for the first time in three years more than one in 10 in-patients are waiting more than 18 weeks for their hospital treatment; the proportion of people waiting more than four hours for emergency treatment is the highest for six years; and the number of people waiting for diagnostic tests for more than six weeks has doubled. Those are the Government’s figures, confirmed recently by the independent King’s Fund. Can the House, through you, Mr Speaker, ensure that the Health Secretary sets the record straight and, in future, gives a full and accurate account of the changes in waiting times that we have seen over the past year?

Mr Speaker: What I would say to the right hon. Gentleman is as follows. First, Ministers are responsible for the content, including the accuracy, of the answers that they give and the statements that they make to the House. Secondly, I hope he will understand when I say that I cannot get involved in the question of the quality of an answer. Thirdly, I think it would be well beyond the limited powers and capacities of the Chair to join an almost theological debate about what constitutes stability, in respect of either the health service or any other feature of our national life. However, the shadow Health Secretary has put his point on the record.

John Hemming: On a second point of order, Mr Speaker, of which I also gave notice, I wish to make another point about sub judice. There is a tendency for people to issue injunctions on the basis of a claim that they intend to issue proceedings, but then not actually issue those proceedings. One such case is AMM, in which no proceedings have been issued. One would therefore presume that such a case never becomes sub judice.

Mr Speaker: The ingenuity of the hon. Gentleman is almost boundless, and that fact will not have gone unnoticed in any part of the House. However, the initial observations that he made demonstrate to me that the second issue that he has raised is also one for consideration at our private meeting, which I feel sure he is eagerly awaiting.

Barry Gardiner (Brent North) (Lab): On a point of order, Mr Speaker. You will know that during the parliamentary recess over Easter, a number of Members wished to see the recall of Parliament in order to debate Libya more fully. Indeed, that was borne testament by the number of contributions following the statement

26 Apr 2011 : Column 60

this afternoon. Is there a way that is in order to thank you for extending the statement by almost half an hour to enable all Members to get in?

Mr Speaker: Well, there is, because the hon. Gentleman has just proved that there is and done it. We are grateful to him for his point.

Chris Bryant (Rhondda) (Lab): On a point of order, Mr Speaker. Over the Easter break—an unfortunate term, perhaps—News International confessed to the fact that there had been a very significant degree of criminality at the News of the World, in direct contradiction to the evidence that it had provided to two Select Committees of this House. In other words, it had misled the House. In addition, Rebekah Brooks, who on 11 March 2003—I can see that the Clerk is worrying, Mr Speaker. I am not—

Mr Speaker: Order. What I would say to the hon. Gentleman is that it is clear to me that he is raising a matter of privilege. That is certainly my very clear understanding of what he has said—it is about privilege and the breach or invasion thereof. It seems to me, therefore, obviously a matter that should be pursued with me in writing in the first instance. I readily expect and almost invite the hon. Gentleman to take that course if he so wishes.

Chris Bryant rose

Mr Speaker: I am being very generous, but I will give the hon. Gentleman one last go at a point of order.

Chris Bryant: I am grateful to you for your generosity, Mr Speaker.

In addition, Rebekah Brooks, who in March 2003 said that she had paid police officers for information, wrote to the Home Affairs Committee only a couple of weeks ago to say that what she really meant was that other newspapers had done so. That is a blatant lie. Before I write to you about standards and privileges, Mr Speaker, may I ask whether you have had any apology from News International? The House should no longer put up with being lied to.

Mr Speaker: I am not aware that the House has received any apology, and I certainly have not. Notwithstanding the intellectual and political ingenuity of the hon. Gentleman, his second set of observations merely confirm the truth and wisdom of what I said in my first answer, which is that he should pursue these matters with me in writing in the first instance. He and other Members know that on this matter, as on others, I am very receptive to hearing what the House has to say. These matters should be aired, but they must be aired in the appropriate forum and at the appropriate time.

If there are no further points of order—the creative juices of the House are always on display when we have had a long recess—we will move on.

26 Apr 2011 : Column 61

Industrial Relations (Voting Procedures)

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

5.35 pm

Mr Dominic Raab (Esher and Walton) (Con): I beg to move,

That leave be given to bring in a Bill to prohibit strike action in the emergency and transport service sectors unless a majority of employees in the unionised workforce has voted in favour of such action; to make procedural provision in relation to balloting for industrial action; and for connected purposes.

The right to peaceful protest and collective action are inextricably linked to, and bound up with, this country’s struggle for liberty, democracy and basic rights. The House will recall that it was a criminal offence to strike in Britain until 1875 and the Administration of Benjamin Disraeli. We should never forget the sacrifices made by those who went before, including the Chartists, social reformers and the early union movement, those who campaigned against child labour in the poor house and virtual slave labour under the poor laws, and those who campaigned for greater democratic representation.

Industrial action played its part in securing reform, from Annie Besant’s match girls union striking against the use of yellow phosphorous in match-making, which caused bone cancer, to the 1889 dockers’ strike in east London against the mercenary exploitation that pitted desperate workers against one another in competition for casual labour on the very harshest terms. I wonder what those heroic campaigners would have made of recent strikes over travel perks, annual bonuses and the right to retire at 50.

Despite a massive expansion of health and safety regulation, employment law and various other social protections, Britain is still episodically held hostage by a vocal minority led by militant union bosses. The damage to the British economy and jobs is immense. In 2002 and 2007, we lost more than 1 million working days because of strike action—[ Interruption. ] Opposition Members may find that a laughing matter, but the tax-paying public do not.

In 2009—a comparatively quiet year—we lost almost 0.5 million days, which is way more than in Germany, Italy, the US and Australia, and the last tube strike cost the capital £50 million each day, disrupting more than 1 million commuters. What is worse still is the way in which union bosses frequently rely on a minority of members to corral and coerce the majority into strike action. That is what the Bill addresses.

The number of strike ballots carried on a minority of members is increasing at a rapid rate. The National Union of Rail, Maritime and Transport Workers, led by Bob Crow, is one of the worst offenders. A third of members supported his tube strikes in the autumn of 2010. The current ballot, for which results are due tomorrow, seeks to escalate previous strike action on the Bakerloo and Northern lines and carried just 35% and 20% of support from members.

In 2010, the Public and Commercial Services Union, claimed legitimacy for a strike ballot on redundancy pay that carried the support of only 20% of its members. Unite and the Broadcasting Entertainment Cinematograph and Theatre Union have also recently led strikes with minority support.

26 Apr 2011 : Column 62

My Bill will address that by amending the Trade Union and Labour Relations (Consolidation) Act 1992 to require the support of a majority of members—not simply a majority of those voting—for strike action in the emergency services and the transport sector to be lawful.

Let me be absolutely clear: the Bill would have stopped not the majority of recent strikes, but just those not supported by a majority of union members. Some will say, “Yes, but politicians are elected only by those who turn out to vote,” but strike ballots and political elections are fundamentally different—[Hon. Members: “Why?”] I am coming to that very point. Strike action takes advantage of an express immunity created by an exemption to the law. Without that exemption, unions could be sued in contract and tort law for the damage that they do, just like everybody else.

Strike action based on minority support allows union bosses to corral, cajole and sometimes even bully the majority of union members into supporting strike action and losing pay, when actually they want to get on with their work and their job. Guidance issued by many unions instructs all members to support strike action regardless of whether they voted for it. Then there are the widespread reports of bullying. When British Airways sacked and suspended almost 100 workers after the 2010 strike, it stated that they were mostly for allegations of bullying or intimidation made by other colleagues. The pending RMT ballot was called by Mr Crow in defence of a tube striker sacked after being accused of abusing another tube worker during a strike in 2010, and just last month his right-hand man at RMT, Mr Steve Hedley, was convicted of assault after attacking a fellow worker who crossed the picket line to work. It speaks volumes that the RMT leadership backed Hedley over the victim of that assault.

This kind of bullying is bad enough in any circumstances, but it is particularly reprehensible during strikes that cannot command a majority of support among a union’s own members. Why should a militant minority coerce, intimidate and bully the silent majority? [Interruption.] I think we are hearing the answer from the mutterings from Labour Members. Nor should the same militant minority be licensed to disrupt the wider public and damage the UK economy. This Bill will focus on strikes in the emergency services and the transport sector, where the scope for such disruption is particularly acute. The CBI, Policy Exchange and the London Mayor have all called for a threshold for strike action. Other countries, such as Denmark and the Czech Republic, have a threshold, and the Prime Minister has agreed to consider the case for reform in this area.

In truth, this is just one of the changes we need. However, the Bill is framed in terms that would at least allow for a wider debate, if Labour Members can stomach it, particularly on, for example, the case for a requirement that strike ballots specify the grievance, so that—God forbid—members are actually told what they are being asked to strike for, and so that union bosses cannot exploit a successful ballot on a specific grievance in pursuit of their own wider vested interests. Likewise, there is a case for requiring individual ballots for strikes against each legal public sector employer, so that nationwide strikes cannot be instigated on the thin pretext of some localised dispute.

The main aim of the Bill, however, is to give strikes greater democratic legitimacy. Union bosses on six-figure salaries, some elected by a small fraction of their

26 Apr 2011 : Column 63

membership, have grown out of touch with their members and with reality. The number of minority strikes shows that they are often less interested in representing all their members, and more interested in pursuing their own political agendas. Our law gives them too much power, and they are abusing it, not just to blackmail the Government, but to coerce their own members and inflict maximum damage on the wider taxpaying public. The question for the House, therefore, is: who is prepared to stand up for the hard-working majority in this country? These proposals will support the silent majority struggling and striving across both the public and private sectors. I commend the Bill to the House.

5.43 pm

Tony Lloyd (Manchester Central) (Lab): Obviously, I rise to oppose the Bill. Let me be honest: it was not just the sight of the salivating rants of Tory MPs and their Lib Dem friends that got me to my feet; it was probably this sense of déjà vu, this groundhog day. I was looking round for Lord Tebbit—I have been in the House a long time—because this proposal is cast very much in the mould of what we have seen before. [Interruption.] Those same old Tories indeed.

The beginning of the speech by the hon. Member for Esher and Walton (Mr Raab) was interesting, because he invoked some of the great industrial disputes of the past, when people fought for their basic legitimate rights and the kind of things that people are now fighting for in Egypt, Syria and wherever else. However, the instinct of the parties of Government is to crush exactly that right of people to proper demonstration against injustices imposed on them whether by employers or someone else. That is what is so sad. Once again, we have a rewind of history.

I know that the hon. Member for Esher and Walton does not have the opportunity to reply to this debate, but there are some serious points that I hope he will consider. He did not mention where else our national legislation sets out such a terrifically high threshold. Not even the advocates of AV propose such a high threshold. The bizarre thing in all this is that any election with a turnout of 70% where 70% of those voting supported a proposition would fail the test for legitimacy under the hon. Gentleman’s Bill. A turnout of 70% with 70% in favour would be seen as an overwhelming victory for the proponents of a particular course of action, whether a politician standing for elected office or anyone else.

I will make an offer to Government Members. If they accepted the same concept—a 50% threshold among all those available to vote—as a means of determining the 2010 general election, when the coalition parties got under 40% of the vote between them, and if on that basis we reverted to the status quo of a Labour Government, then many people in this country would accept the legitimacy of that threshold. What they would not do, however, is accept that the Bill has anything to do with modern industrial relations.

It is interesting that in proposing the Bill, the hon. Gentleman failed to mention the fact that in many cases bad employers are involved. Bad employers have consequences for the work force. They lead to increases in, for example, absenteeism, sickness and, of course,

26 Apr 2011 : Column 64

the capacity of the work force to think about taking industrial action. The other thing that the hon. Gentleman did not mention is the fact that in many disputes the turnout would pass his threshold—a threshold that I do not think he managed to pass in his general election results. He did not get 50% of eligible voters voting for him in the general election.




I am told that he did. Will all Government Members who got the support of 50% of those eligible to vote put their hands up?




We see three—a very poor test of democracy among representatives of the governing coalition.

The important point is that this Bill has nothing to do with modern industrial relations or ensuring that we bring parties in dispute to the negotiating table. At no point did the hon. Gentleman mention the fact that we need an industrial framework that involves ACAS at an early stage, and includes a capacity for arbitration, and give and take on both sides. Instead, for Government Members, this issue is about domination—one side being the victor under all circumstances—but that is not the modern world that Britain wants. That mentality is why, when the Conservatives and their friends were in government in the ’80s, more than 1 million days were lost every year in industrial action. That dropped by a third when a Labour Government took office, because the industrial relations climate was very different.

Members in all parts of the House—even on those on the Government Benches—should pause and ask whether this Bill is really the direction of travel that modern Britain wants to take. I have been in this House for quite a long time, and I remember the days when rather bizarre ideas were thrown up by Back Benchers in ten-minute rule Bills, early-day motions and so on. We dismissed them and laughed at them as the fancies of the rabid right-wing of the Conservative party—and now its Lib Dem friends—but the problem was that quickly afterwards those ideas were translated by those on the Front Bench into Government policies. That is why it is so important that the House and the country should recognise the irrelevance of this Bill when it comes to having any practical impact on modern Britain or addressing its need for improved industrial relations.

I invite the hon. Gentleman to get out a little more and to talk to people who work and who are not bullied by trade union bosses but who cast their vote in secret. That is the nature of the balloting process for trade unions; it is a secret ballot in which individual members cast their own votes. Those members are sovereign. Most aspects of the balloting process for industrial action are widely accepted by trade unions and by employers as the legitimate way of doing this. Very few of them are arguing that we should increase the height of the hurdles to make it difficult for legitimate industrial action to take place.

The reality is that when we restrict the capacity for people to register this kind of protest, we do not improve industrial relations. There might be short-term gains, but in the end, such action merely entrenches the disaffection of those employees who feel that they have been badly treated and increases the arrogance of the bad employers. That is exactly what we had in the 1980s: an arrogant management culture; attempts by the Government to support arrogant managers; the de-industrialisation of Britain; an increase in the number of days lost through industrial action; and the very shameful record of previous Conservative Governments on industrial relations.

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Perhaps the hon. Gentleman should come over and talk to some of the people on the Opposition Benches who know employers and employees, and who know what good industrial relations look like. Perhaps we could give him a quick crash course on how to move forward with a measure that makes sense in modern Britain. If his Bill is not defeated today, perhaps he could gracefully withdraw it and say, “Yes, I admit that I got this wrong. I was influenced by those around me who simply wanted to turn the clock back to the 1980s. On that basis, I withdraw my Bill and we will start again with a better concept and a way of looking at industrial relations as something that involves the employer and the employee in partnership, rather than in permanent conflict.” I urge hon. Members to oppose the Bill.

Question put (Standing Order No. 23)

The House divided:

Ayes 121, Noes 171.

Division No. 255]

[5.51 pm


Aldous, Peter

Amess, Mr David

Andrew, Stuart

Bacon, Mr Richard

Baker, Steve

Baron, Mr John

Barwell, Gavin

Bingham, Andrew

Binley, Mr Brian

Blackman, Bob

Bottomley, Sir Peter

Brady, Mr Graham

Brazier, Mr Julian

Bridgen, Andrew

Brine, Mr Steve

Bruce, Fiona

Campbell, Mr Gregory

Carmichael, Neil

Cash, Mr William

Clifton-Brown, Geoffrey

Colvile, Oliver

Crouch, Tracey

Davies, David T. C.


Davies, Philip

de Bois, Nick

Dodds, rh Mr Nigel

Drax, Richard

Ellis, Michael

Elphicke, Charlie

Evans, Graham

Fallon, Michael

Freer, Mike

Fuller, Richard

Gale, Mr Roger

Garnier, Mark

Glen, John

Gray, Mr James

Griffiths, Andrew

Gummer, Ben

Gyimah, Mr Sam

Halfon, Robert

Hancock, Matthew

Harris, Rebecca

Hart, Simon

Hinds, Damian

Hollingbery, George

Hollobone, Mr Philip

Hopkins, Kris

James, Margot

Jenkin, Mr Bernard

Johnson, Gareth

Jones, Mr Marcus

Knight, rh Mr Greg

Kwarteng, Kwasi

Laing, Mrs Eleanor

Latham, Pauline

Leadsom, Andrea

Lee, Dr Phillip

Leigh, Mr Edward

Lewis, Brandon

Lewis, Dr Julian

Liddell-Grainger, Mr Ian

Lilley, rh Mr Peter

Lopresti, Jack

Lord, Jonathan

Lumley, Karen

Main, Mrs Anne

Maynard, Paul

McCartney, Karl

McIntosh, Miss Anne

Mercer, Patrick

Metcalfe, Stephen

Mills, Nigel

Mordaunt, Penny

Morris, Anne Marie

Morris, David

Morris, James

Mosley, Stephen

Mowat, David

Norman, Jesse

Nuttall, Mr David

Offord, Mr Matthew

Ottaway, Richard

Parish, Neil

Patel, Priti

Pawsey, Mark

Phillips, Stephen

Pincher, Christopher

Poulter, Dr Daniel

Raab, Mr Dominic

Reckless, Mark

Rees-Mogg, Jacob

Robertson, Mr Laurence

Rosindell, Andrew

Ruffley, Mr David

Sandys, Laura

Shannon, Jim

Shepherd, Mr Richard

Smith, Henry

Spencer, Mr Mark

Stanley, rh Sir John

Stewart, Bob

Stewart, Iain

Stuart, Mr Graham

Sturdy, Julian

Syms, Mr Robert

Tomlinson, Justin

Truss, Elizabeth

Uppal, Paul

Vickers, Martin

Walker, Mr Charles

Walter, Mr Robert

Weatherley, Mike

Wharton, James

Wheeler, Heather

White, Chris

Whittingdale, Mr John

Williamson, Gavin

Wilson, Sammy

Wollaston, Dr Sarah

Zahawi, Nadhim

Tellers for the Ayes:

Chris Heaton-Harris and

Stephen Barclay


Abrahams, Debbie

Ainsworth, rh Mr Bob

Alexander, Heidi

Ali, Rushanara

Allen, Mr Graham

Anderson, Mr David

Bailey, Mr Adrian

Bain, Mr William

Barron, rh Mr Kevin

Bayley, Hugh

Begg, Dame Anne

Beith, rh Sir Alan

Bell, Sir Stuart

Benton, Mr Joe

Berger, Luciana

Betts, Mr Clive

Blackman-Woods, Roberta

Blears, rh Hazel

Blomfield, Paul

Blunkett, rh Mr David

Bradshaw, rh Mr Ben

Brake, Tom

Brennan, Kevin

Brown, rh Mr Nicholas

Bruce, rh Malcolm

Bryant, Chris

Buck, Ms Karen

Campbell, Mr Alan

Campbell, rh Sir Menzies

Campbell, Mr Ronnie

Caton, Martin

Chapman, Mrs Jenny

Clarke, rh Mr Tom

Clwyd, rh Ann

Coaker, Vernon

Connarty, Michael

Cooper, Rosie

Corbyn, Jeremy

Creasy, Stella

Cruddas, Jon

Cryer, John

Cunningham, Alex

Cunningham, Mr Jim

Cunningham, Tony

Curran, Margaret

Danczuk, Simon

David, Mr Wayne

Davidson, Mr Ian

Dobbin, Jim

Dobson, rh Frank

Docherty, Thomas

Donohoe, Mr Brian H.

Doran, Mr Frank

Dowd, Jim

Dromey, Jack

Edwards, Jonathan

Efford, Clive

Elliott, Julie

Ellman, Mrs Louise

Evans, Chris

Farron, Tim

Fitzpatrick, Jim

Flynn, Paul

Foster, rh Mr Don

Fovargue, Yvonne

Francis, Dr Hywel

Gapes, Mike

Gardiner, Barry

George, Andrew

Gilbert, Stephen

Gilmore, Sheila

Glindon, Mrs Mary

Goggins, rh Paul

Green, Kate

Greenwood, Lilian

Gwynne, Andrew

Hamilton, Mr David

Hancock, Mr Mike

Hanson, rh Mr David

Harris, Mr Tom

Hemming, John

Hendrick, Mark

Hepburn, Mr Stephen

Hilling, Julie

Hood, Mr Jim

Hopkins, Kelvin

Horwood, Martin

Hosie, Stewart

Howarth, rh Mr George

Hunt, Tristram

Huppert, Dr Julian

Jarvis, Dan

Johnson, Diana

Jones, Helen

Jones, Mr Kevan

Kaufman, rh Sir Gerald

Keeley, Barbara

Lammy, rh Mr David

Lavery, Ian

Lazarowicz, Mark

Leech, Mr John

Leslie, Chris

Lloyd, Tony

Llwyd, rh Mr Elfyn

Love, Mr Andrew

Lucas, Caroline

Lucas, Ian

MacShane, rh Mr Denis

Mann, John

McCarthy, Kerry

McDonnell, John

McFadden, rh Mr Pat

Meacher, rh Mr Michael

Meale, Mr Alan

Mearns, Ian

Michael, rh Alun

Mitchell, Austin

Morris, Grahame M.


Mudie, Mr George

Munt, Tessa

Murphy, rh Paul

Murray, Ian

Nandy, Lisa

Onwurah, Chi

Pearce, Teresa

Percy, Andrew

Pound, Stephen

Pugh, John

Raynsford, rh Mr Nick

Reeves, Rachel

Reynolds, Jonathan

Riordan, Mrs Linda

Robertson, John

Robinson, Mr Geoffrey

Rogerson, Dan

Rotheram, Steve

Roy, Lindsay

Ruane, Chris

Ruddock, rh Joan

Russell, Bob

Sanders, Mr Adrian

Sarwar, Anas

Sharma, Mr Virendra

Sheerman, Mr Barry

Skinner, Mr Dennis

Slaughter, Mr Andy

Smith, rh Mr Andrew

Smith, Angela

Smith, Sir Robert

Spellar, rh Mr John

Stringer, Graham

Stuart, Ms Gisela

Sutcliffe, Mr Gerry

Tami, Mark

Timms, rh Stephen

Twigg, Derek

Vaz, Valerie

Walley, Joan

Watson, Mr Tom

Weir, Mr Mike

Whitehead, Dr Alan

Whittaker, Craig

Wicks, rh Malcolm

Williams, Hywel

Williams, Stephen

Williamson, Chris

Wilson, Phil

Winnick, Mr David

Wishart, Pete

Woodcock, John

Wright, David

Tellers for the Noes:

Mr Dai Havard and

Mr Dave Watts

Question accordingly negatived.

26 Apr 2011 : Column 66

26 Apr 2011 : Column 67

26 Apr 2011 : Column 68

Finance (No. 3) Bill

[Relevant document: The Tenth Report from the Treasury Committee on Budget 2011, HC 897 ]

Second Reading

Madam Deputy Speaker (Dawn Primarolo): Before calling the Minister to move Second Reading, I inform the House that Mr Speaker has selected the amendment standing in the name of the Leader of the Opposition.

6.4 pm

The Chief Secretary to the Treasury (Danny Alexander): I beg to move, That the Bill be now read a Second time.

The clauses that we are here to debate are another important step on the long road to economic recovery. They will promote growth and provide support for households and small businesses under pressure. They will encourage investment as well as enterprise, and they will help us to clean up the mess that the previous Government left behind.

As we start this debate, it is worth recalling the state of the economy that this Government inherited nearly a year ago. Britain had endured the longest and deepest recession in living memory. We were borrowing one pound for every four we were spending. We had the largest budget deficit in our peacetime history, one of the largest in Europe and the largest in the G20, yet no detailed plan was in place to deal with it—and that was not the end of the story. In the preceding decade Britain had slipped down the international league of competitiveness from fourth to 12th. We had seen our share of world exports decline, and we were considered to be a worse place to start a business than many of our European neighbours.

That was the coalition Government’s inheritance, which is why we have set about restoring confidence and stability to our economy, with a clear strategy for growth. At its heart is a credible plan to tackle the enormous deficit—a plan we are already implementing—so that the current structural deficit will fall in each and every year of this Parliament, and is forecast to be eliminated by 2015. National debt is forecast to fall as a proportion of gross domestic product in the same year, so that we can finally start to reduce the huge interest payments with which this country has been saddled—the lasting legacy of Labour’s failure.

The action we have taken on the deficit has shown that Britain’s economic future is now in safe hands, that this is a Government who know how to manage the country’s finances and that we have a credible plan to deliver the strong, sustainable and rebalanced growth that this country needs.

Mr Andrew Love (Edmonton) (Lab/Co-op): If things are so rosy, why has the Office for Budget Responsibility forecast for growth gone down from 2.6% to 1.7%? Why has it projected that unemployment will increase by 200,000 as a result of this and previous Budgets? Why is it that we are doing so badly under this Government?

Danny Alexander: I do not think I said that the position was rosy. I was going out of my way to describe the calamitous state of the public finances that the Labour party left.

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I would like to touch on growth first. In the Budget we set out four economic ambitions: that Britain should have the most competitive tax system in the G20; that Britain should be the best place in Europe to start, finance and grow a business; that we should be a more balanced economy by encouraging exports and investment; and that we should have a more educated work force who should be the most flexible in Europe. The clauses in the Bill set us on the road to meet those objectives.

For the past decade Britain has been losing ground in the world economy. While other nations have reduced their business tax rates, ours have lost competitiveness. While other countries have removed barriers to enterprise, ours have grown higher still. We cannot afford this to continue. Instead, our plan for growth is based on private sector enterprise, not public sector borrowing—growing businesses, not growing debts—and on securing sustainable long-term investment.

Essential to that is creating a competitive tax system—one that enables our businesses to compete on a global stage. That is why clause 4 will see our corporation tax rate fall by 2% this year. As the House already knows, we will implement further cuts of 1% in each of the next three years, so that by 2015 we will have the lowest corporate tax rate in the G7, allowing businesses to invest more of the money that they earn, hire more workers, export more goods and support the recovery.

Dame Anne Begg (Aberdeen South) (Lab): The right hon. Gentleman says that in order to encourage business growth he will drop corporation tax. Why has he taken a completely opposite approach to those who are developing the North sea oil and gas reserves?

Danny Alexander: For the simple reason that the very high price of oil on the world markets is having a direct effect on consumers and, I am sure, on motorists in the constituency of every Member. It is right, I think, to ask the one industry that is benefiting substantially from the high price of oil to make an additional contribution to help us to reduce fuel duty.

Dame Anne Begg rose

Danny Alexander: I will deal with the supplementary charge in more detail later, and the hon. Lady might want to come back to me at that stage, but I shall make some progress now, if I may.

An efficient tax system is not just about lower rates. To be competitive we must also look at how we tax, how that affects our businesses, and what has been holding them back in the past. The Bill legislates for reform of the taxation of foreign branches, as well as making interim changes to the outdated controlled foreign companies rules—a process started and consulted on under the previous Government. This will stem the tide of businesses leaving our shores for more favourable climes, and will ensure that the UK is an attractive place to locate and headquarter. This shows that Britain is once again open for business.

Mr Andrew Tyrie (Chichester) (Con): Has the Chief Secretary had a chance to look at the six tax principles set out in the Treasury Committee’s recent report? Will he tell us whether he agrees with those principles, and if

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so, how the changes in the North sea tax regime accord with one of them—namely, that there should be certainty over time to enable businesses to plan?

Danny Alexander: I have looked at those principles. The Government will, of course, respond to the Committee’s report—along with other reports—in the usual way, but the principles seem very sensible.

In fact, this is among the Finance Bills on which there has been the most consultation in advance. I believe that 260 of its 390-odd pages were published in draft some months before its publication. [Interruption.] I am replying to the question asked by the hon. Member for Chichester (Mr Tyrie). We have taken on board some of the principles to which he referred, but the Government must be able to respond to economic circumstances with their tax policy. As I have said, one of the predominant economic circumstances that we face is the high price of fuel. The Government considered that in order to relieve motorists of some of the burden on them—which we felt was incredibly important—we should ask the oil industry to pay a little more tax in the form of a supplementary charge.

Dame Anne Begg: At what point—it was certainly not during any discussions, because there were none—did the Chief Secretary discover that slightly more than 50% of the business of offshore oil operators is in gas, and that the price of gas is the equivalent of about $55 a barrel?

Danny Alexander: As the hon. Lady knows, the price of gas has also been on an upward path. However, we have discussed the matter with representatives of the industry, including Centrica, which has raised it directly with me and with other Ministers. We said in the Budget that we were willing to consider extensions of the field allowance regime to provide breaks for particular fields in the event of particular problems, and we are doing that at the moment. Existing rules allow breaks for very deep oil wells and heavy oil, for example. The discussion continues. It is right for us to engage with the industry openly, in recognition of the issue raised by the hon. Lady.

Stewart Hosie (Dundee East) (SNP) rose—

Danny Alexander: I will give way to the hon. Gentleman, but I must make progress once I have heard his intervention.

Stewart Hosie: The right hon. Gentleman says that the price of gas is rising. It will be driven up by, possibly, a third because the $75 trigger point established by the Government is equivalent to about 80p a therm. The gas price is currently about 57p a therm. The Government’s actions will drive the price up to an extraordinary extent. Did they not understand that before they set their Budget?

Danny Alexander: I do not accept the hon. Gentleman’s analysis. As he will know, we are currently consulting and engaging with the industry on precisely that question of the trigger price.

I am sure Members in all parts of the House agree that on the road to sustainable growth, access to finance is also a critical issue. For that reason, clause 42 increases

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the relief available for the enterprise investment scheme to 30%, encouraging further investment in small and growing businesses; clause 9 doubles the lifetime limit on entrepreneurs’ relief from £5 million to £10 million; and clause 43 raises the rate of research and development tax credits for small and medium-sized enterprises to 200%. As we announced in the Budget, from next year it will rise again to 225%, providing real support for small firms investing in research and development.

Small and medium-sized enterprises are the driving force behind the recovery. They employ 60% of Britain’s work force, and contribute to about 50% of all output. Their success will help to define the future of our economy. The last Government planned to increase the small profits rate of corporation tax, but we have chosen to do the opposite. Clause 6 will reduce the rate paid by small businesses to just 20%. The Budget also revealed that we would continue to provide business rate relief for small firms for another year, which will support growing businesses up and down the country.

Mr Geoffrey Robinson (Coventry North West) (Lab): Many firms will, of course, be grateful for the reduction in corporation tax, but will not the slashing of investment allowances go a long way towards offsetting any benefit that might have been gained by small companies in particular? According to the Institute for Fiscal Studies, the real beneficiaries of both measures will be the less capital-intensive service sector,

“historically typified by the financial sector”,

rather than the small companies that export and depend on investment which the Chief Secretary is seeking to help.

Danny Alexander: I believe that the reduction in corporation tax will benefit businesses in all sectors. As for the question of capital allowances, the changes in relation to short-life assets have been welcomed throughout the business community, and particularly by the Engineering Employers Federation.

In 2007 the last Government reduced the writing down allowances from 25% to 20%, and we are reducing them from 20% to 18%. That is a balanced move which will ensure that firms in all sectors, including manufacturing, benefit from the new corporation tax environment that we are introducing.

Ms Angela Eagle (Wallasey) (Lab): The Chief Secretary has mentioned small business. It is clearly agreed throughout the House that the SME sector will make a vital contribution to future growth in the economy. Does it worry him that, once again, it has been demonstrated that lending to small business fell in the first quarter of this year, despite the attempts to boost it in Project Merlin? What is he going to do about that?

Danny Alexander: Of course I am worried if lending to small businesses is falling. The Merlin agreement, which we announced at the end of February, was an agreement with the major United Kingdom banks to secure an additional £10 billion of lending to small businesses this year. We will monitor the position, the figures will be made available, and we will watch the banks

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like a hawk to ensure that they deliver on the agreement. That is critically important: this Government have acted as the last Government did not manage to.

Ms Eagle rose—

Danny Alexander: I am going to press on now. I want to deal with the issue of fairness.

Although growth is key to improving everyone’s prospects in the medium term, we know that many families face real financial pressure now. The Bill therefore includes measures to help hard-working people with low and middle incomes, and to support families who are struggling to make ends meet. The Government are committed to real increases in the personal allowance every year, until no one earning less than £10,000 is caught in the income tax net. Clause 3 takes the first step towards meeting this objective by increasing the personal allowance by £1,000 for this tax year. That is the largest single rise in history. It means that 23 million taxpayers in Britain will be £200 better off this year in cash terms, and that more than 800,000 people will be taken out of income tax altogether.

The Budget also revealed the next step in the process. An increase of £630 next year will keep us on track to deliver the £10,000 allowance by 2015, as promised. That is progressive action by a coalition Government who recognise that those with the broadest shoulders should continue to bear the largest burden, and that those on the highest incomes should pay their fair share.

The Bill includes 11 new measures to close tax loopholes that have remained open for too long. For example, clause 26 will help to end the unfair practice of disguised remuneration. No longer will highly paid employees be offered virtually tax-free lifetime loans which, in truth, will never be repaid. Such arrangements are completely unacceptable. We will ensure that they cannot continue, and that all income is properly taxed. We have consulted to ensure that the impact of the legislation on commercial arrangements is limited, and we intend to make further changes when the Bill is considered in the Public Bill Committee.

Those measures will give us more resources to help families who pay their taxes, but who are struggling with the daily cost of living. The same motivation lies behind clause 7, which increases the supplementary charge on the large profits being made from oil and gas extraction in the North sea.

I understand that the increases in the supplementary charge are controversial, at least in the oil and gas sector. Given that the sector is benefiting hugely from the rapid rise in the world oil price, which currently stands at $124 a barrel, it was right to ask it to share some of its profits with motorists, but we are listening carefully to its concerns about specific investments. As we said in the Budget, we are discussing with several firms the possibility of using the field allowance regime to continue to support investment. The industry is understandably concerned about the stability of the tax regime, given the long-term nature of investments in the North sea. That is why we committed ourselves in the Budget to working with the sector to provide certainty about the long-term future of decommissioning relief, and why we announced a fair fuel stabiliser to reduce the supplementary charge if oil prices fall below an agreed trigger level.

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However, we should not lose sight of the fact that this money is financing a much-needed package of support for motorists. First, it is funding the 1p reduction in fuel duty to which clause 19 refers. Secondly, it has helped to cancel Labour’s inflation uprating until January next year. As a result of these two changes, fuel is 6p a litre cheaper now that it would have been under the plans we inherited.

I should also remind the House that this Government inherited plans for above-inflation increases in fuel duty for 2011, 2012, 2013 and 2014. The increase in the supplementary charge has allowed us to abolish this fuel duty escalator, so that duty will not rise above inflation for the rest of this Parliament. As with fairness, so in understanding the issues facing hard-pressed motorists it is this coalition Government who are looking to share the burden of higher oil prices.

Let me now turn to the issue of taxing Britain’s banks. The previous Government announced and implemented a temporary tax on bonuses for one year only. Indeed, it was the former Chancellor of the Exchequer, the right hon. Member for Edinburgh South West (Mr Darling), who advised against repeating that. Clause 72 introduces a permanent levy on bank balance sheets, which will raise £2.5 billion in each and every year of this Parliament. That amounts to £10 billion of additional tax from the banks over the next four years, and, thanks to the decision announced by the Chancellor in February, an extra £800 million for this year too. There will be extra money to help us support jobs and growth this year, such as by providing the finance for an additional £100 million of investment in new science facilities at Cambridge, Norwich, Harwell and Daresbury, and £250 million of investment in the FirstBuy scheme for new-build homes, giving a helping hand to 10,000 people as they climb the first rung of the property ladder.

The Bill will also deliver fairness over the longer term. The changes to the requirements on annuitisation set out in clause 65 have long been called for, and will give people more control over their finances. They will allow those approaching retirement to make their own choices about how they use their pension savings, and they will offer greater flexibility in planning for old age. The introduction of automatic enrolment that is supported by the taxation changes in clauses 68 to 71 will help ensure that a low-cost pension scheme is available for the 5 million employees expected to save in the National Employment Savings Trust. The simpler, fairer rules on pensions tax relief in clauses 66 and 67 will limit the amount of tax relief received by those who make the highest pension contribution. From this year, the annual allowance will be set at £50,000 and the lifetime allowance will be reduced to £1.5 million. That will generate about £12.5 billion by the end of this Parliament, and it will ensure that the pension system remains generous for savers, is fair to taxpayers, and is affordable for the Exchequer. At the other end of the age range, clause 40 introduces individual savings accounts for children, offering a simple and tax-free way to save for a child’s future

Turning to the environment, the introduction of a carbon price floor in clause 77 is a revolutionary move. It demonstrates this Government’s commitment to being the greenest Government ever, and it makes us the first country in the world to introduce such a measure for the power industry.

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Joan Walley (Stoke-on-Trent North) (Lab): Does the right hon. Gentleman accept, however, that there is concern about the amount of hidden subsidy for the nuclear industry in the Finance Bill, and given the coalition agreement that there is to be no subsidy for nuclear power, does he share my concern on behalf of manufacturers, particularly in my constituency, that if there is any windfall tax it should be directed to promoting energy and waste-resource efficiency in terms of manufacturing? Is there not a complete mismatch here?

Danny Alexander: I understand the concern, and I know that it has been expressed by a number of lobby groups, although I have to say that I think it has been grossly exaggerated. The purpose of the carbon price floor is to ensure a stronger, and strengthening, market over future years for investment in low-carbon energy. It will deliver a genuine incentive for green and renewable energies to be developed and invested in. Meeting the carbon reduction targets, which I think all Members support, will require several tens, or even hundreds, of billions of pounds of new investment in renewable and other energy sources, and I think that introducing a carbon price floor is exactly the right mechanism to achieve that.

Dr Alan Whitehead (Southampton, Test) (Lab): Does the right hon. Gentleman not accept that raising the carbon price floor initially to such a level above the EU emissions trading scheme will not actually reduce emissions across Europe because they are fixed on a European basis, will risk investment moving to the other end of the interconnectors, and will move us substantially away from consultation on the issue of £1 above EU ETS, which I think most people would have accepted as a starting point for a longer-term carbon price floor to move towards the 2030s? Does he accept that he has got that price floor wrong, and that he needs to review it so as to make it actually work by genuinely increasing investment and reducing emissions?

Danny Alexander: No, I do not accept that we have got this wrong; I think we have got it right. The level of the carbon price floor was set out in the consultation. A range of options were given, and we have taken a mid-point of the various responses we received. I think it is right that this country is the first country to introduce a carbon price floor. That is a very important mechanism to help us deliver on the low-carbon power generation to which I thought those on the hon. Gentleman’s side of the House were as committed as we are on this side. Of course this will have an impact; it is designed to have an impact. It is designed to have the impact of ensuring that companies and industries seeking to invest in low-carbon power generation have a clear sense of certainty about the price they will receive for that energy over future years. As a result of that, our country can ensure that we deliver on our targets for renewable energy and carbon emissions reduction, which are, I hope, very important to every Member of this House.

Sammy Wilson (East Antrim) (DUP): Does the right hon. Gentleman not see any contradiction in terms in what he has said about making industry more competitive by giving it tax breaks? Introducing a carbon price floor will take more money from industry than corporation tax reductions give to it. Does he not recognise the

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point made by the hon. Member for Southampton, Test (Dr Whitehead): that in places like Northern Ireland this will simply push investment in electricity into the Irish Republic because of the single electricity market, rather than keep electricity production in Northern Ireland?

Danny Alexander: I recognise the force of the hon. Gentleman’s concerns, and I have great respect for the detailed way in which he puts them forward, which I have learned about through the relationship we have had as a result of his role as Finance Minister in the Northern Ireland Assembly Government. On this point however, I have to say that I think he is wrong. I hope that the carbon price floor will, alongside other measures, encourage investment in low-carbon power generation, including in Northern Ireland. That is what we are seeking to achieve through this mechanism. I think he also referred to energy-intensive industries, and we have announced that the climate change agreements, which are to the benefit of such industries, are to be rolled forward for another phase and that the relief given through those agreements is to be significantly increased. I hope that will ensure that such energy-intensive industries will be able to make the transition to lower, or different, energy use in a way that does not have the economic effects he describes.

Joan Walley: Given what the right hon. Gentleman has just said about the importance of investment, does he agree that the Budget should actually be giving the advantage to energy efficiency? Because of the delays in developing the green investment bank, are there not now real concerns about where we are going to get the resource efficiency from?

Danny Alexander: I agree that energy efficiency is important, of course. That is precisely why the Department of Energy and Climate Change has been working so hard to bring forward the green deal scheme, which will start next year. It is designed precisely to give additional encouragement and incentive, and to provide a mechanism for people to engage in the sort of action on domestic energy efficiency in which they have not previously engaged over the years, which I hope the hon. Lady agrees is very important. Also, there are not delays in respect of the green investment bank. Quite the contrary; we announced in the Budget both a trebling of the amount of public money going into the bank, partly through asset sales, and that it will start its operations in September next year, thereby providing yet another strand to the additional investment we all want to see in green energy.

The measure I have been discussing will make us the first country in the world to introduce a carbon price floor for the power industry. It will help to provide an incentive for the billions of pounds of investment in cleaner sources of energy that this country needs, so ensuring we are on course to meet our carbon reduction targets. We have also preserved the link between the climate change levy and prices, through clause 23, to act as a further incentive to low-carbon investment.

The Bill will also help to address other important social issues. The new duty on high-strength beers in clause 15 will help to tackle problem drinking, increasing

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the cost of a typical can of high-strength lager by 25p. That is coupled with a reduction in the duty on lower-strength beers to help encourage the consumption of alcohol in a more responsible way.

Andrew Griffiths (Burton) (Con): I agree with the intention of the measure, which is to encourage people to drink lower-strength beers. However, does the Chief Secretary agree that what would help both the industry and the health of the nation would be if the Government were to go to Europe to argue for that level to be raised from 2.8% to 3.2% or 3.4%, so that brewers could brew something tasty and drinkable that would nudge people to reduce their alcohol consumption?

Danny Alexander: The hon. Gentleman makes a very good point. He will perhaps know that the Economic Secretary, having taken this measure forward, is making that case for greater flexibility at a European level. As this country has taken a lead on having greater flexibility in beer duties, we are in a stronger position to argue this case. Similarly, as this country has taken the lead on deficit reduction, we are in a stronger position to argue the case that we must argue at a European level, which is that further increases in the EU budget are unacceptable. So in a number of ways the actions this Government have taken put us in a position to make strong cases at European level.

Kelvin Hopkins (Luton North) (Lab): Are the Government not just tinkering with the alcohol measures, rather than facing up to the reality of the drink problem that Britain faces? Would it not be much better to have a significant unit price for alcohol, which would not affect pubs, beer drinkers in pubs or the average bottle of wine, but would raise the floor price for those who drink to excess, particularly the young?

Danny Alexander: If the hon. Gentleman were being fair, as I hope he would be, he would recognise that this Government have taken a number of measures to tackle problem drinking and that our approach on beer taxation, which is the subject of part of the Bill, will send further right signals. I hope that many hon. Members would agree that the consumption of high-strength beer is a particular problem in relation to antisocial drinking, and that allowing this sort of differentiation within the tax system should help to send the right signals. The Bill also includes a further step to help people to stop smoking, as clause 16 raises the duty on tobacco.

In conclusion, the Bill sets out changes that will enable our businesses to grow and succeed, supports the necessary plan to deal with the deficit, helps to tackle the rising cost of living, supports growth and supports fairness. I commend it to the House.

6.32 pm

Ms Angela Eagle (Wallasey) (Lab): I beg to move an amendment, to leave out from “That” to the end of the Question and add:

“this House declines to give the Finance (No. 3) Bill a Second Reading because whilst the Minister of State for the Cabinet Office acknowledged that the country faces an ‘immediate national crisis in the form of less growth and jobs than we need’ this Bill does not address it; because the economic approach set out by the Government in this Bill puts jobs and growth at risk; because the Bill cuts capital allowances to businesses who invest in growth;

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because the Office of Budget Responsibility estimates that after all the measures in the Bill are taken into account the number of unemployed will be higher by up to 200,000 than forecast in November 2010; because the Bill fails to reverse the higher petrol prices faced by families as a result of the Government’s VAT increase in January 2011; because it does not address the damage done to family living standards caused by the wider tax and benefit changes this month; and because without a repeat of the bank bonus tax, the bank levy alone will mean lower taxes for the banks at a time when families and children are bearing the brunt of the Government’s cuts to household incomes.”

At the beginning of the Second Reading debate on a Finance Bill, it is appropriate to take stock of the situation that we face in the UK and of the Government’s handling of our economy almost a year into their time in office. This was the self-styled “Budget for Growth” that downgraded the growth figures. When one in five young people were out of work, it was a Budget that forecast higher levels of unemployment. This was a Budget from the deficit cutters which forecast £46 billion of higher Government borrowing.

After listening for months to his analysis of the economic challenges facing this country, I must confess that I am very worried about the credibility of the Chancellor. His explanation of the origins of the banking crisis and the recession that it caused is partisan fiction—it has very little connection to economic reality. It seems that I am not alone in worrying about his grasp of the facts, because over the weekend he has been attacked by the enemy within. He has been accused of “fiddling the figures” and telling “untruths”, threatened with a lawsuit and told to withdraw “completely unfounded” claims or risk losing “his credibility as Chancellor”—that is just what the Energy Secretary is saying about him.

The Chancellor is clearly also a founder member of the enemy faction identified by the Deputy Prime Minister in his interview with The Independent over the weekend as

“a right-wing elite, a right-wing clique who want to keep things the way they are”.

Perhaps the Chancellor could tell us, if he bothered to turn up—[Interruption.] Perhaps the “Orange Book” Liberals are part of that right-wing clique. Perhaps the Chancellor will tell us whether this right-wing clique all have a uniform as fetching as the Bullingdon club tux?

What about the Chancellor’s deputy, the Chief Secretary? In response to the Chancellor’s wild accusations last week about the funding of the “Yes to AV” campaign, the Chief Secretary said:

“I think it is a real shame that this sort of pretty desperate scaremongering is going on.”

Well let me tell the Chief Secretary that I know just how he feels, because the Chancellor has been indulging in pretty desperate scaremongering about the threat of a UK sovereign debt crisis since his theatrically named “Emergency Budget” last June, and he has been aided and abetted by none other than the Chief Secretary. As the Energy Secretary said in his letter to the Chancellor over the weekend:

“Robust debate is normal in British politics. Persistent resort to falsehoods is not.”

So the Energy Secretary is off to consult his lawyers, and the Chancellor, the Prime Minister, the Foreign Secretary and the chair of the Conservative Party all appear to be in his sights.

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In the meantime, will the Chief Secretary now admit, in the interests of not persistently resorting to falsehoods, that the banking crisis and global recession were not caused by the previous Prime Minister? The truth is that he helped to avoid a global depression and that the current Chancellor got every important call in those days of world crisis wrong. Will the Chief Secretary also have the decency to admit that the deficit was not caused by too much spending on schools and hospitals or by the profligacy of nurses and teachers? The truth is that the crisis was caused by unforgivable excess in the banking sector. Will he also take this opportunity to disown and stop repeating the Chancellor’s irresponsible and pretty desperate scaremongering about Britain being on the brink of a sovereign debt crisis like Greece or Portugal, when it is obvious that it is not?

Like the Energy Secretary, I believe that robust debate is normal in British politics, but persistent resort to falsehoods is not. Will the Chief Secretary therefore now disown the “pretty desperate scaremongering”—I use his own words—about the supposed threat of a UK sovereign debt crisis? The truth is that it was the banking crisis that had a disastrous impact on the public finances. Between 2008 and 2009, nominal GDP fell by 1.8%—that cost £20.6 billion—and tax receipts dropped by 3.7%, costing £19.9 billion. Will he acknowledge that this sudden collapse in economic activity is responsible for the bulk of the deficit? This is not a deficit caused by too much public spending before the crisis, but a deficit caused by the crisis. The truth is that the deficit is the price that we are paying for the failure of the banking system and the recession that was caused by that failure. It is also the price that we paid to prevent a global recession from turning into a worldwide depression, and it was essential to our future well-being as a nation that a depression was averted. We could all have a more mature and relevant debate in this House about the formidable economic challenges facing us, if we began with an acknowledgement of the truth of these facts.

Last June, in their first Budget, this Government embarked on a risky and dangerous experiment with the future of our economy. Last year, they abandoned Labour’s plans to halve the deficit in four years and decided to plough full steam ahead with a deficit reduction plan that went further and faster than that of any other major economy in the G20. So preoccupied were they with their desire to make the biggest public spending cuts since the second world war that they also failed to ensure that growth formed a key part of deficit reduction. They opted for a high-risk approach, and this Finance Bill continues that dubious experiment.

It appears that the Government are in thrall to the economic dogma of a long-dead 19th-century economist, David Ricardo, and their ideological preference for a small state. They imagine that the smaller the government, the less taxation and spending there will be. They think that the private sector will somehow automatically fill the gap left by cuts and that the economy will just grow. That is why they have embarked on a drastic programme of deep and immediate cuts that, if their theory is correct, should already be turning the economy around by now and why they are so uncomfortable with publishing their wholly inadequate self-styled, “Plan for Growth”, which was meant to be the public relations centrepiece of the Budget. Their laissez-faire economic approach assumes that growth will happen automatically without

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the need for any Government support, much less a plan. That is why the plan was so delayed and of such dubious merit when it finally arrived. Keynesians, however, believe that the economy works very differently and that the Ricardian equivalence dogma is wrong. We ignore the insights of Keynes at our peril, which is why the Government’s economic policy, as set out in the Bill, is taking us in the wrong direction.

The great banking crisis of 2007, which began in the American sub-prime mortgage market, administered a huge and near-fatal shock to the world’s financial system.

Kelvin Hopkins: I agree entirely with everything my hon. Friend has said. The Government have completely failed to understand the importance of demand in the economy if we are to get growth, and demand looks as though it is weakening. Even the Treasury now estimates that by the end of this Parliament, borrowing will overshoot by £11 billion. The Government are driving the economy in precisely the wrong direction.

Ms Eagle: That is essentially the insight that Keynes developed from his experience as a practising economist. We ignore his insights at our peril—[ Laughter. ] Hon. Gentlemen on the Government Benches can laugh, but if we get this wrong and the economy does not grow or develop, the price will be paid through a smaller economy, fewer opportunities and lower standards of living for men and women up and down the country. That is not something that the Government or the Government parties should be making a joke of.

The great banking crisis transmitted itself to the real economy in the form of a synchronised global recession. Nothing so serious has been experienced in the advanced economies since the Wall street crash. That great crash destroyed the economic and social fabric of many societies in the interwar years, causing untold hardship and misery. Governments in the 1930s were in thrall to the same Ricardian dogmas as now hold sway in both the Government parties. They did not see a role for the state in protecting the economic and social well-being of their citizens. Their lack of vision and hands-off approach to economic policy led to the great depression and ultimately, the collapse into dictatorships and a cataclysmic world war.

Fortunately, in 2007 the previous Labour Government and economic policy makers the world over did not make the same mistake. They had absorbed the lessons of the interwar years, and they took actions to prevent the recession from turning into a global depression, but before the recovery had become securely established, the deficit hawks reasserted themselves, demanding austerity despite warnings from leading experts around the world that that would be the wrong approach.

Ed Balls (Morley and Outwood) (Lab/Co-op): And from the Liberal Democrats.

Ms Eagle: That is true—the Liberal Democrats gave us such warnings before the election.

Undeterred by the lessons of history and without an electoral mandate for such drastic cuts, the new Administration in the UK have proved to be the most extreme of the deficit hawks. They decided that dealing

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at breakneck speed with the deficit created by the banking crisis was more important than any other consideration, including protecting people against long-term unemployment or against cuts in vital public services. So, before the patient was long out of the emergency room, the Government decided to start administering a deficit reduction shock therapy that could end up being worse than the original illness. There is nothing in economic theory that dictates that Governments should plan to eliminate deficits in four years rather than eight.

The sheer scale and speed at which the Government have proceeded came as a surprise, not least to the 6.5 million people who voted Liberal Democrat at the last election. The Business Secretary warned about the dangers of cutting too far and too fast before the election, only to go along with the most savage cuts that we have had in the UK in peacetime straight after it. Meanwhile, in his speech to the Liberal Democrat Scottish conference last year, the Chief Secretary promised to

“create…jobs and boost the recovery”.

Instead, he has followed the example of the leader of his party when it comes to election promises—he has done the exact opposite of what he said he would do.

Just today, Mr Gary Millar, a councillor in Liverpool, has quit the Liberal Democrats in disgust over their broken promises. He said that he was once

“happy to call myself a Lib Dem, today they make me question my integrity and reputation.”

Like so many others, he feels personally betrayed by the Liberal Democrats, which is why they will face the wrath of an angry electorate next week.

At the time of the election last year, the economy had begun to improve from the depths of the banking-induced recession. Growth was up, inflation and unemployment were falling and borrowing had come in £20 billion better than forecast in the 2009 pre-Budget report. Formidable problems lay ahead, of course, but we were moving in the right direction and growth was seen as part of the solution.

Since the fiscal hawks rolled up at the Treasury, our economy, which was improving, has ground to a halt. Unemployment is higher, inflation is double the Bank of England target and the Chancellor has presided over a collapse in consumer confidence to lower levels than it reached in the depths of the 2009 recession, because he made the political choice to inflict on ordinary families the largest and longest squeeze in living standards since the 1920s. As the cost of living rises and wages fall, he has chosen to impose the increase in VAT, huge cuts in local services and a reduction in the support for child care that threatens to drive many women out of their jobs. His VAT increase alone will cost the average family with children £450 this year, far more than they will gain through increases to tax thresholds. Little wonder, then, that the Office for Budget Responsibility has downgraded the growth forecast again and again.

In his Budget speech, the Chancellor boasted:

“Our country’s fiscal plans have been strongly endorsed by the International Monetary Fund, by the European Commission, by the OECD, and by every reputable business body in Britain.”—[Official Report, 23 March 2011; Vol. 525, c. 951.]

The IMF has lowered its growth forecasts for the UK, however, and its head, Dominique Strauss-Kahn, has warned against cutting budgets too far, creating long-term unemployment and abandoning entire generations to a

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workless future with no hope. The recent interim OECD assessment of G7 economies predicted that the UK was expected to grow more slowly than any other G7 country except Japan, which has just been hit by powerful earthquakes, devastating floods and the ongoing battle against a nuclear disaster.

Kelvin Hopkins: Again, I agree entirely with my hon. Friend, who is making an absolutely excellent speech. There is another factor, however, driving deflation, and that is the fear of unemployment. When people are frightened of losing their jobs, they stop spending their money and try to pay off their mortgages. That is what is happening now and that is why demand will be savagely cut by this Government’s policies.

Ms Eagle: My hon. Friend makes an extremely good point about confidence and sentiment in the economy transmitting their way into the real figures through their effect on demand.

Even those who gave their personal stamp of approval to the Chancellor’s aggressive cuts agenda last year in a letter to The Daily Telegraph are now voicing their doubts about weak growth. Ex-Tory MP Archie Norman is worried that the Government’s growth predictions are too optimistic and former Asda boss Luke Bond is predicting a two-year retail recession, which picks up on the point that my hon. Friend the Member for Luton North (Kelvin Hopkins) has just made.

The Government are going too far too fast, and we are paying the price in lost jobs and slower growth. Their phobia about the deficit means they are cutting public expenditure much further and faster than any other major economy. They have made deficit reduction the only thing that matters, regardless of how terrible its social or economic effects will be; they appear to be blind to the lessons of history; they refuse to listen to public concern; and they fail to recognise the absolute necessity of re-establishing growth to get the deficit down. Without growth, austerity measures simply make the deficit worse and impoverish the society they are inflicted on. The Chancellor should, as he so notoriously lectured us in February 2006, “Look and learn from across the Irish sea”. Ireland is on its fourth austerity budget with no end in sight. The evidence shows that all the countries that implemented drastic austerity measures saw their economies go into reverse in the fourth quarter of 2010. Those economies shrank in Greece by 1.4%, in Iceland by 1.5%, in Ireland by 1.6%, in Portugal by 1.5% and in the UK by 0.5%. In contrast, both the German and the American economies grew.

The Chancellor is not solving the problem; he is in danger of making it worse. The day after the Budget, the ratings agency Moody’s embarrassed the Government by suggesting that the UK’s triple A rating might be at risk not because of the deficit but because of slower growth. I would take any pronouncement from the rating agencies with a very large pinch of salt, as they are hugely compromised by the part they played in making the banking crisis worse and they need to be reformed, but, unlike the Chancellor, we have neither made their flawed and partial judgments the central justification for our economic policies nor installed them as the most important judges of our success by giving a dangerous credence to the fiction that the UK’s ability to finance its debts is at risk for reasons of petty

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party politicking. Their influence makes the inconvenient point for the Government’s political cuts narrative that growth is equally important to successful deficit reduction. Without growth, the deficit will not be sustainably reduced.

Mr Love: According to the Government, one of the major contributors to growth in coming years will be an increase in net exports, but with all our European partners struggling, as has been shown, how are we meant to get that increase in net exports and demand?

Ms Eagle: With a 25% devaluation in the value of our currency, we certainly ought to be seeing strong increases in economic performance, but my hon. Friend makes an important point about demand in other areas of the economy, especially in the European Union, which is our largest export partner—60% of our exports go there.

The Chief Secretary will already have seen the growth figures for the first quarter of 2011, and I am looking at his face for any scrutable or inscrutable reaction. The figures are due to be released tomorrow, so he has an advantage over the rest of us. I do not know whether he is going to give us any facial hints as to what is in them, but if the OBR’s three-times downgraded forecast of 0.8% is right, the economy will have grown a tiny 0.3% over the past six months against the 1.8% it achieved in the previous six months under the influence of the previous Government’s policies for recovery. As the Financial Times says today,

“it will be difficult to claim that the recovery is self-sustaining unless Wednesday’s number is at least 1.2 per cent and possibly as high as 1.7 per cent.”

The Government’s growth strategy is a hotch-potch of reheated Thatcherite fiddling on the supply side. At its centre is the dubious belief that the most important driver of economic growth is creating a low corporate tax jurisdiction for multinationals, but the economic literature shows that growth tends to be higher in countries that have a higher investment in social and intellectual assets, as well as good capital infrastructures. The Government have a simplistic view that cutting corporate taxes will automatically lead to more investment, but we believe that an investment strategy is needed and that it sends the wrong signal to cut investment allowances. The £200 million one-off extra investment in science and apprenticeships, although welcome, is dwarfed by the £5 billion-a-year cost of reducing corporate taxes, which will help growth only if that money is reinvested in business activities in the UK. The Government’s decision to abolish the regional development agencies and cut regional growth funding by two thirds has set back many viable plans for development that could even now have been building an economic recovery in every region of the UK.

Despite the biggest squeeze in living standards since the 1920s, the OBR is forecasting that one quarter of economic growth this year and a third next year will come from UK households and will be financed by a sharp increase in household debt. Close study has revealed something that the Chancellor chose not to mention in his Budget speech: the OBR expects families to go deeper into debt each year between now and 2015 and expects household debt to rise to a record high of 175% of disposable income, or £77,000 per family, by

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the end of this Parliament. The Chancellor claims that the only thing that matters is getting Government borrowing down, but he does not say that his plan is to pass that debt directly on to already hard-pressed families. Although they did not cause this crisis, ordinary hard-working people and families are being made to pay for it. People are suffering under the pressure of the Chancellor’s hike in VAT, sky-high petrol prices and inflation, and we know that his real economic strategy is to force people to take on even more debt just to make ends meet.

What then of the sector that caused the crisis? Instead of making the banks pay more this year, the Government are giving them a tax cut. Project Merlin, the Government’s so-called final settlement with the banking sector, is a damp squib. As the majority shareholder, the Government have just approved, for the chief executive of the nationalised Royal Bank of Scotland, £7.7 million in pay and bonuses for last year despite the bank’s having lost £1 billion. It has also emerged that bank lending to small businesses fell again in the first quarter of the year. Lending to small businesses is vital to recovery and despite all the promises from the banks it is going down, not up. The Government should not be giving the banks a tax cut, but should follow Labour’s suggestion and repeat the bank bonus tax this year. That extra money could be used to build 25,000 extra affordable homes, to create more than 100,000 jobs to help tackle youth unemployment and to boost enterprise in the regions.

The Government are hellbent on taking us back in time to the divided Britain of the 1980s. The Tory leaders in the coalition are trying to re-enact the failed Thatcherite policies of the past, which resulted in one part of our society being divided against another. Not only are they making life tougher for people, but they are kicking away the ladders to a better future. They are teaching people to blame the weak and despise the poor. It is happening all over again, just like in the 1980s, but this time the Liberal Democrats are helping them to do it. At the weekend, the Deputy Prime Minister accused the Prime Minister of “defending the indefensible”, but I think that the Deputy Prime Minister and his Government colleagues are doing a pretty good job of that themselves. In public they complain, but in private they roll over and agree to every damaging Tory plan.

The Government fail to recognise the pain that their economic strategy is inflicting on people up and down the country. They want Britain to have a smaller state; they want to create a nastier, meaner, shabbier society that leaves people to fend for themselves; and they are trying to fool the country into believing the myth that the economic storm was all Labour’s fault and that this extreme and dangerous fiscal consolidation programme is the only option to deal with it. The Government need not have cut this far or this fast, because there is a better, fairer and safer way. They need to wake up and accept that their economic polices are not working and are just hurting, and they need to change course before it is too late.

6.58 pm

Anne Marie Morris (Newton Abbot) (Con): I welcome the Finance Bill, which will reform the economy, deliver real growth for business and create jobs. One of the very

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special parts of the Bill is what it does for the very smallest businesses, as they are going to be the key to re-growth in our economy. I am sure that the House is well aware that two thirds of our businesses are so small that they have fewer than five employees and a turnover of less than £250,000. They may represent only 15% of our economy but they are vital because, first, all our successful businesses have to start somewhere, and it must be there, and, secondly, without those very small businesses—whether it is the plumber or the electrician—some of our rural communities and some deprived urban communities would find it difficult to keep economically active. For these very small businesses, I am pleased to see a mandate for growth.

I shall elaborate on some of the provisions mentioned by my right hon. Friend the Chief Secretary and look at what they deliver and how they might be developed in future. Businesses rates are, for me, one of the most important issues and the subject of many complaints from small businesses in my constituency. I am delighted that the small business rate relief has been extended for a further year, and pleased that half a million businesses will benefit. In the south-west, which is my part of the country, 68% of businesses will see some economic benefit from that relief.

Will my right hon. Friends and the Treasury team look carefully at business rates in future? An awful lot more needs to be done. Issues such as turnover are relevant criteria. It is not uncommon for me to walk into a pub and to be told by the publican that the way in which the business rates have been calculated is biased against small pubs. It is not uncommon for me to walk into a small retail business and to be told, “This used to be the high street but it’s not any longer, and I feel that my business rates are disproportionate and inappropriate.” A shake-up of business rates is needed.

I welcome the reduction of fuel duty by 1p and the removal of the escalator. Without that, the projection from the Federation of Small Businesses that all small businesses would find their bills going up by £2,000 in six months would have become a reality. To me, that reduction is crucial. I am sure that those on the Opposition Benches would be the first to say, “But at the pump, prices don’t seem to have come down.” My response is that they would have been an awful lot higher but for these changes. We need to consider how to ensure that those who are delivering petrol at the retail end are passing on those reductions to the customer. A number of people have expressed concern that the help that we as a Government are giving has not been passed on to the consumer.

Thomas Docherty (Dunfermline and West Fife) (Lab): If I follow the hon. Lady’s logic correctly, she welcomes a policy, the results of which, she admits, have not been passed on to the customer, so what benefit have most of her constituents received from the fuel duty cuts?

Anne Marie Morris: They are 6p a litre better off than they might otherwise have been. The challenge that we face is the retailer, but I do not believe that the Opposition would have been able to do anything different. That is another aspect that needs to be looked at going forward. But we digress. Let us move on to some of the other issues facing small businesses, such as income tax and national insurance.

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For many small businesses, national insurance is a headache and it is one of the key reasons why they will not take on new employees. We have the largest tax code in the world. One of the things that I am pleased to see predicted for the future, though not in the Bill, is a move to simplify tax and to consider combining income tax and national insurance. That would be a great step forward and a huge saving in administrative time and burden for very small businesses. I was sad to see that the NI holiday was not extended further for existing businesses, a matter that I have raised with the Treasury team on a number of occasions. If in future we could find a way of combining income tax and national insurance, that would be a good step forward.

I am pleased that corporation tax is coming down to 26%, and I am pleased to see a move to deliver the lowest corporation tax in the G7. That is extremely good news. Given that my mandate is to shout loud for the very smallest businesses, it would have been even better for the small companies rate to have come down further. I appreciate that it has already come down to 20%, which is a good move, but anything further that can be done going forward would be welcomed. The special provision to increase the SME rate of research and development tax credit to 200% is extremely welcome. I thank the Treasury team very much for that as it will make a significant difference.

The crucial challenge for many small businesses is finding investment, so I am particularly pleased to see entrepreneur relief changes which will increase the capital gains tax lifetime limit to £10 million. That is a hugely welcome step. I am pleased that the enterprise investment scheme has been also been developed so that the income tax relief has moved from 20% to 30%, and the eligibility criteria have changed so that larger businesses will be included in EIS. However, I would be grateful if the ministerial team would look at how we can extend EIS so that it attracts investment for the very smallest businesses. At present it is much more geared towards a small or medium-sized business and corporations. It is not intended for a sole trader or a partnership. If we could come up with EIS-lite in some form, that would be extraordinarily helpful.

In summary, I am delighted to see the focus on the smallest of businesses. I sincerely hope that that will be a trend to be welcomed for the future. One thought I have for the Treasury team is that, going forward, we might look more closely at a specific definition of a micro-business, a small business and a medium-sized business. If we did that, as happens in other countries, we might find that the Treasury team had a little more flexibility to give particular help to the very smallest businesses, from which growth will ultimately stem.

7.6 pm

Mr Frank Doran (Aberdeen North) (Lab): I shall speak about the oil and gas industry, to which the Chief Secretary gave prominence in his contribution. I am sorry that he has gone. He claimed the credit for the policy, but he may in future regret that rather naive political claim. He has produced a system that is too clever by half and does not pay much attention to the reality of the oil and gas industry.

The oil and gas industry is probably the single most important industrial investor in the UK. Some £6 billion was invested last year alone, with anticipated increased

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investment this year, led by the high oil price. The industry supports nearly half a million jobs throughout the UK, either directly or in the supply chain. A substantial proportion of those jobs are located in just four constituencies around the city of Aberdeen—my own constituency, Aberdeen North, and Aberdeen South, Gordon, and West Aberdeenshire and Kincardine, where we have a grand total of just over 132,000 oil and gas-related jobs. That has a huge impact on our local economy.

Oil jobs exist in other parts of the country too. There are, for example, 14,250 such jobs in the City of London, where many of the major companies have their headquarters, nearly 8,000 in Reading East, and over 8,000 in Poplar and Limehouse. Uxbridge has 2,170 oil and gas-related jobs, and Stockton North has 2,270. Even the Prime Minister in rural Witney has about 1,000 such jobs, according to figures produced last year by Oil and Gas UK. So it is not just a regional issue or one that involves only East Anglia or the north-east of Scotland. The last time such a survey was done—this one was carried out about a year ago—the Economic Secretary to the Treasury would have been able to claim several thousand jobs in her constituency, but Kellogg Brown and Root, which used to be located in Putney, has moved on. The industry affects the whole country.

Last year, the industry paid £8.8 billion in corporation tax and the estimates show that £13.4 billion is likely to be paid in 2011-12. Of that, £3 billion to £4 billion in revenue is linked directly to the oil price, so the Government are already benefiting from the spike in oil prices. Before the Budget the industry was already the most heavily taxed sector in the UK economy, with 50% to 75% of all UK continental shelf profits going to the Government. Given that we own the oil after all, since it was nationalised under the Petroleum (Production) Act 1934, such a split does not look excessive on either side.

However, exploiting our oil and gas resources is a dangerous and expensive operation that requires high levels of commitment and investment. Investment decisions in the UK industry are not all made in the UK. It is a genuinely global industry and UK sector decisions are made in Houston, Dallas, San Diego, Paris and Vancouver as well as in London and the middle east. Competition for investment is fierce. UK management has to fight against bids from other oil provinces, such as Brazil, Australia and India, and from emerging oil provinces such as west and east Africa and from a host of other foreign company headquarters.

The managers who make those decisions consider a number of factors in addition to the most prominent one—the likely return on investment. The key factors are a stable political background and a stable financial background. Above all, for long-term investment the oil industry needs certainty in the tax regime, and I am sure that the Economic Secretary had that message hammered home very seriously by the industry when she visited Aberdeen not so long ago.