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Robert Halfon (Harlow) (Con): May we have a debate on falling unemployment? In Harlow in the past three months, 200 more jobs have been created and unemployment has fallen to 2,400 from a peak, under Labour, of well over 3,000. Does my right hon. Friend agree that the best way to bring jobs back to Harlow and elsewhere is by boosting apprenticeships and cutting taxes for businesses, rather than the policies of Labour Members?

Sir George Young: I agree. I am sure the whole House will welcome the drop in unemployment that was reported yesterday, and I am pleased to hear what is happening in Harlow. We have undertaken a number of measures to reduce youth unemployment, in particular. We have announced a new innovation fund with £10 million a year to fund organisations working with young people through social finance models and a package of additional support for 16 to 17-year-olds’ jobseeker’s allowance, including more adviser support, access to work clubs and work experience. I hope that we can build on these measures and make much more progress in Harlow and other constituencies.

Mr John Spellar (Warley) (Lab): I should like to ask a further question regarding Baroness Warsi. Business before pleasure, however, and I must ask about the impact of compulsory water metering on gardeners—the water tax. Last Thursday, I asked the hapless Secretary of State for Environment, Food and Rural Affairs why she was even considering compulsory water metering, and her reply completely avoided the subject. Will the Leader of the House arrange for a statement next week—the week, incidentally, of the Chelsea flower show—in which the Secretary of State can categorically rule out compulsory domestic water metering?

Sir George Young: I will draw the right hon. Gentleman’s concern to my right hon. Friend’s attention and ask her to write to him about our policy on compulsory water metering. I am sure that he shares the concern of Members on both sides of the House about doing all we can to drive down water consumption and conserve water, and I hope that he will not rule out measures such as the one that he has touched on.

Graham Evans (Weaver Vale) (Con): Last weekend, my youngest son went on his first cubs camp, and I went along as a helper. However, I was not able to stay at the camp overnight because I do not have an up-to-date Criminal Records Bureau check for the cubs. That is a pity, as I have helped out at the same Cheshire cubs branch, which my older son went to, for the past seven years. May we have a debate on the over-the-top CRB requirements that can be such a disincentive to volunteering?

Sir George Young: I would like to find time for such a debate, and perhaps the Backbench Business Committee could provide it. One of the unforeseen consequences of trying to protect children by introducing CRB checks is that fewer people are then able to help children through voluntary organisations such as the scouts. We have to try to get the right balance that gives children the protection to which they are entitled but does not discourage volunteers such as my hon. Friend from playing an active part in their activities.

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Barry Gardiner (Brent North) (Lab): If the Government are to help to make substantial progress at the United Nations framework convention on climate change in December, they will have to get their submissions in before the summer recess. May we have a debate in Government time on the Floor of the House before the recess to discuss the UK’s contribution to Durban?

Sir George Young: We have just had Energy and Climate Change questions; I do not know whether the hon. Gentleman had an opportunity to ask that question then. I will certainly undertake to ensure that any submission is made in good time, and I will pass on his concerns to my right hon. Friend the Secretary of State.

Christopher Pincher (Tamworth) (Con): May we have a debate on the role of the private sector in job creation—an issue that goes to the heart of the Government’s strategy for sustainable growth? Given that the Office for National Statistics has announced 77,000 more jobs in the private sector, it seems a timely moment to discuss the progress being made to rebalance the economy.

Sir George Young: My hon. Friend raises an important issue. Private sector employment increased by 449,000 between December 2009-10, and public sector employment fell by 132,000, so that rebalancing is beginning to take shape. If my hon. Friend looks at the Office for Budget Responsibility report, he will see that it forecasts an increase of 900,000 jobs over the next four years, with 1.4 million in the private sector, which more than counterbalances the fall in employment in the public sector. Rebalancing is on its way.

Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op): An answer to a recent parliamentary question highlighted the fact that more than 1,200 young people under the age of 18 serving in our armed forces had sustained some form of injury during a 12-month period. In the light of this and other concerns about the recruitment of under-18s, can we find time to have a debate on this, either in the context of the Armed Forces Bill or in another way?

Sir George Young: I did not announce the business for the rest of June, but I anticipate that we will take the remaining stages of the Armed Forces Bill, when there will be an opportunity for the hon. Lady to make her point.

Julian Smith (Skipton and Ripon) (Con): Small parish councils remain very concerned about the decision by Her Majesty’s Revenue and Customs to force them to pay their parish clerks through the pay-as-you-earn system. May we have a debate about how we can exempt small parish councils from this legislation?

Sir George Young: Like my hon. Friend, I have a large number of small parish councils in my constituency. It is very important that they are not discouraged in any way by unnecessary bureaucracy. I will share his concern with the Financial Secretary to the Treasury and ask him to write to my hon. Friend outlining our policy on PAYE and parish clerks.

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Katy Clark (North Ayrshire and Arran) (Lab): The Leader of the House will be aware of the concern about the activities in protest groups of undercover police officers such as Mark Kennedy. A review is being carried out by Her Majesty’s inspectorate of constabulary. Will the Leader of the House ensure that there is a statement to the House once that report becomes available?

Sir George Young: I will give my right hon. Friend the Minister for Policing and Criminal Justice who is replying to Monday’s debate on the police notice that the hon. Lady has raised this issue and see whether we can deal with it in the opening or closing speeches.

Bob Blackman (Harrow East) (Con): On Monday, the Government published the long-awaited report on the process of compensation for Equitable Life policyholders, thereby honouring another part of our pledge properly to compensate those people who were so scandalously treated by Labour. However, that weighty tome has given rise to several concerns among MPs in all parts of the House, and I wonder whether there will be an opportunity for a statement or a debate in the House so that the Minister can respond on the record to those concerns for the benefit of the wider public.

Sir George Young: I understand the concern of policyholders to which my hon. Friend refers. I cannot find time for a debate, but it strikes me that he could raise the issue at the next round of Treasury questions or put in for a debate in Westminster Hall, where there have been several debates on Equitable Life. I am sure that several other colleagues would like to attend such a debate.

Jim Fitzpatrick (Poplar and Limehouse) (Lab): Further to the right hon. Gentleman’s answer to the hon. Member for Truro and Falmouth (Sarah Newton) on the coastguard review, the consultation closed earlier this month, but was extended by the Secretary of State for Transport to allow the Transport Committee to carry out its investigation, which is very positive. However, it is clear from speculation in The Times this morning and from the reassuring statements in Westminster Hall from the Under-Secretary of State for Transport, the hon. Member for Hemel Hempstead (Mike Penning), who has responsibility for shipping, that the proposals will not proceed in the form in which they were consulted on. May we have an updated ministerial statement on what conclusions have already been drawn and an assurance that the original decision to report back to the House before the summer recess will be adhered to?

Sir George Young: I understand the hon. Gentleman’s concern. The Under-Secretary of State for Transport, my hon. Friend the Member for Hemel Hempstead (Mike Penning), who has responsibility for the coastguard service, will be giving evidence to the Transport Committee in the relatively near future. That will be an opportunity for such questions to be answered.

Mr Philip Hollobone (Kettering) (Con): Will Her Majesty’s Government table their amendments to the Armed Forces Bill in good time, and will the Leader of the House confirm that those amendments will enshrine the military covenant in law, as the Prime Minister wishes, and not simply beef up the report on the covenant, as the Ministry of Defence is seeking to do?

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Sir George Young: We had a statement on that matter this week, and I am sure that my hon. Friend will have read that exchange. Of course the Government will want to table any necessary amendments in good time for the House to see them and, if necessary, for Members to table their own amendments.

Mr Dave Watts (St Helens North) (Lab): Given the poor response to the Deputy Prime Minister’s puny reforms of the House of Lords, may we have a debate on whether it would be better to pass this matter to another Minister who can make more progress?

Sir George Young: No.

Andrew Bridgen (North West Leicestershire) (Con): May we have an urgent debate on trends in employment, as it is clear from the latest figures that the overall situation is far more complex than the headlines might suggest? In my constituency of North West Leicestershire, there are currently 1,513 claimants, who make up 3.3% of the economically active population. There has been a welcome fall of 10% in that figure over the last year. It would be helpful if the debate compared the overall fall in unemployment in the quarter to March this year with the number of people on jobseeker’s allowance.

Sir George Young: My hon. Friend is right to say that one has to drill down into the figures to get a truer picture. The rise in JSA payments, to which he referred, was due in part to new measures to move single parents whose children are attending school off employment and support allowance and on to JSA. The important figures are the continuing fall in unemployment and the continuing rise in employment.

Luciana Berger (Liverpool, Wavertree) (Lab/Co-op): A 19-year-old constituent of mine, Paul Lawrence, has been on remand since February. He is autistic and has been diagnosed with Asperger’s. He has tried to hang himself and has taken an overdose while in prison, and yet he has been kept locked in his cell, until recently in isolation, and is only let out for meals. His mother is constantly worried about his safety. May we have a debate about how vulnerable people are treated while on remand?

Sir George Young: There will be a debate on sentencing on Monday, during which the hon. Lady may have an opportunity to debate that matter. Some of the decisions on whether somebody should be on remand are decisions for the courts, and it is important that they retain their independence.

Mr Speaker: I am grateful to the Leader of the House and colleagues for their co-operation.

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McNulty Report and West Coast Rail

12.43 pm

The Secretary of State for Transport (Mr Philip Hammond): With permission, Mr Speaker, I would like to make a statement about the publication today of Sir Roy McNulty’s independent study into value for money in the rail industry, and to update the House about the west coast franchise process.

Sir Roy’s report notes that UK rail has enjoyed a revival in recent years, with strong and resilient growth in overall passenger numbers and in passenger satisfaction, and huge improvements in reliability and safety. The Government want Britain’s railways to continue to prosper and have demonstrated by their actions their commitment to them. Despite the difficult fiscal climate, we have allocated funding to complete Crossrail and Thameslink, and to support the upgrade of the London underground. We have announced electrification on the great western main line and in north-west England. We have resumed the intercity express programme to improve reliability, comfort and journey times on the east coast and Great Western main lines. We have given the go-ahead to the Ordsall chord project in Manchester and the Swindon to Kemble redoubling. We have confirmed the purchase of more than 2,000 new rail vehicles for Thameslink, Crossrail and other franchises, and the cascading of 100s more. Last but not least, we have begun the High Speed 2 consultation process.

But Sir Roy made another, less welcome, finding. Spending on the passenger railway has increased by 60% in real terms since 1996-97—that is more than £4 billion—and despite significant passenger growth, unit costs in 2009 were almost exactly the same in real terms as in 1996. Therefore, UK rail is now up to 40% more expensive per passenger mile than the railways of our European competitors. Allowing for unavoidable differences, Sir Roy estimates that UK rail costs are 20% to 30% higher than they should be, and that potential savings of between £740 million and £1.05 billion a year could be found by 2018-19 without any reduction in services. Those savings, added to the savings that Network Rail is committed to achieving up to 2014 and the savings that Sir Roy expects the regulator to seek from Network Rail over the period to 2019, should largely close the efficiency gap.

Many of Sir Roy’s recommendations are directed to the industry, and the open and inclusive process that the study adopted means that some of them are already being implemented. The industry has come together to form a rail delivery group to provide the leadership that Sir Roy noted was lacking in the past. Network Rail has announced its plans to devolve significant autonomy to route managers across the network, starting with the Wessex and Scottish regions.

Sir Roy’s remit, which was set by my predecessor and the Office of Rail Regulation which co-sponsored the study, was narrowly focused on the cost base of the railway. He makes a large number of recommendations. Over the coming months, the Government will consider the recommendations that are directed to them, and they will deliver their response later this year. Many of the recommendations on franchises reflect the changes that the Government have already announced. In addition, I can confirm today that my Department will accept

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Sir Roy’s recommendation that it should conduct a full review of fares policy, which will include addressing anomalies in the current system and the potential for much greater use of smart technology. In parallel, the Government are developing a wider rail strategy to ensure that we have an affordable, sustainable, safe and high-quality railway that delivers a better deal to taxpayers and fare payers. It will set out clearly the roles of central and local government, train operators and Network Rail in securing the future of the railway.

This is urgent and vital work. Let us be in no doubt that the excessive cost base that Sir Roy has identified is the reason that UK rail fares are the highest in Europe by some margin, even though our levels of taxpayer subsidy are also among the highest in Europe. Let us be clear about the potential prize. The successful delivery of cost reductions over the next few years on the scale set out by McNulty would enable us to reduce levels of taxpayer subsidy and, at the same time, put the era of inflation-busting fare increases behind us.

To achieve the challenging targets for cost reduction and industry-wide efficiency that Sir Roy has identified, all players in the industry will have to work together. The train operators, Network Rail, rolling stock companies, unions and the Government cannot avoid playing their part if we are to deliver a sustainable and affordable railway for the future.

Sir Roy makes it clear that the Department needs to step back from excessively detailed specification of train services and the micro-management of rail operations. I recognise that that will represent a major culture change, but it is one that I am determined to deliver. I would like to place on record my thanks to Sir Roy McNulty and his team for the excellent work they have done, and to welcome Sir Roy’s commitment to working with the industry on an ongoing basis.

I also wish to announce to the House the publication of the draft invitation to tender and stakeholder briefing document for the intercity west coast franchise, which lays out the train service specification that I am minded to procure for that route. As I have said, the Government have already adopted Sir Roy’s recommendation that franchise specifications should become less prescriptive. The proposed train service specification for intercity west coast represents a relaxation of the rigid timetable specifications of the past, while retaining obligations that protect the key elements of service such as principal first and last train services and minimum numbers of station stops per week and per day. That marks a significant shift from the micro-management under the current system that has prevented operators from maximising capacity and reacting to the changing demands of their passengers.

Among other proposed changes, we intend to replace the current cap and collar revenue-sharing system that has driven perverse behaviour by train operators with a gross domestic product-based risk-sharing arrangement and a profit-sharing mechanism that will ensure that the taxpayer benefits from any unexpected profits over the term of the franchise.

Because the relaxation of the full prescription of train services in line with Sir Roy’s recommendations was not signalled in the consultation document that we published on 19 January, I have decided that it is right

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and proper to consult on the proposals again, starting today and ending on 17 August. As a consequence of that decision, I can inform the House that the new franchise for the intercity west coast will now be awarded in August 2012, after a competitive process involving the four shortlisted train operators, and will commence operations on 9 December 2012. In making that decision, I have deliberately avoided a change of franchise immediately ahead of or during the Olympic period. I have also decided to take advantage of the short delay to complete the integration of the 106 new Pendolino carriages into the fleet prior to the commencement of the new franchise. The Department will seek to agree acceptable terms with the existing franchisee for a contract extension to 9 December 2012, but Directly Operated Railways Ltd, the Government-owned company that runs East Coast, will be ready to operate the franchise between April and December 2012 if necessary.

Copies of the rail value-for-money study and the draft invitation to tender for the west coast main line have been placed in the Libraries of both Houses and are available on the Department’s website. Our expectation is that future passenger franchises on UK rail will allow operators greater flexibility to meet passenger demand and pursue innovation, while protecting the key elements of service for passengers.

Longer franchises and a changed relationship with Network Rail will have a positive impact on the behaviour of train operators and their appetite for investment and risk taking. However, I want to send a clear message that the new culture of co-operation in the rail industry, and the focus on cost reduction, is here to stay and is mandatory, not optional. I can announce today that as a matter of policy for all future franchise competitions, a significant part of the assessment of bidders’ capability at the pre-qualification stage will be evidence of success in collaborative working and driving down costs.

The facts are clear: our railway costs too much, and in consequence fares are rising faster than inflation and taxpayer subsidy has reached unsustainable levels. To secure the future of the railway, we now have to tackle that problem after a decade of ignoring it and get costs into line with those of our European comparators, bringing relief to taxpayers and the prospect of an end to the era of above-inflation fare increases to passengers. I commend this statement to the House.

Maria Eagle (Garston and Halewood) (Lab): I begin by thanking the Secretary of State for early sight of his statement. May I place on record the thanks of Labour Members to Sir Roy McNulty for the detailed and thorough work that he has carried out? As the right hon. Gentleman acknowledged, that work began under the previous Government.

I have said before that we would look seriously at the conclusions of the value-for-money review and support any sensible proposals to take costs out of the industry. I promise again today that we will study the details of Sir Roy’s report, and that it will inform our own transport policy review.

I agree with the Secretary of State that we should reduce the public subsidy to the rail industry, and we need to be clear about why much of that subsidy exists if we are to address it effectively. It is partly the result of the enormous structural fragmentation within the industry, and let us be clear that that fragmentation is the legacy

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of the botched privatisation carried out in the dying days of the last Conservative Government. The Secretary of State should have apologised today for the shambles of that privatisation and the staggering sums of money wasted as a result. Unlike him, I take our share of the responsibility for being too timid about addressing that fragmentation during our time in government.

Closer working between train operators and Network Rail makes sense, and I support the internal reorganisation that is going on at Network Rail and many of the proposals that have been made to ensure that costs are removed through greater partnership. I am pleased that the Secretary of State appears to have stepped back from his earlier plans for the wholesale breaking up of our rail infrastructure, which would have been a costly mistake and added yet more fragmentation to the industry. Can he confirm that he does not intend to proceed with an experiment of handing track over to train operating companies within any of the franchise areas? Previously there has been briefing that the East Anglia franchise would be used for that experiment. Can he reassure the House that that is no longer the plan?

I welcome the Secretary of State’s decision to establish a proper review of fares. Despite the efforts that we made, the current system is too complex and leaves passengers frustrated. However, does he understand why passengers will have very little faith that he does not intend to impose yet further hikes in ticket prices? At a time when families are feeling the squeeze on their household budgets, he has imposed fare rises of more than 30% over the next three years. I believe he was wrong to give back to train companies the right to average out the cap across their fares, rather than apply it to each fare individually as we insisted when we were in government. He was also wrong to increase the cap on regulated fares from 1% to 3% above inflation.

In opposition, the current Minister of State said that fare rises of such a level would

“price people off the railways”,

and the Under-Secretary of State, the hon. Member for Lewes (Norman Baker), promised below-inflation fare rises—more broken promises from the two Government parties. Will the Secretary of State reject proposals to give the train operating companies greater freedom to set the level of fares? Will he listen to his own consumer watchdog, Passenger Focus, which has today described the suggestion of reducing regulation on off-peak tickets as a “leap in the dark”? Does he share its concern, as I do, that if the plans go ahead, we might end up with affordable, flexible travel for longer journeys being confined to a brief window in the middle of the day?

Will the Secretary of State also reject the suggestion to remove any role for politicians in the setting of fares, which would effectively remove any public accountability for fares through the ballot box? The link between the fare box and the ballot box should not be broken.

May I urge the right hon. Gentleman to approach reform to staffing levels and pay and conditions within the rail industry in a spirit of partnership, not confrontation? That is something that we have not seen in the language and tone of briefings by his Department in recent days. I urge the trade unions to work with the Government as they look to carry out reforms within the industry, but will he ensure that he includes those who represent staff on the high-level group that he is establishing to take

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forward these reforms? As he considers staffing, will he understand the value that passengers place on staffed trains and open ticket offices, and the fact that women in particular feel safer in properly staffed stations, particularly late at night?

We have heard today the extent to which the right hon. Gentleman’s policy on rail franchising has descended into chaos and confusion, with his decision to delay the awarding of the west coast franchise. Can he confirm that First Group is to hand back its Great Western franchise three years ahead of schedule? Is the reason that it has given for that decision, as reported in the press, that it has calculated that it will make losses in the final years of its franchise period? Does he agree that that is unacceptable?

Will the Secretary of State confirm that there is a possibility that the east coast main line, the west coast main line and the Great Western franchises will all be run by the Government while he decides what his franchising policy is? Does that not make a mockery of the whole franchising system?

Does the Secretary of State understand why commuters in East Anglia are dismayed at the cost and chaos of his decision to award a contract for less than two years, risking three owners in as many years, with only the companies that supply the paint to redo the liveries benefiting? Are not the future of franchising, the massive public subsidies that go to the private train operating companies, and the vast sums that leave the industry in profits the big missing pieces of the work of looking at costs in the industry?

I welcome the Secretary of State’s decision to replace the current cap and collar revenue-sharing system, but does he agree that we will not get the costs of the industry under control until we look seriously at its structure and the future of franchising? The public want a simplified industry—one in which the driving force is less maximising profit and squeezing every last penny out of the fare payer and the taxpayer, and more the delivery of a world-class service. That is why I have committed Labour’s policy review to look at alternative models for the future of the rail industry, including not-for-profit models. I urge him to do the same.

Finally, the right hon. Gentleman’s statement was not the only announcement to be widely spun and briefed to the media in advance of his coming before the House. Several newspapers are reporting that he has abandoned his plans to close more than half the UK’s coastguard stations, yet the Opposition understand that far from abandoning the plans, he has simply put them on hold. Those plans were never agreed by Ministers in the previous Government, and I would not have approved them. Will he now take this opportunity to end the huge uncertainty facing coastguard stations and agree to abandon those reckless proposals?

Mr Hammond: I might get some guidance from you, Mr Deputy Speaker, on whether it is appropriate for me to respond to the hon. Lady’s comments on coastguards—I would be happy to do so if you indicate that that is in order.

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. It is up to the Secretary of State which points he wishes to answer.

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Mr Hammond: Thank you, Mr Deputy Speaker, for that very helpful guidance.

I am grateful for the hon. Lady’s comments about Sir Roy, who was of course appointed by my predecessor. I very much hope that we can take forward the rail reform agenda with a degree of cross-party consensus, which would be very helpful—realistically, it is asking a great deal to expect that we will agree on everything.

The hon. Lady blames “structural fragmentation” for the high cost of our railway. She obviously has not yet had a chance to read the full report, but when she does, she will see that Sir Roy identifies many causes. However, she seems to be displaying the famous Labour disease of collective amnesia. She might recall the inconvenient facts that her Government created Network Rail a decade ago, and that her Government spent 13 years in power doing nothing at all about the structural fragmentation of which she now complains.

The way forward that passengers and taxpayers would expect us to take for our railway is one of evolution rather than revolution, although that evolution must be rapid. I have taken a conscious decision, which I conveyed to Sir Roy, that I would like to see how far we can go within the existing railways legislative framework rather than spark an ultimately unproductive and, for passengers, entirely unhelpful political debate over the next couple of years on major railway legislation. The idea of Sir Roy McNulty’s agenda is to take forward significant reductions in costs in the railway within the existing legislative framework.

The hon. Lady asked about track-train integration. As she will know, Sir Roy has suggested that we pilot closer integration between train operators and the devolved Network Rail infrastructure operations on the different routes and regions. Sir Roy suggested that the railway is not homogeneous, and that we should go forward at different paces on different sections of our railway. I agree with that general principle. We will look very carefully at Sir Roy’s specific proposals and suggestions on track-train integration, and incorporate a response into the wider rail reform proposals with which I intend to return to the House before the end of this year.

The hon. Lady welcomed the fares review, and I am grateful to her for that. She asked whether the review is a cover or code word for increases in prices, but I say this to her: the Government want an end to the era in which fares rise faster than inflation, but we can do that only by delivering Sir Roy’s savings and by getting the costs of our railway back under control. That prize is within our grasp if we progress Sir Roy’s agenda. To reassure her, I have no intention of ending the system of regulated fares. That is not suggested by Sir Roy, and I know not where she got the idea that I was in favour of it.

The hon. Lady asked me to try to take a collaborative approach with the unions on labour productivity. I would be delighted to do so if an opportunity arises. I was slightly heartened by what I heard Bob Crow say on the radio this morning, although I may have heard only a part of the total interview. He said he was willing to look at proposals for more efficient working practices, which is at least better than his saying that he is not willing to look at such proposals. We must be clear that all players in the industry must change if we are to harvest those savings. The prize for the unions is also big. The railway is a growing industry—it is not in decline, as it was before privatisation, but growing rapidly

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and robustly—and huge increases in passenger numbers are projected. If we can deal with the problems of the cost base, we could have a hugely successful business for the benefit of British fare payers and taxpayers.

The hon. Lady has won me a small bet by referring to my strategy on west coast franchising as being in “chaos and confusion”, so I am grateful to her for that. In fact, I have today announced an example of open government. We could have progressed with the draft invitation to tender that I published today without further consultation, but I felt that because there has been a material change from the documents that we circulated at the time of the January consultation, it is right to consult again. That introduces a three-month delay, and I do not want the franchise changeover to come immediately before the Olympics, which necessarily means a delay until the latter part of next year, which gives us the opportunity to complete the integration of the Pendolino fleet. We have taken a set of careful and interlinked decisions on the timetable for that franchise, and I hope that, on reflection, she welcomes the approach that we have adopted.

The hon. Lady asked about First Great Western. It is of course true that First Great Western has decided to exercise the break clause that exists in its franchise, which allows it to surrender it in 2013 rather than in 2016. However, before she adopts too strident a tone, she should remember who let that franchise with that break clause in it. First Group has exercised the rights that her Government gave it in that franchise. She might also reflect on the fact that her Government let the GNER franchise and the NXEA franchise before she gets too strident about them as well.

The hon. Lady mentioned profit in the railway. I do not consider “profit” to be a dirty word. I consider that proper incentives and profit-making companies delivering efficient public services can be effective ways of delivering for the taxpayer and the passenger. This Government will introduce a profit-sharing arrangement in new franchises, the like of which does not appear in the current crop of franchises, which her Government let, and the like of which would have prevented situations such as the one on the Trans-Pennine franchise, where profits of 30% on revenue are being earned. We will ensure that the taxpayer gets a fair share of any unanticipated profits that are earned over the lifetime of the franchise. I hope that we all have the same objective—the delivery of a world-class railway service that is affordable for taxpayers and for fare payers. However, to deliver that, we have to drive out cost-effectively and, after Members and others have heard what I have had to say and what the hon. Lady has had to say, it will be for them to decide who will most effectively be able to achieve that objective.

Mr Robert Buckland (South Swindon) (Con): Does my right hon. Friend accept that for many Swindon residents travelling to and from London to work during peak hours has resulted in eye-wateringly high fares for far too many years? What hope can he offer them for the future of peak-time rail fares?

Mr Hammond: There are two things that I can say to my hon. Friend. First, if we do not address the challenges that Sir Roy has set out, there will be only one direction of travel—worse services and higher prices. That is not acceptable to anybody in this House or in the country.

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I want to make a point specifically about commuter fares and season tickets. At the moment, we have a very inflexible system of season tickets. People buy a season ticket which assumes that they will travel in peak hours every day. Increasingly, people have opportunities for flexible working patterns—indeed, the Government are committed to giving people greater opportunities for flexible working patterns. Smart ticketing technology will allow us to be able to start to recognise people who have a pattern of work that allows them to work at home one day a week or a fortnight, instead of their having to pay the rail fare even though they are not using the railway. That technology can help us to address some of the perverse incentives that season ticket holders currently have to use the railway in peak time when perhaps they do not always need to do so.

Geraint Davies (Swansea West) (Lab/Co-op): On the issue of value for money and rail electrification, can the Secretary of State undertake to have a look at transnational transport funding from Europe to help to support the case for the Swansea to Cardiff electrification? It would complete the electrification from Paddington to Swansea and, with the ferry link to Ireland, provide access to significant European funding.

Mr Hammond: I have already made a statement to the House on the economics of the electrification from Cardiff to Swansea and I am afraid that those economics have not changed, but if the hon. Gentleman is raising the issue of trans-European network funding, I am not aware that there is any still available. However, I undertake to have a look at that potential source of funding.

Dr Julian Huppert (Cambridge) (LD): I welcome this report and congratulate Sir Roy McNulty on it. Commuters and other travellers have suffered for far too long from high and complex fares and overcrowded trains. Can the Secretary of State assure me and all those who use the trains that the savings that must be made from the system will be returned to people in lower fares and better services?

Mr Hammond: I thank my hon. Friend for his question. I have to put it to him slightly differently: the savings will be returned to people in the form of lower taxpayer subsidy—which we have to deliver, because my Department, like every other Department, has to make its contribution to dealing with the fiscal mess that we inherited—and in due course, if they are successful, there will be lower pressure for upward real increases in fares. I would like to see a return to a world in which fares rise broadly in line with inflation, and a move away from the era of inflation-busting fare increase that we have faced over the last few years and, unfortunately, will have to face over the next three years.

Ian Lavery (Wansbeck) (Lab): The McNulty report did not seriously consider the possibility of the reintegration of the rail system into public ownership. I mention that because many systems abroad are largely in public ownership. One of the reasons why our system is at least 30% more expensive is the billions of pounds siphoned off in profits and dividends. Will the Secretary of State explain why they did not look at that option and why it is not on the table at the moment?

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Mr Hammond: A good old Labour contribution from below the gangway! Sir Roy McNulty did look at the options of greater integration, but the hon. Gentleman might not be aware that things have moved on a little in Europe since the last time he read the manual. European law on railways has evolved, and the separation of train operations from track operations is now mandated across the European Union. While much of the railway is still in public ownership, it is not integrated in the way that he may imagine.

Sir Roy’s clear conclusion was that a monolithic UK-wide system is not the direction of travel and that more devolution of responsibility and autonomy to route networks is the way forward.

Mr Edward Timpson (Crewe and Nantwich) (Con): Although I understand the reasons behind the delay in the decision on the west coast main line franchise, can my right hon. Friend reassure my constituents that the decision will include provision for the train operators to play a more active role in the future of stations, especially in their infrastructure and presentation to passengers?

Mr Hammond: Yes, I can give my hon. Friend that assurance. The proposal that we have put forward—as he will see when he has a chance to look at the invitation to tender—is that the train operators should be granted a peppercorn rent lease of the station for the duration of the franchise. We also propose a revised residual value mechanism, so that train operators have an incentive to invest capital in station infrastructure throughout their franchises with the confidence that they will be reimbursed a fair value for that investment at the end of the franchise.

Mr Barry Sheerman (Huddersfield) (Lab/Co-op): Does Sir Roy’s report which, from what the Secretary of State has said, is very stimulating and interesting, mention the possibility of mutualisation or a co-operative form for Network Rail? We want a profitable, safe and effective service but if, as MP for Huddersfield, I look at the rolling stock that gets my constituents to Wakefield, Leeds and Manchester, I see that it leaves a great deal to be desired. Could we also see some changes on that front?

Mr Hammond: I am sure that the hon. Gentleman will have been pleased by the announcement that we made recently about additional rolling stock for the commuter services into Leeds. Sir Roy did not specifically address the question of any form of mutual structure. Network Rail is of course an independent company, and as Secretary of State I do not have any power to direct it. There are issues of the governance of Network Rail that need to be addressed, and I accept that, but I suggest that the urgent need is to look at its operational structure. The issues of governance and the rather theoretical question of ownership can be looked at on a longer time horizon. Right now we need to drive out cost.

Mr Marcus Jones (Nuneaton) (Con): Following the work of the last Government, there are no fast off-peak services on the west coast main line to or from Nuneaton station. Many of the fast off-peak trains thunder through Nuneaton station half empty while there is a strong demand for off-peak services to and from that station.

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Will the west coast main line specification make it possible for franchisees to look, for example, at changing services so perhaps a fast train could stop at Nuneaton station every hour, trading off a small increase in end-to-end journey times for the possibility of maximising revenue on that service?

Mr Philip Hammond: I thought, at the beginning of my hon. Friend’s question, that perhaps he had missed what I said about less departmental micro-management, but I saw from how he ended that he had not missed it all. We will not mandate the new franchisee to do what he describes, but we will make it possible by relaxing the rigid timetabling and specification imposed in the past. We will also give operators an incentive to do so. By moving away from the cap and collar revenue-sharing regime, we will make operators much more responsive to the demands of passengers waiting on a platform and ready to pay good money to get on a train. In the past, that has not always been the case, because 80% of what passengers handed over went directly to the Government.

Mr Jim Cunningham (Coventry South) (Lab): I note what the Secretary of State said about subsidies and fares—we will return to that later in the year—but will he give us a progress report on the Coventry Knuckle project, which I am sure he knows a lot about, because it would help Coventry’s economic situation?

Mr Hammond: As the hon. Gentleman knows, I had a productive meeting with him, some of his parliamentary colleagues and local councillors about the project. I think they took from that meeting clear guidance on what needs to be done to raise the project’s prospects of achieving local authority major scheme funding. I remain happy to engage with him and his colleagues in progressing that project.

Amber Rudd (Hastings and Rye) (Con): Wages in Hastings have fallen dramatically against the rest of the south-east in the past 10 years, but wages of commuters are significantly higher. Does the Secretary of State agree that if we manage to redress the imbalance between the continually deteriorating service and higher wages, we would improve the regeneration of towns such as Hastings as well as the quality of life of commuters themselves?

Mr Hammond: My hon. Friend is right. High-quality rail services deliver major economic benefits to the towns they serve, which, of course, is one of the major rationales behind the Government’s enthusiasm for the high-speed rail project.

Jonathan Edwards (Carmarthen East and Dinefwr) (PC): What consideration has been given to a Welsh franchise based on a not-for-profit model operated by the Welsh Government? I believe that is the policy of at least two of the main parties in the National Assembly.

Mr Hammond: I am pleased to be able to tell the hon. Gentleman that franchising policy in Wales is a matter for the Welsh Assembly Government, so it will be for them to decide when the current Arriva Trains Wales

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franchise comes up for renewal, which—off the top of my head—is in 2016. However, I said something this morning that he will be interested in: I indicated that when we return to the House later this year with our proposals for broader rail reform, we will consider the greater devolution of regional railways and regional railway funding, both to the devolved Administrations and to local authorities and integrated transport authorities around the country. That will enable us to oversee the national strategic rail routes, but not manage the regional and local railways system, from the Department in London. That seems a sensible way of proceeding.

Duncan Hames (Chippenham) (LD): I welcome the greater autonomy for Network Rail route managers in the Wessex area, because rail passengers in my constituency are endlessly frustrated by the pass-the-parcel attitude to responsibility for performance on the railways. In the light of First Great Western’s recent announcement, will the timing for the letting of the Great Western franchise enable the Government fully to embrace the McNulty report proposals in setting out the future of rail travel for my constituents?

Mr Hammond: Yes, of course. The fact that the Great Western franchise will be re-let in 2013 will enable us to bring forward to that date the incorporation of the benefits of McNulty’s work. However, I would re-emphasise that one of Sir Roy’s key conclusions—one that I strongly share—is that our railway is not the same in every area. What is right for the west coast main line might not be right for the East Anglia franchise. What is right for the northern franchise might not be right for the south-eastern franchise. We will consider each franchise individually, and look at different models appropriate to the type of railway involved. We will proceed on that basis, and we will learn as we go.

Mr Bob Ainsworth (Coventry North East) (Lab): The west coast main line has improved dramatically over the years in both capacity and reliability, because of the investment made. However, it is the victim of its own success. Use has risen exponentially and the trains are packed at peak times. Despite what the Secretary of State said about regulated fares, there is a widespread fear that the proposals he has announced will allow substantial increases in off-peak rail travel fares. If that is so, it will not only damage people travelling in off-peak periods, but remove the incentive to plan one’s travel and thus make the crush at peak times even worse. What can he say in response to those fears?

Mr Hammond: I can say that they are unfounded. By the way, the right hon. Gentleman made the case for High Speed 2 more eloquently than I could. It will deliver a massive increase in capacity on the west coast corridor and allow much more innovative and flexible services on the west coast main line, which is now operating at—or very close to—capacity. However, there is a serious point about pricing and cliff edges in the pricing system. Anyone who stands at Euston station on a Friday evening will see that nobody wants to board a train at 6.50 pm or 6.55 pm, because that means paying the peak fare. They are all trying to get on the train at 7.2 pm, to the extent that the British Transport police regularly have to deploy to physically keep people off the trains for safety’s sake. That is a barmy pricing

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system. We have to consider the anomalies of massive cliff edges and try to smooth them out, so that there is less of an incentive not to travel on a particular train. However, overall I would expect such a move to be revenue-neutral across regulated fares; this is about managing the system better, not raising more money.

Mr Philip Hollobone (Kettering) (Con): One of the understandable grumbles of the Kettering rail users group is that for historical reasons the fare for a journey from Kettering to London is disproportionately higher than that for a journey to London of a similar length from other places. Will the fares policy review seek to iron out such anomalies?

Mr Hammond: I do not want to pre-empt the rail fares policy review, to which I am sure that my hon. Friend will make a submission, but I have recently enjoyed meeting the Northampton rail users group, and the Minister of State has just said that she would be happy to meet the Kettering rail users groups, so perhaps we can carry a dialogue forward.

John McDonnell (Hayes and Harlington) (Lab): I refer to my entry in the Register of Members’ Financial Interests. On a constituency matter, with regard to First Great Western and the handing back of the franchise, I would welcome the Secretary of State or the Minister convening a meeting of the relevant MPs along that line to discuss the security of service provision. This looks like a creeping re-nationalisation of the railway service—but there we are! However, as the Secretary of State said, there is a big staffing agenda. All three rail unions have welcomed the opportunity to work with the Government on that agenda. However, it is crucial that they are represented at every level of the industry and in every forum discussing the staffing agenda. It is not conducive to good industrial relations to have statements about threats of further anti-trade union legislation at this time.

Mr Hammond: I will have to disappoint the hon. Gentleman on creeping re-nationalisation: there is not one, and I can assure him that so long as I am in this job, there will not be one. However, I am happy to meet MPs along that route to talk about the Great Western franchise. First Group will continue to operate the franchise until 2013, and it has assured us that it will operate it as normal and run the franchise properly during that period. It has every incentive to do so, because, as I just announced, our policy is that eligibility for participating in franchise competitions will depend on demonstrated ability to deliver co-operative working, and to bear down on cost pressures.

I am absolutely ready to meet the unions. In fact, I think my office is in the process of arranging a meeting with the rail unions through the TUC, which I hope can play a constructive role in this process—it is a process I think we all want—of making this a viable and affordable industry that has a bright future, and which will employ not fewer but more people as the railway expands on the trajectory of current projections.

Jeremy Lefroy (Stafford) (Con): I welcome the Secretary of State’s approach to the west coast main line franchise. As has been said, overcrowding in standard class in particular is a problem on the west coast main line. I

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pay tribute to the quality and courtesy of the staff I encounter in difficult circumstances. However, first-class carriages are often under-utilised. Can he confirm whether the new franchise will include a duty to take all practical measures to ensure that people do not have to stand on trains that often travel at more than 120 mph?

Mr Hammond: As I said earlier, the intention is to be less prescriptive. Train operators already have the freedom to de-designate first-class carriages and reconfigure their trains if they want to, and all the new Pendolino cars that will be inserted in existing nine-car sets will be standard-class carriages. I do not want to talk about imposing a specific duty on operators, but they will have to deliver on targets to reduce overcrowding, and we have powers to force them to take action if they do not.

Kelvin Hopkins (Luton North) (Lab): I had the pleasure of meeting Sir Roy McNulty on two occasions during his consultation. I put to him the points made by Tom Winsor, the former rail regulator, that British Rail worked miracles on a pittance and that when the railways were handed over to the privateers, they were handed over “in good order”—his words. Also, the Catalyst report recorded BR as having the highest productivity of all the railways in Europe. BR was desperately underfunded, with not enough investment, but it worked miracles on a pittance. I also put it to Sir Roy that the staggering rise in costs that has occurred since privatisation is a direct result of privatisation. I personally believe that it is pie in the sky to think that we will bring those costs down without public ownership again. When is the Secretary of State going to look at that again?

Mr Hammond: I am not. I think the hon. Gentleman suffers from the disease—which I have noticed is quite widespread—of taking a rose-tinted retrospective view of British Rail. People were quick enough to criticise and complain about British Rail’s performance when it was operating; now, at 15 years’ distance, that era suddenly appears to have been some halcyon period of British excellence. The hon. Gentleman is right that British Rail operated the railway on a shoestring at relatively low cost, but in doing so it built up a tremendous legacy of under-investment and disregard for safety risk, the terrible consequences of which we saw only too clearly in the late 1990s and the early years of this century.

Graham Evans (Weaver Vale) (Con): I welcome this report and the associated cost reductions on the west coast main line. We can learn from this report, so will my right hon. Friend please ensure that the forecast build and running costs for High Speed 2 are not exaggerated?

Mr Hammond: Yes. The High Speed 2 business case and the build and running costs put forward in the consultation document incorporate the Treasury’s generous additional percentages for risk and optimism bias—with as much as 60% added to the basic costs in some cases—to address the very concern that my hon. Friend outlines.

Jeremy Corbyn (Islington North) (Lab): In all this emphasis on devolving and transferring responsibility to train operating companies, does the Secretary of

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State not recognise that there is a danger of losing the whole principle of having an integrated rail service, with integrated timetabling and ticketing for those who make complicated journeys? Additionally, he did not say very much in his statement about reopening disused branch lines, which could well benefit by becoming a useful feeder service into the network, or about the east-west freight line, which is so important in increasing freight usage and using existing rail tracks more efficiently.

Mr Hammond: I am grateful for the hon. Gentleman’s question, which allows me to make an important point. Integration in the railway at the level of timetabling, planning and route network operation is important. The hon. Gentleman will not have had a chance to read the report yet, but Sir Roy makes that point clearly. Those things have to be done on an industry-wide basis; they cannot be fragmented when greater autonomy is devolved to network rail route managers or when train operators are given greater flexibility.

The hon. Gentleman also talks about reopening disused lines. I am afraid to tell him that work on the cost base has a little way to go before that becomes a practical reality. However, as I said earlier, I intend to look carefully at the case for devolving responsibility for commissioning services and the budgets with which to do that for regional and local railways later this year. I would expect decisions to reinstate any currently disused lines to be taken at that level.

Andrew Jones (Harrogate and Knaresborough) (Con): I congratulate the Secretary of State on this encouraging report. What are the prospects for improved rolling stock on the Leeds-to-York line via Harrogate and Knaresborough? We have rapidly growing numbers of passengers on the route, but the rolling stock is some of the very worst that I have seen in the country.

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Mr Hammond: I am grateful to my hon. Friend for his question. As I mentioned earlier, an announcement was made recently about additional rolling stock for services into Leeds. I had it in my mind that that covered the route in question, but he is testing the extreme edges of my memory now, so it would be better for me to write to him with the specific answer to that question.

Katy Clark (North Ayrshire and Arran) (Lab): Surely the Secretary of State must accept that fragmentation costs more. For example, I understand that Network Rail employs about 600 legal staff to negotiate with the train operating companies, and no doubt each operating company also employs significant numbers of such staff. Surely we should be looking at integration, as it will save us money.

Mr Hammond: The hon. Lady has obviously read the RMT press release from this morning. Of course there are additional frictional costs—interfaces—in the operation of the railway that we currently have, with franchisees and an overall network operator. However, there are also a lot of unnecessary costs that are caused by the adversarial relationship between Network Rail and the train operators. As I said earlier, I do not believe that the answer is some massive revolution that requires primary legislation and will take the rest of this Parliament to deliver. Instead, this is about getting people working together differently. Let us get to a railway that is different from the one that we have now. In the railway that we have now, the brightest and the best people in all train operating companies are the ones who spend their lives allocating responsibility for failure and collecting money from each other. Hundreds of people are literally spending their days trying to decide whether each delayed train is the responsibility of Network Rail or of this or that operator. That is not productive. Getting the industry to work together, looking at industry-wide costs and focusing on solving the problems, rather than allocating blame for them, is the way forward.

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Points of Order

1.37 pm

Sir Gerald Kaufman (Manchester, Gorton) (Lab): On a point of order, Mr Deputy Speaker. I wish to raise with you a matter relating to the rights of Members of this House. I have today received a notice about the restrictions being imposed on access to this House on the day of the visit by the President of the United States. I recognise entirely that it is essential to provide the President with maximum security. I recognise further that this will involve, and needs to involve, restrictions on access to this building by strangers—people who are not Members of this House. However, the notice includes a series of restrictions on access to this House by elected Members of this House. I regard that as unacceptable. It is also a violation of the Sessional Orders, which give every Member the right of access to this House in the service of his or her constituents. I would therefore ask you to have this matter re-examined urgently, so that while of course welcoming the President and providing him with security, we can at the same time maintain the right of Members of this House to come into this building whenever they need to.

Mr Deputy Speaker (Mr Lindsay Hoyle): What I can say is that we do not discuss security issues in this Chamber, and quite rightly so, as Sir Gerald will know, given that he is a very senior Member of this House with great knowledge. I suggest that he meet with the Serjeant at Arms to discuss the issues. He has put them on the record for the rest of the House to consider, but the right way to proceed is to sit down with the Serjeant at Arms. I will, of course, also pass on his comments to Mr Speaker.

Bill Esterson (Sefton Central) (Lab): On a point of order, Mr Deputy Speaker. I am glad that the Secretary of State for Transport is still in his place to hear my point of order. Have you had any indication from him that he intends to make a statement to the House to clear up the confusion caused by his comments on television and in The Times today? Coastguards at Crosby and across the country, and the public whom they serve, are extremely concerned about the proposed changes, as are Members of all parties across the House, and we would all appreciate some clarification in a statement from the Secretary of State.

Mr Deputy Speaker: That is not a matter for me, but the hon. Gentleman has placed his comments on record.

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Backbench Business

[27th Allotted Day]

BBC World Service

[ Relevant documents: The Second Special Report from the Foreign Affairs Committee, The Implications of Cuts to the BBC World Service, Responses from the Government and the BBC to the Committee’s Sixth Report of Session 2010-12, HC 1058; The Fourth Report from the Culture, Media and Sport Committee, on the BBC Licence Fee Settlement and Annual Report, HC 454 . ]

1.40 pm

Richard Ottaway (Croydon South) (Con): I beg to move,

That this House notes the Sixth Report from the Foreign Affairs Committee, The Implications of Cuts to the BBC World Service, HC 849; endorses the Committee’s support for the World Service’s invaluable work in providing a widely respected and trusted news service in combination with high-quality journalism to many countries; considers that the unfolding events in North Africa and the Middle East demonstrate the continuing importance of the soft power wielded through the World Service; believes that the value of the World Service far outweighs its relatively small cost; and invites the Government to review its decision to cut spending on the World Service by 16 per cent.

This is an historic moment for the House of Commons, because this is the first debate in the House by a departmental Select Committee on a substantive motion relating to a major issue of public concern since the introduction of the new arrangements for Back-Bench business. This is good for democracy and good for the reputation of Parliament.

Power falls into three categories: military power, economic power and soft power. It is the view of the Foreign Affairs Select Committee that the BBC World Service is a key component of Britain’s soft power. We recognise the economic constraints and the background to our report, but we believe that it is a mistake to implement the proposed heavy cuts to the World Service’s budget. This is a question of priorities. We live in a fast-moving world where the internet and the media have grown in reach, influence, power and authority faster than anyone could have dreamed. It might seem odd to quote no less a person than Osama bin Laden on the importance of soft power, but, talking about jihad, he said:

“The media war in this century is one of the strongest methods. It’s…90% of the total preparation for battles”.

He was talking about the power and influence of media communications—soft power.

Soft power is a rapidly growing way of achieving desired outcomes. In the cold war era, power was expressed in terms of nuclear missiles, industrial capacity, numbers of men under arms, and tanks lined up across the central plains of eastern Europe. Today, none of those factors confers power in quite the same way. The old structures are moving on. Cyber-attacks and the more subtle methods of the information age are the norm. Soft power—the power of Governments to influence behaviour through attraction rather than coercion—dominates. That point is not lost on the Foreign Office, high up on whose list of structural reform priorities—the reforms that it believes should have priority—is the

“use of ‘soft power’ to promote British values, advance development and prevent conflict”.

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I can think of no better definition or illustration of the need for the World Service, and it is the opinion of our Committee that the cuts to its output are a false economy. If anything, it should be expanded to address the concerns of a changing world, just as the security services and the number of diplomats to key sensitive postings have been expanded.

The BBC World Service is a priceless institution. Its value dramatically exceeds its costs. It is a key national and global institution at the forefront of international broadcasting, operating to the highest standards. In evidence to the Select Committee, BECTU—the Broadcasting, Entertainment, Cinematograph and Theatre Union—said:

“The World Service is the world’s most recognised news service.”

The National Union of Journalists described it as a “force for good”. A Chinese journalist told us that it was the most “trusted and respected” news service. The Financial Times described it as

“one of Britain’s principal sources of soft power”.

Mark Thompson, the director-general of the BBC, described it as

“one of the most precious things the BBC does and a lifeline to many tens of millions of people around the world who don’t enjoy proper access to accurate, impartial, open media”.

A listener said that it

“punches far above its weight and brings a disproportionate amount of prestige and soft power to the United Kingdom”.

Another wrote to me saying that it would be

“better to cut the increase to the aid budget and bolster the World Service”.

Mr Bob Ainsworth (Coventry North East) (Lab): First, may I thank the Chairman of the Select Committee for the leadership that he has shown during the preparation of the report? I believe that we have managed to produce an enormously influential report under his chairmanship. He was talking about the value of the World Service, but I know he recognises that that is changing. Others are investing in this area. For example, at this time of the Arab spring, we are seeing al-Jazeera becoming increasingly powerful in the influence that it brings to bear. Our influence is in great danger of being completely eclipsed.

Richard Ottaway: I thank the right hon. Gentleman for that, and for the support that he gives me on the Committee. I also thank him for his contributions to the Committee, and the expertise that he brings from his previous career. He is absolutely right about the changing world that we live in. I think that the Foreign Office gets that point. I do not wish to be critical of it, and I think that it does understand this, but we are trying to emphasise that the World Service represents one of the best ways of communicating with this changing world. The right hon. Gentleman makes his point well.

The World Service enhances Britain’s credibility. I have heard a story that President Kikwete of Tanzania starts his day by rising at dawn and listening to the BBC World Service rather than the local Tanzanian media. Others record that Mikhail Gorbachev turned to the

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World Service for real information during the coup against him in 1991. It is no wonder that the Foreign Secretary said that

“the BBC World Service will remain of fundamental importance to this country’s presence in the world”.

The strategic defence review singled out the World Service, saying that it

“plays unique roles in promoting our values, culture and commitment to human rights and democracy”.

In the interest of balance, however, I should report to the House that one listener wrote to me to say that it was a complete waste of money for the World Service to be broadcasting cricket to northern Europe. I had to point out that that was on long wave, and not the World Service and, unfortunately for him, he would have to continue to listen to ball-by-ball commentary and detailed analysis of the LBW rule.

The Select Committee believes that the World Service is a jewel in the crown which promotes British values of truth and democracy across the globe. In our motion, we say that its value “far outweighs its relatively small cost”. As yet another Minister defects from Libya, the dramatic events in north Africa and the middle east show that soft power, properly deployed, is likely to bring even more benefit to the UK. In the fog of war and media spin, people everywhere trust the World Service to be fair, honest, courageous and decent. And so, by association, Britain is endowed with those same qualities. This is soft diplomacy, and it is valuable.

Rory Stewart (Penrith and The Border) (Con): Does my hon. Friend agree that a key element in this is that the Government’s contribution to the World Service does not have to be a permanent one? The licence payer is going to take over the cost of the World Service in three years’ time. Were the Government to cut the World Service by the same amount as the rest of the Foreign Office, there would be a temporary imposition on the taxpayer, not a permanent one.

Richard Ottaway: My hon. Friend is absolutely right, and I shall come to that point in a moment. It is the disproportionate nature of the cuts that is of concern to so many people.

Sir Menzies Campbell (North East Fife) (LD): On behalf of the Committee, may I thank my hon. Friend for so eloquently putting the case set out in our report? A moment ago, my hon. Friend the Member for Penrith and The Border (Rory Stewart) mentioned the question of governance. Does my hon. Friend the Member for Croydon South (Richard Ottaway) share the anxiety felt by many of us that the financial responsibility for the World Service will be transferred to the BBC budget, which is subject to a six-year moratorium with regard to any increase in the licence fee? Is there not a risk that the World Service will find itself competing with other parts of the BBC family—entertainment, for example—so that the admirable Mr Robin Lustig might find himself competing for funds with the equally admirable Mr Bruce Forsyth?

Richard Ottaway: My right hon. and learned Friend is absolutely right. It is a key recommendation of our report that the future governance relationship between the BBC World Service and the Foreign Office is not

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defined clearly enough in the concordat. Our concern is that we might be told, “You want an Arabic service and you want a Mandarin service, but we don’t have enough funds for both, so you need to decide which one”. To be fair to the Foreign Office, it has taken that point into account in its reply. I am pleased that it is still looking at the issue.

The central recommendation of the report was that the decision to reduce spending on the World Service by 16% should be reversed, but that if the funding has to be reduced, it should be done in such a way as to minimise the damage. A wide range of services will either be closed altogether or have a reduced output. I have no quarrel with some of the planned changes. For example, radio audiences in Vietnam have fallen to 1% and it has only about 110,000 listeners. In the meantime, Vietnam is seeing an internet boom with some 400,000 users now accessing the World Service online. The decision to focus on online services is obvious and sensible. None the less, we highlight plans to cut three services, which we think should be reviewed: the Mandarin, the Hindi and the Arabic services. It is doubtful whether their reduced output is in the nation’s interest.

Keith Vaz (Leicester East) (Lab): I join others in congratulating the hon. Gentleman on his leadership role and his Select Committee on its excellent report. On the Hindi service, does he share my concern to the extent that the Government have made it clear, from last year’s Queen’s Speech to this week’s statement by the Foreign Secretary, that India is a priority? We are sending more diplomats to India in order to improve our relationship with that very important country, so will cutting the Hindi service not send out the wrong message to a country with which we really want to do business?

Mr Deputy Speaker (Mr Lindsay Hoyle): We must have shorter interventions, as we are rapidly running out of time.

Richard Ottaway: The right hon. Gentleman is right that India is of huge strategic importance to the United Kingdom. It is a rising power and a stated foreign policy priority. The World Service audience in India is some 11 million, which beats “EastEnders” any day. The estimated cost of reaching that audience is only £680,000 a year, which the producer of “EastEnders” would probably die for. I am not convinced, and I hope the House is not convinced, that losing that huge audience to save a bit over £0.5 million is worth it—and I am pleased that the Government agree in their reply to our report.

Mike Gapes (Ilford South) (Lab/Co-op): I accept that the Government say they are prepared to bring in some temporary measures whereby the World Service will provide limited hours in the Hindi service for a temporary period, but does the hon. Gentleman agree that the real solution is not temporary measures, but recognition that losing an audience of 10 million in India and a total loss of nearly 20 million to the World Service audience will reduce its share of the global audience so that it will no longer be the premier broadcaster internationally?

Richard Ottaway: I thank the hon. Gentleman for his work in the Select Committee in preparing the report. He makes exactly the point I am about to make. I hope

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that the Government will accept the motion—I have reason to believe that they may well do—and when they conduct the review, the hon. Gentleman’s point is exactly the one they should be looking at.

I shall move on from India to China. BBC China has been struggling with the jamming of shortwave radio signals by the Chinese authorities for more than a decade. As a result, its impact has been lost. Despite that, witnesses told us that they continued to hold the service in high regard. Sometimes it may be jammed in cities, but not in rural areas. After the Szechuan earthquake of 2008, the local community tuned in to BBC shortwave so that they could find out what was happening with the relief efforts. Chinese listeners tuned in to the Nobel peace prize ceremony, which the media was banned from reporting.

In response, the World Service is refocusing its online provision to China. However, let me express a word of caution about the move to online services. Internet services can be turned off at any time by totalitarian regimes. A good example was seen in Egypt during the Arab uprising when some 80 internet providers were cut off overnight. The Chinese Government have published a strategy paper asserting their rights to censor the internet inside their own borders.

It is the cuts to the Arabic services that have caused the greatest concern. No embarrassment should attach to the World Service or the Government over this decision, which was made last December before the Arab uprisings in January of this year. The value of BBC Arabic services is highlighted by photographs—colleagues may have seen them—of protesters on the streets of Syria carrying placards saying “Thank you, BBC”. Across north Africa, only two radio stations are listened to: al-Jazeera and the World Service. I mean no disrespect to al-Jazeera, but in my judgement, the far more independent and therefore respected service is the World Service.

This is a region that requires quality journalism and news coverage. The Foreign Office has responded to recent events in the Arab world by diverting considerable resources to the region. It has expressed its surprise over the reduction in World Service output—I hope that surprise will work its way into its review—and I welcome the fact that the Foreign Office is in discussion with the World Service to review the situation. What is needed, however, is a full reversal of the proposed cuts.

Let me deal with funding. Since its inauguration, the World Service has been funded by the Foreign Office. This will end in 2014 when responsibility will be transferred to the BBC. During the intervening four years, the budget is to be reduced from £241 million to £212 million a year. Taking into account inflation, that is a 16% real- terms cut. Last autumn’s spending review announced that the overall FCO budget would fall by 24%. However, a closer look shows that, once the World Service and the British Council are taken out of the equation, the actual cut in the Foreign Office budget is a shade under 10%.

In my judgement and in the opinion of the Select Committee, a 16% cut in the World Service budget, compared with 10% in the Foreign Office budget, is disproportionate. I sympathise with the director of the World Service who argued that the service had to some extent been singled out. In his defence, the Foreign Secretary told us that he did not regard the cuts to the

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World Service as being disproportionate. He argues that the World Service proportion of the FCO overall budget had been kept at its 2007-08 level through to 2013-14.

There seems to be some disagreement over the figures. The World Service tells us that, using the FCO’s baseline of 2007-08, when the World Service had 16% of the budget, it does not keep the same proportion, but declines to 15.6% in 2013-14. That 0.4% difference might not sound much, but it amounts to £6.6 million a year of the World Service budget, which would be enough to save a number of services.

In response, the Government say that they “do not recognise” the World Service calculations. So, in an effort to explain the difference and resolve the dispute between the World Service and the Foreign Office, I dug into the figures. I discovered that they were produced by the House of Commons Library. On digging a bit further, I found that the Library stands by the figures as they are based on the FCO’s own resource accounts and letters to the Committee from the Foreign Secretary and the permanent secretary. Quite how the FCO can say that it does not recognise the World Service figures is a bit of a mystery. Perhaps the Minister will explain the figures further in his reply.

Those are the problems. What are the solutions? I am advised that the additional funds required to retain the Mandarin, Hindi and Arabic services, about which the Foreign Affairs Committee expressed concern, amount to between £3 million and £4 million per annum, which is less than the discrepancy between the World Service figures and those of the Foreign Office. The Committee does not believe that there should be any cuts at all, but believes that if there are to be some cuts it would not be a stupid decision to focus on a small number of priority services, to allocate a relative pinprick in terms of public expenditure, and to reverse the decisions on Mandarin, Hindi and Arabic using the unallocated £6.6 million.

Many Members, and witnesses from outside the House, have suggested that the huge and growing DFID budget could be used to make up the shortfall in the World Service budget. That course is subject to two constraints. First, although it might have been permissible before the International Development Act 2002 came into effect, the Act states that any funding by DFID should be used for the reduction of poverty. Secondly, DFID funding must comply with OECD guidelines to become official development assistance. Therein lies the problem. There is a limit to exactly how much a broadcaster’s output can be described as official development assistance or as reducing poverty, and I understand that that limit has been reached.

Others have suggested that a way around the problem would be to slice a few million quid off the DFID budget and give the money to the Foreign Office for onward transmission to the World Service. That suggestion runs into the difficulty of meeting the United Nations target that 0.7% of GDP should be spent on international development. However, the House will welcome an announcement by the Secretary of State for International Development, who, following discussions between us, wrote to me on 13 May stating that he intended to make a grant to the World Service Trust and put his Department’s relationship with the trust on a more strategic basis. The trust is the charitable arm of the World Service, focusing

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on development. He believes that he can significantly expand its operations, increasing development outcomes and poverty reduction. That is an extremely helpful development. I congratulate the Secretary of State and his colleagues in the Department and thank him for his personal involvement, and I hope that the Foreign Office will be equally responsive.

Following the tabling and publishing of the motion last week the Government published a fairly emphatic rejection of our report, and it is with some surprise that I now learn that they intend to accept the motion, which calls on them to review the decision to cut the service by 16%. Several key Select Committee Chairmen, a former Foreign Secretary and other senior Members of Parliament support the motion because of the widespread concerns that I have raised.

In its report on the BBC, which was published today, the Culture, Media and Sport Committee strongly endorses the Foreign Affairs Committee’s report, which means that two Select Committee reports have unanimously expressed concern. I must tell the Minister that it would be a mistake to undertake a review and then to take no further action. If that does happen, the FAC will return to the subject.

The World Service is important. It is a national asset and a jewel in the crown, and it has an unrivalled reputation throughout the world. It is no surprise that Kofi Annan described it as

“perhaps Britain’s greatest gift to the world”.

In those circumstances, I urge the House to support the motion.

Several hon. Members rose

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. I must be honest with Members. We have very little time. I am sorry, but I must introduce a speaking time limit of eight minutes.

2.4 pm

Mike Gapes (Ilford South) (Lab/Co-op): I will try to be brief, Mr Deputy Speaker.

It is a pleasure to follow the Chairman of the Foreign Affairs Committee, the hon. Member for Croydon South (Richard Ottaway), who introduced our report so ably. Let me underline what he said at the end of his speech. If the Government allow the motion to be passed this afternoon but prove to have had no intention of taking its wording seriously, the House will definitely revisit the issue—and in a different mood from the one it has adopted today.

I believe that there is virtual unanimity in this country about the importance of the BBC World Service. Where do people who live in totalitarian and authoritarian regimes and have no access to free media obtain the truth? If they mentioned two or three sources, one of them would be the BBC. The BBC provides the best possible image for this country, and I think it was very foolish of the Government to present proposals that would lead to reductions in the services of the World Service and in its audience share.

Reference has already been made to cuts in language services. Perhaps the Minister will clarify something that is puzzling me. The tone of the response to our

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report from the Foreign and Commonwealth Office implies some lack of convergence and consensus with the BBC World Service and its management in regard to facts and interpretation. It appears from the wording of the report and the responses to it that there is some tension and frustration within the FCO about some of the things that we have said and been told.

Let me ask a specific question. When the World Service was told that it must reduce its budget significantly—I understand that at one point it proposed to close up to 13 language services—what was the Government’s response? Is it true that they said that that was far too large a number and that a smaller number must be reduced, but with disproportionate cuts in those services? We now have the absurd situation of a 10 million loss of audience in India. We also have the absurd difficulties with BBC Arabic to which the Chairman of the Committee referred.

In recent years the World Service has introduced an Arabic television service, which is very popular, and a Persian television service, which is extremely popular and very important in a country that is as important to us as Iran. It has also developed a number of digital and online services, which cost much more than the radio services that are being slashed as a result of these disproportionate cuts. Both the present Government and their predecessor are committed to recognising the importance of those Arabic and Persian television services and the potential establishment of an Urdu television service, which we have discussed with Ministers in this and the last Government, and which might have a significant impact on a country as important to us as Pakistan. Is it not part of the wielding of our “soft power” and our promotion of this country’s values—is it not in our national interests?—not to cut the World Service’s radio services in order to finance that expansion, but to recognise that the World Service is a vital priority for British policy projection?

I am not arguing that the World Service should simply do what the Government want; one of its great benefits is its independence. However, I fear that we have created what is potentially the worst of both worlds. We are drastically reducing the World Service’s footprint globally. As the right hon. and learned Member for North East Fife (Sir Menzies Campbell) made clear in his intervention, in three or four years’ time one tabloid newspaper or another will ask why, for instance, we should be financing languages in Africa that no one in this country understands, rather than paying to have the best “X Factor”-style television programme—or some other style of programme—that is under threat.

In one of our Committee’s final recommendations, we expressed deep concern about whether the BBC World Service could rely on the BBC as a whole to protect it under the new arrangements. One of the consequences of the Foreign and Commonwealth Office’s relationship with the World Service is that there has been parliamentary accountability and scrutiny of the World Service. I was serving on the Foreign Affairs Committee in the 1990s when attempts were made under the John Birt regime to get the World Service under the control of the BBC. Those proposals were dropped because Parliament was not happy about the possibility of the values and ethos of the World Service being undermined, and I do not believe that we have the

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necessary assurances in place now on preserving the ethos and values of the World Service under the future arrangements.

I hope the House resoundingly supports this very important motion. The fact that it has broad support is a great tribute to the Chairman of our Committee—and to the other Select Committee Chairs who have put their names to it, as well as the rest of us who are signatories. The Government must listen and introduce a speedy review—not a review that will take a long time so that the cuts the World Service will have to introduce are irreversible. We must have a swift review with fast results, and we must assert that the World Service is the jewel in the crown and will remain so.

2.12 pm

Mr Robert Syms (Poole) (Con): I support the motion. The Foreign Affairs Committee has produced a good report. The Chairman’s arguments were right and were pitched extremely well. It is clear from all the information produced, especially the written documentation the Committee received, that many people hold the World Service in very high esteem, and I therefore think we would be foolish hastily to proceed in the direction in which we seem to be going. Even if we accept that there might be a degree of bleeding stumps in some of the worst case scenarios, it is time for the Government to reconsider this issue before any lasting damage is done.

Consideration of the comprehensive spending review and the licence fee negotiations were concluded fairly quickly and without a vast amount of consultation, yet the implications for the World Service are very substantial indeed. Therefore, if there is a right time to pause so that we can carefully consider how to proceed, that time is now.

The issue of soft power and the flow of information around the world has already been mentioned, and it is of great importance for this country’s influence globally. Any of us who travel abroad appreciate that there is a great appetite for information from the BBC, as well as enthusiasm for British Council centres, and even British newspapers and the rest of our media. It is important that information flows, but the specialised analysis of that information by British journalists and foreign journalists working for the World Service is also important. We have witnessed upheaval, revolution and the fog of war, and reference has been made to the Facebook revolution. Often the analysis of experienced journalists is needed to decipher what is actually happening and to impart an accurate view to the world.

I heard a discussion on, I think, Radio 4 between two history professors, one of whom said, “If we look back into history and substitute the word “crowd” for “mob”, we can totally change the way in which people view events.” Journalists who work for the World Service must be allowed to get on with the job and give their best analysis of what is happening so that people who do not share our privilege of living in a free society can receive that information.

Rehman Chishti (Gillingham and Rainham) (Con): My hon. Friend rightly talks about the importance of such experienced journalists, and another advantage of the World Service is its independence and impartiality, which is crucial for empowering people to seek democracy in highly regulated states.

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Mr Syms: Yes, and we could not buy that. As the Chairman of the Select Committee has said, where the BBC withdraws a service another organisation will fill that vacuum, perhaps with a less good service, and probably with a less accurate one.

Looking back at the events in my lifetime, it is clear that the flow of information and the use of technology can change worldwide events. One factor in the overthrow of the Shah of Iran was the fact that he modernised his telephone system so that plugs could not be pulled out, which allowed the Ayatollah to phone through the digital system and give instructions to his followers. The flow of information from western television channels telling people in East Germany that they could get out to the west through a neighbouring country led to the great events that resulted in the Berlin wall being torn down. It is also clear from what is happening in parts of north Africa and the rest of the world now that information is a vital commodity.

The investment over decades in the Reithian tradition of striving for truth is very important, and we should bear in mind the sums involved here. I think the figure for the Hindi service is £680,000, and that is very small in the grand scale of things. We therefore must pause to reflect, and it would be a good idea if thought was given to addressing the issue of the Department for International Development budget. Aid is one answer to the world’s problems, but good governance and truth is another. We can greatly improve the manner in which the developing and third world is governed by getting more truth and information into countries and getting much more openness, transparency and democracy. The World Service can, of course, play a role in that.

I therefore hope the Government will listen. I hope they reflect on this excellent Select Committee report, and that we do not, as it were, throw the baby out with the bath water and for the sake of a small sum of money lose the ability to project truth, honesty and transparency to the world, which is so valued by people who live abroad and do not share our advantages.

2.17 pm

Martin Horwood (Cheltenham) (LD): The Liberal Democrats welcome the debate and strongly support the motion. The Select Committee Chairman set out very well the terms of the debate and the contrast between soft and hard power. Hard power in military terms is certainly often appropriate, as in the cases of Libya and Afghanistan, but it is an expression of British power overseas that is often fraught with military, political and financial difficulties. Even in the gentler realm of diplomacy, we are rightly reviewing our diplomatic presence around the world—and, it is to be hoped, expanding it in many cases in light of a changing world—while also having to pay attention to the financial context at home.

Soft power and expressions such as “the BBC World Service” are extraordinarily cost-effective. They reach billions of people and are enormously positive with very few complications, including many of the negative complications of other expressions of British interest around the world. The World Service in particular has attracted extraordinary plaudits from the likes of Kofi Annan and even Nelson Mandela. It has been refreshing in recent months to see placards on the streets of Muslim countries calling not for death to Britain or

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anything like that but thanking the BBC. They are talking about the BBC World Service, of course. In that context, it is extraordinary that we are facing the prospect of cuts to the Arabic service in particular. So, it is right that Ministers should be reconsidering the matter.

The current funding relationship is somewhat uncomfortable. The Select Committee is cautious about the eventual transfer of World Service funding to the BBC and rightly says that safeguards should be

“put in place to prevent any risk of long-term erosion of the World Service’s funding and of Parliament’s right to oversee its work.”

The intervention by my right hon. and learned Friend the Member for North East Fife (Sir Menzies Campbell) was also well made. Provided that those safeguards can be put in place—the Select Committee suggested a formal concordat with the BBC Trust—there is one advantage to the transfer of funding, which is that it underlines the independence of the BBC World Service from political decisions about both funding and editorial content. That is an important reassurance for World Service listeners worldwide.

In the meantime, we have something of a problem in the period leading up to 2014. I welcome the Committee’s call for funding arrangements to be re-examined. We are happy to support it and I am glad that the Government are accepting the motion. I appreciate, however, that this is not as easy as it first looks. I understand, like others, that Ministers have thought about this very carefully and are aware of the issues involved. I am certainly very grateful for the time that Ministers and their advisers from both DFID and the FCO have spent answering my questions on this subject, as well as those of my right hon. and hon. Friends in this Chamber and in another place.

I particularly welcome the Secretary of State for International Development’s announcement about the prospect of a significant grant to the BBC World Service Trust. Many development issues can be addressed in World Service programming, from gender awareness, to global responsibilities for climate change, adaptation to it and how people can prepare for it, to health awareness, particularly about matters such as the HIV epidemic.

There are limitations, however. It is right that DFID’s funding should be restricted to matters that qualify as official development assistance and not all broadcasting can come within that remit. It would set a bad precedent if DFID was asked to fund areas that did not qualify as ODA under OECD rules and we would not want that precedent to be set. Nor would we want World Service programming to be skewed completely in the direction of development programming. The provision of information and a British perspective on world events is very important in many countries. The Hindi and Mandarin services spring to mind and the priority in those cases is not development but our economic, diplomatic, political and cultural presence, which is vital.

The BBC should have to examine its costs, its overheads and its back-up costs just like any other public spending. It is quite right that it should try to do that and if the hon. Member for Ilford South (Mike Gapes) is correct, there has clearly already been an iterative process between Ministers and the BBC on the exact nature and extent of these cuts and their impact on particular broadcast services. Even if that is true, following that iterative process we are still facing cuts in such vital services as

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Arabic, Hindi and Mandarin, so it is clear that we must reconsider the transitional arrangements between now and 2014. We should consider how we can protect those key services.

In the great scheme of things, the amounts of money involved are not huge. As has been pointed out by the Select Committee, they are a relatively small proportion of the increases in DFID’s budget. Even within wider Government and FCO spending, we are not talking about large amounts of money. As I said at the outset, the cost-effectiveness of the programming and influence of the World Service and the respect that it earns this country are of almost incalculable value. I urge Ministers enthusiastically to accept the motion and do whatever they can to protect this jewel in the crown of British broadcasting.

2.24 pm

Jeremy Lefroy (Stafford) (Con): I congratulate the Foreign Affairs Committee on its excellent report and I rise to speak in favour of the motion. I pay tribute to the excellent speeches of the Chairman of the Committee and other Members.

For 11 years, when I lived in Tanzania, the World Service was my main source of news. I learned of progress in the first Gulf war, the Bosnian conflict, the Rwandan genocide and two general elections from the BBC World Service. I valued its impartial, measured news and comment as a service for expatriates such as me, but more importantly it was the main source of information for many of my Tanzanian colleagues. I remember meeting one of them the day after the 1997 general election, which he had been following very closely on the BBC. He was amazed and impressed at how quickly we had changed our Government in this country, and he was even more impressed that the outgoing Prime Minister went to watch a game of cricket rather than finding himself on the wrong side of a jail door, having been locked up by the new Government. It is at such times that we realise that the World Service is indeed a gift to the world, as has been said. However, it is more than that. It is also important in presenting Britain and British values to the world. At a time when our political and economic future is bound up ever more closely with the developing world, where much of the World Service output is broadcast, its importance is growing, but it is also at this time that we are proposing to make cuts to that valuable service.

I want to distinguish between the financial cuts and the cuts to the service itself. I understand that the Foreign and Commonwealth Office cannot be exempt from the cuts being made elsewhere in government, and I understand that the World Service has to be part of that, but I believe that the cuts to the grant could be mitigated, if not entirely made up, in four ways. First, the Foreign and Commonwealth Office could revisit the cuts it is making. As has been said, we are talking about cuts of 16% compared with cuts of 10% across the rest of the FCO. Secondly, commercial activity could be expanded. World News TV is funded commercially; indeed, I understand that it made a profit last year.

Thirdly, as has been touched on, there could be greater use of development funding. As has been pointed out, if spending is to qualify, it must be undertaken by the official sector and it must have as its main objective the promotion of economic development and welfare

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and be made at concessional financial terms. Those are the rules that the OECD insists on for something to qualify as official development assistance. In this country, we go further because we make it quite clear that such spending must also be for the reduction of poverty. I still think, however, that we could look further at that approach. The media, and particularly the World Service, play a vital role in development in three ways—as a watchdog, in setting the agenda and by providing information that is necessary for development.

The BBC World Service helps Governments to develop policies that benefit the majority of their population and it is not driven by sectional or ethnic interest. There has been analysis of how World Service spending might be classified as ODA, and I accept that this is one of those issues that one might say is about as long as a piece of string, but I have seen analysis showing that up to 40% of spending—something like £100 million out of the total spending of £250 million, including capital—could be classified as ODA. I therefore welcome the Secretary of State’s letter to the Chairman of the Foreign Affairs Committee in which he stated that he would be prepared to support the relationship between the Department for International Development and the World Service Trust and that he would, in principle, be prepared to support it with an accountable grant.

Finally, the cuts could be mitigated through better use of BBC World’s own resources, perhaps by looking at some of the salaries at the higher end of the organisation.

On the cuts to the service itself, the Foreign Affairs Committee has rightly spoken about the Hindi service, BBC China and BBC Arabic, but I would like to draw attention to the Kiswahili, Kinyarwanda and Kirundi services, in which I have a special interest from my time in east Africa. Those short-‘wave and medium-wave services are accessible to people who cannot access pretty much any other services save those provided by their own broadcasting corporations. Those people are in remote areas, whereas internet and FM services tend to be available to people in urban areas. It is part of this Government’s policy to reach people, such as those in smallholder agriculture, for whom a service provided on short wave by the BBC might be the only such service that they can receive at certain times that is relevant to them. I therefore urge the Foreign Office to look in particular at such services.

In conclusion, the BBC World Service is a huge asset to the United Kingdom, but it is also of tremendous importance to tens of millions across the world. Where the BBC withdraws, as has been said, other less independent organisations will step in. Therefore, I support the motion.

2.30 pm

Mr Wayne David (Caerphilly) (Lab): We have had a short but truly excellent debate this afternoon. The hon. Member for Croydon South (Richard Ottaway) began the debate by speaking powerfully as Chair of the Foreign Affairs Committee. He reinforced and explained extremely well the main conclusions of his Committee’s report, which is first rate. He summarised the main concerns that Members have expressed today and in previous discussions and interventions in the House. He has put a significant question mark over the Foreign and Commonwealth Office’s financial calculations regarding the World Service.

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We then heard a contribution from my hon. Friend the Member for Ilford South (Mike Gapes), who reiterated what the Chair of his Committee had said and stressed the fact that the World Service is seen as a jewel in the crown. We heard from the hon. Member for Poole (Mr Syms), who gave a number of practical examples of how the dissemination of objective information can help the development of democracy in a truly practical way. Similarly, we heard from the hon. Member for Cheltenham (Martin Horwood), who reinforced the case put by other Members and made it clear where his party stood on the matter. Finally, we heard from the hon. Member for Stafford (Jeremy Lefroy), who spoke with great insight about the importance of the World Service and referred to his experience in east Africa. It is only by understanding such concrete examples that we can really appreciate the value of the World Service.

As well as expressing concern about the short wave BBC China Mandarin service, which broadcasts in a country where democracy is in short supply, I would like to focus briefly on two areas. First, it was initially announced that the BBC Hindi short wave service was to close in March 2011. However, the Government announced a partial reprieve in March with the continuation of an hour of current affairs broadcasting, pending commercial funding being found. This concerns me greatly. We all know that India has enormous economic potential, and the Government are rightly strengthening their bilateral relations with that country. It is all the more worrying, I suggest, that the sword of Damocles still hangs over the BBC Hindi short wave service. That should not be the case.

The other huge concern I have relates to BBC Arabic. The events in north Africa and the middle east over the past few months have been truly momentous, and the process of change continues apace. It is therefore extremely worrying that the World Service has announced 60 job losses in its Arabic service. Surely the World Service should, if anything, be providing more resources to BBC Arabic, rather than less. I fully appreciate that many of the plans were drawn up before the incredible events of the past few months, but that is all the more reason for the Government to accept that reality and revisit the whole programme.

In addition to these concerns, I would like to give an example of how the World Service impacts in a positive way on one country in particular. Earlier this week I was in Serbia. I was there with the Labour party and the Westminster Foundation for Democracy. I undertook the political reconnaissance as part of an ongoing assessment of how democratic debate in that country can best be assisted. Serbia has made good progress over the past few years, but there is still much to be done. One of the crucial elements that has helped Serbia’s march to democracy, as a number of people made very clear to me, is the BBC World Service. It is no exaggeration to say that there is not a single democrat in Serbia who does not acknowledge the important role of the World Service. Equally, there is universal disappointment that Serbia is one of those countries that will lose World Service coverage.

One of the people I spoke to earlier this week was Sasa Mirkovic, the managing director of the radio and television company B92. He explained to me how the

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World Service has been a source of objective information, inspiration and hope to a whole generation in Serbia, and he deeply regretted the end of its broadcasting in Serbia, because, as he said to me, democracy in that country needs to be encouraged and continually reinforced.

What is true of Serbia is true of many other parts of the world. The Opposition have very real concerns about the Government’s plans, and this afternoon Members have underlined the conclusions of the Foreign Affairs Committee’s excellent report. As well as the loss of crucial influence in key countries and regions throughout the world, the cuts will mean a diminution in Britain’s global influence. There will be a drop of 30 million people—from 180 million to 150 million—in the service’s global audience, and such a cut is quite unprecedented.

There has to be an ongoing assessment of how finite resources can be best used, but such a reduction in grant-in-aid will greatly undermine the service and send a negative message around the globe—that Britain no longer sees high quality, objective and honest reporting as being particularly important. I hope that nothing is further from the truth.

In the order of things, the BBC World Service is a mere drop in the ocean of public expenditure, but the money invested in the service is a sound investment—an investment that effectively promotes the universal values of which all Members are justifiably proud.

I therefore ask the Government to think again, to take heed of what our friends throughout the world are saying to us, to recognise the worth of the World Service and not to engage in this false economy. I urge the Government to accept the motion before us, and, if they are inclined to accept it and agree to a review, I suggest that that review takes place as quickly as possible, and as a matter of urgency.

2.37 pm

The Minister for Europe (Mr David Lidington): I thank my hon. Friend the Member for Croydon South (Richard Ottaway) for introducing the debate, and for doing so in a characteristically courteous and thoughtful fashion; and I pay tribute to all members of the Foreign Affairs Committee for a comprehensive report on what all Members, whether in government or not, agree is a matter of great public significance and of significance to how we advance the interests of the United Kingdom.

My right hon. Friend the Foreign Secretary has said frequently in opposition and in government that he sees the World Service as, to use the words of my hon. Friend, a key element of British soft power. My right hon. Friend has also underlined frequently the central importance of the World Service and the British Council in giving this country an unrivalled platform from which to project our culture and to share our values.

The Government and, in particular, my right hon. Friend will clearly want to reflect carefully on what has been said during this debate, but I make it clear that there cannot be any avoidance of difficult financial decisions and hard choices for the Foreign Office or for the World Service, as for any part of the public sector. I hope that when I have concluded my speech hon. Members will recognise that the Government are committed to finding ways—within the terms of the existing settlement announced in October last year, and in discussions about possible additional sources of World Service

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revenue—in which the current and potential resources available to the World Service can be used to the greatest possible advantage. My hon. Friend the Member for Stafford (Jeremy Lefroy), in particular, listed a number ways in which that might be possible.

Rehman Chishti: Can the Minister confirm that in 2010 the chief executive of the BBC World Service earned £215,000 and five of his colleagues earned more than £200,000? Does he agree that chief executives and other senior officials should have had their salaries frozen or taken a reduction instead of cutting front-line services?

Mr Lidington: My hon. Friend makes an important point. I am not somebody who usually harps on about high salaries for people who hold important positions of responsibility, but it is fair to acknowledge that the BBC World Service board is responsible for a significantly smaller operation with a smaller budget than the Foreign and Commonwealth Office, and yet the World Service’s board is more numerous and significantly more expensive than the board that runs the FCO. I do not want to make too much of that, but my hon. Friend makes an emblematic point that I will come to later.

I am not trying to deny that hard choices are having to be made, but there is a need to say to the World Service, as to every other part of the public sector, that it needs to look rigorously at how to make finite budgets go further and try to reduce all unnecessary costs.

Mel Stride (Central Devon) (Con): Does my right hon. Friend believe that the BBC World Service is doing enough to amortise the costs of news gathering and production among other services, including within the BBC family, before looking at a reduction in language services?

Mr Lidington: One of the challenges that the World Service management faces is to draw up what I hope will be very ambitious and detailed plans to deliver a reduction in administrative and other inessential costs that match commitments of the sort that Government Departments throughout Whitehall, including the FCO, are already having to make. The BBC World Service has announced that it is committed to a significant reduction. We have not seen details of that, nor are we entitled to do so. It is an independent organisation, quite properly so, although the National Audit Office and the Public Accounts Committee are of course free to investigate further.

I hope that the World Service will choose to make those plans public and will look to take advantage of the opportunities that will arise from the new arrangements for the relationship between the World Service and the BBC as a whole to merge and share costs where possible. For example, arrangements to combine studios for the World Service and other parts of the BBC would seem to be a sensible way forward. Indeed, the BBC has indicated that it is considering that in the context of the new arrangements.

Mike Gapes: Is the Minister aware that the BBC World Service spends proportionately less on human resources, finance and IT than the FCO? Is he also

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aware that there has been a reduction of about 32% in the management costs of the World Service since 2009?

Mr Lidington: The hon. Gentleman, perhaps uncharacteristically, is choosing to overlook the fact that the FCO is responsible for well over 100 operations in different countries overseas and that in those circumstances the requirements of currency operations and IT add up to quite a considerable overhead. I welcome the public commitment of the World Service to a significant reduction in its administrative costs, and I am sure that the House looks forward to seeing how it proposes to deliver that.

Mr David rose—

Mr Lidington: I will give way to the hon. Gentleman, and then I will make progress, because I want to be fair to the many hon. Members who want to take part in the next debate.

Mr David: I hear what the Minister says, and of course we all want to see efficiency savings and economies. However, it is important to bear in mind that the cost of producing a message or sending out a programme is lower in the BBC World Service than in any other international broadcaster.

Mr Lidington: It is certainly important to bear such things in mind, but many parts of the public sector in this country can point to how their best practice matches that in other parts of the world. Nevertheless, the financial state in which this country finds itself as a consequence of the inheritance bequeathed to us by the Government of whom the hon. Gentleman was a member is so grave that we have no alternative but to ask every part of our public services, no matter how well and efficiently they perform, to drive those efficiencies further.

My hon. Friend the Member for Croydon South, and indeed the report, criticised the Government’s decision to reduce the budget of the World Service by 16% and argued that it was disproportionate. To set the matter in context, as the House knows the Government inherited a massive fiscal deficit when they came to power. We made it clear from the start that it would be the Government’s overriding priority to take swift and effective action to reduce that deficit. Every member of the Government has always made it clear that rebalancing the nation’s finances will not be without pain and that every taxpayer-funded organisations will have to play its part, as will the private sector. Frankly, if as a country we fail to deal with the overriding challenge of our deficit, all our hopes, whether for prosperity, improved public services or enhanced international influence for the United Kingdom, will come to naught.

The World Service was asked to reduce its budget by 16%. The Foreign Affairs Committee has argued that that is disproportionate. I say candidly, but politely, to my hon. Friend that I disagree with that verdict. At the beginning of the previous comprehensive spending round in 2007-08, the World Service budget was 13% of the Foreign and Commonwealth Office budget. By the end of 2014-15, its budget will be 14.4% of the FCO budget. The proportion of its budget at the end of this Government’s tenure will therefore be slightly higher than it was before. To respond to the particular case put

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to me by my hon. Friend, in 2007-08 the World Service received £222 million, and in 2013-14 it will again receive £222 million. However, the FCO budget will fall from £1.7 billion in 2007-08 to £1.55 billion in 2013-14. It is those figures that lie behind the percentages that I quoted.

Richard Ottaway: Is the Minister including the costs of conflict prevention in his figures?

Mr Lidington: I will take advice on that point and come back to my hon. Friend either later in the debate or in writing.

It is also fair to point out that the FCO has been more severely affected by the impact of foreign exchange losses than has the World Service. From 2007 to 2011, the loss of the mechanism that protected the FCO against foreign exchange risk accounted for a 17% loss to the FCO core budget, but only a 2% loss to the BBC World Service core budget. That discrepancy is explained by the fact that a much greater proportion of the FCO’s diplomatic effort is located overseas than is the case with the BBC World Service.

The Foreign Affairs Committee has made its case, and I hope that I have provided figures that back up the evidence my right hon. Friend the Secretary of State gave and that support our contention that although the settlement is indeed tough, it is fair when set alongside what has happened to the core FCO budget over the past few years.

The World Service undoubtedly provides a valuable service, but that is true of many other public bodies. The police, the military and the education system have all had to make savings, and so have the British Council and UK Trade & Investment. Some of those organisations have suffered cuts considerably larger than 16%. I am happy to stand at the Dispatch Box and say that all those institutions are vital assets of the UK. We do not take pleasure in what we have had to do, but the measures that we have taken are essential for the future well-being of our country. Much as I dislike having to support cuts to the budget of the BBC World Service, we cannot in good conscience say that we support cuts in general but resist all of them in particular.

Members will have heard the announcement by my right hon. Friend the Foreign Secretary on 11 May, in which he set out plans for the future of the Foreign Office’s diplomatic network. We will find £100 million a year in savings from our administration budgets, yet at the same time we are both widening and deepening our diplomatic network. We are opening more posts and strengthening existing ones in emerging economies of key importance to this country. The savings that we are having to find to finance that expansion are not easy, but they are essential if we are to develop within tough financial constraints.

When I go to British embassies overseas, I am left in no doubt about the seriousness of the choices that Ministers have to make. I regularly have meetings with our staff at our posts throughout Europe and the former Soviet Union, and at practically every meeting I meet staff who are worried about their jobs, some of whom have worked loyally for the FCO for a large number of years. The FCO is not immune from difficult

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decisions, and there is no pain-free way to make the choices necessary to provide a strong voice for Britain in the world. I do not think the World Service can be exempt from the need to make difficult choices.

The World Service originally approached the Foreign Secretary for authority to close 13 of its 31 language services—even more closures than were authorised by the Government of whom the hon. Member for Caerphilly (Mr David) was a member. When I heard him denounce the policies of the current Government, I worried about the selective amnesia that had come over him about his Government’s record on the World Service.

My right hon. Friend the Foreign Secretary was not prepared to support those suggested closures, and after frank discussion with the World Service and the BBC Trust he reluctantly agreed to the closure of five services. That was after he had received clear assurances that the closures would not cause major damage to the World Service’s overall services and audience share. The World Service also assured us that it would make strenuous efforts to find efficiency savings and drive down non-editorial costs to protect its front line. It has said that it will find savings of up to a third in finance, human resources, business development, strategy, marketing and other administrative operations.

I hope that the World Service will match that commitment with detailed plans, and that it will match the greater transparency of financial arrangements that the Government have undertaken to provide. The BBC is not obliged to do that under the current arrangements, but it would add to public confidence in the organisation, including the World Service, if it endorsed greater transparency so that taxpayers and licence fee payers could see where their money was being spent.

There are other changes in how World Service output is delivered, such as the closure of radio transmissions in Mandarin or the cessation of the Hindi shortwave service. Ministers have no power to veto such decisions. Some access to the World Service in those languages will remain, whether online or through FM or television, but those choices fall squarely within the responsibility of the World Service—the Government were not consulted in detail on those changes and we had no locus to intervene. The BBC believes that those decisions were soundly based, and we have seen its justification for those changes.

As a number of hon. Members mentioned, given recent events in the middle east and north Africa, the FCO chose to reprioritise in order to bolster our effort there. It is entirely sensible for the World Service to do likewise. However, even before the Arab spring, the decision to curtail Arabic broadcasting was somewhat surprising.

On potential sources of additional money for the World Service, first, there is the prospect of commercial income. We agreed with the World Service that it would increase its sources of commercial income, with an initial target of £3 million. It is important for it to adopt an entrepreneurial approach to developing that source of income.

Secondly, on funding from the Department for International Development, my hon. Friend the Member for Croydon South quite fairly pointed out that there are two genuine hurdles to be surmounted, the first of which is meeting the OECD kitemark for measures that

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count as official development assistance. The OECD requires that any activity that qualifies as ODA must have the

“promotion of the economic development and welfare of developing countries as its main objective”.

However, even if activity qualifies under OECD rules as ODA, it does not necessarily meet the second, stricter test, which is embodied in the International Development Act 2002. The Act gives the Secretary of State statutory authority to spend money when that allows for the relief of poverty—that is the prime measure. As my hon. Friend mentioned, my right hon. Friend the Secretary of State for International Development is looking at a new relationship with the World Service trust. In addition, the Government are approaching the OECD with a view to getting its agreement to classify a proportion of World Service spending as subject to ODA rules.

It is worth noting that the settlement included money to be used as the contribution of the World Service to the overall BBC pension deficit. The BBC says that its original estimate of that deficit has been revised down by about one third. We do not yet know the detailed figures for the World Service, but if, pro rata, it no longer needs a third of the money it has allocated for pensions—that would amount to about £4 million a year—it could choose to restore the five cut services and the Hindi service, or to restore the cuts to the Arabic, Hindi and Mandarin services that it previously announced.

Those choices are for the BBC. In a recent article in Ariel, the World Service controller of languages said that even if funding were reinstated, it would not necessarily restart services that it had stopped, but would instead look at new investment. Global shortwave audiences are falling dramatically—20 million listeners were lost from 2009-10 alone.

My right hon. and learned Friend the Member for North East Fife (Sir Menzies Campbell) and my hon. Friend the Member for Cheltenham (Martin Horwood) asked about the place of the World Service in the proposed new arrangements with the BBC, which will take effect from 2014-15. As I have already said, these provide opportunities for things such as the combination of news rooms and studios, and for different arms of the BBC to share costs, which might help World Service funds to go further. But it is also true that the BBC, through its new chairman and director-general, has made it clear that it places a high value on the World Service and sees it continuing as a key element of BBC output. The new governance arrangements will be guaranteed by an amendment to the BBC agreement between the Secretary of State for Culture, Olympics, Media and Sport and the BBC. We are discussing with the BBC Trust a formal exchange of letters to confirm this. The BBC Trust is also considering an international trustee to represent the interests of the World Service.

Even after the cuts, the World Service will still receive funding from the British taxpayer of £733 million over the next three years. The settlement that we came to

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with the World Service was challenging, and we take seriously the points that have been made by the Select Committee and in the Chamber today and will reflect further on them. We will work with the World Service to find ways in which it can continue to fulfil its mission as an independent broadcasting voice that is at the same time a key element in the promotion of British culture and values.

3.1 pm

Richard Ottaway: Time does not permit me to acknowledge in detail the speeches that have been made today. It has been a great debate, but the Minister must have felt a bit lonely. We have heard seven speeches today, six of which supported the thrust of the motion and the desperate need for a review of the service, and his own which was more defensive of the Government’s position. The Minister is a good friend of mine, in both the personal and political senses, but he has not quite got the point that everyone has made today.

We all recognise the economic pressures on the Government—indeed, everyone who spoke is a member of a party that supports the need to address the desperate financial situation the country is in. However, it is a question of priorities. When the facts change, so must the policies. The circumstances in Libya have meant that more resources have been diverted to that country. The international tensions of worldwide terrorism have meant that more money has been put into the security services. The extra need for diplomacy around the world was behind the statement last week about extra funding for diplomacy. What colleagues are saying today is that, with the changing world we live in and the desperate need for more soft power—

Mr Lidington: Will my hon. Friend give way?

Richard Ottaway: I am afraid you would never forgive me if I gave way, Mr Deputy Speaker.

There is a desperate need to address the changing world and to take soft power more seriously. I appreciate the fact that my right hon. Friend has agreed to a review. I hope that it will be a constructive review and that this is not brushed under the table saying, “That’s the House of Commons dealt with.” The House is serious about this and I hope the Foreign Office will be as well.

Question put and agreed to.


That this House notes the Sixth Report from the Foreign Affairs Committee, The Implications of Cuts to the BBC World Service, HC 849; endorses the Committee’s support for the World Service’s invaluable work in providing a widely respected and trusted news service in combination with high-quality journalism to many countries; considers that the unfolding events in North Africa and the Middle East demonstrate the continuing importance of the soft power wielded through the World Service; believes that the value of the World Service far outweighs its relatively small cost; and invites the Government to review its decision to cut spending on the World Service by 16 per cent.

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Rural Broadband and Mobile Coverage

3.3 pm

Rory Stewart (Penrith and The Border) (Con): I beg to move,

That this House recognises that rural businesses and rural communities across the UK are isolated and undermined by slow broadband and the lack of mobile voice and mobile broadband coverage; urges Ofcom to increase the coverage obligation attached to the 800MHz spectrum licence to 98 per cent.; and calls upon the Government to fulfil its commitment to build both the best superfast broadband network in Europe and provide everyone in the UK with a minimum of 2 Mbps by 2015.

I am grateful for the opportunity to move this motion, which also bears the names of 100 other Members of Parliament. When I last saw Ed Richards, the head of Ofcom, he said that the most powerful argument he required was a political argument. He wanted to hear that Members of Parliament cared about broadband and mobile coverage. If that is all he requires, I might as well resume my seat now. I am not an expert on the constitutional history of this House, but as far as I know there have not been so many names on a motion on the Order Paper for debate on the Floor of the House in recent memory.

I wish to thank very much everybody who has supported this motion. I wish to thank first my hon. Friends from Cumbria, on both sides of the House, as well as the many Members who have put so much energy into mobile broadband over the last three to five years. That includes my hon. Friends the Members for Skipton and Ripon (Julian Smith), for Suffolk Coastal (Dr Coffey) and for Hereford and South Herefordshire (Jesse Norman), and of course many Members from other parties. From the Liberal Democrats, we have had contributions from the hon. Members for Caithness, Sutherland and Easter Ross (John Thurso), for Cambridge (Dr Huppert) and for Chippenham (Duncan Hames)—to roll out the Cs—and from the Labour side, we have had support from the hon. Member for Dagenham and Rainham (Jon Cruddas), and the right hon. Members for Coventry North East (Mr Ainsworth) and for Leicester East (Keith Vaz). We have also had support from the Scottish National party and Plaid Cymru.

What, though, is the motion facing us today? It has three parts. The first focuses on rural need, which I hope Members will address in their speeches. The second focuses on mobile coverage, and the third focuses on the Government’s commitment to super-fast broadband. All three are connected. In a sense, it is already outdated to separate them. It is increasingly clear that a separation between voice coverage and data coverage is a thing of the past; that an attempt to separate the rural areas from the urban areas is a thing of the past. The central fact about broadband and mobile coverage is that it is—not to be too pretentious—a single global universe. Nevertheless, I will hand over to other Members, who will talk about the first and third elements of the motion. I will focus exclusively on the second part—the mobile coverage obligation.