Sir George Young: My hon. Friend is right: we have to get the balance right. We have to be fair to those who are entitled to public sector pensions and to the taxpayers,

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who fund a large part of that. If he has read the Hutton report, he will see that there is a strong rationale for rebalancing the current arrangements, as the cost to the taxpayer has increased by about a third in the last 10 years, to some £32 billion. We want public sector pensions to remain the best. We do not want a race to the bottom, but we must find a sustainable way of funding them in the long term.

Jon Ashworth (Leicester South) (Lab): The Leader of the House will be aware of the Government’s upcoming cuts to provision for ESOL—English for speakers of other languages. He will also be aware that the Minister for Further Education, Skills and Lifelong Learning has promised an equality impact assessment. Can he guarantee that that impact assessment is published before the recess and that there is a debate on its findings on the Floor of the House?

Sir George Young: The first of those two requests may be easier to deliver than the second. I cannot promise a debate on the Floor of the House, but I will see whether publication will be made promptly, as the hon. Gentleman has just said.

Andrew Griffiths (Burton) (Con): May I return to the thorny issue of IPSA? I recently submitted two duplicate invoices to IPSA by mistake. Despite having the same supplier name, the same date and the same reference, and despite being for the same amount, those receipts were paid by IPSA. The first that IPSA knew about it was when I turned up in its office with a cheque. Not only was I advised by an IPSA member of staff that there was no system in place to pick up such duplication, I was also advised that the system ran by “trusting Members”. Given the urgent importance of reassuring the public about the way our expenses system operates, may we have an urgent debate about what we are spending £6 million of taxpayers’ money on?

Sir George Young: My hon. Friend has not used the fifth amendment to protect himself from self-incrimination. I hope that there will be no dire consequences from his double claiming for the same item. He will know that there is a liaison group between the House and IPSA. A number of my hon. Friends sit on it, and he may like to raise the matter with them. The House has just approved the estimates for IPSA for the current year. If he looks at the suggestions that were made alongside that, he will see that SCIPSA, the committee that gives money to IPSA—[ Laughter ]—I am sorry: the Speaker’s Committee for the Independent Parliamentary Standards Authority—has made some suggestions about IPSA continuing to raise its game and improve the quality of its performance.

Mr Speaker: What a master of understatement the Leader of the House is.

Mr Barry Sheerman (Huddersfield) (Lab/Co-op): The Leader of the House will know that there is increasing evidence of economic and financial warfare being waged against companies in this country—indeed, against Governments—involving the manipulation of interest

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rates and currencies. The Government are aware of this, but there is no joined-up reaction to it. Are we coping with it and doing our best to combat it? May we have an early debate, so that we can enlighten some Members on just how worrying this economic warfare is?

Sir George Young: We are debating the Finance Bill for two days next week, including on Third Reading. It may be appropriate for the hon. Gentleman to raise the subject in those debates. However, in the meantime I will alert my Treasury colleagues to his concern and see whether we can take any additional action to prevent the sort of manipulation to which he refers.

Stephen Barclay (North East Cambridgeshire) (Con): May we have a debate on the lack of transparency in the annual accounts of many arm’s length bodies? For example, the East of England Ambulance Service NHS Trust increased its management costs by 23% in its last accounts, but when I asked for an explanation, I was told that I would have to submit a freedom of information request. Can my right hon. Friend look at how we better hold to account senior executives for the spending choices that they make?

Sir George Young: I am sorry that my hon. Friend has had that problem. His request sounds perfectly reasonable, and it is one that someone charged with safeguarding the taxpayer’s interests is entitled to make. I would hope that we can get the information that he has asked for without going down the FOI route, and I will ask my right hon. Friend the Secretary of State for Health to see whether he can make some progress on it.

Pat Glass (North West Durham) (Lab): The Leader of the House will recall that, last week, I raised the issue of the proposed takeover by B&Q of a Focus store in my constituency. He very kindly offered to speak to the Office of Fair Trading that day about what appeared to be its tardy decision making. He did so, and I am grateful to him. The OFT has now told us that a decision will be reached by 5 August, but that will be too late for the employees who will be made redundant on 18 July in my constituency, and in the constituencies of 30 other Members including the Prime Minister, at a cost of £4.5 million in unnecessary redundancy and welfare payments. I realise that I am being greedy with the Leader of the House’s time, but will he speak again to the OFT and ask if it could possibly move the decision forward, so as to avoid unnecessary heartache for the employees and unnecessary costs to the public purse?

Sir George Young: Of course I understand the concerns of those who might lose their jobs, and the hon. Lady’s anxiety to bring the matter to a swift conclusion. I was pleased to hear that last week’s exchange produced results. Without making any promises, I hope that she is on a roll and I will have another go this week.

Andrew Stephenson (Pendle) (Con): Will the Leader of the House grant us a debate or a statement on the effect of entrepreneurs’ relief, particularly on manufacturing firms in my constituency, in encouraging those who want to expand their businesses and invest in growth?

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Sir George Young: That is indeed an important engine for growth, and I am grateful to my hon. Friend for raising the matter. He will know that we have raised the lifetime limit on capital gains qualifying for entrepreneurs’ relief to £10 million, and I hope that that will make the UK a more attractive location for entrepreneurs by encouraging those who want to expand their business and reinvest in growth to do so here.

Kevin Brennan (Cardiff West) (Lab): May we have a statement on Ministers’ replies to Members’ correspondence? I have received an e-mail from the Under-Secretary of State for International Development, the hon. Member for Eddisbury (Mr O'Brien), in which he says that it is not the policy of the Department for International Development to respond to “similar items” of correspondence that MPs send to it, because

“this places a burden on DFID’s resources which would be better directed towards the poor.”

I do not recall the code of conduct on Ministers replying to Members’ correspondence containing that kind of provision, and I would be grateful if we could have a statement and perhaps some consultation on this matter, to clarify the extent to which Ministers can pick and choose to which MPs’ letters they reply.

Sir George Young: Every Member of Parliament is entitled to a prompt and courteous response from Ministers to the letters that they send, but if a Member sent 1,500 identical cards to a Minister, for example, it would be reasonable for the Minister to send one reply and ask the Member to notify the constituents who had sent all the cards to him. It does not follow that every single identical letter sent to a Minister is entitled to a personal reply, but each individual subject should certainly get an answer from the appropriate Minister.

Bob Blackman (Harrow East) (Con): Earlier this week, I accompanied my constituent, Karen Kannair, to meet officials from the Department for Education, to whom she gave a harrowing description of the treatment that she and her son had received after he had been excluded from school some two and a half years ago. Could we find time for an urgent debate on the performance of local education authorities in dealing with excluded pupils?

Sir George Young: It is important that pupils who are excluded from school should not lose contact with mainstream education, and that they should get back into it as soon as possible. The experimental statistics published today show that pupils in alternative provision perform significantly less well in GCSEs than those who are in mainstream schools. These are vulnerable children, and they need the support to which my hon. Friend refers. We set out in our White Paper last year our plans to increase the autonomy, accountability and diversity of alternative provision in order to help to drive up standards.

Diana Johnson (Kingston upon Hull North) (Lab): May we please have a debate on the effect of the Deputy Prime Minister’s announcement yesterday about business rates? It seems to me that the better-off areas of the country will become still better off, and that the poorer areas such as my constituency will suffer even more.

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Sir George Young: We have not come to a final decision on business rates, as I said earlier. However, if local authorities decided to keep the business rate, there would still have to be a system of equalisation to ensure that those local authorities with fewer than average businesses did not suffer unduly.

Kwasi Kwarteng (Spelthorne) (Con): May we have a debate in the House on bureaucracy in the NHS, and a statement about the reduction in the number of managers since the general election?

Sir George Young: I would welcome such a debate because, since the general election, we have reduced the number of managers in the NHS by 4,000, reversing the record of the previous Administration, under whom the number of managers increased at six times the rate of the number of nurses.

Mr Gerry Sutcliffe (Bradford South) (Lab): Will the Leader of the House have a word with the Home Secretary about her failure to answer named-day questions? The shadow Home Secretary has tabled 15 questions over the past couple of weeks, only two of which have been replied to. Is not that a distressing return on the number of questions tabled, given that the convention is that named-day questions should be answered on the named day?

Sir George Young: I will raise that matter with the Home Secretary, who might possibly be in the House quite soon. It is indeed the objective of every Minister to reply to questions on the named day, and if that is not possible, they will send a holding reply, but I will raise the matter with my right hon. Friend to see whether we can get a prompt response to the outstanding questions.

Brandon Lewis (Great Yarmouth) (Con): Small and medium-sized enterprises in Great Yarmouth and Lowestoft are working hard to pull together with the local enterprise partnership to put forward a bid for an enterprise zone in our area. Bearing in mind all the work that they are doing, may we have a debate in the House on what small and medium-sized enterprises are doing for the economy and what the Government are doing to assist their development?

Sir George Young: I understand my hon. Friend’s advocacy of an enterprise zone for his constituency, and I commend his zeal in bringing it forward. There might be an opportunity on Monday and Tuesday next week to discuss the incentives that we have produced, including a moratorium on domestic regulations, abolishing the jobs tax, the small business rate relief, the enterprise finance guarantee, the growth capital fund and many similar initiatives.

Barry Gardiner (Brent North) (Lab): Following the announcement by Scottish Power of its price increase of up to 20%, consumer organisations have said that, should other utility companies follow suit, 4 million households in the UK could be driven into fuel poverty. Will the Leader of the House arrange for a debate on electricity market reform, so that we can address the vertical integration of the companies and the lack of transparency, and ensure that that does not happen?

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Sir George Young: There will be an opportunity a week today, on 7 July, to address those specific questions to my hon. Friends in the Department of Energy and Climate Change. We have retained a number of measures to help to tackle fuel poverty, including cold weather payments and winter fuel payments, and a Bill is going through Parliament that will enable people to insulate their homes without having to dig into their pockets. There will also be a statement in due course on electricity market reform.

Gavin Barwell (Croydon Central) (Con): May we have a debate on Tuesday’s higher education White Paper? Yesterday, I welcomed representatives of Drexel university, one of the leading universities in the United States, to my constituency. They are looking to set up an operation in the United Kingdom with a UK institution. Is not the Government’s policy of freeing up institutions to expand and allowing new entrants into the market the best way to ensure that students get value for money in higher education?

Sir George Young: My hon. Friend is absolutely right. Perhaps he was in the House on Tuesday, when the Minister for Universities and Science, my right hon. Friend the Member for Havant (Mr Willetts) made a statement—which was well received, certainly on this side of the House—offering a sustainable future for higher education, giving more power to students to choose their university and rewarding those universities that perform well. Also, looking ahead, we will strike a fairer balance between taxpayers and students.

Luciana Berger (Liverpool, Wavertree) (Lab/Co-op): I recently met Frankie, a Whizz-Kidz ambassador in Liverpool, who told me about the situation that he is facing. He finishes school this year, but he still does not know whether the course that he has applied for at the local college will be made available. He will not find that out until August. His travel to the youth club has been cut, and his opportunities to socialise have been significantly scaled back. Frankie and his family face an uncertain future. May we please have an urgent debate on how the Government’s cuts are specifically affecting disabled older teens?

Sir George Young: In taking the difficult decisions that we had to take to get the deficit under control, we have sought to protect vulnerable members of the community—people who suffer from disabilities, the elderly and the sick; we protected the NHS budget—and in our reforms to welfare, we are also seeking to protect people such as Frankie. Inevitably, some reductions in public expenditure have had to be made and it would help if the hon. Lady’s party would at some point indicate how it would have responded to the fiscal challenge that we inherited.

Christopher Pincher (Tamworth) (Con): From today, victims of the Equitable Life scandal—in Tamworth and around the country—begin to receive justice as the compensation scheme begins to pay out. Following years of vacillation from previous Governments, may we have a statement or a debate to mark that milestone?

Sir George Young: My hon. Friend is right. In 13 months we have done more for Equitable Life pensioners than the previous Administration did in 13 years. It is indeed

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the case that, as we said, the first payments would be made in the first half of this year. Those first payments are now going out, so we have honoured the commitment we made to providing a transparent and fair system of compensating those who lost money in Equitable Life.

Nic Dakin (Scunthorpe) (Lab): The Government have now confirmed that £115 million will be made available to schools and colleges to disburse through discretionary learner support awards and bursaries rather than the £180 million that was originally promised. Will the Leader of the House arrange for the Secretary of State to make a statement on why those amounts have changed?

Sir George Young: My right hon. Friend the Secretary of State for Education did indeed make a statement when he announced the transfer from education maintenance allowance to the discretionary learner fund, so we have already had that exchange. There might be an opportunity at questions on Monday 11 July to press the Secretary of State even further on the matter.

Charlie Elphicke (Dover) (Con): Will the Leader of the House make a statement about the training of hon. Members in matters of procedure, which can be confusing and difficult not just for new Members like me? I noticed on Report of the Finance Bill that there were starred amendments and new clauses from more senior Members of the House, so a general refresher might be worth while.

Sir George Young: We are debating the Finance Bill again next week and I hope that there will be no repetition of this week’s inexplicable incident. The official Opposition failed to table an amendment in time on their flagship policy; they then refused to vote on an identical amendment tabled by another party, only to vote for some anodyne alternative. I hope that there will be no repetition of that embarrassment from the Opposition Front-Bench team.

Alun Cairns (Vale of Glamorgan) (Con): May we please have a debate on the funding of political parties? At a time of industrial action, it would be useful to tease out the influence that trade unions can have on some parties’ policies.

Sir George Young: As my hon. Friend knows, Sir Christopher Kelly and the Committee on Standards in Public Life are looking at the important issue of party funding. My own view is that it is unhealthy that one political party is dependent for about 87% of its funding on the trade unions.

Nadhim Zahawi (Stratford-on-Avon) (Con): May we have a debate on the reform of the laws relating to industrial action? The nation is clearly opposed to the teachers’ unions going out on strike when only one third of their members voted.

Sir George Young: My hon. Friend reminds us that less than 20% of the overall PCS membership voted for strikes, which is less than 10% of the civil service. Only two teaching unions have a mandate for strike action

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and the turnout in both ballots was low. As I said in response to an earlier question, we have no current plans to legislate, but we are keeping the matter under review.

Paul Uppal (Wolverhampton South West) (Con): My constituency carries the unenviable burden of having one of the highest rates of empty shops. Will the Leader of the House facilitate a debate on what measures could be introduced to encourage local authorities to provide free car parking, which would be a fillip not just to city centres, but to high streets and small independent retailers?

Sir George Young: I understand my hon. Friend’s concern. The coalition Government are very committed to localism and devolving decisions such as whether to extend free local car parking to local councils and local authorities, which are best placed to take such initiatives forward. If he has not already done so, my hon. Friend should get in touch with his local authority to see whether it will take the action that he advocates.

Robert Halfon (Harlow) (Con): Following my question to the Prime Minister yesterday, may we have an urgent debate on petrol prices and how they are hitting public services? Last year, the police spent £78 million on motoring fuel and it could hit £90 million this year—money that could have been spent on policing. The Royal College of Nursing says that 60,000 nurses now subsidise NHS petrol bills out of their own pockets. Does my right hon. Friend agree that high petrol prices are becoming a real threat to front-line services?

Sir George Young: My hon. Friend is right. Our petrol prices have begun to come down over recent weeks, and we all hope that that initiative can be sustained.

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The coalition Government have taken action to help. As he knows, average pump prices are approximately 6p a litre lower than they would have been if we had continued with the previous Government’s escalator.

Nigel Mills (Amber Valley) (Con): Will the Leader of the House find time for a debate on the importance of the food and drink manufacturing sector to the UK economy, which would enable Members to explain the importance of the sector locally and allow me personally to trumpet the quality and value for money of Thorntons products?

Sir George Young: If my hon. Friend is ingenious, he might be able to get into the debate on the Finance Bill next Monday or Tuesday to draw attention to the importance of the food and drink sector to the national economy. Alternatively, he could put in for an Adjournment debate on our last day, which, if the Backbench Business Committee so decides, would give him more time to amplify his point.

Several hon. Members rose

Mr Speaker: Order. We come now to a statement by the Minister for Policing and Criminal Justice.

Mr David Hanson (Delyn) (Lab): On a point of order, Mr Speaker.

Mr Speaker: Order. Points of order come after statements.

I really must encourage better timekeeping by those on the Treasury Bench. Ministers should be here in time to make their statements; this is a serious matter, not a laughing matter.

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Police Detention

12.56 pm

The Minister for Policing and Criminal Justice (Nick Herbert): I apologise, Mr Speaker.

With permission, I would like to make a statement on the recent High Court ruling on police bail. The Home Secretary is in Madrid at a G6 meeting.

Since the Police and Criminal Evidence Act came into effect in January 1986, the police, the Government and the courts have all agreed that the time suspects spend on bail does not count towards the maximum permitted period of detention without charge. For more than 25 years, this sensible and uncontested way of working has enabled the police to investigate crimes and keep the public safe.

On 5 April, a district judge refused a routine application from Greater Manchester police for a warrant for the further detention of a murder suspect, Paul Hookway. On 19 May, Mr Justice McCombe confirmed the district judge’s decision in a judicial review. Mr Justice McCombe’s written judgment was made available on 17 June. Since then, Home Office officials and lawyers have been working with the police, the Crown Prosecution Service and others to evaluate the scale of the problem that the judgment presents.

When the scale of the problem became clear, Ministers were alerted on 24 June. If any suspect is released on bail, the judgment means that they are, in effect, still in police detention. That means that time spent on bail should count towards any maximum period of pre-charge detention. The judgment goes against a quarter of a century of legal understanding and accepted police practice, and as the Home Secretary said yesterday, it causes us grave concern.

The police believe that the judgment will have a serious impact on their ability to investigate crime. In some cases, it will mean that suspects who would normally be released on bail are detained for longer. It is likely that there will not be enough capacity in most forces to detain everybody in police cells. In other cases, it risks impeding the police to such an extent that the investigation will have to be stopped because the detention time has run out. The judgment will also affect the ability of the police to enforce bail conditions.

We cannot, must not and will not ask the police to do their work with one hand tied behind their backs, so they have our full support in appealing the decision to the Supreme Court. With about 80,000 suspects on police bail around the country, however, we cannot afford to wait for a Supreme Court ruling. That is why the Association of Chief Police Officers has today advised the Home Secretary that new legislation is needed.

We agree with that assessment, so we will urgently bring forward emergency legislation to overturn the ruling. That emergency legislation will clarify the position and provide assurance that the police can continue to operate on the basis on which they have operated for many years. We are also seeking urgent further advice on how to mitigate the practical problems caused by the Court’s decision in this interim period. I welcome the support that the Opposition Front-Bench team have already promised for this action.

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There must be proper rules governing the detention of suspects before charge, which was what Parliament intended more than 25 years ago. This judgment upsets a careful balance that has stood for a quarter of a century and impedes the police from doing their job. That is why it must be reversed, so I commend this statement to the House.

Yvette Cooper (Normanton, Pontefract and Castleford) (Lab): That was an astonishing statement from the Minister. I do not even have a copy of more than two pages of it, which I was given as he walked into the Chamber, and I believe that other Members do not have copies at all. I was advised by the Minister’s office that lawyers were still checking it. He was very lucky that an urgent question was asked this morning, because otherwise he would not have had a statement to give on what is a very serious issue, six weeks after the original judgment. What has the Home Office been doing in the meantime?

As the Minister said, this is a deeply serious situation for the police, prosecutions, and, ultimately, justice for victims. Twenty-five years of police practice and legal interpretation have been overturned. We understand that the ruling has immediate effect, and we agree with the Minister that the previous position must be restored at the earliest opportunity. The ruling affects 80,000 suspects who are currently on police bail, but prosecutions and trials could be put at risk if the police have not acted in line with the current law.

I have been advised that Home Office officials were informed of the judgment soon after it was made on 19 May. Can the Minister confirm that? He said that they had the written judgment on 17 June, 13 days ago. What have the Government been doing since then? Why is it still not clear what this means for the police? Some forces believe that it affects custody but not bail conditions, while others fear that it means that bail conditions no longer apply. That could include bail conditions affecting whether or not a suspect can interfere with witnesses. Has definitive guidance been circulated among the police? If not, why not?

During the 13-day period since the written judgment was made available, has the Home Secretary or the Attorney-General even looked at the legal position or sought legal advice, rather than simply leaving it to the police to take a view? The police need to know what to do 43 days after the original judgment was delivered. What has been done to get the judgment suspended in the meantime? I understand that this morning the Supreme Court granted leave to appeal. Has it been able to introduce a stay of judgment? Did anyone apply to it for a stay of judgment? Was it asked to conduct an expedited hearing in order to introduce a stay of judgment? Was an appeal made to Mr Justice McCombe to stay his initial judgment pending further appeal from the Supreme Court? It is not good enough to say that this is a matter for the police, because it has implications for justice throughout the country.

Why did it take so long to conclude that emergency legislation was needed, and why has no work been done to sort that out? The Leader of the House has just stood up and given the House the business for the next two weeks. Will he have to stand up again and tell us what the business for the next few days will be so that the Government can get the emergency legislation through?

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We have had no discussions with business managers, and I have seen no draft emergency legislation. Why was legislation not drawn up 43 days ago as a contingency measure to deal with these extremely serious circumstances?

Will the emergency legislation be retrospective? How will it deal with the cases that are currently being handled in police custody centres and police stations across the country? What guidance are the police being given on whether they are jeopardising prosecutions through decisions that they are making in custody cells every day and every hour across the country? When will we see the legislation? I have already told the Home Secretary that we will support emergency legislation to restore the previous position, and we will seek to do that as soon as possible.

I know that the Home Secretary is in Spain today, but she was not there yesterday, and she should have made the decision at a time when she could come to the House and announce it. There has been considerable chaos in the Home Office, not just this week but for the past few weeks. The situation is ludicrous: someone whom the Home Office tried to ban from the country has sauntered in, while people whom it is trying to put in custody are sauntering out. There is a worrying level of carelessness, drift and incompetence. Justice for victims and protection of witnesses are too important to be handled in this way, and the Home Secretary should get a grip.

Nick Herbert: My understanding is that there is widespread agreement and concern about the impact of the decision, and that we should proceed on the basis of sensible discussion. We are grateful for the Opposition’s support in that regard.

The right hon. Lady asked about the Home Office’s role since the judgment. Mr Justice McCombe delivered his judgment in the divisional court in Manchester on 19 May, but it was an oral judgment. The Greater Manchester police forwarded a copy of it, but only when we received the written judgment, on 17 June, were we able to begin to ascertain the extent of its effect, and, in particular, only then did it begin to become clear that its implications went beyond the issue of warrants of further detention. Since then the Home Office, the Crown Prosecution Office and officials of the Association of Chief Police Officers have been engaged in a constant dialogue in an attempt to understand the detailed implications, which are complex. On 24 June—-last Friday—the leaders of ACPO met senior Home Office officials, and at that point Ministers were informed. ACPO then commissioned advice from a leading QC. The right hon. Lady asked about the guidance issued to police officers; ACPO issued interim guidance to all chief constables at that point.

Last Wednesday ACPO commissioned additional advice from Steven Kovats QC, which it received this morning. I hope to explain some of the circumstances to which the right hon. Lady referred. It was this morning that ACPO presented its case for urgent legislation to Ministers, and it was therefore this morning that it was appropriate for us to come to the House to say what would be the right thing for us to do. We will seek to put the legislation before the House as soon as possible, following discussion through the usual channels. The matter is of concern to the police, but it is appropriate for us to continue to

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work carefully with them in relation to the guidance that will need to be given to forces following the further advice received from the QC.

There seems to be general agreement that this was an unusual judgment, which overturned 25 years of legal understanding. We cannot wait for a Supreme Court decision, and emergency legislation is therefore sensible and appropriate. I am glad that that is also the view of the official Opposition, and we are grateful for their support in expediting it.

Tom Brake (Carshalton and Wallington) (LD): There is a clear and urgent need for emergency legislation. Does the Minister expect permanent legislation to be included in the Legal Aid, Sentencing and Punishment of Offenders Bill? Pending the implementation of emergency legislation, what emergency measures are being considered, such as the creation of additional temporary cell capacity?

Nick Herbert: We expect the emergency legislation to be the last word on the subject. We do not believe that it will be complicated to return to the status quo ante, which, after all, was the basis of legal understanding for 25 years. We do not think that it would be possible to leave the matter to an amendment to one of the Bills that are already before the House, because we would not secure that legislation soon enough. It is therefore appropriate for us to consider introducing legislation much more swiftly.

As I said in my statement, we are urgently seeking further advice on how to mitigate the impact on the police. We will do everything that is lawfully possible to ensure that they can conduct their business and deal with the interviewing of suspects, and that is the subject of ongoing discussion with the Association of Chief Police Officers.

Keith Vaz (Leicester East) (Lab): I thank the Minister for his statement. These must be busy times at the Home Office, but I am disappointed that there has not been a statement on the Sheikh Raed Salah case as the implications of that are equally important.

The Minister is absolutely right that there must be emergency legislation, and it would be useful if copies of the draft legislation were sent as soon as possible to the shadow Secretary of State, my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper), and the Home Affairs Committee, so that we can all help the Government to get this legislation through. There is one issue, however: what happens in the next eight or so days? Do we accept the ACPO guidance, or are we saying that individual forces might act differently—I understand that the Met and West Yorkshire police are proposing different responses to this situation—so may we have a clear and definitive statement on the steps the police should take? The Home Secretary will appear before the Committee on Tuesday, so perhaps we can explore these matters with her then.

Nick Herbert: I am grateful to the right hon. Gentleman for his support for introducing emergency legislation, and we will, of course, discuss that as fully as possible with him and with the shadow Secretary of State, as that is the right way to proceed. The Metropolitan police has issued interim guidance on the basis of the

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judgment, and that is available to other forces. However, we will have further discussions with ACPO about what the appropriate guidance should be for all forces in this interim period, so that it is consistent with our and their obligation to comply with the law as now stated by the High Court. We will do everything possible to mitigate the impact of the judgment, because we want to ensure that the police are not impeded in going about their business and in dealing with criminals.

Mark Reckless (Rochester and Strood) (Con): Will my right hon. Friend reflect on the relative roles of himself, Home Office officials and ACPO in respect of the advice just given to the House, and will he agree to publish the legal advice that has been provided—through ACPO in this instance, it appears? Will he also reflect on the development in the use of police bail over the past 25 years? Clearly, it has been accepted practice, but is there any evidence of a trend of suspects being put on police bail often for many months, or even years, when the police might instead be taking a more expeditious approach to their cases?

Nick Herbert: I am not aware of any such trend, nor am I aware of any concern in this House, or more widely, that gave rise to the decision. The judge’s decision in this instance was based on the narrow case that was before the court. So far as I am aware, there has not been any wider debate suggesting concern about the way police bail has been operated over the past 25 years. That is why we feel that it is appropriate to introduce emergency legislation. I doubt that it would be proper for ACPO to publish its legal advice, which it has received from two Queen’s counsels, but I can confirm that ACPO has written to the Home Secretary to confirm its view that emergency legislation is required. It has given a summary of counsels’ advice, which was given to it since 23 June, and that summary was sufficient to persuade it and us that it is necessary to move forward in the way I have suggested.

Mr David Hanson (Delyn) (Lab): First, why did it take six weeks for Home Office officials to make the Minister aware of the judgment? Secondly, will the legislation be retrospective? Thirdly, will he advise police authorities, including mine in north Wales, that are currently mothballing police cells—such as in Mold in my constituency—on what action to take in respect of maintaining operational police cells in case he does not provide the legislation or win any appeal?

Nick Herbert: I have answered questions about when it became clear that this case was of concern. There was undoubtedly increasing concern among ACPO representatives and, when they met Crown Prosecution Service and Home Office officials, the full implications of the judgment became clear. The right hon. Gentleman asked why we did not do more, but, as I have explained, Ministers were not alerted to this by officials until 24 June, which was last Friday, and that followed deliberations that officials had been having with ACPO after it, in turn, had received its written advice. I am confident that ACPO has been working properly both in talking with officials in order to understand the implications and also in taking formal legal advice not once, but twice, about what those implications were. I

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am also confident that it was right for us then to come to the House once we had established a course of action, so that we could inform the House of the right way to proceed.

Helen Jones (Warrington North) (Lab): The Minister’s comments have revealed an extraordinary degree of complacency in the Home Office about this very serious situation. Did Home Office officials know about this judgment in May? If so, why did they not alert Ministers, and when Ministers first found out about the judgment, why did they not immediately come to this House and make a statement and talk to the Opposition about how to get emergency legislation through to rectify the situation? Why has the Minister waited for so long?

Nick Herbert: I answered those points in terms in my previous answer, and I have nothing to add. It was important for us to establish what the implications of the judgment were first at official level, working with ACPO, and then on the basis of proper legal advice. It was only when officials received the written judgment of the High Court that it became clear that the original judgment might have an implication beyond that which was initially understood. There have been discussions during the course of the week about the appropriate way to proceed, and I have sought to update the House once we knew the course of action, so as to bring clarity. I repeat that I do not regard this as a matter for partisan difference. We are grateful to the Opposition for adopting a sensible approach to this matter and for supporting emergency legislation. We do not need to disagree on this.

Robert Halfon (Harlow) (Con): I thank both my right hon. Friend for the statement and the Government for their prompt response in terms of the emergency legislation. Will he ensure that when this legislation is passed it will give a clear signal to judges such as the one who made the decision that we must be on the side of the victim, not the criminal?

Nick Herbert: I will not comment on the specific points in that question, for reasons I am sure my hon. Friend will understand, but, of course, in general it is important both that we have a criminal justice system that properly reflects the interests of victims and that justice is done. The police bail system had been operating for 25 years in a manner with which, as far as I am aware, everybody was content, and this judgment alone has, effectively, sought to undo that. That is why we think it right to bring forward this legislation.

Mr Kevan Jones (North Durham) (Lab): Although the emergency legislation is welcome, police throughout the country are faced with the problem of administering the current law. What advice have the Minister or the Home Office given to police authorities about reviewing the availability of police cells and what estimate has been made of any additional costs? If there are additional costs, will the Home Office give additional grants to the police so that they can cope?

Nick Herbert: We are seeking to bring forward legislation to deal with the problem sufficiently swiftly to avoid any such impact that may be caused in the interim. We will also seek to mitigate the situation to the greatest possible extent, and I will discuss that with ACPO. Clearly there

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are implications in respect of resources and also for defendants, because as I said in my statement, it is possible that people will be detained in custody for longer, so the judgment’s practical effects will have implications for both civil liberties and the sensible operation of police bail.

Mr David Nuttall (Bury North) (Con): Does my right hon. Friend agree that judgments such as this, which fly in the face of common sense, run the risk of bringing our justice system into disrepute? How can someone who is free possibly be judged to be inside? At this rate, all our prisons are going to be empty.

Nick Herbert: I think that the best way that I could respond would be by quoting the legal expert Professor Michael Zander QC, whom my hon. Friend may have heard on the “Today” programme this morning. He said:

“The only justification for the ruling is a literal interpretation of the Act which makes no sense”.

Chris Ruane (Vale of Clwyd) (Lab): For the third time, was the Home Office advised of the oral judgment in May, yes or no?

Nick Herbert: For the third time, I say to the hon. Gentleman that I have explained the timeline in detail. When he looks at the record, he will see that I said—I am happy to repeat this—that Greater Manchester police approached the Home Office in May, but we received the written judgment from the court only on 17 June. Therefore, action was taken as soon as possible to understand the effects and seek advice once that written judgment was taken.

Paul Blomfield (Sheffield Central) (Lab): This is an important point, and information from the House of Commons Library suggests that Home Office officials did know in May. Will the Minister give a clear answer to the House on whether that is the case, yes or no?

Nick Herbert: I do not understand why Labour Members are trying to pursue a point that I have already answered on a number of occasions. I am happy to repeat that officials were informed in May about the oral judgment, but it was only in June that we received the written judgment of the High Court judge. Officials then began to appreciate that the implications extended beyond that which was originally understood from the oral judgment. I am happy to go on repeating that timeline to hon. Members for as long as they seek to ask these questions.

Nigel Mills (Amber Valley) (Con): I am sure that we all appreciate that these legal judgments can be complicated and that their full implications can take some time to work through, but does my right hon. Friend agree that there is a bit of concern about how long this took to reach Ministers? Is there perhaps scope for reviewing the interaction between his officials and ACPO to see whether a better process can be put in place to deal with the unlikely event that something as horrible as this ever happens again?

Nick Herbert: I note my hon. Friend’s point, but I think that officials wished to ascertain, with ACPO and in consultation with the Crown Prosecution Service,

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what the full implications of this judgment were before they came to Ministers with advice, because they needed to be able to advise Ministers properly on the extent of the implications. We will continue to work very closely with ACPO to do everything we can to support the police in doing the job that they have to do.

Mr Jim Cunningham (Coventry South) (Lab): I think that what hon. Members are trying to get at is this: when the Home Office knew in May why could action not have been taken right away to set something in motion?

Nick Herbert: I say to hon. Members that it would be better if we dealt with the substantive issue, because I have repeated on a number of occasions the timeline and the reasons why. In particular, I have discussed the need to take legal advice to understand the implications of a complex judgment that was simply not expected. That is why ACPO has taken two sets of legal advice, and it was this morning that ACPO formally asked us for emergency legislation. I hope that that explains to the hon. Gentleman the sequence of events and why we have come to the House today to explain what we want to do.

David Mowat (Warrington South) (Con): Our criminal justice system costs about 10 times more than similar criminal justice systems in similarly sized countries, yet judgments such as the one yesterday, which are perverse and self-regarding, are causing this sort of reaction by Government. When are we going to consider more structural reform of a system that is barely fit for purpose?

Nick Herbert: Without commenting on the specific judgment, I agree with my hon. Friend to the extent that we do have one of the most expensive criminal justice systems in the world, and that is why we seek reform of the system across the piece. It also explains the important reforms that my right hon. and learned Friend the Lord Chancellor has introduced in his Legal Aid, Sentencing and Punishment of Offenders Bill and the reforms that we seek on enhancing the accountability of the police. We will have more to say in due course about the efficiency of the criminal justice system and how we seek to drive forward on value for money and a more effective justice system.

Mr Alan Campbell (Tynemouth) (Lab): The House of Commons Library advises that the Supreme Court has not stayed the judgment this morning and that nobody applied for a stay. Can the Minister confirm that that is correct?

Nick Herbert: I understand from the Solicitor-General that that was the case this morning, but I should say to the hon. Gentleman that every effort has been made by Greater Manchester police to appeal against this judgment—the force did this from the original court of first hearing to the High Court—and that the Government are now making every effort to overturn this judgment. That is precisely why we wish to introduce emergency legislation; we do not think that a recourse to further legal process will give sufficient certainty or will deal with the issue in the time that we think is necessary.

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Bob Blackman (Harrow East) (Con): As the Minister has described, some 80,000 people are affected by this judgment. No doubt many of them will be consulting their Member of Parliament this weekend and in the future, so can we have some urgent clarification and guidance from the Home Office about what to say to these people?

Nick Herbert: As I said in my statement, we are urgently seeking advice so that we are able to update the police, through ACPO, on how we intend to mitigate the impact of this judgment. I am happy to ensure that the House is updated as well.

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Points of Order

1.27 pm

Karl McCartney (Lincoln) (Con): On a point of order, Mr Deputy Speaker. My constituency has in the past year enjoyed a number of visits from other Members of the House—that is understandable because Lincoln is a beautiful city with many beautiful people. Visitors have included: the right hon. Members for Leeds Central (Hilary Benn) and for Southampton, Itchen (Mr Denham); my right hon. Friends the Members for North Somerset (Dr Fox), for Richmond (Yorks) (Mr Hague) and for Witney (Mr Cameron); and my hon. Friends the Member for Bexhill and Battle (Gregory Barker), for Faversham and Mid Kent (Hugh Robertson) and for Aldershot (Mr Howarth). Although I was notified of some ministerial visits—on one occasion this occurred at 10.30 pm on a Sunday evening for a visit that was to take place less than 12 hours later, which was timely perhaps but not within the lexicon of due diligence—I, like many colleagues, do not always receive such a courtesy from Members from all parts of this House.

I recognise that, in response to a point of order raised in 2008 by the then right hon. and learned Member for Sleaford and North Hykeham, the previous Speaker drew a distinction between “ministerial business” and “party activities” in relation to constituency visits—Opposition Members are quick to quote that to me. I am also aware that yesterday my hon. Friend the Member for Shipley (Philip Davies) referred to this matter in a similar point of order, although I note that he was lukewarm in his welcome for 50 Members from our coalition partners visiting Shipley. However, I feel that such a courtesy to any Member of this House should be extended to include all visits from every Member of the House, regardless of nature, unless undertaken in a strictly private capacity. On a number of occasions I have attended constituency events, business visits—

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. I have got the message. Members are supposed to keep points of order short and we are in danger of having an Adjournment debate on this. My ruling from the Chair is that, as the House is well aware, it is convention that right hon. and hon. Members allow Members in those constituencies being visited due notification before the visit takes place. That has always been the case and I hope that convention will be the norm.

Diana Johnson (Kingston upon Hull North) (Lab): On a point of order, Mr Deputy Speaker. At Prime Minister’s questions yesterday, in response to my question on the planned changes to vetting and barring in the Protection of Freedoms Bill, the Prime Minister claimed that

“anyone who has criminal convictions”—[Official Report, 29 June 2011; Vol. 530, c. 953.]

will be barred from working with children. However, I have checked clause 66 of the Protection of Freedoms Bill, which clearly removes the current procedure of automatically barring someone who has, for example, raped a child. Given the concern in the country about that loophole, may I seek your guidance on how to correct the record?

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Mr Deputy Speaker: The hon. Lady has already put that information on the record and I am sure that she will find other ways to ensure that the necessary correction takes place.

Yvette Cooper (Normanton, Pontefract and Castleford) (Lab): On a point of order, Mr Deputy Speaker. Today, we have had a statement from the Home Office and a business statement. It is clear from the few answers that the Home Office Minister was able to give that the Government were not ready to come to the House and would not have done so had we not asked an urgent question this morning. Is there provision for the Home Office Minister to come back to the House at the end of the day, once he has clarification from the lawyers on the position for the police as regards the situation under which they must operate, and is there provision for the Leader of the House to come back and make another business statement now that we know that emergency legislation will definitely be needed and will need to be timetabled as a result?

Mr Deputy Speaker: It is up to the Government whether they wish to come back, but that would have to be with the permission of Mr Speaker. I am sure that the right hon. Lady’s message has been heard.

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Civil List

1.31 pm

The Chancellor of the Exchequer (Mr George Osborne): I beg to move,


(1) new provision be made for, or in connection with, the financial support of the Sovereign and of the heir to the throne;

(2) any sums payable in respect of provision so made should be payable out of money provided by Parliament;

(3) provision be made enabling the continuation, in the reigns of Her Majesty’s successors, of the payment of the hereditary revenues of the Crown as directed under section 1 of the Civil List Act 1952;

(4) provision be made about allowances and pensions under the Civil List Acts of 1837 and 1952;

(5) any sums payable in respect of such allowances and pensions by virtue of any provision so made should be charged on the Consolidated Fund;

(6) it is expedient to amend the law relating to the financial support of members of the Royal Household.

The Queen’s Gracious Message yesterday invited Parliament to consider the provision of support to Her Majesty, her successors and other members of the royal household. That reflects a simple fact: the current civil list arrangements are no longer sustainable. They are inflexible, less than transparent and, critically, rely on a reserve of public funds that has steadily been run down and is about to become depleted.

As I explained to Parliament last October, we have been working with the royal household to design a new funding arrangement. It will take the form of a new sovereign grant that balances the public interest in our Queen being properly funded to carry out her official duties with the legitimate interest of the taxpayer in proper accountability and value for money. If we approve the motion, the Bill to establish the sovereign grant will be published later today and the House will have an opportunity for a longer and more detailed debate in two weeks’ time, or thereabouts, on Second Reading.

We must start our discussion today by recognising the Queen’s long service and immense contribution to public life in our country. I was firmly put in my place on taking office when I was reminded that I was the 19th Chancellor of the Exchequer to serve under Her Majesty. In the 59th year since her accession to the throne and the 86th year of her life, Her Majesty still took part in 440 public engagements. Her visit to Northumberland last week reminds us of the work that she and other members of her family carry out week in, week out to celebrate the achievements of communities across Britain. The royal family also conduct official business on behalf of the Government, leading 2,700 engagements and 150 official overseas visits last year. More than 41,000 people were invited to events at one of the palaces.

The monarchy is also a powerful magnet for international tourism, worth, according to one recent estimate, some £500 million to Britain. There is little doubt that our monarchy is a source of great national pride and constitutional strength that is widely admired around the world. As has been recognised for centuries, however, the official duties of the monarch cost money. That is why in the 18th century an historic arrangement was reached between the Government and the monarch.

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Until then, the monarchy was indistinguishable from the state and both were funded from the income the mediaeval Crown collected from its estates, as well as duties, fines and other charges.

In 1760, George III agreed to surrender for his lifetime the full income of the Crown Estate to the Government in return for a civil list. That arrangement has been in place ever since and a clear demarcation has long been established between the private income of the royal family for their private expenditure and the publicly funded income, derived from the civil list, for the royal family’s public duties.

At the beginning of each reign, Parliament passes a new Civil List Act setting out a fixed annual amount for the whole of that reign. That was done in 1952, when Her Majesty was proclaimed Queen. By 1972, high inflation had so eroded the value of the civil list that the system had to change and this House agreed to set fixed annual amounts for 10 years at a time, but this system, too, had its weaknesses. As inflation was hard to forecast accurately over a 10-year-period, the civil list ended up being too generous at the beginning of the period and too meagre at the end. We are living with those weaknesses still.

In 1990, the annual civil list amount was set at £7.9 million. Additional support was provided to the monarch in the form of two grants in aid, one for travel and one for maintenance of the royal palaces, but inflation in the 1990s was falling faster than forecast and much of the funding was not spent. Instead, it went into a reserve, which by 2001 had grown to more than £37 million. At the beginning of the last decade, it was decided that rather than set a new civil list, the royal household should run down that reserve to fund its official duties.

That means that over the past three years, the royal household has on average spent about £35 million a year. Let me set out how the spending breaks down for 2009-10, the most recent year for which there is out-turn data. There was £7.9 million from the civil list, £6.5 million from the reserve—that was, of course, public money that had been provided earlier—£3.9 million for travel, £400,000 for communications, and £15.4 million for royal palace maintenance. It should be made clear that over recent decades the royal household has done a huge amount to cut costs and improve the effectiveness of its spending. Indeed, total spending has come down from £45.8 million in 1991 to an expected £35 million in 2010-11. That is a real-terms cut of more than 50% in 20 years. No other Government Department can claim to have achieved anything like that.

Those efficiencies have continued in recent years. For example, visitor income to the palaces has almost doubled, commercial lettings at Hampton Court and Kensington palace are up 30% and a two-year pay and recruitment freeze on the royal household has been imposed. I want to take this opportunity to thank the current Keeper of the Privy Purse, Sir Alan Reid, and his predecessors for doing such a good job.

Despite such impressive efficiencies, however, there are problems with the current system. It is very inflexible. For example, money saved in travel cannot be used to undertake an urgent repair of a property. It is opaque,

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as the National Audit Office’s access to official spending is limited and, although it has carried out value-for-money studies, it has no audit function. Critically for today’s discussion, it was clear by April 2010 that the royal household’s reserve, which had provided a key component of its annual income, was running out.

The previous Government took the decision, which I completely understand, to leave it to the incoming Government to fix that situation. This is how we propose to do it. We will introduce a new sovereign grant that provides appropriate resources for the Queen to do her job with dignity but balances that with fairness and accountability for the taxpayer. It is designed around three principles. First, it provides the monarchy with sustainable long-term financing free from annual political interference, by which I mean the budget can be set for the long term and automatically uprated without an annual political argument. Secondly, it provides flexibility, so that the royal household can manage its funds efficiently to deliver best value for taxpayers. The third principle is that, alongside more sustainable finances with greater flexibility, we will ensure greater accountability and transparency and establish proper checks and balances to prevent the sums provided from becoming too excessive. Those are the three principles underpinning our approach.

[Official Report, 5 July 2011, Vol. 530, c. 13-14MC.] Let me now turn to some of the detail, recognising that in a fortnight’s time or so people will have had a chance to study the legislation and we will have a longer debate on Second Reading. First, we need a funding mechanism that prevents the sovereign from coming to Parliament each year for resources, and that provides funding broadly in line with the growth of the economy. There is such a mechanism at hand, through the historical connection with the Crown Estate, so I propose that from 2013-14 the royal household receives 15% of the profits made by the Crown Estate in the two years prior. That is an average.

As the House will know, the Crown Estate is a large commercial property portfolio comprising £6.7 billion of assets, and 15% of the profits is estimated to provide a sovereign grant worth about £34 million in 2013-14—in other words, broadly in line with the latest data on grant and reserve spending for 2009-10, which was £34 million.

Each year, as the economy grows, the revenues of the Crown Estate will grow, and the monarch will eventually receive 15% of those revenues using that formula. There will be a cash floor to protect the monarch from cash cuts, but basically the monarch will do as well as the economy is doing. We will see how the Crown Estate performs, but the current estimate is that the 15% formula will mean that by 2014-15, the last full year of this Parliament, the monarch will receive about £35million. In cash terms, that is broadly in line with what it has spent in recent years; in real terms, it is about a 9% cut over the Parliament.

We are also preparing a further important improvement to the current system. Historically, extending funding arrangements to new monarchs required primary legislation within six months of their accession. That arcane process made it difficult for the royal household to plan for the future, and for each new monarch to achieve a smooth transition at the beginning of their reign when so much else needed to be done. So I propose that the new legislation should be a permanent arrangement that outlives the sovereign. It will require only an Order in

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Council, rather than a whole new piece of legislation, to extend the sovereign grant to a new monarch, and I hope that Members agree that this is a sensible arrangement.

We will also use the Bill to remove an historical anomaly about the Duchy of Cornwall. The revenues of the duchy are used to fund the Prince of Wales in his official duties, but they are available to him only because he is the Duke of Cornwall, and only the eldest son of the monarch can be the Duke of Cornwall. So if the heir to the throne is female or, indeed, a second son or a grandson, they cannot be the Duke of Cornwall, which means that they would not get the revenues of the duchy.

We propose to correct that anomaly by making it clear that in future Duchy of Cornwall revenues will in effect go to the heir, whether or not they are the Duke of Cornwall. There will also be a provision in the Bill to deal with the situation in which the heir is not yet an adult.

We will also bring to an end another anomaly by which certain members of the royal family receive statutory payments from the Exchequer only for the money to be reimbursed to the Exchequer by the Queen. Yesterday, I received a letter from the Keeper of the Privy Purse on this matter, copies of which will be made available in the Library after my speech. The new sovereign grant will replace all statutory payments and annuities to other members of the royal family, with the exception of the Duke of Edinburgh.

The second principle behind our proposals is flexibility. As I have said, under current arrangements, the Queen receives three different blocks of money: a travel grant from the Department for Transport; a royal palaces and communications grant from the Department for Culture, Media and Sport; and the civil list from the Treasury. That is very inflexible. It means that the royal household cannot set its own priorities and flexibly manage its resources in the course of each year, as any modern organisation would want to do.

I propose abolishing the three separate blocks and merging them into a single grant from the Treasury. As has been the case for many decades, any underspent public money will go into a reserve. This is a sensible arrangement that will allow the royal household to provide for contingencies and to invest in one-off capital projects.

Unlike previous years, however, we are going to have a maximum target on that reserve, so that it never rises above about 50% of the annual grant. This means, for example, that if the annual grant is £34 million, the reserve will be limited to £17 million, which is very much lower than the £37 million that was accumulated in the reserve 10 years ago.

The third principle of our approach is an incredibly important one: accountability to Parliament for the spending of public money, and value for money for the taxpayer. I think that we get excellent value for money from our monarchy. It amounts to 51p per year per person in the United Kingdom, but it is right and proper that Parliament should exercise oversight.

For many years, the National Audit Office and the Public Accounts Committee have been allowed to conduct value-for-money studies in some areas of royal business, such as travel or palace maintenance, but not to conduct full audits as they do with other Departments. The Bill

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proposes to change that. From now on, the NAO will have full access and become the statutory auditor of all the royal household’s official business and of the sovereign reserve. It will also be able to audit the assets used by the royal household in carrying out its official business. The National Audit Office will not become the financial auditor of the Queen’s private business, including the Duchies of Lancaster and Cornwall, which remain private funds.

To ensure accountability to Parliament, the sovereign grant accounts will be laid before the House. The Public Accounts Committee will also be able to conduct hearings on the royal finances, with the royal household itself providing evidence at such hearings. That is a big and historic extension of parliamentary scrutiny, and I should like to thank Her Majesty for opening up the books.

We also propose checks and balances on the size of the sovereign grant and the reserve. As I said, the sovereign grant will be set at 15% of Crown Estate revenues, and that percentage will be reviewed every seven years to determine whether it remains appropriate. The review will be conducted by the three current royal trustees, the Prime Minister, the Chancellor of the Exchequer and the Keeper of the Privy Purse, and every seven years we will come to Parliament with the proposed review and a recommendation on what it should be.

There cannot be an increase without agreement from Parliament through the affirmative procedure. The royal trustees will also act to make sure that the reserve remains within its 50% cap by reducing the annual grant as required, and of course the Treasury has a responsibility each year for ensuring that the sovereign grant is spent on the official duties that it is supplied to be spent on.

Those arrangements also deal with the potential situation, which some people predict, of an increase in Crown Estate profits from offshore wind activity. Currently, those revenues are running at about £2.5 million per year, but some forecast that they could increase substantially in the 2020s. The 15% formula will be reviewed before that may come about, and we will not allow revenues from offshore wind to lead to a disproportionate rise in revenues to the royal household. We will shortly also set out proposals, unconnected to this legislation, to make sure coastal communities can benefit from the development of the Crown Estate’s marine activities.

Today, we recognise the value of the monarchy and we put its finances on a sustainable long-term footing. I have put forward the principles behind our proposed new sovereign grant, and we will debate those in detail next month. Our aim is to ensure that the sovereign can carry out her official duties effectively and with dignity, while ensuring accountability to Parliament and value for money to the taxpayer. I hope that our proposals receive all-party support, and I commend the motion to the House.

1.47 pm

Ed Balls (Morley and Outwood) (Lab/Co-op): Although I, like other Members, have not yet seen the Bill that we are debating today, I thank the Chancellor of the Exchequer for giving me a briefing a full 48 hours in advance of today’s debate. That allowed me to spend yesterday preparing my response and the Chancellor to spend the

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afternoon at centre court, Wimbledon. I know that he was in a box; I do not know whether it was the royal box, but there we are.

We are debating a very important reform today. As the Chancellor of the Exchequer said, it is the most significant reform to the financing of the royal household since the accession of King George III in 1760, when building upon the Civil List Act 1697—see, my day yesterday was well spent—tax revenues and Crown land revenues, which were hitherto under the independent control of the sovereign, were surrendered to Parliament in exchange for a civil list then of £800,000.

This is the first time that Parliament has had the chance to debate those matters from first principles since the Civil List Act 1972, and, as the then Chancellor of the Exchequer, Anthony Barber, told the Committee of the Whole House:

“I do not believe that the British people want the work of the Royal Family to be cut down. I believe that they want it to be continued and performed by the Royal Family.”—[Official Report, 19 January 1972; Vol. 829, c. 551.]

He had already reminded the House that in debating these matters,

“we are taking decisions about an institution which, just as much as Parliament, is an essential part of our history, our constitution and our way of life.”—[Official Report, 14 December 1971; Vol. 828, c. 292.]

Almost 40 years on, that sentiment will find widespread support across all parts of this House. Replying for Her Majesty’s Loyal Opposition, the then shadow Chancellor of the Exchequer, the late Lord Jenkins of Hillhead, was right also to point out:

“The acceptance and the appreciation of the Monarchical function does not preclude proper consideration by this House of how financial provision should be made.”—[Official Report, 14 December 1971; Vol. 828, c. 383.]

Again, that is a sentiment that will command support from all parts of this House.

Reading back over those debates from the early 1970s, it was clear that not everyone in the House supported the changes. Indeed, I noted that my hon. Friend the Member for Bolsover (Mr Skinner)—he is not in his seat today—voted against the changes in 1972. I looked for his contribution to the debates, but the Hansard record does not record a speech by my hon. Friend, just a series of documented comments from a sedentary position; some things do not change. At one point, the Member for Chelmsford, a future Leader of the House of Commons, Norman St John-Stevas, remarked that

“criticism of the Monarchy, just as of this House, should be fair and temperate not unfair and prejudiced.”—[Official Report, 21 December 1971; Vol. 828, c. 1357.]

Hansard shows that the newly elected Member for Bolsover simply shouted out, “Why?” It was a relatively tame intervention. My hon. Friend was just at the foothills of what has turned out to be a very fine parliamentary heckling career.

The world, the monarchy and the House have all changed a great deal since the early 1970s. The global demands of the royal household have grown significantly, with all that that entails in security and admin burdens. The monarchy has changed greatly—it is now much more open and more scrutinised than ever before—and Parliament, as the Chancellor said, now has a greater

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role in scrutinising the finances of the royal household than in the 1970s. Of course, the one unchanging rock across all those turbulent decades has been Her Majesty the Queen herself, whose grace, wisdom and dedicated service to our country are second to none.

I agree with the Chancellor about this. I know that not everyone in this House will agree with what I am going to say, but it is the view of Her Majesty’s Loyal Opposition, as it is the view of the Government, that the monarchy continues, and must continue, to play a vital role in the affairs of our nation in the new century, but that to play this role and to command public support, the royal household must, as the Chancellor said, be financed in a proper, open and fair way, which means fair to the royal household and, as the Chancellor said, fair to the taxpayer too. There is a balance to be struck, as there has been for over 250 years since the 1760 settlement. It is the job of the Prime Minister, the Chancellor and the Government, with the royal household, to strike a fair and workable balance between the legitimate needs of the household and the interests of the taxpayer. It is the responsibility of Her Majesty’s Opposition to scrutinise the actions of the Government to make sure that it is done in a fair and proper way, and it is the job of this Parliament to oversee these matters.

I thank the Chancellor for giving me advance notice of the details; as I said, I have not yet seen the legislation. I want to assure him that although we have questions to ask, it is our intention to support him in reforming the current arrangements. However, it is very important that he seeks to establish a consensus not only across the Dispatch Box but in the country as a whole in support of these reforms. At a time when many families and businesses are under real financial pressure, the Chancellor will need to provide, today or on Second Reading, some more clarity, detail and reassurance on four particular issues that I will set out today in advance of those debates: the level of the sovereign grant; the costs of royal security, which, while not covered by the sovereign grant itself, are material to these matters; the mechanism for uprating the sovereign grant; and how Parliament scrutinises these new arrangements.

On the first issue, the Chancellor and the Treasury will need to provide some more analysis in advance of Second Reading to explain why, in choosing the figure of 15% of the profits of the Crown Estate, they believe they have set the sovereign grant at the right level. I understand that, adjusting for the issue of the drawing down of the reserves, this new arrangement is expected to maintain the current level of spending broadly over the course of this Parliament.

It is right that we ask whether this is the right level of expenditure given the costs, pressures and demands on the royal household. On the one hand, the Queen has managed to deliver a 50% reduction in the total expenditure of the royal household over the past two decades, but has this process of efficiency savings come to an end, or are there further savings that can and should be made? On the other hand, the wonderfully successful wedding of the Duke and Duchess of Cambridge, who start their visit to Canada today, has thrust the younger members of the royal family into the limelight: they are in demand in this country and all round the world. Meanwhile, Her Majesty the Queen’s historic visit to Ireland and the Duke of Edinburgh’s recent birthday celebrations have seen their popularity reach new heights, and this can

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only increase as we move towards the diamond jubilee next year. This necessarily raises issues of resourcing and security.

The demands on the newly extended royal family are higher than they have ever been, and it is right that we ask whether the level of the royal grant is commensurate with the high tide mark in the royal family’s responsibilities and public appearances. This necessarily raises security issues too. It has been reported that a number of members of the royal family have had their security support downgraded, or in some cases removed. We should ask whether the Chancellor, as part of this process, has examined the impact of these changes on the royal family and on the public purse, and whether they may have gone too far. Does the current security budget meet the needs of the wider royal family in this more demanding environment? At a time when the Home Office and security budget is very stretched and under pressure, it is important that we ask that question.

That takes me to the third issue: the arrangements for the uprating of the sovereign grant. The Chancellor’s proposals imply that the total expenditure of the royal household will fall in real terms from the beginning to the end of the Parliament, but the proposals also imply that spending will, from next year, be rising in cash and in real terms, alongside a 3.2% real-terms rise in the total sovereign grant between now and the end of the Parliament. I understand, too, that the Chancellor is proposing to put a cash floor on the finances of the royal household into the future, by however much the profits from the Crown estates fall. I have to say that this is a generous proposal which suggests that the Chancellor thinks that the efficiency savings have come to an end. We also know that the profits of the Crown Estate could rise. If they rise markedly in future, the House and the country will need an assurance that proper and responsive arrangements are to be put in place.

It is unclear at this stage whether the Chancellor is saying that any increase in revenues over and above the levels that he is currently predicting will automatically be passed into the reserves or could lead to higher expenditure by the royal household. The arrangements that he set out appear to suggest that if expenditure were to rise alongside income, there would not then be an automatic review of the percentage of income allocated through the sovereign grant. If revenues are higher, then rather than waiting a full seven years for a review and risking upward pressure on spending or a repeat of the accumulation of reserves that we saw in the 1990s, is there not a case for a more automatic and immediate formula to return those excess revenues to the taxpayer?

As the Chancellor said, this issue is particularly relevant because the Crown estates are set to see an increase in their income from the exploitation of wind and tidal energy in the coming years. Crown Estate income from the renewables sector grew by 44% to £2.6m in 2009-10 alone. The annual report of the Crown Estate describes current growth as “exponential” and growth over the next 10 years as “significant”. Given the potentially significant change in income from renewables in the coming years, it is important that we ensure that the proposals are robust as regards a significant rise in Crown revenues.

The final issue is parliamentary oversight.

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Oliver Heald (North East Hertfordshire) (Con): I certainly support the comments of the right hon. Gentleman and the Chancellor. Is the right hon. Gentleman at all interested in asking for an assurance or some information on whether the proposals are likely to influence the investment strategy of the Crown Estate, and what that might involve? How much income or growth are required are often quite important parts of an estate’s strategy.

Ed Balls: The hon. Gentleman raises an important question. It is good that Parliament has an opportunity to scrutinise the proposals in the coming weeks or months. We are in an unusual situation. This debate is not a statement, so it is inappropriate for me to ask questions of the Chancellor today and expect him to respond. The debate is also on a Bill that we have not yet seen, which is obviously awkward. I am in a stronger position to ask detailed questions than everybody else, because I knew some of the content of the proposals in advance, but I do not know all the detail.

Today we are setting out questions and issues on which the Government might want to provide more detail between now and the debate on Second Reading. We will certainly expect more detail and debate then. I am sure that in reaching that deal over past months, the Chancellor and members of the royal household scrutinised the kind of issue that the hon. Gentleman raises. However, we need to find out the detail of that scrutiny, what analysis was looked at before that agreement was reached, and the impact of the proposals on a number of things. I mentioned security and the uprating formula, and the hon. Gentleman asks the very important question of whether the measures will enhance the Crown Estate or deter it from seeking to make new investments. I do not know the answer to that, but it is a good issue for debate.

Mr George Osborne: The right hon. Gentleman is right: this is not a statement. It is a rather archaic procedure, but if it is any consolation, it is a lot less archaic than it was in the early 1970s—through discussions with the Chair, we managed to reduce some of that procedure. I am unable to respond to the points that he makes, but I shall use this intervention to say that I thank him for the support in principle that he has given to the measure. He has asked some good questions, to which I hope to respond on Second Reading, and other hon. Members will raise other issues. I was not able to publish the Bill until this resolution has been passed by the House. I appreciate the right hon. Gentleman’s approach. The debate on Second Reading will be an opportunity for hon. Members to go into the detail of the Bill after they have studied it.

Ed Balls: I was in no way criticising the approach that has been taken. I was simply noting the rather odd situation that we are in: I am able to say some things that, potentially, nobody else fully understands because they have not had the briefing from the Chancellor that I had, but I totally understand the Chancellor’s position.

Paul Flynn (Newport West) (Lab): As this announcement has been described as “important”, a disappointingly small number of Members are in the Chamber. Will my right hon. Friend tell me when he first heard that this announcement would be made today?

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Ed Balls: I do not want to say anything inappropriate, but I believe that it is appropriate for me to say that the Prime Minister briefed the Leader of the Opposition on these matters a week ago. The Chancellor requested that I meet him, and we met on Tuesday. The clear view of the House authorities, the Government and the royal household—I do not know exactly who makes such decisions—was that the first public knowledge of the proposals should be the making of the gracious request, which happened yesterday. It was then a matter for the Government to respond the next day, which is where we are. That is the fullest answer I can give, so there we are.

It is welcome that, for the first time, the National Audit Office and the Public Accounts Committee will have the same powers to audit and scrutinise the royal household as any other Government Department. I am sure that the Chair of the PAC will speak in this debate about that in greater detail. However, there are important issues of detail in respect of how the proposals will work in practice. Will the reports be frequent and timely? Will all necessary information be disclosed to the PAC and Parliament? Who will give evidence to the Committee on those matters?

In June last year, the Chair of the Commons Public Accounts Committee, my right hon. Friend the Member for Barking (Margaret Hodge), said:

“If there is to be serious assessment of efficiency and economy and effectiveness (of the monarchy), one has to look at the total income and expenditure. It is difficult to look at just a part.”

That has been our situation in recent years. As the Chancellor says, even before today’s Bill, our situation is a substantial advance from where we were 40 years ago. It is true that the original debate was opened by the Prime Minister and that the Chancellor represented the Government in a Committee of the whole House, but it is also true that that was pretty much the only opportunity for scrutiny of such matters in the previous 40 years. We are therefore in a better place, but the Chair of the PAC is right to say that we need to go further and to do so in a proper way. I hope that we hear from her today, but it is vital that Parliament has the proper information so that it can properly and fully scrutinise such significant sums of revenue.

In conclusion, the Opposition will support the Chancellor in making necessary reforms, but my advice to him is that there is more work to do on providing more detail and reassurance in advance of the debate on Second Reading. It is necessary to build a consensus not only in the House but in the country. The case needs to be made that the reforms represent a secure, balanced and fair way forward for the royal household and the taxpayer in the years to come. We look forward to playing our part in those debates and that scrutiny in the coming weeks and months.

2.6 pm

Mary Macleod (Brentford and Isleworth) (Con): I want to put this debate in the context of Her Majesty’s life of service to this country. As we are all aware, the Queen fulfils a number of duties as Head of State, including her constitutional duties, such as the state opening of Parliament, giving Royal Assent to legislation, carrying out state and royal visits overseas, and receiving state and official visitors. However, the Queen, and indeed the whole royal family, play a much greater role in our society: that of providing a focus for national

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identity, unity and pride. They recognise success and contribute to our nation through their public service and support for the voluntary sector, which includes many of the unsung heroes in our local communities. The Queen and the royal family also support the vulnerable and highlight the need to help in challenging areas of society.

We need only cast our minds back a couple of months to the royal wedding of the Duke and Duchess of Cambridge for an illustration of how much the monarchy means to everyone in this country, and indeed across the world. The royal family is a hard-working institution, and we are rightly proud of it in this country. As we heard earlier, the Queen entertains almost 50,000 people per year, not to mention the many thousands of people she visits around the country and the world.

It is difficult to quantify the full benefit of the royal family, not just to tourism and our country’s status abroad, but to our national identity, history and traditions—the things that make us proud to be British. They also support our values of freedom, democracy, the rule of law and equality.

More specifically on the motion, the Queen and the royal household currently receive funding from several sources, as we have heard. However, following the agreement made in 1760 in return for the fixed annual payment, Crown lands are managed on behalf of the Government, and the surplus revenue goes to the Treasury. In the last financial year, that amounted to more than £210 million. Let us be clear about this. In the last financial year, the Queen and the royal household received £38.2 million in total from the Government, and paid back to the Treasury £210.7 million in surplus revenue from the management of the Crown Estate. In other words, they contributed a net sum to the Government of £172.5 million. That sounds like a pretty good deal to me.

Regardless of that net contribution to our economy over the past decade, the Queen and her staff have made significant efforts to make the royal household more efficient, as the Chancellor said. Head of State expenditure has more than halved during that time from the £87.2 million in 1991-92, to £38.2 million in 2009-10, and the projected spend this year of £35 million.

As my right hon. Friend the Chancellor outlined in the Chamber today, a new sovereign support grant will be introduced to cover funding for the Queen and the royal household. The grant will combine all the sources of funding into one sum covering all the monarchy’s official expenditure, not just the expenditure currently covered by the civil list. This will simplify an overly complex process for allocating funding—one that is haphazard at best. The level of funding will be linked to the Crown Estate’s surplus and will provide levels similar to those currently received. Surpluses and funding will be held in reserve for future years and levels will be protected from falling significantly from previous years. As we heard, full parliamentary scrutiny and audits of all expenditure will continue. The proposals will provide for continuity in the event of the succession of a new monarch so as to ensure certainty and stability for the royal family and household. I believe completely in and support the three principles that the Chancellor outlined.

In summary, the sovereign support grant will give the royal household greater control to manage its funding and continue its efficiency measures. It will also provide clarity, flexibility and longer-term planning, and will

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make it much easier to communicate the finances of the Queen and the royal household to members of the public. The sovereign grant Bill is consistent with the Government’s quest for greater transparency of funding, which we are trying to get across government, together with increased accountability and focus on achieving value for money for taxpayers. It also, importantly, continues to support the sovereign in the long term in the outstanding contribution that she makes to this country on a daily basis. I therefore support the motion.

2.11 pm

Margaret Hodge (Barking) (Lab): I join others in welcoming today’s announcement and the motion put forward by the Chancellor with the agreement of the royal household. Like others, I recognise the fantastic contribution that the Queen and members of the royal family make to the United Kingdom, and acknowledge the respect and warmth that the Queen commands among the British people. Most recently, as others have said, the royal wedding of the Duke and Duchess of Cambridge gave us all an uplifting moment of joy, allowing us to celebrate with the royal family on an occasion filled with happiness at a time when so many families are facing difficulties and insecurity in their daily lives.

Clearly, if the Queen and the royal family are to carry out their constitutional duties effectively, they need appropriate funding. Some of this funding comes from the taxpayer, so we need to have in place an open and accountable system. The Chancellor’s announcement today puts the direct support from the taxpayer to the royal family on a transparent footing, which will enable both Parliament and the public to understand how much taxpayer money is being spent annually by the royal family and what it is being spent on. This is undoubtedly an important change for the better, and as Chair of the Public Accounts Committee, charged with following the taxpayer’s pound, I warmly welcome it.

I also recognise the historic significance of the changes proposed, and believe it is hugely important for the future stability of the monarchy and its role in our constitutional settlement that we should modernise our structures so that they are fit for purpose in today’s world, and properly meet the legitimate expectations of the taxpayer and the general public. As others have acknowledged, the Queen has acted sensitively and prudently in managing her finances over the past two decades. That is right and proper, and she should be applauded for doing so. She has cut her real-terms expenditure by more than 50% in the past 20 years, and at a time when we are asking every family to tighten their belts, people will be heartened to see that she is playing her part.

The powers proposed in the legislation, as outlined by the Chancellor, are hugely significant for Parliament. The Comptroller and Auditor General will be appointed by statute to audit the sovereign grant accounts and he will be empowered to prepare value for money reports that the PAC can consider. This puts, for the first time, those parts of the royal finances that come directly from the taxpayer each year on a transparent basis, consistent with other public expenditure. The PAC has a long and well-established history of effective public scrutiny, and we will, I am sure, approach these new responsibilities in our traditional way, working objectively and thoroughly on behalf of Parliament and the taxpayer.

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We will show no fear or favour. On the one hand, we will not give this new area of our work special treatment, but on the other hand, we will take the issues seriously and ensure that we hold the appropriate accounting officers to proper public account. In our approach, we will examine critically both how the Government allocate funding to the royal family and how the royal family then spend that allocation. As right hon. and hon. Members know, we have a reputation for being straightforward, direct and clear in our recommendations, and I hope that both the Chancellor and the royal household will welcome the new accountabilities and the implications for them. You never know, Mr Deputy Speaker, we might, in years ahead, end up praising the royal household for providing value for money and criticising the Treasury for its meanness. Time will tell.

In this instance, I expect us to take evidence from the Keeper of the Privy Purse and Treasurer to the Queen, Sir Alan Reid. Although the incorporation of the civil list into the new sovereign grant gives us new powers, with new audit and access rights for the Comptroller and Auditor General and new areas for public scrutiny of this expenditure by Parliament, the PAC has in the past examined areas of expenditure by the royal household covered by the grant for royal travel from the Department of Transport and the grant aid for the royal palaces from the Department for Culture, Media and Sport.

As the Chancellor said, in 2010, £5.4 million was granted for royal travel and £15 million for aid to royal palaces. When the PAC reported on the occupied royal palaces in 2008-09 we found that, although the royal household claimed a £32 million backlog of maintenance work, that figure was not supported by rigorous analysis. We said then that in the absence of a consistent approach to assessing the condition of the Crown Estate and calculating the backlog, and without an assessment of the practical consequences of the backlog, the Department and the household could not be sure how big the problem was or what to do about it. We said that the household should define the criteria for inspecting the condition of the estate, agree with the Department the basis for calculating the maintenance backlog and, before the end of 2009, set out a plan for managing it.

As a result of that recommendation, the household adopted a new system for monitoring the condition of its estate to better manage prioritisation of the maintenance work. In the same report, we noted that the Royal Collection Trust received more than £27 million from visitors to the occupied royal palaces, of which just £1.8 million was passed to the royal household to top up the resources available to maintain the palaces. The report found that the arrangement by which money paid by visitors to the palaces went to fund the trust dated from 1850. Clearly times have changed. More palaces have opened to the public and hundreds of thousands of tourists visit them each year, yet only a fraction of the income generated has, in the past, been used to maintain the palaces. The amount paid to the household is at the discretion of the trust, but some staff of the household are also involved with the trust and have potential conflicts of interest.

We said that the Department should work with the household and the trust to revise the arrangements for the collection and distribution of visitor income to

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reflect the fact that visitors come to see the palaces as well as the works of art in them. In response, the royal household announced a new arrangement under which, in 2009-10, the trust started paying an amount to the royal household in respect of visitors to Buckingham palace, which again helps offset public funding.

To give another example, following a visit by the then Public Accounts Committee to Kensington palace on the back of a report on maintaining royal palaces, the Queen agreed to pay rent—initially £60,000 a year, rising to £120,000 a year—for the Prince and Princess of Kent’s apartment at Kensington palace from her own income. We understand that from 2010 the Prince and Princess of Kent will remain at their apartment but will pay the rent from their own funds.

Those have been our past successes. In future, we might well want to look at a new range of issues, such as whether the royal estate is being used in the most cost-effective and efficient way, with the royal household maximising the potential for income from commercial lettings, and whether maintenance work is being properly prioritised given the backlog. On travel, we might also look at the cost-effectiveness of the options chosen by the royal household—for example, between road, rail and air—to ensure that best value for taxpayers’ money is secured.

On the former civil list, we might want to examine procurement, staffing costs or expenditure on receptions and entertainment. Having listened to the Chancellor’s welcome statement, I would appreciate it if he dealt with a number of issues that I believe arise. He has said that the sovereign grant will be reviewed every seven years. As I understand his statement, he will be taking new powers to reduce the sovereign grant year on year if the income from the Crown Estate exceeds his expectations. I understand that such a power does not exist at present and I would be grateful if he confirmed that it will be a new power. A similar issue arises on the income that the royal household receives from opening the palaces and the royal art collection to the public. How in those circumstances will any increase in income be treated in determining the sovereign grant?

Finally, today’s proposals deal with the annual income received by the Queen from the taxpayer, but we need to ensure that the public interest in all the assets and estates held by the monarch on behalf of the public is accounted for in a transparent and consistent way. This is particularly important in these stringent times when we are asking so much from hard-working families. I would be grateful if the Chancellor addressed this issue in his reply.

I warmly welcome today’s announcement by the Chancellor. This is a truly historic occasion. For the first time ever, we are placing the royal expenditure financed by the taxpayer on a proper footing—transparent for all to see and consistent with all other public expenditure. This is a sensible act of modernisation that I am sure will be welcomed by Members on both sides of the House and by the general public at large. It will help to ensure continuing admiration and support for the Queen and for the role she plays in our constitutional arrangements.

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2.23 pm

Mr Edward Leigh (Gainsborough) (Con): It is a pleasure to follow the right hon. Member for Barking (Margaret Hodge), who is the current Chair of the Public Accounts Committee. Under my chairmanship and hers, the Committee has for many years fought a relentless campaign on this issue, but I never thought this day would come. My right hon. Friend the Chancellor has risen to such distinction, but I remember his being a member of our Committee when he was a very new, young Member of Parliament, and he may recall a visit we made to Kensington palace together. The trouble with dealing politically with royal family matters—I know this from my many years of chairing the Public Accounts Committee—is that whereas an incredibly worthy report about tens of millions of pounds, or even hundreds of millions of ponds, being wasted in the Department for Work and Pensions will end up only on page 15 of the Financial Times, if we are lucky, something involving the royal family gets much more interest. I think that the visit we made to Kensington palace was on pages 2, 3, 4, 5 and 6 of the Daily Mail. There is enormous public interest where the royal family is concerned.

My right hon. Friend is to be commended for being the first Chancellor of the Exchequer to have the guts to take this issue on and deal with it. As I said, I thought this day would never come. When we started this campaign and really tried to gear it up, we were looking at three areas in which we thought that parliamentary accountability was absolutely vital: the royal family and all aspects of royal finances, the BBC and the Bank of England. Those three great institutions stand without Parliament and we were told for all sorts of reasons why it was quite inappropriate for the National Audit Office to crawl all over their accounts. It has been like pushing water uphill, but I think that after many years and many bloody battles we are going to drag the BBC to full accountability—and not a moment too soon. That is quite right. Again, I commend the Chancellor for what he is doing. The Bank of England is a more difficult issue and we are still struggling on that, but we have a great victory today. For the first time since this modern settlement was made in 1760, Parliament will, through the Public Accounts Committee, be able to scrutinise all aspects of royal finances.

Although there has been great resistance to this proposal, I have to say that in all my many conversations with the royal household I never detected any resistance from it. I think it has been Governments who have worried about certain republicans on the Public Accounts Committee crawling over the royal finances. I should like to pay tribute to a great and wonderful parliamentarian, who has not been mentioned yet and who is a personal friend of mine—Mr Alan Williams, a former Father of the House, who served with great distinction for many years on the Committee. We all know that he gave the royal finances a good going over. Unfortunately, another personal friend of mine, the hon. Member for Glasgow South West (Mr Davidson), is not here, but I am sure that if he were still on the Committee he, too, would be giving the finances a good going over.

This will be tough for the royal household—there is no doubt about that—and there will be strong questioning in the Committee, as there is on all these subjects, but that is absolutely right because that is what we are about: accountability. I think they have absolutely nothing

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to fear. As the shadow Chancellor made clear—we do not need to labour this point, because we all know it so well—the Queen has throughout her reign acted with incredible grace and wisdom and with such enormous constitutional propriety. We know all that, but what is not so well appreciated—certainly not by the general public and perhaps not by many Members of Parliament—are the enormous strides that the household has made in delivering efficiency savings and cutting costs. I am pretty confident that when the Committee, working with the National Audit Office, is allowed to crawl over the accounts, it will find a first-rate, modern institution.

It is unfortunate that up to now the Committee has been able to deal only with royal travel and palaces and not with the rest. That seemed a strange state of affairs. We managed to save the royal train, by the way, which is, in terms of modern accountability, a fantastically wasteful but noble instrument of royal travel. [Interruption.] It is necessary. It is so old that it can only travel at night.

Jacob Rees-Mogg (North East Somerset) (Con) rose—

Mr Leigh: I give way to an ornament of the constitution.

Jacob Rees-Mogg: My hon. Friend and his colleagues saved the train but unfortunately not the yacht. Is there any chance that for the diamond jubilee we will get the yacht back?

Mr Leigh: Well, some stingy previous Government, whom I will not mention by name, got rid of the royal yacht. What a tragedy. It is not the working part of the constitution but it is an important part. As for the royal train, it is quite right that this wonderful elderly lady should sometimes be allowed to sleep on the royal train so that when she visits Newcastle or Manchester she can wake up and perform her duty refreshed, and not be forced out of bed at 5 am to take a plane. We saved the royal train; that, I think, is something that the PAC achieved.

The PAC, then, will not cause any unnecessary trouble. Although I cannot speak for the new Committee, I have great respect for the right hon. Member for Barking, and I know that she will handle the matter in an effective and completely non-partisan way. I am sure that the Committee will do a wonderful job.

Before I finish, I want to say something about royal palaces. We paid that visit to Kensington palace, and we visited Buckingham palace. We found a lot of peeling wallpaper there—there was a lot of under-investment.

Chris Ruane (Vale of Clwyd) (Lab): Disgraceful!

Mr Leigh: Yes. This is the Head of State. She should not be in a palace that is falling down, and we should not be mean and stingy about that. I think that the Government had been a bit stingy. Perhaps these new arrangements will allow her to look after her palaces better.

There is one scandal that I want to raise: Frogmore, the royal mausoleum. It is falling down. As I understand it, under the new arrangements there will be an opportunity for the royal household to have greater control of its own affairs so that it can rehabilitate Frogmore, which is an important national monument and in an appalling

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state. It is a national scandal that the mausoleum for Queen Victoria and the Prince Consort is in such a derelict state that the public can no longer be admitted. That shows some of the problems with the royal finances. The Queen and her household have been making enormous strides in creating efficiency savings, but they simply have not had the independence or the resources to try to maintain the whole of the estate. It is vital for the nation that they be allowed to do so.

In conclusion, I warmly commend the Chancellor, and say well done for finally getting parliamentary accountability. We now want to continue doing battle with the BBC and the Bank of England, and make sure that this Parliament can audit all aspects of our national finances.

2.31 pm

Mr Kevan Jones (North Durham) (Lab): I, too, broadly welcome what has been said today. It is a credit to Her Majesty that she has agreed to what the hon. Member for Gainsborough (Mr Leigh) said is a revolutionary change, bringing openness and transparency to the royal accounts. Having tried to get the expenses of BBC executives and certain producers made public, I totally agree with him about the BBC. It resists freedom of information tooth and nail. If it is good enough for the palace, I am sure that it is good enough for the BBC.

I accept that today’s statement is a strange way to proceed and that the debate will come later, but there are questions that need to be asked. My right hon. Friend the Member for Barking (Margaret Hodge) said that if the royal accounts are to have full transparency, we have to look at them in total, not only at the civil list as it is now or at the new sovereign grant. As the Chancellor said, it is ridiculous that we pay the royal household money and then pay it back to ourselves, which is very inefficient administration.

If we are to get an idea of the full costs, we need to see what Departments pay the royal household in other ways. I give an example from the Ministry of Defence, which rents certain properties from the royal household, including the Chief of the Defence Staff’s current apartments in Kensington palace, which costs the MOD £108,000 a year. There is also military support for the royal household. That, too, comes from the MOD budget, but is vital to the workings of the household and to supporting Her Majesty in her duties. If we are to have full transparency we need to know what that costs. There is an argument to be had about whether some of the costs that fall on the MOD should come out of that budget. If we are to have a look at expenditure overall, it is important that that is taken into account. My right hon. Friend the shadow Chancellor mentioned security, which should also be included.

The general point of the proposals is to get consensus both in the House and across the country that not only are we getting good value for money from the expenditure, but we are accounting for it all. Certainly, it is very welcome that the National Audit Office and the Public Accounts Committee will be looking at the entire issue.

Something that will come out in the Bill is the way the fund will work in practice. I am not quite clear how the 15% formula will work. In some years the amount will go up, and in others it will go down, and I accept that there has to be a floor; we do not want the royal household suddenly to find that it does not have enough

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in-year money. I am, however, a little concerned about the idea of allowing it to build up a surplus. It was reported today in

The Daily Telegraph

that the Treasury is looking at a yearly cap on that figure, which I think would be better than allowing the royal household to build up a surplus over the seven-year period, which many people would criticise. I ask the Chancellor to look at an annual cap on the investment that comes from the Crown Estate, because otherwise the current efficiency drives might not continue.

I accept that giving the royal household more flexibility in how it spends the money is sensible, but there must also be some debate on who benefits from the current civil list and who will benefit from the new sovereign grant. Will it just be left to the royal household to decide which members of the royal family benefit? That will need to be clarified in the Bill, because there is clearly a public perception that some people on the civil list do not deserve the support they receive, and that needs to be looked at. Having said that, I know from my time at the Ministry of Defence that many of the minor royals do a lot of work to support armed forces charities and others. They do not get a great deal of publicity but should be commended, and it is important that that should be allowed to continue.

I broadly welcome the proposals and look forward to the Bill, but if we are to have proper scrutiny of what the royal household costs, it should include everything. I ask the Chancellor to look carefully at the MOD’s budget, which I know he is already doing, and to consider whether it is realistic that we pay it money that is then paid out to the royal household for something that is not a core military task but which is important to the household.

2.36 pm

John Thurso (Caithness, Sutherland and Easter Ross) (LD): Much of what I wish to say has already been said. I congratulate the Chancellor on what seems to be the beginnings of an elegant solution to a difficult problem. I wish to make three quick points for him. First, on the matter of principle, it is extremely important that the process does not become a formula that is reviewed annually which puts the whole of the household's finances into play on an annual basis. Whatever method is used for the calculations, it must be robust enough, as the previous debates that the shadow Chancellor cited made clear, to allow the dignity of the Crown across a period of time. That is an important principle.

Secondly, as other Members have suggested, we should consider exactly what we mean by the profit, because students of the Crown Estate’s annual finances will know that that is a highly variable figure, depending on the point at which we decide to look. It depends on whether it is the operating profit and whether there are movements in surpluses. There is one number that we might look at, which is not necessarily a profit but relates most closely to what might be regarded as the surplus cash within the Crown Estate: the annual remittance to the Treasury, which last year was £200 million or so. That is the figure that the Crown Estate remits to the Treasury, having considered what it wishes to withhold for future investment and having regard to the various discrepancies that come in the statement of total recognised

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gains and losses. The Chancellor might wish to look at that percentage, rather than a particular profit figure, and perhaps it could be made clear whether the grant is intended to be supplemental to that £200 million or part of it.

My final point relates to the Chancellor’s comment on the potential income from marine renewable energy, including wind, tidal and wave energy. It is rather curious that that sits within the Crown Estate at all. If we look at the precedent of the Forestry Commission, which was created in 1919, and to which the Crown Estate forests were transferred in 1923, we will see that it might be worth considering whether the marine estate should be transferred in its entirely out of the Crown Estate and possibly given to all the local authorities on the coast that could benefit from what is going on. That might be an interesting way of giving a direct benefit to local authorities on the coast, where marine energy could form the bedrock of a future economy, without having to trouble the Chancellor. I leave that little thought with him and again congratulate him on what looks like the beginnings of a very elegant solution to an old problem.

2.40 pm

Paul Flynn (Newport West) (Lab): The sight of the British Head of State bowing her head in respect at Croke park to those who had been murdered by the British Army was a symbol of profound potency. She also paid her respects to the many thousands of soldiers from the Republic who died in the first world war. She visited the English market in Cork, which a number of us have visited recently, and that has had a practical benefit for the area. I believe that that visit will help to heal the deep wounds between the Republic and ourselves. The Queen has a splendid and unblemished record of service as the Head of State, and I do not want to stray into saying that she does not. She has rightly earned the respect of us all. However, some of the hyperbole this afternoon, which we always have on these occasions, goes a little too far.

Last year, Prince Charles increased the amount of taxpayers’ money he spent by 18% and his personal spending went up by 50%. That was at a time when his 159 staff had their wages frozen. We must look carefully at the royal finances. I found it an Alice-in-Wonderland concept for the hon. Member for Gainsborough (Mr Leigh) to say that one of the great achievements of the Public Accounts Committee was to save a bit of money on transport that he described as fantastically wasteful. I think that we must apply the same financial discipline to the royal family that we apply to the poorest in society.

There should be a distinction, as was suggested by my hon. Friend the Member for North Durham (Mr Jones), between the way we treat the monarch, because of her role, and other members of the royal family. Perhaps we could be a bit more critical in the way in which we work out the benefit of visits from minor members of the royal family to charities and set that alongside the security and military costs that are incurred. That does not happen now.

It is not true to say that support for the monarchy as an institution is universal in this country. I come from a constituency where the last insurrection that tried to set

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up a republic took place in 1839. The 20 people who died in that insurrection are honoured every year. There are people in this country who are happy to describe themselves as republicans, although the figure varies. It was about 45% at the time of the death of Princess Diana and it goes down to about 25%. Those people have a credible view that should be heard.

We had little prior knowledge of this debate. I had no idea that it was happening today. There seems to be an acceptance of this matter without a knowledge of the fine details. I urge that we find a simpler solution, because the one we have seems to be very complex. There is income from various sources, some of which are controlled and some not. Perhaps we could apply a system similar to the one that I urged hon. Members to use for ourselves some years ago in supporting a motion tabled by Chris Mullin, which was that the salaries of hon. Members should be linked to changes in the basic state pension, so that if there was an increase in the basic state pension, our salaries would increase, and if it was frozen, our salaries would be frozen. I believe that a simple mechanism of that type would be acceptable to the country as a whole, and it would be beneficial to the House because it would give us a greater interest in the level of the basic state pension. It would be interesting to put a cap on future payments for the civil list, and if it was linked to a mechanism like that, whether based on the retail prices index or the consumer prices index, it would be possible to understand it. It is essential that the royal family should face the same financial discipline as every other family in the land.

Of course the royal family have done many beneficial things recently, particularly raising money from the royal palaces. However, it is worth remembering that the most profitable royal palace in Europe is Versailles, and they have had rather a different attitude to royalty in France from the one that we have had here. However, that is not essential.

The royal family are in the position that we cannot attack them or say anything critical. That is the rule in the House, which we accepted some seven centuries ago. We know the recent history, with the behaviour of certain members of the royal family having been widely criticised in the press, but it is impossible for us to make any derogatory remarks about them here. I believe that we should remove that gag, not because we wish to criticise the Head of State but so that when minor members of the royal family are extravagant or outrage the public by their standards of behaviour, we in the House have the freedom to be critical of them.

2.46 pm

Michael Ellis (Northampton North) (Con): May I personally commend and congratulate the Chancellor of the Exchequer not only for taking the initiative in this matter, which has been pressing for many years, but for making excellent and historic improvements to the current arrangements, which have been unsustainable for some time?

The royal family are one of the few departments of Government—just about the only thing that the Government funds, I would suggest—that make a profit for the taxpayer. They brought into the revenues of the Treasury something in the region of £200 million than was paid out last year. That was a profit for the taxpayer

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in raw figures. It has also been estimated that one weekend, the weekend of the recent royal wedding, brought hundreds of millions of pounds into the Revenue in tourism, merchandise sales and the like. That profit for the taxpayer is well worth sustaining.

Mr Kevan Jones: I take the hon. Gentleman’s point about tourism and other matters that provide a net contribution, but surely under the settlement of the 1760s we cannot really consider the Crown Estate as still being owned by the royal family. It was given up so that it could produce the money for the state that it currently does. I would not look at it in the same terms as the hon. Gentleman.

Michael Ellis: The hon. Gentleman may not, but others may choose to do so. In fact, I happen to think that the 1760 arrangements were an historic injustice to King George III and his heirs and successors. There is every reason to say that if the hon. Gentleman is not happy with the arrangements being proposed, perhaps the royal family could sustain having 100% back.

Jacob Rees-Mogg: Hear, hear!

Michael Ellis: I see that that idea is getting agreement.

John Thurso: The hon. Gentleman has tempted me. Part of the 1760 settlement was that the Crown no longer had to pay for the Army. Would it be equitable for it to take back the Crown Estate and the entire Ministry of Defence Budget?

Michael Ellis: Now my hon. Friend is tempting me.

It is important to bear in mind, as Professor Vernon Bogdanor has stated in one of his treatises on subject—“The Monarchy and the Constitution”, I think—that it costs about the same to run the royal family as it does to run the Driver and Vehicle Licensing Agency in Swansea. I venture to suggest that the royal family attract far greater support from the British public than most institutions.

The issues at stake are important, and they are: fairness, accountability and transparency, and the necessary flexibility, which has not been built into the system to this point. As my right hon. Friend the Chancellor of the Exchequer has pointed out, the previous system, although not that old, was quite frankly archaic, bureaucratic and burdensome. It was also inflexible, so that if money was saved in one department—for example, in travel arrangements—it could not be spent on, say, repairing a leaking roof. The previous arrangements were unnecessarily bureaucratic, and they urgently needed reform to save taxpayers’ money and to save time. They also needed to be more accountable and transparent, which is what these necessary reforms will achieve.

If we take the trouble to look at how the money is spent, we see, for example, that £400,000 is spent on communications. I venture to suggest that much of that money is spent on communication with members of the public who write in to the palaces, and on other necessary duties, such as inviting to garden parties the tens of thousands of people—and it is, in fact, tens of thousands—who enjoy and appreciate visiting the royal

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households by invitation every year. This money is not spent on trifles; it is spent for the general public’s enjoyment.

The same thing goes for the palaces. Much of the expenditure goes on the maintenance of royal palaces. I venture to suggest that not even the few republican diehards whom we might find in this House would propose that the royal palaces be knocked down after the abolition of the monarchy and car parks built in their stead. Even in the absence of a monarchy—may God forfend—those palaces would have to be maintained. They might be museums or something similar, but they would still need the maintenance that they need now. In fact, they have been allowed to fall into a state of disrepair because of the lack of funds, which only makes it more expensive to repair them.

I also support the modernising arrangements as they relate to the Duchy of Cornwall. That is welcome, because in future the heir to the royal house will be able to secure funds and revenue from the Duchy of Cornwall without necessarily being male—that is, without being the Duke of Cornwall. That is important and follows other reforms, in the tradition of the Demise of the Crown Act 1901. Formerly, offices of the state were cancelled on the demise of the Crown. However, the various Acts that Parliament has seen fit to pass over the past 100 years or so have meant that such positions—ministerial positions, judicial appointments and the like—could continue. My right hon. Friend the Chancellor of the Exchequer’s further reform, making it necessary only for an Order in Council after the completion of one reign and the beginning of another, simply follows in that historic tradition.

I commend these measures, and I support them in full. I congratulate the Chancellor on bringing them forward, and I invite Members of this House to consider supporting Her Majesty in her 60th jubilee gift, which the House is currently considering.

2.53 pm

Mr Denis MacShane (Rotherham) (Lab): This has been a most enjoyable debate. With the need to refurbish some of the royal households with up-to-date wallpaper, we have learned that the fortunes of Osborne & Little might now increase. We heard from my right hon. Friend the shadow Chancellor some historical evidence of our hon. Friend the Member for Bolsover (Mr Skinner) making interventions from a sedentary position when this issue was last discussed in the 1970s. People listening to this debate from outside this place might have felt that some of the speeches by right hon. and hon. Members were delivered not so much from a sedentary position but, as it were, from a kneeling position, if that were possible in the House. I would say gently to the hon. Member for Northampton North (Michael Ellis) that some of us think that the land in this country that is not in specific private ownership belongs to the people. For us, the notion that the royal family is signing generous cheques to the taxpayer sits a little oddly.

I want to raise one substantial point today. The Chancellor and the shadow Chancellor said that we needed to look back to 1760, but if my history—learned

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from Linda Colley and other historians of the period—serves me right, it was actually a cunning manoeuvre by the late King George III that substantially increased royal revenues, rather than the act of generosity that it is sometimes presented as. One part of the motion, which I think the House will support, that worries me conceptually is the notion that the time of transition from one monarch to another is not the time for reflection on the arrangements that we want for our Head of State. The notion that we are going to write down a settlement that cannot be debated for another 200 years might therefore need some reflection on Second Reading.

I respect the Queen and I have travelled with other members of the royal family, although I hate the term “minor royals”—it is offensive to the very hard-working men and women who give a lot of their time to public service. If I can, I always welcome in person any of them who come to my constituency, because they are always well received and well liked. Her Majesty came to the Advance Manufacturing Centre in Catcliffe with Prince Philip last November and stood for an hour asking good questions. I was amazed at her stamina and her presence; the visit really cheered up all the people there. This just goes to show that 85 really is the new 55.

None the less, how does one justify 159 butlers, valets, cooks, dressers, housekeepers and the rest for Prince Charles? [ Interruption. ] We are all reading the memoirs written by the father of the hon. Member for North East Somerset (Jacob Rees-Mogg) in The Times, and there is a lovely entry today about how he and Rupert Murdoch managed to cheer up the Queen at a lunch back in the 1970s; I would not have minded eavesdropping on that. But why on earth, when we keep a royal flight, is Prince Charles taking a jet trip from Mr Joe Allbritton, who is not British at all but some kind of American oligarch and millionaire—

Michael Ellis: Why not?

Mr MacShane: The hon. Gentleman, from a sedentary or kneeling position, asks why not—

Jacob Rees-Mogg: Will the hon. Gentleman give way?

Mr MacShane: Of course.

Jacob Rees-Mogg: It seems a little bit mean to object when the royal family employ someone, and then object when they save a bit of money by taking a free flight. I do not think the right hon. Gentleman can have it both ways.

Mr MacShane: I am trying to choose my words carefully, because this is a serious matter. Serious questions would be asked if any Government Minister, acting on behalf of the nation, were to start hopping around in oligarchs’ planes—

Chris Ruane: And yachts!

Mr MacShane: I do not think that right hon. Member for Tatton (Mr Osborne) was a Government Minister at the time of that yacht trip—

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Mr Deputy Speaker (Mr Lindsay Hoyle): Order. The right hon. Gentleman is in danger of straying into—

Mr MacShane rose—

Mr Deputy Speaker: No, I will finish. Individual names are being attached to what is being said, and that is not what we should be doing. This is a general debate on the civil list, and we should not refer to individual members of the royal family or to individual amounts spent.

Mr MacShane: There, to some extent, we have it. I accept fully your ruling—

Mr Deputy Speaker: Order. I will go on to the next speaker if the right hon. Gentleman does not accept it.

Mr MacShane: I said that I accept your ruling fully, Mr Deputy Speaker, and I will not say another word, save that—[ Laughter. ] If it is in order, Mr Deputy Speaker, I should like to say that it is not right for this debate to take place in the Daily Mail, The Daily Telegraph and The Independent but not on the Floor of the House. That is all.

Mr Deputy Speaker: Order. There are clear rules for this House that we have to abide by. The right hon. Gentleman might not like it, but that is the case.

Mr MacShane: I actually believe that a plane should be made available for the use of senior Government Ministers, including the PM. He had to scrounge a lift from Prague to Brussels with the Czech President the other day. He got something out of it, but frankly, every senior Minister in most democracies has that mode of transport available to them. Our planes are continually available to any member of the royal family, while elected Ministers come second.

We then have the problem of explaining why the present monarch and the next one are such giant landowners. Is that an issue that we might be able to debate, Mr Deputy Speaker?

Of course we all enjoyed the royal wedding celebration this year and we will enjoy the diamond jubilee next year. Roman emperors promised their subjects panem et circenses: the current Government are doing their best to reduce the quota of panem with their cuts and cruelties imposed on the poor and handicapped, but they are increasing the availability of circenses through the royal shows.

I do not believe that there is any kind of republican mood in the country. It was interesting to hear the oleaginous loyalty, if I may put it that way, expressed by my hon. Friend the Member for Newport West (Paul Flynn), who had a tremendous enthusiasm for the monarchy, which has surprised many of us. I remember the silver jubilee in Rotherham in 1978, when I am told that 41,000 Union Jack flags were sold in the socialist republic of South Yorkshire.