From the start, the coalition Government have been actively looking at how we can ease the burden on motorists, although that is incredibly challenging given the constrained and difficult fiscal situation that we inherited. One of the first things we did, as the hon. Member for Coventry South (Mr Cunningham) mentioned, was ask the Office for Budget Responsibility to look at

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how high oil prices flow through to impact on the economy and try to understand that. As the hon. Gentleman pointed out, we were concerned to understand the impact on businesses and jobs. That was part of our work in looking at how we could construct a fair fuel stabiliser, which I will come to in a moment.

As part of the Budget, we finally announced our plan to ease the burden on motorists with a £1.9 billion package. The Government listened to hard-pressed motorists and businesses and acted. What did we do? We acted by cutting fuel duty. The hon. Member for Central Ayrshire clearly wants us to go further in cutting fuel duty, but he should at least be able to welcome the fact that we have already cut fuel duty by 1p a litre from 6 pm on Budget day. We acted by cancelling the previous Government’s plan for a fuel duty escalator for the rest of the Parliament. We acted by introducing a fair fuel stabiliser that will better share the burden of high oil prices between motorists and oil companies, so fuel duty will increase by inflation only when oil prices are high.

Mr Donohoe: Does the Minister accept that there is a correlation between the duty and the increase in VAT? Indeed, the cost of the VAT increase to the motorist was 2.8p a litre. If the Government are to do anything to redress the imbalance, it is that amount, not the 1p that she talks of, that should be taken from the price, because the consequence of increasing VAT to 20% has been an increase in the price to the motorist of 2.8p.

Justine Greening: I take the hon. Gentleman’s point. The issue was raised of VAT being applied to the total price of fuel, including fuel duty. For clarification, that is in line with EU rules. That is the reason why that approach is taken. However, I will say two things to the hon. Gentleman. First, we have introduced a £1.9 billion package to support motorists. Secondly, I have heard a number of Opposition Members bemoan the increase in VAT, but they have had several chances in the Division Lobby to vote against that VAT rise and they have not taken them. I would be happy for any hon. Member who voted against the VAT rise to intervene on me now, but having checked Hansard[Interruption.] Let me be clear that I am not referring to the Scottish National party contribution to this debate, because of course it called the vote. I think that both I and the hon. Member for Na h-Eileanan an Iar (Mr MacNeil), who represents the SNP, would recognise that the Labour party abstained in that vote and did nothing, despite its words. It never followed them up with action. Those Members owe it to their communities to be a little more frank about the fact that they waved through the VAT increase themselves.

Graeme Morrice: Who put VAT up to 20% in the first place?

Justine Greening: I did not hear the whole of that intervention. I am sure that if the hon. Gentleman repeats it, I can respond.

Graeme Morrice: Who put VAT up to 20% in the first place?

Justine Greening: Well, of course, that is one of the key measures that we had to put in place—[Interruption.] The hon. Gentleman laughs, but he is—

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Graeme Morrice: You did it.

Justine Greening: I would rather be in my position, voting for things that I believe in, being clear to my constituents and accountable and being part of a Government who are tackling a huge fiscal deficit. I think it is the worst fiscal deficit handed to any incoming Government. It is one of the deepest seen in a developed country.

Graeme Morrice: Caused by the banks.

Justine Greening: It was not caused by the banks, actually. Let me explain to the hon. Gentleman what a structural deficit is. Even in the good times, the previous Government were spending more money than they were taking in taxation. That did not have to do with the banks. The banks simply dramatically exacerbated that problem. That was what we were talking about when we said that the previous Government did not fix the roof when the sun was shining. My point is that there is no point in Opposition Members complaining about the VAT rise when they have not taken the opportunity to vote against it. I think that most people in Britain would think that that was slightly disingenuous.

Graeme Morrice rose—

Justine Greening: I will give way again if the hon. Gentleman wants to keep digging his hole.

Graeme Morrice: But we are not in government. When the sun was shining, we built schools and hospitals and improved public services. We spent the money on the people’s priorities. The current Government are now cutting that.

Justine Greening: There are many people with schools in their constituencies—I can certainly think of one in mine—that saw none of that investment. Frankly, it is easy to spend, spend, spend. That is the Labour party’s legacy to Britain—a debt that is so high that it is costing taxpayers £120 million of interest every day. It is always the same. Let us not forget that the other legacy was unemployment that was 400,000 higher.

Anas Sarwar rose

Kerry McCarthy rose

Justine Greening: I will give way to the hon. Gentleman, but then I would like to make some progress and talk about fuel, because that is clearly the point of the debate. However, I am happy to have a debate on the economy, because many people in Britain recognise exactly whose fault it is that the economy is in the state that it is in today—it is the fault of the Labour party.

Anas Sarwar: I give the Minister some credit for being able to rewrite history in the way that she has. Can she tell me why the Conservative party supported Labour’s spending plans before the financial crisis?

Justine Greening: You always know that you are making progress in an argument, Mr Dobbin, when people have to turn back to things that happened decades—[Interruption.] Opposition Members can make this into

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a political issue. I would like to make it into an issue that involves people outside this place. Frankly, if those in the Labour party had spent less time arguing among themselves, as we now know they were doing, and a little more time moving away from political stunts to manage the economy responsibly, perhaps the public finances in this country would not have been in the mess that they were in when they were handed over to us at the last election.


An Opposition Member says, “You are in government.” Yes, there’s a good reason for that—because the British people had just about had enough of the Labour party being in control of the purse strings. I think we all hope that it will be an awfully long time before it is given control of the purse strings again.


I now want to make some progress on fuel duty and I particularly want to —


Jim Dobbin (in the Chair): Order. Could I ask hon. Members to behave themselves?

Justine Greening: Thank you, Mr Dobbin. I want to make some progress on fuel duty, because that is the key concern in our minds today. The issue of hauliers was raised. The package that we introduced has meant that hauliers have been able to benefit on average by about £1,700 a year.

Mr MacNeil: I know that time is getting on—we meandered down a funny road there. I want to pull the Minister back to two important points. First, when are we likely to see the rural fuel derogation in place? That is very important. Secondly, does the Minister have any sympathy with my point of view that I am tired of the red and the blue sheriff and I would like to see some of this controlled in Scotland?

Justine Greening: We will update the House very shortly on what is happening with the rural fuel duty discount. We have made progress with the European Union. That will be good news for the hon. Gentleman. It will mean that we can get on with our pilot. I am sure that he very much welcomes that. In terms of other issues raised by the hon. Member for Argyll and Bute (Mr Reid), he will be aware that of course his islands will be part of that pilot. As he pointed out, we have within the Treasury met stakeholders—petrol retail associations and of course regional owners and operators—to talk about how we can ensure that any rural fuel duty discount scheme works effectively. I think that we are making good progress with that. Clearly, whenever we bring in such a scheme, we must ensure that we understand that it will do what we want it to do and that it will work in the way that we want it to work. We want it to be of help. We were therefore keen to sit down and work through some of the issues that came up, for example, in relation to cash flow. It is also important to ensure that the scheme is not administratively over-burdensome. We are making good progress with those discussions. We have made good progress with the EU. Perhaps we will be able to give further details of that in coming days.

Finally, I want to point out once and for all why it is simply not possible to go down the route of creating a separate VAT rate for petrol. I am surprised that I still hear the Labour party talking about that. We rejected that proposal for a number of reasons. One was that it

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would take six years—possibly more—to come into effect. The other was that it is illegal, because fuel is standard-rated in terms of VAT, as part of EU rules. If we want to reduce the rate of VAT on fuel, we need a revision of the VAT directive. In fact, we would have to have unanimous agreement from all member states, and the European Commission would have to approve. As I said, it could take six years or more. I say that because that is what the French found when they sought a reduced VAT rate. Just in case that is not enough of a problem, the EU has also agreed a moratorium on revising the VAT directive. That was agreed under the previous Chancellor of the Exchequer. That route is not the route to help motorists, whereas the route that we took of a £1.9 billion package to support motorists was.

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Radar Industry

12.30 pm

Mr Andrew Turner (Isle of Wight) (Con): Before I begin, I thank you for calling me to speak, Mr Dobbin. I also thank my hon. Friend the Minister for coming to discuss the future of radar. I have asked for the debate because my attention has been brought to a situation in my constituency involving BAE Systems and the procurement of radar systems by the Ministry of Defence.

Since 1940, Britain has been at the forefront of international research and development when it comes to radar. That heritage, along with our experience, knowledge and unsurpassed expertise, is routinely admired by militaries and Governments across the world. BAE Systems has been in the vanguard of the highly specialised radar industry for more than half a century. As the most significant UK company in the field, it is almost singlehandedly responsible for having put us in our current enviable position. At the same time, it has worked tirelessly with the Government, and particularly the MOD, to ensure that the nation is secure from airborne and seaborne threats. Additionally, it has provided skilled employment to a multitude of people and an unsurpassed graduate scheme, and it has generated huge sums for the taxpayer. It is also one of the largest private employers on the Isle of Wight.

Globally, the market for radar technology is £5 billion a year, with 20% coming from the US, and the majority of the balance coming from other markets. As a result of our highly regarded skill in the sector, UK radar products are now installed in approximately 100 countries, and the majority of those products are believed still to be in active service. BAE is the primary UK supplier of radar technology to global customers, but international competition is strong from the likes of Lockheed Martin, SELEX, Thales and Raytheon. If developed correctly, the UK has obvious political and economic advantages, which will allow BAE to remain a market leader.

On the island, BAE employs 290 people. In its radar business, it employs 510 people across the UK, and it has additional sites in Chelmsford, Portsmouth and Dunfermline. In 2009, an Oxford Economics report on BAE assessed its financial contribution to the UK as being more than £78,000 per full-time employee, which is 85% higher than the national average and 34% higher than in manufacturing in general. In the same year, it was estimated that BAE spent £4.1 billion paying for equipment, components, raw materials, rent, energy and other services from UK suppliers. That meant that for every 10 BAE jobs in the UK, another 12 were created in the supply chain. One example is a company called Pascall Electronics, which is also on the Isle of Wight, and that is just one of many local Isle of Wight suppliers in BAE’s supply chain.

Those figures cannot be ignored. The economy and defence of the UK, and the population of the Isle of Wight, simply cannot afford to lose the radar industry. Recently, however, events have conspired to threaten the current situation, and this incredibly specialised and niche manufacturing industry is in danger of being lost. The first reason for that is that a number of large long-running programmes have finally been finished. They have been delivered to the MOD after years of extensive planning, research, development, trials and

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testing. The most notable are Sampson, which is in the Type 45 destroyers, and the forthcoming Artisan RT997, which will be in the Type 23 frigates. Sampson has been universally recognised as a world leader, and Artisan has benefited greatly from the reuse of parts of the same technology. Consequently, it, too, has been designed to be extremely competitive in the global market. That has particular significance because both systems are designed and constructed on the Isle of Wight.

As those contracts with the MOD come to an end, BAE’s work load in the UK has decreased. There is simply not enough work to sustain such high employment and the range of specialist skills required for further development. BAE therefore recognises that it must focus on its international markets to avoid redundancies. Additionally, the MOD has chosen to take delivery of an off-the-shelf system from the US company Lockheed Martin rather than a BAE system to cope with the modern problem of offshore wind farms. That was done instead of working with BAE to mature a wind farm solution that could have been made available through its existing radars.

Having made that observation, let me quickly stress that the company appreciates the MOD’s logic in making that particular decision at that particular time, but the side effect has been to create genuine concern. If the MOD is planning further purchases of off-the-shelf products from the US or any other foreign supplier, and BAE so much as appears to fall out of favour with the MOD, its opportunities for export business will be adversely hit. The reason for that is that when potential clients abroad look at BAE products, they judge their worth by the standards of the UK. Has the MOD bought these products? Does it endorse them? Should the MOD cease to work in partnership with BAE, it will indirectly, and probably irreparably, damage the company’s credibility in foreign markets.

Should global sales in BAE start to diminish, it is likely to do what companies do when sales decrease—make employees redundant. Should it then go as far as deciding to cease work on radar, the MOD will simply lose the only technical experts in the field of radar in the UK. The inevitable outcome will be a huge increase in the costs of through-life care for the MOD’s current radar fleet, because it will have to pay a foreign company to keep it running.

The possibility that a company might lose international credibility and have to lay off staff is not a reason in itself for the MOD to purchase equipment from any defence company, let alone BAE. Indeed, BAE is not asking for handouts, subsidies or guarantees of sales at some point in the future—far from it. It recognises that having just come to the end of some very long-term programmes, the MOD has no need to buy further equipment. It accepts that there will be a competition for the replacement of the rest of the air defence system in 2017, and it is confident that its entry in Project Vigilance will be of the highest standard. However, it feels a firm appreciation of the relevant issues by the MOD is vital for the protection of the UK radar industry’s future. The most cost-effective method of developing the next generation of radar defence for the UK is by defining a cohesive and credible long-term partnership with the MOD. That was demonstrated

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successfully with the last projects, and those before them, including the multi-function electronically scanned adaptive radar and advanced radar technology integrated system testbed programmes. I also fervently hope to protect the employment of my constituents, and those constituents of my colleagues who are also affected by the issue.

I want to make a final point. Radar has defended our country definitively at least once, in 1940. It is likely that it has done so on many other occasions that are not in the public domain and it is more than likely that it will do so again. I pose this question: is it not essential that the radar technology our military are asked to use should be of British origin, in research, design and manufacture? It makes perfect sense to me that the company that we use to develop such sensitive technology should be British-based, like most of its employees. What would happen if there were to be an incursion into our airspace by a foreign power and the UK Government did not have the control and flexibility that we enjoy today, because the designs were not British? Many might scoff at that suggestion, and say that surely it makes no difference which of our allies makes our radar. It probably does not at the moment, when our airspace is not being challenged on a daily basis, but none of us knows what will happen in the future. Why should we take the chance when there is a world-class company specialising in the area in question, native to our country? Why would we even think about taking the risk? That would not only be imprudent, but would smack of recklessness.

No one is asking the Government to help one company over another, to provide subsidy or even to point fingers and lay blame about previous decisions that have affected a company’s reputation. By continuing to ignore those companies in the UK that add genuine value to the economy, are recognised world-class providers of technological solutions, carry the British brand globally, employ large numbers of people and, in the case of BAE Systems, are integral to the very defence of the United Kingdom, we will end up cutting off our nose to spite our face.

12.43 pm

The Parliamentary Under-Secretary of State for Defence (Peter Luff): I begin in the customary way, but entirely sincerely, by congratulating my hon. Friend the Member for Isle of Wight (Mr Turner) on securing the debate. I am always impressed by the diligent way he represents his constituents’ interests, and I hope to encourage him by showing that there is a significant amount of work for British radar companies both here and overseas.

I hope that my hon. Friend will forgive me for saying that he gave a rather half-empty view of the radar world and the future of the British industry. I hope to persuade him that the glass is comfortably more than half full. The future of the British radar industry is an important topic and I am pleased to be able to share with the House all the good work in which the Government are involved, in support of that industry. My hon. Friend will understand that success has many fathers and failure is an orphan, and in that spirit I offer the thought that, as a Worcestershire Member, I look towards Malvern’s proud role in the development of British radar systems; I take a close interest in the development of radar.

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The defence and security of our nation and people are the primary responsibility of Government, and defence is, as will be appreciated, my primary interest. There is a vital requirement for the detection of airborne assets entering and travelling through UK airspace, as my hon. Friend emphasised in his excellent speech. Radar is the primary tool used for such detection, whether for the tracking of co-operating civil aircraft or the detection and engagement of potentially hostile aircraft. UK companies such as BAE Systems, SELEX and Thales supply many of the radars that we rely on for that critical role. I want to emphasise that: I regard SELEX and Thales as British companies, and later this afternoon I will receive a delegation from colleagues in the House, making the case for SELEX, and will be visiting its excellent offices in Edinburgh on Monday to see its radar work. However, my hon. Friend is right to recognise the proud record of BAE Systems as well.

Our armed forces operate across the world—not just in Afghanistan and Libya, but also in our permanent bases overseas such as the Falkland islands. Accordingly, radar technologies sourced from British companies are deployed by our armed forces around the world, so we recognise the importance of radars across a range of military systems. They are a critical element of our air defence capability, supporting operations on land and sea and in the air. Recent operations over Libya have clearly demonstrated the effectiveness of commanding the air domain. Radars are required for combat systems working alongside our complex weapons from ships, submarines and aircraft as well as troops on the ground, so our ability to sustain and develop those systems, including our ability to respond rapidly to emerging and evolving threats, is essential to our operational effectiveness. On that point, there is nothing between my hon. Friend and me.

I am glad to reassure my hon. Friend that the UK’s industrial capability is critical to meeting the vital defence requirement that I have outlined. Indeed, we are working with BAE Systems and other UK industrial players, together with our scientists in the Defence Science and Technology Laboratory, better to understand the issues and to share our thinking regarding the evolving requirements—and they can evolve quite fast. That is very much in the spirit set out in last year’s Green Paper on technology, equipment and support. We enjoy a close and productive working relationship with our radar suppliers and look forward to maintaining that in the years ahead, so I was slightly disappointed by the way my hon. Friend characterised our relationship. I hope that BAE Systems feels that it has a constructive relationship with us.

On my hon. Friend’s points on air defence radars and wind farms, I must stress that the provision of up to three proven wind farm-tolerant radars by the wind farm developers, removing the objections of the Ministry of Defence to those wind farms and releasing significant renewable energy potential, is seen across Government as very encouraging. My ministerial colleagues have worked hard to achieve that. Indeed, the Secretary of State for Energy and Climate Change has acknowledged that work, which has been achieved by co-operating across Government, and with industry, to reach an outcome that is beneficial to our national security, energy security and decarbonisation goals. Furthermore, it is not the case that the UK’s air defence radar

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network will be made up of a foreign fleet in the future. I am assured that UK industry is developing a wind farm-tolerant air defence radar, and I welcome that.

There are many radars in service with our armed forces. Some examples are long-range air defence sensors, medium-range air defence systems, Type 45 air defence sensors—my hon. Friend referred to the Type 45—and air traffic control sensors, many provided by UK companies, including BAE Systems. In the long- range sector, UK BAE Systems produces the Type 101 and 102 radars used in support of the defence of the UK. In air traffic control there is UK involvement in the Watchman radar—again with BAE.

However, it is in ensuring the future capability and reach of the Royal Navy that UK companies stand out. I am happy to endorse what my hon. Friend said about the Sampson multi-function radar fitted to our newest class of destroyers, the Type 45, which, incidentally, is supported by MBDA UK and BAE Mission Systems. I want to make the point that support is extremely important. My hon. Friend should not concentrate only on manufacture, although I understand its importance for his constituency. The supporting of radars is also hugely important, and it brings many important jobs. It is an important skill for the UK.

Also in the Type 45 class of ship there is the Thales long-range radar, which is supported by BAE Mission Systems, and the Royal Navy’s next generation of radar capability, the UK company BAE Mission Systems radar—the RT997. The contribution to the Royal Navy’s current capabilities by UK companies is evidenced by the BAE mission systems radar 909, fitted to Type 42 destroyers and mainly supported by the same British companies. There is also the RT996, which is fitted to many ships throughout the fleet, including Type 23 frigates and destroyers, amphibious support ships and Illustrious, for which in-service support is provided through an award-winning long-term contract with a UK company. There is no shortage of business here, especially for UK companies.

Penny Mordaunt (Portsmouth North) (Con): I thank the Minister for giving way. Does he agree that, when deciding whether to buy in the UK or from overseas and where to invest in research and development, we should be thinking about the export market, how many can be built over a particular cycle, and whether the technology is genuinely innovative? The examples that he gives fit into all three categories.

Peter Luff: I agree with my hon. Friend. I hope to talk later about exports and our export ability, an important part of the future of the UK’s radar industry. One of the major changes that we seek to achieve through our acquisition strategy—not only in radar but across the board—is to ensure that the exportability of a product developed for UK purposes is considered early in the life-cycle and acquisition process. When investing in capability for the British armed forces, we should develop a capability that has a ready export market. My hon. Friend is right to emphasise that point, and I shall return to it.

I turn next to a future capability referred to by my hon. Friend the Member for Isle of Wight. Project Vigilance will provide an upgrade to existing air defence radar systems, with the opportunity for industry to

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compete for those elements of the air defence radar system that need replacement. The project is still in its early days, and its exact scope and requirements are still being decided.

Project Vigilance is currently planned to sustain the long-range surveillance and air defence capabilities provided by the T101 and T92 radars, which allow United Kingdom air surveillance and control system force command and chief of joint operations to detect, track, identify, monitor and, if necessary, take action against objects flying within, approaching or adjacent to UK and Falkland Islands airspace. Work to develop the strategy is under way.

Given the financial climate, taking an incremental approach to Project Vigilance will ensure that existing sensors are utilised to full effect, the whole air defence network is coherent and each reaps maximum benefit from other interlinked projects. That applies not only to MOD projects, but to other Departments’ initiatives and requirements, including the need, whenever possible, to enable the use of renewable energy; I say “whenever” to emphasise the great importance that we attach to that.

Surveillance data are not limited to military air defence radars; information comes from a multitude of sources that includes military and civilian air traffic management radars, and links to NATO air defence sites and tactical data links from air, surface and land platforms. Again, industry has been and will be invited to compete in these and other projects.

Moreover, the utilisation of a plethora of data sources not only provides resilience, but allows defence to optimise the air defence radar footprint to ensure that an appropriate level of redundancy is met. We must have the capacity to ensure that we can carry on doing what we need to do in adverse circumstances. It is on this foundation that the air command and control strategy is being developed, but we recognise the need to ensure that value for money is obtained from the Project Vigilance procurement strategy, as my hon. Friend would wish.

There is also good news on another radar project. Project Marshall is a large and wide-ranging project for the provision of terminal air traffic management, essentially the provision of air traffic services to military and civil aircraft operating in and out of Government aerodromes. Air traffic control services are currently provided to 70 MOD-owned airfields and air weapons ranges through the use of a wide range of equipment located on more than 100 locations in the UK and overseas.

Project Marshall has four key objectives. The first is to ensure a safe and enduring terminal air traffic management capability; the second is to address issues of equipment obsolescence through a programme of capital investment; the third is to address regulation changes and make provision for emergent regulatory issues; the final one is to rationalise arrangements to benefit from associated efficiencies and savings. This transformation project will ensure that military air traffic control services continue to be operated in a safe manner, while complying with relevant legislation. The new services are planned to commence in 2014, and several UK companies are involved in the ongoing competition.

There is more good news, this time on the naval side. I have already highlighted some of the support that the

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Royal Navy receives for radars from UK companies. Five types of primary and secondary navigation radar are fitted to Royal Navy surface warships and submarines. I recognise the excellent support that a range of radar contractors have provided over recent years in maintaining the primary and secondary navigation systems used by the Royal Navy.

As for the future, the navigation and situational awareness radar is planned to replace 1007, which is fitted to most Royal Naval vessels; it is being designed to provide primary navigation and sustained situational awareness on surface warships. The project is in its assessment phase and, against current plans, the radar system is due to enter service in 2016.

I turn next to the air sector. I bear in mind what my hon. Friend the Member for Portsmouth North (Penny Mordaunt) said about exportability. Our highly capable Typhoon aircraft have long been served by the mechanically scanned, or m-scan, Captor radar, which is produced by the four partner nations on the Typhoon project. However, as the defence environment evolves, no matter how good those mechanically scanned radars are, they are having to be replaced by electronically scanned, or e-scan, radars, which provide increased detection and agility against a wider range of targets and a less easily countered capability.

In partnership with our Typhoon partners and industry, we are developing an e-scan solution that will further enhance Typhoon’s capabilities well into the 21st century. Industry has played, and continues to play a full, active role in achieving the optimum solution on e-scan. Not only will e-scan result in a capability leap for the UK Typhoon fleet, but it will further the chances of success for Typhoon in the highly competitive fast-jet export market, where e-scan is a key discriminator for many export customers. For example, the Indian Government order depends on the development of the e-scan radar, and we attach great importance to winning it, as it will represent a lot of business for UK industry—not only in radar, but across the aerospace sector.

We must not forget exports. There are significant opportunities to supply civil radar, for airports and air traffic control services throughout the UK. There will be an increasing demand for solutions that can mitigate against interference from wind farms. There are also increasing opportunities overseas, driven by airport expansion and upgrades in markets such as Brazil, Russia, India, China and the middle east. UK strengths in civil radar and air traffic control solutions, which my hon. Friend the Member for Isle of Wight rightly emphasised, mean that we are well placed to make the most of these prospects—but in a responsible manner, consistent with the UK’s export controls. UKTI can help UK companies sell overseas through a range of support, including trade missions, overseas exhibitions and inward buying missions. I encourage UK industry to make the most of these opportunities. Although I suspect that BAE systems needs no such encouragement, I encourage it none the less.

The defence and security equipment international exhibition takes place in Docklands this week, and it will showcase UK industry on the world stage. My ministerial colleagues and I will use that event to meet a large number of overseas Government delegations; high on the agenda, if not at the top, will be defence exports and the scope for the UK to engage in greater industrial

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partnerships across the globe. There are a number of attractive export prospects for UK radar systems, from a range of British companies, including those companies that I mentioned at the outset. It is a diverse sector. For example, UKTI DSO is already actively supporting BAE Systems with a campaign in Qatar.

In summary, I assure my hon. Friend and the House that we remain committed to supporting the future of the radar industry. To me, the future of the industry looks exceptionally bright. My hon. Friend has every reason to be confident about it, and about the future of his constituents.

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Gaza (Aid)

12.58 pm

Michael Connarty (Linlithgow and East Falkirk) (Lab): I gave you a note, Mr Dobbin, to say that we may be joined by others who have recently been on a trip to Gaza. Should they make it here—they are currently in other Committees—they would like to speak in this debate, rather than just intervene. If the Minister agrees, I should like to end my contribution early so that they can tell us about the recent events that they have seen with their own eyes.

The Parliamentary Under-Secretary of State for International Development (Mr Stephen O'Brien): I am grateful that I have been given that notice. It is fine for those Members to speak, provided that we keep roughly to the same split of time.

Michael Connarty: Mr Dobbin, it is my intention to give the Minister adequate time to speak.

Having been to Gaza on five occasions, I feel that I should say a word about the people there. I was lucky enough to be a monitor at the first democratic elections in Gaza city. At all times, the people were unbelievably welcoming, friendly and tremendously supportive and I was much buoyed up by my meetings with them. On my last visit, we went to Beach camp. I was very ill—an allergy that I suffer from kicked in while I was there—and I found the people to be unbelievably hospitable and caring. They looked after me very well. I have nothing but the highest regard for them; they were kindness incarnate. It is those people whom I want to talk about in this debate.

First, though, I must talk about the context in which such recent visits have taken place. Deep concerns have been expressed, and continue to be expressed, about the impositions placed on the people of Gaza and the humanitarian effects of them. In the second democratic election, the people of Gaza chose to elect a Hamas majority Government. Since then, there have been tremendous controversies. I join others in condemning not only the inability of that Government to stop the firing of rockets into the Israeli territories and households, but the unbelievable excessive force used in retaliation by the Israeli Government, which has killed more than 1,000 people and destroyed many of the basic facilities required for humanitarian reasons.

There has been strong condemnation from the Turkish Government over the killing of nine Turkish citizens on the aid flotillas. They have now said that they will defend the flotillas taking humanitarian aid to Gaza if they are carrying Turkish citizens. The problem has been caused by Israel’s appalling blockade of Gaza. Access to the Gaza strip remains severely restricted. Only the Kerem Shalom crossing is functioning, although it has recently been subject to Palestinian industrial action, which is in protest at the recent closure of the Kami crossing. The Gisha Legal Centre for the Freedom of Movement notes that Kerem Shalom can accommodate 250 trucks per day in both directions, compared with 1,000 trucks in both directions at Kami, so that is clearly severely restricting the amount of aid going into Gaza.

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In September 2009, the IMF directly attributed the continuing restrictions on access to Gaza as a prime reason for the continued high unemployment rate, low growth and high inflation. Gaza could reach growth rates of 7 to 8% if the economic blockade were lifted. As for the children of Gaza, one in three is anaemic and one in 10 is malnourished. The Food and Agriculture Organisation of the UN classes 61% of Gazans as “food insecure” and the United Nations Relief and Works Agency reports that 80% of Gazans rely on some form of aid.

A report published in January 2011 on the website of the Norwegian newspaper Aftenposten, which has access to documents obtained by Wikileaks, makes it quite clear that the Israeli Government are determined to starve the economy of Gaza to bring it to the point of collapse. If people cannot sustain their own economy, the need for aid grows and grows, and that is a strategy that the Israeli Government are clearly using. That is wholly unacceptable.

The report said that a shortage of Israeli shekels in Gaza has continued to be an issue. Last July, Tony Blair, speaking in his role as representative in the middle east, said that he welcomed

“Israel’s decision to allow the entry of 50 million shekels into Gaza as well as the exchange of 31.5 million shekels of spoiled banknotes”.

The pressure is on Israel. This is about not just starving people of basic materials that the international community would give them or that people would be able to trade, but trying to break the economy in retaliation for people exercising their democratic right, which we are always espousing, to choose a different Government.

Let me put on the record the names of all those Members who went on the visit in July 2011. They are my hon. Friends the Members for Manchester Central (Tony Lloyd), for Ayr, Carrick and Cumnock (Sandra Osborne), for Kilmarnock and Loudoun (Cathy Jamieson), and for Edinburgh South (Ian Murray), and Lord Warner. Before I quote from their reports, I also want to put it on the record that the right hon. Member for Rutland and Melton (Mr Duncan) was the first Minister to visit Gaza in the last decade. I hope that the Under-Secretary of State will follow that example and go to Gaza to meet the people.

Guto Bebb (Aberconwy) (Con): The difference between Israel’s attitudes to the Gaza strip and the west bank might be because it faces more of a threat from the Gaza strip. As for the recent visit to the west bank, my understanding is that the economic growth in that part of the Palestinian authority is about 12% per annum. Clearly, the message is that if the Palestinians can restrain the violence being shown by Hamas in Gaza, economic growth in Gaza might be much greater.

Michael Connarty: Even when I have visited some of the worst regimes, I have always been impressed by the tremendous entrepreneurial ability of the people of the Palestinian nation and their tremendous thirst for knowledge and high skills. We see them all around the world. We have quite a number in Scotland who contribute to our economy.

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If we look at what has happened on the west bank, and such things have been well recorded, we see that the people have to manage in very straitened circumstances, especially given the Israeli Government’s attitude to land, roads and water. Even in the west bank, the people live under a penal regime. In Gaza, there is an attempt to starve out and harm the ordinary people in retaliation for what is the unacceptable use of rockets.

Everyone recognises that Israel has used disproportionate force. We cannot just blame Hamas. The circumstances are set by the occupying nation, which is Israel. That may change shortly, because there will be an attempt in the UN to recognise the nation of Palestine as a state. Hopefully, that will change the attitude of the people in the UN—perhaps not in the Security Council. It will help Hamas and Fatah to try to create one non-violent approach to unity and to statehood.

Let me turn now to the situation that our colleagues found when they visited Gaza in July. The blockade clearly aims to cause great harm to the people’s ability to generate income and run their own economy. The effects of denying them the supplies that they require to function were quite stark. My hon. Friend the Member for Kilmarnock and Loudoun said that it took them three hours to get into the occupied territories. Some of the Palestinians who were waiting at the crossing to get through had been waiting for days.

The imposition was deliberately put in by the Government. On a positive note, my hon. Friend said that when she spoke to women’s groups, voluntary organisations, small businesses and trade unions, she found a tremendous sense of activity within the community to overcome the burden placed on them. The people are not lying down with their hand out waiting for someone to come to their aid; they are a very determined people who are attempting to live under these terrible conditions and to do their best.

None the less, the reality is that the people cannot generate much of their own wealth—50% of factories were destroyed in the Israeli war in 2008-09. The numbers of employed fell from 135,000 to 15,000; that is a massive drop that impacts on their ability to generate income. As a result, inferior, illegally imported goods are coming through, which create safety problems. They are not of the right quality. Raw materials for manufacturing are difficult to source, so the Palestinian people’s ability to save their own economic life is minimal.

Another problem that has always existed in Palestinian communities is the difficulty of sourcing adequate water. The hon. Member for Aberconwy (Guto Bebb) compared Gaza with the west bank. There is a water problem in the west bank, but the water problem in Gaza is probably more extreme. Even when I was last in Gaza, before the latest problem caused by the reaction to the election of Hamas, most of the main water sources had been diverted to Israeli settlements outside Gaza.

That has always been a problem, because the Israeli wells are sunk much deeper than the Israelis allow the Palestinians to sink their wells, so the Israeli wells soak up water from the aquifers. The Coastal Municipalities Water Utility organisation in Gaza has said that, because of the reduction in the flow of the water, the amount of nitrates and the level of chlorine contamination are now rising very fast in the water sources that the Palestinian people have to use. Even when I was last in Gaza, which is some time ago now, doctors told me that children

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were beginning to show signs of diseases that had not been prevalent among the Palestinian people for quite some time, and children are the ones who are harmed by using contaminated water.

Another thing that caused me great distress when I was last in Gaza was the fact that people were not being allowed to dump their rubbish by taking it away to somewhere safe; often they had to dump it within the limits of their cities and communities. That meant that, when it rained, material from the rubbish leached down into the aquifers and was then absorbed back into the bodies of the people using water from the aquifers.

Because of the inability to generate enough electricity, the people in Gaza now have problems keeping even the basic facilities running in their hospitals. One of the hospitals in Gaza city is mostly comprised of wards that were built with donations from the families of returning or deceased soldiers from the first world war. Many soldiers recuperated in Gaza city after the terrible Gallipoli campaign and many of the wards in that hospital have plaques on the walls to show that they were built by the British.

To keep those wards running is very important. However, the recent British delegation visited Al Shifa hospital in Gaza city and the members of the delegation were told that kidney dialysis machines have to be disconnected from patients every time the power goes out, meaning that the blood has to be cleaned and the dialysis process has to be restarted every time the power goes out. Dialysis has to be done twice, which is a great imposition on kidney patients.

There is also a major problem in trying to source legitimate building materials, because of the argument put forward by the Israeli Government that certain things, including basic building materials, have dual use and therefore should be denied to the people of Palestine. That argument does not make any sense. For example, radiotherapy drugs for cancer patients are banned, because Israel says—for some reason—that they are a dual use product. I am not quite sure how to extract the small amount of radioactivity from radiotherapy drugs and how it could be used for anything other than medical purposes.

I know, Mr Dobbin, that you come from a medical research background and so you will know that a small amount of radioactive material, with a very low level of radioactivity, is generated by every hospital in the country. I do not see anyone saying that we need to rush around and put that material in a high security facility, so the Israeli attitude is nonsense and an imposition on patients.

Doctors who spoke to the British delegation that visited Gaza recently estimated that in the past year 500 Palestinians have died simply because of a lack of medication; Gazans are simply not being allowed to import medication in adequate quantities. Children and cancer patients are most at risk, as they are denied the treatment they need. For example, we met a young boy with a sickle cell anaemia problem. In this country, we would regard any child who had that problem as being a priority, but that child in Gaza was denied drugs to deal with that terrible disease. Providing those drugs is what humanitarian aid is about.

We must ask the Minister, “When will the warm words and the talking stop? When is all this nonsense about it being all right when we have a negotiated

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settlement going to stop?” There is a widespread feeling that the Israeli Government do not want to have a negotiated settlement that would give the Palestinians an equal and adequate life, and it is quite clear that we are condoning and colluding in the situation in Gaza. We did not like the result of a democratic election and we have not done enough to try to move from that viewpoint, to a situation where that election result is not seen as a threat but as something that should be absorbed into the discussions about what happens in Palestine.

In all the years since I last visited Gaza, and in the time since the British delegation visited Gaza recently, there seems to have been very little movement, except perhaps for a backward movement in the conditions of the people there. That is a great tragedy and, to be quite frank, in the past it has been a cause of great shame for my party when we were in government; we should have dealt with that situation if we were in any way humanitarian and democratic socialists.

Now the challenge lies with this Government, without regard to party. I hope that they make the choice to change their position so that they support UN recognition of the state of Palestine. But if they cannot do that, I hope that they will do something to argue very strongly for, and win through the UN, a situation whereby it is accepted that it is wrong for Israel to do what it is doing in preventing humanitarian aid and other basic aid from being taken to the people of Gaza by whichever route people choose to take it.

1.15 pm

Jeremy Corbyn (Islington North) (Lab): Thank you very much, Mr Dobbin, for calling me to speak. I will be very brief and I am grateful to my hon. Friend the Member for Linlithgow and East Falkirk (Michael Connarty) for giving me a few moments to say something.

I have visited Gaza on quite a number of occasions and every time I have come away even more depressed than I was at the end of the previous visit. There was a sort of high point post-Oslo in the late 1990s, when there was an airport ready to function, there were water supply systems, drainage systems were in operation, forests were being planted, trees were growing, agriculture was developing, and there was a high level of employment and a real sense of optimism and hope.

I then went to Gaza in 2005 as an election observer. I have vivid memories of Israeli border guards at the Rafah crossing deciding to shoot into the town of Rafah on polling day. Why did they do that, other than to intimidate those people who were trying to cast their votes legitimately and democratically in that election? I was not particularly surprised at the result of that election. Along with many others, I confirmed that it was peacefully carried out and democratically conducted and that there was no intimidation of voters. So we must recognise what has gone on in Gaza; the situation there is very serious.

On a subsequent visit, I discovered the number of people suffering from mental illnesses and from wholly preventable conditions, because of polluted water supplies and everything else, which indicates that we are dealing not with a natural tragedy but a human tragedy, of human proportions, created by the blockade, the bombardment, Operation Cast Lead and the constriction of supplies. Under the Mubarak regime in Egypt, the

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Rafah crossing was opened and closed at various times. Now it is open most of the time and it is the only way that sufficient supplies can get into Gaza, because the Israeli blockade continues.

In the short time left to me, I want to make a plea to the Minister. I plead with him to understand that the people of Gaza—1.5 million people—are in prison. I plead with him to try to understand what it is like to be a young person growing up in Gaza, knowing that it is only possible to watch the world through television and computers and that it is only possible to listen to the world through radio, because the chances of travel are limited, job opportunities are limited and aspirations are limited. Education in Gaza is often very good; there are very many graduates and people with other educational qualifications in Gaza. That is what breeds the anger and all the problems that I have just outlined.

The pressure must be put on to lift the blockade of Gaza, to recognise the legitimate rights of the people of Palestine, and, above all, to get aid to Gaza as quickly as possible, to deal with what is a developing human tragedy of undernourishment and medical problems, including mental health problems, caused by the blockade. Anything that the Government can do in that respect would be very much appreciated and I appreciate the short time that I have had today to contribute to this debate. I also congratulate my hon. Friend on his contribution.

1.18 pm

The Parliamentary Under-Secretary of State for International Development (Mr Stephen O'Brien): Thank you very much indeed, Mr Dobbin, for calling me to speak. I congratulate the hon. Member for Linlithgow and East Falkirk (Michael Connarty) on securing this very important debate and I thank him for doing so.

Let me begin by stating very clearly that the humanitarian situation in Gaza is unacceptable and unsustainable. In Gaza, 66% of the people are dependent on food aid; 90% of mains water is unfit to drink, the consequences of which were particularly noted by the hon. Member for Islington North (Jeremy Corbyn), who has just contributed to the debate; and, despite the fact that schools are running on double or triple shifts, 40,000 children have no school place. Gaza’s economy is depressed and aid-dependent. There has been strong growth recently, but from a very low base. GDP per capita remains 40% below 1994 levels. At 37%, the unemployment level is among the highest in the world, and 38% of Gazans live in poverty. It is deeply troubling that Gaza, which should have a thriving economy, is currently one of the highest per capita recipients of aid funding in the world.

We believe that the actions of both Israel and Hamas have contributed to the current situation in Gaza. Between 18 and 21 August this year, we witnessed, once again, an alarming escalation of violence: a terrorist attack in southern Israel, more than 100 rockets and mortars launched from the Gaza strip at Israeli civilians, and retaliatory strikes by the Israeli air force against targets in Gaza. Nine Israelis were killed during the rocket attacks, and many more were injured.

We strongly condemn the appalling violence. In Gaza, at least 15 people have been reported killed, including three children, and 44 injured. We have urged the Israeli

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Government to ensure that everything is done to avoid further civilian causalities. The announcement of the current ceasefire is welcome, and it is vital that both sides now show restraint and seek to reduce the tensions. Like the hon. Members for Linlithgow and East Falkirk and for Islington North, I have been to the region, although not to Gaza itself—that was the Under-Secretary of State for Foreign and Commonwealth Affairs, my hon. Friend the Member for North East Bedfordshire (Alistair Burt)—but in the southern Israel area the problems are real and continuing.

Israel retains obligations under international law as an occupying power. It controls the majority of Gaza’s borders, and sea and air space and, as such, has primary responsibility for facilitating humanitarian access to Gaza. We welcomed the changes to the Gaza access regime announced in June 2010, and the subsequent package of measures agreed by Quartet representative Blair and Prime Minister Netanyahu on 4 February this year. However, recent UN reports show that the measures have not brought any fundamental change to Gaza, with food insecurity remaining high and economic opportunities scarce.

Much more needs to be done to ease restrictions on exports, construction material imports and the movement of people. Israel’s commitments on exports that were agreed with the Quartet representative in February 2011 have not yet been met. Increases in imports since June mainly relate to consumer goods, with the number of trucks entering still being only one third of what it was pre-blockade. We understand Israel’s security concerns, but the current access regime imposed by Israel has the perverse effect of fostering radicalisation and empowering Hamas, while punishing the ordinary people of Gaza.

Economic restrictions have not brought political change or degraded the military capability of Hamas. On the contrary, legitimate business is being strangled while Hamas allies are strengthened. Isolation and growing frustration at the lack of economic opportunities make extremism more attractive, a point ably highlighted by my hon. Friend the Member for Aberconwy (Guto Bebb) in his intervention. An improved economy and a resurgence of Gaza’s business sector are not only essential for the people of Gaza, but firmly in Israel’s security interests.

The vast majority of goods entering Gaza come not through the official crossings but through the vast network of tunnels between Egypt and Gaza. Hamas controls the tunnels and imposes taxes on goods passing through them, the money raised forming a large part of their revenue base. As a result of the blockade, UN and non-governmental organisation projects confront constant difficulties in gaining access and in importing construction materials, which means that projects designed to help the most vulnerable people are blocked, delayed or made more expensive. Meanwhile, 30 times more cement and 10 times more steel comes in through the Hamas-controlled tunnels than through the crossings.

Jeremy Corbyn: I hope that the Minister has the opportunity to visit Gaza at some point. I welcome what he says, but does he not acknowledge that the tunnels are a product of the blockade? Without the blockade there would be no point in the tunnels, and there certainly would be no economic advantage in having them. The blockade must be lifted; that is the crucial issue.

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Mr O'Brien: I certainly recognise that it is difficult to envisage how the tunnels might have come into being but for there being a difficulty in getting goods to move, so I fully understand the hon. Gentleman’s point.

The United Nations Relief and Works Agency reports that at the current approval rate for reconstruction projects, it will take 78 years to rebuild Gaza. Only 28% of its work programme for Gaza has been approved by Israel, and only half of the materials needed for approved projects have entered into Gaza. UNRWA wants to build 100 schools, but at the moment has permission for only 42. The UNRWA schools are vital, because they teach the lessons of the holocaust and of the universal declaration of human rights. If a child cannot get a place at an UNRWA school, he or she might end up unable to go to school at all, or might attend a school with a curriculum approved by Hamas or another extremist group.

What is the UK doing? We continue to press the Israeli Government bilaterally to ease the movement and access restrictions. We have consistently lobbied the Israeli Government at ministerial and official level, in close co-ordination with the office of the Quartet representative and European Union partners. The Department for International Development supports the UN Access Coordination Unit to work with the United Nations, Israel, the Palestinian Authority and aid agencies to facilitate the transfer of vital humanitarian assistance, including medical equipment and supplies, in and out of Gaza. DFID has also contributed to a greater international understanding of the situation in Gaza and the impact of the blockade. Earlier this year, DFID-funded reports by the World Food Programme and the UN Office for the Co-ordination of Humanitarian Affairs provided detailed and impartial analysis of the situation in Gaza, and that has provided a solid, analytical basis for our work with partners in identifying ways to improve the situation.

We are also providing support through our programmes. Immediately after Operation Cast Lead, we concentrated on humanitarian aid, working with the UN, the International Committee of the Red Cross and NGOs to provide drinking water, food, shelter, medical assistance and support for those traumatised by the conflict. Our current work on Gaza addresses the key access constraints, promotes economic growth and provides support to the poorest and most vulnerable parts of society.

The UK supports the Palestinian Authority and UNRWA to provide basic services, such as education and health, to the people of Gaza. About 50% of our support to the Palestinian Authority and 30% of our support to UNRWA benefits the Gazans. We provide 2,400 vulnerable families with work and an income through our support for UNRWA’s back-to-work programme, and we help to develop the private sector by supporting 304 small companies in Gaza and generating

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jobs for more than 1,800 unemployed Gazans. We also provide food vouchers to 5,750 poor households through our support to the World Food Programme, enabling them to purchase the basic food items, such as bread and milk, that they need to survive. We help 24 UN agencies and 132 international NGOs to get aid and goods into Gaza through our support to the UN Access Coordination Unit and the Palestinian Authority’s crossing co-ordination committee.

We understand Israel’s security concerns, but for a peace settlement to work any future Palestinian state must be economically viable.

Michael Connarty: Will the Government take up with some priority the matter of much-needed medical drugs, particularly for the treatment of cancer? It is ridiculous to deny people cancer-treatment drugs because of the dual-use nonsense.

Mr O'Brien: I am happy to undertake that we will look into that, to see what the situation is and what can be done, not least because of the commitments that I have just listed, particularly our help in ensuring that there are supplies for assisting with medical needs—not just in emergencies, but for ongoing health requirements.

In the last couple of minutes of the debate, I shall touch on the broader process. We in the UK hope that the reconciliation agreement between Fatah and Hamas announced in May this year will lead to the formation of a Government who reject violence and pursue a negotiated peace. We will judge any future Palestinian Government by their actions and their readiness to work for peace.

It is clear that negotiations towards a two-state solution are the only way to meet the national aspirations of both Israelis and Palestinians and to achieve a sovereign, viable and contiguous Palestinian state living alongside Israel in peace and security. We therefore call on both parties to resume talks on the basis of clear parameters, including borders based on 1967 lines with agreed land swaps, security for Israel that respects Palestinian sovereignty, a just and fair resolution of the refugee problem, and Jerusalem as the future capital of both states.

We want the new generation of Palestinians to grow up in hope, not despair, and to believe in a peaceful settlement with Israel, rather than being impoverished and susceptible to terrorist recruitment. We want the next generation of Israelis to live free from the fear of rocket fire, and able to enjoy peaceful relations with their Arab neighbours. We cannot deliver that for either side, but as friends to both the Israelis and the Palestinians, we will work with our international partners to help deliver progress in the peace process. We remain a strong supporter of those who are building the institutions of a future Palestinian state.

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UK Environment Capital (City of Peterborough)

1.30 pm

Mr Stewart Jackson (Peterborough) (Con): It is a pleasure to serve under your chairmanship for the first time, Mr Dobbin. I am also delighted to welcome the Minister of State, Department for Business, Innovation and Skills, my right hon. Friend the Member for Tunbridge Wells (Greg Clark), who is doing an excellent job in his ministerial capacity. I am somewhat surprised, as I was expecting the enterprise Minister, the hon. Member for Hertford and Stortford (Mr Prisk), but my right hon. Friend is a more than adequate substitute. This is my opportunity to showcase the city of Peterborough’s positive and innovative growth agenda, particularly our aspiration to be the home of the UK environment capital, and to put on record our belief that we have a good case for being the future home of the new green investment bank.

From time to time, I have disagreed with Peterborough city council about the quantity of housing development in the city. I have also expressed concerns, as have many Members over the years, about the correlation between residential development and infrastructure. However, I believe that we are resolving those issues. Peterborough city council, the urban regeneration company Opportunity Peterborough, neighbouring Members of Parliament and I share ambitious plans for the future of Peterborough, which I will elucidate.

Peterborough’s population of 170,000 is set to grow to well over 200,000 by 2021, and there are plans to deliver more than 25,000 homes and 24,000 jobs by 2026. A McKinsey report published this year predicted that by 2025, Peterborough would have the highest growth in GDP of any English city. Private sector job growth is vital to the city’s economic prosperity and growth. Peterborough’s location—just 46 minutes from London by train, with direct links to the north of England, Birmingham, Cambridge and Stansted airport—makes it a nationally and internationally well-connected city that attracts and retains businesses.

The city’s economic growth is based on strong sectoral foundations. I will mention its environmental and financial businesses in a moment. Peterborough’s manufacturing companies have outperformed many competitors and include global giants such as Caterpillar Perkins, Dresser-Rand and Applied Energy. In printing and media, Peterborough boasts Bauer Media, Europe’s largest privately owned publisher, and Ideal World, digital broadcaster to more than 22 million homes in the UK. In food and drink, the full spectrum from processing and packaging to innovation and cutting-edge technology is covered by companies such as Coca-Cola, New Covent Garden Food Co., Masterfoods, British Sugar and AB Agri.

Although nowhere has been wholly unaffected by the recession, Peterborough has performed relatively well, creating over 3,000 private sector jobs in the past year. Investment has continued to head to the city. New high-profile operators such as TK Maxx, Nando’s, Patisserie Valerie, Van Hage, Andronicas, Pandora and Superdry have all set up in Peterborough recently, and imminent arrivals such as Kelway IT services and Stobart Group are due to deliver more than 700 jobs.

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Given its accessibility, Peterborough’s economic growth is available to a wide geographic area. The city has taken a lead role in the development of the Greater Cambridge and Greater Peterborough local enterprise partnership and is assisting in the delivery of the enterprise zone at Alconbury in Huntingdon, ensuring that the zone’s benefits are more widely exploited. I must put on record my disappointment that the local enterprise partnership did not push for the Peterborough railway corridor, which would have had greater resonance as a catalyst for change, built on our regeneration, and had a bigger social and economic impact. However, that was the LEP’s decision. While I am making minor complaints to my ministerial colleagues, I must say that Peterborough’s exclusion from the national insurance contributions holiday will have had a slight impact on people minded to set up businesses in Peterborough, at the border between the east midlands and the east of England, rather than in the east midlands, Lincolnshire or Northamptonshire. However, those are my only gripes.

As we know, the east of England contributes significantly to the national economy, to the tune of £30 billion a year. As a powerhouse for growth in the area, Peterborough could have a positive impact on the UK economy, and its environmental credentials could make it an exemplar city for sustainable growth.

Peterborough was designated as an environment city in 1993 and became the home of the environment capital in 2010. The city’s environment capital is a collection of assets including, among many other things, a unique cluster of environmental businesses, innovative approaches to understanding environmental performance, development of the UK’s largest zero-carbon homes project, one of the highest amounts of green space per capita in the UK and a drive for sustainability at the core of all its activities. More than 380 organisations and businesses constitute the environment cluster, including Government and voluntary organisations such as Natural England, the Environment Agency, the Wildlife Trust and Froglife and international consultancies such as Halcrow, Royal Haskoning and the Rolton Group. It also includes major businesses such as Dresser-Rand, which is developing energy from wave technologies, Caterpillar Perkins, formerly Perkins Engines, which is reducing engine CO2 emissions, and Anglian Water, which is delivering leading-edge innovation in water management.

Peterborough Environment City Trust is delivering nationally unique environmental programmes, attracting funds for major retrofit projects, developing community skills through its Greeniversity programme and the Green Apple resource kit and awards for local schools and involving more than 400 local businesses in environmental management improvements through its Investors in the Environment scheme. With 295 code 6 homes on the south bank of the River Nene, Peterborough will be the country’s biggest carbon challenge city. The city is also developing innovative utility provision to support housing and economic growth through a council-led energy services company installing photovoltaic and other energy solutions for council property.

As one of three Department for Transport sustainable transport demonstration towns—an initiative branded as Travelchoice—the city has achieved a significant shift towards more sustainable travel modes, including a 35% increase in the number of bus passengers between 2004 and 2009, a 14% increase in walking and

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a 12% increase in cycle journeys. The recent award of a £5 million Department for Transport grant to Travelchoice reflects the transformations already achieved and will enable the city to develop them further.

The 2008 Government-commended integrated growth study produced by Arup on behalf of the city council demonstrated how the city could meet its ambitious growth targets while achieving environmental, economic and social sustainability. Data sets from the study underpin the pioneering Peterborough model, a web-based visualisation of city-wide environmental performance developed through a public-private collaboration. The model has received interest from as far afield as New York, Cape Cod and Bordeaux, as well as closer to home from Her Majesty’s Treasury, to support the green infrastructure plan.

Skills development is key to the city’s future. The city council has recently partnered with Cranfield university to establish the Centre for Renewable Energy and Bio-Fuels and is supporting the commercial research and development of algae biofuel energy. That brings me to the bid for the green investment bank. The pioneering work of the coalition Government in establishing the green investment bank requires relevant expertise in the host city and a similarly innovative attitude. As the home of the environment capital, Peterborough has unrivalled expertise in environmental sustainability, with its 380 businesses and organisations, its innovation networks, which reach across the globe, and its innovative mapping of environmental performance through the Peterborough model.

Peterborough also has more than 27,000 people working in the financial sector, proportionally more than the east of England and the United Kingdom. Major companies with main offices in Peterborough include the insurance operators the BGL Group—famous for the meerkat adverts—Royal Sun Alliance and Diligenta, which is part of the giant Tata Consultancy Services conglomerate. Other financial operators include BNP Paribas, Handelsbanken, the Lloyds Group, Aldermore, Travelex and Clydesdale Bank. Many of these companies have announced significant growth and expansion, even during the recession.

Innovation is key to the financial as well as environmental performance of the city. Local companies such as PinPlus, for financial security, iGo4, for insurance, and indeed the city council, through its mortgage partnership with Lloyds TSB, are all leaders in creative approaches to finance. In these difficult times for first-time buyers, I commend in particular the collaboration between the city council and Lloyds TSB in providing much-needed finance for first-time buyers. I certainly commend it to other local authorities.

In Peterborough, the green investment bank would have access to unparalleled levels of financial and environmental expertise and innovation, as is already demonstrated by the Treasury’s interest in using the Peterborough model to support the green infrastructure plan.

In conclusion, Peterborough is ambitious and growing, with a work force to match. The city is actively exploring pioneering public-private partnerships to remove the burden from the taxpayer without slowing progress in

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the city. Innovation in all areas of environmental, financial, economic and social capital is matched by understanding infrastructure needs and opportunities.

I will finish with a quote from Diligenta, which is a subsidiary of the huge Tata group, is a leading player in UK life and pensions business process outsourcing, and has a headquarters in the city. It says:

“Peterborough…has great infrastructure that supports a vibrant economy and a financial sector presence. We strongly recommend it as an excellent location for any business looking to invest.”

Peterborough is moving forward and grabbing the opportunities of the Government’s growth agenda. I look forward to hearing the Minister’s response.

1.43 pm

The Minister of State, Department for Communities and Local Government (Greg Clark): It is a pleasure to serve under your chairmanship for the first time, Mr Dobbin, and to be able to respond to the debate initiated by my hon. Friend the Member for Peterborough (Mr Jackson). He has referred to the Peterborough model, and I think that he is the Peterborough model of a Member of Parliament who is absolutely passionate about his constituency and who represents it with the vigour for which that city is itself famous.

As my hon. Friend has said, Peterborough is a growing city. Even during the recession, it has performed well with 3,000 new jobs announced last year. It has great strength in sectors such as the environment, manufacturing, finance and investment. It is a city with innovation at its heart, with its Eco-Innovation Centre and Water Innovation Network. Cranfield university is not far away and Peterborough is working with it to establish a commercial research and development base in algae biofuel technology.

As my hon. Friend has indicated, Peterborough’s leading role in the Greater Cambridge and Greater Peterborough local enterprise partnership, which was announced in October, is a major positive force for the economy. There are great hopes for that local enterprise partnership, being, as it is, such a concentration of some of our most promising businesses and industries.

My hon. Friend has mentioned the new enterprise zone in Alconbury. It is outside his constituency, and I acknowledge his point about the Peterborough railway corridor. I say to him that that was the choice of the local enterprise partnership, and I know that his constituents will benefit from the general uplift that it will give to the whole area. Moreover, many of the powers in a local enterprise zone are in the gift of local authorities to bestow on other areas to create, as it were, enterprise areas. On simplified planning, for example, a new discretion will be available in the Localism Bill to give business rate discounts to particular types of businesses for start-ups. The proposed reforms to the local government finance system will allow authorities to retain the benefit of the uplift in business rates. I hope that, when he returns to Peterborough, my hon. Friend will encourage both the local enterprise partnership and the city council to think about how some of the benefits of the local enterprise zone in Alconbury might be conferred on the area in Peterborough that he has mentioned.

The unique model of the Peterborough skills vision of brokering direct links between local business and schools and colleges is another area that other cities are looking to replicate. Peterborough has so much more to

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offer besides, such as a spectacular cathedral and excellent rail links, which my hon. Friend has mentioned, as well as being the home of the Posh and of one of my great heroes, Peter Boizot.

The green economy is important to the whole country and I am aware that that applies nowhere more than in Peterborough—350 eco-businesses are located there and it has 29 conservation areas and an amazing commitment from its people to improve the city’s environment, as they have done over time. Peterborough’s long-standing association with the environment is clear. It was designated an environment city 15 years ago—one of only four at the time—and it recently celebrated its 20th green festival. In addition, I was pleased to hear about Peterborough’s recent environmental business successes with a Queen’s award for enterprise and the international interest generated by the Peterborough model, which my hon. Friend has mentioned and which brings the city’s environmental performance data to life through an online visualisation.

Peterborough is right to be so committed to the green economy. The green economy in the UK was worth more than £116 billion in 2009-10. By 2015, the sector is expected to employ more than 1 million people. We are taking action now to put the whole economy on a low-carbon, resource-efficient path. UK expertise and innovative low-carbon businesses can lead the way in refocusing our economy to capture the global opportunities that were worth £3.2 trillion in the past year alone and are forecast to grow by about 4% a year over the next five years.

A greener, low-carbon economy is one of the key areas that we have focused on in our plan for growth. The Government recently published plans that map out the Government’s action to enable the transition to a green economy, including areas such as climate change, resource efficiency, waste prevention and carbon capture and storage. These plans will form the basis for continuing dialogue between Government, business, universities and communities.

We understand that business needs to invest substantial resources, but it needs to be confident that this is at the heart of the Government’s agenda. I hope that it can see that it clearly is. We are putting in place the policies that will establish the long-term framework in which investment decisions can be made with confidence. Providing that consistency creates an attractive environment for investment, which, by its very nature, will pay dividends over a long period.

We are committed to substantial reductions in carbon emissions. We have launched the world’s first incentive scheme for renewable heat, which should increase investment in green heat technologies, and we are launching the green deal, under which householders, businesses and landlords will be able to improve the energy efficiency of their homes and buildings at no up-front cost. We are also introducing a carbon price floor, proposals on electricity market reform and a range of initiatives to encourage the roll-out of green vehicles.

High-quality economic infrastructure is important for any competitive, growing economy. The transition to a green economy will require unprecedented investment in green infrastructure in key areas. Hundreds of billions of pounds, mostly from the private sector, will be required

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in the energy sector alone. In the long term, the benefits to be gained from that action will be much greater than the costs of taking it. To ensure that a lack of sufficient finance is not a barrier to the scale and pace of the transition, we need to go beyond existing policies.

To that end, we have announced our intentions for the green investment bank, which is the first of its kind in the world and one of the Government’s top priorities. The green investment bank will be dedicated to providing financial solutions to accelerate and increase private sector investment. A new institution rather than a series of Government interventions is required, and the green investment bank will build the necessary deep expertise in financial markets and green investments. It will be an institution that complements our existing green policies and addresses the areas of under-investment that persist in spite of the other measures I have mentioned.

Our green objectives are ambitious, and to achieve them we need tailored and targeted financial intervention to overcome under-investment in those key areas. The green investment bank will work towards a double bottom line of achieving a significant green impact and making financial returns. There has been a great deal of interest in the green investment bank and I know that my hon. Friend is keen to understand where we are with setting it up and to ensure that Peterborough is well represented in those considerations.

We are at the early stages of establishing the green investment bank, and there is much to be done. Our proposals need to be approved by the European Commission before we can establish the bank as a fully independent financial institution. However, we know that there is a need for early action, so my Department will start to make direct state-aid-compliant investments in green infrastructure projects from April 2012. The advisory group, which was recently appointed and which met for the first time last week, will provide us with advice on the establishment of the green investment bank, including what its strategic priorities should be. Those priorities will then be decided by the Secretary of State and will be regularly reviewed by Ministers and the institution’s corporate board.

We will also need to decide on the bank’s location. Although it will not be a large institution, we know that people already see it as a valuable organisation and an asset to wherever it will be located. We are currently defining a process to decide the location that will build on the criteria we published in our May update on the green investment bank. We will, of course, make an announcement in due course about the process and ensure that all those who have already expressed an interest are kept informed.

We believe that a green economy is a growing economy and welcome Peterborough’s commitment to green growth. Through our green policies, our work with businesses and the green investment bank, we believe that we are firmly on our way to achieving that vision of a green economy. We will continue our work to establish the green investment bank, including the design of a process to decide the location, and we hope to make an announcement on progress as soon as it is sensible to do so.

I pay tribute to my hon. Friend for the consistent interest that he has taken in the green powerhouse that is the city of Peterborough’s potential in this area. No one in his city should doubt the fact that they could not

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wish for an advocate who has a stronger or more respected voice in this House. It has been a privilege to respond to his debate and to serve under your chairmanship, Mr Dobbin.

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Question put and agreed to .

1.52 pm

Sitting adjourned.