House of Commons Hansard Debates for 02 Feb 2011 (pt 0001)

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House of Commons

Wednesday 2 February 2011

The House met at half-past Eleven o’clock

Prayers

[Mr Speaker in the Chair]

Oral Answers to Questions

Wales

The Secretary of State was asked—

Great Western Main Line

1. Huw Irranca-Davies (Ogmore) (Lab): What recent discussions she has had with the Secretary of State for Transport on the electrification of the great western main line. [36719]

6. Mrs Siân C. James (Swansea East) (Lab): What recent discussions she has had with the Secretary of State for Transport on the electrification of the great western main line. [36724]

The Secretary of State for Wales (Mrs Cheryl Gillan): I have many discussions about this matter, and I remain fully supportive of electrifying the great western main line.

Huw Irranca-Davies: I thank the Secretary of State for that update. I never thought that I would say this, but I agreed with the Chancellor when he said last week that high-speed rail

“will provide for the next generation.”

This generation of businessmen and commuters from south Wales are looking forward to a fully electrified higher-speed rail all the way to Swansea. Will the right hon. Lady do everything in her power to ensure that we have that as soon as possible?

Mrs Gillan: I hear the hon. Gentleman, and I am pleased to agree with him that good infrastructure will be of great benefit to our economy in Wales. However, I should remind him that his party had 13 years to electrify the great western line to Swansea, yet failed to electrify a single inch.

Mrs James: I am sure that the Minister is aware that electrification of the south Wales main line to Swansea is vital, especially for the economy of the city, but also for the economies of west Wales. The recent Centre for Cities report forecast that Swansea would face severe challenges during the recovery period. Given that news, does she agree that rail electrification to Swansea is even more vital to local businesses and citizens in the region?

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Mrs Gillan: I am happy to say that I have had sight of that report. I continuously worry about how we will build up our economy in Wales and restore our fortunes. Like her hon. Friend the Member for Ogmore (Huw Irranca-Davies), the hon. Lady is absolutely right to say that infrastructure is important, whether it be railway or roads infrastructure, or broadband. I would encourage her to make her representations directly on this matter. I hope that she has written to my right hon. Friend the Secretary of State for Transport and also to my office.

Jonathan Evans (Cardiff North) (Con): My right hon. Friend is right to draw attention to the abysmal record of the outgoing Labour Government, but let me make it clear that we on the Government Benches are arguing just as passionately for electrification right through to Swansea, to see the Welsh economy rebalanced from the public sector and private sector jobs coming through. We cannot have money spent on high-speed rail without electrification in Wales.

Mrs Gillan: My hon. Friend knows that we plan to invest £14 billion over the next four years to fund maintenance and investment in our railways. Whatever we end up with when an announcement is made, he can rest assured that we have left no stone unturned in making the case for electrification into Wales.

Roger Williams (Brecon and Radnorshire) (LD): Electrification will take many years to complete, so will the Secretary of State consult the franchisee to see whether we can have direct routes from London Paddington to Bristol, Newport and Cardiff, thereby reducing the journey time to that achieved 20 years ago?

Mrs Gillan: My hon. Friend is right. I have already met First Great Western on that very subject, and I will continue to hold meetings. We appreciate that we are talking about a crucial project but, as my hon. Friend knows, the last Government had 13 years, and all they came up with was a cheap promise and no funding to back it up.

Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC): Will the Secretary of State please confirm that it is entirely Westminster’s responsibility to maintain and develop the south Wales line?

Mrs Gillan: I am sure I do not have to tell the hon. Gentleman what is devolved and what is not. He knows that the electrification of the main line is Westminster’s responsibility. However, let me remind him that there are also important improvements that could be made to the diversionary lines and the Cardiff valleys network. That is the responsibility of the devolved Administration, yet we have not seen any progress on that front.

Mr Llwyd: Is the right hon. Lady aware that the cost-benefit analysis for electrification of the south Wales line is far better than that for Crossrail? However, whereas Crossrail, at £16 billion, is going apace, nothing has happened for the past nine months on this vital issue for the south Wales line.

Mrs Gillan: I remind the hon. Gentleman that plenty has happened in regard to this vital issue, but this is not a decision that can be taken overnight. The previous

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Government were very happy to make uncosted promises about this routing, but this is not a simple process. A range of factors must be thoroughly considered and, to that end, the Wales Office has been working not only with the Department for Transport but with the Welsh Assembly Government, and I remain optimistic about a good outcome.

Mr Peter Hain (Neath) (Lab): Does the Secretary of State have any meetings on rail electrification scheduled for 1 April?

Mrs Gillan: I am sure that if the right hon. Gentleman wants details of my diary, he can ring the office.

Mr Hain: As it happens, I have details of the right hon. Lady’s diary here. Instead of progressing rail and other Wales matters, the entire Wales Office ministerial team—the Secretary of State and the Under-Secretary, the hon. Member for Clwyd West (Mr Jones)—will be at a Conservative party fundraising event in Chesham and Amersham. This is no April fool’s day story: I have the invitation here.

On the decision to electrify rail, the former Transport Secretary, Lord Adonis, said:

“The business case for electrification to Swansea is strong. All the technical issues, for example, electrifying the Severn tunnel, were resolved.”

If he says that the business case is strong, why the delay?

Mrs Gillan: I am ashamed that the shadow Secretary of State for Wales has wasted his two questions and resorted to trivia. Unlike him, I take this matter very seriously. The letter that I received from his wife actually made more sense than his questions at the Dispatch Box today.

Inward Investment

2. Andrew Griffiths (Burton) (Con): What discussions she has had with the Welsh Assembly Government and other stakeholders on steps to attract inward investment into Wales. [36720]

The Secretary of State for Wales (Mrs Cheryl Gillan): I have had various discussions with the First Minister and the Deputy First Minister on attracting inward investment to Wales. I have also discussed the matter with ministerial colleagues, including the Secretary of State for Business, Innovation and Skills and the Government’s trade adviser, my right hon. Friend Lord Brittan. This afternoon, I shall facilitate a meeting between the First Minister, the Deputy First Minister and my hon. Friend Lord Green, the Trade Minister, on the same issue.

Andrew Griffiths: The Secretary of State will know that Wales is heavily reliant on a small number of very large companies: 1.8% of the companies in Wales account for 69% of turnover, and the number of new businesses established between 2004 and 2009 fell by 28%. What meetings is she having with the Welsh Assembly Government on support for small and medium-sized enterprises in Wales?

Mrs Gillan: My hon. Friend is quite right about the figures on the private sector in Wales. Indeed, the shadow Secretary of State has often said that he thought the

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private sector in Wales was too small, but he failed to address that issue while he was in government. I have continual meetings with the Welsh Assembly Government on these matters, and we are particularly committed to encouraging business confidence through the measures that we are taking for small businesses and others. I know, from meeting businesses in Wales, that the cancellation of the job tax proposed by Labour went down particularly well with the business community.

Dr Hywel Francis (Aberavon) (Lab): Higher education plays a big role in attracting high-quality inward investment to Wales. Will the Secretary of State therefore join me in welcoming the decision of the Labour-led Welsh Assembly Government to announce a large investment in Swansea university’s new science and innovation campus, which will be located in my constituency? Will she also outline what she intends to do to support such initiatives across the whole of Wales?

Mrs Gillan: The hon. Gentleman is absolutely right. I have had the privilege of going down to Swansea and looking at the Institute of Life Science buildings, ILS1 and ILS2, and I welcome that investment. As he knows, this is a devolved matter, and the levers of power and the decisions about money rest with the Welsh Assembly Government. That is why I was so sad to see the closure, by the Labour Welsh Assembly Government, of some of the techniums across Wales. However, the hon. Gentleman can rest assured that I will continue to press this case, because I believe we have some of the best universities in the country providing the best research and support to businesses that are looking to invest in Wales.

Driving Standards Agency

3. Jenny Willott (Cardiff Central) (LD): What discussions she has had with the Secretary of State for Transport on the closure of the Driving Standards Agency office in Cardiff. [36721]

The Parliamentary Under-Secretary of State for Wales (Mr David Jones): My right hon. Friend the Secretary of State and I have regular discussions with my right hon. Friend the Secretary of State for Transport and his ministerial team on a range of issues, including the restructuring of the Driving Standards Agency. The possibility of job losses is a serious matter for all concerned, and the staff in Cardiff should not have had to find out about this matter as a result of the information being leaked to the media.

Jenny Willott: I have been contacted by a number of constituents who are losing their jobs as a result of the Driving Standards Agency office closure, and they have told me that they are being offered no support to help them to find new work. Will the Minister speak to colleagues in the Department for Transport, the Department for Work and Pensions and the Welsh Assembly Government to ensure that my constituents are given as much help and support as possible so that they can secure new work as soon as possible?

Mr Jones: It is a matter on which my right hon. Friend and I have already been in touch with the Department for Transport, and I understand that that Department

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and the Driving Standards Agency are looking into possible redeployment options for those affected. Certainly the individuals concerned will need as much support as possible and I will work with ministerial colleagues to ensure that as much as can be done is done.

Hywel Williams (Arfon) (PC): What assessment have the Government made of the effect of job losses on the already unsatisfactory service that the DSA provides through the medium of Welsh?

Mr Jones: I understand that the proposed closure will have no impact on services through the medium of Welsh.

Comprehensive Spending Review

4. Paul Flynn (Newport West) (Lab): What recent estimate she has made of the number of public sector job losses in Wales attributable to the implementation of the outcomes of the comprehensive spending review. [36722]

The Parliamentary Under-Secretary of State for Wales (Mr David Jones): The Office for Budget Responsibility published figures last year on the expected public sector job losses. These are based on UK-wide macro-economic data, so no regional figures are available. We remain committed to working with ministerial colleagues and the Welsh Assembly Government to minimise the impact of the deficit reduction programme on the workers and families of Wales.

Paul Flynn: Will the Minister use the welcome additional two months to reflect on the proposed loss of jobs in the Newport passport office and to study the Centre for Cities report, which identifies Swansea and Newport as the two UK cities most vulnerable in the present economic situation and those that will have the greatest difficulty in recovering? Will he also study the impact of the proposed closures and come up with a proposal that does not unfairly punish south Wales?

Mr Jones: I am pleased that the hon. Gentleman welcomes the two-month extension of the consultation period. I can assure him that my right hon. Friend and I are working closely with the Department to ensure that the case for Newport is put forward. The Centre for Cities report makes worrying reading and it will be necessary for the Government to work closely with the Welsh Assembly Government to ensure that the people in this area have sufficient skills.

David T. C. Davies (Monmouth) (Con): Will the Minister join me in welcoming the decision to extend the consultation period and to undertake a full economic impact assessment? Does this not show that the Government are listening, despite the problems caused by the £1 trillion deficit and debt left by Opposition Members?

Mr Jones: Yes indeed, and I am glad that my hon. Friend welcomes the extension of the consultation period. I can assure him that my right hon. Friend the Secretary of State and I are working closely with the Department to see what can be done to mitigate the impact on the area.

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Chris Ruane (Vale of Clwyd) (Lab): The Minister will be aware that nearly 50% of the workers in his constituency and mine work in the public sector. Thousands will be thrown on the dole by his party, so what consultations has he had with the Prime Minister and the Chancellor about providing additional ring-fenced funding for constituencies with large numbers of public sector workers?

Mr Jones: The hon. Gentleman should know that we liaise constantly with our ministerial colleagues, but he should recognise, as his right hon. Friend the shadow Secretary of State does, that the private sector is too small in Wales and the public sector too predominant. I was interested to see, by the way, that the hon. Gentleman has been appointed Parliamentary Private Secretary to the shadow Chancellor—no doubt deficit denial was part of the job description.

Alun Cairns (Vale of Glamorgan) (Con): Inward investment and private sector job creation will help to overcome the public sector job losses that we have inherited as a result of the state of the economy under the last Administration. Given that millions of pounds worth of deals were struck between the UK and China last month, does the Minister recognise and share my disappointment that whereas the Scottish First Minister has been to China four times in the last two years, the Welsh First Minister has not been there once?

Mr Jones: Yes, that is disappointing. China presents enormous opportunities for inward investment to Wales and to the UK as a whole, and these are matters on which my right hon. Friend the Secretary of State is liaising closely with the Department for Business, Innovation and Skills.

Owen Smith (Pontypridd) (Lab): As we have already heard and as the Secretary of State will know, hundreds of public sector jobs in Wales have already been lost on her watch. Is she aware that there will be further job losses at the Driver and Vehicle Licensing Agency when it closes its offices in Bangor and Cardiff? Will she tell us what she is doing to keep those precious jobs in Wales?

Mr Jones: The hon. Gentleman is clearly privy to information to which I am not privy, but in view of the leaked information that appears to fall into his hands so regularly, perhaps that is not surprising.

Aviation Industry

5. Neil Carmichael (Stroud) (Con): What recent assessment she has made of the role of the aviation sector in Wales. [36723]

The Parliamentary Under-Secretary of State for Wales (Mr David Jones): My right hon. Friend and I have had regular discussions with ministerial colleagues on support for the aerospace industry in Wales. We have much in the sector of which to be proud. In recent weeks, both GE Aviation and Airbus have announced the creation of jobs owing to increased demand.

Neil Carmichael: Like Wales, my constituency has strong supply and service links with Airbus and other aviation sectors in the south-west. Does the Minister

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agree that it is essential for us to have free trade in the world of aviation, and to fight protectionism wherever we see it so that we can protect jobs and provide high-value-added industries for our communities?

Mr Jones: My hon. Friend is entirely right. Airbus, which is an important employer in his constituency as well as in north Wales, has a great deal of which to be proud. Its recent announcement that it will offer permanent contracts to 770 agency workers in Broughton, who will build aircraft wings following the largest commercial order ever, is a great vote of confidence in the sector.

Ian Lucas (Wrexham) (Lab): Does the Minister agree that the development of the supply chain for Airbus through companies such as Magellan Aerospace and Tritech in my constituency is a vital part of the development of the aerospace sector in the United Kingdom? What are the Government doing to support that?

Mr Jones: The Government are doing a great deal. It is clear that the high-tech, high-value-added industries will be the powerhouse for the economy in the future, which is why my right hon. Friend the Secretary of State visited the Deeside area recently to see what is being done by companies such as Toyota. As my hon. Friend says, there are some extremely good high-value, high-tech companies in his constituency.

Apprentices

7. Robert Halfon (Harlow) (Con): What recent discussions she has had with the Secretary of State for Business, Innovation and Skills on the effects of her Department's policies on apprentices on the number of apprentices in Wales. [36725]

The Secretary of State for Wales (Mrs Cheryl Gillan): I have regular discussions with Cabinet colleagues on a range of issues, including apprentices. The Government believe that apprenticeships are a key component of the development of work force skills and one of the best forms of work-based learning.

Robert Halfon: Will the Secretary of State give Welsh backing to my campaign—supported by the Minister for Further Education, Skills and Lifelong Learning, my hon. Friend the Member for South Holland and The Deepings (Mr Hayes), who is responsible for apprenticeships—for the establishment of a royal society of apprentices and an apprenticeship card to provide training, support and mentoring which would benefit apprentices in the whole United Kingdom, including Wales?

Mrs Gillan: This is the first time I have heard about such a scheme from my hon. Friend. Next week is apprenticeship week: between 7 and 11 February, efforts will be made to encourage more businesses to provide opportunities for apprentices in Wales. I should be delighted to meet my hon. Friend, and to give whatever support I can to that new organisation in order to confer greater status on what I consider to be a fantastic opportunity for many young people.

Albert Owen (Ynys Môn) (Lab): There is a general consensus across the House that we need more apprenticeships in Wales, including apprenticeships in such areas as green technology. Will the Secretary of

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State ask the Secretaries of State for Business, Innovation and Skills and for Energy and Climate Change to reconsider their ports policy, which allows the construction of wind farms throughout the United Kingdom? The Government have now changed the rules to give English ports precedence over Welsh ports. Will the Secretary of State ask them to reconsider, and to introduce joined- up thinking to attract inward investment and create apprenticeships?

Mrs Gillan: Despite the deficit, we remain committed to apprenticeships, as, I am sure, does the hon. Gentleman. We are spending £250 million a year in England, and the Welsh Assembly Government have received consequential funding.

I have looked into one of the issues pertaining to ports, namely the money provided by the Department of Energy and Climate Change for renewables. I understand that there has been a Barnettised consequential. However, I will double-check because I know how important the issue is, but I suggest to the hon. Gentleman that when matters are Barnettised, he should press the Welsh Assembly Government to spend the funds in that way.

Mr Speaker: Order. Far too many private conversations are taking place in the Chamber. I want to hear Stephen Mosley.

Inward Investment

8. Stephen Mosley (City of Chester) (Con): What discussions she has had with the Welsh Assembly Government and other stakeholders on steps to attract inward investment into north-east Wales. [36726]

The Secretary of State for Wales (Mrs Cheryl Gillan): I have regular discussions with Welsh Assembly Government Ministers and other stakeholders on a range of issues affecting Wales, including attracting inward investment.

Stephen Mosley: North-east Wales and Chester share the single economic sub-region that straddles the Anglo-Welsh border, so inward investment in north-east Wales benefits Chester too. What action is the Secretary of State taking to ensure that local authorities and the new local enterprise partnerships in England, over the border, support much-needed inward investment in north-east Wales?

Mrs Gillan: My hon. Friend knows that I am very keen on inward investment. One of the things I did in the past two weeks was visit the Deeside hub to look, in particular, at the apprentice training taking place at Deeside college. The college has links to large cities such as Manchester and Liverpool, which are established clusters of high technology and innovative business. I am keen to work with the Welsh Assembly Government and other Departments of state to get institutions working together in the interests of the Welsh economy and attracting inward investment to Wales.

Mr Speaker: May I appeal to the Secretary of State to face the House so that we can all hear her?

Mr David Hanson (Delyn) (Lab): Will the Secretary of State make contact with Kerry Foods of Ireland, which proposes to transfer business out of north-east

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Wales from Headland Foods Ltd in Flint, in my constituency, to Grimsby? Will she examine whether steps can be taken, even at this late stage, to retain those jobs in Wales? If they cannot be retained, will she ensure that she stands up for the work force and their redundancy terms and seeks alternative inward investment to help to replace those jobs?

Mrs Gillan: I am sad to hear from the right hon. Gentleman that someone is thinking of moving business out of his constituency and across the border. I hope that he has made representations to the Welsh Assembly Government—I would not want to cut across anything that they are doing, as they are responsible for economic development, but my door is always open to him. If he would like to write to me about this particular case and company, and the associated issues, I will make investigations to see how I can help. I think that that is the proper way of conducting business.

Economic Growth

9. Greg Hands (Chelsea and Fulham) (Con): What recent discussions she has had with ministerial colleagues on steps to assist economic growth in Wales. [36727]

The Secretary of State for Wales (Mrs Cheryl Gillan): In the past week, I have met my right hon. Friends the Secretary of State for Transport and the Home Secretary, and the Minister for Trade and Investment, Lord Green, to discuss a range of issues to assist economic growth in Wales.

Greg Hands: Given this year’s corporation tax cuts, the new national insurance contributions holiday for small businesses and the cancellation of Labour’s national insurance tax hike next month, does the Secretary of State agree that this Government are restoring Wales’s good reputation as a destination for inward investment, which was so badly damaged by the previous Government?

Mrs Gillan: My hon. Friend knows that we will be working night and day to restore Wales’s reputation as a good destination for inward investment. Indeed, my right hon. Friends have already started that work by reducing over-regulation on business, reducing the taxes on business, introducing national insurance holidays and rolling back the wicked jobs tax that would have affected business in Wales and all over the United Kingdom.

Jonathan Edwards (Carmarthen East and Dinefwr) (PC): In the light of last week’s disastrous economic figures, where will the private sector jobs come from to replace the public sector jobs that the Government are intent on slashing?

Mrs Gillan: I think the hon. Gentleman should take a deep breath and not talk Wales down, but talk it up. I was particularly pleased to see this week’s manufacturing figures, which reflect very well on the United Kingdom and are a great source of optimism. I hope he will join me in sending out the message that Wales is open for business and that businesses should look to us for their investment.

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Groceries Code Adjudicator

10. Mr Mark Williams (Ceredigion) (LD): What discussions she has had with the Secretary of State for Business, Innovation and Skills on the likely effect on Wales of the establishment of a groceries code adjudicator. [36728]

The Parliamentary Under-Secretary of State for Wales (Mr David Jones): My right hon. Friend and I have regular discussions with ministerial colleagues on a range of issues affecting Wales, including the food industry. We believe that it is important to ensure a fair deal throughout the food supply chain. The new body will help future investment and innovation by increasing confidence among suppliers and consumers.

Mr Williams: I know that the Minister met the Farmers Union of Wales last week. Did he detect the impatience that I detected in my discussions with the union about progress being slow on the development of a supermarket ombudsman? Such an ombudsman will gain support across the House. What progress has he made in his discussions and will he push the agenda further in his discussions with the Department for Environment, Food and Rural Affairs?

Mr Jones: My hon. Friend will be pleased to know, I am sure, that I will be visiting his constituency tomorrow, when I will discuss this very issue with the Farmers Union of Wales. He is absolutely right: the proposal has been well received in the industry. This was mooted as long ago as 2001 by the former Prime Minister, Tony Blair, but nothing came of it.

Prime Minister

The Prime Minister was asked—

Engagements

Q1. [37418] Bob Russell (Colchester) (LD): If he will list his official engagements for Wednesday 2 February.

The Prime Minister (Mr David Cameron): I am sure that the whole House will wish to join me in paying tribute to Private Martin Bell of the 2nd Battalion the Parachute Regiment, who died last week in Helmand province. He died a true hero, showing exceptional bravery and selflessness as he went to the aid of an injured colleague. It is clear from the tributes paid by those who served with him that he was a hugely respected and well-liked soldier. Our thoughts and deepest condolences should be with his family, friends and colleagues.

This morning I had meetings with ministerial colleagues and others and, in addition to my duties in the House, I shall have further such meetings later today.

Bob Russell: I thank the Prime Minister for those generous words about Private Bell, because his battalion is based at the Colchester garrison.

A characteristic of the British way of life is its charities and voluntary organisations. Does the Prime Minister share my concern that some local authorities and health trusts are using the perceived cuts as an excuse to make cuts, thus undermining voluntary organisations and charities with the big society concept?

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The Prime Minister: I absolutely share the hon. Gentleman’s concern and he is right to air it. In the case of the Department of Health, there are not cuts in the health budget, which is going up. It is very important that the Department does everything it can, as I know my right hon. Friend the Secretary of State is doing, to protect the very important voluntary organisations working in that Department. Yes, there are reductions in local government spending, as there would be, frankly, whoever was standing at the Dispatch Box now, but I urge local authorities to look first at their own costs. It is only when they can show that they are sharing chief executives and cutting out their own bureaucracies that they can show that they need to make reductions elsewhere. In some cases, they are not yet being convincing.

Edward Miliband (Doncaster North) (Lab): I join the Prime Minister in honouring the memory of Private Martin Bell from 2nd Battalion the Parachute Regiment. He showed enormous bravery and dedication, as the Prime Minister has said, and we send condolences to all his family and friends. Last weekend, I saw for myself the bravery and commitment of our troops in Afghanistan and all those involved in our wider effort there. Like everyone who visits, I came away with an overwhelming sense of admiration and humility and I pay tribute to everyone who is based in Afghanistan.

May I ask the Prime Minister about the unfolding situation in Egypt? Will he update the House on the important issue of the security of British nationals, and inform us of the arrangements being made for those who want to return to the UK?

The Prime Minister: I thank the right hon. Gentleman for his generous tribute to our troops and for his visit to Afghanistan. It is very important that we go ahead in this difficult endeavour on a cross-party basis, and I praise him for what he has said.

On Egypt, of course he is right: the first concern should be for our UK nationals and the situation they are in. There are about 30,000 UK nationals in the Red sea area, which at the moment remains calm and stable. We have not yet changed travel advice about that part of Egypt. In terms of the rest of Egypt, there are about 3,000 UK citizens in Cairo and about 300 in Alexandria. In terms of making sure that those who want to return can, and we have urged many to do so, there are still very good commercial flights and we have added a flight commissioned by the British Government. In the past 48 hours, 1,000 UK citizens have returned.

The UK Government have acted swiftly. We had a rapid deployment of 25 special consular staff to Cairo and the military logistics team of eight was sent out immediately. We were the first country to set up a team at Cairo airport, and many other countries have gone on to imitate that. I do not take any of this for granted—there should be absolutely no complacency—but I think our ambassador, Dominic Asquith, and his team have done an excellent job and we should praise them.

Edward Miliband: I am grateful to the Prime Minister for that reply. Let me now ask him about the wider issues on Egypt. I think everybody has been moved by the images we have seen on our screens in the past few days of hundreds of thousands of people, against overwhelming odds, demanding a more democratic future.

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Following President Mubarak’s statement last night, may I ask the Prime Minister whether he agrees with President Obama that the stable and orderly transition to democracy must be meaningful, peaceful and begin now?

The Prime Minister: We absolutely take that view. The transition needs to be rapid and credible, and it needs to start now. As the right hon. Gentleman says, we should be clear: we stand with those in this country who want freedom, democracy and rights the world over. That should always be our view. We cannot watch the scenes in Cairo without finding it incredibly moving—people wanting to have those aspirations in Egypt, as we have them in our country.

The Government take a very strong view that political reform is what is required, not repression. We have made that clear in all the calls I have made, including to President Mubarak and, yesterday, the Egyptian Prime Minister. As the right hon. Gentleman says, the key question is, have they done enough? President Mubarak says he is going, and we respect that, but what matters is not just the orderly transition, but that it is urgent, credible and starts now. The more they can do with a timetable to convince people that it is true, the more I think the country can settle down to a stable and more democratic future.

Edward Miliband: I think the whole House will be pleased by the Prime Minister’s answer and share the view he has expressed. Is it not also clear that, far from indicating support for extremism, the people on the streets of Egypt are demanding some very basic things—jobs, freedom of speech and the right to choose by whom they are governed? We have a clear interest in stability in all countries in the region, but is it not now apparent that the best route to stability in Egypt is precisely through democracy?

The Prime Minister: I agree with that. I think that we should take the view that the long-term interests of Britain lie in a stable middle east and a stable Arab world. We will not get that stability unless they make moves towards greater democracy.

Where I think we need to be clear is that when we talk about greater democracy, we do not just mean the act of holding an election; we mean the building blocks of democracy. I want to see a partnership for open societies where we encourage stronger civil society, stronger rights, stronger rule of law, a proper place for the army in society and a proper independent judiciary. It is those things—the building blocks—that I think can give us a stronger, more stable, more democratic future that will very much be in our interests, and theirs as well.

Edward Miliband: I am sure there is a consensus across the House on the points that the Prime Minister makes, and I know he will keep the House updated on the situation in Egypt. I want to turn now to Afghanistan. We support the mission and the timetable he has set for the end of combat operations by British troops. During my visit, the commanders on the ground told me that we are bringing real pressure to bear on the insurgency. Will he provide the House with his latest assessment of the overall progress of our mission in the light of the timetable that has been set?

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The Prime Minister: I am grateful for that. We are making progress in Helmand, but it is important not to focus just on Helmand; we have to look at the rest of Afghanistan too. If we look at where we are responsible for—Helmand itself—we see that Government authority has gone from six provinces to 12. That is where the Afghan Government have control, out of a total of 14. That is progress. Crucially, the increase in the Afghan national army is on target for 171,000 soldiers by the end of this year and 134,000 police.

I think the key is the better balance of forces we now have. There has been a surge in the number of troops and we have a better balance between the US and the UK forces, so we are more thickly concentrated in fewer areas and better able to do the job. We have set this clear timetable, saying we do not want UK forces to be in combat or in large numbers by 2015. I believe that is achievable, but we are going to have to work hard on training the Afghan national army and pursuing a political track to reintegrate those who have been involved in insurgency, and we also need to ensure that the government of Afghanistan improves in the way that I know the right hon. Gentleman believes, too, is important.

Edward Miliband: It is that point about the political track that I want to pursue with the Prime Minister. Does he agree that setting a timetable makes it even more important that we have a lasting political settlement, and one that endures beyond the departure of British troops? Does he further agree that an inclusive political settlement must reach out to those elements of the insurgency that are prepared to break all links with al-Qaeda, renounce violence and respect the Afghan constitution?

The Prime Minister: Those are the absolutely key conditions. To those who worry about a timetable, I would say that setting a timetable encourages people in Afghanistan themselves to recognise that they have to take the steps necessary to take control of their country again—so, yes, we do need this political track. We need to work much harder at it. The keys are separating the Taliban from al-Qaeda, rejecting violence and accepting the basic tenets of the Afghan constitution, and we need to push this extremely hard so that we can do what we all want to do, which is bring our brave soldiers home at the end of this conflict.

Edward Miliband: I sense that people are not used to this kind of Prime Minister’s questions, but let me finally emphasise to the right hon. Gentleman the urgency of supporting the Afghan Government in establishing that political settlement. I will support him in all the efforts he makes on that with the United Nations, the United States and all our NATO partners. What concrete steps does he believe we can take between now and the Bonn conference at the end of the year to make that happen?

The Prime Minister: I am sure the right hon. Gentleman is right. From all the noises off, it is clear that people would prefer a bun fight, but sometimes it is sensible to have a serious conversation about the issues that we face. I know and he knows that when we visit our troops in Afghanistan they want us to discuss what they are doing—to discuss it sensibly and try to get it right. With

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reference to encouraging the political track, it is important that we engage not just with the Afghan Government, but with the Pakistan Government. It should be our aim to create an Afghanistan that is stable enough for us to take our troops home without it becoming a hotbed of terrorism. We will not be able to do that unless we engage with the Pakistanis. That is the key to solving the problem, and having a political track so that those who have been opposed to us recognise that there is a democratic path—a peaceful path—that they can follow, but they must give up violence and renounce al-Qaeda before that can happen.

Q2. [37419] Simon Wright (Norwich South) (LD): East Anglia celebrated in October the announcement that the Government had put aside the funding required to complete the dualling of the A11, and the support of the Prime Minister then was very much welcomed. Will he join me and our coalition colleagues across the region in pressing for an early start date for the scheme so that the economic benefits can be delivered as soon as possible?

The Prime Minister: All of us who visited Norwich at the time of the by-election remember how important the A11 is to people in Norwich. We have guaranteed the funding in the spending review. We are spending over £30 billion on transport infrastructure over the next four years. Work on the A11 is an important project. The Highways Agency is preparing a programme for how it will be delivered, and construction work will start in the current spending review period.

Q3. [37420] Vernon Coaker (Gedling) (Lab): Dylan Scothern is a six-year-old autistic boy in my constituency. At six years old, he has had his speech and language therapy support at his school taken away because he is too old. What does the Prime Minister think I should say to his mother, Rachel, who is outraged at the way in which the support for that autistic boy has been taken away?

The Prime Minister: I am sure the hon. Gentleman, like anyone in the House, will work as hard as he can to help that family to get the therapies that they need. What that means is going to the county council and arguing the case, as many of us have had to do not only with constituents, but with our own children. One has to make the fight. We intend to produce a paper on special educational needs that will try to reform the way such things are done and make it less confrontational. I know as a parent how incredibly tough it is sometimes to get what one’s family needs.

Laura Sandys (South Thanet) (Con): I thank the Prime Minister and the Ministers who have been so helpful over the past 24 hours with regard to the Pfizer closure in my constituency in Sandwich. Will my right hon. Friend assure me and my hon. Friends from east Kent that the Government will do everything they can to secure the site, the highly skilled employees and the local economy in east Kent?

The Prime Minister: My hon. Friend is right to speak out about that depressing news. Pfizer’s decision is bad news. My office has been in contact with the company and I spoke to the company again this morning. There

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is no doubt that the decision is being taken not because of some UK-based issue, but because the company has decided to exit some whole areas of endeavour, such as allergies and respiratory diseases. The company is keeping all the options open for what should happen to the site, including getting partner organisations to continue work there and getting other companies to come in, because it is a state of the art site and it has brilliant employees doing great work there. The Government will do everything they can, co-ordinated by my right hon. Friend the Minister for Universities and Science and the head of the Office for Life Sciences, to try and make sure that we make the best of a depressing piece of news.

Q4. [37421] Ian Mearns (Gateshead) (Lab): Can the Prime Minister confirm a report in today’s Financial Times that the Deputy Prime Minister has written to him suggesting that councils should be given the power to raise their own fuel duty, and does he agree with him?

The Prime Minister: The Deputy Prime Minister and I write to each other and speak to each other on a frequent basis. I will put it like this: what we both want to see is well-resourced local councils that have greater powers, greater devolution and less top-down bureaucracy than we had under the Labour party.

Q5. [37422] Nadine Dorries (Mid Bedfordshire) (Con): This Friday, hundreds of Mid Bedfordshire residents, 24 parish councils, the Marston Morteyne Action Group and I will provide a very warm welcome to the visiting members of the Infrastructure Planning Commission who will be coming to decide whether to grant planning permission for the huge incinerator that Covanta wishes to put in my constituency. If we are truly the party of localism, will the Prime Minister give his assurance that the draft national policy statements that will guide the IPC in its decision will be amended so that the weight is given to the wishes of local people? If they do not want it, it should not be imposed on them.

The Prime Minister: I thank my hon. Friend for her question. We can actually go a bit further than that: I can confirm in her own case that, yes, the IPC will be taking representations from local people, but of course as a Government we have committed to abolish the IPC, because we think that it is too much of a top-down, bureaucratic method and that there should be ministerial decisions that can take into account local opinion and be more democratically run.

Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC): Does the Prime Minister share my dismay at the fact that, despite being 86% publicly owned, the Royal Bank of Scotland is still dishing out huge bonuses? May I suggest to him one course of action that might be helpful? Will he agree with me that those bankers who defy Government and continue to make these grotesque bonuses should never be considered for any honours in future?

The Prime Minister: First of all, I congratulate the right hon. Gentleman on his new position—[Laughter.] That has probably ended his career, so I am sorry for that. We are in discussions with RBS about this issue. We are bound by a contract that was signed by the

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previous Government, but I am absolutely clear that what we want to see from the banks is a lower bonus pool and more lending, and we want to see them contributing more in tax to the Exchequer. I am quite convinced that we will see all of those things from the discussions that we are having.

Q6. [37424] Daniel Kawczynski (Shrewsbury and Atcham) (Con): The local NHS trust in Shropshire is proposing major reconfiguration changes to services throughout the county, including maternity and paediatric services. Those are causing significant concerns for local Shrewsbury doctors, GPs and patient groups. Can the Prime Minister give an assurance that those concerns will be taken on board and acted upon before any changes are made? My hon. Friend the Member for Montgomeryshire (Glyn Davies), whose constituents also use the Royal Shrewsbury hospital, shares my views.

The Prime Minister: I can certainly given that assurance, because my right hon. Friend the Health Secretary has put in place much stronger arrangements for making sure that local people are listened to when these discussions are taking place. No changes will be allowed unless they focus on improving patient outcomes, unless they consider patient choice and unless they have the support of the GP commissioners, and remember that in the future health system it will be the decisions of GPs and people that will drive the provision of health services, not top-down decisions made by Ministers in Whitehall.

Q7. [37425] Mr Ronnie Campbell (Blyth Valley) (Lab): With wage freezes, pension cuts, legal aid cuts, tens of thousands of public workers sacked and the disabled and poor hit, how can the Prime Minister justify the build up of a £50 billion election war chest at the expense of these vulnerable, hard-working people?

The Prime Minister: All of the things that the hon. Gentleman says about the tough decisions we have had to make about pay, about pensions and about welfare, they are all, each and every one, the consequence of the Government that he spent 13 years supporting.

Q8. [37426] Kris Hopkins (Keighley) (Con): This week, I met a gathering of ESOL—English for speakers of other languages—students at the Keighley campus of Leeds City college. Sadly, too many children in Keighley start school unable to speak English. Does the Prime Minister agree that there is a responsibility and obligation on parents to make sure that their children speak English?

The Prime Minister: I completely agree, and the fact is that in too many cases that is not happening. The previous Government did make some progress on making sure people learned English when they came to our country; I think we need to go further. If we look at the number of people who are brought over as husbands and wives, particularly from the Indian sub-continent, we see that we should be putting in place, and we will be putting in place, tougher rules to make sure that they do learn English, so that when they come, if they come, they can be more integrated into our country.

Ann Clwyd (Cynon Valley) (Lab): There are 51 disabled workers at the Remploy factory in Aberdare in my constituency, and they have all been offered voluntary

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redundancy. They take pride in the product they make. Two years ago, the current Deputy Prime Minister pledged his support to the Remploy workers. What will the Prime Minister do?

The Prime Minister: My understanding is that we inherited a plan that was actually phasing out support for the Remploy workers. That is actually what we inherited. [Hon. Members: “No.”] I will get back to the right hon. Lady if that is not correct, but we will do everything we can to try to support and help into work people who are disabled. That is exactly what the new benefits system and the new Work programme will be all about.

Q9. [37427] Tony Baldry (Banbury) (Con): Would my right hon. Friend describe the biggest structural deficit in the G7 as a golden economic inheritance?

The Prime Minister: I certainly would not, and my hon. Friend makes an extremely good point, which is that at the weekend the shadow Chancellor stated boldly that there was no structural deficit when Labour left office, even though—

Ed Balls (Morley and Outwood) (Lab/Co-op) indicated assent .

The Prime Minister: He nods now, even though the Institute for Fiscal Studies could not be clearer that we had one of the biggest structural deficits of anywhere in the advanced world. I have to say, if you start in opposition from a position of complete deficit denial, you will never be taken seriously again.

Q10. [37428] Stephen Timms (East Ham) (Lab): With youth unemployment at its highest level since records began, will the Prime Minister reconsider the decision to scrap the future jobs fund?

The Prime Minister: First, may I say how good it is to see the right hon. Gentleman back, well and in his place? As I said last week, youth unemployment is a problem that got worse during the boom years under the previous Government, then got even worse during the recession and is still, yes, a very big problem. I do not believe the future jobs fund is the answer, because it was five times more expensive than other schemes, and in some places such as Birmingham only 3% of the jobs were in the private sector. It was not a good scheme, and it is going to be replaced with better schemes, but everyone in this House needs to work together on how we tackle youth unemployment—a scourge that has got worse over the past 13 years.

Zac Goldsmith (Richmond Park) (Con): Will the Prime Minister commit to making continued support for the common fisheries policy absolutely conditional on an end to the appalling phenomenon of fish discards?

The Prime Minister: My hon. Friend will speak for many in this House when he says that the current regime of discarding perfectly healthy fish is not acceptable and needs to change, and now we are in government we have an opportunity to try to work to that end.

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Q11. [37429] Dr William McCrea (South Antrim) (DUP): Prime Minister, before the election you came to the Province, entered into a contract with the people of Northern Ireland and promised to bring change to “our economy”. In your speech about the contract, you told the people to

“read it, keep it, stick it to your fridge, use it to hold us to account”.

Ten months later, we have lost £4 billion from our capital budget, and there is rising unemployment. Can you update the House on any progress to reduce radically Northern Ireland’s level of corporation tax, bearing in mind that we are in competition with the Irish Republic, which this country bailed out recently?

The Prime Minister: I remember the visit that the hon. Gentleman mentions, and one of the things we said was that we would sort out the Presbyterian Mutual Society, and I am proud to say that we have done that and delivered that important pledge to people in Northern Ireland. Everyone in Northern Ireland knows that we have got to rebalance the economy: the public sector is too big, the private sector is too small. My right hon. Friend the Northern Ireland Secretary is looking at all the potential of things such as enterprise zones and different tax rates to try to help to bring that about. That is exactly what we are committed to.

Q12. [37430] Guy Opperman (Hexham) (Con): During my recent visit to Ponteland high school, pupils told me that apprenticeships were their No. 1 priority. With strong ongoing local schemes already operating in the area at Egger and SCA, will the Prime Minister back the skills for work campaign to encourage more youngsters in the north-east to take up the apprenticeships that are there?

The Prime Minister: My hon. Friend is absolutely right to raise this. We have made some difficult decisions in this spending round, but we have increased the funding for apprenticeships so that we will be funding 75,000 more apprenticeships than what was planned under Labour. We think this is absolutely vital not just to help young people into work for the short term but to make sure they can have good and worthwhile careers in our rebalanced economy.

Huw Irranca-Davies (Ogmore) (Lab): Airborne Systems in my constituency is a brilliant little world-leading company that makes parachutes for the UK, but also the international market. However, it is in danger of being stuffed in a tender competition, which will cost 50 jobs that will go to a French company. My local company’s products are cheaper and better, and there is an opportunity for the Prime Minister to intervene and allow it, at its own cost, to put them into trial for the UK MOD. That will lead to exports as well.

The Prime Minister: The hon. Gentleman makes a passionate plea for a business in his constituency, and he is absolutely right to do that. I am sure that the Ministry of Defence will hear what he says. Of course, I want every opportunity for British defence manufacturers to compete and succeed, and we are doing everything we can to help them. We have just been talking about apprenticeships. We are also delivering the lowest rate of corporation tax in the G7. All these things will help us to compete with, take on and beat our competitors.

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Q13. [37431] John Glen (Salisbury) (Con): Following the report in December by the right hon. Member for Birkenhead (Mr Field) about how to prevent poor children from becoming poor adults, what actions does the Prime Minister intend to take to address the central recommendation of the report—that greater prominence should be given in public policy to the earliest years?

The Prime Minister: My hon. Friend is quite right. It is good that the right hon. Member for Birkenhead (Mr Field) has produced this excellent report about how we try to help children out of poverty. The two most important steps we are taking are funding two-year-olds in nursery education—a pledge never made and never delivered by Labour—and a pupil premium for all children who are on free school meals so that the money follows them into school. Labour Members shake their heads. They had 13 years to do it; they never did.

Thomas Docherty (Dunfermline and West Fife) (Lab): There were 4,000 stillbirths in the United Kingdom last year, and obviously the pain for those families is utterly unimaginable. Will the Prime Minister give a guarantee that there will be no cut in the funding of research into the causes of stillbirths?

The Prime Minister: What I can tell the hon. Gentleman is that there is no cut in the national health service. We are putting £10.6 billion extra into the national health service during this Parliament, against the advice of many, including his own Front Benchers. I will get back to him on the specific research that he speaks about. Every hon. Member will have met constituents who have been in this situation, and I know how heart-breaking it can be. Where we can get to understand more what the cause of stillbirth is, of course we should be doing that work.

Q14. [37432] Jackie Doyle-Price (Thurrock) (Con): Last month, Ockendon school in my constituency celebrated becoming an academy. Staff and governors at the school are delighted with the freedoms that becoming an academy has given them. Could my right hon. Friend give some words of encouragement to other schools in Thurrock that are considering taking this important step?

The Prime Minister: I would certainly encourage all schools to look at academy status because of the extra freedom and responsibility it gives them. The evidence is now clear that academy schools, particularly those in less well-off areas, have transformed the results in those places. In the past nine months, as a coalition Government, we have managed to create as many academy schools as the previous Government did in the past seven years. We are making good progress with this, but we should keep up the pressure.

Anas Sarwar (Glasgow Central) (Lab): A ComRes poll for ITV News found that 48% of the British people feel that the Government have lost control of the economy, and the Chancellor himself has admitted that he has no plan B. Given that this Government have axed the future jobs fund, trebled tuition fees and scrapped the education maintenance allowance, the question that

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people up and down the country are asking is whether this Prime Minister even has a plan A for our young people.

The Prime Minister: What is clear is that only one side in this House has a plan at all. The Opposition have absolutely no plan apart from to deny the deficit, to say there was not a problem, and to pretend that somehow they handed on a golden inheritance when in fact we had the biggest budget deficit of advanced countries and an absolute pile of debt to deal with.

Mr Oliver Heald (North East Hertfordshire) (Con): Given the commitment of the coalition Government to reinvigorate occupational pensions, will the Prime Minister welcome the launch yesterday by the National Association of Pension Funds of its workplace retirement income commission, which is designed to produce proposals to improve the adequacy of pensions so that people can live with dignity and with enough money in retirement?

The Prime Minister: My hon. Friend makes a very good point. We want to see strong private sector pension provision. The history of that provision over the past 13 years has been depressing, because so much money has been taken out of the pension system, not least by the pensions tax that happened year after year, and which was probably proposed by the two people who now run the Labour party. We want to see stronger private pension provision so that people can have independence and dignity in their old age.

Mr Barry Sheerman (Huddersfield) (Lab/Co-op): Two hundred years ago, the privileged people in this country managed to steal the English common land from the English common people. Why are the Government returning to such activity by taking the forests and woods of our country from the ordinary people?

The Prime Minister: This Government are taking a completely different approach from the previous Government, who sold off forestry with no guarantees of access, no guarantees that it was free and no guarantees about habitat. I am, of course, listening to all the arguments that are being put on this matter. However, I ask whether there are organisations, such as the Woodland Trust and the National Trust, that could do a better job than the Forestry Commission. I believe that there are. Is there a problem with the Forestry Commission—[ Interruption. ]

Mr Speaker: Order. I apologise for interrupting the Prime Minister. The Prime Minister must not be shouted at. The question was heard and the answer must be heard.

The Prime Minister: I say to the hon. Member for Huddersfield (Mr Sheerman), is there not a problem when the Forestry Commission is responsible for regulating forestry and is a massive owner of forestry? We do not accept that with the Bank of England or other organisations. It is therefore worth considering whether we can produce a system that is better for access, better for habitat, better for Natural England and better for the countryside that we love.

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Point of Order

12.32 pm

Emily Thornberry (Islington South and Finsbury) (Lab): On a point of order, Mr Speaker. You are well known for standing up for the right of the House to hear statements from the Government before they are heard on the “Today” programme. Unfortunately, it has happened again. It was announced this morning on the “Today” programme and to readers of The Guardian and The Times, that an additional £400 million will be spent on mental health. On the face of it, that is good news. However, although the Deputy Prime Minister and the Minister of State, Department of Health, the hon. Member for Sutton and Cheam (Paul Burstow) have time to tour television studios, they do not have time to make an oral statement to this House and to answer questions such as whether this is new money and how the money will be spent to get the results that we all want to see.

Mr Speaker: I am grateful to the hon. Lady for her point of order, and for notice of it. A written ministerial statement has been given today. I have not received notice of an oral statement. The House will be aware that the Procedure Committee today published a report on ministerial statements. Matters of policy must be communicated first to the House, but the precise means by which that is done is ordinarily left to the Government. Today, there is nothing that I can usefully add, but she has registered her concerns forcefully and they will have been heard by the Leader of the House.

Before the hon. Member for Manchester Central (Tony Lloyd) rises to propose his ten-minute rule motion, I appeal, as I should have done before the hon. Member for Islington South and Finsbury (Emily Thornberry) rose, for Members to leave the Chamber quickly and quietly, showing the same courtesy to the hon. Gentleman as they would want to be shown to them in similar circumstances.

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High Pay Commission

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

12.34 pm

Tony Lloyd (Manchester Central) (Lab): I beg to move,

That leave be given to bring in a Bill to make provision for the establishment of a High Pay Commission; and for connected purposes.

The Bill would begin to do something credible about the problem of high pay for those at the very top of the earnings ladder in Britain, who are gorging themselves while the rest of the country is doing badly. I am delighted that the Secretary of State for Business, Innovation and Skills is in his place, because he was an advocate of a high pay commission in an earlier incarnation. I hope that he still shares that view this side of the general election.

The public are still furious about the Government’s failure to deal with bankers’ bonuses. Nothing makes people up and down this land so angry as the knowledge that before the election both coalition partners promised tough action on bankers’ bonuses, but the Bob Diamonds of this world and their gilt-edged friends still operate seemingly with impunity. People contrast that with members of the Government who did not commit themselves to the austerity programme that is being brought in, but who are now presiding over a situation in which real wages will have dropped by 4% between 2009 and the end of this year, the Governor of the Bank of England is on record as warning of the biggest squeeze since the 1920s, and the Office for Budget Responsibility, the Government’s own independent body, says that average pay for those on low and middle incomes will drop by £720 a year.

People in work are making big sacrifices, and of course those who will lose their jobs as a result of the Government’s programme will lose out even more. When the Governor of the Bank of England says that that is the inevitable consequence of an economy that is rebalancing, we therefore have to say that we also need some rebalancing of the pay of those at the very top.

The top-paid are doing not just very well but very much better than they were not so long ago. There is very little evidence that very high pay makes a material difference to the success of business in our country. In fact, rather the opposite. The gross bonus culture has actually led to short-termism, not just in the banking industry but across British industry of all kinds. There is little evidence, too, that pay needs to be ratcheted up to such levels to retain the top managers. There is no brain drain of managers. British managers are actually better paid than those anywhere other than the United States, and there is no systematic evidence of our managers being poached and moving across the Atlantic. The arguments in favour of top pay are effectively spurious.

Top pay is driven by the bonus culture and by the capacity of remuneration committees—the old pals’ act—to operate on the basis of “I’ll scratch your pay packet as long as you’ll scratch mine.” That is wrong and unacceptable. If we look at the evidence on pay, we see that the bonus culture has grown massively in the years since 1997. That is not just in banking, because the Prime Minister is right that we should not scapegoat

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banking. We should examine the top pay across the whole of our society. In 1997, bonuses across the City were estimated at £1.5 billion, not a small sum. By 2006, that figure had grown to £8.8 billion. It dropped a little at the bottom of the financial crisis, to £3.6 billion in 2008, but it is believed that this year bonuses will be back up to £7 billion. The Government, frankly, have not dealt with the problem.

If we examine the pay of chief executives across British industry, we see that the average pay of chief executives in FTSE 100 companies was something in the order of 47 times that of the average worker in those companies in 2000. That difference had grown to 88 times in 2009, so it has doubled in real terms from already colossal levels. In fact, the average chief executive is now paid 200 times the minimum wage. In a society such as ours, fairness means that if the poor and those on squeezed middle incomes are playing their part in the Government’s austerity programme, so should those at the very top. People on 200 times the minimum wage—not just the Bob Diamonds but those across all our industries—ought to begin to take their fair share of the strain.

A high pay commission—as I said, the Business Secretary is already on record as supporting the concept—could begin to do something positive about the problem. I hope that it can be charged with the following, among other things. First, we have to have transparency. We have to know what these people really are paid, not simply through their basic pay but through bonuses and the very high pension contributions that companies make on their behalf. That is simply a matter of social equity. Stakeholders, not just shareholders—employees, customers and wider society—are entitled to know what is going on. The high pay commission should therefore establish mechanisms for making transparent the whole question of high pay.

Inevitably, the high pay commission ought also to deal with the regulation of bonus payments, and to set down a framework by which bonus payments can be paid. It could set limits and time frames within which bonuses can be achieved. Of course, it could also make recommendations about the taxation of bonuses, which is an important part of bringing the bonus culture into some form of realism.

The commission should look at the role of remuneration committees—the old pals’ act that I have described, when one person looks after his friend’s pay, with the inevitable result that pay is ratcheted ever upwards.

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Remuneration committees ought to be opened up to the wider world. For example, employee representatives, whether trade union officials or others, and perhaps representatives of society more widely, should be on them, so that there is some reality in how pay is fixed for top earners.

The commission should be charged, every year, with making a report on tax avoidance. We know that tax avoidance among top earners amounts at least to an astonishing £13 billion a year. I must tell Ministers that recouping that £13 billion would make a serious contribution to the kind of deficit reduction with which the Government are concerning themselves, and in particular that it would make a big, material difference to the cuts in our police forces and our social and health services. It is not unreasonable that those at the top, who after all have the biggest shoulders, take the weight and make a proper contribution by way of taxation.

The thing that many people would most like the commission to look at is pay ratios. The Prime Minister asked Will Hutton to look at pay ratios in the public sector, and recommended a guarantee that the top earners earn no more than 20 times those at the bottom. That is a good starting point, but there is absolutely no reason why the principle for the public sector should not also apply to the private sector. That 20:1 ratio might be a good starting point for the high pay commission. The Government could ask the commission to make recommendations and to begin the process of a proper national debate. People are now being paid 200 times the national minimum wage—200 times what the lowest paid people in our society are legally paid, even if we ignore those who are paid less than that.

Fairness, social cohesion, simple common justice and the natural decency of the British public say that we must now do something about high pay. The rich and the better off in our society are gorging themselves when the rest of society is being asked to make restraint a way of life. It is about time that those who can afford to make that contribution are asked to do so.

Question put and agreed to.

Ordered,

That Tony Lloyd, Mr Dennis Skinner, Kate Green, Ian Mearns, Jim Sheridan, Frank Dobson, Mr David Anderson, Mr David Crausby and Martin Caton present the Bill.

Tony Lloyd accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 18 March, and to be printed (Bill 141).

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Opposition Day

[10th Allotted Day]

Department for Business, Innovation and Skills (Performance)

Mr Speaker: I advise the House that I have not selected the amendment on the Order Paper.

12.44 pm

Mr John Denham (Southampton, Itchen) (Lab): I beg to move,

That this House notes that the Business Secretary in June 2010 called the Department for Business, Innovation and Skills (BIS) the department of growth; believes that the overriding priority is growth and jobs; expresses deep concern that after nine months BIS has failed to deliver this promise on growth, that the Growth White Paper is still not published, that the dismantling of regional development agencies is ‘chaotic’, that local enterprise partnerships lack powers and resources, and that regional development funding is slashed and grants for business investment abolished, causing oversubscription to the Regional Growth Fund; regrets the refusal of the Sheffield Forgemasters loan; notes with concern that responsibility for the digital economy has been transferred to another department without consultation with business or rationale, that there has been no progress in securing lending to small businesses, while bank taxes have been cut, and that BIS has failed to persuade departments not to change planning policies and public services which damage jobs and growth; further notes the sharp reductions in adult training, that there is no longer a 10-year science funding strategy, and that BIS is prioritising unfair and damaging reforms to universities instead of enabling them to support growth; notes the lack of strategy or leadership for key sectors vital to rebalancing the economy; shares the CBI Director General’s concern that the Government has no plan for growth and that BIS is a ‘talking shop’; and calls on the Government to take decisive action to remedy the deficiencies in that Department.

On 3 June last year, the Secretary of State for Business, Innovation and Skills said that he wanted his Department to be the Department for economic growth. At that time, growth was running at 1.2%. Britain was emerging from the deepest global recession for two generations. Nine months later, Britain’s economy was shrinking—so much for the Department for growth. The Government blame the snow, but in the USA the snow struck too—and there last quarter growth was 0.8%. We must have had the wrong sort of snow—or perhaps the wrong sort of Government.

People are seeing prices rise, they are worried about their jobs and they wonder where jobs, growth and prosperity are meant to come from. The Business Department has failed to give the leadership on growth and jobs that this country needs. It has made the wrong choices, harming growth and business instead of supporting them. At a time when other Departments needed to be persuaded to put business first, the Business Department has lost the argument.

Julian Smith (Skipton and Ripon) (Con): I cannot believe that the shadow Secretary of State has started his speech without admitting the appalling inheritance that he gave this Government and without coming clean about the mess in which his party left this country and the debt and deficit that it left behind.

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Mr Denham: The hon. Gentleman is wrong: the reason for the large deficit was the global banking crisis, which cut corporation tax receipts by £40 billion in a year. The measures that we took, which got us out of recession quickly and had the economy growing this time last year, were the right measures. There are no deficit-deniers—we are proposing the right measures for tackling the deficit. The point of this debate is that the Business Department has made wrong choice after wrong choice in responding to the economic situation.

The Government have been reckless in their approach to deficit reduction. They are making the wrong choices on growth. By cutting too far, too fast, the Government are putting economic recovery at risk. Shrinking growth and rising unemployment are not only bad news for families, but will make it more difficult to get the deficit down. The economy should be growing by now, not shrinking. Unemployment should be coming down by now, not going up. To make things worse, the Business Department has failed to produce any plan for growth and jobs.

Even with a more measured and responsible approach to deficit reduction, it would be private sector growth and jobs that Britain needs. That means creating the confidence for businesses to invest, to take on people and grow their business, with every aspect of public policy being bent to ensuring the right conditions for a strong, competitive and fair economy. But there is no plan for growth. As Sir Richard Lambert, the outgoing director general of the CBI, said last week about the Business Department, the country needs it to be

“Less of a talking shop, more of an action-oriented growth champion.”

Mr Dave Watts (St Helens North) (Lab): Does my right hon. Friend agree that if the Government were serious about encouraging private sector investment, they would not have cut the grants to business that poured money into our areas? That money has now been sucked away. Is not that a demonstration of the Government’s inability to encourage investment in our areas?

Mr Denham: My hon. Friend is absolutely right, and I shall address several such decisions that the Business Secretary has made.

Mel Stride (Central Devon) (Con): Will the right hon. Gentleman give way?

Mr Denham: Not at the moment.

It is not as though the Government were not warned about what was coming. When the Tory-led Government took over, recovery was strengthening and unemployment falling. Since then, every decision they have made has made things worse. They stopped the loan to Forgemasters, showing that they had no plan to ensure that British companies gained from a new nuclear programme. When the emergency Budget was introduced in June, the Office for Budget Responsibility said that growth would be slower and employment down as a direct result of the Government’s measures. When they chose to make the biggest cuts in the most vulnerable communities, it was clear that the regions would need new growth and new jobs. When the Government published the comprehensive spending review in October, the Office for Budget Responsibility told them that growth would fall and

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unemployment would rise. Independent organisations from the Chartered Institute of Personnel and Development to PricewaterhouseCoopers and the Local Government Association warned that reckless cuts would destroy jobs in the public and private sectors, yet the Business Secretary did nothing.

We were promised a White Paper on growth in October. Then the civil servants said that there was not enough content to warrant one. Two months later, the Business Secretary was bundled aside and the Chancellor took charge, so now we are promised a Budget for growth on 23 March. This Tory-led Government will have been in office for 10 months and three weeks by then. That will be 321 wasted days of complacency, drift and inactivity. By the time any Budget measures are implemented, we will have had a wasted year that this country cannot afford.

Margot James (Stourbridge) (Con): The shadow Minister’s accusations of inaction are not borne out by my area of the black country, which has already formed a local enterprise partnership and had it approved, and has submitted four bids to the regional growth fund, with a total of 12,000 jobs protected or created. Things are on their way in the black country, thanks to the policies of this Department.

Mr Denham: A year ago the black country had a functioning regional development agency. That agency has been destroyed. The hon. Lady is clutching at straws when she says that there may come a point when the Black Country LEP is fully functioning, but it will have no resources, no powers and no legal rights. That is not a step forward; it is a step backwards. That is typical of the damage that the Business Secretary and his Department have done to economic policy in the past year.

Mr Dennis Skinner (Bolsover) (Lab): A week last Friday, together with Bolsover district council, we went to the east midlands region to try to get money for a firm that was going to provide 50 jobs on an old ex-pit site in the Bolsover area. There were quite a lot of applications, but the people there said that they could not deal with them. The net result is that we were talking for hours, but their hands were tied. The region still had some money available, but this Government, through this Department and the Department for Environment, Food and Rural Affairs, were refusing to let them use it to provide the jobs to get the economy to grow. What a shower!

Mr Denham: My hon. Friend is absolutely right, and his experience will be typical of many hon. Members’ experience, because this will have been a wasted year.

When the global banking crisis hit, the Labour Government did not sit by hoping that something would turn up. In the six months after that crisis hit, we cut VAT to boost growth; gave businesses time to pay the Revenue; speeded up payments to small businesses; introduced the scrappage scheme; started the enterprise finance guarantee; invested in key technologies and regionally important sectors; boosted investment in education and health; and reformed training support and expanded apprenticeships. In six months there was real energy and drive; from this Government and this

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Department there has been nothing in nearly nine months. Worse than that, the Business Secretary has made the wrong choices. Each has made life harder for businesses that wanted to invest to create jobs and grow. Instead of creating certainty and confidence, the Business Secretary has sown doubt and confusion.

Alok Sharma (Reading West) (Con): The right hon. Gentleman talks about a wasted year. Does he not acknowledge that he was part of a Government who wasted 13 years, increasing taxes on businesses, national insurance, regulation and the complexity of the tax system, and doing everything to stifle jobs and growth? Does he not agree that he should be congratulating this Government on reversing many of those excesses and thanking us for putting in place a policy that will lead to growth and jobs?

Mr Speaker: Order. May I gently point out to the House, first, that interventions should always be brief, and secondly, that there are time constraints? A lot of Members want to get in, so over-long interventions are not just ineffective; they are damaging to colleagues, whatever the intention, and that is of wide application.

Mr Denham: Thank you, Mr Speaker, and given what you have said, the House will understand if I do not take too many more interventions. However, I would simply point out that I was proud to be part of a Government who created 3 million jobs. After we had been in office, there were 1.1 million more small businesses than there were when we came into power.

Mel Stride: Will the right hon. Gentleman give way?

Mr Marcus Jones (Nuneaton) (Con): Will the right hon. Gentleman give way?

Mr Denham: No, I am afraid that I have tried a few interventions from the Government Benches, and they have not really added to the quality of the debate.

The Secretary of State himself described the abolition of regional development agencies as “chaotic” and “Maoist”. In June he gave a perfectly sensible interview, saying that regions that wanted to keep their regional development agencies could. He was overruled. He lost. The Communities Secretary beat him. Now no part of England has a fully functioning local economic partnership or a fully functioning regional development agency. It is the last thing that business needed. The Secretary of State let the Communities Secretary tear up regional planning policies and put nothing in their place. Some 160,000 planning permissions for new homes have been lost to the building industry already. That is a blow to construction, which is already struggling and reeling from the cancellation of Building Schools for the Future. Businesses have no idea how planning applications for new developments will be treated in different parts of the country under the new policies. It is the last thing that business needs.

The Business Secretary has failed to ensure that the migration cap does not prevent growth. Just yesterday, Airbus UK told the Select Committee on Business, Innovation and Skills that it could not access tier 2 immigration visas and that the Home Office was not responding or answering telephone calls on the matter. The Business Secretary lost that argument. The Home Office’s student visa policy threatens the income of

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further education colleges and universities. The UK’s seventh biggest export industry is now being put at risk because the Business Secretary has lost that battle too. Our universities are huge drivers of growth. This year above all years, the Business Secretary should have told every vice-chancellor to concentrate every effort on promoting growth and their business links in the regional, national and international economy. Instead, every university is preoccupied with working out how the shambolic, unfair and unnecessary new fees system is meant to work. That is a complete diversion from what business needed.

In September, the Business Secretary promised tough action on banks, arguing that there was a “compelling case” for taxing them if they continued to pay out bonuses when businesses cannot get access to finance. He has obviously lost that battle, too. Project Merlin has still not reported. Small businesses are still struggling to get finance. The Tory-led Government whom the Business Secretary supports are desperately casting around for face-saving measures while tax on the banks is being cut. Grants for business investment have stopped. Nissan says that those grants helped to safeguard or create 1,600 jobs in the north-east. Indeed, Nissan told the Business, Innovation and Skills Committee:

“The UK has a clear choice of whether it chooses to fight for new business, new jobs, and rebalance the economy or allow the opportunity of this business to go elsewhere.”

We should all be concerned that the Business Secretary has made the wrong choice.

The funding for English regional development has been slashed from about £1.4 billion a year from the regional development agencies to the £1.4 billion in the regional growth fund over three years. That is funding for the whole of English business, which, to put it into perspective, is about the same amount that the Government are planning to spend on sub-post offices. Predictably, because the regional growth fund has been told to include bids for transport and housing, it has been over-subscribed tenfold. The Business Secretary is in a panic, because the future jobs fund has been scrapped and unemployment is rising. Businesses were promised that the fund would support sustainable private sector growth and help to rebalance the economy. Will he confirm that he has changed the rules at the last minute, discouraging bids that will not create short-term sticking-plaster jobs, and that plans to expand Birmingham airport and regenerate Longbridge, which were going to be put into the regional growth fund, have been put on hold, because it is said that they have no chance of succeeding? There are many projects with private sector commitment, which could lever in huge sums of private investment, that are not going ahead. They will not even be considered, because this Tory-led Government are not prepared to tax the banks fairly to invest in jobs and growth.

The broadband infrastructure is vital for business, but it has been delayed and delayed again. Labour had a costed commitment to achieving universal broadband by 2012 and high-speed broadband by 2015. The Government have put back universal broadband by three years, putting the UK in the broadband slow lane.

There is no coherent approach to the use of tax policy to support business growth. Corporation tax has been cut, rewarding the banks, while capital allowances for manufacturers have been slashed. There is total

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confusion about the future of research and development tax credits. At one moment, the Government rightly back Labour’s patent box for the pharmaceutical industry; the next, Labour’s support for the video games industry is dropped, causing a predicted loss of 25% of jobs in that sector. The Government trumpet an additional 75,000 apprenticeships over the next three years, yet Labour increased the number from a planned 200,000 to 279,000 in the last year alone. This Government are slowing the growth in apprenticeships, and their own figures show that, each year, 500,000 fewer adults will get public support to improve their skills.

The Government’s record of failure in regional policy, higher education, bank lending and bankers’ bonuses is lengthy. It is hard to identify a single pro-business, pro-growth policy that BIS has successfully championed against opposition from the Treasury, the Department for Communities and Local Government and other Departments. There is no strategy for growth, and no one knows where the Government expect it to come from, how they will support it or how it will be achieved.

Today, Sir James Dyson, the Conservatives’ own innovation champion, has referred favourably to President Obama, who said:

“In America, innovation doesn’t just change our lives. It’s how we make a living.”

Sir James commented:

“That might seem like political rhetoric to some people, but I wish this philosophy was shared by the British Government.”

That is from the Government’s own innovation champion.

Sir Richard Lambert has said that the Government have

“taken a series of policy initiatives for political reasons, apparently careless of the damage that they might do to business and to job creation.”

We saw that happening just before Christmas. For no other reason than the Business Secretary’s personal unsuitability to make a competition judgment, the Prime Minister transferred responsibility for an entire critical industry, the digital economy, to the Department for Culture, Media and Sport. There was no public policy reason for doing that. There was no consultation with business. The media and the creative industries have a great interest in the digital economy, but so do advanced manufacturing, the IT industry, the service sector and retail. The years that were spent bringing industrial sponsorship together within Whitehall so that business could work better with the Government were swept aside in the crudest possible act of media management, to save the Secretary of State’s face.

The same is true when we look forward. For all the words about rebalancing our economy and supporting key sectors, there is no sign of that happening. Governments cannot create private sector growth, but they can create the conditions in which the private sector is most likely to grow. In the areas in which we hope to compete with the best in the world, such as advanced manufacturing, business services, the creative industries and the low-carbon economy, every part of Government policy, from fundamental research to export support, needs to be properly aligned and working together. This Government cling to a different view, however. They believe that if they simply cut the public sector and cut corporation tax, the private sector will rise up of its own accord to fill the gap. That will not work. Sure, the Government

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will make the odd eye-catching announcement to hit the headlines and make it look as though they are doing something, but, fundamentally, they do not believe in an active role for the Government.

Yesterday, Pfizer said that it was closing its plant at Sandwich, affecting 2,400 employees and many more in smaller companies. That is one of the industries in which Britain should be leading the world. We have a huge advantage in fundamental and applied research and the NHS has huge potential for properly regulated clinical trials, yet one of the world’s leading manufacturers is closing a major plant here, in Kent. Only a few weeks ago, the Prime Minister told us how he had personally been on the phone to the leadership of Pfizer to encourage them to invest and employ people in the UK. The truth is that the Prime Minister has been snubbed. The Government and the Business Department were not players in that huge decision. Whatever the immediate reason for Pfizer’s action, this warns us all that nothing can be taken for granted if this country is to remain strong in this global industry.

In the past year, the Business Department has done nothing apart from implementing Labour’s patent box tax relief. Science spending has been cut in real terms, with capital investment down by 40%. The Government have not set out a clear vision of the future of the pharmaceutical and bioscience industries. They have not said how they will support them, or made it clear to the rest of the world that we will fight tooth and claw for the largest share of this global industry.

The same challenge is true for the other key sectors of the economy—the areas in which, if we do not succeed, we will not be able to pay our way in the world. The truth is that where there should be action, there is a talking shop. There is no plan, no strategy and no vision. There is no leadership and no urgency. The Government are drifting, and making the wrong choices. They are buffeted by events, but not in control of them. For all our sakes, it is time they got a grip.

1.6 pm

The Secretary of State for Business, Innovation and Skills (Vince Cable): I welcome this opportunity to have a serious debate on economic growth and jobs, but listening to the right hon. Member for Southampton, Itchen (Mr Denham) giving us a lecture on economic growth was a little like being offered a lesson on seamanship by someone who was on the bridge of a ship that, despite innumerable warnings, was driven at full speed into an iceberg. That was the experience of the British economy over the past few years.

I sat on the Opposition Benches for 12 years, and twice a year the then Chancellor of the Exchequer would come along and tell us that the British economy had achieved the most impressive growth performance since the days of the Hanoverians. One thing that the previous Government could never be criticised for was a lack of reports or plans. Members who were around at the time will remember the documents that we used to get twice a year, telling us how growth had been achieved and how neoclassical endogenous growth theory had been translated into reality. It all came to a shuddering halt, however, because of a combination of massive

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personal debt, a housing bubble, a structural deficit in the budget and an overweight banking system that collapsed.

If we want judgments on the experience, which we have now inherited and are trying to sort out—[ Interruption. ] I am not looking for political comment—[ Interruption. ] I will take interventions later. I do not know how many Opposition Members read the speech that the Governor of the Bank of England made last week. He explained why there is a growth problem in the UK, and I will read out the relevant extracts. He said:

“The economy as a whole must deal with the legacy of extraordinarily high debt levels built up prior to the crisis…The indebtedness of the financial system doubled, from 3½ times GDP in 1998—already high by international standards—to over 7 times GDP in 2008. To appreciate the scale of that increase, even if the financial sector were to cap its debt at today’s level, it would take more than a decade for growth in the economy to return indebtedness relative to GDP to its 1998 ratio.”

That spells out the extremity of the problem that we inherited and the time scale that will be required to restore sustainable growth.

Several hon. Members rose —

Vince Cable: I will finish this point before I take an intervention.

The Governor of the Bank of England calls in aid the former director-general of the CBI, who has made some strong criticisms. We have, of course, listened to those criticisms and treat them with respect. It is worth going back to what the director-general said. In the opening part of his speech, he described the fundamental problem facing the UK economy, which we are now trying to deal with. It is worth reading that part of his speech at a little length, because it encapsulates what this whole growth debate is about. He said:

“This coalition Government has been single-minded—some might even say ruthless—in its approach to spending cuts. Very unpopular decisions are being driven through on the argument that they are essential to the long-term stability of the economy. That policy is strongly supported by business, on the grounds that sound public finances are an essential foundation for a sound economy.”

[Interruption.]In case this gentleman becomes an icon for the Labour party, let me quote what he said next. He said that there were “two reasons” why the public finances were in a mess:

“One is that the tax and spending policies of the last Government created a substantial structural deficit—a hole in the budget that had to be tackled irrespective of what happened to the economic cycle.

That’s what made substantial spending cuts inevitable, irrespective of who won the last election.”

That is the position we are in.

Chris Leslie (Nottingham East) (Lab/Co-op): I am grateful to the Secretary of State for giving way, but his professorial picking through of a variety of quotes is quite pitiful. Can he tell us where his growth plan is? Where is it?

Vince Cable: I will describe in detail the various steps being taken to sustain growth. If there were a silver bullet, the right hon. Member for Southampton, Itchen and his hon. Friends would have found it—but they did not.

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Mr David Hanson (Delyn) (Lab): The right hon. Gentleman says that he is concerned about the approach of business to the deficit issue. Does business support the VAT increase, which the right hon. Gentleman himself opposed during the general election?

Vince Cable: Business—the CBI and all other businesses —has made it absolutely clear that it supports the tough action necessary for debt reduction. What Sir Richard Lambert went on to say was:

“Spending cuts do less damage to employment and growth…than do tax increases.”

I think that provides a very convincing answer to the right hon. Gentleman.

Several hon. Members rose —

Vince Cable: I will proceed.

I referred to the core problem of the Budget. One difficulty we have had in debating this subject with Opposition Members is the state of denial not just about the big problem, but more specifically about the Business, Innovation and Skills budget. Our preoccupation has been to deliver for the coalition our contribution to deficit reduction. That has been our major task over the last year, and we have done that. There was a 25% cut over the spending period in the BIS spend. What makes engagement in debate with Opposition Members difficult is the fact that we know—because of the ring-fencing decisions made by the last Government and because of the Institute for Fiscal Studies analysis—that they also planned to cut the BIS budget by 25%. Whenever we hear these appeals to have more money for industrial support, more money for the regions, more money for universities and science and more money for further education, we ask this simple question: where would the money have come from in the midst of those 25% cuts? Opposition Members have a basic problem, although I am not quite sure what it is. It is either an acute problem of amnesia or one of fundamental economic illiteracy.

Nadhim Zahawi (Stratford-on-Avon) (Con): Does my right hon. Friend agree that this goes beyond mere deficit denial, as it is political opportunism of the worst kind? It is also irresponsible, because talking down our manufacturing base and all the hard-working businessmen and women in our country does no good in helping us get out of the mess that Labour left behind.

Vince Cable: I will come on to manufacturing in a moment. We are trying to recover from a position in which there was active de-industrialisation for the best part of a decade—[Interruption.] I shall come to the figures shortly.

Several hon. Members rose —

Vince Cable: I will take more interventions later.

Let me deal with the issue of growth. The right hon. Member for Southampton, Itchen has commented, quite reasonably, that the last quarter’s figures and the flash estimates of gross domestic product growth were negative. Those were not good figures, of course, but let us try to put them in the context of what those data tell us, and what the survey data tell us, about the UK economy. Private sector business investment, which is at the core of the recovery, is 3.73% up on last year’s performance. The OECD, the International Monetary Fund and the

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European Union all agree that for the first time in many years, trade—exports minus imports—is driving growth after a long period in which we had large importation to feed a consumer boom fed by debt. Crucially, on manufacturing, to deal with the point raised by my hon. Friend the Member for Stratford-on-Avon (Nadhim Zahawi), the Institute for Supply Management manufacturing survey published yesterday corroborated what the Chartered Institute of Purchasing and Supply and others have confirmed: that manufacturing is growing at the fastest pace—more than 5% a year—since records began 20 years ago.

Several hon. Members rose —

Vince Cable: Let me finish my point about manufacturing and then I will take another intervention. I shall pursue the point I was making in response to my hon. Friend the Member for Stratford-on-Avon about what we have inherited from the previous Government—a decade of remarkable de-industrialisation. Let us go back over the numbers. In 1997 the share of manufacturing in the British economy was about 20%—just a little less than in Germany, Japan and Italy. A decade later it had fallen to 11%, and far more rapidly than in any other industrial country. Manufacturing employment in that period fell from 4.3 million to 2.5 million, so we lost almost 2 million people in the manufacturing sector. The manufacturing trade deficit over that period rose from £7 billion to £53 billion.

Mr Marcus Jones: My right hon. Friend’s argument is compelling. Does he agree that the Labour Government’s record on manufacturing was absolutely despicable, because we lost those 1.8 million manufacturing jobs on their watch? Labour Members seem to forget that.

Vince Cable: The hon. Gentleman is absolutely right: that is the core point. It is a strange irony, because many Labour Members came from industrial Britain and had built their movement on it. In that decade, however, manufacturing industry was substantially devastated, and we are living with the legacy of it now. What we must emphasise—this is the core of our growth strategy, which the hon. Member for Nottingham East (Chris Leslie) asked about—is that manufacturing matters, and we will do everything we can to support it.

Paul Farrelly (Newcastle-under-Lyme) (Lab) rose —

Mr Watts: rose —

Vince Cable: I will take one more intervention before moving on.

Paul Farrelly: The right hon. Gentleman is a respected economist and will know full well that an expansion of exports is to be expected following the decline of sterling. That is not a growth strategy; it is a consequence of the previous economic policy that he used to agree with. Before he gets too carried away in making accusations about amnesia, may I ask him whether he recognises these words, written in 2009 and reprinted this year:

“I have taken the view that in the current circumstances it is on balance right to attempt a fiscal stimulus, recognizing, however, the risks. The alternative—prolonged and deepening slump—would be worse”?

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Mr Speaker: That is quite long enough.

Vince Cable: There are indeed many wise words in that book, which is why it has been reprinted several times—it retains its relevance.

Let me move on from the general picture of de-industrialisation to the specifics. Let me also deal specifically with the Pfizer closure, which is a serious matter and an extremely disappointing development. The implication in the remarks of the right hon. Member for Southampton, Itchen was that the Government had somehow or other failed to head off a closure, which could have been avoided. Let me therefore talk him through the sequence of events, which is also important to many colleagues behind me, and explain what we are doing about the problem.

We were first notified about this at the beginning of last week—on 28 January. The chief executive came to London and briefed the Minister for Universities and Science, who rightly immediately asked what the British Government should do to avert the closure. The answer was that this was not a matter for British Government policy, and that the choice was not made on the basis of whether Britain was an attractive place to do business. Rather, the company was making global closures, including large closures in Dusseldorf in Germany and Massachusetts in the United States. The cycle of the company’s patents was relevant, and it was a purely commercial decision. What happened with Pfizer is offset by what is happening elsewhere in the pharmaceutical industry. Only a few weeks ago GlaxoSmithKline announced a £500 million investment, creating 1,000 new jobs directly—and much else happening in the industry is positive.

The right hon. Member for Southampton, Itchen asked me what we were doing about the situation. First, I have established a taskforce comprising Kent county council, local interests and the Department for Work and Pensions working together to look at the local labour market and what we can do to help. My ministerial colleagues are involved in the process. The Minister for Universities and Science is working with the Secretary of State for Health to see how we can relocate scientists from those research facilities into the rest of the pharmaceutical industries. We may well establish a model based on the relative success so far of Allan Cook’s efforts in the defence industry to see how best to pursue the relocation policy. However, the decision was not based on the investment climate in the United Kingdom. It was a commercial decision, and we are acting promptly in doing whatever we can to help the people who are caught up in that difficulty.

Simon Hughes (Bermondsey and Old Southwark) (LD): Many of us who have been in the House for a while know that this country often suffers as a result of decisions involving local businesses which are made elsewhere in Europe—or, as was the case when the Peek Frean factory in my constituency was closed, in Idaho. However, all my experience since May, both in my constituency and around the country, suggests that people are desperate to see manufacturing back on its feet, and desperate for the skills and apprenticeships that will allow it to perform. That is the great demand out there in relation to Government economic policy, and my right hon. Friend is going in absolutely the right direction by making it a priority.

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Vince Cable: My right hon. Friend is right. It was suggested a few moments ago that the process of manufacturing recovery that we are beginning to see was driven entirely by exchange rates. That is, of course, a major factor, and it is something for which neither the last Government nor this one claim credit.

Several hon. Members rose —

Vince Cable: I will take interventions later.

What I think we can claim credit for is establishing a climate of confidence in which businesses can invest, and taking concrete action in specific areas—

Several hon. Members rose —

Vince Cable: I will take interventions in a few moments.

I think that we can claim credit for specific actions that have made a real difference in terms of manufacturing skills.

I believe that the right hon. Member for Southampton, Itchen said that apprenticeships were in decline. It is worth reading out the latest quarterly figures, because they are directly relevant to the intervention of my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes) and those of Labour Members.

A year ago there were 63,400 level 2 apprenticeships; now there are 76,300. A year ago there were 35,200 advanced apprenticeships at level 3; now there are 42,300. The number of higher-level apprenticeships has risen from 700 to 1,200. That is a direct consequence of our intervention during the spending review, when we had to make tough choices. We chose to concentrate on supporting the apprenticeships that are the backbone of British industry.

James Morris (Halesowen and Rowley Regis) (Con): The Secretary of State is making a very good point. It is particularly applicable to the economy of the west midlands and the black country, where manufacturing still plays a very important role. The creation of a local enterprise partnership to focus specifically on manufacturing skills will directly benefit the local economy. It would be madness to pursue the policies of the previous Government, which failed to create the private sector jobs that we need in the west midlands.

Vince Cable: I thank the hon. Gentleman for his support. He makes the point extremely well. Local enterprise partnerships will achieve a great deal, at a far lower cost than the Labour party’s £21 billion investment in regional development agencies. They are already beginning to make their mark.

Several hon. Members rose —

Vince Cable: I will take one intervention, and then move on.

Angela Smith (Penistone and Stocksbridge) (Lab): Steel manufacturers’ confidence would increase if the Secretary of State could demonstrate that he was prepared to invest in steel, which he failed to do in the case of Sheffield Forgemasters, and if he came clean on whether his party supports the new generation of nuclear power stations that would create so much work for those manufacturers.

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Vince Cable: As it happens, 10 days ago I talked to representatives of British Steel’s successor, Tata Steel in India, about its plans for investment in the United Kingdom. I made it absolutely clear that we stood behind it, and would do all we could to support it. My colleague at the Department of Energy and Climate Change has already made it clear that we support investment in nuclear power, provided that it is not accompanied by a state subsidy. I also met the largest investor in that industry in order to support his activities.

Several hon. Members rose —

Vince Cable: I will move on now, and take interventions later.

Let me deal with the general complaint that the Department has made wrong choices by considering some of the decisions that we have had to make since coming to office. I will start with the universities. The Minister for Universities and Science will say a little more about fees policy later. It is an issue that we have debated several times.

I vividly recall, within days of beginning my job, having to sign off several key appointments to the Student Loans Company, and then having to make a very quick trip to Glasgow to visit an organisation which had been in a state of collapse and which we had inherited. I remind the right hon. Member for Southampton, Itchen—who, I believe, played a part in establishing that organisation; the Public Accounts Committee is currently reviewing the episode—that during a period at the beginning of the last academic year for which the last Government were responsible, when students were desperately telephoning the company about their finances, 87% of calls were unanswered. Moreover, only 46% of claims were processed. As a result of the decision to firm up the organisation, the percentage rose to 69% in the current academic year. That is still too low, but an organisation that was wholly dysfunctional under the last Government is beginning to be turned round.

Mr David Lammy (Tottenham) (Lab): The Secretary of State prays in aid the example of the Student Loans Company. He will be aware that an independent review by Sir Deian Hopkin found the board and the chair culpable, which is why they are no longer in the organisation.

Vince Cable: I seem to remember that an independent report established very firmly that responsibility lay with Ministers.

Mr Denham: I am grateful to the Secretary of State for giving way, because he referred to me personally in this connection. I think that he is missing the point. Part of the business of being a Minister, or a Secretary of State, is sorting out problems that arise—[Interruption.] Let me tell Members that things will go wrong for this Government, as they occasionally went wrong for our Government. It is part of a Secretary of State’s job to sort those things out, but this Secretary of State is using that as an excuse for having done nothing about the really big challenges involved in promoting growth. It is no good his telling the House, “We couldn’t do anything about growth because I was sorting out the Student Loans Company.” That is a ridiculous argument.

Vince Cable: I am glad to hear it acknowledged that we began by having to sort out a mess. That is a good starting point for discussion.

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Let me now deal with the further education sector, in which I became engaged, with the Minister for Further Education, Skills and Lifelong Learning. We began visiting further education colleges, many of which were utterly demoralised and unable to fulfil their function because their capital work had been stopped as a result of a process of utter incompetence. They had been authorised to spend nine times the amount that was actually available.

Let us examine the underlying trends, to which the motion refers. In the last five years of the Labour Government, adult learning—involving people over 19—fell by 1.1 million to 3.5 million. At a time when Government money was being thrown at problems, the Government’s priorities were such that a key area was neglected and declined. We have sought to refocus that energy on apprenticeships, with the consequences that I have already described.

Mark Tami (Alyn and Deeside) (Lab): May I return the Secretary of State to the subject of manufacturing? My right hon. Friend the Member for Southampton, Itchen (Mr Denham) raised the issue of Airbus at the Business, Innovation and Skills Committee. There is great concern about the fact that key workers who are vital to the future of the business will be prevented from entering the United Kingdom under tier 2 of the points-based system. I know that the Secretary of State is concerned about that as well, but what is he going to do about it?

Vince Cable: The right hon. Member for Southampton, Itchen made a wholly wrong assertion. The system of immigration for skilled workers was substantially modified to remove intra-company transfers from immigration control. If there are particular cases involving particular companies, I shall be happy to pursue them. As it happens, I met Mr Gallois yesterday and the issue was not raised, but I will happily pursue any specific cases.

Let me now deal with another issue. A few moments ago, I received a challenge. Why, I was asked, did we not move away from some of the messes that we had inherited, and concentrate on the issues relevant to business growth? Let me start with an issue that is absolutely critical but does not merit even a word in the motion—regulation.

We inherited a system in which five new regulations were introduced every day, at a cost to the business sector that was independently assessed at £80 billion— about 5% of GDP. A few days ago the Minister of State, Cabinet Office discovered a book, only one copy of which is in circulation, of all the regulations that had been accumulated. Some 22,800 were bearing on businesses and adding enormously to their costs—

Richard Burden (Birmingham, Northfield) (Lab) rose —

Vince Cable: I shall finish this point and then give way. What we have done is, first, establish a process to stop the accumulation of regulation. Last week, with the support of the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for Kingston and Surbiton (Mr Davey), I started attacking an issue that is a particular concern to small business: the problem of tribunals. I believe that there are almost 250,000 such cases a year, many of which are frivolous. They are being brought by people who are not required to pay any fee in order to be heard before the tribunal.

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We are trying to establish, following a consultation, a level playing field to help small business deal with the problems established by the tribunal system. In future all cases will go through a mediation process before they get into the costly and disruptive process of a tribunal. It is worth remembering that the previous Government tried twice to reform this process, but backed off on both occasions, under pressure from the people who pay their bills.

Alison McGovern (Wirral South) (Lab): The Secretary of State is talking about regulation, but he began his speech by giving us a history lesson on the financial services sector crash. So will he take this opportunity to explain what he would have done to regulate that sector further and prevent the global financial crash?

Vince Cable: It is a pity that the hon. Lady was not here to hear my speeches on this subject for the five years running up to the crisis, but I shall make two simple points now. The first is that when the financial crisis occurred, I thought and said openly, as I shall repeat now, that the interventions made at that time by the then Chancellor were exactly right and deserved support. What the then Government did not do—this is what we are doing through the Banking Commission—is look at the fundamental issues of overly large banks, concentrations of retail and investment banking, and how to deal with the very complex problems of those two things being locked in the same institution. We are dealing with the fundamental issues behind the banking crash, rather than the superficial aspects of it.

Mr Watts: I am grateful to the Secretary of State for finally giving way. He seems keen on encouraging manufacturing investment, so may I suggest that he restore the grants for business, which actually brought in £3.9 billion of investment and created 70,000 jobs, before he scrapped them?

Vince Cable: No doubt the hon. Gentleman will tell us where that fits on the shopping list. On industrial support, I shall simply say that where the previous Government promoted good schemes, such as the manufacturing advisory service, we are building on them, because we are looking at them on their merits, not doctrinally. However, where schemes were failing and were not cost-efficient, we have reduced them and scrapped them.

Julian Smith: Small businesses across Britain were delighted to hear last week’s announcement by the Government on tribunals. May I encourage the Secretary of State and his excellent employment Minister, the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for Kingston and Surbiton (Mr Davey), to go further and faster on freeing things up, and freeing small business from Labour’s legacy of red tape?

Vince Cable: I am grateful for my hon. Friend’s encouragement, and the Government intend to do exactly what he suggests. Shortly, we will take a forward look at the pipeline of regulation, and how we plan to reduce regulation and make it proportionate.

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Richard Burden: A little earlier, the Secretary of State answered a question about the west midlands, so may I tell him what is worrying people and businesses there? On 28 October he made a statement on local growth, and his answer to everything in terms of industrial and other assistance was, “There will be a regional growth fund.” That fund is oversubscribed and the rules have been changed at the last minute—although the Government have denied that they have done that. In Birmingham and the west midlands, the vital infrastructure projects for Birmingham airport and the regeneration of Longbridge look like being left high and dry. In practical terms, what confidence can he give to people in the west midlands that he will stand by them on such things?

Vince Cable: Rather than prejudge what the first tranche of the regional growth fund will be, let us just wait for the outcome and decide which projects will proceed on the basis of the independent evaluation that they have had.

Mr Adrian Bailey (West Bromwich West) (Lab/Co-op) rose —

Vince Cable: I have taken a large number of interventions. I will take one more, from the Chair of the Select Committee, and then move on.

Mr Bailey: The Secretary of State mentioned the manufacturing advisory service, and I welcome his comment that he is going to build on it. However, I had a meeting with a representative of that service who seemed very unsure what its future would be in the context of the new Government policy. Will he take the opportunity to give reassurance to members of that service?

Vince Cable: I can certainly reassure the hon. Gentleman that that organisation has a good record and a good future. If he wants to talk through the details, I am sure that the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford (Mr Prisk) will engage with him on that subject.

I was reviewing some of the areas where the Government inherited major problems and are now trying to deal with them—university administration, further education colleges, apprenticeships and regulations—but let me mention another, which does not even figure in the motion: the appalling history of Royal Mail and the Post Office. One of the things that we have done, which the previous Government were not able to do, is pass through the first stage of parliamentary scrutiny of a process that will eventually get those organisations on a sound footing.

Let us remind Labour Members what we inherited: a collapsing post office network, which had declined from 19,400 post offices to 12,000, mostly as a result of a forced planned closure programme; and a Royal Mail that had a negative cash flow in the last financial year of £520 million, an operating loss of £320 million and a pension deficit of almost £10 billion. We are taking the necessary action to solve those problems, whereas the previous Government had an opportunity to do so but walked away from them.

Mr Mike Weir (Angus) (SNP) rose —

Vince Cable: I am not taking any more interventions, because I have been very generous.

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House of Commons

Wednesday 2 February 2011

The House met at half-past Eleven o’clock

Prayers

[Mr Speaker in the Chair]

Oral Answers to Questions

Wales

The Secretary of State was asked—

Great Western Main Line

Inward Investment

Driving Standards Agency

Comprehensive Spending Review

Aviation Industry

Apprentices

Inward Investment

Economic Growth

Groceries Code Adjudicator

Prime Minister

The Prime Minister was asked—

Engagements

Point of Order

12.32 pm

High Pay Commission

12.34 pm

Opposition Day

Department for Business, Innovation and Skills (Performance)

12.44 pm

1.6 pm

Footer links