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House of Commons

Tuesday 26 June 2012

The House met at half-past Two o’clock


[Mr Speakerin the Chair]

Business before Questions

London Local Authorities and Transport for London (No. 2) Bill [Lords]

Motion made,

That the promoters of the London Local Authorities and Transport for London (No. 2) Bill [Lords], which was originally introduced in the House of Lords in Session 2007-08 on 22 January 2008, may have leave to proceed with the Bill in the current Session according to the provisions of Standing Order 188B (Revival of bills).—(The First Deputy Chairman of Ways and Means.)

Hon. Members: Object.

To be considered on Tuesday 3 July.

Canterbury City Council Bill

Motion made,

That so much of the Lords Message [21 May] as relates to the Canterbury City Council Bill be now considered.—(The First Deputy Chairman of Ways and Means.)

Hon. Members: Object.

To be considered on Tuesday 3 July.

Leeds City Council Bill

Motion made,

That so much of the Lords Message [21 May] as relates to the Leeds City Council Bill be now considered.—(The First Deputy Chairman of Ways and Means.)

Hon. Members: Object.

To be considered on Tuesday 3 July.

Nottingham City Council Bill

Motion made,

That so much of the Lords Message [21 May] as relates to the Nottingham City Council Bill be now considered.—(The First Deputy Chairman of Ways and Means.)

Hon. Members: Object.

To be considered on Tuesday 3 July.

Reading Borough Council Bill

Motion made,

That so much of the Lords Message [21 May] as relates to the Reading Borough Council Bill be now considered.—(The First Deputy Chairman of Ways and Means.)

Hon. Members: Object.

To be considered on Tuesday 3 July.

26 Jun 2012 : Column 140

City of London (Various Powers) Bill [Lords]

Motion made,

That so much of the Lords Message [21 May] as relates to the City of London (Various Powers) Bill [Lords] be now considered.—(The First Deputy Chairman of Ways and Means.)

Hon. Members: Object.

To be considered on Tuesday 3 July.

Transport for London Bill [Lords]

Motion made,

That so much of the Lords Message [21 May] as relates to the Transport for London Bill [Lords] be now considered.—(The First Deputy Chairman of Ways and Means.)

Hon. Members: Object.

To be considered on Tuesday 3 July.

Oral Answers to Questions


The Chancellor of the Exchequer was asked—

Excessive Card Surcharges

1. Teresa Pearce (Erith and Thamesmead) (Lab): When he expects to publish the consultation document on tackling excessive card surcharges. [113577]

8. Mr Andrew Love (Edmonton) (Lab/Co-op): When he expects to publish the consultation document on tackling excessive card surcharges. [113584]

The Financial Secretary to the Treasury (Mr Mark Hoban): The Department for Business, Innovation and Skills is taking forward work on excessive credit card surcharges. I understand that the consultation to seek views on how and when a ban might be applied is going on in the summer.

Teresa Pearce: For many years, families in my constituency have faced surcharges—sometimes 240 times the actual processing costs—when booking plane tickets. There are now charges on theatre tickets and utility bills and some funeral directors are applying them. Given the prevalence of this issue, does the Chancellor still intend to ban excessive debit and credit card charges by the end of the year?

Mr Hoban: The hon. Lady is absolutely right to highlight the costs imposed by this on our constituents. Our estimate was that in 2010 nearly £500 million was spent by consumers on surcharges. It is still our intention to ban them. Both consumers and businesses should be clear that after many years of inaction by our predecessors, it is this Government’s intention to ban these excessive charges.

Mr Love: The super-complaint was upheld in December last year. The Government have not even started the consultation that would be necessary to introduce this

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measure. Meanwhile, £8 million a month has been lost just by those suffering surcharges on flights from this country. When are we going to get some action?

Mr Hoban: As I said, we are going to publish a consultation this summer and take action to ban these surcharges as soon as possible after that. We should be very clear not only that we are going to ban them, but that some firms have already responded to the action we are going to take, with a number of them reducing their charges on credit and debit card use. That shows that even without legislative action, consumers are getting a better deal as a consequence of our policy.

Mr David Evennett (Bexleyheath and Crayford) (Con): This is a matter of very serious concern to our constituents. May I welcome the Minister’s commitment to tackling the payment surcharges and urge him to do whatever he can as soon as possible?

Mr Hoban: I am grateful for my hon. Friend’s welcome. I am working closely with the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for North Norfolk (Norman Lamb), who is responsible for consumer affairs, to ensure that we act as quickly as possible to ban these surcharges and to deliver a better deal to consumers.

Quantitative Easing

2. Natascha Engel (North East Derbyshire) (Lab): What estimate he has made of the proportion of the money issued through quantitative easing which has been used by banks to pay off their debts. [113578]

The Chancellor of the Exchequer (Mr George Osborne): Quantitative easing is a tool of the independent Monetary Policy Committee and has been designed to work through channels other than the impaired banking system by stimulating activity in capital markets. The Government and the Bank of England are working together on a new funding for lending scheme that will more broadly support sustained and increased bank lending to the economy. I can confirm for the first time that in the three months since the start of the national loan guarantee scheme, over 10,000 cheaper loans worth over £1.5 billion have been offered to businesses. I can also confirm that we have today secured EU state aid approval to extend the scheme to medium-sized businesses with a turnover of up to £250 million. That means 99.9% of UK businesses can now benefit.

Natascha Engel: Quantitative easing was certainly intended to stimulate the economy, but in reality it is being used to write off the debts of reckless banks with hundreds of billions of pounds’ worth of virtual money. Has anyone in Government thought through the consequences of this policy, and if so, what are they?

Mr Osborne: The Bank of England conducted a study of the first round of QE that it undertook under the last Government, and estimated that it had increased real GDP by between 1.5% and 2%. The Bank’s chief economist says that the asset programme regime

“was explicitly designed to go around the banking system”.

I therefore do not accept the hon. Lady’s characterisation.

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Mr Andrew Tyrie (Chichester) (Con): Now that the Bank of England has finally shown more willingness to provide some liquidity support, there should be no obstacle to the exercising of more flexibility by the Financial Services Authority when it comes to how the liquidity buffers are used. That is being desperately demanded by banks. Does my right hon. Friend agree that the FSA should take action as soon as possible, and that such action is what is required to provide borrowing and lending at reasonable rates for the hundreds and thousands of businesses throughout the country that need it so desperately?

Mr Osborne: The liquidity auction undertaken by the Bank of England last week was very welcome, and the Bank is proposing future auctions. My hon. Friend, who chairs the Treasury Committee, has been prescient in pointing to some of the procyclical nature—if unintended—of some of the liquidity regulation in the United Kingdom in recent years. The Financial Policy Committee was set up to look at risks on both the downside and the upside. The Financial Services Authority must make its own independent decisions, but I am sure that it will have paid close attention to my speech and to the speech of the Governor of the Bank of England at the Mansion House.

Mr Adrian Bailey (West Bromwich West) (Lab/Co-op): Notwithstanding the Chancellor’s warm words about the impact of quantitative easing, I have yet to meet a banker, a businessman or indeed a Government representative who can identify the benefits that have accrued as a result of its introduction. While I do not necessarily oppose it, all the evidence that I am being given by bankers suggests that lack of demand is causing the main problem. Will the Chancellor do something to stimulate consumer demand and investment confidence in order to maximise the potential that quantitative easing might bring?

Mr Osborne: In conducting its most recent assessment of the UK economy, the IMF explicitly looked at unconventional monetary policy tools that are currently being used, and concluded that quantitative easing was having a positive impact. I think that we should welcome that. I believe that we are able to pursue loose monetary policy—that we are able to use all the tools that are available to us on the monetary policy side—precisely because we have international credibility on the fiscal side.

21. [113599] Matthew Hancock (West Suffolk) (Con): I, too, warmly welcome the action of the Bank of England last week to increase liquidity in its liquidity auction, but should not the role of the Financial Policy Committee be not only to stand against procyclical financial policy and liquidity buffers, but to lean against the wind and make sure that we can get the lending to businesses in our constituencies?

Mr Osborne: The Government established the Financial Policy Committee because under the previous tripartite regime, designed and implemented by the shadow Chancellor, absolutely no one was paying attention to overall levels of debt and credit in the economy. That is why we had such a deep recession, and why we went from such a large boom to such a big bust—to coin a

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phrase. My hon. Friend is entirely right: the FPC should be symmetrical in the way in which it looks at risks. We have made that clear, and we are amending the Financial Services Bill in the House of Lords to ensure that that the FPC has, as a secondary objective, due regard for the Government’s broader economic policy.

Jonathan Edwards (Carmarthen East and Dinefwr) (PC): Yesterday the Financial Times reported that the Bank for International Settlements was warning of the dangers for economies that get hooked on ultra-low interest rates. Is not the reality that monetary policy alone will not kick-start the sustained recovery, and that fiscal intervention will be needed if we are to avoid a lost decade?

Mr Osborne: The very low interest and mortgage rates in Britain are extremely welcome to families and businesses across the country. If we want to know what the alternative looks like, we just have to look across the channel at countries that have not been able to maintain their credibility in international markets, where we see rising bank lending and funding costs and increased costs for Government borrowing. We have now five countries in the eurozone who have had to apply for bail-outs. It is because we have fiscal credibility despite inheriting the largest budget deficit in the European Union that we have been able to keep our interest rates very low.

Ian Swales (Redcar) (LD): I, too, welcome the announcement of extra liquidity for our banks, but how will the Chancellor ensure that our international banks lend this money to British businesses?

Mr Osborne: The funding for lending scheme, which the Governor and I announced at the Mansion House, is explicitly designed to address the high bank funding costs and it is tied to lending into the UK economy, so that is precisely what this new scheme is designed to do.

Economic Growth

3. Stephen Timms (East Ham) (Lab): What recent estimate he has made of the level of economic growth in 2012. [113579]

The Chief Secretary to the Treasury (Danny Alexander): The Office for Budget Responsibility is responsible for producing independent economic and fiscal forecasts. In its March economic and fiscal outlook, the OBR forecasted economic growth of 0.8% in 2012, but more recent independent forecasts have been lower, reflecting the fact that the euro-area crisis remains the biggest risk to the UK recovery.

Stephen Timms: A worryingly large jump in Government borrowing has been reported today. Why is it that of all the G20 countries, only Britain and Italy are in recession?

Danny Alexander: The right hon. Gentleman refers to borrowing, but his Front-Bench team wants us to borrow tens of billions of pounds more, which is not the right response. If he studies the figures carefully, he will see that departmental spending is rising much less than was forecast, but, of course, the automatic stabilisers in the

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economy are operating. That is precisely the flexibility in our plan, which is tough on the structural deficit but supportive of the economy.

George Freeman (Mid Norfolk) (Con): Has my right hon. Friend seen the latest Office for National Statistics figures, which show that unemployment is down 50,000 in the last quarter and over 800,000 new jobs have been created since we took office? Does he agree that this suggests that the Government’s programme of deficit credibility, public sector restraint and support for business is laying the foundations for a sustainable recovery?

Danny Alexander: I am grateful to my hon. Friend for that question. He is, of course, right to say that the recent figures show that unemployment has been falling, and that is good news, of course. Inflation is also coming down, which is good news for hard-pressed consumers.

Rachel Reeves (Leeds West) (Lab): Does the Chief Secretary think the fact that the economy is in recession explains why today’s figures show that borrowing is going up, not down as the Government intended?

Danny Alexander: As I said to the right hon. Member for East Ham (Stephen Timms), the figures reflect a combination of things, including the fact that departmental spending has been held down by more than was forecast, but the automatic stabilisers in the economy are operating. That is the flexibility in our plan. It is because of the fiscal credibility the Government have brought to this country that we can do that.

Rachel Reeves: I do not think the Chief Secretary answered the question. Figures out this morning show that, with the economy in recession, tax receipts are falling, and the benefits bill is going up, so borrowing is already £4 billion higher this year than last. Is it not time that the Government admitted their plan has failed, and without action on jobs and growth, borrowing does not go down, it just goes up?

Danny Alexander: That is an astonishing question from the party that made the mess in the British economy that we are trying to clear up, and the party whose plans wanted this Government to borrow even more. That just goes to show what would have happened to the UK economy if we had been unfortunate enough to have the Labour party stay in power.

Nicholas Soames (Mid Sussex) (Con): Does my right hon. Friend agree that protectionism is the enemy of economic growth? What steps will he take to re-energise the Doha round?

Danny Alexander: I wholeheartedly agree with my right hon. Friend. It is a very important point that, in times of economic stress worldwide, some countries may seek a protectionist approach. That is why at the forthcoming European summit the Prime Minister will again be arguing for measures within Europe to strengthen the single market and to increase free trade within the EU, and for measures for the EU to take to build on the free trade agreements that, collectively, we are signing with a number of other important economies in the world. We need to keep up the momentum of that process in order to help support the world economy.

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Regional Pay

4. Jessica Morden (Newport East) (Lab): What progress he has made on his consultation on regional pay for public sector workers; and if he will make a statement. [113580]

The Economic Secretary to the Treasury (Miss Chloe Smith): The independent pay review bodies are considering how public sector pay can be made more responsive to local labour markets, and will report from July. Nothing has been decided, and no changes will be made unless there is strong supporting evidence and a rational case for proceeding.

Jessica Morden: The Tory finance spokesperson in the Welsh Assembly said that introducing regional pay could disadvantage thousands of public sector workers, and that

“we are making it absolutely clear that we are against”

it. Does the Minister agree?

Miss Smith: As I have just set out, this is a question at present for the independent pay review bodies, which will report back in July. There is an argument that more local, market-facing pay in the public sector has the potential to support more for the same investment, and to help local businesses become more competitive.

23. [113601] Michael Fallon (Sevenoaks) (Con): How can it be fair for small businesses outside London and the south-east to have to compete for staff paid on national rates working in public offices? Given that the last Government committed us to local pay nearly 10 years ago, and that it already operates in the Courts Service, what is the problem with encouraging other departments to follow suit?

Miss Smith: My hon. Friend makes a valuable point that I am sure the independent pay review bodies will consider. If I were to put a number on the average premium for working in the public sector, I could name 18% in Wales.

Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op): Last week, it was left to the Minister for the Cabinet Office and Paymaster General to come to the Chamber to explain the Treasury’s position on regional pay. Was that because the Chief Secretary does not support the policy and the part-time Chancellor does not want to make another U-turn?

Miss Smith: We had an extensive and rather premature debate on this last week in the Chamber, and I shall say again what I said then: the independent pay review bodies are producing a report, and it would be premature to review that without the evidence, which they are considering.

Cost of Living

5. Sarah Newton (Truro and Falmouth) (Con): What recent steps he has taken to reduce the cost of living. [113581]

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The Chancellor of the Exchequer (Mr George Osborne): Rising global prices have increased the cost of living for families here in Britain. This coalition Government will do everything we can to help. We have already frozen council tax, kept mortgage bills low and abolished the fuel duty escalator. I can tell people that we will now stop any rise in fuel duty this August and freeze it for the rest of the year. This means that fuel duty will be 10p a litre lower than planned by the last Labour Government. We are on the side of working families and businesses, and this will fuel our recovery at this very difficult economic time for the world. The one-off cost of this change will be fully paid for by the larger than forecast savings in departmental budgets, and we will set out details of those, as usual, in the autumn statement.

Sarah Newton: If I were not on crutches I would be jumping for joy. The people of Cornwall will really welcome this move, which proves once more that this Government are on the side of hard-working families.

Mr Osborne: My hon. Friend is absolutely right and I know this news will be welcome in Cornwall, as across the country. I repeat: because of the actions we have taken today and in recent Budgets, petrol duty is 10p a litre lower than it would have been under the Budget plans voted for by the Labour party. We are on the side of working families, we are helping motorists, helping businesses—doing everything we can in very difficult circumstances for the world.

Catherine McKinnell (Newcastle upon Tyne North) (Lab): I am glad that the Chancellor is beginning to listen to the shadow Chancellor. However, the Government’s own figures show that cuts to tax credits are leaving thousands of parents up to £72 a week worse off, and some are better off if they quit their jobs. With the cost of living rising and the economy in double-dip recession, surely it is time we saw a U-turn on this perverse policy, to make sure that work pays.

Mr Osborne: First, all families, if we take into account the benefit and tax changes, are £5.50 better off a week from April, and we have actually increased tax credits for the poorest families. We have had to make difficult welfare changes. They were completely opposed by the Labour party, which also opposed the cap on welfare benefits. We have to ask the question: what would Labour Members do to get control of the budget deficit that they created? We have had two years and not a single answer from Labour. That is why, as I say, we are the people trusted to lead this country out of the economic mess that they put us in.

Andrea Leadsom (South Northamptonshire) (Con): Does my right hon. Friend agree that it is astonishing that Opposition Members do not welcome his announcement to cut the fuel duty that they proposed when they were in government? Does he agree that this Government will focus everything they can on cutting the cost of living for hard-working people?

Mr Osborne: We should judge people by actions as well as words, and Labour Members voted for increases in fuel duty, which this Government have stopped. That is because we are on the side of working families, whereas Labour Members are simply on the side of the economic mess that they created.

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Economic Performance

6. Andrew Gwynne (Denton and Reddish) (Lab): What assessment he has made of the performance of the economy in the last 18 months. [113582]

The Chief Secretary to the Treasury (Danny Alexander): As the Office for Budget Responsibility made clear last autumn, Britain’s recovery has faced strong headwinds from the euro area, high oil prices and the impact of the financial crisis being deeper than previously thought. Our actions to reduce the deficit and rebuild the economy have secured stability and kept interest rates near record lows, benefiting families, businesses and taxpayers, although, of course, considerable external risks remain.

Andrew Gwynne: That just does not wash, because by May 2010 the British economy was growing, whereas since the Government’s emergency Budget of June 2010 the economy has at best flatlined and at worst dropped back into recession. Why does the right hon. Gentleman think that is?

Danny Alexander: By May 2010, the hon. Gentleman’s Labour Government had put in place plans to increase fuel duty by above the rate of inflation each and every year of this Parliament. He should be welcoming the fact that we are taking steps to support hard-pressed families and hard-pressed consumers across the country in the very difficult economic circumstances that we face.

Robert Halfon (Harlow) (Con): Does my right hon. Friend agree that motorists across the country will welcome the cut in fuel tax announced for August and that it will greatly improve the performance of the economy? Does this not show that the Government are on the side of hard-pressed working people?

Danny Alexander: I agree entirely with my hon. Friend. I met representatives of the FairFuelUK campaign yesterday. We have a great deal of sympathy with its arguments, as well as with those made by families across this country, including in remote and rural areas. It is worth saying that thanks to the decisions this coalition Government have made not only is fuel tax 10p a litre lower than under Labour’s plans, but council tax is lower and income tax is lower. In the Budget in March we also saw the largest ever increase in the income tax personal allowance, all of which puts money back into the pockets of hard-pressed families.

EU Regulations

7. Mr David Nuttall (Bury North) (Con): What recent assessment he has made of the effect of EU regulations on economic growth. [113583]

The Financial Secretary to the Treasury (Mr Mark Hoban): The Government are taking action to reduce the burden of EU regulation on UK business. At Budget 2011, the “Plan for Growth” announced a comprehensive package for tackling EU regulation. The Government estimate that the cost of European regulations to the UK has varied from 27% to 60% of the total UK regulatory cost since October 2009.

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Mr Nuttall: I am grateful to the Minister for that reply. Although British businesses will welcome the fact that the United Kingdom is not in the eurozone, and will not suffer from the loss of sovereignty and the new regulations that fiscal union would mean, they are nevertheless burdened by EU-imposed red tape, which means that it is much harder for them to compete successfully for new contracts against companies from outside the EU, which are not subject to such regulations. May I urge him urgently to conduct an investigation into and an assessment of the extent to which that is holding back the British economy?

Mr Hoban: My hon. Friend makes an important point, and that is why we are taking action through the “Plan for Growth”. We want the Commission to publish an annual audit of the cumulative cost of all planned EU regulations, but assessments are not enough in themselves, which is why as a consequence of lobbying by this Government the EU has introduced an exemption for micro-businesses and is looking at lifting the burden of regulation on the small and medium-sized businesses that are key drivers of growth in our economy.

Kelvin Hopkins (Luton North) (Lab): I am sure I am not alone in believing that what regulation we do have should be made by this Parliament and not by the Commission in Brussels. However, I am sure that the Minister will be aware of the survey reported by the CBI that shows that 94% of businesses are concerned above all about demand and the ability to sell their goods and services. Is that not the problem with Government economic policy?

Mr Hoban: What we need are measures to tackle some of the structural problems in the economy that we inherited from the previous Government and to tackle issues to do with education, transport infrastructure and the complexity of the tax system. Those are the reforms we need to ensure that the economy grows.

Economic Growth

9. Damian Collins (Folkestone and Hythe) (Con): What recent steps he has taken to encourage economic growth. [113585]

The Chancellor of the Exchequer (Mr George Osborne): To help the economy, we are cutting taxes for businesses and families. We are, as we have just heard, freezing fuel duty, helping 10,000 businesses with the national loan guarantee scheme, reforming the planning system, creating enterprise zones, setting up the regional growth fund and creating the biggest number of apprenticeships this country has ever seen.

Damian Collins: The recent Growth Factory report on industrial strategy highlighted the importance of rebalancing our economy. Does the Chancellor agree that the record increase in employment in the manufacturing sector in the first quarter of this year is a welcome sign of the growing confidence at the heart of our economy?

Mr Osborne: My hon. Friend is right and I commend him and his group for the interesting ideas, many of which I agree with, that they are promoting. He is absolutely right to point out the increase in employment,

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including in manufacturing employment. An interesting recent statistic from an independent international body on the British economy showed that the share of manufacturing in the UK economy is increasing for the first time in a very long time, having almost halved under the previous Labour Government.

Mr Jim Cunningham (Coventry South) (Lab): Why did not the Chancellor cut fuel duty sooner? Why has it taken him all this time? He has done about 33 U-turns as far as I can see.

Mr Osborne: Last year we cut fuel duty and froze it. This year, we have frozen it again and the hon. Gentleman should welcome that. I know that he is in a slightly difficult position in that he was one of the Labour MPs who voted for the increase that we have now delayed, but he should just get up and welcome these moves.

Stephen Gilbert (St Austell and Newquay) (LD): Economic growth in Cornwall would be discouraged by the introduction of regional pay or the regionalisation of benefits. Will the Chancellor undertake to publish the Government’s evidence to the independent pay review bodies that are considering this issue?

Mr Osborne: I point out to my hon. Friend that we have published that evidence. As I say, the matter is now with the independent pay review bodies, so let us wait to hear what they have to say.

Infrastructure Investment

10. Roberta Blackman-Woods (City of Durham) (Lab): If he will discuss with his ministerial colleagues bringing forward the timing of public infrastructure investment in order to encourage economic growth. [113586]

The Chief Secretary to the Treasury (Danny Alexander): We are having those discussions as we speak. We are already spending more on new roads and new rail now than we were at the height of the spending boom in the previous Parliament. We have provided £2.4 billion for the regional growth fund, £770 million for the Growing Places fund and £570 million for the Get Britain Building fund. We can also support infrastructure investment through the use of Government guarantees and will be announcing more about how we plan to do so later this summer.

Roberta Blackman-Woods: But will the Chief Secretary listen to the business leaders quoted recently in the Financial Times, who said that they had heard Ministers talking about infrastructure projects for months but with no visible results? Will he publish a timetable today, or very soon, for each region showing the projects that will be brought forward with their delivery dates?

Danny Alexander: The hon. Lady will have seen that last November we published the national infrastructure plan, which does precisely what she said and which was widely welcomed by business leaders and business organisations across the country. She will know that we are spending more on road and rail than the previous Government managed, including on a number of projects in her part of the world.

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Jane Ellison (Battersea) (Con): My constituents warmly welcome the Government’s support for the Northern line extension in the Vauxhall/Nine Elms development area. Is that not a good example of exactly the kind of infrastructure project that the Government could support to help unlock economic growth?

Danny Alexander: It is precisely such an example of the sort of infrastructure that this country needs and the sort of project from which the economy of London and elsewhere will benefit if we can bring the investment forward and make things happen more quickly. As I said, we are looking for ideas about doing just that.

Mr Geoffrey Robinson (Coventry North West) (Lab): Is the Chief Secretary not aware that the so-called national infrastructure programme is way behind schedule, that the construction industry is flat on its back and that the apprenticeships in that sector, so badly needed by the industry and by the Government, are seizing up? Why does he not get his finger out and do something about it instead of making vague promises?

Danny Alexander: The hon. Gentleman is wrong to say that the national infrastructure plan, which we published last November, is behind schedule, but of course he is right to say that there are problems in the construction sector. That is why we have taken a number of steps to support the house building sector, but we will make further announcements in that area later this summer.

Elizabeth Truss (South West Norfolk) (Con): Over the past four years, footfall on the Norwich-Cambridge line and the Fen line has increased by 20%. In the Government’s infrastructure plan, will they bring forward the upgrading of the Ely North junction, which will enable half-hourly services on both those lines?

Danny Alexander: I do not know the details of the Ely North junction project but I shall certainly raise the matter with the Secretary of State for Transport. However, that is precisely the sort of project we have been bringing forward over the past two years to support economic growth across the whole of the United Kingdom, rather than having a model of growth based solely on receipts from the City of London, which was basically the policy of the Labour party.

Small Businesses

11. Mr Rob Wilson (Reading East) (Con): What recent steps he has taken to increase bank lending to small businesses. [113587]

The Financial Secretary to the Treasury (Mr Mark Hoban): The Government have launched a package of credit easing measures to improve credit availability for smaller businesses. This includes the £20 billion national loan guarantee scheme and the business finance partnership, which will provide £1.2 billion of additional finance through non-banking channels. The Government and the Bank of England are working together on the new funding for lending scheme, which will provide funding to banks linked to their lending to the real economy.

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Mr Wilson: There are a significant number of small businesses in my constituency that want to expand and create jobs but cannot get sensible bank financing. I therefore welcome the recently announced funding for lending scheme, but I understand that in exchange for this funding, banks will have to provide collateral to the Bank of England. Will my hon. Friend confirm, given that the precise details of the scheme are not available yet, whether small loans will be acceptable to the Bank of England as collateral? Otherwise, the desired lending to smaller businesses will not get off the ground.

Mr Hoban: My hon. Friend makes a very important point. He is right to point out that the details of the scheme have yet to be finalised, but I take on board his comments. We will discuss this with the Bank of England. It is important that the scheme works and that it helps funding and lending to households and businesses.

Mr George Mudie (Leeds East) (Lab): In view of the banks’ disgraceful behaviour on delivering the Merlin agreement, will the Minister assure the House that this new scheme will be transparent and will be published and monitored independently each month? Above all, will he assure us that every pound of additional money that goes to the banks through this scheme will mean additional lending to small businesses and households?

Mr Hoban: The scheme is designed to encourage lending not just to small businesses and households but across the board to all businesses. We want to make sure that when banks put collateral to the Bank of England, it is in response to their having lent more. That is absolutely vital for a scheme that encourages lending and we will make sure that we design the scheme to do so.

Child Poverty

12. Mr Russell Brown (Dumfries and Galloway) (Lab): What assessment he has made of the effect of the Government's fiscal policies on the level of child poverty. [113588]

The Economic Secretary to the Treasury (Miss Chloe Smith): The Social Mobility and Child Poverty Commission is being set up and will provide an assessment of child poverty using a wide range of measures, including income.

Mr Brown: Before the 2010 election, the Prime Minister said:

“Poverty is relative—and those who pretend otherwise are wrong.”

Why are the Government now planning to abolish that measure of child poverty?

Miss Smith: The Government have confirmed their commitment to child poverty targets and we are going further by consulting on better measures of child poverty in the autumn. We seek a range of views on that.

Andrew Bridgen (North West Leicestershire) (Con): Does the Minister agree that the real failing of the previous Government was their narrow focus on income

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transfers instead of addressing the real root causes of welfare dependency such as low aspirations and worklessness?

Miss Smith: I certainly do. The important point is how we help people to get out of poverty and stay out. I note that there are problems with the current measure of poverty. Because median incomes fall, children are considered to have moved out of poverty when there will have been no real change to their lives. That cannot be a fully accurate measure.

Kate Green (Stretford and Urmston) (Lab): What will the Government do to address the still very high levels of in-work poverty, and how can freezing working tax credit and reducing help with child care costs possibly help?

Miss Smith: Let me name a number of things the Government are doing to support families and let me note our plans to move toward universal credit, which will help with work incentives. Let me note our plans to have doubled the number of disadvantaged two-year-olds receiving free hours of child care each week. On tax credits, let me note that we have had to fix the previous Government’s unsustainable budgeting in that area and that six out of 10 families with children are still eligible.

Charlie Elphicke (Dover) (Con): Is it not especially important that we take action on child poverty, given the quite sharp increase in the previous Parliament? The targets were missed by about 600,000, I think, and when the previous Government left office, 4 million children were in poverty.

Miss Smith: My hon. Friend is correct: child poverty is a real problem. This Government are committed to eradicating it and to increasing social mobility. We are taking the measures to assist children that I listed in response to the previous question. I should also point out that the average household gains about £5.50 a week from the tax and benefit changes made in April this year. We are making progress and acting where we can. It is important to keep up the pressure on child poverty.

Fuel Duty

13. Mr Philip Hollobone (Kettering) (Con): What assessment he has made of the effect on economic growth of increases to fuel duty. [113589]

The Economic Secretary to the Treasury (Miss Chloe Smith): The effects on the economy of fuel prices, including oil prices, refinery margins and tax, are assessed by the Office for Budget Responsibility as part of its economic and fiscal forecasts.

Mr Hollobone: Motorists in the Kettering constituency and local hauliers will warmly welcome today’s announcement by the Chancellor. Has my hon. Friend undertaken any analysis of the negative impact on national economic growth that would have occurred had the present Government increased fuel duty by as much as the previous Government intended?

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Miss Smith: I can confirm that, through the actions of this Government, pump prices are 10p a litre lower than they would have been under the previous Government, who had scheduled in 12 fuel duty rises while they were in office and six more for afterwards.

HMRC Helplines

14. Chris Evans (Islwyn) (Lab/Co-op): What the average waiting time for calls to Her Majesty’s Revenue and Customs helplines was in (a) the last 12 months and (b) the previous 12 months. [113590]

The Exchequer Secretary to the Treasury (Mr David Gauke): The average waiting time for a customer calling HMRC’s helplines in the past 12 months was four minutes and 19 seconds. In the preceding 12 months, it was four minutes and 13 seconds.

Chris Evans: A constituent of mine has had a nightmare experience trying to get through to HMRC: he phoned several times throughout the week, but never spoke to an adviser and kept getting an engaged line. His is just one of many cases involving HMRC in my constituency office at the moment. With 10,000 HMRC staff being laid off, how do the Government hope to clamp down on tax avoidance when they obviously cannot collect taxes in the first place?

Mr Gauke: The first point to make is that the numbers of front-line staff dealing with tax avoidance and tax evasion are increasing over the course of this Parliament, in contrast with what happened during the last Parliament. There has been improvement in contact centre performance in the number of calls that get through, but more progress is needed. HMRC is deploying staff more flexibly and conducting small-scale pilots to see whether the private sector can provide additional capacity. HMRC is determined to improve performance.

Jo Swinson (East Dunbartonshire) (LD): My elderly constituent Mr George Robertson is concerned about the amount of money that has been wasted because of a catalogue of errors over two years by HMRC helplines and administration. They wrongly issued cheques for overpayments to Mr Robertson, despite his correctly informing them that, in fact, he owed money; and when the saga was eventually “resolved” in April, they got it wrong again. Will the Minister look into that case and the wider lessons that need to be learned, so that HMRC becomes more accurate and cost-efficient?

Mr Gauke: I am grateful to my hon. Friend for raising that point and I am happy to look into the case. HMRC’s record in dealing with end-of-year reconciliations and improving accuracy is moving in the right direction, but there is more to do.

VAT (Savoury Products)

15. Chi Onwurah (Newcastle upon Tyne Central) (Lab): What representations he has received on the treatment of different savoury products for the purposes of levying VAT. [113591]

The Exchequer Secretary to the Treasury (Mr David Gauke): HMRC is shortly to publish on its website a summary of the responses to its consultation, “VAT:

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Addressing borderline anomalies”. The response document will contain a list of those who contributed to the consultation.

Chi Onwurah: As I am sure you know, Mr Speaker, Newcastle is the home of the Greggs pasty, so I was hopeful that the Chancellor’s latest U-turn but one would have resolved the great savouries shambles, but now I learn that he has turned his wrath on the pretzel sellers of Newcastle, including Auntie Anne’s in Eldon Square. Could the Chancellor possibly focus on bringing growth to the economy, rather than confusion to our eating habits?

Mr Gauke: I am sure the hon. Lady is aware that Greggs welcomed what we said about hot food. None the less, there has been an anomaly in the tax system whereby some hot foods have been treated differently from others. We are seeking to remove that anomaly and that is exactly what we are doing.

Fiscal Policies (Output)

16. Kevin Brennan (Cardiff West) (Lab): What recent estimate he has made of the effects of his fiscal policies on the rate of growth in output. [113594]

The Economic Secretary to the Treasury (Miss Chloe Smith): Tackling the deficit is necessary for supporting sustainable economic growth. The Government’s credible consolidation plan, which includes important measures to support investment and output, has restored confidence in the UK’s fiscal position, helped avoid a rise in market interest rates and allowed a more activist monetary policy.

Kevin Brennan: Given that the lead-in time for fiscal policy is about 18 months, how can the Minister explain the fact that the UK economy is now in recession, following the full impact of her Government’s fiscal policies?

Miss Smith: It is essential to return the public finances to a sustainable path. It is this Government who are doing that, it is this Government who are keeping interest rates low, it is this Government who are taking action on fuel duty, and it is the Opposition who have no answers at all.

Topical Questions

T1. [113602] David Morris (Morecambe and Lunesdale) (Con): If he will make a statement on his departmental responsibilities.

The Chancellor of the Exchequer (Mr George Osborne): The core purpose of the Treasury is to ensure the stability of the economy, promote growth and employment, reform banking and manage the public finances so that Britain starts to live within her means.

David Morris: Inflation has now lowered from 3% to 2.8% in May, which should be welcomed on both sides of the House. Does my right hon. Friend agree that it is other Government measures such as freezing the council tax, freezing the fuel duty and increasing the personal

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allowance that have helped tens of thousands of my constituents in Morecambe and Lunesdale with their cost of living?

Mr Osborne: I absolutely agree with my hon. Friend that it is very welcome news that inflation is now falling. That will help families. The Government want to help families further by keeping those mortgage costs very low, and the only way we can do that is by having a credible plan for the public finances. We have also frozen the council tax, increased the personal allowance, with another big increase next year, and as my hon. Friend has just heard, frozen fuel duty for the second year running, so that his constituents in Lancashire and people across the whole country can be helped at this difficult economic time.

Ed Balls (Morley and Outwood) (Lab/Co-op): The Chancellor told the “Today” programme a few weeks ago that the only thing worse than listening is not listening. Well, he certainly listened to the “Today” programme this morning. We have now had U-turns on pasties, churches, charities, caravans and skips, and today a U-turn on fuel, which we welcome. It would be interesting to know at what point this morning the decision was made, and whether the Transport Secretary was even told. Now that the Chancellor is on a roll, will he also do a U-turn on the millionaires’ tax cut and rescind the granny tax rise? There is a vote next week. Will he join us in the Lobby or will he do the U-turn first?

Mr Osborne: It is quite difficult for a Conservative Chancellor to do a U-turn on a Labour policy. I am not sure the Opposition is entirely joined up—or maybe it is because the right hon. Gentleman waited half an hour to come in. The hon. Member for Hyndburn (Graham Jones), sitting directly behind him, who is a Labour Whip, has just tweeted on the fuel duty announcement that it is a deferred rise and cannot improve the economy. If the Labour Whip thinks it will not improve the economy, what does the shadow Chancellor think it will do?

Ed Balls: It is about time this part-time, U-turning Chancellor took some responsibility for his own decisions. What is the reality? A double-dip recession, borrowing rising, family budgets under pressure—his plan has failed. Is it not time he listened to the Opposition and admitted that austerity has failed? Is it not time he did another U-time and adopted Labour’s five-point plan for growth and jobs?

Mr Osborne: We enjoyed reading recently that the right hon. Gentleman has been spending thousands of pounds on commissioning private opinion research about why his economic message is not getting through. It was leaked to the papers, saying that he was seen as “uninspiring” and “untrustworthy”. He had no need to spend thousands of pounds on that. He can ask Labour MPs and get that opinion of the shadow Chancellor. He has had two years to come up with a credible economic policy, and two years to apologise for his part in putting Britain into the economic mess that we are taking Britain out of.

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T5. [113606] Mr David Evennett (Bexleyheath and Crayford) (Con): Does my right hon. Friend agree with the head of the IMF, who said that she shivers to think what would have happened to the British economy without this Government’s plans to reduce Labour’s deficit?

Mr Osborne: The managing director of the IMF put it in a very graphic way. She presented to the whole country the alternative that we faced in May 2010. If we had stuck with the Labour party’s incredible plans, we would be one of the countries seeking a bail-out, rather than, as we are now, a country that is a relatively safe haven in the very, very difficult European situation. [Interruption.] The shadow Chancellor will not move forward unless he concedes his role in getting Britain into this mess. Until he does that, he will remain a man of the past with no ideas for the future.

T2. [113603] Jim McGovern (Dundee West) (Lab): Will the Chancellor update the House on what progress has been made on his offer to the computer games industry of tax incentives in his last Budget? It is important to get the details of the policy correct, but it is also important that time is not wasted unnecessarily. As the old adage goes, actions speak louder than words. When can we expect to see the words turned into action?

Mr Osborne: We will be consulting on that policy very, very shortly, alongside the new credits for animation and high-end television production. The video games industry is important in Scotland—for example, in Dundee there is a particular centre of excellence—but it is important across the entire UK, and the video game tax credit will help, alongside animation and high-end TV production.

T4. [113605] Jessica Lee (Erewash) (Con): In order to help small businesses and those seeking new opportunities, will my right hon. Friend endorse the jobs fair that I am hosting in Erewash on 5 September? Will he further set out what the Government are doing to support small businesses, which remain the real engine of the British economy?

Mr Osborne: I certainly support my hon. Friend and congratulate her on organising the jobs fair. As the most recent unemployment figure showed, not only is unemployment falling but 200,000 private sector jobs have been created in the last few months in our economy. When it comes specifically to small businesses, as I set out to the House earlier, the national loan guarantee scheme has already helped more than 10,000 businesses with loans, we have cut the small companies corporation tax from the rate we inherited from the last Government, and the freeze in fuel duty will also help small businesses.

T3. [113604] Mr Dennis Skinner (Bolsover) (Lab): In a time of austerity, when food banks are increasing in almost every town and city in Britain, is it not high time that the Government published a comprehensive list of all those people who are profiting from these tax avoidance schemes? Even Graham Aaronson, a Government adviser, forecast today that if something is not done there will be riots on the streets. This is a

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home-grown problem. Do not blame anybody else. Let us have a list of all those people close to home and those on millionaires row.

Mr Osborne: The last Labour Government, which the hon. Gentleman supported, had 13 years to introduce a general anti-avoidance rule; we are introducing one after just two years in office. The last Labour Government had 13 years to stop stamp duty avoidance schemes; this Government, after two years in office, are doing exactly that and stopping those schemes. The last Labour Government had 13 years to cap uncapped income tax reliefs, which are used for avoidance; we have introduced and are introducing that cap. Frankly, actions speak louder than words.

T6. [113607] Mr John Baron (Basildon and Billericay) (Con): With belt-tightening very much on the agenda right across Europe, will the Chancellor at least consider making deep cuts to our EU budget contributions, and so ally himself with the vast majority of people in this country?

Mr Osborne: We have worked very hard to freeze the EU budget during the last couple of years and avoid the very large increases that both the Commission and the European Parliament have sought. We are now beginning the very important negotiations on the next multi-year budget framework, and our objective is to deliver the best deal for the British taxpayer and make sure that unnecessary money is not going over to Brussels.

T10. [113611] Gemma Doyle (West Dunbartonshire) (Lab/Co-op): Written answers to my hon. Friend the Member for Rutherglen and Hamilton West (Tom Greatrex) reveal that the nationalist Scottish Government have made no approach whatever to the UK Government on membership of the Bank of England’s Monetary Policy Committee. Does the Chancellor think that Scotland would have more influence on monetary policy as part of the UK or outside the UK using sterling as a foreign currency?

The Chief Secretary to the Treasury (Danny Alexander): The hon. Lady refers to just one of a number of shambolic statements made by the Scottish National party since it launched its campaign for independence a few weeks ago, and not just on the Bank of England, but on financial services regulation. She makes the point very powerfully indeed that Scotland is “better together” as part of the United Kingdom. We have greater strength together as part of a more credible economic unit and part of the shared monetary policy of the Bank of England. All that would be jeopardised if Scotland were ever to become independent.

T7. [113608] Andrew George (St Ives) (LD): The Chief Secretary has rightly committed the Government to clamping down on tax avoidance. Given recent high- profile cases of tax avoidance, and notwithstanding the earlier question from the hon. Member for Bolsover (Mr Skinner), will my right hon. Friend update the House on the progress being made and perhaps give a projection for the progress he expects over the rest of this Parliament?

Danny Alexander: I am grateful to my hon. Friend for his question. As the Chancellor said, the Government have done more on this issue in two years than the previous Government managed in 13 years. In particular,

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at the time of the spending review I announced that we would invest an extra £900 million in Her Majesty’s Revenue and Customs so that it could employ a large number of additional experts to deal with tax avoidance. That programme is projected to lead to an additional £7 billion a year in tax revenue by the end of this Parliament, and we are well on track to meet that objective.

Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab): Can the Chancellor confirm that the Government are going to spend an additional £150 billion in borrowing above their plan of a year ago?

Mr George Osborne: The Institute for Fiscal Studies was very clear that, had we pursued the plan proposed by the previous Government, borrowing would be £200 billion more than it is today. As I have said, it is this Government’s credible fiscal plan that has brought record low interest rates and market credibility. We can see across the English channel what would happen if we did not have that credibility. That is where Labour would have put us.

T8. [113609] Sir Tony Baldry (Banbury) (Con): Has my right hon. Friend noticed that the most recent figures from the Office for National Statistics show that employment is up by 311,000, the biggest quarterly increase since the general election, and does not that mean that since the general election two jobs in the private sector have been created for every job lost in the public sector?

Mr Osborne: My hon. Friend—a knight of the realm—is absolutely correct. Despite these very difficult and challenging economic times, the private sector is creating jobs. We of course have to help it to create more jobs through the measures I have already outlined—cutting the small companies tax rate, help with credit and the like—but we also need to help those looking for work. That is why we have the Work programme and the youth contract, instruments that are much more effective than the programmes promoted by the previous Government at helping people who are out of work to link up with companies that want to employ people.

Chris Williamson (Derby North) (Lab): Britain is the only G20 country in a double-dip recession, youth unemployment is at record levels, poverty is on the increase, public services are in meltdown, and the Government are borrowing around £4 billion more this year than they did last year. The lessons of the 1930s demonstrate that the austerity programme that the Chancellor is pursuing will not work. Will he learn the lessons of history—

Mr Speaker: Order. We are extremely grateful, but I am afraid that we do not have time to go back to the 1930s now. We have the gravamen of the hon. Gentleman’s question.

Mr Osborne: I suggest that tonight and tomorrow the hon. Gentleman turns on the television and watches the evening news, because he will see that there are problems facing many economies around the world. The Labour idea that somehow Britain alone faces these challenges

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because the Government are trying to deal with the debt is absolutely ridiculous. There are all these European economies in recession, the US economy had disappointing jobs data, and the Chinese economy is slowing. These are difficult times, but we are doing everything we can to help the British economy deal with the problems we inherited.

T9. [113610] Mr Dominic Raab (Esher and Walton) (Con): Last year we lost the most working days to strikes in 20 years, and since the last election union leaders have never won the backing of a majority of their members for any major strike. Will my right hon. Friend task the Office for Budget Responsibility to provide annual estimates of the cost to the economy of strikes and of the concessions, paid for by taxpayers, to avoid them?

Danny Alexander: I am not sure that the hon. Gentleman’s suggested idea would be an appropriate task for the Office for Budget Responsibility to undertake, but he is right that strike action is costly to the economy. He would also be right to observe that it has not stopped this Government proceeding with the reform of public service pensions, and with pay restraint in the public sector, too, to help deal with the enormous mess left to us by the Labour party.

Alison McGovern (Wirral South) (Lab): With regard to the problems at RBS this week, my constituent David Robinson has been unable to access his funds, including disability allowance, from his account with thinkbanking. It is an internet-based bank that uses the RBS platform, so he could not go into an RBS branch to resolve his problems. Will the Minister please make contact with RBS about internet banking users and make sure that my constituents—and everyone else—are not unduly affected?

The Financial Secretary to the Treasury (Mr Mark Hoban): The hon. Lady makes an important point, and I spoke to Stephen Hester this afternoon to find out what progress RBS has made in resolving its issues. It introduced measures to help people who can access branches, but she makes a very important point about internet banking, and RBS is very keen to learn the lessons from those problems and to put in place contingency arrangements for the future. I encourage her to get her constituent to write to RBS, and, if he has suffered additional costs as a consequence of the situation, to make that claim to it.

Stephen Williams (Bristol West) (LD): Embarrassing revelations about celebrities’ tax affairs usually bring a flurry of people to their tax accountants, asking them to check whether their affairs are all in order. Will the Treasury ask HMRC to encourage people to come forward voluntarily now and confess to what they may be up to, rather than wait for an investigation into their tax affairs?

The Exchequer Secretary to the Treasury (Mr David Gauke): My hon. Friend makes a very good point, and I hope that all those who have engaged in aggressive tax avoidance schemes consider whether it is the right thing to do and reconsider their affairs.

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Sheila Gilmore (Edinburgh East) (Lab): One of my constituents was told by her department store employer that she either had to accept a 12-hour contract, which amounts to fewer hours than she works at the moment, or go fully flexible, which does not fit with her child care. Is it not time that the Chancellor decided to do another U-turn and to restore tax credits to those working couples who do not work up to 24 hours a week?

The Economic Secretary to the Treasury (Miss Chloe Smith): We on the Treasury Bench have argued many times in the House that it is fair to ask couples to work under similar requirements as lone parents, and I urge the hon. Lady to consider that in this case.

Mr John Redwood (Wokingham) (Con): When will the House be given the details of the three very large schemes for monetary easing announced at the Mansion House, and when will we be given a chance to debate them?

Mr Osborne: It is standard practice for the Bank to announce its own monetary and liquidity schemes. That is what it did with the liquidity proposals, and the Governor of the Bank was answering questions about them this morning before the Treasury Committee in this House. When we have further details about the funding for lending scheme, we will of course come to the House and make that announcement, but I hope that my right hon. Friend will allow me to continue to make Mansion House speeches as Chancellors have before.

Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op): The counter-party proposal and the levy control mechanism fall within the ambit of the Treasury. Within the past hour the Energy Secretary has told the Energy and Climate Change Committee, which is undertaking pre-legislative scrutiny of the Energy Bill, that he would welcome a Treasury Minister going before it to explain those proposals. Why is the Economic Secretary refusing to do so?

Miss Chloe Smith: In correspondence with the Chairman of the relevant Select Committee, I have articulated that there is no precedent in the records that we can find for a Minister from one Department to assist in the scrutiny of another Department’s legislation.

Mr Speaker: Last but not least, the House—and the nation—can hear from Mr Simon Hughes.

Simon Hughes (Bermondsey and Old Southwark) (LD): Following the exchanges about tax avoidance and the Government’s very robust position, can one of the Treasury team tell us how soon we will have in place a system that targets not just celebrity individuals but all high-worth individuals, so that they all pay a decent share of tax to the nation?

Mr Gauke: HMRC already has in place a particular team that focuses on high-net-worth individuals; under this Government, we have also introduced a team that deals with not just the very top but the next band; and we are looking to introduce a general anti-abuse rule that will address tax avoidance—aggressive tax avoidance—more widely. This Government remain absolutely determined to ensure that people pay their fair share.

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Rio+20 Summit

3.34 pm

The Deputy Prime Minister (Mr Nick Clegg): Last week, 196 nations met in Rio, 20 years after the original Earth summit. Our task was to find a way to set the world back on a sustainable path. Important progress had been made in the past two decades on reducing poverty and protecting our environment, but all in all, ambitions had not been met. Our dilemma was to agree ways to grow our economies without hoovering up or destroying our precious natural resources, recognising that our economic and environmental agendas must go hand in hand. Our challenge was to take the right decisions, not just for ourselves, but for the next generation which, in just 18 years, will need 30% more water, 45% more energy, and 50% more food.

Was this summit an unqualified success on all those fronts? No, it was not—but few would have expected it to be. But we did make progress on the key areas that the UK sees as the priority for sustainable development and green growth. I pay tribute to my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs for her commendable efforts at the summit itself and for her intensive preparations with the Secretary of State for International Development.

At the summit, the United Kingdom Government played a crucial role in leading on four important shifts. First, while the Rio declaration was not all that we would have wanted, this is the first time that a multilateral document expressing such strong support for the green economy has been agreed. That in itself is a major achievement recognising that, in the long term, greening our economies should not conflict with growing them. The declaration helped to alleviate some of the fears of developing countries that green growth is a veil for a kind of eco-protectionism designed to stymie their development. It united nations behind the simple principle that, as US Secretary of State Hillary Clinton put it at the summit,

“the only viable development is sustainable development which will deliver lasting progress for everyone.”

Secondly, Rio+20 recognised that we need to develop broader measures of progress to complement GDP in order to take account of the natural assets that will contribute to future prosperity—so-called GDP-plus. In the UK we have already committed to including natural capital within our system of national accounts by 2020. We worked hard at the summit to ensure that all nations present recognised the importance of broader measures of environmental and social wealth to complement GDP.

Thirdly, we agreed to set up the sustainable development goals—a concept proposed by Colombia. I was one of the first to welcome this idea when President Santos visited London in November. The UK has been pushing hard to secure agreement ever since, and achieving it, even at this high outline level, was no mean feat. The UN Secretary-General, Ban Ki-moon, said that the SDGs should draw on the success of the millennium development goals and should be an integral part of the post-2015 development framework. We would have liked to see specific themes agreed, focusing on ensuring that everyone can access enough food, energy and water, but getting such agreement was always going to be a huge

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undertaking. The UK Government will continue to keep up the pressure for rapid agreement. From now on, the process must be coherent and co-ordinated with the work of Secretary-General Ban’s high-level panel on the post-2015 framework, which the Prime Minister will co-chair along with the leaders of Liberia and Indonesia.

Fourthly and finally, at Rio national Governments recognised the importance of working alongside businesses. Thanks in no small part to the leadership of UK firms, Rio recognised the role of corporate sustainability reporting to their shareholders and to prospective investors—something that would have been inconceivable even a year ago. I also announced in Rio that we will be the first country anywhere to mandate large companies to report on their greenhouse gas emissions. A growing number of companies and investors are realising that their own success is directly linked to sustainable, green growth. We hope that the call from all nations for businesses to report their sustainability performance will usher in a new era of transparency and consistency in the global business community.

In summary, although Rio+20 did not go as far as we would have liked, it revived a global commitment to an agenda that has come gravely under threat. Progress was made in the areas where progress needed to be made. The declaration agreed by all 196[Official Report, 3 July 2012, Vol. 547, c. 7-8MC.] countries should not be seen as the upper end of our ambition; it should be our baseline and we should all strive to surpass its expectation. We must build on the steps that were taken to reinvigorate the drive for sustainable development and lasting growth.

The UK played a leading part last week because we are on track to deliver our commitment to spend 0.7% of gross national income on official development assistance to developing countries from 2013; because I announced the adaptation for smallholder agriculture programme, which will improve the lives of more than 6 million smallholder farms; because we are taking the lead in areas such as reproductive health and family planning; because we are the first country whose major businesses will report their greenhouse gas emissions as part of their annual accounts; and because of the range of ways in which we are greening our economy. We will remain committed to working with our partners and will be ambitious for the future. The summit is over but the work continues, and the UK will continue to lead from the front.

3.40 pm

Mary Creagh (Wakefield) (Lab): I thank the Deputy Prime Minister for the advance copy of his statement.

The original Rio declaration sought to eradicate poverty, reduce unsustainable production and consumption, and promote greater co-operation to protect the world’s ecosystems. It is as relevant today as it was 20 years ago. Expectations were low for this summit, and those expectations were met. I pay tribute to the Deputy Prime Minister and the Secretary of State for Environment, Food and Rural Affairs, who worked as part of the EU delegation to prevent the summit from reaching abject failure.

There was a glimmer of hope. Ban Ki-moon’s zero hunger challenge aims for a future in which everyone enjoys their basic human right to food and in which global food systems are resilient. It aims to provide

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access to adequate food all year round, increase small farm productivity and see zero waste of food. We welcome the UK’s contribution of £150 million to help meet the zero hunger challenge.

Will curbing land grabs by large companies and improving land rights, especially for women, be on the agenda of the high-level meeting on hunger that will take place during the Olympics? What does the Deputy Prime Minister make of the Prime Minister’s comments yesterday that a future Conservative Government would consider handing out some state benefits “in kind” rather than in cash? Does he think that handing out food vouchers to the poor is a good idea, when the Brazilian zero hunger scheme was based on the Bolsa Família, which gave money directly to families in poverty and let them choose how best to feed their children? How will the zero hunger initiative tackle food poverty in the UK, where the Trussell Trust charity estimates that it will feed 130,000 people this year, 45,000 of whom are children?

The Deputy Prime Minister mentioned that the Prime Minister, alongside the Presidents of Liberia and Indonesia, will co-chair a new UN committee to establish a new set of millennium development goals to follow those that expire in 2015. How will the new goals relate to the sustainable development goals that will emerge from Rio?

There was progress in the field of energy, with the Secretary-General’s sustainable energy for all initiative, which received pledges of $323 billion in funding to bring clean energy to more than a billion people in developing countries. We welcome that. We also welcome the Deputy Prime Minister’s announcement at Rio that the UK will introduce carbon reporting for 1,800 quoted companies from April next year, as set out in Labour’s landmark Climate Change Act 2008. That was, sadly, the weakest option that the Government consulted on. It creates the anomaly that British Airways will report its carbon footprint as a public company, but that Virgin Atlantic, as a private company, will not. However, we are the first country in the world to do it, which gives us a temporary, green competitive advantage to make up for the Government’s disastrous handling of the solar feed-in tariffs.

The agreements on biodiversity, oceans and the trade in endangered species are welcome. However, the Government have refused to guarantee funding for the UK’s wildlife crime unit after next April. Does he agree that that unit is on the front line of fighting the illegal trade in endangered species, and will he argue for its benefits at the heart of Government?

Sharing the benefits of the planet’s biodiversity equally is an important building block for what happens after Rio, yet the Government have still not ratified the Nagoya protocol, which was agreed last year, on access to and benefits from genetic resources. What assessment has he made of the action we need to take to comply with the protocol, and will the Government show leadership in the EU by ratifying it?

We know that sustainable development starts at home. Far too often, the Government have been found wanting—they abolished the Sustainable Development Commission and failed to introduce marine protected areas, and their implementation of their forests policy was disastrous.

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Will the Deputy Prime Minister therefore tell the House how the Government will change how they do business to reflect the Rio conference outcomes?

Will the Government publish a UK action plan as a framework for the changes that they seek after Rio? Does the Deputy Prime Minister agree with his right hon. Friends the Secretaries of State for Environment, Food and Rural Affairs, for International Development and for the Foreign Office that the Government need to invest more in a resource-efficient economy and low-carbon jobs to reduce costs and protect the UK from rising oil prices and energy dependency?

The Deputy Prime Minister should be in no doubt that the Opposition will work with him across party boundaries to achieve the long-term solutions that our planet needs. Rio showed that the solutions to ending hunger and deforestation, and to securing clean energy and water for the poorest, are all out there. We just need to scale them up.

The scientists tell us we must act now and businesses stand ready to play their part. The tragedy is that the politicians did not agree concrete mechanisms by which those things can happen, but as the Deputy Prime Minister has said, Rio was not a destination but a milestone on a long road. We stand ready to support the Government to make the change we need to deliver the future we want.

The Deputy Prime Minister: I thank the hon. Lady for her recognition of what I think is our shared commitment to the agenda discussed at Rio. I totally share her support for the zero hunger initiative; I attended a session in Rio at which the initiative was discussed. She asked about the hunger summit that will be held this summer. I do not know the precise agenda, but she referred to the importance of legal rights to property and land, which are crucial to dealing with hunger sustainably.

The hon. Lady asked about the interaction between sustainable development goals, ill-defined though they were at the Rio summit, and the work on the post-2015 agenda. The Government’s strong view is that the sustainable development goals as defined by the group of 30 representatives, which will be established in September, must feed into the wider review of the millennium development goals through the high-level panel that has been established by the Secretary-General.

I will not disguise from the hon. Lady the fact that within that procedural complexity, there are a lot of sensitivities. Candidly, some developing countries have hitherto felt that their voice is not strongly enough heard in some UN processes. The Prime Minister and his co-chairs will work hard to ensure that the voices of the developing world are properly listened to in the review of the MDGs to allay the concern that precisely the part of the world that will benefit most from the process is shut out from it. We need to do quite of lot of work to ensure that the different acronyms and processes do not start becoming rival acronyms and process—that is a danger.

The hon. Lady mentioned the sustainable energy for all initiative, which I am glad she supports; it is an outstanding initiative. I hosted a preparatory meeting of the group on the initiative in London some months ago. We had hoped that the Rio declaration would

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adopt the initiative as a core conclusion. In the event, because of the nervousness of some participants on what the initiative means and its implications, it was “recognised” in the declaration. We would have inserted a stronger verb, but none the less, as with all those initiatives, we now need to exploit that recognition and work on it.

The hon. Lady complained that the proposal on greenhouse gas emissions reporting does not go far enough. We have to start somewhere. We are the only country doing this. Some people complain that we have already gone too far and are imposing too many burdens on business. Other business groups, such as the CBI, have welcomed the proposal. I think we are breaking new ground, and I hope she will welcome that rather than cast aspersions on it.

The hon. Lady will know that the Darwin initiative is a robust initiative that we are using to monitor the plight of endangered species. Finally, she rightly said that these summits make sense only if one acts consistently with them at home. We are rightly proud of our record: we are the first country to establish a green investment bank; the green deal, which will be up and running in the coming six to eight months or so, will be the largest initiative of its kind for installing energy efficiency measures and bringing down energy bills in homes up and down the country; and the green sector, the green economy, is growing by about 5% a year, employs close to 1 million people in this country and actually runs a trade surplus. That is something we should cherish and celebrate. The carbon floor price is another major innovation of the Government, while the electricity market reform, which is one of the most ambitious legislative and regulatory overhauls of an electricity market I am aware of anywhere in the developed world, is explicitly designed to ensure that we have a sustainable energy mix for future generations.

Miss Anne McIntosh (Thirsk and Malton) (Con): I congratulate everyone involved on what was a genuine team effort. Will the Deputy Prime Minister assure the House that one of Rio’s lasting legacies will be the agreement to reaffirm a universal, open, non-discriminatory and equitable multilateral trading system for food and agricultural products? Will he give an undertaking that we will really push for Doha to deliver this through the World Trade Organisation?

The Deputy Prime Minister: No one is in any doubt that one of the greatest boosts to prosperity across the world would be a successful completion of the very, very, very, very long-awaited Doha development round. It is immensely frustrating that getting agreement on it has proved so elusive. Many have written it off altogether, and it is difficult not to be pessimistic about it, but that does not mean that we should not continue to pursue the cause of multilateral trade liberalisation.

Mr Peter Hain (Neath) (Lab): Given the frustratingly disappointing outcome of Rio and the crisis of investor confidence in solar PV, onshore wind and nuclear in Britain, is it not even more important that the Deputy Prime Minister joins the growing cross-party support for the Severn barrage, which would generate 5% of the

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electricity in Britain and create nearly 40,000 jobs—a green project that will deliver the Government’s renewable energy commitments?

The Deputy Prime Minister: I pay tribute to the fervour with which the right hon. Gentleman is throwing himself into this new cause in a political career of many great causes. I agree with the underlying assertion that for investors to make investments in major energy infrastructure of whatever kind, they need long-term stability and long-term certainty about the direction of Government policy. That is precisely what the electricity market reform aims to provide.

Zac Goldsmith (Richmond Park) (Con): Despite the prominence given before the conference to protecting the world’s oceans in the face of the ongoing collapse in world fish stocks and the continued obliteration of coastal livelihoods, it has been widely reported that the concrete steps put forward were effectively blocked by Russia, Canada and the US. Is that true? If not, what specific steps were agreed?

The Deputy Prime Minister: In many ways, it is actually more dispiriting than the hon. Gentleman suggests, because we did not manage to get any agreement on any of the themes governing the sustainable development goals. Sensibly, perhaps, in view of the dynamics at Rio, that has been left for the working group in September. On the plus side, from his point of view, the text reflects the importance of oceans and their sustainable use, and I would be surprised if oceans did not feature prominently in the final shape of the sustainable development goals as they are crafted in the months and years ahead.

Dame Joan Ruddock (Lewisham, Deptford) (Lab): The Deputy Prime Minister will have heard my hon. Friend the Member for Wakefield (Mary Creagh) mention the Nagoya protocol, which, as he knows, has not been ratified. He knows how important it is to access and benefit sharing. Will he undertake to meet his EU counterparts in order to move forward the EU position on this matter, which is truly critical?

The Deputy Prime Minister: We certainly want to see full ratification of the Nagoya protocol. It is something that this country has done, and I know that my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs is working with her counterparts in the European Union to encourage those who have not yet taken the necessary steps to do so. To make one observation, the Nagoya protocol flowed from the original Rio+20 summit, but it was not agreed at that summit. The only reason why I make that point is that, for those who say that an insufficient number of legal texts were agreed this time around, it is worth recalling that the history of the last Rio+20 summit was that, while it was much more substantive than this one, it did lead and create a momentum that subsequently led to legal texts. I say to those who have responded with complete despair about this summit that it is now a matter of what we do with it and whether we can turn it into legally binding documents, which is the challenge for the future.

Mr Peter Lilley (Hitchin and Harpenden) (Con): Within the privacy of this Chamber, will the Deputy Prime Minister admit that Rio actually showed that it is

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now blindingly obvious that no other major country proposes to follow us in imposing a legally binding obligation to cut emissions by 80% at a cost of £430 billion to our economy, so we should discreetly shelve the Climate Change Act 2008 as soon as possible?

The Deputy Prime Minister: My understanding is that Mexico has done just that, just now, so it is not right to say that countries are not seeking to follow our lead. In my bilateral discussions with members of the Brazilian Government, I was struck by how forceful they were, as a major emerging economic power, in expressing the view that their own future success would be defined by their ability to grow sustainably, which would require a departure from simply copying how development has been pursued in the past. I am afraid that I do not share the right hon. Gentleman’s pessimism about the virtues of, and potential for, sustainable growth in the future.

Caroline Lucas (Brighton, Pavilion) (Green): The final text from the Rio summit effectively sells out the vision of a green economy by replacing the usual phrase “sustainable development” or even “sustainable growth” with a phrase of a quite different meaning—“sustained economic growth”. Given that Kenneth Boulding has famously written:

“Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist”,

will the right hon. Gentleman tell us whether the problem at Rio was too many madmen or too many economists?

The Deputy Prime Minister: I will not choose which. I think the hon. Lady is selecting somewhat partially from a mammoth text, which refers to “sustainable growth” and “sustainable development” throughout and in almost every paragraph. She has been a little partial in her selection of those two phrases. The whole assumption behind Rio was an overt recognition that it is senseless, and unfair on future generations, our children and our grandchildren, to grow today and clean up later. That fundamental development dilemma, whereby development is pursued at the cost of the sustainable use of resources, was at the heart of Rio thinking before the summit and during it, and it must remain part of our thinking subsequent to the summit as well.

Simon Wright (Norwich South) (LD): The agreement at Rio for a new high-level political forum on sustainable development could provide the leadership that has been lacking in the past for the implementation of declarations and action plans. Will the UK Government do all they can to ensure that the new forum has a wide agenda, a clear mandate to act and high-level political backing?

The Deputy Prime Minister: Yes; I think there is great potential for that forum to do good work. Given that all these forums are working on agendas to which we have made a great commitment as a Government, we will remain committed to their successful work.

Joan Walley (Stoke-on-Trent North) (Lab): In thanking the Deputy Prime Minister and the Secretary of State for their work at Rio and notwithstanding the outcome, will the right hon. Gentleman commit to an early appearance before the Environmental Audit Committee, so that all the different strands of all the different

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groups that want urgent action now, but did not get that reflected in the high-level agreement, and this UK Parliament and its legislators, can map out a way of taking urgent action and ensuring that it is followed up?

The Deputy Prime Minister: I thank the hon. Lady for her invitation, and I will think about it carefully. I know that my right hon. Friend the Secretary of State has attended her Select Committee. She is right, of course, to say that the Committee plays a crucial role in mobilising the opinions of many groups—non-governmental organisations and others—which take an interest all this. I hope that she recognises—as I know she was there—that the Government made considerable efforts to talk to all those groups on an ongoing basis, notwithstanding their evident disappointment in the outcome of the summit, and we will of course continue to do so.

Paul Uppal (Wolverhampton South West) (Con): There is great news about the economic development of sub-Saharan Africa, which is a possible portent for the future but is also a double-edged sword, because that development is built on the back of natural and mineral resources. Can my right hon. Friend assure me that the UK will continue to take a lead on sustainability, and will tackle concerns about eco-protectionism head-on?

The Deputy Prime Minister: That is one of the issues that were raised forcefully by many of the leaders from Africa. I had a meeting with President Meles of Ethiopia, who is a leading thinker on all these matters. He recognises, in a way that I think is pretty far-sighted, that notwithstanding the challenges that his people now face, he will be doing a disservice to them and, indeed, to future generations of Ethiopians if they do not use the resources that are available to them in a sustainable fashion.

Mr Ben Bradshaw (Exeter) (Lab): The hon. Member for Richmond Park (Zac Goldsmith) was right to identify as particularly depressing the total failure to make any progress on the second biggest environmental issue that affects us—the need to protect our marine environment—but would not Britain have more credibility in terms of leadership if we were not already two years behind in establishing our own network of marine protected areas, and if the Government had not drastically reduced their number so as to render them almost useless?

The Deputy Prime Minister: I think that it was right for us to take the extra time to secure a firm evidence base in regard to those areas. We are not abandoning the agenda; we are trying to do our job as thoroughly and rigorously as I know the right hon. Gentleman would expect.

Mr John Redwood (Wokingham) (Con): The UK hit the Kyoto targets, while a number of our leading European Union competitors signed up with a fanfare but came nowhere near hitting them. Is there any sign now that those European big energy-using countries will do better in the future?

The Deputy Prime Minister: My own view is that any developed economy will serve itself best by moving towards an energy mix that is diverse, sustainable, and

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not over-reliant on unreliable forms of energy and very volatile global prices. I think it is a good thing that we have been leading that agenda in this country while also meeting our Kyoto targets. Those activities are not inconsistent with each other, and I personally rebut the idea that a shift of that kind is incompatible with highly competitive economies.

Barry Gardiner (Brent North) (Lab): I welcome the frankness with which the Deputy Prime Minister delivered his statement on the outcomes of Rio, which were not what we could all have wished for. I think he recognises that one of the real strengths of the processes surrounding Rio is what is happening at national level. In that context, would he care to comment on the success of the world summit of legislators, which was held during the weekend before the high-level session, and on the progress that was achieved there at national level? He referred to Mexico, but there has also been progress relating to natural capital, the marine environment and deforestation.

The Deputy Prime Minister: I pay tribute to the hon. Gentleman for his work in GLOBE International, the world legislators’ forum. It was very helpful to me in Rio to listen to his views about the work of that body. I strongly agree with him: I think that some Governments and Parliaments sometimes struggle to know exactly what legislative steps they should take in this regard. The establishment of best practice for them, via GLOBE, on a range of sustainable development issues can serve as an important catalyst to ensure they do not just talk the talk, but walk the walk.

Andrew George (St Ives) (LD): I congratulate my right hon. Friend and his ministerial team on pushing the summit further than I suspect it would have gone without them, although the outcomes themselves were very modest. Does he agree, however, that although binding agreements and legislation were never going to be part of the final outcome, we should welcome the fact that the summit put genuine sustainability back on to the agenda, and also set out a vision for its delivery?

The Deputy Prime Minister: Yes. The breakthrough, conceptual though it is and not concrete enough, is that 196 countries are saying overtly and explicitly, “We think development needs to be resource-sustainable and we want to craft sustainable development goals.” However, in a sense, this is a concept without sufficient content. The test of whether it will be looked back on as a complete wash-out or a great triumph is what we then do with that outline concept, and whether we have the political will to use the mechanisms that have been established—not least the group that will start work in December—to flesh out the content and feed that into the wider review of the millennium development goals as they are reviewed and strengthened in the post-2015 framework.

Mr Mike Weir (Angus) (SNP): The Deputy Prime Minister has been very candid about the limitations of the declaration from Rio, but he urges us to strive to surpass his expectation. Does he any specific ideas about what the UK might do in this respect? In particular, has he thought about following the Scottish Government’s example of establishing a climate justice fund?

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The Deputy Prime Minister: As the hon. Gentleman may know, we have not only set an international precedent by, for instance, announcing that some of the largest companies will be abiding by new greenhouse gas emission reporting requirements; we are also setting the pace by moving towards what I referred to in my statement as GDP-plus by 2020, whereby we do not just take a snapshot of our nation’s wealth and prosperity, but try to include in that new measures of the resources we are using and their sustainability. We have established a natural capital committee, chaired by Professor Dieter Helm, which I think is the first of its kind. Those are not only institutional but methodological innovations that are genuinely world beating, and I very much hope that other countries will follow our lead.

Mr David Nuttall (Bury North) (Con): Does the Deputy Prime Minister agree with Mr Kandeh Yumkella, the joint head of the United Nations “sustainable energy for all” initiative, who said:

“You can’t save the forest if you don’t have gas”?

Consequently, this country ought to expedite the use of our shale gas reserves in order to reduce domestic energy prices.

The Deputy Prime Minister: As the hon. Gentleman may know, the Chancellor announced at the Budget that we would be developing a gas strategy. Our overall approach to energy policy as a Government is to make sure that the sources of energy we rely on are as diverse and sustainable as possible, and clearly, gas plays an important role in that. That is why we are committed to producing this new gas strategy.

Mark Hendrick (Preston) (Lab/Co-op): The Deputy Prime Minister referred in his statement to the commitment to providing 0.7% of GNI for development assistance. All three major political parties would like to put that commitment into law. Why, therefore, did the International Development Secretary—he is in his place next to the right hon. Gentleman—categorically refuse point blank to support my private Member’s Bill? Members of both parties in the coalition have said that they will support the Bill, and doing so would save parliamentary time and get it through sooner, rather than later.

The Deputy Prime Minister: As the hon. Gentleman knows, the response to his private Member’s Bill is a matter for the House. I should point out to him that if he attaches such significance to legislating on this issue, why on earth did his party not do it in 13 years in office? We are very clear that we will be delivering our commitment to allocate 0.7% of GNI from next year, and that we will legislate as soon as we possibly can.

Mr Graham Stuart (Beverley and Holderness) (Con): Across the world at national level, legislators are effecting environmental change and improvement, even as intergovernmental processes stall. Further to the Deputy Prime Minister’s reply to the hon. Member for Brent North (Barry Gardiner), will he support the GLOBE world summit of legislators process going forward, so that, from Mexico to China in the past, and other countries in the future, we can see action today, rather than words at summits?

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The Deputy Prime Minister: As I explained in my meeting in Rio, I am intuitively a big supporter of GLOBE, as I think it is far better if these summits are not just a get together of Presidents, Prime Ministers, Deputy Prime Ministers and Ministers, but involve legislators; they should not just be a great big club of the Executive. The more we can involve legislators and Parliaments, the more we can guarantee that action is subsequently taken. I am very happy to look at ways in which the Government could provide more support, in as much as we can, to the excellent work that GLOBE has already undertaken.

Nia Griffith (Llanelli) (Lab): Following Rio+20, I am sure that we all agree that fine words need to be backed up with practical actions, so could the Deputy Prime Minister tell me what safeguards his Government will put in place to ensure that, with the growing number of biomass-fuelled power plants, imported biomass material comes from genuinely sustainable sources and is not contributing to deforestation and loss of biodiversity?

The Deputy Prime Minister: My understanding is that there are European Union standards that seek to ensure that the biomass industry adheres to basic environmental standards, but it is one industry of many in which this Government are keen to ensure that there is more, rather than less, investment, in order that we get the diverse mix of energy sources and energy generation that I referred to earlier.

Martin Horwood (Cheltenham) (LD): I commend my right hon. Friend and the Secretary of State on the positive stand taken by Britain in Rio, but given the lack of any landmark agreements comparable to the original Earth summit, how can Britain now promote rapid, timetabled agreement on issues such as GDP-plus and the sustainable development goals?

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The Deputy Prime Minister: The SDGs, which are the core commitment at Rio, do have fairly clear procedural timetables; a group of 30 representatives will be established in September, and the UN Secretary-General has been clear that that must feed into the wider post-2015 millennium development goals process. There is a pretty clear process. However, we just have to recognise that a summit in a world where power is shifting to different hemispheres and different continents is different from one that took place 20 years ago. Brazil now has authority and clout on the international stage that it did not have then; the G77 is organised as a caucus of developing countries, which was not quite the case 20 years ago, and they are rightly more demanding that their voice and voices should be heard. That is reflected in the more diverse push and pull that we witnessed at the Rio summit.

Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op): One of the areas of disappointment was the failure to move forward on measures to improve access to water and sanitation for the many millions in the world who do not have that. Given that, and given that I know the Government are committed to that objective, what steps will they take in other international bodies to try to promote the objective of improving access to water and sanitation throughout the world?

The Deputy Prime Minister: I agree with the hon. Gentleman that that is one of the most important issues, as we see from the shocking and scandalous figures on the number of children and women, in particular, who have died because of poor sanitation and restricted access to clean water. It was one of three themes—food, water and energy—that we had hoped would be defined in greater detail under the rubric of the sustainable development goals at Rio. We will continue to push to do that as they are defined in greater detail in the months ahead.

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Points of Order

4.13 pm

Mary Creagh (Wakefield) (Lab): On a point of order, Mr Speaker. During yesterday’s urgent question on flooding, I asked the Secretary of State for Environment, Food and Rural Affairs what support Calderdale council could expect to receive under the Bellwin scheme to fund both its emergency response and its recovery effort. In her reply, she said that

“the trigger for the Bellwin formula is 15% of a local authority’s income”.—[Official Report, 25 June 2012; Vol. 547, c. 25.]

That did not sound right to me, so I went to the House of Commons Library and discovered that the trigger is in fact just 0.2% of a council’s annual income; that triggers a reimbursement from central Government of 85% of the costs incurred. Would you like to invite the Secretary of State to comment and correct the record on this matter?

Mr Speaker: Clearly this is a key point in the mind of the shadow Secretary of State. As the Secretary of State is with us and literally on the edge of her seat, let her come to the Dispatch Box and respond if she so wishes.

The Secretary of State for Environment, Food and Rural Affairs (Mrs Caroline Spelman): This just shows what we all know in the House: when it is not one’s departmental brief, one probably should not venture an opinion. The hon. Lady has informed the House of this matter. The 15% figure that was in my mind when answering the urgent question comes from the amount that is then disbursed to the local authority. I have taken

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the matter up with the Department for Communities and Local Government, but what matters is that the council gets help if it is entitled to it.

Mr Speaker: We are grateful to the Secretary of State for that acknowledgement and explanation, which is very helpful.

Dr Julian Lewis (New Forest East) (Con): On a point of order, Mr Speaker. Although, sadly, the Deputy Prime Minister is no longer with us—corporeally, at any rate—I was concerned, as I trust you were, at the widespread reports in the weekend press that he had vetoed any prospect of a referendum on the possible introduction of a proportional representation voting system for elections to a reformed upper House. Given the constitutional importance of such an issue and the motivation that it is clearly designed to help the Liberal Democrats retain a permanent stranglehold on future legislative processes, should not such announcements be made initially to this House rather than via the media?

Mr Speaker: That was a scintillating polemic for the House to savour, but what I would say to the hon. Gentleman, whom I have known for 29 years this October, is that although the logic of his attempted point of order is compelling, it suffers as a point of order from the disadvantage that the premise on which the logic has been built is, in my judgment, misplaced. The reason I say that to the hon. Gentleman is that the Deputy Prime Minister was not announcing a change of Government policy but, as far as I can tell, merely reiterating the status quo. That will have to do for now, but all these matters will doubtless be explored eloquently, in detail and at length in the upcoming debates on House of Lords reform, to which I fancy the hon. Gentleman will wish to contribute.

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Opposition Day

[3rd Allotted Day]

Secondary Education (GCSEs)

Mr Speaker: I inform the House that I have selected the amendment in the name of the Prime Minister.

4.16 pm

Stephen Twigg (Liverpool, West Derby) (Lab/Co-op): I beg to move,

That this House notes the forthcoming consultation on the restructuring of the secondary education system; further notes the proposals reported in the press on Thursday 21 June of Government plans for replacing GCSEs with an O-Level and CSE system; believes that these proposals could, in the words of the Deputy Prime Minister, ‘lead to a two tier system where children at quite a young age are somehow cast on a scrap heap’; and calls on the Government to ensure any proposal for changes to the secondary education system are subject to approval by the House.

In three years’ time, the education leaving age will rise to 18. That change represents a huge challenge to schools and colleges up and down the country. How can the education system adapt to the challenge? How can we enable all children and young people to achieve their full potential? How do we ensure that young people have the skills and knowledge to succeed in life, including in the world of work?

Earlier this month, the Secretary of State was advocating a return to Victorian-style rote learning in our primary schools. Now he wants to bring back a two-tier exam system, which his own party abolished more than 25 years ago. That is all from a Government who are making the biggest cuts to education spending since the 1950s. I am a great supporter of history, but I do not believe that we need a school system that is stuck in the past.

The Opposition believe in stretching the most able students. We believe in rigour, high standards and opportunity for all students in all subjects, academic and vocational.

Several hon. Members rose

Stephen Twigg: I will give way shortly, but I want to develop my argument first.

The most important ingredients of success in education are the quality of leadership and the quality of teaching and learning; the Secretary of State is nodding his assent. It is vital that those ingredients are backed by a credible set of qualifications. We support reforming the structure of the examination system to deal with unhealthy competition between exam boards. If that means a single exam board, we will consider those plans in detail, and I understand that the Select Committee is due to make proposals to deal with that precise challenge shortly. Sensible, thought-through and evidence-based measures to increase rigour and tackle grade inflation will have the full support of the Opposition, but let us be clear about the fundamental difference between us and the Education Secretary: the proposal to divide pupils at 14 into winners and losers.

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When the Deputy Prime Minister woke up in Rio last Thursday, he said about the Secretary of State’s proposals:

“I am not in favour of anything that would lead to a two-tier system where children at quite a young age are somehow cast on a scrap heap. What you want is an exam system which is fit for the future”


“doesn’t turn the clock back to the past…so it works for the many and not just…the few.”

I agree with that sentiment. The question for Liberal Democrat colleagues is whether they have the courage to vote for our motion, which supports the words of their leader.

Alok Sharma (Reading West) (Con): Labour made a real difference to our education system—there is no doubt about that. However, at the same time as grade inflation was on the rise we were dropping in the international league tables on maths, English and science. Should not the hon. Gentleman be apologising for the disservice he has done to our young people, or is he now championing mediocrity once again?

Stephen Twigg: Well read, I suppose. I must correct my earlier remark when I referred to Liberal Democrat colleagues because I think there is only one Liberal Democrat Member in the Chamber. [Hon. Members: “Two!”] Sorry, there are two. I was going to comment on the absence of the Liberal Democrat Minister of State, Department for Education, the hon. Member for Brent Central (Sarah Teather), but we have instead the Liberal Democrat Minister of State, Foreign and Commonwealth Office, the hon. Member for Taunton Deane (Mr Browne). I think the percentage would be just under 2%—that is my calculation.

Last week, the Daily Mail, in a leaked story, reported:

“None of the plans require an Act of Parliament.”

This week, according to the Government’s amendment on the Order Paper, the Government are calling for proposals that are approved by Parliament. May I welcome yet another U-turn by the Government to give Parliament a proper say, but may I suggest that as well as changing the process, the Secretary of State should change the substance of these leaked proposals? Today’s debate provides the House with an opportunity to reject a move to bring back a system that was created in the 1950s and abolished in the 1980s.

These proposals were leaked just as pupils were sitting their GCSEs. As nervous and stressed young people were queuing up to sit hugely important exams, the Secretary of State was saying that those exams were worthless. How insulting to young people who have studied and revised so hard. How insulting to parents who have helped their children through the stress of exams and how insulting to our brilliant teachers who have worked so hard to prepare their pupils. Why are these changes being made now and why are they being rushed? Is the Secretary of State concerned that his other policies will result in a fall in school standards? Is it that he needs to mask the reduction in standards by abolishing the main existing measure of secondary school results? Is that why the Government are so determined to do this?

Jake Berry (Rossendale and Darwen) (Con): In 2004, when the hon. Gentleman was criticised for putting a cake decoration qualification on a par with GCSE

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maths he called it “educational snobbery”. Does he stand by those comments? Does he still believe that cake decorating is equivalent to GCSE maths?

Stephen Twigg: I have never believed that cake decoration is equivalent to GCSE maths, and I certainly think the hon. Gentleman should come up with better interventions than that.

These plans are nothing less than a cap on aspiration. When he introduced the GCSE in 1984, the then Conservative Secretary of State, the late Lord Joseph, said the new system would be

“a powerful instrument for raising standards of performance at every level of ability.”—[Official Report, 20 June 1984; Vol. 62, c. 304.]

Last week, the hon. Member for Beverley and Holderness (Mr Stuart), the distinguished Conservative Chairman of the Select Committee on Education, said that the Secretary of State is

“setting out a policy that appears to be more focused on the brighter kids…and not focusing on the central problem we have which is doing a better job for the children at the bottom.”

The Government amendment this afternoon claims that they want “high standards for all” to boost social mobility, but the proposals leaked to the Daily Mail admit that 25% of “less-able pupils”—about 150,000 a year, every year—would take

“simpler qualifications similar to old-style CSEs”.

Last week, Lord Baker, another Conservative former Education Secretary, said that the certificate of secondary education was

“a valueless bit of paper. It was not worth anything to the students or the employers.”

How will writing off a quarter of young people boost social mobility and standards for all?

Mr David Lammy (Tottenham) (Lab): Does my hon. Friend recognise the scenario in, I think, the first year in which the GCSE was introduced, where many working-class children in inner-city contexts were streamed off to the CSE and then went on to the failed youth training scheme? We do not want that scenario back in our inner cities. We need to ensure parity for all at 16.

Stephen Twigg: My right hon. Friend is absolutely right and anticipates my next point. We know from analysis of the CSE that it was, in practice, a school-leaving certificate for the poor. In the decade after its abolition, the number of the poorest pupils staying on at school after 16 increased by a very significant 28%. The CSE and O-level system was designed more than half a century ago, when our society was completely different—there were far more unskilled jobs and typically children were split off into grammar schools and secondary moderns. A pupil at a comprehensive in 1971 was 25 times more likely to take CSEs than a grammar school pupil—perhaps not surprising. A pupil in a secondary modern school was 50 times more likely to take CSEs than a grammar school pupil.

Elizabeth Truss (South West Norfolk) (Con): Does the hon. Gentleman agree with me that the world’s skills are increasing and we need to compete? Can he explain why, under the Labour Government, in 2000 we were ahead of Germany in the maths league table, but

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by 2009 we were 12 places behind Germany? What did he do when he was in government to raise standards in vital subjects and compete with other countries?

Stephen Twigg: First, how would this solution help? As the hon. Lady knows, there are different international comparisons and analyses. The study carried out by the programme for international student assessment, PISA, to which she refers, shows one thing, but the trends in international mathematics and science study, TIMSS, shows something quite different: English results in mathematics are much better in TIMSS than in the PISA study. I take the challenge she sets out very seriously—we do need to do more and I am in favour of more rigour. What I do not understand is why that cannot be done by reform of the GCSE system. We can make GCSEs more rigorous. We do not have to go back to dividing children into sheep and goats at 14.

The hon. Lady is an authority on these matters and I pay tribute to her hard work, especially on mathematics. The number of young people taking mathematics at A-level started to increase significantly under the Labour Government. We need to do more to accelerate that trend and to explore all the ways we might do that, but surely she welcomes the fact that the number taking A-level maths increased under the Labour Government?

Elizabeth Truss: In fact, there was a massive drop in the number of students taking maths in 2000, when Labour introduced modular exams; that had a massively damaging effect. That number is now beginning to recover, which is indeed good news, but does the hon. Gentleman agree that the previous Government were responsible for the drop in the first place and the decline in standards relative to countries such as Germany? He still has not answered my question about how Germany managed to reform its system.

Stephen Twigg: Let us learn from other countries’ systems. That is the point I was seeking to make. We recognised that there was an issue, which is why we addressed it and why, as the hon. Lady acknowledged, the number taking maths at A-level has started to increase, and not just since the change of Government in 2010; it predated that change of Government. When we debate these topics, it is important that we are balanced in our use of evidence. I am prepared to acknowledge the issue that she outlined as regards PISA, but I am sure she could acknowledge that we do a lot better in some of the other international research, including TIMSS.

The Financial Times has done an in-depth analysis of the proposed new CSE. It says that it

“will tend to be an exam for poorer children”.

It goes on to say:

“There will be a geographical effect, too, with some areas switching heavily to it. . . The CSE will be a northern qualification”.

This matters. The Secretary of State is in danger of putting a cap on aspiration for poorer children and for those living in the poorer regions of the country.

In last week’s urgent question the Secretary of State told the House that we already have a two-tier system, but he knows that at present pupils who sit the simpler foundation papers for GCSE can still get a C. Indeed, if their coursework is good enough, they can even get a B.

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With the CSE system, they will have a qualification on their CV which suggests to employers that teachers thought they had low ability. There is a real danger that they will simply stop striving for success.

The Labour Government started to narrow the gap in education between rich and poor. These proposals pose a real threat that the north-south divide will worsen and even fewer young people from the poorest families will stay on at school or go on to university. I am sure the Education Secretary has read the OECD’s research, which concluded that social mobility is lower in countries which

“group students into different curricula at early ages”.

Most scientific evidence now shows that teenagers’ brains can change late in life, even up to the age of 16. Professor Cathy Price of University college London found that teenagers’ IQs can jump by as much as 20 percentage points. She comments:

“We have to be careful not to write off poorer performers at an early stage when in fact their IQ may improve significantly given a few more years.”

Gavin Barwell (Croydon Central) (Con): I am grateful to the shadow Secretary of State for giving way and I apologise for dragging him back slightly, but before we go on to talk about what the solutions might be, it would helpful to have some clarity about where we start from. Does he believe that an A grade at GCSE when it was introduced was equivalent to an A grade at O-level, and that it is easier to get an A grade at GCSE today than it was back in 1988?

Stephen Twigg: I absolutely acknowledge that there is grade inflation in the system—[Hon. Members: “Ah!]— and I have said that previously. The “Ah!”s are very welcome, but it is not something that I have not said before, and I have said today that we will support measures that root out grade inflation. We will support sensible reform of the examination boards because there is a good argument that a kind of competition to the bottom has contributed to grade inflation.

Helen Jones (Warrington North) (Lab): Does my hon. Friend agree that experience in teaching shows that it is very difficult to predict at the age of 14 exactly where a young person will be at the age of 16? Is not the problem with the Government’s proposal that there is no way of deciding at that age exactly what a child’s performance will be in two years’ time?

Stephen Twigg: Absolutely. My hon. Friend has struck at the heart of the debate and at the heart of where the Opposition differ from the Secretary of State. We cannot write young people off at 14, for the reasons that she set out.

Several hon. Members rose

Stephen Twigg: I shall make a little more progress, then I will take a couple more interventions. I know that there are a number of hon. Members who want to speak in the debate as well.