We in this Chamber are all politicians, and we know that the only solution to this problem is political. On where the two sides stand—I was aware of this in this country, but it was underlined for me in my short time in Palestine—the Palestinian Authority are frustrated and feel that they cannot go any further. They have done an excellent job in managing, looking after and ensuring security in the areas that they control, but they are frustrated that they cannot make any progress during

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talks. Whatever plans the Israeli authorities have in mind for the long term, settlement of this problem does not seem to be one of them.

When we met the Israeli authorities, it was clear that a number of things were on their mind. Iran was top of the list, and next was the Arab spring and the impact that that will have on their plans. There were also concerns about what a second Obama presidency might mean to the state of Israel.

We will reach a resolution only if we find a political solution, and it does not seem to me that either side is capable of working towards that. It is, therefore, a question for us. I know the excellent work that the Minister has done in this area, and his praises were sung virtually everywhere we went. I say that to him as an old football colleague; I know him and his integrity on these issues well. A simple fact, however, is that the people whom we and others in the debate met in Palestine, including those who live in Khan al-Ahmar, deserve a better life. It is our job to help them find it.

2.53 pm

Bob Stewart (Beckenham) (Con): I start by congratulating the hon. Member for Aberdeen North (Mr Doran). I am speaking loudly because I understand that the sound system is not very good and people cannot hear. I apologise if I am shouting like a sergeant-major, but I hope people can hear me.

I spent my boyhood in Amman; my father was an officer with Glubb Pasha. I loved Amman and I remember visiting Jerusalem. I even spoke a bit of Arabic. In 1967, when I was doing my A-levels, I watched the war in June with horror. My dad despaired. He just put his head in his hands and said, “What will happen now?”

I remember Security Council resolution 242 being passed. It said that Israel should go back to the pre-1967 boundaries, and that the security of Israel should be guaranteed internationally. In 45 years, that has not been achieved—[Interruption.] Oh—the sound is back on; I shall calm down.

Israel has only to lose a war once, so I understand why it is dominated by thoughts of its own security. It is surrounded by people and some states that wish nothing more than its demise. Iran has declared that it wants to see Israel eliminated, and rockets are fired into Israel by Hamas and associated terrorist groups that also carry out suicide bombings against innocent people.

Jerusalem is a holy city for the world’s three great Aramaic religions. Jews, Arabs and other peoples have always lived in Jerusalem together, almost since history began, and in a way it is the world’s first international city. However, I want to talk specifically about the west bank, particularly Area C.

The hon. Member for Aberdeen North has already explained the meaning of the three areas, A, B and C, but if I may, I will amplify his comments to stress that Area A is the population centre for the Palestinians and contains mainly towns; Area B is controlled administratively by the Palestinians—although not for security which lies with the Israelis—and has more villages; Area C, as the hon. Gentleman said, occupies about 60% of the west bank and includes about 310,000 settlers, not

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including the 200,000 who live in East Jerusalem, which is separate. That area is under full Israeli security and civil control. It also has Israeli-controlled water, planning and administration.

As the hon. Gentleman said, the Oslo agreement was meant to be an interim measure, although it seems to be becoming the status quo. Internationally, Israel does not have sovereignty in Area C, or indeed the west bank—it does not. Therefore, under international law, Israel is the occupying power in that land, and it most definitely has responsibility for the people who live there.

Grahame M. Morris: The hon. Gentleman is making some excellent points. Does he agree that although under the terms of the Oslo agreement the Israeli authorities have responsibility for planning, water and security measures in Area C, that was an interim measure? The plan was for responsibility to be transferred to the Palestinian Authority over time, but that does not seem to be happening.

Bob Stewart: Yes, I accept what the hon. Gentleman says about that.

Area C is, of course, the key to sorting out the problem because it makes up the majority of the west bank. The right hon. Member for Lewisham, Deptford (Dame Joan Ruddock), who is no longer in the Chamber, has already made that point.

Mr Hollobone: Can we please get the facts right? According to the United Nations, Area C is 39% of the west bank. That is not the same as the area covered by settlements. I am afraid that my hon. Friend is not correct to say that Area C makes up the majority of the west bank. According to the UN, it is 39%. I recognise that it is a big area, but let us get our facts and figures correct to better inform the debate.

Bob Stewart: I hope my hon. Friend will forgive me, but when I look at the map he is holding up, it looks to me more like 60% blue. But let us not get into an argument; whether the area is 40% or 60%, something is wrong.

There are, as we have mentioned in the debate, about 310,000 Israeli settlers in Area C. There are 149 settlements—okay, people might dispute that, but it is more than 100—and there are about 100 outposts, which are illegal under both international law and Israeli civil law. Already, it is said, about four of the settlements could rightly be called cities. That is quite big. Under international law, all settlements are illegal and outposts are most definitely illegal.

Two kinds of people live in Area C. There are Israelis, who are subject to Israeli civil law, loosely—as I understand it—because they sometimes do not pay much attention to the Israeli police. In fairness, they are sometimes, apparently, in defiance of what Israeli police are trying to do. The other kind of people living there are Palestinians. They are subject to military law. That is wrong. When I visited Area C, the difference was quite clear. Palestinians cannot build where they live, except in a small percentage—1%, 2% or 3%—of the country; nor do they have freedom of movement. They have to stay in their home

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area. For example, a Palestinian living in Area C with relatives in East Jerusalem cannot easily go to visit them. That is wrong.

Andrew Percy: Does my hon. Friend accept, on the movement issue, that 100 roadblocks have been removed and movements between Israel and the west bank and within the west bank have increased significantly? Who does he blame for the lack of progress on a negotiated peace settlement? Everyone knows that the 1967 line will not be the final settlement, so who does my hon. Friend blame? Does he blame the Israelis or does he blame the Palestinian side?

Bob Stewart: I thank my hon. Friend for that intervention. The answer to his question is that I do not blame either side. I have been involved in too many negotiations for the UN to start from a position of saying “You’re wrong” to one side or the other. The answer is: negotiate. There is wrong on both sides in this matter.

Andrew Percy rose

Bob Stewart: I have given way once. You can keep quiet for the moment.

Mr Robin Walker: I neglected earlier to refer to my entry in the Register of Members’ Financial Interests. Is my hon. Friend aware of the work of organisations such as Breaking the Silence, which tries to show in Israel the damage that the occupation is doing to Israelis?

Bob Stewart: I thank my hon. Friend for that point, and I apologise if I seemed rude to my very good hon. Friend the Member for Brigg and Goole (Andrew Percy). I do not mean to be rude.

I am aware of the organisation Breaking the Silence. Perhaps someone else will bring it up.

Mr Bradshaw rose

Bob Stewart: Perhaps it will be my right hon. Friend, although he is not meant to be.

Mr Bradshaw: On this issue, I think I probably am. Does the hon. Gentleman agree that a better description than settlement, which is a fairly neutral, anodyne word, would be colony? These are illegal colonies. Does he agree that the description that he has just given of Area C, although it is not a complete parallel, is moving towards a situation that is comparable with apartheid South Africa?

Bob Stewart: I thank the right hon. Gentleman for that point. I am trying to avoid using words such as “apartheid” and “ghetto”. They are emotive terms. “Colony” is just acceptable, but I am trying to avoid using those terms, because, as I said to my hon. Friend the Member for Brigg and Goole, I am trying to avoid putting blame on anyone. I am just trying to explain the situation.

Mrs Grant: I understand why my hon. Friend resists labelling, but does he accept that the terrible lack of freedom of movement is having a devastating effect on jobs, investment and economic growth for the entire region?

Bob Stewart: I thank my hon. Friend, who is most definitely a very good friend. I agree. It is quite clear that that is one of the problems.

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Bob Blackman (Harrow East) (Con) I recognise and accept that apportioning blame in this situation is not the right thing to do. We should be aiming to get people round the negotiating table, but does my hon. Friend not agree that during the 10-month period when the Israeli Government froze all settlement activity, there was a failure by the Palestinians to get round the negotiating table and make progress?

Bob Stewart: Yes, but there are circumstances as to why that was the case.

Andrew Percy rose

Bob Stewart: I give way to my hon. Friend, otherwise he will give me hell later.

Andrew Percy: Not at all, but I thank my hon. Friend for giving way. Like other hon. Members in their contributions, he has hit on the nub of the situation, which is that we want to encourage economic development. That is probably the best way of going towards peace, but it is not the fact that continued Israeli frustration is harming the economy. The economy in the west bank is growing significantly. The number of work permits issued to citizens in the west bank to work in Israel has increased, and the number of work permits issued to west bank residents to work in the settlements has also increased. Trade between the west bank and Israel has increased substantially year on year in the last few years.

Annette Brooke (in the Chair): Order. I remind Members that a number of people still wish to speak, and the number who are able to do so is in your hands. The winding-up speeches will start promptly at 3.40 pm.

Bob Stewart: Thank you, Mrs Brooke. I will speed up and allow fewer interventions. I am going to speed up and cut down, because I think that is fair.

My experience as a United Nations commander informs me of one essential truth, which everyone in this room will fully understand without having been in my circumstances. Injustice will in the end cause such resentment that it will erupt. That happened in Ireland and it has happened in other places where I have been—it will eventually burst.

I know that Israel has often been provoked mightily, but what is happening in Area C worries me. There is continued expansion of settler communities in the west bank. That in a way signals to the Palestinians that there is very little intention to stop it or to come to some sort of solution. Unless the settlements stop, there can be no chance whatever of a two-state solution, and the only alternative to a two-state solution is a one-state solution—one state where Jews and Palestinians recognise one another as equals. Surely that is not totally utopian. Acceptance of human beings’ human rights is what the United Nations is all about and what everyone in this room feels strongly about, too. For its part, Hamas, in Gaza, must somehow recognise the right of the state of Israel to exist. After all, Israel did withdraw from Gaza in 2005.

Bob Blackman: What happened?

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Bob Stewart: For doing so, its reward was often a rain of rockets. The whole situation seems somewhat intractable. In my experience, it is always the little people, the ordinary people, who suffer in conflict situations. They simply want to live their lives as best they can. Whether they are Israeli or Palestinian, they are human beings. Remedial action must come from leaders on all sides. They must convince their people that it is necessary.

I end by asking God to bring back King Solomon. He was respected by Jews and Muslims equally, and my God, we need his wisdom now.

Several hon. Members rose

Annette Brooke (in the Chair): Order. Members can see by the number of people rising that not everybody will be able speak unless there is discipline over time.

3.10 pm

Mr Andy Slaughter (Hammersmith) (Lab): In deference not only to that, Mrs Brooke, but to the two fine speeches we heard setting out the core of the issue with Area C, I will keep my comments short and limit them principally to one case, which is the village of Susiya.

When debating Palestine, we sometimes lose a little context when we talk about Israel’s problems in its governance of the west bank. Israel is an occupying power of the west bank and has been since 1967. Over that time, it has engaged in an aggressive policy of colonisation, which has also involved the active displacement of the indigenous Palestinian population, whether they be settled or Bedouin communities. That is the context.

The lives of the Palestinians are compromised and disrupted daily, whether physically, by the settlements, barriers and checkpoints, or organisationally, through pass laws and restrictions on movement, trade and so on, which, sadly, bear a resemblance to some activities of the apartheid regime in South Africa—pass laws and such matters. The fact is that Israel has no business under international law being in the west bank. That is why, although I agree with the hon. Member for Beckenham (Bob Stewart) that we must try to bring people together, blame must be attached where blame falls. It principally lies with the occupying power.

To assist the hon. Member for Kettering (Mr Hollobone), I can tell him the figures that the United Nations Relief and Works Agency gave recently when it came to Parliament to brief Members on the situation in Area C: Area A, which is under full Palestinian control, is about 17% of the west bank; Area B is about 21%; and Area C, where there is full Israeli control, is about 61%. Those figures were given to us within the past two weeks.

Equally important when considering Area C is the fact that 70% of that 60% is off limits to Palestinians. It is either settlements, land controlled by settlements or other areas—my hon. Friend the Member for Aberdeen North (Mr Doran) mentioned nature reserves and other “scams”, for want of a better word—that restrict Palestinian access. Given that 29% is already built-up land, only 1% of Area C is actually potentially available for development by Palestinians—the people whose land it is. We will get nowhere until that situation is resolved.

I will briefly use the example of the village of Susiya to show exactly what the Palestinians are up against. It is a Bedouin village on an escarpment in the south

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Hebron hills, and is the agricultural centre of the region. It has been settled by the same families since the 19th century. In that respect, it is similar to other villages around Jerusalem or in the Negev. I visited one of the villages and have seen villages in the Negev that have been demolished five times by Israeli forces and then rebuilt. Just this week, B'Tselem, a well respected human rights organisation, said about Susiya:

“On Tuesday, 12 June 2012, Israel’s Civil Administration distributed demolition orders to…50—

that is essentially all—

“structures in the Palestinian village of Susiya in the South Hebron Hills. The orders stated that they were renewals of demolition orders originally issued in the 1990s. Residents were given three days, until 15 June 2012, to appeal the orders…Residents are planning to submit their opposition”.

With the intervention of human rights groups, the demolition orders were extended to last Sunday, but they have now expired again. We are talking about residential tents, which house over 100 people; kitchens; shops; a clinic; a community centre; museums; the solar panels that provide electricity; and shelters for animals. The entire village—everything—will be demolished. The villagers are on watch every day waiting for the bulldozers to arrive under the protection of the army. That is life for many Palestinians. Will the Minister take up that case, not only because it is important in itself, but because it is the tip of the iceberg of what is happening to villages in that area? If he has not done so already, I ask him to make particular mention of the case to the Government of Israel.

I was alerted to that case by an organisation called the Ecumenical Accompaniment Programme in Palestine and Israel, which is a very good Christian organisation through which people live peacefully with Palestinian villagers for months. Its members brought in videos that showed me not only threats from the military, but from another village called Susiya, which is a nearby, well developed Israeli settler village with every modern convenience. Under the protection of the military, the settlers come down to the Palestinian village armed with guns; they throw stones and attack Palestinian villagers. That is something that I have seen myself on video and film.

Mrs Grant: Does the hon. Gentleman agree that the activities of the Israeli defence and security forces in a number of situations have a real effect on normal people—the little people whom my hon. Friend the Member for Beckenham (Bob Stewart) referred to—and engender an atmosphere of worrying hate and distrust?

Mr Slaughter: Absolutely. Occupation does that in its own right, but this is not a benign occupation. This is violence. It has accelerated with an increase in settler violence of 144% in the past two years. It is an organised campaign to disrupt the lives of Palestinians and to extend the occupation, which continues year-on-year and which, as the hon. Member for Beckenham said, increasingly makes a two-state solution difficult, if not impossible. That is why we need more from the Government—not only words, but action.

Mr John Denham (Southampton, Itchen) (Lab): Does my hon. Friend agree that one of the most cynical aspects is the Kafkaesque way in which the illegal

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occupiers use international law to say, “Ah, we should rely on the established law—Ottoman law and mandate law—for the legal framework for house demolitions”? Those laws are used in a perverted way to disadvantage the Palestinian residents who should have rights in that illegally occupied land, while a completely different set of legal rights are applied to the illegal occupations. Is it not that twisted way of interpreting the law that adds offence to the physical destruction of homes, schools and other properties?

Mr Slaughter: My right hon. Friend is right. Rules and regulations are manipulated in an absolutely cynical way to wear down and break the spirit of Palestinians living in the west bank. I think that it has been proved that that does not work. The resilience of the Palestinian people there is extraordinary, which is why there is also violence. Arrests, detention—including of children—and administrative detention, which happens on a continual basis, are all designed to break the will of the Palestinian people and favour the occupier and settlers over the indigenous population. I know that the Minister knows those matters well, but I hope that he will redouble his efforts. I will end on that point.

I know that it is a little cheeky, but in the interests of trying to be conciliatory on these matters, can I get a response from the Minister fairly soon on Mohammed Abu Mueleq? He is a former Hamas fighter and activist who is now reformed and wishes to come to the UK to talk to us about the ways of peace.

Mr Doran: On a point of order, Mrs Brooke, in my previous contribution I mentioned trips that had been organised by the all-party group, but I forgot to draw attention to my entry, which I would like to be noted, in the Register of Members’ Financial Interests.

Annette Brooke (in the Chair): I thank the hon. Gentleman for putting that on the record.

Because of the number of hon. Members still wanting to speak, I am imposing a time limit of three minutes on Back-Bench speeches. Each of the first two interventions accepted will stop the clock and give the Member accepting the intervention an extra minute. The Clerk will ring the bell when there is one minute left.

3.19 pm

Andrew Percy (Brigg and Goole) (Con): I think I understand the timings, Mrs Brooke, and will try to stick to them. I congratulate the hon. Member for Aberdeen North (Mr Doran) on securing the debate, and on his point of order, which reminds me that I should also draw attention to my declaration in the Register of Members’ Financial Interests.

I feel that some rebalancing is needed in some of our discussions in the House on this subject. I make no apology for my position of support for Israel as a state, and its right to exist. Accepting it as the only legitimate democracy in its part of the world, we rightly attach to Israel a higher standard than we do to others. That is entirely correct. However, the middle east process is fraught with difficulty and nuances, and it is important to give a fair hearing to both sides.

The use of language is important, and I bristle somewhat at the use of the word “apartheid”, just as I do not approve of those who accuse people of being anti-Semitic if they criticise Israel. Some of the issues raised today,

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such as settlement, are important factors, which deserve debate and must be dealt with. However, they do not necessarily lie at the core of the conflict. Making them, as has happened increasingly in recent years, the sole reason for the lack of peace, while blaming Israeli intransigence, is not helpful. It is important to look at the history of peace negotiations and offers.

Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op): Will the hon. Gentleman give way?

Andrew Percy: I will give way quickly, because I get my extra minute, and I want to hear the hon. Lady.

Cathy Jamieson: Before the hon. Gentleman goes on to talk about the history, will he accept that, notwithstanding all he has outlined, and all the nuances, we should be concerned when we hear of the basic humanitarian issue of people not getting enough water to live on?

Andrew Percy: Absolutely, and projects have just been approved, I think, by the United States Agency for International Development that we hope will resolve that. The issue of water needs to be resolved quickly. My support, if one calls it that, for the state of Israel does not mean that I am an unconditional friend. There are things that the Israeli Government do that I—and a large number of Israeli citizens—do not approve of. It is important to remember that some of the biggest criticisms of the Israeli Government come from within Israel.

Guto Bebb (Aberconwy) (Con): On the humanitarian issue in the Israeli-Palestinian conflict, people often describe the security barrier as an apartheid tool. Has not the number of people killed in suicide attacks and similar occurrences fallen dramatically as a result of the building of the wall? Does not every state have a responsibility to protect its citizens from violence?

Andrew Percy: That is true. It is important to remember that the barrier—the figures speak for themselves, but I do not have time to quote them—protects Israeli citizens, including Arab and Christian Israelis, as well as Jewish Israelis. We should never forget that. We should also not forget that the Israeli Government have been taken to court and have lost in the courts on the issue, because Israel is a democracy.

Let us look at some of the offers that have been made. There were peace treaties with Egypt in 1979 and with Jordan in 1994. Both of those are clear examples of land being relinquished in return for a peaceful settlement. It is not true that Israel is not prepared to cede land for peace. In 2000, at Camp David, a major peace offer was made by Israel. Had that been accepted, 97% of the land in the west bank and Gaza would have been available to create a Palestinian state. My hon. Friend the Member for Harrow East (Bob Blackman) mentioned the settlement freeze. That was rejected and ignored, and then, all of a sudden, at the end of it, with about a month to go, settlements were an issue that was key to bringing the Palestinians around the table.

On a recent visit to Israel, hon. Members heard from Ehud Olmert that the offer made in 2008 would have meant withdrawal from 93% of the west bank. As I said in some of my interventions, we need to understand that there have not been any new settlements since 1993.

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I personally do not agree with the expansion of settlements, but we must understand that the vast majority of those settlements are along the 1967 green line, and most of them will come into Israel. Israel has not been frightened in the past of removing illegal settlements, as it is doing with outposts at the moment.

I am a bit confused as to how long I have left for my speech. [Interruption.] I think that is a minute—excellent. My goose is cooked in a minute. I wanted to talk about incitement. It is a matter of concern that documents from junior Foreign Office officials say that incitement is being used as an excuse in Israel. That is not the case. Some of the examples of how Israel, Jewish people and, indeed, Christians are described on Palestinian television are unacceptable. There is incitement in the Palestinian Authority, which has a serious impact. It is an abuse of the population there, and it has an impact on bringing the two sides together. That needs to be addressed more rigorously. In particular, there is the issue of school text books, on which we have not received a satisfactory response from the Department for International Development. At the end of the day, as my hon. Friend the Member for Maidstone and The Weald (Mrs Grant) said, the issue is education and increasing trade. Those things are more likely to bring both sides together—

Annette Brooke (in the Chair): Order.

3.25 pm

Yasmin Qureshi (Bolton South East) (Lab): It is a pleasure to serve under your chairmanship, Mrs Brooke.

We have talked about the context, and I want to go back to that. When the state of Israel was created, the Jewish population was given 55% of the land, even though three quarters of the population of the then state of Palestine was Palestinian. In 1948, after the war of independence, Israel managed to obtain 78% of the land, and the Palestinians were given 22%, which is what we call Gaza and the west bank. More than 3 million Palestinians were expelled by the Israelis during those times.

One part of the Oslo agreement related to the west bank, and it was divided into three sectors. My hon. Friend the Member for Aberdeen North (Mr Doran) has talked about that, and I want to talk about Area C, which is now controlled by the Israelis. As a result of various actions in the past few years, it appears that a further percentage will be absorbed, and that Area C will probably end up as part of Israel, leaving Palestine with only 12% of the land.

I am not overly fond of statistics, but they show the stark contrast in the picture. In 1972 the number of Israeli settlers in Area C was 1,200; in 1993 it was 110,000; and in 2010 it was 310,000. That does not include the 200,000 living in East Jerusalem. The number of Palestinians, as of now, is only 150,000. The illegal settlers often live in the 124 formal and about 100 informal settlements, both of which have been declared illegal under international law and, as been mentioned, under Israeli law as well.

If people doubt the sources of my information, what I am referring to comes from the UN Office for the Co-ordination of Humanitarian Affairs. A fact-file from January states:

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“The forced displacement of Palestinian families and the destruction of civilian homes and other property by Israeli forces in the West Bank, including East Jerusalem, have a serious humanitarian impact. Demolitions deprive people of their homes, often their main source of physical and economic security. They also disrupt their livelihoods”.

The psychological effects on families are distressing. The fact file adds that the Israeli authorities say that often

“demolitions are carried out because structures lack the required building permits. In reality, it is almost impossible for Palestinians to obtain permits. The zoning and planning regime”—

Annette Brooke (in the Chair): Order.

3.28 pm

Bob Blackman (Harrow East) (Con): It is a pleasure to follow the hon. Member for Bolton South East (Yasmin Qureshi). I congratulate the hon. Member for Aberdeen North (Mr Doran) and draw hon. Members’ attention to my entry in the Register of Members’ Financial Interests.

I have listened with interest to the debate. One of the problems is that we get hung up on the issue of settlements. We must consider Israel’s history of dealing with settlements in relation to peace. In 2005, Israel destroyed the Jewish settlements in Gaza and withdrew from them. In 1982, in return for peace with Egypt, it withdrew from Sinai, destroying the settlements as part of the peace agreement. In fact, only last month, the outpost of Ulpana was ruled illegal by the Israeli courts. Israel has withdrawn from that and will demolish it.

The key point is that the Israeli Government will remove settlements once peace has been agreed. I have been to Israel and the west bank with the Conservative Friends of Israel, and I have also been to Jordan, the west bank and Israel with the Council for European Palestinian Relations, and I have seen that the situation on the ground is dire. It is important that negotiations take place without preconditions.

Richard Burden (Birmingham, Northfield) (Lab): The hon. Gentleman mentioned the settlement of Ulpana, which is being demolished. Will he confirm that the deal that demolishes that illegal settlement includes the construction of 851 other units somewhere else? When he refers to settlements, does he include East Jerusalem, which Israel does not regard as settlement building?

Bob Blackman: East Jerusalem must be part of the negotiations between the Palestinians and the Israeli Government. The reality is that there are now more Arabs living in Jerusalem than ever before. I agree that the negotiations are paramount and must take place forthwith. The problem is that while the Palestinians fail to get round the negotiating table, and continue to set preconditions that will not be acceptable to the Israeli Government, settlement activity will continue apace. We have heard lots of statistics today. The reality is that just 5% of Area C is occupied by settlements. There will be a negotiation at some future time over whether that land is to be part of Palestine and the west bank, or part of Israel, as a result of land swaps.

The key issue before us today is the need to encourage the Government of Israel and the Palestinian authorities to get round the table. I urge my hon. Friend the

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Minister to do all that he can to persuade both parties to do so immediately. The position now is that Netanyahu is heading a coalition Government, which gives Israel certainty for the indefinite future. Under freedom of information requests, we have discovered that Foreign Office officials seem to have written off Netanyahu. That is wrong, and what we should be doing is encouraging him and his whole Government to get round the table with the Palestinians.

Guto Bebb: On the issue of the Netanyahu coalition, does my hon. Friend share my aspirations to see the Kadima and Likud Government move forward to constructive dialogue? Such a dialogue might have been difficult in the past because of the dependence of the previous coalition on some of the extremist parties in Israeli politics.

Bob Blackman: Indeed. The one thing that I would not wish on anyone is Israel’s system of elections. However, the coalition Government give us the potential for a lasting and just settlement, and the opportunity for stability and peace. It is for the Palestinians to grasp this opportunity. It is right that they get round the table now, without preconditions, to ensure that they achieve that peace.

Finally, there is one significant gap in the Queen’s long reign: she has never paid a proper state visit to Israel or any part of Palestine. I ask the Foreign Office—I have written to the Foreign Secretary about this—to prevail upon the Queen to make such a visit. After all, if she can go to Northern Ireland and shake hands with the Deputy First Minister, why not go and seek peace in that great part of the holy lands of this world?

3.33 pm

Mr John Denham (Southampton, Itchen) (Lab): I draw the Chamber’s attention to my declaration in the Register of Members’ Financial Interests, and to the fact that I accompanied my hon. Friend the Member for Aberdeen North (Mr Doran) on his recent visit to the region.

What the hon. Member for Harrow East (Bob Blackman) described as preconditions were, until recently, regarded as the mutually agreed starting point for the way to achieve a two-state solution. Those have now been withdrawn from negotiations, which makes things more difficult. I wanted to highlight the way that Area C, which was originally conceived of as a transitional measure—part of the process of going to a two-state solution—is slowly but surely being taken by the Israelis as an area of Israeli authority, in which they are able to impose their will, often with a fiction of law, as I said in an intervention, to the disadvantage of the Palestinian people. That is a very different concept of Area C. It raises a number of important questions.

As European taxpayers, we are, to a considerable extent, paying the human and social cost of that occupation. We are paying the very substantial funding for the Palestinian Authority, and for pretty much all of what is described as economic growth within the occupied territories. It has been wholly right to provide funding in that way, as part of a genuine transition towards a two-state solution. It is not at all obvious to me how we will continue to make the case for European taxpayers finding that money when we are funding not a transition to a peaceful solution, but the status quo.

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One of the things that struck me on my most recent visit was how small the place is and how critical the issues are. We went to the Ma’ale Adumim area, where the Bedouin whom we talked about earlier were. The area between that settlement and Jericho is the same as the area between my constituency in Southampton and Winchester. On a train, that is about enough time get a cup of coffee and get out a laptop. Yet if that settlement continues, the west bank is effectively wholly divided. There is no possibility of a Palestinian state with physical integrity. That is why the settlement must stop now; otherwise, it will be almost impossible for the negotiations to reach a resolution.

3.36 pm

Mr Philip Hollobone (Kettering) (Con): It is a pleasure to follow the right hon. Member for Southampton, Itchen (Mr Denham). I congratulate the hon. Member for Aberdeen North (Mr Doran) on securing this debate. This is a hugely complex issue. All of us who have visited Israel or the Palestinian Authority will know what a small geographical area of land we are talking about. It is important to get these complex issues into some sense of proportion. We are talking about Area C, in which 150,000 Palestinians live. There are 1.4 million Palestinians living in Israel and 2.5 million Palestinians living in Areas A and B. It would be wrong if this Chamber today gave the world the impression that we are talking about most of the Palestinian population, because we are not.

The west bank has always been under occupation. In 1948, it was annexed by Jordan, which, as far as I can tell, did not do much with it. The Gaza strip was annexed by Egypt, and then the situation was even worse. To imply that it is just Israel that has occupied this benighted land would be quite inaccurate.

Mr Slaughter: The hon. Gentleman is showing uncharacteristic false logic. The reason for designating Area A is because it contains the main Palestinian towns. It would be a bit like saying that as long as we excluded London, Manchester and Birmingham, we could allow someone else to occupy all the rural areas of England. This is the Palestinians’ land, and they are entitled to all of it.

Mr Hollobone: One of the big tragedies of the Palestinian nation was that it did not accept the United Nations partition plan in 1948. A whole series of wrong decisions have been made by the Arab people since that time. The Israelis are not going to go away. After the holocaust in Europe, they deserve a homeland. As David Ben-Gurion said, we will have to arrive at a peaceful settlement with the Arab people who live in the Holy Land. We are all still in pursuit of that peace. Some of the Palestinians live in terrible situations. I visited them myself in the Gaza strip, and on the west bank. That is all the more reason to arrive at a peace settlement with Israel, so that both peoples can live in harmony with each other. Like my hon. Friend the Member for Beckenham (Bob Stewart), I am not in the blame game. I recognise that this is a hugely complicated situation, but we must get a sense of proportion if we are to arrive at sensible and lasting peace for both the Israeli and Palestinian people.

Annette Brooke (in the Chair): I call Ben Bradshaw—literally for one minute.

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3.39 pm

Mr Ben Bradshaw (Exeter) (Lab): Thank you, Mrs Brooke, for giving me—a former middle east Minister —a minute to speak.

I want to ask the Minister specifically about the Government’s policy on produce from the illegal settlements. As he will be aware, the Foreign Office has consistently said that it cannot move the British Government’s policy forward on this issue, because it would be illegal to do so. However, he may be aware that the Foreign Office has recently received new legal advice—if he is not aware of it, I hope that he will make himself aware of it—that points to the opposite being the case. It is actually arguable that a country that sells or receives produce from the illegal settlements is itself breaking the law—in other words, we may be breaking the law—and that a ban on produce from the illegal settlements would not be illegal under EU law, under World Trade Organisation law or under the general agreement on tariffs and trade obligations.

I make this appeal to the Minister if he is interested in doing something that I think most people here would like him to do. Condemnation and criticism is all very well but it has achieved nothing with the Netanyahu Government. The remorseless expansion of settlements continued during the years when I was a Minister, it continued under my successors and it still continues now that he is Minister. Will he please look at the issue again and, with his European partners, ensure that we have a much more robust policy on importing goods from the illegal settlements?

3.41 pm

Ian Lucas (Wrexham) (Lab): It is a privilege to be here in Westminster Hall under your chairmanship, Mrs Brooke, and to have listened to the contributions to the debate. As always seems to be the case when we have debates on the middle east, we have not had enough time for people to expand their arguments. It would be very welcome indeed if we could have a longer debate. Perhaps we could consider approaching the Backbench Business Committee to ask for an opportunity to discuss matters at greater length. That would be very helpful.

I also want to draw Members’ attention to my entry in the Register of Members’ Financial Interests. I was privileged to go to the middle east—to Israel and Palestine—recently, in the company of my hon. Friend the Member for Aberdeen North (Mr Doran), my right hon. Friend the Member for Southampton, Itchen (Mr Denham) and the right hon. Member for Bermondsey and Old Southwark (Simon Hughes). As a member of Labour Friends of Israel, I visited Israel last November, in the company of the shadow Foreign Secretary, my right hon. Friend the Member for Paisley and Renfrewshire South (Mr Alexander).

On my most recent visit, which was about two months ago, I was struck by the urgency of the issues relating to Israel and the Palestinian Authority, and by the profound frustration that I found on the west bank in Ramallah when I spoke to representatives of the Palestinian Authority about the pace of progress in the discussions that were taking place. Like most people, before I went out there I was aware that people were perhaps looking to a second term for President Obama as a time when there might be some progress. However, the message I received from

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the Palestinian Authority was that the situation on the ground was very pressing indeed and much more urgent than I had appreciated. There is a real sense of frustration, and I feared what the consequences of that frustration might be when I visited communities in the west bank.

Let us be clear. If we are to build a two-state solution, which I think everyone in the Chamber wants, there must be two viable states, which are secure in their borders. It is, of course, accepted that the precise nature of the two states—their geographical outline—will be a matter of negotiation between Israel and the Palestinian Authority, but the continued expansion of the settlements poses an urgent threat to the future for a two-state solution.

I was very struck when I was in Israel by a discussion that I had—other Members in the Chamber were present—with an official from the Israeli Ministry of Foreign Affairs. First, he said that, in his words, “A one-state solution would be a disaster for the state of Israel.” Secondly, he said that he wanted to see a two-state solution but time was running out for the creation of two viable states in Israel and Palestine. The reason why time is running out is the expansion of the settlements, which is happening each day, each week and each month that goes by. The Palestinian Authority has done a very good job in improving security, which is a profound and legitimate concern for Israel, but it feels that it is not making progress with Israel in the way that it wishes to.

Many of us are very frustrated by the present approach of the Israeli Government. I am a very strong supporter of an Israeli state; for so long, although thankfully no longer, it was the only democracy in the middle east. However, it is imperative that we continue to engage with Israel, and I deplore those who suppress discussion and debate with legitimate organisations that support Israel, because none of us will get anywhere by cutting off discussion and debate; it is very important indeed that they continue.

When I meet friends from the Israeli embassy, I always make clear my frustration about the expansion of settlements. It is a key issue and it must be resolved. One or two comments in the debate have rather diminished it, but it is central and it must be resolved if we are to make real progress.

I am afraid that when I visited the west bank I was depressed by what I saw. I will talk about one particular visit, which was to Hebron, a beautiful city.

The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Alistair Burt): Very sad.

Ian Lucas: It is profoundly sad, because Hebron is a place that I would love to see in better times. In the centre, a horrible concrete wall runs down the middle of the main shopping street, which separates Palestinians from Israelis. It is profoundly sad to see, and the situation is clearly untenable in the longer term.

Sometimes I think that we have too many maps of Israel and Palestine, and not enough good sense, because this is about attitude, state of mind and trust between communities. Of course people have lived together in communities for a long time in the region, but it is imperative that some element of trust is built up. In the Palestinian Authority, it is very clear that Prime Minister

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Salam Fayyad is highly thought of by the Israelis, and the security situation has improved enormously, but the authority feels that the progress that has been made, including some economic progress, is not being rewarded by progress in the creation of an atmosphere of trust that will lead to proper negotiations that will bring resolution to the dispute.

Israel has a very strong record, with an independent judiciary and judges who stand up to the Government, much as our judges do—sometimes—in this country. However, I am afraid that Israel is not applying the law fairly in areas of the west bank, as we have heard. I visited a military prison where juvenile offenders were being tried. They had not had access to legal advice; indeed, they were not allowed to have their parents present at interrogations. Israel could do something about that. Israel has a proud tradition of giving individual rights to people, and that tradition should be extended to those courts. I have written to the Israeli embassy expressing that view in forthright terms, because this is about building up trust.

At the moment, there is an increasing sense of resentment in the west bank among Palestinian communities who are seeing the expansion of settlements. “Settlements” is a very misleading word, because they are huge estates and developments; they do not appear temporary at all. We need a different attitude from the parties to the dispute, to begin to take matters forward. I hope that comes from the creation of a new Government in Israel—set up in the week I was there—but as yet, I am afraid that no progress has been made.

I urge the Minister to convey the strong views that have been expressed today to the Israeli authorities and to Palestine, and to ensure that the Palestinian Authority sees that engagement with Israel and discussion about the pressing issues is vital—I am sure he will. There needs to be active discussion, certainly before the presidential elections in the United States. The current situation cannot continue. The two-state solution is under threat.

3.50 pm

The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Alistair Burt): It is a pleasure to serve under your chairmanship, Mrs Brooke. I thank the hon. Member for Aberdeen North (Mr Doran) for securing the debate, and for the thoughtful and measured, but passionate, set of remarks with which he opened it, in typical fashion. That was followed by a number of high-quality contributions from Members on both sides—so many, in fact, that I hope colleagues will appreciate that I am not able to refer to each and every one. They were followed in turn, and in no small measure, by the equally thoughtful remarks of the hon. Member for Wrexham (Ian Lucas).

In a sense, we have two issues: the placing of the discussion of Area C in the context of the overall settlement, to which a number of colleagues referred, and the matters that relate specifically to Area C. I will concentrate on the latter but, as all colleagues know, and as many have mentioned, it is impossible to separate the ultimate future of Area C and the issues that we have discussed from the overall context of the need for a conclusion to the long-standing dispute between Israel and Palestine.

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I want to pick up, and endorse entirely, the sense of urgency with which the hon. Member for Wrexham spoke. In the past 18 months, when the world’s attention has been directed to many things in the region, not least the Arab spring, the Government have sought continually to raise with those most closely involved the importance of not losing sight of making progress in the middle east peace process, efforts of which I hope colleagues are proud. I recognise the sense of urgency. I recognise the sense of frustration when visiting areas where people are wondering what happens next. We convey that to both sides, and it is why we have engagement.

In the past few days, I have spoken to the negotiators on both the Israeli and Palestinian sides. Despite the fact that talks in Oman earlier this year were not conclusive, there is still contact on both sides. I think there is recognition that something has to happen, but it is tentative stuff, as we all know. We encourage both sides to be as flexible as possible, and not to talk about preconditions but to ensure that those who need to talk together are able to do so. Ultimately, this is all about Israel’s future security, about ensuring that it is a viable, secure and universally recognised state, and that there is an independent and viable state of Palestine that has the opportunity to develop.

Richard Burden: I certainly know the sincerity with which the Minister is talking. He has been clear—both Front-Bench speakers have—about the illegality of settlements, and about the fact that the window for a two-state solution is closing rapidly. Will he, though, address the question that my right hon. Friend the Member for Exeter (Mr Bradshaw) asked? If the settlements are illegal—they are—and the European Union and the UK purchase goods from them, or are involved with companies that trade with them, there is growing legal opinion that we are colluding in that illegality. Is the Minister prepared to look into that? There might need to be some pressure, if we are going to move this along in the way that we need to.

Alistair Burt: I will come to settlements in a moment. On settlement produce, we value the fact that people have choice about their purchase of goods, but the issue of settlement produce and financing is under active consideration in London and in Brussels.

I shall say a little bit about settlements. The fact that we have such a good relationship with both Israel and the Palestinians is important. It enables us to discuss issues directly. Israel is a valued friend to the United Kingdom, and we are working together to deepen that relationship in a number of important areas, but not at the expense of other relationships. Just as we are building a strong partnership with Israel, so too we are continuing to enhance our relationship with the Palestinians. We do not always agree with each other, and one of our primary concerns, which a number of Members have addressed, is in relation to settlements. We take the view, which we have repeated, and which is shared on both sides of the House, that settlement building is illegal under international law and increasingly threatens the viability of the two-state solution. The issue is rising up the international agenda, and I urge the Israeli authorities to listen carefully. They do not take the same view of its importance as those outside Israel do.

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The issue of settlements is increasingly important, and we will repeat our concerns when we hear about new ones, but it cannot be denied that the issue will not be concluded unless the overall settlement is agreed. That is why we encourage both sides to get to work on it. Merely complaining about settlements will not be enough. I assure the House that we take the matter seriously, and continually urge the Israeli authorities to try to understand why we are so concerned. If the viability of the two-state solution is threatened, I do not think that the ultimate prospects will be as good for Israel as they should be.

The international community considers the west bank and Gaza as occupied territory, and recognises the applicability of the fourth Geneva convention on the protection of civilians. In relation to Area C, certain things could be addressed now, regardless of the overall context, one of which is building. Figures from the Israeli civil administration show that between 2007 and 2010, 1,426 building permit applications were submitted by Palestinians in Area C, of which only 64 led to permits being issued. That is in contrast to Israeli settlement and development, and it affects the economic viability of Area C and the west bank. That viability is to the mutual benefit of Israel and the Palestinians, and we hope to see the issue settled. Equally, until Area C comes more under Palestinian control, it will not be possible for the Palestinian Authority to build up its revenues and deliver to the rest of the Palestinian people, which would save the rest of us money because we support that economic development and the Palestinian Authority.

A particular concern, which a number of Members have highlighted, is the situation of the Bedouin in Area C. We have objected strongly to Israel’s plans for the forced transfer of Bedouin communities, in particular from the area east of Jerusalem. A number of Members

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mentioned Khan al-Ahmar, and colleagues probably know that I, too, have been there, and have seen the school that the hon. Member for Aberdeen North mentioned. I saw the construction of the road barriers, because we dropped in unannounced on the day they were being put in, so we saw that the access to the village had been changed.

We have discussed the Bedouin settlement itself; the question is what to do in the future. The chances of the settlement being moved to a rubbish dump are now lower than they were, but that is not conclusive. Of importance is that I also spent time with Israeli Minister Benny Begin. He is Minister without portfolio, who is responsible for the difficult job of talking to the Bedouin community about their ultimate future. I formed the view that he is sincere in his efforts to consult with the many different Bedouin groups, to try to find an answer that is not forced, but colleagues will have the chance to judge for themselves because he is due to be in the UK next week. His programme is not fully settled, but I am hopeful that there will be an opportunity for Members to have a conversation with him about the matter. I recommend that they take the opportunity, should it arise, as I think they would find it helpful.

A point was raised about EU projects being demolished. That issue has been taken up with the Foreign Affairs Council. We need to work hard to ensure that the EU builds things that are not prone to demolition, but we have expressed our concerns.

Finally, Members raised the different treatment under the law of Palestinians, particularly children, in the west bank and Area C. The matter was recently taken up by an independent report, which speaks for itself. We will be looking closely to see how the Israeli authorities, who have said many good things about wanting to change the law, deliver.

It is 4 o’clock, so I conclude by saying that I appreciate colleagues’ engagement with such an important topic.

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Nuclear Power

4 pm

Ms Margaret Ritchie (South Down) (SDLP): It is a pleasure to serve under your chairmanship today, Mrs Brooke.

In the debate on the future nuclear programme, our inability to learn from past mistakes is sometimes staggering. I well remember the 2008 Public Accounts Committee report that drew attention to the vastly underestimated cost of nuclear power and highlighted the nuclear industry’s tendency to lumber the taxpayer with an ever-increasing and seemingly endless bill. The fallacy of committing billions more pounds of public expenditure to nuclear energy has never been more apparent than it is now. Whether it is the disastrous consequences of the Japanese earthquake, Germany’s decision to end investment in nuclear or, closer to home, the billions of pounds of subsidies being squandered at the uneconomical mixed oxide—MOX—plant at Sellafield and the decision of RWE, SSE and E.ON to pull out of the market, it is clear that nuclear is not the energy source on which the Government should be concentrating.

Hon. Members may be wondering why an MP from a constituency in Northern Ireland has a particular interest in this subject. I represent the constituency of South Down, which is straight across the Irish sea from Sellafield, and we have had many concerns over the years. I am very pleased that the Minister is here to respond to the debate. Although its main focus will be the economic costs, I must mention the impact of nuclear on public safety, which cannot be separated from the economic argument.

The real point in looking at a disaster such as Fukushima in Japan is not necessarily to try to draw a direct parallel to what might happen here, but rather to use it to illustrate the fact that nuclear power can never be made entirely safe. There will always be unforeseen contingencies that have potentially disastrous consequences. People in my constituency and across Ireland have been living in the shadow of such a possibility because of the Sellafield plant, which has been considered the most radioactive site on the planet for more than 40 years.

Over the plant’s lifespan, there have been hundreds of recorded safety breaches and high levels of indiscriminate discharges of radioactive waste into the Irish sea. The MOX plant at Sellafield, which was built to process spent fuel from the old thermal oxide reprocessing plant or THORP—itself the subject of an international nuclear event scale level 3 leak—has also required high levels of hazardous transportation of plutonium dioxide through the Irish sea to Cumbria. All this for a plant that was disastrously inefficient and had to be closed following its financial failure. It is not therefore surprising that public opinion in my constituency has been consistently anti-nuclear, and it must be recognised that a major incident will not heed, or relate to, any borders on our island. There is also concern about the possibility of underground storage for the world’s radioactive waste.

It was against the backdrop of such catastrophic risk, as demonstrated by the disaster at Fukushima, and with a more realistic appraisal of the spiralling cost of nuclear power provision, that Chancellor Angela Merkel and the German Parliament decided to pull out of the

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nuclear market and to invest in a truly secure, low-carbon renewable energy future. Given where I come from, I want this Parliament to move in a similar direction.

Nuclear power development has always required high levels of public subsidy. The Minister should know better than anyone the deferred cost of an ill-thought-out nuclear programme, as the Nuclear Decommissioning Authority spends £1.7 billion a year on managing nuclear waste and other liabilities from Britain’s current nuclear power programme. That amounts to more than half the budget of the Department of Energy and Climate Change, which is a staggering legacy for the taxpayer and one to which the previous Secretary of State frequently alluded.

The Nuclear Decommissioning Authority was also responsible for closing the MOX plant at Sellafield. That plant cost the taxpayer £1.6 billion, and was another disastrous legacy of the nuclear programme. Its existence also meant that a constant stream of hazardous material was being shipped daily through the Irish sea and along the Irish coast. That was all for a plant designed to process 120 tonnes of MOX a year, but which instead produced the grand total of six tonnes over its entire lifespan.

On the draft Energy Bill 2012 and the future nuclear programme, sadly, there are warning signs that this Government are prepared to repeat the same mistakes. I fear that people will be having a similar debate in 20 years’ time. It could not be clearer, given current record oil and petrol prices, that reliance on imported fossil fuels is not serving customers, business or the wider economy. Although I commend the stated aim in the Government’s draft Energy Bill to decarbonise the electricity sector, the path set out in the legislation seems to prioritise subsidising nuclear fuel, and people will continue to be vulnerable to high prices.

In Northern Ireland, more people every year are falling into fuel poverty, and the draft Bill was an opportunity to make the bold changes necessary to reform the energy market with a view to the long-term needs of the economy. Consumers and businesses are suffering and they need a coherent strategy that delivers clean, green jobs and sustainable fuel prices. Sadly, the draft Bill appears to do little more than nod to the renewable industry, while winking at the nuclear industry. The Government seem intent on delivering more of the same, especially in their continued obsession with the expensive and ultimately unsafe energy source that is nuclear power.

Mr Andrew Smith (Oxford East) (Lab): I congratulate the hon. Lady on securing this important debate, and I agree with all the points in her extremely cogent argument. Is not one of the many risks that consumers, and the economy generally, will get locked into artificially high prices for electricity as the only means of making it viable for energy companies to undertake the huge investment necessary to build nuclear plants?

Ms Ritchie: I thank the right hon. Gentleman for his intervention, and I agree with that thesis. I want to make a little progress.

David Mowat (Warrington South) (Con): I, too, congratulate the hon. Lady on securing this debate. She is talking about the level of subsidy in relation to the current Bill and in general. Does she not agree that

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the level of subsidy that will be proposed for nuclear is considerably lower than that for solar, offshore wind or, indeed, onshore wind? How does that equate with her concerns about fuel poverty, because that seems a little odd?

Ms Ritchie: I thank the hon. Gentleman for his intervention. I take what he says, but I am obviously putting forward a different thesis. I disagree with his fundamental point, but perhaps I can provide some explanation, if he will let me continue.

The Government are clearly going in the face of the energy industry, given the decision by various companies to pull out of the future nuclear programme. Even EDF, the only remaining player in the game, has seemingly adopted a lukewarm approach to the new build programme and has postponed its commitment to it, saying only that it will decide at the turn of the year. To answer the hon. Gentleman’s question on cost, I come from the position of favouring renewables; I have a strong belief in them, as opposed to nuclear, given the geographical position that I come from. EDF’s approach is hardly a ringing endorsement, from the only company that has even tentatively committed to the future nuclear programme. It seems that no serious player in the industry thinks that future investment can go ahead without a serious public subsidy. Indeed, no nuclear plant has ever been developed without large amounts of public subsidy, and it is obvious that the companies will not enter into the future nuclear programme without such assurances.

The Government’s proposal in the draft Energy Bill for contracts for difference appears to be little more than a subsidy through the back door. CFDs allow utility firms to levy a top-up charge should the price fall below a certain level. If the cost of nuclear power is to be cheaper than the current market rate, or at least competitive, as EDF and the Government maintain, why is the complex mechanism of CFDs required at all? In the words of Keith MacLean, policy director of Scottish and Southern Energy, which has itself pulled out of the future nuclear programme:

“This complex and messy CFD policy looks like an attempt to try to hide the state aid from the European Commission and the subsidy from political opponents of new nuclear.”

David Mowat: CFDs are necessary because nuclear is considerably more expensive than either coal or gas, even though it is many multiples cheaper than most large-scale renewables. I find the hon. Lady’s position difficult to understand, given her concern about fuel poverty.

Ms Ritchie: I thank the hon. Gentleman for his intervention. I have made it clear that I am opposed to nuclear power, which, as he has said, is very expensive—it has required Government subsidy to sustain it, and I fundamentally disagree with that.

Guto Bebb (Aberconwy) (Con): I congratulate the hon. Lady on securing this debate. Her position is contradictory, because she seems to be complaining about subsidy for the nuclear industry, yet applauding it for the renewable sector. Surely we should have a level playing field. I share the hon. Lady’s concerns about fuel poverty, but in my part of north Wales we have poverty because our nuclear industry is closing down.

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If we do not get a replacement for the nuclear capacity in north Wales, we will see real poverty in many parts of north-west Wales.

Ms Ritchie: I understand the concerns of hon. Members whose constituencies have nuclear facilities, but I see the issue from a different perspective. We have witnessed the harmful effects of nuclear on the environment. I will not talk about its harmful effects on health, because I do not think that the evidential base has been built up sufficiently, but it has definitely had an effect on the environment. There has been too much public subsidy for nuclear, and I firmly believe in and support renewables.

How can CFDs be seen as anything other than a veiled subsidy, and how is that coherent with the coalition agreement, which ruled out any such subsidy? Has the Minister consulted on the potential conflict with European Union state aid rules? Is he able to rule out a potential long-running wrangle with the EU, which would do nothing other than bring more uncertainty to the sector and to renewable energy investment at this vital time?

No nuclear plant has ever been built without state subsidy, and such plants simply cannot exist in the open market. There is a pattern of activity to underscore that, because every statement from and move by the industry is a tacit admission of that fact. We must learn from past mistakes and acknowledge that the headline price attached to nuclear power is always far below the eventual cost once decommissioning and waste disposal have been accounted for. It not only presents a potential environmental catastrophe, but leaves a radioactive economic legacy. It is not good enough to buy now and leave taxpayers and future Governments to foot the bill years down the line.

In summary, is the Minister not concerned that three of the four major players in the nuclear new build programme have pulled out; that the fourth, EDF, has expressed serious concerns; that no nuclear plant and subsequent decommissioning has ever been achieved without a large Government subsidy; and that the draft Energy Bill’s proposals have been considered by many in the industry as tacit admission that the new build programme is little more than a subsidy through the back door that may contravene EU state aid regulations?

It is often said in relation to energy policy that the Government should not try to pick winners, but it seems as though they are determined to pick a loser. I do not want us to be left with a potential environmental catastrophe that we will have to subsidise for years to come. Instead, we need a lasting commitment to truly renewable energy sources and a green new deal. The coalition Government have underscored a commitment to the Green investment bank and to green and renewable resources. I am firmly committed to that and I look forward to the Minister’s response to the various issues that I have raised. I understand the points made by hon. Members who reside in Britain and have nuclear facilities in their constituencies that provide jobs, but I see the issue from a different geographical and political perspective.

4.15 pm

The Minister of State, Department of Energy and Climate Change (Charles Hendry): It is a pleasure to serve under your chairmanship, Mrs Brooke, and I am grateful to the hon. Member for South Down

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(Ms Ritchie) for securing this timely debate. Transparency and openness are an important part of the discussions that we need to have about nuclear. In that context, I want to start by making a couple of corrections to what she said. We are not down to just one major nuclear player alongside EDF. Centrica, the UK’s biggest energy company, is a partner in its consortium, and other major European players, such as Gaz de France and Iberdrola, as well as other international players, are considering how they can be part of the nuclear renaissance in the United Kingdom. This is an area that has attracted a significant amount of investment from major companies, and it continues to do so.

On another issue of transparency—to pick up on a point made by my hon. Friend the Member for Warrington South (David Mowat)—I hope that the hon. Lady would also accept that, if she rules out the least costly large-scale, low-carbon source of generation, the consequence for her constituents, particularly those who are off-gas-grid customers and have a greater reliance on electricity, would be a rise in their bills, because of their reliance on higher-cost sources of generation. That is an integral part of understanding the economics of this debate.

The challenge of building new nuclear is undoubtedly significant. Since 1995, when Sizewell B began generating electricity, no new nuclear power station has been built in Britain, which demonstrates the challenge of ensuring that the first new nuclear power station is followed by a full nuclear programme. Although new nuclear power stations are being built elsewhere around the world, some of them have gone over time and over budget.

Tackling the nuclear legacy is a national priority, as the hon. Lady has said. We are keen to see it dealt with with a degree of vigour that has never been seen before. We want to ensure that the current and previous UK nuclear fleet is cleaned up and decommissioned properly as the various sites cease operation. To do that, we must understand and learn from the lessons of the past on nuclear decommissioning.

That is why the previous Secretary of State, the right hon. Member for Eastleigh (Chris Huhne), commissioned a report, which was published in March, by Professor Gordon MacKerron of the university of Sussex, on the history of managing nuclear wastes and decommissioning. Professor MacKerron paints a warts-and-all picture of the UK’s nuclear history and explains why we have such a difficult legacy of old facilities and waste to manage. He found that delays by Government and public bodies in tackling nuclear liabilities led to a progressive escalation of costs and a deterioration in facilities, which has only begun to be addressed in recent years.

The cost of decommissioning those old nuclear facilities today is high for two primary reasons. The first is the post-war military and research origins of the UK nuclear industry as this country raced to build a nuclear deterrent. We are dealing with many of those costs today. The second reason is that those responsible—in Government and industry—gave too little priority to clean-up. As the hon. Lady has said, half the Department of Energy and Climate Change budget is spent on that, and the amount will rise to two thirds of our budget in due course. We are absolutely adamant that there should be no financial constraints on dealing with those legacy matters. To all of us involved in these policy issues, an

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unparalleled commitment to clearing up the legacy of the past is an integral part of having permission for a new-build nuclear programme in the future.

It is necessary to understand that the UK’s civil nuclear legacy is quite unique, as it is made up of a range of experimental facilities created up to 50 years ago. The poor condition of some of the estate and the high cost of dealing with it now reflects the unfortunate fact that, historically, decommissioning challenges were overlooked and ignored. However, that also means we are moving into the sector ahead of many other countries. There is a very important business opportunity for British companies in the sector to win international contracts as other countries start their decommissioning programmes as well.

Of course, with new nuclear power will come nuclear waste. The cost of managing our existing nuclear liabilities is significant. The current discounted estimate of the cost of managing that programme is some £50 billion. That is why we are so committed to finding a long-term, cost-effective solution for managing and disposing of our radioactive waste going forward. The Government’s policy for the longer term is a safe and secure management of higher-activity radioactive waste by placing it in a geological disposal facility. That is the internationally accepted way forward and it is the Government’s policy, which continues on from the work of the previous Administration.

Ms Ritchie: On the potential disposal site for radioactive waste, will the Minister indicate where it might be located and which countries the waste might come from? There are concerns in my constituency about that because of the geological fault line that lies in Cumbria and the clear, direct parallel with my constituency straight across the Irish sea in South Down.

Charles Hendry: Let me give the hon. Lady a complete assurance that we are looking at managing our own legacy waste, which includes one of the biggest stockpiles of plutonium in the world. Alongside that we are looking at whether there are ways to reuse that plutonium as a fuel. We are looking for volunteer communities and have identified some in Cumbria who are prepared to work with us to see where appropriate sites might be. However, that would only happen if we are absolutely clear about the geological safety of the sites being proposed. We are just beginning to carry out such a process. We want to move it forward faster than has been the case so far, but that can only happen if we are absolutely satisfied about the environmental, geological and geographical matters that relate to it. Builders of new plant will have to put funds into an independent fund to ensure that their own costs associated with their nuclear waste in due course can be managed within that programme. This is an integral part of the process moving forward.

I want to focus now on why I believe we need new nuclear in this country and how that ties in with the concerns the hon. Member for South Down has raised about market reform and why that is such an important part of this process. We estimate that in order to have a low-carbon economy where we have sufficient generation to ensure security of supply we will need up to 70 GW of new low-carbon generation by 2030. To put that in context, the ambition of the industry in the nuclear

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sector is for 16 GW by 2025. The overwhelming focus, therefore, is on a range of other low-carbon technologies alongside nuclear, including carbon capture and harnessing our own renewables. It is completely wrong to suggest that we are focusing only on nuclear. We see that as a very important element within a much wider and more balanced programme.

Guto Bebb: The point my hon. Friend has just made is extremely important because sometimes the debate is structured in terms of renewables versus nuclear. That is not the issue. For example, in north-west Wales, the commitment has been made to develop all sorts of energy sources, not just nuclear.

Charles Hendry: I am delighted to respond to my hon. Friend’s point. I recently had the chance to be in Anglesey, which is close to his constituency, to see its vision as an energy island. An immense amount of work is going on there by a range of industrial and educational partners, the local authority and others to create a very compelling case for investment in renewables alongside nuclear as part of a balanced mix.

The process of market reform is fundamental to achieving that. We have structured things in a way that we believe delivers the necessary investment at the lowest cost to consumers. The hon. Lady highlighted one part of the contract for difference and said that if the price drops, more will be paid. However, the corollary of that is that if the price is high, we will claw back the contribution. Investors will have continuity, certainty and predictability of income stream, which reduces the cost of capital and of the building programme to consumers.

In answer to the point made by the right hon. Member for Oxford East (Mr Smith) in his intervention, such an approach is necessary because we must secure twice as much investment each and every year of this decade, compared with the previous decade, to keep the lights on. The matter is a national emergency in terms of our energy security and is absolutely critical.

David Mowat: Will the Minister give way?

Charles Hendry: I hope that my hon. Friend will understand if I do not give way in the last remaining moments. I think that I have picked up on some of his points. I completely agree with him that market reform is the best way of delivering for consumers and that having a range of policies and technologies is the best way of delivering security of supply.

On new build, as on decommissioning, we are keen to control costs. The progress of construction of the first new nuclear power station in the UK will be watched carefully by potential investors and developers. We know that an inability to deliver to time and on budget will affect the level of interest in nuclear new build in the future, and that would severely limit the potential for a new nuclear programme.

If we are to maintain strong public support—this is one of the few countries where public support for nuclear has grown since the Fukushima accident in

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Japan—we must continue to demonstrate that we are learning from experiences around the world. Implementing lessons from other nuclear power plant construction projects has the potential to reduce the cost in the United Kingdom, reduce the construction risks, help to validate timings and identify design changes that will allow for more efficient construction practices. Some of those are already being dealt with, and the whole process of the generic design assessment programme has been absolutely at the heart of that. We must ensure that we have identified the exact nature of the new reactors to be built before we start taking that forward.

One of the most important aspects of the whole programme has been the work to take the matter out of politics and carry on Lord Hutton’s work when he was Secretary of State. He did an enormous amount to identify the challenges and give security to investors in enabling them to understand that there is a continuity of Government approach here that will secure the investment.

Finally, I want to deal with the issue of subsidy. Let me make it absolutely clear where we stand on the matter. The coalition agreement set out clearly that nuclear power plants should be taken forward without public subsidy and, in a written statement to Parliament in October 2010, we reconfirmed that policy. There will be no market support to a private sector new nuclear operator for electricity supplied or capacity provided unless similar support is also made available more widely to other types of generation.

Within that, it is implicit that we recognise that nuclear is the lowest-cost large-scale, low-carbon source of generation and that, therefore, additional support will need to be made available to those emerging technologies in the renewable sector. They will be a very important part of the process. Any such change requires state aid approval. We have started to engage with the European Commission on that and we believe that approval will be achieved because the Government are not providing support; they are providing a mechanism whereby investors can get a return on their investment.

We see nuclear as an important part of our energy future, which has the potential to bring an enormous number of jobs to the United Kingdom. We have already seen the university of Oxford, which is represented in part by the right hon. Member for Oxford East, harnessing its own nuclear skills and working in coalition and partnership with the university of Bristol. Many other universities are coming forward, and a tremendous number of companies recognise that they can benefit from the programme.

I assure the hon. Member for South Down that we are looking at the matter very much in the round. We see the benefits of nuclear power, but we will only take that forward when we are completely convinced about the wider issues. Market reform is an important part of that process and will be critical to securing the necessary investment. The wider range of issues—safety and security matters and long-term waste management—are also important. We have a programme in place that comprehensively addresses those and I hope that I have been able to help to reassure her on those points.

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Cruise Market (Competition)

4.29 pm

Caroline Nokes (Romsey and Southampton North) (Con): It is a pleasure to serve under your chairmanship, Mrs Brooke.

At the outset, I pay tribute to all the right hon. and hon. Members who called for this important debate. I draw the Minister’s attention to the cross-party nature and geographical spread represented by those present. This is not simply Southampton versus Liverpool; it is about the principles of fair application of competition rules wherever they are applied. The issue relates to all parts of the country. I am particularly pleased to see the hon. Member for North Tyneside (Mrs Glindon) and the right hon. Member for South Shields (David Miliband). There are very few things that can bring together the south coast ports of Southampton and Portsmouth, so I regret that my hon. Friend the Member for Portsmouth North (Penny Mordaunt) cannot be here, but she has expressed sympathy on the matter before.

I direct the attention of right hon. and hon. Members much further north to the Scottish satirical writer, Thomas Carlyle, who said:

“Our life is not really a mutual helpfulness; but rather, it’s fair competition cloaked under due laws of war”.

That is why so many hon. Members here today are flummoxed or angry, or both, at the different application of due laws of war to different parts of the country, to different ports and to different port operators. Those due laws of war are not simply set down by a very British sense of fair play and a desire to see a level playing field—or whatever the equivalent nautical term is—but are clearly set out in European competition rules designed to ensure that state aid is not available to give an unfair advantage.

Charlie Elphicke (Dover) (Con): I congratulate my hon. Friend on securing this important debate, which is also of significant concern to the people of Dover and its very successful cruise turnaround business. When it comes to state aid, should not the entire £19 million be repaid?

Caroline Nokes: I thank my hon. Friend for making that point, and for standing up for the cruise business in Dover. He makes an interesting point, which I will move on to later.

I have an unashamed loyalty to my home port of Southampton, the second-largest cruise port in Europe and the embarkation point of a cruise voyage for 720,000 passengers a year. Southampton is not a port that is afraid of competition. It is not afraid to invest private money to provide the facilities required for a thriving and expanding cruise business. As port director Doug Morrison, who has taken the time to be here today, has said on more than one occasion:

“We believe in fair competition. We do not fear Liverpool and competition, but it is simply not right.”

Of course, that is what our debate is about: ensuring that competition in the cruise industry is on an equal footing, and that a leg-up to one port is not an iceberg to another.

European competition rules on state aid are clear. The European Commission website devotes a considerable number of words to explaining them. Why does that

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come as no surprise? The Commission seems to be very good at devoting a considerable number of words to many things, but perhaps less good at applying those ideals when it comes to the crunch. I will quote those words to the Minister:

“Sometimes Government authorities spend public money supporting local industries or individual companies. This gives them an unfair advantage over similar sectors in other EU countries. In other words, it damages competition and distorts trade...It is the Commission’s job to prevent this,”

which seems a fairly unequivocal statement to me. It does not say that the Commission’s job is to sit back and allow market distortion. No—it is the Commission’s specific job to prevent it. However, first it must apparently ask some questions. That is fair enough, and I would like to take hon. Members and the Minister through those questions and ask whether they have been rigorously asked and responded to in relation to the UK cruise market.

Have state authorities given support, for example, in the form of grants, interest and tax relief, guarantees, holdings in companies, or goods and services provided on preferential terms? The answer strikes me as a big yes in the case of the port of Liverpool, which has received £19 million in grant and been asked to pay back only somewhere between £8.8 million and £12.6 million. Has such aid been available to other port operators in the UK, or has investment and expansion in their cruise facilities been without such support and advantage?

Is the support likely to affect trade between EU countries? Arguably, yes again. Barcelona and Venice are two of the leading ports in southern Europe, and a significant proportion of the UK cruise market heads directly to the Mediterranean. Clearly, therefore, there is potential for an impact. Of course, it is not only ports on the Mediterranean, but other European ports, too. For the past two years, the port of Copenhagen, primarily hosting departures to the Norwegian fjords and the Baltic, has been rated as Europe’s leading cruise port at the world travel awards. In Southampton, we might have a view on that, but it would come as no surprise to learn that cruises from Liverpool might reasonably be expected to head in that direction as well.

Southampton has been shortlisted at the world travel awards for the past four years, and I am pleased to see that it is nominated again for 2012. I have no doubt that the other ports shortlisted this year, which range from Las Palmas in Gran Canaria to Stockholm in Sweden, are all extremely concerned about the state aid to the Liverpool cruise terminal, which could have a very detrimental effect on the business they have worked so hard to attract. It is a market that continues to expand, as one in every eight British package holidays sold is a cruise.

Mr John Denham (Southampton, Itchen) (Lab): I congratulate the hon. Lady on securing the debate. She has made a compelling case about the importance of EU rules in this case. I am sure that she will be aware of the recent statement by Commissioner Almunia, who said that he has reminded the British Government

“of their obligation to comply with EU state aid rules.”

Does the hon. Lady agree that this is not a matter where the Minister can simply say that it is down to the European Commission in Brussels? He has a personal

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responsibility to ensure compliance with the rules, which means taking action to prevent Liverpool from breaking them.

Caroline Nokes: I thank the right hon. Gentleman for that comment. When I conclude, I will ask the Minister to work with his colleagues in the Department for Communities and Local Government on that very subject.

Is the support selective? Does it confer an advantage on specific companies, parts of industries, or on companies in specific regions? Yes, again. No other port operator, whether ABP, Hutchison or the port of Tyne, has received that sort of assistance for their cruise facilities. They have had to invest in their facilities themselves using private capital, just as they should in a free and fair market.

Has competition been distorted or might it be in future? We can fairly safely respond to that one. In requiring Liverpool city council to get state aid clearance from the European Commission prior to commencing turnaround cruises, the Government appear to endorse that view. However, what has happened in Liverpool? It has started anyway. The European Commission states that if that has happened, the Commission must disallow the support unless it is shown to be compatible with the common market.

Dr Alan Whitehead (Southampton, Test) (Lab): Would the hon. Lady care to comment on what appear to be further proposals by Liverpool for a permanent terminal by investing £23 million, including a further £10 million of possible public subsidy? I understand that that was not discussed with the Department for Transport when competition was first raised. Does she consider that it indicates a possible permanent arrangement as far as distortion of trade is concerned?

Caroline Nokes: The hon. Gentleman makes an important point. We are not just talking about £21 million of public money, but future moneys, including the £10 million he mentioned, for a permanent turnaround facility that, in my view and that of several other hon. Members across the country, will have a permanent distortion on the cruise market.

To relate some of the history, as the Minister is well aware, the city of Liverpool cruise terminal was built using £19 million of public money on the explicit condition that it would not compete with other ports that had invested their own money to build similar facilities.

Jim Shannon (Strangford) (DUP): I congratulate the hon. Lady on bringing this matter to the Chamber. We all have constituencies where cruise ships bring benefits. People come to Belfast and then go by bus to enjoy the scenery and history of the Strangford area. Does the hon. Lady feel that we need—perhaps the Minister will drive it—a UK or Great Britain strategy that involves all regions to ensure that competition is fair and that we all gain advantage from cruise ships?

Caroline Nokes: Of course, the existing port strategy makes a very clear point about the need for fair competition and a level playing field.

When talking about ports that have invested their own money, I could mention Southampton again, but there are many other examples, such as the port of

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Tyne, where investment worth £100 million has been put in over the past 10 years, and Harwich, where there has been significant investment since 1998, when it joined the Hutchison Port Holdings Group. Throughout the country, as evidenced by hon. Members today, large private investment has been put into both freight and passenger-focused ports.

Mrs Mary Glindon (North Tyneside) (Lab): Like my colleagues, I congratulate the hon. Member for Romsey and Southampton North on securing this important debate. Surely, fairness is an important consideration when talking about private investment. State aid clearance is crucial. We hope that the Minister will assure us that fairness will be the key in this matter.

Caroline Nokes: The hon. Lady is correct. I commend her on the extensive work that she has done on the subject. She hits the nail on the head: state aid and fairness are what matter.

Dr Julian Lewis (New Forest East) (Con): Before my hon. Friend gets back into her stride, does she agree that good faith, as well as fairness, should come into account? It was revealed, as a result of a freedom of information request, that Liverpool city council resisted pressing for a turnaround facility at the outset

“due to advice that there could be state aid complications which could prevent the terminal being built at all.”

The key words are:

“Their approach was to build as a port of call facility and address turnaround later.”

It seems that it was using a Trojan horse tactic and acting in very bad faith.

Caroline Nokes: My hon. Friend makes an excellent point. It is partly about good faith and trusting that the port of Liverpool and Liverpool city council will abide by conditions and rules that are set for them.

By 2008, Liverpool city council had launched its first attempt to lift the conditions, and the conclusion, after a detailed assessment by the Department for Transport, was that the change of use to turnaround cruises would have an

“unfair and adverse effect on competition between Liverpool and other cruise ports. It would be unfair to allow one port to benefit when competitors have found, or would have to find, private money to achieve the same objective.”

And so to today. The Government have decided, “based on independent advice”—even though that advice is from First Economics, a consultancy that freely admits it is not expert in either competition or the cruise industry—that they will withdraw their objection to removing the funding condition and Liverpool being used for turnaround calls, provided Liverpool repays either £8.8 million upfront or £12.6 million over 15 years. None of the European regional development fund money would have to be paid back, but—this is crucial and goes back to the good faith argument—state aid clearance from the European Commission would have to be secured.

Charlie Elphicke: Does my hon. Friend agree that what is happening is astonishingly high-handed? The project has gone ahead regardless, without state aid clearance having been obtained. I note that no Member of Parliament representing Liverpool is in the Chamber.

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Caroline Nokes: I thank my hon. Friend for mentioning that. I was about to move on to that point.

Within one week of the Government’s making their announcement and prior to having even sought, let alone secured, European clearance under state aid rules, the port of Liverpool accepted its first turnaround cruise, which visited France, Guernsey and the Scilly Isles. A quick inspection of the cruises scheduled for the coming year reveals a number of cruises to the Canaries, a focus on the Baltic and various other destinations. Whatever else that was, it certainly was not playing by the rules of war so eloquently described by Thomas Carlyle; it was more like a massive two-fingered salute to the Government and to anyone’s idea of fair play.

David Miliband (South Shields) (Lab): I cannot resist intervening in a debate that brackets South Shields and Venice in the same speech. I congratulate the hon. Lady on that. The addition of Trojan horses raises extraordinary prospects. I congratulate her on securing the debate.

Does the hon. Lady agree that the uncertainty of the current situation will blight a lot of the business development that is taking place around the country? The port that is of interest to me is the port of Tyne, which has a ferry terminal in North Shields and its headquarters in South Shields. It has doubled the number of cruise ships docking in the past year and there is concern that an elongated, uncertain process will damage the business investment planning that it is trying to do. Does the hon. Lady agree that we need some clarity from the Government to get the sequencing of decisions clear and right?

Caroline Nokes: The right hon. Gentleman is spot on. We want certainty and we want a level playing field for private investors, who might otherwise feel nervous and anxious about investing in a number of ports throughout the country. It is important that they have that certainty from the Government.

It is the Government’s responsibility to ensure that there is fair competition. The Minister will have heard that hon. Members wish to hear that state aid rules are not flouted and that original conditions and amended agreements are adhered to. As I said, within a week Liverpool had started turnaround calls without having made any effort to ensure that it had clearance to do so.

The European Commission is in contact with the United Kingdom authorities and has reminded them of their obligations to comply with EU rules. The Commission has written to the United Kingdom requesting information to assess the change in use of European regional development funding. Should the conditions of the original grant offer no longer be complied with, recovery of that grant may be necessary.

A letter dated 8 June 2012, from the head of the ERDF closure team at the Department for Communities and Local Government, states:

“DCLG recognises that the commencement of turnaround operations in advance of State Aid clearance from the Commission may result in financial penalties if the Commission concludes that there is unlawful State Aid.”

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The most pertinent statement in the letter is that any penalties that are subsequently levied would fall upon Liverpool city council and will not be recovered from the Government.

As Andrew Carnegie once said:

“And while the law of competition may be sometimes hard for the individual, it is best for the race”.

Are any hon. Members suggesting that Liverpool would not survive if obliged to refund all the public moneys it has received? Not a bit of it. If the business model is good and if the figures stack up, the operators of the port of Liverpool should be prepared to do what every other port operator in the country has done and put their money where their mouth is. However, we are where we are. As free marketeers, we have to deal in the marketplace where we find ourselves—a marketplace that has become or has the potential to become distorted.

I call on the Minister to respond to three points. First, I should like him to justify the current inaction on the flouting of the conditions laid down for Liverpool with regard to the commencement of turnaround calls before state aid clearance was sought or received, and to use a suspension injunction to prevent further turnaround cruises until such time as the outstanding issues are resolved. Secondly, I should like him to support the calls by Members of the European Parliament throughout the country to the European Commission for Liverpool city council to repay the European regional development funding, and to work with his colleagues in the DCLG to ensure that that goal is achieved. Thirdly, I should like him to ensure that the apparent “anything goes” attitude to the use of taxpayers’ money is halted forthwith and that, in these difficult times, the private companies that we wish to see lead the economic recovery are not disadvantaged by unfair competition from a state-subsidised operation that appears to have no respect for the rules of competition that I mentioned at the start of the debate.

4.48 pm

The Parliamentary Under-Secretary of State for Transport (Mike Penning): It is a pleasure to be here, Mrs Brooke. I should like to get some facts on the record, not only for my hon. Friend the Member for Romsey and Southampton North (Caroline Nokes), but to give the Government’s side.

Like my hon. Friend, I am keen on competition, because I am a free marketeer as well. I am also keen, as a Minister, to consider in detail a request made by anybody anywhere in the United Kingdom. That is not what happened in 2008. The right hon. Member for South Shields (David Miliband) knows full well that when a request was submitted in 2008, it was dismissed quickly. I have not seen any legal advice instructing the Government that it would be illegal for them to look at the matter. Certainly, my legal advice, when Liverpool city council said that it would like to start turnaround, was not that I could not look at that. As a free marketeer, the Minister for the whole United Kingdom, and a Tory MP, here I am defending Liverpool. That is an interesting anomaly. Lord Heseltine would be proud of me.

It is clear that we were open and transparent all the way through; I will come back to how we achieved that. I met the operators of Southampton port—and Members from across the House—on more than one occasion to

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explain things exactly. In a democratic society that believes in a free market, any request should be looked at fairly by a Minister of the Crown. I looked at the request made by Liverpool city council, and I asked my officials what the procedures would be, what powers I had, and what powers were not in my hands. It was obvious that I had the power to look at the request, so we consulted widely, and got submissions from all parts of the House and across the country on what should happen. The key thing that I got back from the submissions was the point about fairness; that needs to be in whatever we do.

I looked at what I could do about the two separate payments made to Liverpool when it got the grants. First, I asked whether I or anyone in the UK had the power to ask for the regional development grant to be repaid. The answer was no; it is a Commission issue, for the Commission alone to deal with.

Dr Julian Lewis rose—

Mike Penning: I will continue for the moment, because I am conscious of the time, and I want to cover many of the points made. If I have time at the end, I shall come back to my hon. Friend.

The issue is being looked at by the Commission, and it is for it to decide. What was in my power was the ability look at whether Liverpool had to pay back the full UK part of the grant, whether there was any depreciation because of the length of time, and whether interest would be added. My Department made an evaluation, and Liverpool asked to pay £5.3 million as a lump sum, which I rejected. The assumptions of my officials were that the amount should be about £8 million —we ended up with a figure of £8.8 million. To ensure that I was seen to be impartial, I asked for some independent advice on how much money should be repaid. My hon. Friend the Member for Romsey and Southampton North came up with the right amount, which was £8.8 million, or £12.6 million if phased. That is almost identical to the figures that the modelling came up with, after consideration of how other repayments were made.

I made that decision, and put it to Liverpool that it would have to pay those moneys back. As yet, Liverpool has not indicated how it will pay that—in stages, or in one lump sum. The assumption—that is all it is—is that it will be a one-stage payment. As yet, Liverpool has not indicated to the Department for Communities and Local Government how it will pay the money, or when it intends to do so. My officials have been in touch with DCLG officials, who have been in touch with the city council to push it on the need for a decision.

It is absolutely the case that state aid has not been cleared yet, but I do not have any power to stop Liverpool while we wait for the Commission to act. The key to the situation is that my officials and I as the Minister, independently and with no vested interests, have looked at what can be done. I believe that competition is good, and that competition around the country will drive up the excellent cruise market. I was at the European Cruise Council conference in Brussels only last week, and even after the terrible Costa Concordia disaster, the market has picked itself up and is moving forward again.

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Mr Denham: Will the Minister give way?

Mike Penning: If the right hon. Gentleman could bear with me, I will give way in a moment.

Looking at the situation from my point of view, have we been open and completely honest about what we did and the process? I believe we have. Is Liverpool doing what I asked it to do? No, because it has not paid the money back and we do not yet have state aid clearance. Do I have the power to stop Liverpool? The answer is no. Would I really want to? If the European Commission declares the payment to be incorrectly done state aid—my legal advice is that it is not—Liverpool would have to pay the moneys back. Liverpool, however, has indicated that it will pay the money back. The words of the then leader of Liverpool city council, now the mayor, were, in effect: “We will pay back what you ask us to pay back.”

Mrs Glindon: Will the Minister give way?

Mike Penning: Will the hon. Lady bear with me for a second, because two other colleagues have tried to intervene as well? I have been given only 10 minutes to sum up the debate and, with so many people present, we could have done with a little longer.

The key for me is whether the effect on other ports and other incomes around the country will be dramatic. I have seen no evidence for that yet. At the European cruise conference, I spoke to the representative of a cruise operator that does not operate here at the moment, but will put 22 cruises in next year. I asked, “Would you be doing this at any other port in the UK?” The answer was no. I had to take that at face value. Will there be such a dramatic effect? I do not honestly think so. The Government have been genuine and honest about how much pain there should be, and Liverpool city council will have to step up to that and be as honest and open with us, and with its own electorate, as we were with it on what will have to be paid back and when. Also, should it have gone ahead without state aid approval? No, it should not have done.

Dr Julian Lewis: With regard to the European money, are the Government in a position to make representations to the European Commission on the matter? If the Government think that the Commission is unlikely to ask for the money back, does that not suggest that the Commission acted in a distorting and anti-competitive way when making the money available in the first place?

Mike Penning: My hon. Friend is leading me down a path that I am probably quite happy to be led down. I understand from my legal advice that the Commission has never asked for any such funding back in other, similar cases. Looking around Europe at subsidies, the Commission would probably rather not open such a Pandora’s box.

Mr Denham: The Minister says that he has no power to act, but infraction proceedings would be taken against the British Government in the first instance, not Liverpool. Ministers have always had the ability to prevent the misuse of European regional development fund money, if they thought the misuse would leave the Government liable to action by the Commission. There must be legal powers for him to take to guard against the risk of infraction proceedings by the European Commission.

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Mike Penning: The right hon. Gentleman would be absolutely right if my legal advice was that I would be in breach, but my legal advice is that I will not be. He has had far more senior positions in government than me, so he knows that Ministers look at their legal advice and sometimes ignore it and sometimes accept it. In this case, I decided to accept the legal advice, as it came from those more qualified than me.

Mrs Glindon: I thank the Minister for giving way. In 2009, the Department for Transport specifically said that the port of Tyne would be adversely affected by the lifting of the restrictive conditions, and that remains the case, because as a port, we are in direct competition with Liverpool for some of the cruise destinations. Furthermore, if the Government do not enforce a suspension injunction, they could be failing to comply with their EU treaty obligations.

Mike Penning: I thank the hon. Lady for her intervention. I have visited the great port of Tyne, and there are great plans for it. I was not a Minister in the Department for Transport in 2009, so she will have to speak to her colleagues about not paying back the subsidy. The key is that there is a formula for how much should be paid back, because there is a discount for the period of time, and interest must be added. That formula produced the figure. The issue is difficult for hon. Members, especially those who represent other ports, and I would probably feel exactly the same if I represented a port. The issue is all about fairness and what is legal.

I have sought advice. Any former Minister in this Chamber knows that we would never have said how

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much must be paid back without obtaining legal advice on whether it would be in breach of anything. Based on the legal advice that I have received, we are not in breach, and that is why I gave Liverpool the option of paying back the £8-plus million, or £12 million over a period. That is what Liverpool must make up its mind about. It should have paid back earlier, and it should not have gone ahead as it did.

Mrs Glindon rose—

Mike Penning: I need to come to my conclusion. It is useful that people understand that the process has been open. I have tried throughout to ensure that competition is fair. I know that some colleagues will not like the result, and that people in other ports think that there will be a huge adverse effect. As a Conservative, I passionately believe in competition, and that is what this is all about. If the legal advice is that under the formula £8.8 million should be paid back, subject to the Commission’s permission, that is only fair. If I had acted in any other way, I would have had a load of Liverpool MPs in this Chamber arguing the matter the other way around.

Instead of ignoring the situation, I looked at it carefully, and instead of dismissing it straight away, which is what happened in 2008, we considered whether we could increase capacity, create jobs and create more turnaround. That is what I hope we have done. This debate has been useful, but I do not think everyone will agree.

5 pm

Sitting adjourned without Question put (Standing Order No. 10(11)).