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Mrs May: I answered in response to a point raised by the right hon. Member for Wythenshawe and Sale East (Paul Goggins) that part of the discussions with the Commission and member states will be precisely about that process and the time at which any opt-ins that we choose to exercise come into force. By that time we will be able to consider what has come out of those negotiations with the European Commission, and assess the impact of opting in or not.

Dr Julian Huppert (Cambridge) (LD): There is clear need for improvement to the European arrest warrant, but does the Home Secretary agree with 13 former security and police chiefs that scrapping it altogether would be entirely self-defeating? It has become an essential tool in the fight against cross-border organised crime, delivering fast and effective justice across Europe. More than 700 serious criminals have been brought back to the UK to face justice, accused of robberies, murders, rapes, child sexual offences and more. Does the Home Secretary agree that those people should be brought back promptly to face justice?

Mrs May: Of course I agree that people who are guilty of such crimes should be brought back to face justice. I say to my hon. Friend, however, that part of the process we will undertake includes careful consideration of each of those 133 measures. As I have said, some of those are now defunct, we may wish to opt back into some, and there are some that we will not opt back into. There will be careful consideration by the Government about what is in the national interest.

Mr William Bain (Glasgow North East) (Lab): Does the Home Secretary accept that since the introduction of the European arrest warrant in 2004, the amount of time taken to extradite someone who objects to extradition has fallen from 12 months to 48 days on average? What does she say to the Law Society and the Law Society of Scotland, which are deeply concerned about the impact of her announcement on the prevention and detection of terrorism and serious organised crime?

Mrs May: I remind the hon. Gentleman that I have not indicated one way or the other in relation to the European arrest warrant. I have said that we will look carefully at each individual measure, and the organisations he has cited will provide the Government with their views on this matter.

Ben Gummer (Ipswich) (Con): I thank the Home Secretary for her comments. In July 2010, my constituent, Sarah Shields, was murdered. Her boyfriend was accused of the murder and extradited under a European arrest warrant within two months. In her review, I hope that the Home Secretary will bear in mind those beneficial aspects of the European arrest warrant. It has caused a speedy return which, as she knows full well, would not have been so quick 10 or 20 years ago.

Mrs May: I fully accept the cases cited by my hon. Friend and a number of hon. Members. We will look carefully at examples of the operation of the European arrest warrant when we consider our final decision on it.

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Mr Peter Bone (Wellingborough) (Con): What a star we have in the Home Secretary—terrorists are sent home, powers are brought back from Europe and Parliament is given a year’s notice on something. What more can she do? Will she consider the views of the all-party group on human trafficking, which recognises that most of the successful operations against traffickers have been bilateral and not undertaken through the European regulation? Will she bear that in mind?

Mrs May: I shall certainly bear that in mind, particularly given my hon. Friend’s work against human trafficking. It would be wrong to assume that there is only one way of doing things—we can co-operate in a variety of ways to ensure that we get the best results in the national interest.

Mr Robin Walker (Worcester) (Con): I congratulate the Home Secretary on at last starting the process of bringing powers back from Europe. My constituents in Worcester want British justice to be finally decided in the British Parliament. Will she therefore assure the House that any decisions to opt back in will be given plenty of time for hon. Members to debate them individually and in detail on the Floor of the House?

Mrs May: There will be a proper opportunity for Parliament to consider these matters. As I have said, the Minister for Europe set out some time ago the Government’s desire for Parliament to have a say. Precisely what form that takes has yet to be discussed with various parliamentary groups, but I shall certainly take my hon. Friend’s point into account.

Henry Smith (Crawley) (Con): I welcome the Government’s intention to come out en bloc of the European justice and home affairs provisions. However, given that the Government might be minded to opt back in to certain provisions, as my hon. Friend the Member for Worcester (Mr Walker) says, we should have not only parliamentary scrutiny, but Divisions. Will she confirm that that option will be part of the mix?

Mrs May: We will enter full, frank and open discussion with various bodies on how the process should be undertaken and on any votes in the House. The crucial thing is that this Government are giving Parliament an opportunity to have its say.

Nick de Bois (Enfield North) (Con): The Home Secretary will enjoy the full support of my constituent, Andrew Symeou, who languished in a Greek jail, denied his basic human rights. Much of that was facilitated as a result of the European arrest warrant. When she considers any future arrangements, may I urge her to examine in detail cases such as that of my constituent, which Lord Justice Scott Baker unfortunately did not consider when preparing his report?

Mrs May: My hon. Friend has highlighted precisely the issue that many hon. Members raise in relation to the European arrest warrant. On the one hand, my hon. Friend the Member for Ipswich (Ben Gummer) cited a case in which the EAW was beneficial, but on the other hand, my hon. Friend the Member for Enfield North

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(Nick de Bois) cites a case in which an individual feels that they suffered as a result of it. We will certainly look at that balance.

Andrew Stephenson (Pendle) (Con): I fully support our opting out of those 130 EU measures, especially the European arrest warrant, but we should tread carefully. Opinion in the House is clearly divided on the measure, so does my right hon. Friend agree that it is essential that our Parliament looks at the issue in detail and votes on it in our national interest?

Mrs May: It is absolutely right that we give Parliament the opportunity to vote on the issue. That is why the Government will discuss with Parliament how that vote should take place, the timing of the vote, and what information Parliament will want to have available to it.

Stephen Lloyd (Eastbourne) (LD): Last month, the 15-year-old schoolgirl Megan Stammers, a constituent, was abducted by her teacher, Jeremy Forrest. Much to my relief and that of her family and friends, Megan returned to the UK eight days after she was reported missing. Jeremy Forrest, the teacher, was returned to the UK less than two weeks later to face trial. They were found in Bordeaux by police acting on a European arrest warrant issued three days previously. Without the EAW, it is likely that it would have taken longer to find Megan, and Jeremy Forrest would probably still be in France. What reassurance can the Secretary of State give to my constituent and her family, and thousands of other victims of serious cross-border crime, that the Government will always ensure that British police can work effectively with their European partners to catch criminals abroad and bring them back quickly to face British justice in our courts?

Mrs May: The hon. Gentleman raises a particular case in relation to his constituents. On the general point, I would merely say, as I said earlier, that the Government believe that it is one of the first duties of the Government to protect the public. We recognise the importance of co-operating with other police forces in other jurisdictions in other countries so that we can ensure that people face justice appropriately. These issues, in cases such as the one that he raises, will of course be considered by the Government in looking at the whole question of the European arrest warrant.

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West Coast Main Line

4.50 pm

The Secretary of State for Transport (Mr Patrick McLoughlin): With permission, I would like to make a statement on the west coast main line. On Wednesday 3 October, I announced the cancellation of the inter-city west coast franchise procurement. This decision was taken as the result of significant flaws found within the procurement process undertaken by my Department. These made the continuation of the competition and the award of the franchise untenable.

I know how important the west coast main line is to the economy of this country and to the constituents of Members. This franchise operates more than 300 train services a day, carries more than 26 million passengers a year and employs more than 3,000 staff. This is a regrettable outcome caused by unacceptable mistakes made in my Department during a complex procurement process. It has also meant that I have paused the ongoing franchising programme, including live competitions on Essex Thameside, Great Western, and Thameslink.

I would like to reiterate that there is no suggestion that FirstGroup or any of the other bidders, including Virgin Trains, acted in anything other than good faith during the bidding process. FirstGroup is a great British company and a leading transport operator both here and in the United States. It provides jobs for 13,000 people across the UK and operates four railway franchises, which together carry more than 300 million passengers a year. I want to make it clear today that the cancellation of the west coast competition should not be seen as a comment on FirstGroup, its bid, or its approach to running rail franchises now or in the future. Furthermore, as I have said to the Select Committee on Transport, Virgin has also made a fantastic contribution to both the railways and aviation in this country.

It would be premature at this stage to speculate on where and how the errors in the process emerged. That is why, when I announced the cancellation of the procurement, I also asked for two urgent investigations to be carried out. Both reviews are now well under way. The first of these is an inquiry led by Sam Laidlaw, the chief executive of Centrica. He is the lead non-executive director on procurement across Government and the lead non-executive director of the departmental board. His review is examining what happened during the west coast procurement and why. It will establish the lessons to be learned. I have asked for the initial findings of the review by the end of October and expect the full report by the end of November.

The second review is looking at the implications of the flaws on the west coast procurement for the rest of the franchising programme. This review is being led by Richard Brown, a highly respected industry figure and the chairman of Eurostar. My expectation is that the Brown review will report no later than the end of the year on lessons for the future franchising programme, so that it can be resumed as soon as possible.

I am today publishing the terms of reference for both reviews, and these have already been laid in the Library of the House. Before these reviews have been completed, and particularly before the findings of the Laidlaw review have been published, any speculation as to the nature of the flaws is just that—speculation. I will of course report to the House on the findings of these reviews at the earliest opportunity.

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I would like to take this opportunity, however, to restate the Government’s commitment to ensuring that we continue to have private sector innovation and investment in the railways. Since privatisation, the number of passenger miles travelled has nearly doubled. This growth brings significant benefits to the country’s economy and to the environment, relieving congestion and improving connectivity for businesses, commuters and leisure travellers. Passenger satisfaction is up, and so is punctuality. I want to see these benefits continue, which is why I want this pause, while the reviews are carried out, to be as short as possible. We will restart our refranchising programme, including the competitions on Essex Thameside, Great Western, and Thameslink, as soon as possible.

I now turn to the future operation of the west coast main line. I am committed to ensuring that passengers will see no impact as a result of these mistakes. Passengers will be able to make the journeys they have planned, with the tickets that they have bought. Clearly, we will need to learn lessons from the two reviews, and we will need to run a new competition for the west coast franchise. I want this to happen as quickly as possible, but we want to get it right, which will take time. It is also important that in the intervening period we secure a deal that secures best value for taxpayers, including the continual improvement of service quality.

For that reason, I am today announcing that we are commencing negotiations with Virgin Rail Group with a view to it remaining as operator of passenger services on the west coast main line. Subject to ensuring value for money for the taxpayer, I expect this to last for a short period of about nine to 13 months. In this period, we will run a competition for an interim agreement. This interim agreement, which will be open to any bidders, will then run until the new long-term west coast franchise is ready to commence. I will keep this approach under review so that it can be informed by the Brown findings and recommendations and so that it will ensure value for money.

I am grateful to the team at Directly Operated Railways for all their preparations so far. DOR will continue to stand ready should it be required. Britain’s railways are a great success, and I am determined that this incident will not get in the way of the Government’s record. We have launched the biggest programme of investment since the Victorian era and have just announced reductions in regulated fare rises over the next two years, recognising the importance of access to the railways for millions of commuters. I commend this statement to the House.

4.57 pm

Maria Eagle (Garston and Halewood) (Lab): I thank the right hon. Gentleman for advanced view of the statement. I well understand why, when he announced this embarrassing debacle earlier this month, he did so at one minute past midnight, when he hoped everybody would be asleep, because this is yet another staggering example of the monumental incompetence of this shambles of a Government. It is a failure of policy, a failure of process, a failure of ministerial oversight and a failure of ministerial leadership.

The Government’s new franchising policy, which requires risks to be calculated 15 years into the future, was designed by the current Secretary of State for Northern

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Ireland, announced by the current Secretary of State for Defence and implemented by the current Secretary of State for International Development; and it has shamefully been left to the former Chief Whip to try and deflect the blame for it on to three officials in the Department for Transport. It is just as well it has not been left to the current Chief Whip to deal with, or he would probably have blamed it on the police at the gates of Downing street.

The reality is that Ministers are responsible. It was Ministers who redesigned franchising policy to make it much more difficult to calculate which bidder should win. It was Ministers who slashed faster than any other Department the expertise and staffing available to carry out the task, including apparently making the director of procurement, the director of rail strategy and the director of rail contracts’ posts redundant along with those of senior finance staff; and it was Ministers who reportedly cancelled an external audit that was routinely done in other competitions to check the outcome of the franchise award ahead of its announcement.

It is incredible that Minsters continue to maintain that these problems only came to light late in the day, just before they made that midnight announcement less than two weeks ago. We know that Ministers were sent a report warning of precisely the problems that led to the competition being cancelled five days before the contract was awarded. Today was the opportunity for the new Secretary of State to begin to put things right, yet he has failed his first test and announced a way forward that adds to the chaos and confusion and risks even greater costs to taxpayers, replacing one franchise competition with three, opening up the prospect of three owners in three years, increasing the risk of further legal action and further costs to taxpayers, and adding to the uncertainty for passengers and staff.

Can the Secretary of State update the House on the likely final cost to taxpayers of the Government’s failure on franchising? If reimbursing bidders for the west coast will cost £40 million, what will be the costs of the stalled Great Western, Essex Thameside and Thameslink franchises? What legal advice did he receive on his decision to extend Virgin’s contract? Specifically, what advice has he received on EU competition law, procurement law and the impact on the fairness of future competitions for the franchise? In the light of this debacle, does he agree that it makes sense to maintain a public sector rail company that is equipped to step in at short notice in future, as well as providing a useful comparator? Will he therefore abandon the planned privatisation of the east coast service, which is delivering nearly £200 million back to taxpayers every year, which is profit that in future will be shared with shareholders?

Can the Secretary of State not see that it is completely inappropriate for a member of his own Department’s board, no matter what his other qualities are, to carry out an investigation that has to look at the decisions taken or approved by other members of that board, including Ministers? Will the Secretary of State think again and make his review truly independent? What impact has the 37% turnover of senior civil servants in the restructuring of the Department in the last two years had on its capability to conduct competitions such as this? As the Secretary of State mentioned his fares U-turn, will he now agree to make the train

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companies apply the cap to every route, so that passengers do not find, as they did last year, that fares may still rise by up to 5% above the cap?

This was a franchise fiasco made by Ministers—a policy scribbled on the back of an envelope in opposition; cuts that go too far, too fast, implemented in government. The result is chaos across the rail industry and tens of millions of pounds of taxpayers’ money down the drain—the direct consequence of decisions taken by Ministers. Now we have a proposal for an independent review that is not independent at all, while the Secretary of State’s solution to the west coast franchise fiasco is a decision to do it all over again—that is, twice in just two years. What an appalling waste of taxpayers’ money! What a shambles from this incompetent Government!

Mr McLoughlin: I thank the hon. Lady for her reasoned response to my statement.

The last Labour Secretary of State for Transport was not a Member of this House, but he said some very interesting things. Lord Adonis said:

“Ten year franchises, with the possibility of longer contracts should bidders make sensible and affordable proposals, will allow operators to invest and suggest new innovations.”

At that point the Labour party increased the minimum for franchises to run to 10 years, with an option of 22 years. There is therefore a long-standing position that longer franchises can work, including to the benefit of passengers, which it is important they should do.

The hon. Lady mentioned a number of points. One of the things that I was keen to do, on hearing of the problems we were facing in the Department, was to get to the answers as quickly as possible. That is why I set up the inquiries as quickly as I possibly could. I believe that Mr Laidlaw is perfectly capable of bringing his expertise to bear and showing us—[Interruption.] The hon. Lady ought to wait until he has done the inquiry before prejudging it, because at least we have taken the action to get the inquiry under way. I think that is the right way to go.

The hon. Lady talks about the reduction in members of staff in the Department. There has indeed been a reduction. Bearing in mind the economic climate in which we found ourselves, that was absolutely necessary and I make no apologies whatever for that. I am determined to see that the provision of services to the customers who use the west coast main line—of which there are many, with many constituencies involved—is carried out continuously, and that is why I believe Virgin are the best people to carry that forward.

Sir George Young (North West Hampshire) (Con): The House is grateful to my right hon. Friend for coming here at the earliest opportunity to explain what has gone wrong and to describe the action that he proposes to take. I welcome that. Does he recall that, at the beginning, franchising was done not by his Department but by an independent, arm’s-length body? Twenty-four franchises were issued in some 18 months, none of which was subject to a legal challenge, and this led to the major investment in the railways to which he has referred. Franchising was subsequently brought in-house to the Department. Can he confirm that the Brown review will consider whether franchising should continue to be the job of his Department or whether we should revert to the initial model?

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Mr McLoughlin: Given that my right hon. Friend was closely involved in setting up the original model, I should naturally defer to his great expertise in this matter. I do not want to prejudge the findings of any of the reviews that I have set up, but I am sure that Mr Brown will have heard my right hon. Friend’s comments and that he may well want to investigate that solution further.

Frank Dobson (Holborn and St Pancras) (Lab): May I express my sympathy for the new Secretary of State’s having to deal with this mess? However, in view of the fact that the Department could not come up with figures that would be valid 10 years hence, how can he believe that the same Department, the same officials and the same advisers can come up with accurate predictions on passenger levels, and on inflation generally, in relation to High Speed 2, which does not exist and for which there is no evidence to draw on? I think he needs to look at that matter again. I will not say that he needs to go back to the drawing board; in the case of HS2, it is more a matter of going back to the ouija board.

Mr McLoughlin: I am interested to hear what the right hon. Gentleman says. A number of points have been raised since I made the announcement. The HS2 business case has undergone an extensive quality assurance process, and we are confident that it is accurate. The August 2012 update on the economic case was supported by a 400-person day of independent quality assurance, and HS2 Ltd has appointed independent auditors to undertake a line-by-line check of the analysis being prepared for the deposit of the hybrid Bill. This is all in addition to the existing quality assurance arrangements. I am glad to say that there was a commitment to these proposals in the right hon. Gentleman’s party manifesto to the country as well as in our own.

Mrs Cheryl Gillan (Chesham and Amersham) (Con): My right hon. Friend has come into the Department for Transport like a breath of fresh air. However, like the right hon. Member for Holborn and St Pancras (Frank Dobson), he must know that the failure of the west coast main line franchise process has really shaken people’s faith in the facts and figures that are being used by the Department. Notwithstanding the answer that he gave to the right hon. Gentleman, while he is in the mood for ordering investigations, will he now order a full review of the facts and figures that were used to justify HS2, in order to prevent the Department from making a serious mistake?

Mr McLoughlin: As I do not want to incur your wrath, Mr Speaker, perhaps I should refer my right hon. Friend to the answer that I gave to the right hon. Member for Holborn and St Pancras (Frank Dobson) a few moments ago. I also addressed this issue in one of my first major speeches, in which I outlined the importance of this particular piece of infrastructure to the United Kingdom.

Mr Speaker: I am always very interested to hear what the Secretary of State has to say on this subject, as he will readily appreciate.

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Mr Nick Raynsford (Greenwich and Woolwich) (Lab): The Secretary of State emphasised in his statement that he would seek “best value for taxpayers” in the interim arrangements. He will understand that there is a degree of scepticism in the House about his ability to deliver that. Will he please tell us how he intends to achieve that best value and what comparators he will use? How can he believe that a short-term, nine-to-13-month deal followed by an interim arrangement before the tendering process begins can possibly deliver best value for the taxpayer?

Mr McLoughlin: When we conduct negotiations with Virgin, that will obviously be one of the things that we will want to discuss. The right hon. Gentleman will have plenty of time to check whether we have done that.

Tim Farron (Westmorland and Lonsdale) (LD): The short-term fix of asking Virgin to continue operating the west coast service will come as some relief and will provide some certainty in the short term, but how will the Secretary of State convince this House and, more importantly, passengers using the west coast main line, that the two-year interim franchise deal will not lead to a complete lack of investment, given that the new franchise holder will not have the confidence of a long-term deal?

Mr McLoughlin: I would say that the position in which we find ourselves is not the position I would have wanted to be in. What I am trying to do is to move forward with some certainty so that when we learn the lessons from the Brown review, they can be implemented and acted on. There is considerable interest in this particular line—it is very important—and I think we will see the sort of developments we want, with companies putting forward proposals, with respect to both the two-year contract that we are proposing to let and the longer-term one in due course.

Mr Brian H. Donohoe (Central Ayrshire) (Lab): I welcome the Secretary of State to his position. I listened intently to what he said in his statement, but he made no mention of any contingency funding that will need to be put in place as a result of this debacle. Is it proper to suggest that it is possible for this amount to be as much as half a billion pounds—half a billion pounds that taxpayers will have to pay?

Mr McLoughlin: I have read many figures, but I have not previously read that one. No doubt I am going to read a lot more in due course. I have already said that the estimated cost of refunding the franchises, which is the right thing to do, will be in the region of £40 million.

David Mowat (Warrington South) (Con): This decision was one of the two or three major pieces of work done in the Department for Transport this year. If the permanent secretary will not hold himself accountable for this, what is he accountable for?

Mr McLoughlin: As I have said, I have announced two major inquiries. The permanent secretary took a decision to suspend certain members of staff. This is a suspension—not any prejudging—while these inquiries continue.

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Derek Twigg (Halton) (Lab): I would like to quote what the Under-Secretary of State for Transport, the hon. Member for Wimbledon (Stephen Hammond) said on behalf of the Government in a debate on 17 September, just a few weeks ago. He said:

“The Department is confident that we have taken the right decision in the interests of taxpayers and passengers. We expect to sign the contract soon, but we intend to defend the judicial process robustly.”—[Official Report, 17 September 2012; Vol. 550, c. 236WH.]

Given that the Secretary of State has been in the job for only a few weeks, is he confident that the financial information that he is getting throughout the Department for any major projects—including the Mersey gateway project—is robust and can stand up to scrutiny in the future?

Mr McLoughlin: Yes.

Bill Wiggin (North Herefordshire) (Con): I congratulate my right hon. Friend on his decision and on his statement. In it, he said that he has paused the ongoing franchise programme. Will he use that pause to ensure higher minimum standards and that the Great Western franchise is not given to FirstGroup as a sop?

Mr McLoughlin: I can assure my hon. Friend that the pause is while we wait to see what the Richard Brown inquiry says and whether there are things that we need to put right in these live competitions. Obviously, there will be no sops to any organisations. These are very competitive bids and a lot of work and effort goes into them. Overall, we are seeing far better services for this country’s passengers as a result of franchising and of the very brave decisions taken by my right hon. Friend the Member for North West Hampshire (Sir George Young) some years ago.

Albert Owen (Ynys Môn) (Lab): I genuinely welcome the Secretary of State to his position. The performance of his two predecessors has not set a very high bar when it comes to competence in this matter. [Interruption.] The Minister of State, the right hon. Member for Chelmsford (Mr Burns) is growling at me from a sedentary position, but it was his colleague who said that this was robust. The Secretary of State said that Directly Operated Railways is on standby. What does that mean, and will it be used for the three other franchises that he has suspended?

Mr McLoughlin: I have not suspended the three other franchises; I have put them on hold, which is quite an important differential. I thank the hon. Gentleman for his compliments. I am always cautious about compliments coming from the Opposition Benches, but who knows?

As I have said, the three franchises have not been stopped. They have been put on hold, and I hope very much that we can return to operate and lease them once we have learnt the lessons of the Brown report. I do not think that there is any need to contemplate using DOR on those services.

James Duddridge (Rochford and Southend East) (Con): When the Essex Thameside franchise comes off hold, will the Secretary of State look again at the possibility of mandating the quality of the rolling stock that will be used to ensure that it is as good as the quality of the rolling stock that is used now, or, indeed, even better?

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Mr McLoughlin: I well understand my hon. Friend’s wish to procure better services for his constituents, and I know that a number of other Members will be pushing me for the same thing. I will of course consider his suggestions and see whether we can adopt some of them.

Sir Gerald Kaufman (Manchester, Gorton) (Lab): Now that the right hon. Gentleman has rightly put an end to the shambles that he inherited, will he bear in mind the watchword “If you are in a hole, stop digging”? Rather than engaging in an interim process that prolongs uncertainty, will he be fair to the marvellous train crews of Virgin Trains, who give extraordinarily good service, and tell them that their future is assured? Will he simply award the franchise to Virgin, which has carried it out brilliantly?

Mr McLoughlin: I am very pleased to hear the right hon. Gentleman give such a strong endorsement of the service that he already receives. However, what we are trying to do with franchising is improve that service, not just for his constituents in Manchester but throughout the line, and I do not think that it would be appropriate—in fact, it would not be possible—for me to do as he wishes. I think that what I have set out today is the best course for the next three years on that particular line.

Andrea Leadsom (South Northamptonshire) (Con): I do not want to give my right hon. Friend cause to roll his eyes, so I shall not mention HS2. He can clap if he wants to.

I congratulate my right hon. Friend thoroughly on his decision to call a halt to the west coast main line franchise problem, but does he agree that now is the right time to start looking creatively at how to get fares right down and capacity right up? Perhaps he could consider introducing “standing room only” tickets for short journeys. That would both increase capacity and make journeys far cheaper for passengers who need to travel on a low budget.

Mr McLoughlin: I am not sure how popular that would be, but, as I have said in the House on other occasions, I am looking at the whole issue of fares and the way in which they are calculated.

Mr Dennis Skinner (Bolsover) (Lab): What a way to run a railway! Now that we have seen this shambles, why do we not take the opportunity to stop the practice of lining the pockets of the railway bosses, and use the money to lower fares? We could do it through a “one nation” system of public ownership. Let’s start that: we have had enough of this business.

Mr McLoughlin: The hon. Gentleman obviously speaks from a past era when nationalisation was the apple of his eye. We have seen substantial changes and improvements in the whole railway system since we introduced the private sector to it. The right hon. Member for Manchester, Gorton (Sir Gerald Kaufman) has just told us that he gets a fantastic service from a privatised railway, and I think that most people feel that they get a fantastic service too.

Andrew Stunell (Hazel Grove) (LD): I thank the Secretary of State for his statement. May I remind him that when that train gets to Manchester, many people

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transfer to Northern Rail trains, and that the Northern Rail franchise will come up in 2014? There are some innovative proposals for work to be done on that with Greater Manchester and others. Can the Secretary of State assure us that the delay, the pause, or whatever the word is will not interfere with the development of those innovative and constructive ideas for the Northern Rail franchise?

Mr McLoughlin: One of the interesting things that I have seen since franchising began, and in how these franchises are being worked on, is the engagement with local stakeholders in local communities. They have all come forward with suggestions and ideas, a number of which can be incorporated in the franchise agreements.

David Wright (Telford) (Lab): There is real concern in Shropshire that the interim arrangements that the Secretary of State has put in place will mean that we will not get back a direct service to London. Will he confirm that when he looks again at the franchise process at the end of his interim arrangement—however long that may last—he will write in services to Shropshire?

Mr McLoughlin: I will certainly listen to representations. I know that I will get many.

Mr Nick Gibb (Bognor Regis and Littlehampton) (Con): I welcome my right hon. Friend’s statement, and the candid and honest way in which he has handled this whole issue. I also welcome his comments about Virgin and FirstGroup. Will he confirm that Virgin, FirstGroup and the other bidders all acted with total propriety during the bidding process?

Mr McLoughlin: I can certainly confirm that, and I am grateful to my hon. Friend for asking me the question. That is wholly the case, and the mistakes we found were mistakes made in the Department.

Mr Iain McKenzie (Inverclyde) (Lab): We have now witnessed two procurement fiascos from this Government in quick succession. We have seen that contracts are not being monitored and we are seeing tendering processes that are clearly flawed. One would think that the Minister would be well aware of these and that if he had been alerted to them, he would not have awarded this contract. The question therefore arises: why did he award this contract when he knew that it was flawed?

Mr McLoughlin: The contract was not signed.

John Stevenson (Carlisle) (Con): May I extend my support to the Secretary of State for taking prompt action once he was aware of the problems with the west coast rail franchise? My concern now is about the length of the term of any new franchise, once it is finally in place, as that can affect the investment decisions of a rail company, particularly as regards stations such as Carlisle. Will the length of the new franchise be the same as that initially proposed?

Mr McLoughlin: I understand my hon. Friend’s point. What I do not want to do at this stage is prejudge what the Brown report may eventually say, but I will say that it was commonly accepted that longer franchises would lead to more investment and a better return for the

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taxpayer. We will need to look at this properly and to investigate what went wrong with this particular process before we come to long-term decisions. A number of people in the industry, including the former Secretary of State who sat in another place and not in the House of Commons, have also made that point.

Ms Gisela Stuart (Birmingham, Edgbaston) (Lab): I want HS2 to happen, because it would be good for Birmingham, but I also want to ensure that it is based on accurate and reliable figures. Will the Secretary of State ensure that his review will identify any errors and miscalculations, and whether or not they relate to HS2, and will he ensure that this is a sound calculation?

Mr McLoughlin: I am grateful for the hon. Lady’s support for HS2. As I said a few moments ago, that is a separate process and a lot of work is going into the preparation for the HS2 Bill that will come before the House. There will be a lot of opportunities to debate that over the coming months.

Michael Fabricant (Lichfield) (Con): Can my right hon. Friend, who is sorely missed as Chief Whip, assure my constituents that services will not be damaged by these changes and that stations such as Lichfield Trent Valley, which are badly in need of improvements for disabled access, will not have new works delayed as a consequence?

Mr McLoughlin: I hope we see no delays in investments as a result, and I am always grateful to my hon. Friend, who is always trying to be helpful.

Paul Farrelly (Newcastle-under-Lyme) (Lab): FirstGroup’s bid included a £190 million guarantee, which would in no way have been large enough to compensate the Government if its optimistic bid had failed to deliver the goods—in fact, it gave a strong financial incentive to walk away. Has the Secretary of State yet understood why that basic feature did not set alarm bells ringing before the bid was announced? Will he ensure that future contracts contain no financial incentives for bidders to walk away?

Mr McLoughlin: The time that bidders walked away was under the previous Government, when the operators on the east coast main line did so. There are lessons to be learned. I shall not prejudge what the inquiries might tell us, but I am looking forward to their results and hope that we can then move on based on a safer footing.

Charlotte Leslie (Bristol North West) (Con): I welcome the Secretary of State’s announcement about the Brown review. Will he assure me that this pause will be an opportunity to ensure that on other franchises, such as the Great Western franchise, we seize opportunities when they exist? In my area, that would include a full Bristol metro with a full Henbury loop line to complete the circle line around Bristol.

Mr McLoughlin: I am not sure whether the second part of my hon. Friend’s question was a bid, but on the first part I can assure her that the reviews will inform us

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and that we will take note of them. I would not have set them up if we were not going to do so.

Mr Ian Davidson (Glasgow South West) (Lab/Co-op): I came here today on the west coast main line; the train was late. May I ask the Secretary of State—[Interruption.] May I be the first to ask him to resign?

Let me say what I would like the Secretary of State to do. We will have the short period negotiation, the interim agreement and the long-term franchise. To ensure value for money, will he guarantee a public sector comparator for each of them?

Mr McLoughlin: I heard one colleague shout out, “Not late enough.” Obviously, we have set up the two reviews and we will look at what they produce. When we have put such things out to franchise, we have seen huge competition and interest, and it is a matter of getting the best deal for the taxpayer in the longer term.

David Tredinnick (Bosworth) (Con): I congratulate my right hon. Friend on his common-sense decision to keep Virgin running the west coast main line, particularly in the run-up to Christmas. There are concerns, however, about an interim agreement, which will surely prolong the process. Would it not be better to go to a final agreement and not make things more complicated?

Mr McLoughlin: I can understand my hon. Friend’s frustration, but there has been a huge amount of investment in the west coast main line and it is right and proper that after the initial nine months, during which we will set up the two-year interim contract, we should seek to get the best return for the taxpayer. I think that an open competition is the best way to do that.

Gloria De Piero (Ashfield) (Lab): The Campaign for Better Transport has been quoted today as saying that operational changes in the Department have not been focused on passengers but have been all about the bottom line. Does it not have a point?

Mr McLoughlin: No.

Alun Cairns (Vale of Glamorgan) (Con): I pay tribute to the Secretary of State for the way in which he has handled a very difficult situation, not only accepting responsibility for an error made by an officer in his Department but moving forward swiftly with the review. Will he reassure me that renationalisation is off the cards for a range of reasons, including financial ones?

Mr McLoughlin: I thank my hon. Friend for his kind words. The truth is that both parties have agreed in the past that franchising is the proper way to go and gets better returns for the taxpayer. This particular episode is not acceptable and we need to learn the lessons from it. I am determined to do that.

Tony Lloyd (Manchester Central) (Lab): Does the Secretary of State not agree with the many people who use the line that a public sector interim arrangement would have been preferable as it would have given him control over pricing and quality? Will he explain how he will guarantee those things in the interim period?

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Mr McLoughlin: Obviously, there is a difference in view between the hon. Gentleman and the right hon. Member for Manchester, Gorton (Sir Gerald Kaufman), who praised the current operators of the west coast main line. Indeed, a number of people have praised the operators so I am rather surprised that when I have made a decision to keep the service with them, some people have found a way to attack that decision. The short period involved means that the best way to ensure continuity of service is to do a deal with Virgin, and we are about to embark on that.

Jeremy Lefroy (Stafford) (Con): Those bidding for the franchise offered a number of improvements that were welcome to my Stafford constituents, including fare reductions. Will my right hon. Friend see whether it is possible to introduce some of those improvements in the interim period, along with his welcome cap on rail fares?

Mr McLoughlin: I thank my hon. Friend. As I have pointed out, there will be a two-year franchise that will be negotiated some time next year, and I hope that some of the benefits that were initially to come from a longer-term franchise agreement can be replicated in it.

Mr Jim Cunningham (Coventry South) (Lab): In an age of high food prices, high oil prices and high fares, will the Secretary of State, when he negotiates the west coast main line franchise both in the interim and in the longer term, put a special emphasis on fares, because they are far too high?

Mr McLoughlin: I am glad that we have been able to reduce the proposed increases from RPI plus 3 to RPI plus 1. I hear what the hon. Gentleman says about fares. Of course, some pre-booked fares can cost a reasonable amount, but others are very high, and that is something I think we should all look at.

Jason McCartney (Colne Valley) (Con): What time scale implications will this all have for the east coast main line franchise? Will my right hon. Friend take note of the fiasco that occurred under the previous Government when two train operating companies on the east coast main line collapsed in only two and a half years?

Mr McLoughlin: I thought that it was a utopia under the previous Government and that nothing ever went wrong, but my hon. Friend is right to say that the only time a rail franchise collapsed was under the previous Government. The Opposition seem to have forgotten that today in their attacks on me. I hope that we can learn the lessons and move on and that this will not lead to too long a delay in any of the other franchises.

Richard Burden (Birmingham, Northfield) (Lab): The west coast main line is obviously important to my constituents in Birmingham, but I am worried about the knock-on effects of this fiasco on other franchises coming up for renewal. I draw the Secretary of State’s attention to London Midland and the countless delays there have already been in the west midlands because of driver shortages. There is no long-term thinking on planning for new stations and ticket office hours are being cut, and that is because it is not looking at the

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long term. What impact will this fiasco have on trying to give passengers in the west midlands the kind of service they deserve?

Mr McLoughlin: I want all taxpayers and passengers to get the kind of service they deserve. There have been some specific cases of cancellations on the line, as the hon. Gentleman has just mentioned. I hope that the company will put that right and train more drivers, which I think it is in the process of doing.

Daniel Kawczynski (Shrewsbury and Atcham) (Con): I echo what the hon. Member for Telford (David Wright) said. Shrewsbury is the only county town in England without a direct rail service. All the Shropshire MPs have campaigned very hard over the past year to ensure that that comes about, and both Virgin and FirstGroup have committed to it. Will the Secretary of State do everything possible to ensure that that vital service for our constituents is not delayed more than it needs to be?

Mr McLoughlin: I can give my hon. Friend that assurance.

Mr William Bain (Glasgow North East) (Lab): The west coast main line matters hugely to the Glasgow and Scottish economies, but so does value for money for the taxpayer. Can the Secretary of State identify any previous franchising process that was not subject to external audit, and is it not the case that a decision made by his Department to save hundreds of thousands of pounds has ended up costing the taxpayer tens of millions of pounds?

Mr McLoughlin: The hon. Gentleman is seeking to prejudge the two inquiries I have set up, which is something I am not prepared to do.

Rehman Chishti (Gillingham and Rainham) (Con): On train franchising, will the Secretary of State clarify when Southeastern’s franchise is likely to be concluded, because it is currently undergoing a process of renewal?

Mr McLoughlin: I have announced a pause on three franchises, and there are others that have not yet been concluded in the final bidding process. We will obviously learn lessons from the Brown inquiry and the Laidlaw inquiry, but I hope that this will not have a long-term impact that will delay any of the other franchises that are going to be negotiated.

Joan Walley (Stoke-on-Trent North) (Lab): Is not the most shocking part of this the fact that had Richard Branson not made the legal challenge, we would not even have known about this fiasco? Given the importance of the train services through Stoke-on-Trent, the lifeblood of our local economy rests on the future of the west coast main line. Will the Secretary of State give an assurance that he will give Parliament the true costs of the fiasco, because it is likely to be far more than the £40 million he talks about? We need to ensure that those funds are safeguarded for transport.

Mr McLoughlin: The hon. Lady should just wait and see, because some of the things the reviews might lead to could provide a greater return for the taxpayer in the longer term. I am not for one moment dismissing the

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fact that this has been very expensive and unacceptable—it is and it has been—but the most important thing is that we learn the lessons in the longer term.

Sir Tony Baldry (Banbury) (Con): Most of my constituents just want to ensure that the trains run on time and are affordable. Will the Secretary of State confirm that he has managed to cap rail fares for the next two years? I am not sure that that point has been fully understood.

Mr McLoughlin: I am grateful to my hon. Friend for that question. I can confirm that the Prime Minister announced a cap of RPI plus 1 for not only this year, but next year and the year after.

Mr David Anderson (Blaydon) (Lab): In this House, we have become used to the Government’s incompetence. They could not privatise the forests properly and they made a mess of the NHS; with this, they have shown that they cannot even privatise what is already out there. The job is too big for them. Why do they not just give up—and give up now?

Mr McLoughlin: I am not sure, Mr Speaker, whether that was a question or a statement.

Mr Brian Binley (Northampton South) (Con): Will the Secretary of State give a firm undertaking that none of the costs involved in this incident will be passed on to hard-pressed consumers on the west coast main line? Furthermore, will he reassure the siren voices calling for the scrapping of HS2 that that line is absolutely necessary because the west coast main line is under such pressure that it reaches capacity in a very short period?

Mr McLoughlin: What I would like to say to my hon. Friend is yes and yes.

Emma Reynolds (Wolverhampton North East) (Lab): The Secretary of State is right to make this decision on the west coast main line, but it is unclear to me why his predecessor—who, after all, is an accountant by trade—did not hear the alarm bells ringing for quite some time. Will he reassure me that the review that he has announced today will consider that significant and unacceptable risks were being taken by allowing one of the bidders to backload most of the premium to the end of the franchise? Will he put in place measures to ensure that franchisees cannot simply walk away from a franchise before they make substantial payments?

Mr McLoughlin: My predecessor, like me, was given firm assurances at the Department that the competition was sound. That proved not to be the case. Once I knew and had the full facts, I made the statement that I made.

Paul Maynard (Blackpool North and Cleveleys) (Con): I used the west coast main line today and my train was early, for which I thank the Secretary of State. Can he assure me that when making decisions about the new franchises, he will take every opportunity to incorporate both quality metrics and performance satisfaction ratings from customers?

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Mr McLoughlin: I am grateful to my hon. Friend, who is also a user of the west coast main line. The answer to his question is “definitely”.

Graeme Morrice (Livingston) (Lab): In view of this fiasco and other potential franchise debacles, will the Government now realise that the game is up and take the west coast main line back fully into public ownership, as is the case with the east coast service?

Mr McLoughlin: No.

Mr Robert Buckland (South Swindon) (Con): In respect of the review of the process relating to the Great Western franchise, will my right hon. Friend ensure that the fundamental mistakes about capacity in the previous franchising round under the last Government will not be repeated?

Mr McLoughlin: I hope that the two inquiries that I have set up will help us through the unfortunate position in which we find ourselves and, in the longer term, lead to a much more robust franchising system.

Rosie Cooper (West Lancashire) (Lab): I appreciate that assurances from the Transport Secretary, and Ministers previously, that the process was rigorous, detailed and fair were given in good faith. However, serious concerns remain that the incident was not isolated.

Bearing in mind some of the comments made about loading and how the contract was done, anyone with common sense knew that something was wrong. Will the Secretary of State categorically confirm that mistakes were not made by the Department when awarding franchises on the other routes, before the west coast main line franchise process? When did that analysis take place?

Mr McLoughlin: I am not sure that I am responsible for the franchising that took place under the previous Government, and this franchise was the first that would have taken place under the new system.

Oliver Colvile (Plymouth, Sutton and Devonport) (Con): I thank my right hon. Friend for coming to the House to make this statement. What impact will the reviews have on the Great Western railway? Is he willing to meet me and my fellow Plymouth Members of Parliament to discuss how we can improve connectivity to make sure that we have more three-hour train journeys coming into Plymouth and trains that get there before 11.17 am, as is the case at the moment?

Mr McLoughlin: Franchising gives hon. Members from all constituencies an ideal opportunity to feed into the process to say how they want services to improve; and where that can be done, it should be done. I am certainly willing to meet a delegation led by my hon. Friend.

Mr Barry Sheerman (Huddersfield) (Lab/Co-op): Does the Secretary of State agree that the inquiry we really want is to have, say, the Public Accounts Committee look at all this, because it is far more important than just the chaos surrounding this particular contract? Right across Government, we see this incompetence in procurement time and again. Whether it is about the

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churn of Ministers or the churn of civil servants that we are all familiar with, there is something deeply rotten in the way that we run government in this country.

Mr McLoughlin: I think I need to pause before I respond to that question. The hon. Gentleman talks about the churn of Ministers under this Government, but he should look at the churn of Ministers in this Department under the previous Government, which was fairly substantial; I think that the former right hon. Member for Ashfield lasted eight months. As for what the Public Accounts Committee might look into, I have been in this House long enough to know not to tell any Select Committee what it might or might not look into.

Neil Carmichael (Stroud) (Con): I welcome the Secretary of State’s obvious commitment to investing in infrastructure —whether new, like HS2, or old, like the Stroud and Swindon line. May I turn his attention back to tickets and urge that we have a ticketing system that is characterised by simplicity and transparency and produces more competition within it?

Mr McLoughlin: We are currently undertaking a ticketing review which I hope will address some of the points that my hon. Friend has made.

Mr David Hanson (Delyn) (Lab): My constituents in Flintshire who use the west coast main line daily will be horrified by the potential £40 million-plus cost resulting from mistakes by the Secretary of State’s Department. This is now what is called in the civil service an unfunded pressure. Will he tell the House how he plans to fund it?

Mr McLoughlin: In due course, yes.

Stephen Mosley (City of Chester) (Con): Those of us who use the west coast main line will appreciate that massive improvements have occurred since privatisation and welcome the improvements that were promised in the new franchise, including lower fares and more frequent services to Chester. Will my right hon. Friend ensure in the interim that those promised improvements are still delivered and not forgotten about?

Mr McLoughlin: My hon. Friend, like many colleagues, is calling for better services for his constituents, and I cannot think of a finer place than Chester that people want to go—

Daniel Kawczynski: Shrewsbury!

Mr McLoughlin: I had better be a bit careful, or we might get into a bidding auction. There are a number of places to which people want extra services. That shows that the railways are now held in high esteem by all, and it is very much my intention to try to provide the services that people wish for.

Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op): It will be some years before we know the identity of the long-term operator of the west coast main line. How can anyone have any confidence in the bids for the east coast main line franchise when we have

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no idea of the long-term plans of the long-term operator of its main competitor on the west coast? Is not that why we should keep the east coast main line directly operated for a good few years—preferably indefinitely?

Mr McLoughlin: That is not what the last Secretary of State who sat in the Cabinet for the Labour party said, and it is not what I want to happen.

Ben Gummer (Ipswich) (Con): May I say how pleased I am by the candour and assured manner with which the Secretary of State has dealt with this matter? He will be aware of the enormous importance that travellers, commuters and businesses in the eastern region attach to the letting of the new 15-year franchise. He received a delegation from me and my hon. Friends the Member for Norwich North (Miss Smith) and for Witham (Priti Patel) with great enthusiasm. Can he give any assurances that the programme and timetable for that franchise will not slip as a result of the decision that he has notified to the House?

Mr McLoughlin: It certainly should not slip. I can say to my hon. Friend that the recommendations that he and a number of colleagues have made to me have been fed into the process, and will I hope be reflected in the franchise when it is finally awarded.

Helen Jones (Warrington North) (Lab): My constituents will be horrified at the shambles that this Secretary of State has presided over. Warrington relies on its transport links to promote economic development. What action was taken by his Department on the Europa Partners report, which highlighted flaws in the franchise process five days before the announcement? Was that drawn to the attention of any Minister in the Department?

Mr McLoughlin: What I can say is that the flaws were found as a result of the Department preparing for a judicial review. When they were found and I saw the report and other information, I took the decisions that I announced on 3 October.

David Rutley (Macclesfield) (Con): Like many other Government Members, I welcome the decisive action taken by my right hon. Friend in the face of unacceptable mistakes in the Department for Transport. Will he confirm that, during the interim period and the intervening period before that, passengers in Macclesfield will continue to experience the same high levels of service that they have come to expect in recent years?

Mr McLoughlin: I realise how very important the service on the west coast main line is to my hon. Friend’s constituency. That is why I am keen that, for the sake of continuity, we carry on with the present service operators until such time that we can re-tender for a short, interim franchise. I know he will insist that the service that his constituents get now will continue.

Ian Lucas (Wrexham) (Lab): Will the Secretary of State ask his independent inquiries to consider a mutual model for the railways? Welsh Water in Wales has delivered a 6% reduction in charges since 2001, billions of pounds’ worth of investment, and stability for business. That is what we want on our railways. Why is he so wedded to a broken system?

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Mr McLoughlin: I am not wedded to a broken system; I just look at the reassurances that previous Ministers gave on improvements to the railways since the present franchise system came into operation.

Ann Coffey (Stockport) (Lab): I am very concerned that there will now be a long hiatus in investment in the west coast main line. Will the Secretary of State talk to Virgin about making some money available for long overdue improvements to Stockport station, which were offered by FirstGroup? Alternatively, perhaps he could find some cash from his departmental budget? It seems unlikely that those improvements will happen any time soon.

Mr McLoughlin: I understand that the hon. Lady wants improvements made to her station and I will consider carefully what she has said, but I am not sure that there is any spare money in the Department.

Sheila Gilmore (Edinburgh East) (Lab): Will the Secretary of State ensure that the Brown inquiry does not just tinker with franchising but considers other options? We have heard about the recent option on the east coast main line, but another is the concession process that was used for London Overground. Will the inquiry be able to consider that?

Mr McLoughlin: I will not tell the inquiry what to do. I have published the terms of reference and put them in the Library earlier today. They are comprehensive.

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Referendum (Scotland)

5.48 pm

The Parliamentary Under-Secretary of State for Scotland (David Mundell): I want to make a statement about the referendum on independence for Scotland. The House will appreciate that my right hon. Friend the Secretary of State for Scotland is unable to deliver the statement because he attended the meeting between the Prime Minister and the First Minister in Edinburgh to secure agreement on an independence referendum for Scotland.

In January this year, my right hon. Friend the Secretary of State for Scotland delivered to the House a statement about the referendum. At that time, we acknowledged the Scottish National Party’s victory in the May 2012 Scottish parliamentary election and its manifesto pledge to hold an independence referendum. The Government also made clear their view that the Scottish Parliament did not have the legal power to legislate for an independence referendum. My right hon. Friend the Secretary of State made an offer that the UK Government would bring forward an order to give the Scottish Parliament that legal power.

Since January, the UK and Scottish Governments have held consultations, there has been considerable public debate, and numerous discussions between Ministers have taken place. Many of those discussions took place between me and Bruce Crawford MSP, the Minister for Parliamentary Business and Government Strategy in the Scottish Government, and I acknowledge his contribution to today’s agreement. Following 10 months of deliberation and four weeks of direct negotiations between the Scottish Government’s Deputy First Minister and my right hon. Friend the Secretary of State, I am pleased to report to the House that today in Edinburgh the Prime Minister and the First Minister have made an agreement that will allow a legal, fair and decisive referendum to take place.

This is a significant agreement. The two Governments have agreed that there should be a referendum. We have agreed that the referendum will consist of a single question. It will offer a choice between remaining within the United Kingdom and independence. We have agreed that it must be held before the end of 2014. The referendum will be based on the normal legal framework for UK referendums, with oversight from the Electoral Commission. That includes the key issues of how the referendum question will be determined, and how the rules governing spending and campaigning will be established.

Following today’s agreement, the Government will bring forward an Order in Council under section 30 of the Scotland Act 1998. I have today placed a copy of the agreement and the draft order in the Library of the House. The agreement and draft order are also available to Members from the Vote Office. The order will be laid before Parliament on 22 October and will be debated by both Houses of this Parliament and by the Scottish Parliament. All Members of this House will have the opportunity to consider and vote on the order. If both Parliaments approve the order, and after it is approved by Her Majesty in Council, the Scottish Parliament will have the legal competence to legislate for the referendum. We hope that the order will be passed by February 2013. Once that has happened, the Scottish Government will introduce a referendum Bill, setting out the wording

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of the question, the date of the referendum and the rules for the campaign for the Scottish Parliament to consider.

As part of today’s agreement, the two Governments have agreed that the rules for the referendum will be based on the rules set out in the Political Parties, Elections and Referendums Act 2000. Those rules were used successfully in the two referendums that took place last year. The two Governments have also confirmed that the Electoral Commission will review the proposed referendum question and that its report will be laid before the Scottish Parliament. That is the same process as applies to other UK referendums. Interested parties will be able to submit their views on the question to the Electoral Commission in the usual way. The Scottish Government will then respond to the Electoral Commission’s report.

Both Governments agree on the need for maximum transparency in this process and for a level playing field. Therefore, as part of today’s agreement, the Scottish Government will consult the two campaign organisations that have been established for their views before proposing spending limits for the referendum campaign to the Scottish Parliament. The Electoral Commission will also provide the Scottish Government with advice on the appropriate spending limits for the two campaigns in the referendum, as has happened in previous referendums, such as the 2011 referendum in Wales on further powers for the Welsh Assembly. In that referendum, the Electoral Commission recommended that the spending limit for designated campaign organisations should be set by reference to the expenditure limits that apply to elections to the relevant legislature. In its response to both Governments’ consultation documents, the Electoral Commission provided its view that that model remains appropriate for the Scottish independence referendum.

Both Governments agree that all those who were entitled to vote in the Scottish Parliament elections in May 2011 should be able to vote in the referendum. As with all referendums held in any part of the UK, it will be the legislation that establishes the referendum that sets the franchise. It will therefore be for the Scottish Parliament to define the franchise in the referendum Bill, as would be the case for any other referendum—or indeed election—on matters within its devolved competence.

Although both Governments agree that the basis of the franchise will be that for the Scottish Parliament elections, the Scottish Government have proposed to extend the franchise to allow 16 and 17-year-olds to vote. It will be for them to make the case for that change and to deal with the technical issues that may arise. There is, of course, a range of opinions in this House about changes to the voting age. However, having agreed the principle that the Scottish Parliament should have the legal power to legislate for the referendum—that it should be a referendum “made in Scotland”—the Government accept that it should be for the Scottish Parliament to determine the franchise. I fully expect that the Scottish Government’s proposals will be debated robustly in the Scottish Parliament. Any decision taken by the Scottish Parliament for the referendum will not affect the voting age for parliamentary and local government elections anywhere in the United Kingdom.

Today’s agreement is important, as will be the consideration of the agreement and the order by this House. However, I would also like us to reflect on what will come after. Now that the Governments have agreed

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the process for the referendum, it is vital that we get on with the debate about the most important political decision that people in Scotland will ever take. The UK Government have started to prepare the analysis and evidence for which people in Scotland are calling. Over the next year, the Government will publish thorough, evidence-based information that will set out the key issues in the independence debate. That analysis will be comprehensive, robust and open to external scrutiny. I fully expect it to show that Scotland is better off within the United Kingdom and that the rest of the United Kingdom is better with Scotland in it.

The Government believe passionately in the United Kingdom. We will work tirelessly over the next two years to show the Scottish people and everyone else in this country that together we are stronger, that together we can overcome the challenges confronting us, and that together we can build a better future for Scotland as an integral part of the United Kingdom. The debates ahead will no doubt be long, challenging and, at times, heated. However, I fervently believe that, with the support of colleagues across the House, across Scotland and across the whole of the United Kingdom, in the autumn of 2014, fellow Scots will join me in choosing to stay as part of the United Kingdom. We are indeed better together. I commend this statement to the House.

5.58 pm

Margaret Curran (Glasgow East) (Lab): I thank the Minister for providing me in advance with a copy of the statement.

This is, without doubt, an historic day for Scotland and the Scottish people. Now is the time for the debate on Scotland’s future to move out of the corridors of power and on to the streets of Scotland. I join the Minister in welcoming the fact that an agreement has been reached. It brings all Scots, me included, one step closer to deciding the future of our country.

The Opposition welcome the fact that the deal has been reached, but will seek guarantees that both parties will adhere to the agreement in spirit and in practice. We also have a number of questions to raise. Our position has always been that the referendum must be fair, legal and decisive. We welcome the fact that there will be a legal referendum with a single question and a regulatory role for the Electoral Commission.

Labour has always been, and will continue to be, the party of devolution. Labour brought devolution to Scotland, Wales and Northern Ireland, and we will continue to make the case for our devolution settlement to develop and evolve. We are, and have always been, a party of constitutional renewal, and we know that the best interests of our people are served by binding together, not breaking apart. In the debate about our future over the next two years, we will therefore promote devolution within the Union against those who seek to bring it to an end.

The agreement sets out a framework for how we will move forward to the referendum, but I would welcome clarity on a number of a points, which I hope the Minister will address. First, the Electoral Commission should clearly play a significant role in the process, particularly with regard to the referendum question and the funding of campaigns. Can he assure the House that the memorandum of agreement ensures that the Scottish Government must comply with, not turn their back on,

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the Electoral Commission’s advice? If they do turn their back on that advice, or seek to do so, what action will be taken? Given that no other Government have ever done that, it would be exceptionally damaging to the conduct and process of the referendum.

Secondly, the terms of the agreement leave significant ambiguity regarding the funding of each campaign and the opportunity for financing or related activity by interested third parties. Does the agreement ensure that the limits set by the Electoral Commission will be binding? Will organisations such as trade unions and businesses be able to participate in the referendum in a way comparable to that in which they participated in the Welsh and alternative vote referendums? Does the Minister agree that it is troubling that even before the agreement was signed stating that the Electoral Commission would have a regulatory role, the First Minister’s aides were briefing the press that they would be willing to ignore the Electoral Commission?

Finally, we must ensure that there is adequate scrutiny of the agreement and the subsequent process in this House. Will the Minister therefore explain what opportunity there will be to debate the detail of the section 30 order on the Floor of the House? Will he assure me that either he or the Secretary of State will provide regular updates to the House as the process continues over the next two years?

David Mundell: I welcome the hon. Lady’s welcome for the agreement and her contribution to the debate that has led to it. It is important that the agreement sets out a clear role for the Electoral Commission in relation to both the question and the funding of the campaigns. It is difficult to envisage circumstances in which the Scottish Government would want to ignore the Electoral Commission’s recommendations. As she said, no Government have ever done so, and there would be not just a procedural problem but a significant political price to pay for any party that sought to do so.

We should never underestimate the Scottish people. It is wrong to suggest that they could somehow be duped into supporting independence by any form of chicanery or trickery that might come from either side of the debate. They are much too sensible for that, and I have every confidence that when the referendum comes, whatever the form of the question and however the campaign has been funded, they will make the right decision.

Sir Gerald Howarth (Aldershot) (Con): As an Anglo-Scot, like my right hon. Friend the Minister and the Prime Minister, I believe passionately in the Union and believe that the campaign to remove Scotland must fail.

The Electoral Commission’s involvement is much to be commended, and I commend my right hon. Friend for what he said about it. However, the proposal to extend the franchise to 16-year-olds, who cannot lawfully buy alcohol, drive a motor car or be called to fight on the front line, but who will now be invited to opine on one of the greatest constitutional issues of our time, is surely a nonsense that will create a dangerous precedent.

David Mundell: I can assure my hon. Friend that it will not create a precedent. The franchise for parliamentary and local government elections throughout the United

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Kingdom will be determined by opinions in this House. At the moment, the Government have no proposals to change the voting age, and I do not believe there is a majority in the House to do so.

I say to my hon. Friend and others who share his views that they must now take their arguments to Scotland and the Scottish Parliament, so that the Scottish Government can be held to account when they bring forward their proposals. This is a moment for the Scottish Parliament to demonstrate its own robust ability to scrutinise legislation. When it identifies complexities with enfranchising 16 and 17-year-olds, of which there are many, it can hold the Scottish Government to account and argue against the proposal.

Stewart Hosie (Dundee East) (SNP): I thank the Minister for his statement, although he will forgive me if I do not welcome the final two or three paragraphs. However, I thank him for very early sight of it.

This decision is historic, and I agree with the Minister that it is the most important that we will ever take. It also has the potential to be exciting and transformative for Scotland when the Scottish people vote yes. I very much welcome the 2014 timeline, which was of course the Scottish Government’s favoured position, and the extension of the franchise to 16 and 17-year-olds—also a Scottish Government position.

Does the Minister agree that the most exciting part of this is that, as he said, the Scottish Parliament will be the final determiner of the question? It has the only mandate of any Parliament in the UK to set a question on independence for Scotland.

David Mundell: I am surprised that the hon. Gentleman did not tell us that the Scottish National party wanted only one question, as well.

I do not agree with the hon. Gentleman, because his question reveals his party’s obsession with process. What is important, ultimately, is not who legislates on the referendum but the decision that the people of Scotland take. They will have the opportunity to end the uncertainty and vote to remain part of the United Kingdom.

Sir Menzies Campbell (North East Fife) (LD): May I offer my unqualified endorsement of the statement made so eloquently, if I may say so, by my right hon. Friend?

Does my right hon. Friend hope, like me, that the shadow boxing will now come to an end, along with the Scottish National party’s uncharacteristic reticence, demonstrated again this afternoon, to tell the people of Scotland precisely what its proposals for independence are? May I offer him a crumb or two of comfort? If he will forgive a second sporting metaphor, the Scottish Liberal Democrats will be first off their marks on Wednesday, when we publish our proposals for home rule for Scotland within the United Kingdom.

Hon. Members: When?

David Mundell: I had understood that the Liberals brought forward proposals for home rule for Scotland 100 years ago, but I am sure that we look forward to the right hon. and learned Gentleman’s contribution to the debate. He has made a distinguished contribution to the discussion of Scotland’s constitutional future

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over the years. I think the people of Scotland will indeed be pleased that we can move on from a debate and discussion that have been purely about process to ones on the real issues. The Prime Minister and those campaigning in the Better Together organisation have committed to setting out a positive vision for the United Kingdom, with Scotland playing a part in it. It is incumbent on those arguing for independence for Scotland finally to answer the questions and set out what independence would really mean.

Mr Jack Straw (Blackburn) (Lab): The last time the Electoral Commission considered whether 16 and 17-year-olds should vote, it found that 78% of the British public, including the Scots, were against the change. Whatever opinion Members and the public may hold on the issue, why does not the Minister acknowledge that the question of the franchise, for referendums as well as for elections, is plainly a matter reserved by law to the United Kingdom Parliament, not to any devolved Administration? Given the questions that my hon. Friend the Member for Glasgow East (Margaret Curran) asked about the need for further scrutiny in the House, how will the House be able to have a prior vote on whether there can be votes at 16 or 17 in any type of poll across the whole Union?

David Mundell: I assure the right hon. Gentleman that previous legislation setting out referendums has set the franchise, and that the procedure will be no different in the Scottish Parliament setting out the terms of this referendum and the franchise. All Members of the House will have an opportunity to vote on the section 30 order that will pass powers for holding the referendum to the Scottish Parliament, and the opportunity for a robust debate. All those who are concerned about 16 and 17-year-olds being give the vote in Scotland should make that argument now, and demonstrate the complexities and difficulties of the proposals brought forward by the SNP.

Mr John Redwood (Wokingham) (Con): Who in the Government speaks for England on these matters, and when will English MPs be able to settle English issues without outside help in this Parliament?

David Mundell: As I am sure my right hon. Friend is aware, the Government have established a commission that is looking at the so-called West Lothian question and will deal with the issue he raises about the governance of England within a range of devolved settlements for the other nations of the United Kingdom.

Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab): Has anyone the responsibility—if so, who?—of ensuring that when this debate is reported over two years, people in Scotland can expect impartiality, particularly in broadcasting? That has not always been the case.

David Mundell: I am aware from contributions to debates about television in Scotland that people feel strongly about bias in some elements of the media. I assure the right hon. Gentleman that the normal rules he would expect to apply within an election period will apply during the referendum process.

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Mrs Eleanor Laing (Epping Forest) (Con): Does the Minister appreciate that although most Members of this House have grave reservations about the peculiarities of the proposed franchise, there is also wide agreement that the most important thing about the compromise reached by the Prime Minister is for there to be one decisive question on the ballot paper? The future of Scotland as part of the United Kingdom—to the benefit of everyone in every part of the United Kingdom—should be decided once and for all.

David Mundell: I absolutely agree with my hon. Friend. Throughout these discussions, the Government’s position has been that there should be a single question—in or out of the United Kingdom—and that in the course of that debate, independence and devolution should not be conflated.

Anas Sarwar (Glasgow Central) (Lab): I welcome the Minister’s statement. On the coming debate, and particularly the scope of the Electoral Commission, we have seen in the First Minister’s press conference and televised statements from his Ministers, that they are already rowing back from the role of the Electoral Commission. Let us not be naive about the role of the Scottish Parliament. We are talking about a man who thinks he is Scotland and speaks for everyone in Scotland. What processes will ensure that the recommendations of the Electoral Commission are put into force?

David Mundell: I certainly agree with the hon. Gentleman that Mr Salmond does not speak for Scotland, no matter how much he seeks to hold himself out as doing so. I do not, however, agree that Mr Salmond or the Scottish Parliament can blithely ignore the recommendations of the Electoral Commission. The commission’s recommendations have never previously been ignored by a Government, and it would be a serious political matter were that to happen. I am sure that the hon. Gentleman, and others on his side of the House, would waste no time in drawing that to the attention of the Scottish people.

Sir Malcolm Bruce (Gordon) (LD): I welcome the Minister’s statement. The exchanges we have already heard demonstrate that Members of this House and the Scottish Parliament have a responsibility to ensure that the outcome of the referendum commands the full confidence of the people of Scotland, and that involves responsibility on both sides. Does the Minister agree that all parts of the United Kingdom have a distinctive contribution to make, that the whole is greater than the sum of its parts, and that we would all be diminished were we to break up this 300-year Union?

David Mundell: I absolutely agree with my right hon. Friend that we are better together and that the whole is greater than the sum of its parts, and that will be a significant part of the debate as we proceed. I expect people from all parts of the United Kingdom—not just within Scotland although the campaign will be led by Scots within Scotland—to make the case for the continuance of the United Kingdom.

Ann McKechin (Glasgow North) (Lab): Although there are obviously differing views about extending the franchise to 16 and 17-year-olds, I hope the Minister

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will agree that, as this matter proceeds, it is important that young people in Scotland are treated with respect and not cynically. What assurances does he have that those 16 and 17-year-olds will be equally as able to register as any other adult, and to vote in this important poll that will determine their future?

David Mundell: As the hon. Lady knows, that is one of the significant complexities that the Scottish Government will face if they bring forward their proposals to allow 16 and 17-year-olds to vote. If they use the current electoral register, they will essentially allow only those who are16 years and 10 months old to vote. If they wish all 16 and 17-year-olds to vote, they will have to create their own register, and that carries with it significant complexities.

Mary Macleod (Brentford and Isleworth) (Con): May I congratulate my right hon. Friend the Minister, as well as the Prime Minister, on reaching this agreement with the First Minister in Scotland? Does the Minister agree that we are far better together as the United Kingdom, and that it is now time to determine the real debate in full and look at the dubious suggestions from the SNP about defence, EU membership and currency?

David Mundell: My hon. Friend does the SNP extra credit by suggesting that its members have views on the issues she has set out. In recent weeks and months it has become apparent that despite campaigning for independence over many years—indeed decades—the SNP has no clear idea what an independent Scotland would look like. Now that the process issues are out of the way, it will be incumbent on the SNP to come forward with specific proposals for what an independent Scotland would look like.

Mr Frank Roy (Motherwell and Wishaw) (Lab): Will the Minister ensure that Scottish members of the armed forces and their families who find themselves based outwith Scotland during the referendum will be entitled to vote?

David Mundell: Scottish members of the armed forces and their families will be entitled to vote under the normal rules that apply to members of the armed forces.

Mrs Anne Main (St Albans) (Con): I wholeheartedly concur with comments made by the right hon. Member for Blackburn (Mr Straw). By yoking together two issues, we are causing ourselves a huge difficulty. Some of us may feel that voting for a section 30 order means that we are endorsing the vote for 16 to 17-year-olds. Should we ever vote on a referendum about the EU, for example, it would be impossible to imagine that we could deny the vote to 16 and 17-year-olds in the UK. We must insist that 16 and 17-year-olds either have the vote wholeheartedly, or—as I believe—that they should not have the vote on this major constitutional issue.

David Mundell: I am afraid I cannot agree with how my hon. Friend has brought those two issues together. The UK Parliament will determine the franchise for any referendum determined by it; the Scottish Parliament

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will determine the franchise for a referendum devolved to it. The Scottish Parliament already has the power to set the age for any election for which it has devolved responsibility, and has used it for health board and crofting commission elections. The precedent for 16 and 17-year-olds voting has been set.

Natascha Engel (North East Derbyshire) (Lab): As a supporter of votes at 16, I welcome the Scottish Parliament extending the franchise to 16-year-olds. Far from seeing that as a dangerous precedent, why will the Government not seize the opportunity to consult, debate and vote on widening the franchise to 16-year-olds in all UK elections, including referendums and local and national elections?

David Mundell: In simple terms, the Government will not do that because we do not support 16 and 17-year-olds voting in such elections.

Sir Robert Smith (West Aberdeenshire and Kincardine) (LD): I welcome the agreement, which gives us a single, legally based question that can settle the future for Scotland once and for all. However, will the Minister reinforce the message that any Parliament or Government that chooses to ignore the advice of the Electoral Commission will be judged by the public for what it has done?

David Mundell: I absolutely agree with my hon. Friend. I have absolute faith that the people of Scotland will not be duped by chicanery or trickery by the Scottish Government or anybody else in making this most important decision on the future of Scotland. If any Member of Parliament believes that any party in the referendum is guilty of such a charge, it is their job to hold it to account in debate, whether in the UK Parliament or the Scottish Parliament. We can be confident, because I can see no reason why the Scottish Government, whatever their spin doctors say, would ignore the Electoral Commission’s recommendations, given that no other Government have done so before.

Mr Jamie Reed (Copeland) (Lab): I welcome the Minister’s statement. In fetching forward a detailed analysis of what the proposal means for the people of Scotland and England, will the Government commit themselves to an analysis of the volumes of radioactive materials from Scotland that are stored in England? How much it will cost to remove them to Scotland, where in Scotland will they be buried, and who will be responsible for them in the long term? He will be aware that foreign waste cannot be disposed of in Britain.

David Mundell: The hon. Gentleman makes a good point, but it is for those proposing change to say how they would deal with it. The Government do not wish to break up Britain or want a change to the existing arrangements for the storage of nuclear waste. Those who want to break up Britain must set out clearly how that would be done and what it would cost.

Bob Stewart (Beckenham) (Con): Sadly, I am not 16 or 17—I am a little bit older—but as an Anglo-Scot, I feel slightly disfranchised, because the decision on my father’s homeland will be made without me having one

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bit of say in the matter. I request, please, that we, the Scots of the dispersion, have a say in what happens to our ancient homeland.

David Mundell: I am sure my hon. Friend will have the opportunity to have a say—he can go to Scotland and set forth his passionate views on Scotland remaining in the UK. The issue he raises has been raised legitimately by many Scots in other parts of the UK, who ask why they should not have a vote. The Government’s position has always been that those in the part of the UK that wishes to leave the UK should have a say in determining whether it leaves or not. That is in accordance with international protocol on the separation of nations and was also the franchise that determined devolution to Scotland in 1997.

Pete Wishart (Perth and North Perthshire) (SNP): Today has been an utterly fantastic day. The Edinburgh agreement is the next stage in our nation’s story. I cannot wait to get out and put a compelling and positive case for my nation’s independence. The Minister says he wants a real choice and different visions. In November next year, the Scottish Government will release a full and comprehensive prospectus on what an independent Scotland will look like. The no parties agree on so much now—on anti-universality, means-testing and an austerity programme—but when will they get together and let us know what the no proposition for the referendum will be?

David Mundell: For one moment, I thought the hon. Gentleman said the Scottish Government would announce their proposals this November, but in fact he said that they will do so in November next year. For a party that has campaigned for decades for independence, the fact that you have no proposals on the table on what an independent Scotland would look like reflects the lack of thought you have given to the issue. That is unbecoming of you and unworthy of the people of Scotland.

Mr Speaker: Order. As far as I am aware, I have done nothing unbecoming or unworthy, but it is true that I have given no particular thought to this matter, and that I have no proposals to make on it.

Sarah Newton (Truro and Falmouth) (Con): Does my right hon. Friend agree that home rule for Scotland is available now within the Union, as it is for any part of this country, as a result of a range of Government measures, most notably the Localism Act 2011?

David Mundell: First, may I say that I have always found you most becoming, Mr Speaker? I apologise for suggesting otherwise.

My hon. Friend makes an important point. Very significant additional powers are about to come to Scotland and the Scottish Parliament through the Scotland Act 2012, which will involve the most significant transfer of financial powers since the Acts of Union 300 years ago. The Scottish Government and Parliament focus should be on the implementation of those powers to the benefit of the people of Scotland.

Gemma Doyle (West Dunbartonshire) (Lab/Co-op): No sooner was the ink on the agreement than Scottish Government Ministers were out dismissing the role of

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the Electoral Commission in the process. May I urge the Minister against complacency? Anyone involved in Scottish politics knows it is perfectly plausible that President Alex will ignore the Electoral Commission and set his own biased question. Will the Minister therefore look very carefully at the issue of the question?

David Mundell: The Scottish Government will propose the wording of a question in its referendum Bill. It will then be open to anyone, including the leaders of other political parties in Scotland, who have engaged in an extensive exercise, to allow the Electoral Commission to conduct the sort of scrutiny it has conducted in the past in relation to, for example, the alternative vote UK referendum. I remain confident that the people of Scotland will not simply be duped into breaking Britain up because of trickery or other such behaviour by any party in the debate. It is for anybody who suspects such behaviour or who is dissatisfied with a Scottish Parliament rejection of the Electoral Commission report, which I still consider unlikely, to make that case within the political arena.

David Rutley (Macclesfield) (Con): I welcome a fair referendum and share my right hon. Friend’s view that the continuation of the Union is an important priority. Does he agree that the Union should continue on a basis that is fair to all the parties involved in it?

David Mundell: I absolutely agree, but I think that the first and overriding consideration is to resolve whether Scotland wishes to remain part of the United Kingdom and put that issue to bed. No doubt in future years there will continue to be a debate about the governance of the whole of the United Kingdom, in which we in this Parliament and those in the Scottish Parliament will be able to play a part.

Mrs Anne McGuire (Stirling) (Lab): Harking back to the question from my hon. Friend the Member for Glasgow North (Ann McKechin) and the Minister’s answer, surely the UK Government would bear some responsibility if the Scottish Parliament and Government want all 16 and 17-year-olds to have the vote? It frankly is not good enough for the Minister just to say that it is a complex issue. He should be looking at ways of encouraging the registration of all of those 16-year-olds so that we have registration not by voluntary activity but in the same way as every other voter is registered.

David Mundell: I would encourage everyone to register for this most important vote. The point that I made to the hon. Member for Glasgow North (Ann McKechin) is that the Scottish Government will have two options: to use the existing register on which those people who are to be 18 within the electoral cycle covered by that register may vote, or to create a new register. Whichever option the Scottish Parliament chooses, we will urge all those eligible to vote to register to do so.

Mr Alan Reid (Argyll and Bute) (LD): I congratulate the Prime Minister, the Secretary of State and the Minister on reaching this important agreement. Before people come to vote in the referendum, it is important that they know what they are voting for. When the SNP eventually, in another 13 months, gets round to working out its proposals for an independent Scotland, will the

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Government put the proposals to independent scrutiny so that people can vote knowing what the proposals would mean?

David Mundell: As I indicated in my statement, the Government are already objectively carrying out extensive analysis that will clearly set out the benefits of the United Kingdom, and of Scotland playing a part in it. The people of Scotland will be able to contrast that with the lack of clarity and of any substantive proposals, and the uncertainty, coming from the SNP.

Ian Murray (Edinburgh South) (Lab): I welcome the statement, but may I press the Minister yet again on what mechanism is in place for this House to have a view if the Scottish Government do not take the advice of the Electoral Commission—as they have already indicated will be the case?

David Mundell: The opportunity for Members in relation to the issue as a whole will be in the debate on the Order, and all hon. Members will have a vote on it. If the Electoral Commission’s proposals were to be rejected—and there has been no formal statement from the Scottish Government to that effect—the Scottish Government would have to be held to account for that by the people of Scotland, by politicians in this House and by the hon. Gentleman’s counterparts in the Scottish Parliament. I have faith in the people of Scotland. If they see the Scottish Government flagrantly rejecting proposals from the Electoral Commission, or any suggestion of trickery in the question, they will not look well on the perpetrators.

David Mowat (Warrington South) (Con): We seem to have used the piecemeal extension of the franchise as part of a negotiating process. What concerns me is that 16-year-olds will vote on the sovereignty of their country, but six months later they will be unable to vote in council elections. How can that be right or coherent?

David Mundell: The Government do not support the extension of the franchise to 16 and 17-year-olds, and indeed our Conservative colleagues will argue against that proposal when it comes before the Scottish Parliament. It will be for the Scottish Government to make the case for 16 and 17-year-olds voting in the referendum. That debate needs now to go to Scotland, to the people of Scotland and parliamentarians in the Scottish Parliament, so that there can be a full and proper debate. I remain hopeful that the Scottish Parliament will fully scrutinise any such proposals and, if they are defective, reject them.

Sandra Osborne (Ayr, Carrick and Cumnock) (Lab): The suffragettes did not campaign for the vote on a one-off basis or for a particular part of the United Kingdom. This proposal does a disservice to young people throughout the United Kingdom. Is it not irresponsible of the Government to pass responsibility for the franchise on, when they are clearly aware of major technical difficulties? Should not these be sorted out at a UK level? What would the costs be to the Scottish taxpayer if a separate register were set up?

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David Mundell: The hon. Lady’s final question is one for the Scottish Government and to be asked within the Scottish Parliament. Her colleagues there must hold the Scottish Government to account in relation to any proposals that they make on this referendum. I happen to agree with her that it is not right that there should be different franchises for different elections, but that is a point to be made in the debate in Scotland.

John Stevenson (Carlisle) (Con): Will the Minister confirm that the Electoral Commission will be involved in the setting of the date of the referendum? For example, I would not like to see it held during the autumn school holidays in Scotland.

David Mundell: The decision on the date for the referendum will be one for the Scottish Parliament.

Pamela Nash (Airdrie and Shotts) (Lab): The Minister has made it clear today that it would be unacceptable for the Scottish Government to ignore the advice of the Electoral Commission on the wording of the question. Why then are there no clear consequences for this eventuality in the agreement?

David Mundell: We are following exactly the same process and procedures that were followed in relation to the alternative vote referendum that took place across the United Kingdom, in which the Electoral Commission reported to this Parliament, which then decided whether it would follow that advice.

Mr Graham Stuart (Beverley and Holderness) (Con): The hon. Member for Perth and North Perthshire (Pete Wishart) said that he could not wait to get out there and debate this issue. Of course, SNP Members have waited and waited. I congratulate my hon. Friend the Minister and the Prime Minister on the patience and quiet diplomacy that has flushed these people out. Now they can wriggle on the franchise, they can wriggle on the question, and they can even wriggle on the date they hold it, but the Scottish people will finally have a chance to examine their arguments and put them where they belong—in the bin—when they reject this outrageous attempt to split up this country.

David Mundell: I thank my hon. Friend for that robust contribution. He is right. The people of Scotland will see through the lack of detailed policy from the Scottish National party on what an independent Scotland would be like. As I have said in response to other questions, they will also see through any trickery or chicanery attempted in the setting of the question, the franchise or the spending limits.

Mr Brian H. Donohoe (Central Ayrshire) (Lab): On the question of 16 and 17-year-olds, if—as is possible—not every single person of that age gets the opportunity to vote, there could be a legal challenge against that decision. What would happen to the referendum in those circumstances?

David Mundell: I am sure that the Scottish Government will want to ensure that whatever proposals they make to allow 16 and 17-year-olds to vote in the referendum are legally watertight.

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Mike Crockart (Edinburgh West) (LD): This is indeed a welcome settling of process issues, and it is very welcome that we can now move back to the real debate. As has already been said, next year marks 100 years since the passing of the Second Reading of the Home Rule Bill in this very place. We on these Benches have been honing our alternative for 100 years: will the Minister join me in urging the other Unionist and independence parties to do the same?

David Mundell: I respect the long record of the Liberal Democrats and their predecessors in pursuing these issues, and no doubt, as we approach the 2015 general election, they will set out a range of proposals for the people of Scotland. It is important now, however, that we settle the question of whether Scotland remains part of the United Kingdom or becomes a separate nation state, and we can achieve that with a single-question referendum.

Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op): The Minister referred to a legal, fair and decisive referendum. From what we have heard today, it might well be legal, but does he not accept that the question of fairness and, therefore, of decisiveness rests on the question? His inability this evening to explain what the consequences would be if the Scottish Government decided, as they indicated today they might, to ignore the advice of the Electoral Commission leaves the whole process in question.

David Mundell: I do not agree with the hon. Gentleman. The consequences for the Scottish Government of ignoring the Electoral Commission with the people of Scotland would be significant, and would diminish their argument in the process. I have confidence in the ability of the people of Scotland to see through it.

Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab): My daughter, Erin, turned 18 last week, so she will definitely have the vote—and she has already assured me that she will vote to remain in the United Kingdom, because she knows that we are better together. I remind the Minister that the SNP had the opportunity to extend the franchise in the 2012 local government elections, but chose not to do so. Is the Government’s confidence in ceding this territory in the negotiations based on the fact that it will be impossible to implement in the time scale envisaged?

David Mundell: I welcome the hon. Gentleman’s daughter’s support for Scotland remaining part of the United Kingdom. She reflects the views of many 16, 17 and, indeed, 18-year-olds, as demonstrated by the polls in Scotland. As the process continues, it will be important that we take forward the issues and debates in the Scottish Parliament and that the people of Scotland are engaged.

Mr Ian Davidson (Glasgow South West) (Lab/Co-op): I welcome the fact that an agreement has been reached and that I will have the opportunity finally to vote against separation, but why do we have to wait so long? Why the delay, why the dither? Is it not because the coalition Ministers on the one hand and the SNP on the other have been meeting in secret and not taking account of the views of the vast majority of the Scottish people?

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Our consultation here at Westminster said that we wanted the referendum to be soon, and the Scottish Government’s consultation said—well, we do not know what it said, because they have not published it. The deal has been reached before the consultation has been published. What scrutiny will there be of the detail of the arrangement? For example, will tax exiles have the right to vote? Are we going to have foreign money coming in? Will there be an opportunity to amend not the broad sweep but the detail of these proposals? And what sanctions will there be if somebody breaks an agreement that was reached in good faith?

Mr Speaker: The Chairman of the Scottish Affairs Committee has posed at least four questions, but I know that the ingenuity of the Minister will enable him to reply with a single response.

David Mundell: I expect that both I and the Secretary of State will appear before the hon. Gentleman’s Committee to answer those questions in detail.

John Robertson (Glasgow North West) (Lab): I have great faith in the Scottish people and in 16 and 17-year-olds—we underestimate them at our peril—but I have absolutely no faith in this coalition or the Executive north of the border. These 16 and 17-year-olds will be allowed to vote on Scottish separation, yet, six or seven months later, they will not be allowed to vote in a general election. How would the Minister vote if he was one of these 16 or 17-year-olds? Answer that!

David Mundell: First, I refer the hon. Gentleman to polling in Scotland, which indicates that 16 and 17-year-olds do not support independence, and secondly I urge him to take his argument to Scotland—to the Scottish Parliament and his MSP colleagues there—to make that robust case.

Mr Russell Brown (Dumfries and Galloway) (Lab): The Minister has heard from my hon. Friend the Member for Glasgow North (Ann McKechin), my right hon. Friend the Member for Stirling (Mrs McGuire) and my hon. Friends the Members for Central Ayrshire (Mr Donohoe) and for Ayr, Carrick and Cumnock (Sandra Osborne) about the issue of some 16 and 17-year-olds being disfranchised as a result of not being on the register. I am positive that, during the discussions that he and his colleagues have had, someone somewhere might have raised the issue of a legal challenge. Does he have any idea how much of a delay there might be, if there is a legal challenge?

David Mundell: First, my experience of the Labour party in Dumfries and Galloway is that it is very good at getting people on to the electoral register—and I am sure it will be so again in getting 16 and 17-year-olds registered. The Scottish Government will have to come forward with legally watertight proposals; otherwise, they will be subject to challenge. As we have heard, they could conduct the referendum on the basis of so-called attainers, by which is meant people who will turn 18 within the cycle of the electoral register. It is clear that that could be done legally, but the downside, from the Scottish Government’s point of view, is that not all 16 and 17-year-olds would be able to vote as not all of them would be on the register, because of that age

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limitation. The other option for them is to create their own register. But were they to do that they would have to be sure that it was legally watertight.

Ms Gisela Stuart (Birmingham, Edgbaston) (Lab): Trust is good, but verification is always much better, so will the Minister not accept that the only way to ensure that the Electoral Commission’s recommendations will be complied with is to bring the referendum question back to the House for a vote?

David Mundell: I do not agree with the hon. Lady’s proposition. The Government’s position approaching the discussions on the agreement was that the referendum should be made in Scotland and that the necessary powers should be devolved to the Scottish Parliament. The Scottish Government would encounter significant political difficulties, were they to become the first Government in the history of the UK to ignore the views of the Electoral Commission.

Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op): Why would it not be possible for the voter registration form in 2013 to ask for the details of anyone who would be over 16 on the date of the referendum? Is that too obvious, or is it a simple solution?

David Mundell: That power has not been devolved to the Scottish Parliament in terms of the order agreed today.

Katy Clark (North Ayrshire and Arran) (Lab): One of the complexities regarding 16 and 17-year-olds concerns young people not put on the register owing to child protection issues. If the Government think that the question or any other aspect of the referendum is unfair, will they take action?

David Mundell: The hon. Lady’s colleagues in the Scottish Parliament will have the opportunity to highlight that point, and of course if any proposals are not in accordance with the legislative framework for other issues, they cannot stand.

Jim McGovern (Dundee West) (Lab): Given the responses to at least three of my hon. Friends’ questions about the question, it would appear that the measures outlined in the memorandum of understanding lead the UK Government to believe that a fair and clear question will be presented to the people of Scotland, but obviously some of us on the Opposition Benches have our doubts. If a dubious question is put, will it be open to legal challenge?

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David Mundell: Clearly, all Acts of the Scottish Parliament can be subjected to legal challenge. It is quite clear, however, that were the Scottish Government to reject the views of the Electoral Commission concerning the question—the latter having carried out the thorough scrutiny it has done for previous referendum questions—they would pay a high political price, and the hon. Gentleman and others, in this House and the Scottish Parliament, would waste no time in pointing that out to the Scottish people.

Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op): I wish briefly to return to the issue of the franchise. In the detailed discussions that have taken place, was any account taken of the experience in Scotland of the health board elections in relation to under-18s? Does the Minister agree that it is incumbent on the Scottish Government to say exactly what the franchise would be—whether it would include all 16 and 17-year-olds or be done on the basis of the current electoral register?

David Mundell: I absolutely agree with the hon. Lady: it is now incumbent on the Scottish Government to come forward with their proposals. It is also incumbent on those who have a view on the matter to take the debate to Scotland and the Scottish Parliament. I hope that this issue will show the Scottish Parliament at its best, scrutinising in great detail the proposals that are brought forward and giving a fair and objective assessment of them.

Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab): The Electoral Commission is a respected United Kingdom institution. The difficulty is that the Scottish National party does not have a great track record of respecting UK institutions—we think most recently of the attempt to brand our Olympic athletes as “Scolympians”, which I am delighted to say failed dismally. Can the Minister give an example of where the Scottish Government have respected a fully UK institution?

David Mundell: The Scottish Government respect UK institutions in their day-to-day working with the UK Government. They do not always want to acknowledge that publicly, but on a day-to-day basis the Scottish and UK Governments work closely on many aspects of devolved and reserved issues. However, the hon. Gentleman makes an excellent point. When the First Minister of Scotland tried to designate part of Team GB as “Scolympians”, he was laughed at by the people of Scotland. If he tries in any way to gerrymander the referendum, the people of Scotland will see through it. I trust them to do that.

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Infrastructure (Financial Assistance) Bill

Considered in Committee

[Dawn Primarolo in the Chair]

Clause 1

Expenditure on financial assistance for the provision of infrastructure

6.52 pm

Chris Leslie (Nottingham East) (Lab/Co-op): I beg to move amendment 11, page 1, line 6, after ‘infrastructure’, insert ‘within the United Kingdom’.

The Second Deputy Chairman of Ways and Means (Dawn Primarolo): With this it will be convenient to discuss the following:

Amendment 1, page 1, line 7, leave out ‘includes’ and insert ‘means’.

Amendment 9, page 1, line 11, after ‘health’, insert ‘childcare’.

Amendment 4, page 1, line 13, leave out paragraph (e).

Amendment 2, page 1, line 13, after ‘housing’, insert ‘, the function of which has a national significance.’.

Amendment 10, in clause 1, page 1, line 13, at end insert—

‘(2A) “Infrastructure” excludes the expansion of Heathrow airport before May 2015.’.

Chris Leslie: At near enough to 7 o’clock, I am glad that we finally turn our attention to the Infrastructure (Financial Assistance) Bill. Anybody following these proceedings might be astonished that we have been allowed just over two hours for the Committee stage. In our view it is unsatisfactory to leave the rules governing £50 billion of public expenditure to such scant and inadequate scrutiny. Although we do not necessarily disagree with the broad principles behind the Bill, that does not mean that we should fall short in our duty as parliamentarians to analyse, consider and improve the details of the legislation. Ministers cannot point to the House of Lords as the place where the Bill can be improved and amended if we run out of time for consideration in Committee. I think the last time the Lords sat in Committee on a money Bill was in 1995, when it considered the European Communities (Finance) Bill. This two-hour period is therefore the only opportunity we will get to scrutinise the particulars of the legislation; hence the amendments that are before us.

I want to talk to amendments 11 and 9 in this first group. Amendment 11 would make it clear that the substantive powers in the Bill, which give Ministers the ability to grant financial assistance to any persons, should be used for infrastructure in the United Kingdom, for essentially this reason: we believe that we should focus all our efforts on the domestic infrastructure needs of our country. That is why we think the Bill, if it can bring benefits, needs to focus very much on the benefits of infrastructure and bringing forward capital schemes here at home. Hon. Members will be aware that the UK has been falling behind quite considerably in the past couple of years in terms of infrastructure

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and capital investment schemes. Only today in the

Financial Times

we read about the Construction Products Association warning that

“infrastructure is in free-fall,”

and that it expects spending to fall by 13% in 2012 compared with the last calendar year, despite the hollow words of the Chancellor of the Exchequer. Noble Francis, economics director at the CPA, said:

“We are getting to the stage where the government just can’t make more announcements with nothing happening. At some stage they are going to have to launch some capital investment that sees work happening on the ground. This can be done quickly, easily and cheaply speeding up work on the repair and maintenance of roads, schools, hospitals and housing.”

The article points out that road construction, to take one example of infrastructure investment,

“is suffering in particular, with the CPA projecting a decline of 40 per cent this year and 5 per cent next year.”

Stephen Timms (East Ham) (Lab): I am listening to my hon. Friend’s speech with a lot of interest. I wonder whether he saw the recent CBI survey and the comments by its director general, John Cridland, who described it as

“a wake-up call that businesses in Britain are looking for action”—

on infrastructure—

“and we haven’t seen any yet.”

Chris Leslie: Alarm bells are ringing from a number of eminent institutions across the country, and they are not those that one might necessarily feel were natural allies of Her Majesty’s loyal Opposition. Nevertheless, they are saying exactly the same thing as us: when will the Treasury wake up and realise that the Government’s strategy on infrastructure—this laissez-faire approach—is singularly failing? Rather than driving new schemes forward, with their Bill and the rest of their strategy, the Government seem to be waiting for others to come forward with various schemes; they seem to be saying, “Please will you dream up some ideas?” They are hoping that something will turn up, but that is an approach characterised by drift rather than leadership when it comes to capital investment.

Mr David Anderson (Blaydon) (Lab): Is the situation not worse than that? In the early days of this Government, one of the first things they did was stop the Building Schools for the Future programme, which had been clarified and was seen as the way forward to develop new schools. There were projects involving five schools in my constituency, which would have put £80 million into the local economy, with the money spent on the private sector and building schools for those children. Those projects were frozen—the same thing happened across the country—but if they had gone ahead, we would now be in a much better position.

Chris Leslie: It is the long-term cost to public service quality and communities up and down the country that is the most frustrating thing about the Government’s approach. They have scrapped Building Schools for the Future. Who knows? Perhaps in a couple of years’ time they will realise the error of their ways and devise a “Funding building for schools” scheme, or cobble together some other name. It is no wonder that we are in this prolonged double-dip recession, with the Government

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pulling the rug from underneath the economy in the way that they have, chopping capital infrastructure investment away at its knees. It is no wonder that, for example, the construction sector has shrunk by, I think, 10% in the past 12 months. Nor is it any wonder that the “State of Trade” survey published by the Federation of Master Builders today—apparently it is the only survey of its kind looking at SME construction activity—says that 39% of respondents reported a decline in private new house building workloads in the third quarter of this year or that 40% predicted a further decline in the next quarter.

The Government’s record on capital investment and their approach to infrastructure are lamentable. It has never been clearer that they should be focusing squarely on the needs of infrastructure within the United Kingdom; hence amendment 11. Contrary to the claims of the Government—we will probably hear this from the Minister—figures from the Office for Budget Responsibility show that the Government will have spent £6.6 billion less over the three-year period from the spending review than Labour had planned, with budgets for schools, such as BSF, and affordable housing hit especially hard.

7 pm

Stephen Timms: My hon. Friend has talked about organisations that are not necessarily natural supporters of Her Majesty’s loyal Opposition. Has he seen the recent comments from the Country Land and Business Association, which described the superfast broadband situation as “lamentable”—precisely the same word that he has just used? The association stated:

“It is becoming clear that the Government’s strategy will not meet the target date of 2015…There is no clear mechanism to put in place the universal service commitment.”

Is not this another example of the economy crying out for investment that is simply not being delivered?

Chris Leslie: My right hon. Friend makes an important point that emphasises the argument that we are making. This is not simply a question of the levels of capital investment; it is also a question of competence. It is also about the relentless need to focus on delivery, and on the detail behind the delivery. I just do not see the Treasury, as currently comprised, being capable of getting to grips with the granularity of some of the obstacles that face capital schemes. It is no wonder that we are falling further and further behind. The Treasury seems to see an obstacle and be deterred by it, rather than trying to tackle it and move past it.

Mr John Redwood (Wokingham) (Con): We are being invited to agree to a potential £50 billion commitment. Do the Opposition have any thoughts on the pace of that kind of expenditure? What levels would they recommend for this year, next year and the following year?