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House of Commons

Wednesday 6 November 2013

The House met at half-past Eleven o’clock


[Mr Speaker in the Chair]

Oral Answers to Questions


The Secretary of State was asked—

2014 Commonwealth Games

1. Jim Sheridan (Paisley and Renfrewshire North) (Lab): What assessment he has made of the potential effects of the legacy of the Glasgow 2014 Commonwealth games on the UK tourism industry. [900878]

The Secretary of State for Scotland (Mr Alistair Carmichael): The Glasgow 2014 Commonwealth games provide a great opportunity to showcase Glasgow to the world. Following my recent meeting with Gordon Matheson of Glasgow city council, I am left in no doubt that the games will provide a long-lasting legacy of which the people of Glasgow can be proud. The United Kingdom Government are taking every step to promote the business opportunities that the games present, and I should be happy to receive suggestions in that regard from any Member in any part of the House.

Jim Sheridan: I welcome the Secretary of State to his first session of Scottish questions. I also send best wishes to his predecessor, who was a thoroughly decent man. [Hon. Members: “Hear, hear.”]

Next year’s Commonwealth games will attract thousands of visitors to Scotland. I believe that the best legacy that we can give them is to ask them to come back and visit us again, but that may be extremely difficult for some, given the high rate of air passenger duty. Will the Secretary of State ask his colleagues in the Treasury to review the position, and to carry out an impact assessment of the effects of APD on tourism in Scotland and in the United Kingdom as a whole?

Mr Carmichael: I am grateful to the hon. Gentleman for his welcome to what is, in fact, my first session of Scottish questions as Secretary of State. I have been present for Scottish questions once or twice before.

Let me also associate myself with the hon. Gentleman’s tribute to my right hon. Friend the Member for Berwickshire, Roxburgh and Selkirk (Michael Moore), who did an excellent job. The additional powers that were given to the Scottish Parliament through the Scotland Act 2012 and the negotiation of the Edinburgh agreement are a lasting legacy from him.

I am aware that Glasgow airport is an important asset for the hon. Gentleman’s constituency, and I commend him for the vigorous way in which he prosecutes its interests. I always welcome any representations from

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Members in any part of the House, but air passenger duty is a matter for the Chancellor of the Exchequer, and the hon. Gentleman should get his representations in early ahead of the autumn statement. Good luck to him.

Iain Stewart (Milton Keynes South) (Con): I, too, welcome my right hon. Friend to his new position.

An important legacy from London 2012 was better working between the transport agencies and providers. May I urge my right hon. Friend to work with Transport Scotland and other agencies to ensure that a similar legacy can be secured for Glasgow?

Mr Carmichael: I hope very much that that will happen. A significant transport legacy has already been established by the organisers of the games, and I see no reason why the lessons of the Olympic games, which are substantial and readily available, should not be learnt by those in Glasgow.

Margaret Curran (Glasgow East) (Lab): I join others in welcoming the Secretary of State to his new position, and in paying tribute to his predecessor.

The legacy of the Commonwealth games is vital to the people of Glasgow and their prospects, particularly in relation to jobs, but today that has been overshadowed by reports concerning the future of shipbuilding on the Clyde. The work force on the Clyde are renowned for their skills and expertise, but they now face uncertainty about their future. Will the Secretary of State assure the House that he will work with trade unions and with the company to minimise any potential job losses, mitigate the effects on communities, and secure the future of shipbuilding on the Clyde?

Mr Carmichael: I thank the hon. Lady for her welcome. I can give her every assurance that, as in the recent crisis surrounding the Grangemouth plant, I will work with any party in any part of the country where Scotland’s vital interests are involved. I extend that invitation to the hon. Lady, to the Scottish National party, and to the Scottish Government. The issue is clearly important. Today is a day that we always knew was coming, but I believe that we will meet the challenges much more effectively by working together.

Sir Menzies Campbell (North East Fife) (LD): May I urge my right hon. Friend to take the opportunity, as soon as he can, to visit the sporting facilities that have been created in the east end of Glasgow, particularly the indoor athletics track and the velodrome which is named after Sir Chris Hoy? Does he recognise that they meet the highest possible international standards, and constitute a substantial sporting legacy for the city of Glasgow and, indeed, the whole of Scotland?

Mr Carmichael: For, very possibly, the first time in the 30 years for which I have known my right hon. and learned Friend, I am one step ahead of him. I have, in fact, visited those facilities, and I was immensely impressed, principally by the fact that they are already accessible to some 75,000 people in the area. They will indeed constitute a lasting legacy. Glasgow city council has the opportunity to provide a business legacy, and I am delighted to announce that it has made the Glasgow city chambers

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available to UK Trade & Investment and other organisations for the duration of the games so that they can promote business opportunities.

Angus Robertson (Moray) (SNP): I welcome the Secretary of State to his position. Today is a very sad day for many families in Glasgow, and I am sure the thoughts of everybody on both sides of the House are with them. How will the legacy to Glasgow of the Commonwealth games be affected by large-scale skilled industrial job losses in the city?

Mr Carmichael: I thank the hon. Gentleman for his welcome. As I have already said, we are working with UKTI to bring more business opportunities to Glasgow. As for the announcements, we will hear from the Secretary of State for Defence later today what the full extent of these developments is going to be, but they will be best tackled if we all work together. We have known for a long time that this day was coming.

Angus Robertson: And the legacy to Glasgow will be serious if nothing is done to help those who need it, so what can the Secretary of State and his Government do to help people in these circumstances?

Mr Carmichael: I will be doing what I have been doing since the day and hour I took over this job. I will work with the hon. Gentleman’s colleagues in the Scottish Government, if they are prepared to work with me. I will work with the councillors and officers at Glasgow city council. I will work with UKTI and, most of all, I will work with BAE Systems, which, in very difficult circumstances, has handled itself in a way that should be commended.

“Go home or face arrest” Campaign

2. Pete Wishart (Perth and North Perthshire) (SNP): What discussions he has had with the Secretary of State for the Home Department on the display of materials from the “Go home or face arrest” campaign in the Glasgow UK Border Agency office. [900879]

The Secretary of State for Scotland (Mr Alistair Carmichael): I recently met both my right hon. Friend the Home Secretary and my hon. Friend the Minister for Immigration to discuss a range of immigration matters, including the campaign to which the hon. Gentleman refers. In a written statement last week my hon. Friend the Minister for Immigration informed the House that the poster campaign has no future in Scotland.

Pete Wishart: I thank the Secretary of State for that answer, but was it not absolutely appalling that these disgusting and xenophobic materials graced a public office in Scotland, contrary to everything we have tried to achieve through good and positive community relations in Scotland? This is all about a race to the bottom with the UK Independence party on immigration. We do not even do UKIP in Scotland. We do not even do Conservative; we have got the one lone panda of a Minister, the right hon. Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell), sitting there. Can the Secretary of State reassure me that we will never see the likes of these posters again in Scotland?

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Mr Carmichael: This is a serious issue, and I accept that these posters were not appropriate, but I think a slightly more measured approach than the hon. Gentleman’s is appropriate to questions such as this. It was made clear in the Immigration Minister’s statement last week that these posters will not be back. I am content with that position.

Mr Philip Hollobone (Kettering) (Con): What is the Secretary of State’s estimate of the number of illegal immigrants in Scotland?

Mr Carmichael: I do not have that figure to hand, but I will be more than happy to make the appropriate inquiry and write to my hon. Friend.

Keith Vaz (Leicester East) (Lab): I understand that the Secretary of State personally intervened to oppose this campaign. Can he tell us about the fate of the vans that were central to this campaign? Are they going to be pulped—or maybe recycled and used as ministerial vehicles?

Mr Carmichael: For me, the ministerial vehicle remains, while I am in London, the No. 159 or No. 3 bus, so I do not think I would derive any benefit from the right hon. Gentleman’s proposal. The vans were not used in Scotland, of course. There was, however, substantial concern about the use of the posters in the UKBA office there, which I have to say was particularly inappropriate given the good efforts of Glasgow city council and the wider community in Glasgow to ensure that the tone of the treatment of people coming to the city is appropriate.

Sir Tony Baldry (Banbury) (Con): If the Scottish nationalists want to give everyone such a warm welcome in Scotland, can those of us whose grandfathers fought in the first world war with the Highland Light Infantry and whose great-grandfathers fought with the Gordon Highlanders and who consider ourselves in large part to be Scots, and consider Scotland in part to be home, have a vote in the referendum as well?

Mr Speaker: That is an ingenious question, but it suffers from the disadvantage of being entirely unrelated to Question 2.

Katy Clark (North Ayrshire and Arran) (Lab): I welcome the Secretary of State to his post and pay tribute to the hard work that his predecessor put in. Positive Action in Housing, which he will be aware works with asylum seekers in Scotland, has called the posters “shameful and deeply offensive”. Given what he said about the tone, does he agree with that comment?

Mr Carmichael: I have made it clear that I consider the posters to be inappropriate. They were part of a trial, they have gone and they will not be back. I do not think anything else really matters.

Energy Prices

3. Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP): What recent discussions he has had on the effects of increasing energy prices on households in Scotland. [900880]

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6. Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op): What recent discussions he has had with Ministers of the Scottish Government on household and business energy bills. [900884]

7. Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op): What recent discussions he has had with Ministers of the Scottish Government on household and business energy bills. [900885]

The Secretary of State for Scotland (Mr Alistair Carmichael): Rising energy bills are obviously a serious concern for consumers and businesses. Over the past weeks, I have discussed the issue with representatives of the major energy companies. We continue to work closely with Scottish Government Ministers on all matters facing the economy in Scotland, including energy prices.

Mr MacNeil: As a fellow islander, may I say that it is good to see an Ileach, an Islay man, at the Dispatch Box? With my constituency suffering the highest level of fuel poverty in the UK, can the Secretary of State investigate the benefits that some renewables might bring to offset that? Although it is good that the islands will have different renewables strike prices, he well knows that not all islands are the same. Will he represent that view to the Secretary of State for Energy and Climate Change, to make sure that all islands can benefit and we can tackle these high energy prices?

Mr Carmichael: I am grateful to the hon. Gentleman for allowing me the opportunity to remind the House of this Government’s great achievement in establishing, and putting out for consultation, a strike price for island communities, which will make the development of renewable energy in communities such as his and mine a viable proposition at long last. That may have a contribution to make to tackling fuel poverty. I have already worked closely with the leader of his local council in this matter, and I urge him to do the same.

Mark Lazarowicz: The Government have been giving strong indications that they intend to move some of the cost of paying for energy efficiency to general taxation, and the Scottish National party Government have said that they want to do the same. Unless we also have measures such as Labour’s energy price freeze, would such a transfer not just let the energy companies off the hook and reduce the pressure on them to control prices?

Mr Carmichael: The hon. Gentleman is absolutely right to say that the position announced by Nicola Sturgeon takes money off energy bills but is going to have to be made up for elsewhere. At a time when there is already a £3.4 billion black hole in the SNP figures, one has to think that that is not going to offer much hope for people struggling to pay their energy bills already. We all know the problems associated with his price freeze, and I have no doubt that they will be rehearsed in the House later today. My particular concern relates to the position of smaller energy companies, which are at risk of being forced out. If we reduce the number of companies in the market, we will see prices go up—that cannot be good.

Cathy Jamieson: The Scottish Government and UK Government Energy Ministers appear to have joined forces to suggest that Labour’s plans for an energy price

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freeze would put the lights out. I know the Secretary of State to be a sensible man, so has he talked to the Scottish Government about this and does he agree that the energy price freeze would deliver a £120 saving to my constituents?

Mr Carmichael: I am afraid that we have heard dodgy figures from the Labour party before, and I think we have just heard yet another one from the hon. Lady. The truth is that Labour’s price freeze does risk reducing the number of companies in the market. If competition is reduced, the price goes up. That is basic economics and the Labour party should learn it.

Mr Alan Reid (Argyll and Bute) (LD): People who are on SSE’s “Total Heating, Total Control” system have been told by SSE that their system will not work properly if they switch to another supplier, which means that they are totally dependent on SSE and the huge price increases that it places on them. That is an unacceptable abuse of a monopoly, so will my right hon. Friend investigate it?

Mr Carmichael: I am aware of the issue from my own constituency mailbag, and it relates to those currently on the “Total Heating, Total Control” tariffs. It is a fairly complex position, but I say to SSE that it has enormous customer loyalty from throughout the highlands and islands. When we get the answers to the questions that my hon. Friend poses, I shall be looking at them very closely, because I want to ensure that the customer loyalty that its hydro has in the highlands and islands is valued, and not abused.

Mike Crockart (Edinburgh West) (LD): Ofgem has estimated that £27 of the average annual fuel bill pays to help the fuel poor, £21 pays for renewable obligations and £6 pays for feed-in tariffs. That comes to a total of £54, which is less than the tax paid on a single tank of petrol. Does the Secretary of State agree that that is a good return on a small outlay?

Mr Carmichael: My hon. Friend makes the point very well that although there are such charges on electricity bills the money is then spent wisely on improving the quality of housing and energy efficiency. That, of course, is the real opportunity offered by the energy debate and I think that the Government are sensible to pursue it.

John Stevenson (Carlisle) (Con): Does the Secretary of State agree that the way to reduce energy costs overall is to encourage competition, support innovation, increase supply and remove unnecessary costs rather than a price freeze?

Mr Carmichael: I wonder whether my hon. Friend and I might have a slight difference of opinion in what we consider to be an unnecessary cost, but with that one caveat I have absolutely no difficulty in agreeing with him. Such an approach runs wholly counter to the Opposition’s proposals.

11. [900889] Sandra Osborne (Ayr, Carrick and Cumnock) (Lab): Last Saturday, my advice surgery was full of desperate people who do not know how they are going to get through the week, never mind through the winter.

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If the Government are not prepared even to consider the price freeze, what action will they take right now to help people to get through the winter?

Mr Carmichael: I take seriously the hon. Lady’s point. That is a real and deep concern for households across the country and that is why the Government have taken action on a number of fronts. This year, 230,000 homes will be warmer because of the increased energy efficiency measures that we support and 2 million vulnerable households will get help under the warm home discount. That is £135 off electricity bills for some of the poorest pensioners. The ongoing winter fuel payment for older people and the £25 cold weather payment have been made permanent by this Government.

Margaret Curran (Glasgow East) (Lab): Labour’s energy price freeze would save Glasgow and Edinburgh city councils, Scotland’s two largest local authorities, close to £3 million a year. That is equivalent to 71 teachers and 140 care workers. In the vote later today, will the Secretary of State vote with the Tories and side with the energy companies or will he vote for Labour’s energy price freeze and side with the people of Scotland?

Mr Carmichael: I will be supporting the coalition Government and I am proud to do so, because we recognise that there are no easy answers in this debate and that the proposals from the Opposition will end up putting people’s prices up.

Scottish Independence

4. Andrew Stephenson (Pendle) (Con): What assessment he has made of the effects on businesses in north-west England of Scotland remaining part of the UK. [900882]

The Parliamentary Under-Secretary of State for Scotland (David Mundell): The detailed Scotland analysis papers we have published underline the value to businesses across the whole of the United Kingdom of Scotland remaining part of the Union. As it stands, the UK is a true domestic single market and currency union with free movement of goods and services, capital and people.

Andrew Stephenson: The Minister will be aware of the encouraging economic signs across the north-west of England, with employment up and a recent regional purchasing managers index showing that growth is higher than in any other region in the UK. Does the Minister agree with me that remaining part of the UK is the best way forward for Scottish business?

David Mundell: I absolutely agree with my hon. Friend that that is the best way forward not just for Scottish business but for business in the whole of the UK. Businesses in his constituency benefit from the single domestic market, which includes Scotland.

Stewart Hosie (Dundee East) (SNP): I expect that Scotland will vote yes to independence next year and in those circumstances, the best hope for businesses in the north-west of England—and, indeed, businesses throughout England, which sell £50 billion of goods and services to Scotland every year—is the maintenance of sterling in a formal currency union, which was described by the

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right hon. Member for Edinburgh South West (Mr Darling) as logical and desirable. Does the Minister agree with the right hon. Gentleman or with yesterday’s scaremongering “project fear” nonsense from the Chief Secretary?

David Mundell: I most certainly do not share the hon. Gentleman’s expectation of the outcome of the referendum. He now chooses who to listen to. He used to listen to Mr Jim Cuthbert, who said:

“It’s very difficult to have independence within a currency union. Greece says it all. In any currency union, there are restrictions on individual members and that doesn’t equate to independence.”

Gordon Banks (Ochil and South Perthshire) (Lab): Businesses in north-west England and in Scotland need much the same things, so will the Minister tell the House what Mark Allan, Axa UK’s economist, Brian Ashcroft, professor of economics at Strathclyde university, Andrew Goudie and John Kay, former economic advisers to Alex Salmond, and Gavin McCrone, former chief economist at the Scotland Office, have in common on the impact of currency decisions on business if Scotland does not remain part of the UK?

David Mundell: All those eminent individuals know that Scotland continues to benefit from being part of the single UK domestic market, and they know that anyone who votes for independence on the basis that Scotland would keep the pound in a currency union is hanging their coat on a very shoogly peg.

Royal Mail Privatisation

5. Graeme Morrice (Livingston) (Lab): What assessment he has made of the effects of the privatisation of Royal Mail on people in Scotland. [900883]

The Secretary of State for Scotland (Mr Alistair Carmichael): The privatisation of Royal Mail will protect the universal mail service for the people of Scotland. The Government, with their 30% stake, remain a substantial shareholder committed to the future growth of the company. By transferring the liabilities of the Royal Mail pension plan in April 2012, the Government have safeguarded the benefits for postal workers in Scotland and across the UK that had accrued up until that date.

Graeme Morrice: But can the new Secretary of State provide answers to the many people living in rural Scotland, along with the dwindling band of Scottish Lib Dem supporters, who believe that the coalition Government’s privatisation of Royal Mail is wrong and will lead ultimately to the end of the universal service obligation?

Mr Carmichael: If this privatisation was a threat to rural Scotland I would not support it. This is a privatisation born not from ideology but from necessity. Without it, the real threat would be Royal Mail losing business hand over fist, as it has since his Government liberalised the letter-post market.

Sir Malcolm Bruce (Gordon) (LD): Does my right hon. Friend agree that the privatised Royal Mail, free from state aid restrictions and competition rules, offers

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the best opportunity of promoting the last-mile delivery service and securing the jobs of our dedicated local posties?

Mr Carmichael: My right hon. Friend has a rural constituency that I know well. The points that he makes are very well made. This was necessary to save the universal service and, for the first time, legislation privatising Royal Mail brought with it meaningful protections for that universal service.

Mr Ian Davidson (Glasgow South West) (Lab/Co-op): Does the Minister agree that the privatisation of Royal Mail is likely to increase the cost of letters to Govan shipbuilders? Does he therefore agree that action must be taken to guarantee the future of Govan shipbuilders as quickly as possible? Does he also agree—

Mr Speaker: “Also” is not required.

Mr Carmichael: I commend the hon. Gentleman for his ingenuity in getting a reference to Govan shipbuilders on the record. He will have to wait to hear the full extent of the announcement. I assure him that Govan shipbuilders will benefit from the same mail delivery protections from Ofcom as everyone else.

Mr Mike Weir (Angus) (SNP): Under the Postal Services Act 2011 the only protection for consumers is from Ofcom. Given the less than stellar performance of other utility regulators, why should consumers in Scotland have any confidence that their services will be protected?

Mr Carmichael: As I think the hon. Gentleman knows, but as he continues to ignore, the difference is that this time we have included meaningful protections that give Ofcom the power it needs to protect communities such as mine and his.

Scottish Independence

8. Alison McGovern (Wirral South) (Lab): What assessment he has made of the potential effects on cultural tourism in the UK of a yes vote in the referendum on Scottish independence. [900886]

The Parliamentary Under-Secretary of State for Scotland (David Mundell): Cultural tourism is thriving in Scotland and across the whole United Kingdom. We want Scotland to remain part of the UK to ensure that there are no unnecessary barriers to Scots visiting great cities such as Liverpool, and that people on the Wirral and across the United Kingdom can enjoy the great cultural experience that is Scotland.

Alison McGovern: When Liverpool became city of culture we took inspiration from our friends in Glasgow. Given the significant sporting and cultural connections between the cities of the north-west of England and the cities of Scotland, does the Minister think that our thriving visitor economy will be helped or hindered by an international border between north-west England and Scotland?

David Mundell: I can see no benefit to putting any barriers between Scotland and other parts of the United Kingdom, and I am sure our great city of Dundee in Scotland will learn from Liverpool’s experience as it seeks to become the city of culture.

Several hon. Members rose

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Mr Speaker: Order. In the week in which he celebrates 40 years’ uninterrupted service in the House of Commons, I call Sir Alan Beith.

Cross-border Strategic Roads

9. Sir Alan Beith (Berwick-upon-Tweed) (LD): What recent discussions he has had with Ministers of the Scottish Government on cross-border strategic roads. [900887]

The Secretary of State for Scotland (Mr Alistair Carmichael): My office keeps in regular contact with the Scottish Government on all transport issues concerning Scotland. The Government set out their commitment to a feasibility study on improvements to the A1 north of Newcastle. I am not aware of any such commitment on cross-border routes from the Scottish Government.

Sir Alan Beith: If Ministers want to give a very clear signal that England and Scotland are better together, may we have some tangible evidence before the referendum vote that the strategic road linking eastern England and Scotland will be dualled completely?

Mr Carmichael: I add my commendation to my right hon. Friend for the longevity and the quality of the service he has given to his constituents and to this House. He will know that we have already announced a feasibility study. That demonstrates our commitment to the case for further work. I am more than happy to work with him and with the Scottish Government if that is necessary in future.

Prime Minister

The Prime Minister was asked—


Q1. [900928] Steve Baker (Wycombe) (Con): If he will list his official engagements for Wednesday 6 November.

The Prime Minister (Mr David Cameron): With Remembrance day coming, I am sure the whole House will join me in remembering those who have given their lives in the service of our country. Perhaps particularly with the President of the Republic of Korea here, we should remember those who fell in that conflict and all those who served, many of whom are now coming to the end of their lives, and we should again pay tribute to the heroic job our armed forces do to keep us safe.

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

Steve Baker: I am sure we all wish to associate ourselves with the Prime Minister’s fitting tribute.

Hard-working businessmen facing tough decisions, decent trade unionists and newspapers including the Daily Mirror will have been appalled by the so-called leverage tactics of Unite in the Grangemouth dispute. Will my right hon. Friend take steps to ensure that families, children and homes are protected from a minority of militants?

The Prime Minister: My hon. Friend makes an important point. This sort of industrial intimidation is completely unacceptable. We have seen “Wanted” posters put through children’s letterboxes, we have seen families intimidated and we have seen people’s neighbours being told that

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they are evil. What has happened is shocking. It is also shocking that the Labour party is refusing to hold a review and to stand up to Len McCluskey. At this late stage, it should do so.

Edward Miliband (Doncaster North) (Lab): Let me start by joining the Prime Minister in recognising the enduring importance of giving thanks on Remembrance Sunday to all those men and women who have served our country. This is a moment to remember all those who have lost their lives and to think about their families. That is why I know Members from across the House and people across the country are wearing their poppies with pride this week.

Can the Prime Minister guarantee that there will not be an accident and emergency crisis this winter?

The Prime Minister: We will do everything we can to make sure that the NHS continues to perform in the excellent way it does today. Let me give the right hon. Gentleman the latest figures: last week was the 27th week in a row that we met our A and E targets. The NHS is treating 1.2 million more people in A and E than it was when he was in office. But I can tell him where there will be a particular problem. There will not be a winter crisis in the NHS in Wales, where Labour is in control, because there is a crisis every day of the week in Wales, where Labour is in control.

Edward Miliband: The Prime Minister is simply wrong about the figures. If we look at what is happening in our hospital A and E departments, we see that the target has been missed for 15 consecutive weeks. The whole country will have heard that he cannot guarantee that there will not be a crisis in our A and E departments this winter, and that is because there already is a crisis. That is what the president of the College of Emergency Medicine says. [Interruption.] I know that Government Members do not want to hear about the crisis in A and E departments. He says that

“there are almost daily instances in most A&E departments of patients facing extended trolley waits.”

The Prime Minister said two years ago:

“I refuse to go back to the days when people had to wait for hours on end to be seen in A&E”.

He has broken that promise, has he not?

The Prime Minister: As I said, A and E departments in this country are now treating 1.2 million more patients than they were under Labour. Let me give the right hon. Gentleman one simple fact—[Interruption.]

Mr Speaker: Order. There is simply too much noise on both sides of the Chamber. I appeal to the House, because I get bucket-loads of letters every week from members of the public complaining about it. Cut it out: it is low-grade, down-market and unnecessary.

The Prime Minister: Let me give the right hon. Gentleman one simple fact: today in our A and E departments the average waiting time is 50 minutes. When the shadow Health Secretary was sitting on the Government Front Bench the average waiting time was over 70 minutes. Those are the facts. Because this Government did not take the shadow Health Secretary’s advice—[Interruption.] I would not listen to him, because he is the man who refused to apologise for the mess at Stafford. The NHS in our country is getting better under this Government.

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Edward Miliband: Across the medical profession they are saying that there is a crisis in A and E, but the Prime Minister is saying, “Crisis? What crisis?” How out of touch can he be? In the last year, 1 million people waited more than four hours in A and E. A and E waiting times are up, the number of patients kept waiting on trolleys is up, delayed discharges are up, and ambulance response times are up. Why is that happening? It is because of his top-down reorganisation, which nobody wanted and nobody voted for. Can he tell the House how many NHS managers have received a six-figure redundancy package as a result of his reorganisation?

The Prime Minister: What I can tell the right hon. Gentleman is that there are now 20,000 fewer administrative grades in the NHS, 5,500 more doctors in our NHS, 1,000 more midwives in our NHS and 1,000 more health visitors in our NHS. Let me tell him why that is the case: his shadow Health Secretary said that it would be irresponsible to increase spending on the NHS, and we rejected that advice. We rejected Labour. We invested in our NHS. We are proud of our NHS.

Edward Miliband: What the shadow Health Secretary did was warn against cutting social care, and that is exactly what the Government did. That is the crisis the Prime Minister has produced. Here is the answer to the question he did not answer: 2,300 managers have received six-figure payoffs—[Interruption.]

Mr Speaker: Order. There is too much noise. It had better stop, or the process will take longer. To those who cannot grow up I say: try.

Edward Miliband: The Prime Minister is giving P45s to nurses and six-figure payoffs to managers. Can he tell us how many of the people who have been let go from the NHS have been fired, paid off and then re-hired?

The Prime Minister: First, we are saving £4.5 billion by reducing the number of managers in our NHS. For the first time, anyone re-employed has to pay back part of the money they were given. That never happened under Labour. We do not have to remember Labour’s past record, because we can look at its record in Wales, where it has been running the health service. It cut the budget by 8.5%, it has not met a cancer target since 2008, and it has not met an A and E target since 2009. The fact is that the right hon. Gentleman is too weak to stand up to the poor management of the NHS in Wales, just as he is too weak to sack his shadow Health Secretary.

Edward Miliband: And we have a Prime Minister too clueless to know the facts about the NHS. Let us give him the answer, shall we? The answer is that over 2,000 people have been made redundant—[Interruption.] The hon. Gentleman says it is rubbish; it is absolutely true—we have a parliamentary answer from one of the Health Ministers. Two thousand people have been made redundant and re-hired, diverting money from the front line as this Prime Minister sacks nurses. [Interruption.] The Prime Minister seems to be saying it is untrue; well, if he replies he can tell me whether it is untrue. We know why the NHS is failing: his botched reorganisation, the

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abolition of NHS Direct, cuts to social care, and 6,000 fewer nurses. There is only one person responsible for the A and E crisis, and that is him.

The Prime Minister: We have taken 20,000 administrators out of the NHS—and I am not going to take lectures from a Government who saw patients drinking out of—[Interruption.]

Mr Speaker: Order. Members are shouting at the tops of their voices at the Prime Minister, and they must stop doing so.

The Prime Minister: Let me give the right hon. Gentleman the facts about the NHS under this Government: mixed-sex accommodation down by 98%, 1.2 million more people treated in A and E, and half a million more in-patients. We are doing all that, and we are not following Labour’s advice, which was to cut the NHS. That is the truth under this Government—the NHS getting better. Labour would have cut it, and Labour never stands up for the NHS.

Edward Miliband: What the whole country will have heard today is a Prime Minister complacent about the A and E crisis and clueless about what is actually happening in the NHS. What the British people know is that the NHS is heading into winter with fewer nurses, a lack of senior A and E doctors, and a shortage of beds. He promised he would protect the NHS, but it is now clear that the NHS is not safe in his hands.

The Prime Minister: Once again, the right hon. Gentleman is just wrong on the facts. Let me give him a simple fact: there are more A and E consultants working in A and E than there were five years ago. That is why we are meeting our targets in England and that is why Labour is missing its targets in Wales. I am clear that my job is to stand up for the NHS and deliver a stronger NHS—when is he going to understand that his job is to stand up to the bully boys of Unite and show some courage?

Q2. [900929] Mr Marcus Jones (Nuneaton) (Con): Over the past week we have heard about the Unite union’s attempts and strategy to disrupt business supply chains. Given the Government’s push for inward investment, what signal does the Prime Minister think Unite’s action sends around the world to businesses looking to invest in Britain?

The Prime Minister: This sort of industrial intimidation is bad for Britain, and it very nearly cut off petrol supplies to a large part of our United Kingdom. Every week the Leader of the Opposition comes here calling for an inquiry into this, an inquiry into that—he never stops calling for public inquiries, but he has not got the guts to hold one of his own into Unite.

Angus Robertson (Moray) (SNP): People watching these exchanges today will be struck that when nearly 1,800 people have learned that they are to lose their jobs, neither the Leader of the Opposition nor the Prime Minister has seen fit to raise it thus far. I hope that the Prime Minister’s thoughts are with the families of people who are set to lose their jobs. Will he confirm that he agrees with the BAE statement that Glasgow is the best place to build frigates?

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The Prime Minister: I do think this is a vitally important issue, and that is why the Defence Secretary will be making a statement right after Prime Minister’s questions. These are extremely difficult decisions, and our first thoughts should be with all those who are affected. Frankly, I was surprised that the Leader of the Opposition did not choose to raise this vitally important issue.

Let us be clear about what we need to do here. We want our Royal Navy to have the best and most modern ships and the best technology, and that means we will go on building warships on the Clyde. We will be announcing three new offshore patrol vessels, keeping that yard busy rather than paying it to remain idle, as the previous Government proposed. In Portsmouth, yes, there will be job reductions, but there are many more people involved in ship servicing than in shipbuilding, so the work force will go from 12,000 to 11,000. But no one should be in any doubt of two things. Under this Government, we will have aircraft carriers, Type 45 destroyers, the new frigates, and the hunter-killer submarines; and there is something else they should know: if there was an independent Scotland we would not have any warships at all.

Q3. [900930] Mr Graham Brady (Altrincham and Sale West) (Con): As we approach Remembrance Sunday and the centenary of the first world war, will the Prime Minister join me in commending the work of the Victoria Cross Trust? Will he consider how the Government might assist the trust in its important task of restoring and maintaining the graves of some of the nation’s bravest soldiers, sailors and aircrew?

The Prime Minister: I pay tribute to my hon. Friend for his support for the Victoria Cross Trust and the hard work that he has done. I welcome any initiative that commemorates those who have given their lives in the defence of our country. Many Victoria Cross holders’ graves fall under the protection of the Commonwealth War Graves Commission. We will continue to work with the Commonwealth War Graves Commission and the Victoria Cross Trust to do everything possible to ensure that those people are remembered properly.

Heidi Alexander (Lewisham East) (Lab): Page 47 of the Tory party manifesto says:

“We will stop the forced closure of A&E and maternity wards, so that people have better access to local services”.

How is that going, Prime Minister?

The Prime Minister: There are no changes to services unless they are supported by local GPs. That is completely different from what happened under Labour, when there were top-down closures of hospitals. That is not happening under this Government.

Q4. [900931] Damian Collins (Folkestone and Hythe) (Con): According to Unite, it is

“increasingly recognised that…bullying, harassment and violence are a major problem throughout industry.”

Does the Prime Minister agree that the authorities should always investigate allegations of harassment against employees and their families, including when the allegations involve the members of a trade union?

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The Prime Minister: My hon. Friend is absolutely right. The allegations of industrial intimidation are serious and need to be looked at properly. Because the Labour party is ducking its responsibilities, we will have to consider what we can do to look at the matter. The leader of the Labour party is behaving like the mayor of a Sicilian town towards the Mafia: “They put me in and I don’t want them to take me out.”

Q5. [900932] Jim McGovern (Dundee West) (Lab): Last month, I asked a question about zero-hours contracts. I think most hon. Members would agree that the response that I received was a fudge about the determination of employers and employees. I will put it plainly and simply to the Prime Minister: how many people in this Palace and in the Government buildings are employed on zero-hours contracts?

The Prime Minister: I do not have those figures to hand. What I can tell the hon. Gentleman is that we are having a review of zero-hours contracts. We are looking particularly at people on zero-hours contracts who are forbidden from working for other employers. This Government will look at the matter. The last Government, who saw zero-hours contracts go through the roof, did absolutely nothing about it.

Q6. [900933] Mark Reckless (Rochester and Strood) (Con): The Prime Minister and his Chancellor closed the gaping loophole left by the last Government that allowed the rich to avoid stamp duty. Is it not time to close the other disgraceful loophole that they left, which allows overseas residents to buy up the best housing in London without paying capital gains tax?

The Prime Minister: My hon. Friend makes an important point. The stamp duty change that we made is vital in ensuring that foreign buyers pay stamp duty in London. That needed to happen. [Interruption.] The shadow Chancellor, who was the City Minister when all these things went wrong, is shouting his head off as usual. It is this Government who have insisted that people pay the taxes that are due.

Q7. [900934] Paul Goggins (Wythenshawe and Sale East) (Lab): The Prime Minister is right to extend supervision to prisoners with short sentences and to look for new ways to reduce reoffending, but he must be aware of the growing concern that his Government’s plans will fatally undermine the probation service. Now that a criminal investigation has been opened into G4S and Serco, will he sit down with his Justice Secretary, reconsider the options and at least trial the payment-by-results proposal to see whether it works?

The Prime Minister: The right hon. Gentleman has huge experience in this area. I welcome what he says about the importance of ensuring that there is probation support for people as they leave prison, which will happen under the plans that we are putting in place. I think that payment by results can make a big difference in reducing reoffending. The cruel fact is that half of all prisoners are back in prison within two years. It is time to try a different approach and that is what the Lord Chancellor is doing.

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Q8. [900935] Chris Kelly (Dudley South) (Con): Manufacturing business Petford Tools in my constituency accessed the regional growth fund earlier this year, creating 23 jobs as a result. Will my right hon. Friend join me in congratulating managing director Melvin Sinar and major customers Jaguar Land Rover, Bentley and JCB on that success, and consider visiting the company with me on his next visit to the black country?

The Prime Minister: I would be delighted to make that visit with my hon. Friend. I have made visits with him in the past to look at what is happening in the black country in terms of greater job opportunities. That is part of the picture of a country where there are 1.4 million more people in private sector employment. In spite of the predictions that we would lose jobs, 1 million more people are in work in Britain today.

Mr Pat McFadden (Wolverhampton South East) (Lab): It is the first duty of any Government to protect the public. Since the Prime Minister decided deliberately to downgrade the country’s anti-terror laws, two suspects have used their Government-granted freedom to escape, the latest one clad in a burqa. Will the Prime Minister admit that that decision was a hugely irresponsible mistake, and in particular will he revisit the sunset clause that will lift the remaining regime on the remaining suspects in January?

The Prime Minister: I do not accept what the right hon. Gentleman says. The facts are these: under the control order regime, seven people absconded under control orders. Control orders were being endlessly hacked away at by the courts, so we needed to put a new system in place—a system that has the confidence of the police and the security services. Of course we will look at every single thing we can do to make sure the system is as good and robust as it can be, but we in this House should be frank that we are dealing with people who we are not able to charge and lock up, many of whom we would like to throw out of our country but currently cannot. We have to have some sort of regime like this, but we will do everything we can to make it as robust as possible.

Q9. [900937] David Morris (Morecambe and Lunesdale) (Con): Will my right hon. Friend the Prime Minister join me in congratulating DST Engineering in Morecambe? It exports and fabricates metal products throughout the world and has contributed to the 15% drop in youth unemployment in my constituency. Overall, unemployment has fallen by 10% in the past three months alone. Is that not in stark contrast to the gloomy economic predictions of the Labour party, and will my right hon. Friend visit DST Engineering with me?

The Prime Minister: My hon. Friend does an excellent job standing up for the people of Morecambe, and across the north-west private sector employment is up by 45,000 since 2010. The number of people claiming jobseeker’s allowance is down by 29,000. He is right that the Labour party predicted we would lose 1 million jobs, but the answer is the complete opposite. There are 1 million more people working in our country, and it is about time Labour apologised for prediction after prediction being wrong.

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Q10. [900938] Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab): Last month, Tory councillor Abdul Aziz was at an invite-only party at No. 10. Councillor Aziz is subject to an arrest warrant in Pakistan in connection with a brutal murder. After shaking this man’s hand and having photos taken at No. 10 with this gentleman, would the Prime Minister now like to say that he thinks he should return to Pakistan and face justice?

The Prime Minister: I am looking carefully into this case and I will write to the hon. Gentleman.

Sir Peter Tapsell (Louth and Horncastle) (Con): May I ask the Prime Minister whether he is of the opinion that the intelligence services of some countries may be dangerously out of political control? Is he confident that he is kept fully informed of all sensitive external initiatives taken by our services?

The Prime Minister: I do not want to break the rule of not commenting on intelligence issues, but to answer my right hon. Friend’s question as directly as I can, I have looked very carefully at the governance that we have in the UK for our intelligence services, the work of the Intelligence Services Commissioner and the Intelligence and Security Committee, and the oversight, particularly by the Home Secretary and the Foreign Secretary. I think we have a good system in our country, and to answer my right hon. Friend’s question, yes, I am fully involved in these decisions.

Q11. [900939] Angela Smith (Penistone and Stocksbridge) (Lab): Two years ago, the Prime Minister rightly agreed that extra resources should be made available to assist in the search for Madeleine McCann and yet, only months later, he turned down a similar request from Kerry Needham, my constituent, whose son Ben is still missing after 22 years. Will the Prime Minister please think again and respond positively to my recent letter to him by making extra resources available to help a desperate mother to search for her son?

The Prime Minister: This is an absolutely heartbreaking case—the whole country has followed it over the years. I will look carefully at the letter the hon. Lady has written to me. Obviously, it is important that the police make such decisions themselves. Governments should always stand by to help, which is what happened in the Madeleine McCann case, but I will look at what the hon. Lady says and see what I can do.

Mr Mike Hancock (Portsmouth South) (Ind): Will the Prime Minister elaborate on his earlier statement on what the Government will put in play in terms of mediation and mitigation of the dreadful effects of the 940 core jobs at BAE in the dockyard in Portsmouth, and the many thousands of jobs in its supply chain, that are going? I should be grateful if he would expand on that fairly rapidly.

The Prime Minister: I will expand a little but leave the Defence Secretary to give a detailed answer. As I have said, what is happening in Portsmouth is this: the current work force of 12,000 in defence-related and shipbuilding activities will go down to 11,000. The Ministry of Defence will invest £100 million in Portsmouth in vital

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ship-servicing work. As the hon. Gentleman knows, many more people have been involved in ship servicing than in shipbuilding. Of course, some of the largest and best-equipped warships we have ever had in our country will be based and hosted at Portsmouth—the two aircraft carriers and the Type 45 destroyers in particular—which will mean a lot of work for Portsmouth and for our naval base there for many, many years to come.

Q12. [900940] John Cryer (Leyton and Wanstead) (Lab): Many women face discrimination at work when they become pregnant, so how will charging them £1,200 to go to an industrial tribunal help them? Before the Prime Minister has another attack of the Lyntons and starts talking about all the dreadful trade unionists on the Opposition side of the House, I should like to make it clear that I am a trade unionist and damn proud of it.

The Prime Minister: Millions of people in our country can be very proud of being trade unionists. The problem is that they are led so badly by bully-boys—[Interruption.] They are led so badly by people who seem to condone intimidating families, intimidating witnesses and intimidating the Leader of the Opposition. That is what we have come to with Unite. They pick the candidates, choose the policy, pick the leader and bully him till they get what they want.

Mr Speaker: Order. Actually, I think the question was about tribunals, if memory serves.—[Interruption.] No it is a good idea to remember the essence of the question that was put.

Q13. [900941] Charlotte Leslie (Bristol North West) (Con): Judicial reviews can be valuable in enabling communities to have their say, but what steps is the Prime Minister taking to prevent what is happening in Bristol, where a small, unrepresentative group is using judicial review, costing the local taxpayer thousands of pounds, to prevent the building of a badly needed stadium for Bristol Rovers football club, which Bristolians badly want, and which would bring game-changing benefits to our city?

The Prime Minister: My hon. Friend has been campaigning very hard and relentlessly to provide Bristol Rovers with the ground they need. I commend her for that. Obviously, there has been an issue with judicial reviews. Judicial reviews play a role in holding the Government to account, but I share her frustration that judicial review has become something of an industry. We need to fix that and have taken a series of steps to try to do so.

Several hon. Members rose

Mr Speaker: Order. I call Mr David Winnick—[Interruption.] Order. Can we have a bit of hush and a bit of courtesy? The hon. Gentleman happened not to hear me call him, which is perfectly understandable.

Q14. [900942] Mr David Winnick (Walsall North) (Lab): One of the domestic objectives of the second world war was to bring about a fairer society in Britain. Is the Prime Minister aware how wrong it is for him and the Chancellor, who have never had any form of

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financial insecurity, to pursue policies that hit the most hard-pressed and most vulnerable—the millions of people in our society, many of whom are on low pay, who find it difficult to feed and clothe their children? What is happening is totally unacceptable, and I find it contemptible.

The Prime Minister: What I would say to the hon. Gentleman is that we have taken 2.4 million of the poorest people in our country out of income tax altogether. The figures simply do not fit with the story he is trying to tell. Inequality is at its lowest level since 1986—fact. The pupil premium is directing more money to the poorest children in our schools—fact. Applications from disadvantaged children to universities have gone up, not down—fact. There are fewer workless households—[Interruption.] I am keen to answer the question, and it is a very direct answer. Workless households down by 425,000, payday lending regulated properly for the first time and, yes, a proper consultation on zero-hours contracts—those are the actions that we are taking to build a fairer country and instead of complaining about them, the hon. Gentleman should be backing them.

Mr Peter Bone (Wellingborough) (Con): On 3 September I wrote to the prisons Minister requesting a meeting to discuss the future of HMP Wellingborough. I received no response to that request. This week, I received a letter from the prisons Minister saying that the site of Wellingborough prison was to be sold. I do not understand that, as Wellingborough prison was the third cheapest in the country to run. Would the Prime Minister meet me and concerned constituents to discuss the matter?

The Prime Minister: What I will do is arrange very quickly for my hon. Friend to have that meeting with the prisons Minister that he asked for, so that he can discuss the future of the prison estate. It is important that we modernise it and make sure that we get good value for money for the people whom we keep in prison, and for the taxpayer.

Mrs Sharon Hodgson (Washington and Sunderland West) (Lab): The Prime Minister has just been boasting again about 1 million extra jobs. Can he therefore explain why in my constituency the number of people unemployed for more than two years has risen by 350% in the last year alone? It is now the worst figure in the country. Nine of the 10 worst constituencies on this measure are in the north-east, including all three Sunderland seats. Is that because they are the same old Tories, who do not care about the north-east?

The Prime Minister: We are seeing across our country, including in every region, more job opportunities, more people involved in our private sector and the claimant count coming down. In the north-east, for example, we have the new Hitachi factory, which will make a real difference, and the expansion of Nissan, which is doing extremely well. But I totally accept that we need to do more to keep our economy growing, to keep people employed and to grow the number of jobs. I am certain about one thing: we will not do that if we put up borrowing or taxes. The fact is that today Labour is the greatest risk to our recovery.

Sir Robert Smith (West Aberdeenshire and Kincardine) (LD): Can the Prime Minister confirm that in the

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review of levies on energy bills the fairness of the funding process will be the priority, and that the Government still support vital measures to insulate people’s homes to ensure that the fuel-poor can keep their houses warmer in winter?

The Prime Minister: Of course we want to see insulation programmes and of course we want to help people, especially vulnerable households, to keep their bills down. But we should be looking at every subsidy and every levy and ensuring that it is value for money and that it is not in place for a moment longer than it is needed.

Alison McGovern (Wirral South) (Lab): The Chancellor of the Exchequer would not answer this question yesterday, so let me give the Prime Minister a try. How many of the so-called new private sector jobs that he crows about are people on zero-hours contracts?

The Prime Minister: I do not have the figure for that, but the fact is that there are more people at work in our economy than ever before, two thirds of those jobs have been full-time jobs, and while we are on the subject of pay, perhaps it is a good moment to recognise that Labour-controlled Doncaster does not pay the living wage, whereas Conservative-controlled London does.

Peter Luff (Mid Worcestershire) (Con): On a difficult day for UK shipbuilding, is it not more important than ever to tell our young people that modern engineering offers varied and rewarding careers, and that we urgently need many more engineering apprentices and graduates—the message both of this week’s “tomorrow’s engineers” week, and of Monday’s report from the Department for Business, Innovation and Skills chief scientist, Professor John Perkins?

The Prime Minister: My hon. Friend is right about that, and he has campaigned long and hard to encourage respect for engineering and for more young people to study engineering. We are seeing a growth in the number of young people studying engineering, but it is true that there are still engineering jobs on the skills shortage list of the Migration Advisory Committee. That is a rebuke to our country, and we need to get more young people studying maths and science at school and more people studying engineering at our universities.

Susan Elan Jones (Clwyd South) (Lab): Last year, bankers’ bonuses grew 91% faster than wages for ordinary working people, despite the Prime Minister’s assurances that this would not happen. Will the Prime Minister tell us: is he unwilling to act or just a bit useless at being Prime Minister?

The Prime Minister: The point the hon. Lady should bear in mind is that bonuses were 85% higher when the shadow Chancellor was sitting in the Treasury. It is this Government who are making sure that people—[Interruption.]

Mr Speaker: Order. I want to hear the Prime Minister’s answer, and so does the House.

The Prime Minister: In fact, we inherited a situation where cleaners were paying higher tax rates than the hedge fund managers they were working for. If the hon. Lady wants to see someone who is useless, she should look at her own Front Bench.

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Aircraft Carriers and UK Shipbuilding

12.36 pm

The Secretary of State for Defence (Mr Philip Hammond): With permission, Mr Speaker, I would like to make a statement on the future shipbuilding programme for the Royal Navy and, in particular, the aircraft carrier project.

As the House will know, the previous Government entered into a contract with the Aircraft Carrier Alliance, an industrial consortium led by BAE Systems, to build two 65,000-tonne aircraft carriers—the largest ships in the Royal Navy’s history. In the strategic defence and security review 2010, the incoming Government, faced with the challenge of dealing with a £38 billion black hole in the Ministry of Defence budget, was advised that under the terms of the contract it would cost more to cancel the carriers than to build them. The Public Accounts Committee has subsequently described that contract as “not fit for purpose” and identified, in particular, the misalignment of interests between the MOD and the contractors, manifested in a sharing arrangement for cost overruns which sees, at best, 90p of every pound of additional cost paid by the taxpayer, and only 10p paid by the contractor, as the root cause of the problem.

I agree with the PAC’s analysis. In 2012, I instructed my Department to begin negotiations to restructure the contract better to protect the interests of the taxpayer and to ensure the delivery of the carriers to a clear time schedule and at a realistic and deliverable cost. Following 18 months of complex negotiations with industry, I am pleased to inform the House that we have now reached heads of terms with the alliance that will address directly the concerns articulated by the PAC and others. Under the revised agreement, the total capital cost to Defence of procuring the carriers will be £6.2 billion, a figure arrived at after detailed analysis of costs already incurred and future costs and risks over the remaining seven years to the end of the project. Crucially, under the new agreement, any variation above or below that price will be shared on a 50:50 basis between Government and industry, until all the contractor’s profit is lost, meaning that interests are now properly aligned, driving the behaviour change needed to see this contract effectively delivered.

The increase in the cost of this project does not come as a surprise. When I announced in May last year that I had balanced the defence budget, I did so having already made prudent provision in the equipment plan for a cost increase in the carrier programme above the £5.46 billion cost reported in the major projects review 2012 and I did that in recognition of the inevitability of cost-drift in a contract that was so lop-sided and poorly constructed.

I also made provision for the cost of nugatory design work on the “cats and traps” system for the carrier variant operation and for reinstating the ski-jump needed for short take-off and vertical landing operations. At the time of the reversion announcement, I said that these costs could be as much as £100 million; I am pleased to tell the House today that they currently stand at £62 million, with the expectation that the final figure will be lower still.

Given the commercially sensitive nature of the negotiations with the Aircraft Carrier Alliance, I was not able publicly to reveal these additional provisions in

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our budget, since to do so would have undermined our negotiating position with industry. However, the MOD did inform the National Audit Office of these provisions, and it is on that basis that it reviewed and reported on our 10-year equipment plan in January this year.

I am therefore able to confirm to the House that the revised cost of the carriers remains within the additional provision made in May 2012 in the equipment plan; that as a result of this prudent approach, the defence budget remains in balance, with the full cost of the carriers provided for; and that the centrally held contingency of more than £4 billion in the equipment plan that I announced remains unused and intact, 18 months after it was announced.

In addition to renegotiating the target price and the terms of the contract, we have agreed with the Aircraft Carrier Alliance to make changes to the governance of the project better to reflect the collaborative approach to project management that the new cost-sharing arrangements will induce and to improve the delivery of the programme. The project remains on schedule for sea trials of HMS Queen Elizabeth in 2017 and flying trials with the F-35B commencing in 2018.

Overall, this new arrangement with industry will result in savings of hundreds of millions of pounds to taxpayers, and I pay tribute to the team of MOD officials, led by the Chief of Defence Matériel, who have worked hard over a long period of time to deliver this result.

In reviewing the carrier project, we also reviewed the wider warship-building programme within the context of the so-called terms of business agreement, or TOBA, between the MOD and BAE Systems signed in 2009 by the last Government. As the House will know, we remain committed to the construction of the Type 26 global combat ship to replace our current Type 23 frigates, but the main investment approval for the Type 26 programme will not be made until the design is more mature, towards the end of next year.

There is, therefore, a challenge in sustaining a skilled shipbuilding work force in the United Kingdom between the completion of construction of the blocks for the second carrier and the beginning of construction of the Type 26 in 2016. Under the terms of the TOBA, without a shipbuilding order to fill that gap, the MOD would be required to pay BAE Systems for shipyards and workers to stand idle, producing nothing while their skill levels faded. Such a course would add significant risk to the effective delivery of the T26 programme, which assumes a skilled work force and a working shipyard to deliver it.

To make best use of the labour force, therefore, and the dockyard assets, for which we would anyway be paying, I can announce today that we have signed an agreement in principle with BAE Systems to order three new offshore patrol vessels for the Royal Navy, based on a more capable variant of the River class and including a landing deck able to take a Merlin helicopter. Subject to main-gate approval in the coming months, these vessels will be constructed on the Clyde from late 2014, with the first vessel expected to come into service in 2017.

The marginal cost of these ships, over and above the payments the MOD would anyway have had to make to keep the yards idle, is less than £100 million, which will be funded from budget held within the equipment plan

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to support industrial restructuring. This order is good news for the Clyde. It will sustain around 1,000 jobs as the carrier construction work reaches completion, secure the skills base there and ensure the ability to build the Type 26 frigates in due course, while turning the MOD’s liabilities under the TOBA into valuable capability for the Royal Navy.

I turn now to the final part of this statement. The House will be aware that, this morning, BAE Systems has announced plans to rationalise its shipbuilding business as the surge of work associated with the carriers comes to an end. Regrettably, that will mean 835 job losses across Filton, the Clyde and Rosyth, and the closure of the company’s shipbuilding yard in Portsmouth. The loss of such a significant number of jobs is, of course, regrettable, but was always going to be inevitable as the work load associated with the carrier build came to an end.

I want to pay tribute to the men and women on the Clyde and in Portsmouth who have contributed so much to the construction of the Royal Navy’s warships—including, of course, the Queen Elizabeth class carriers. BAE Systems has assured me that every effort will be made to redeploy employees, and that compulsory redundancies will be kept to a minimum. The company is now engaged in detailed discussions with the unions representing the work force in Portsmouth and on the Clyde.

I know that the loss of shipbuilding capability will be a harsh blow to Portsmouth. The Government and the city council, together with Southampton, are in discussions about a city deal package for the area, to boost growth and jobs in the local economy. We expect to be able to make an announcement on that shortly. I can also announce that Admiral Rob Stevens, the former chief executive of the British Marine Federation, will chair a new maritime forum to advise the Solent local enterprise partnership on its maritime vision.

Despite the end of shipbuilding activity, Portsmouth will remain one of two home ports for the Navy’s surface fleet, and will continue to undertake the vital support and maintenance work that sustains our most complex warships, including the Type 45 destroyers and, of course, the aircraft carriers themselves. Indeed, with both carriers based in Portsmouth, the tonnage of naval vessels based in the port will be at its highest level since the early 1960s, sustaining a total of around 11,000 jobs in the dockyards and related activities. To support this level of activity, I can announce today an investment of more than £100 million over the next three years in new infrastructure in Portsmouth to ensure that the carriers can be properly maintained and supported.

The Chair of the Public Accounts Committee has previously described the carrier programme as

“one of the most potent examples of what can go wrong with big projects in the public sector”.

That is the legacy that this Government inherited: a carrier contract that was not fit for purpose and a TOBA that would have required the MOD to pay BAE Systems to do nothing while our shipbuilding skills base faded away. These announcements today put that legacy behind

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us. They will secure the future of British warship building, set the aircraft carrier project on a new path with clear alignment between industry and the MOD, and deliver important new capability in the form of offshore patrol vessels for the Royal Navy. I commend this statement to the House.

12.47 pm

Vernon Coaker (Gedling) (Lab): I thank the Secretary of State for his courtesy in providing me with early sight of his statement. It is with a heavy heart that I, and I think all Members, listened to what he had to say. However, it was important that he came to the House today, and I am glad that he did so. Let me say at the outset that when the Government do the right thing on defence, especially when difficult decisions need to be taken, they will have our support. We will always say and do what we believe to be in the interests of Britain and its people. These are complicated and detailed matters, and it will take some time to examine the consequences of today’s announcements by BAE Systems and the Government.

The Secretary of State focused today on the aircraft carrier programme. May I remind him that his party supported that programme? From what he was saying, that might have been difficult to believe. He also talked about the start of the Type 26 programme and the interim work. I will return to those subjects in a moment.

My first thoughts, and those of all hon. Members, are with the employees who are facing job losses today, and with their families and the communities in which they live. Britain’s shipbuilders are the best in the world. They have proved that over decades and even centuries, and this is a difficult day for all those people who take pride in our maritime prowess and the history of our nation. Will the Secretary of State join me in praising those who give such great and dedicated service to our country?

What discussions has the Defence Secretary’s Department had with the Department for Business, Innovation and Skills about providing support to ensure that the unique abilities of our skilled work force, particularly in Portsmouth, are not lost? I do not mean over the last week or a number of days; I mean over the last three and a half years of this Government. It seems to me that it is only since news of the potential job losses were leaked out that the Government have given any thought to this matter. In fact, in February 2012, the White Paper, “National Security Through Technology”, said that the MOD

“does not consider wider employment, industrial, or economic factors in its value-for-money assessments.”

Does the right hon. Gentleman still agree with that statement?

Will the Defence Secretary join me in praising the role of the trade unions which have worked closely with the company and have approached these very serious issues with maturity and shown leadership in representing their members across the whole of this United Kingdom? Will he confirm that the Government need to use this opportunity to set out a clearer path to help the UK-based defence industry play its part in modernising both our industrial base and our equipment programme? Does he agree that a strong UK defence industry can be both responsive to the changing threats we face, as well as part of a vibrant, advanced and high-skilled private sector, stimulating jobs and growth?

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The Secretary of State made much of his repeated claim that the Government inherited a £38 billion black hole. That figure does not stand up to scrutiny. He has never explained how he got to that figure and it has never been accepted by any credible organisation, including the National Audit Office, which said it was impossible to arrive at such a figure. Can he tell us how he arrived at that figure and what assumptions he used to produce it?

On the aircraft carriers, the Secretary of State has trumpeted the new agreement to split 50:50 with the industry any overrun on the target cost. Will he confirm that any new changes by the MOD, such as the debacle over the “cats and traps” for fighter jets, which were changed and changed back again—the right hon. Gentleman now says it wasted only £62 million—will be fully met by the MOD? The fact that future costs will be split 50:50 is welcome. Most of the risk has already passed, as evidenced by the fact that the anticipated cost of the programme has almost doubled. And, of course, the 50% that the Government will meet still runs to hundreds of millions of pounds. It does not take an accountant to work out that 50% of £800 million—the reported rise in costs this week—is a lot of money for the taxpayer. Will he confirm that he expects no further rises in the cost of the aircraft carriers?

The cost of the restructuring that has been outlined will be borne by the Ministry of Defence. Will the Secretary of State tell us how much that will be and how it will be paid for?

We welcome the fact that skills will be maintained by the development and construction of the three offshore patrol vessels announced by the Defence Secretary today. Will he give a little more detail about how much these will cost, and will he outline what plans he now has for the second aircraft carrier and whether it is his intention to mothball it?

There has been a lot of conjecture about the role that the politics of the Scottish referendum played in the decision to keep shipbuilding in Govan. Will the Secretary of State confirm, as I and everyone else believe, that today’s decisions were taken on the basis of what is in Britain’s best interests and what will sustain the skills of the work force, thus maintaining the future of our shipbuilding industry and our country’s defence? Will he outline what safeguards are in place if Scotland votes to leave the United Kingdom? None of us wants to see that, but we need to know what plans he has for all eventualities. We must retain a sovereign shipbuilding capability for this country.

Finally, will the Defence Secretary join me in saying that whatever the difficulties we experience, this country is a proud maritime nation? We have a proud, dedicated Navy, serviced by a proud, dedicated shipbuilding work force. We must maintain that across the United Kingdom, and retain the ability to build the warships we will need to defend our island, protect our interests across the world and keep us secure. That is both a task and a duty for us all.

Mr Hammond: I appreciate the hon. Gentleman’s measured tone and I join him in congratulating once again the work forces on the Clyde and in Portsmouth on the excellent naval vessels that have been built for the Royal Navy over the last few years, including the carrier that remains in build.

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I know the hon. Gentleman is new to his post, but he is really going to have to check some of the history before he starts making sweeping statements. He tells me that when the carrier programme was announced, the cost was £3.6 billion. Almost as soon as it had been announced, the then Secretary of State announced a two-year delay, which the National Audit Office says drove a further £1.6 billion into the cost of the carrier. The largest single element of cost increase in this programme was a deliberate act by the then Labour Government to delay the project by two years.

The hon. Gentleman asks me when we first engaged with the Department for Business, Innovation and Skills about the challenges of maintaining a skilled work force. He suggests that that has happened only in the last few days. I can tell him that the Minister of State, Department for Business, Innovation and Skills, my right hon. Friend the Member for Sevenoaks (Michael Fallon), who is in his place on the Front Bench, sat down a year ago to discuss this subject and has been in discussions with the local authorities in the area for at least a year over how to deal with the challenges that these inevitable changes present.

The hon. Gentleman asked me about the union response. I look forward to seeing the union response in full. I understand that, so far, the unions at national level have been constructively engaged with what they understand is an effort to save the shipbuilding industry in the UK. They recognise that the level of employment in naval shipbuilding represented a surge around the carrier project that was never going to be sustainable in the long term. The challenge now is to protect the skills base as we downsize the industry.

The hon. Gentleman asks me about the £38 billion black hole. We could have a very long conversation about that, but put simply, it is the difference between the projected budget available and the commitments that the previous Government had announced. I have set that out in detail. Because the hon. Gentleman is new to his post, I would be happy to write to him and set it out again for his benefit. I would be happy to discuss it with him at any time in the future.

The hon. Gentleman asks about the consequences of the STOVL—short take-off and vertical landing—reversion. If we were to change the specification in the future, the MOD as the customer would, of course, have to accept the consequences, but we are confident that the design of the aircraft carriers is now mature. The mistake made in 2008—it was a small one—was that the contract was placed before the ship had been designed. Unfortunately—I kid my hon. Friends not—anybody who has ever tried to place a contract to build a house before the house has been designed will know that that is a licence to print money for the contractor.

The hon. Gentleman asks whether I can guarantee that there will be no further rises on the £6.2 billion price. Of course I cannot give him an absolute guarantee, but I can tell him that with every pound of additional cost being shared as 50p for the Government and 50p for the contractors, we will at least have the contractor’s serious attention to try to maintain control over the project—something that we did not have under the contract construct that the last Labour Government left us.

The hon. Gentleman asks how we have paid for the additional costs. If he had been paying attention to the statement, he would know that I told him that the full

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costs announced today were provided in the balanced budget equipment programme that I announced in May 2012.

Yes, the hon. Gentleman is absolutely right that we are acting as the Government of the United Kingdom in the best interests of the whole of the United Kingdom, looking at where best to deliver Britain’s warship building capability in the United Kingdom in order to make it sustainable and cost-effective in the future.

Mr James Arbuthnot (North East Hampshire) (Con): My right hon. Friend has said that “with both carriers based in Portsmouth, the tonnage of naval vessels based in the port will be at its highest level since the early 1960s”, which is excellent news. Does that mean that the Government have reached the entirely sensible decision to bring both carriers into service?

Mr Hammond: As my right hon. Friend knows, that decision will be made in the strategic defence and security review 2015. Whether the decision is to bring the ship into service or to mothball it, it will be kept at Portsmouth.

Anas Sarwar (Glasgow Central) (Lab): At the time of the Grangemouth crisis, the First Minister of Scotland said that we should not try to play constitutional politics with such a serious issue, and I hope that he applies the same principle now to what is a very concerning time for workers in Govan.

I welcome the Secretary of State’s announcement of the new contract, but that will give little comfort to workers in Portsmouth, Govan, Scotstoun, and Rosyth who will be losing their jobs during this difficult period. Will the Government give us a pledge that they will work with employees throughout the United Kingdom who are affected by what he has announced, with the trade unions and with the company to ensure that those who have lost their jobs are supported, while also trying to find a sustainable long-term future for shipbuilding that will protect jobs and investment in the UK?

Mr Hammond: What I have announced today will provide that sustainable long-term future for shipbuilding. We have answered the $64,000 question of how we would bridge the gap between completion of the aircraft carrier blocks and the commencement of the Type 26 build programme by commissioning three additional ocean-going patrol vessels which will be built on the Clyde. We have a sustainable naval shipbuilding industry in the United Kingdom, as of today’s announcement.

Of course it is regrettable that jobs will be lost. That is a function of the surge in the size of the industry that is needed to deliver these very large carriers. We will work across Government with the unions, communities and other stakeholders who will be affected to ensure that the transition is as smooth as possible.

Caroline Dinenage (Gosport) (Con): The end of shipbuilding in Portsmouth is devastating for a community with a record of more than 800 years of proud service to the Royal Navy. Does the Secretary of State know when we shall hear of plans to help to ease the pain of this decision—particularly in relation to the city deal—and

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does he know what conversations have taken place with Portsmouth city council about the timing of today’s announcement?

Mr Hammond: My hon. Friend is, of course, right. As I acknowledged in my statement, the decision will be very hard for people in Portsmouth to accept. However, we should put this in context: 940 jobs will be lost, but 11,000 will remain in dockyards-related activity in Portsmouth, which will be the largest centre of surface maritime support in the United Kingdom—and that will continue into the future.

We are engaged in discussions with both Portsmouth and Southampton city councils about the city deal proposal, and I am advised that a statement is likely to be made very soon, as soon as those negotiations have concluded.

Jim Sheridan (Paisley and Renfrewshire North) (Lab): As a former shipyard worker, let me say on behalf of the men and women in our British shipyards that, although they take pride in what they build, they do not necessarily care what they are building. Those at BAE Systems must learn to explore the commercial market, because they will not be able to sustain the company if it is wholly dependent on MOD contracts.

As for the question of industrial relations, we should contrast what is happening with the trade unions at BAE Systems with what has happened at Grangemouth. One employer respects its employees, and the other does not.

Mr Hammond: I am happy to report that relations in the shipbuilding industry between management and unions are good and constructive. The unions understand the challenge that the industry faces, and they have worked with the management to address it. That sometimes means that union officials must make tough decisions as well, because they know that the industry cannot be sustained at its current size.

The hon. Gentleman alluded to the diversity of the shipbuilding industry. We hear a great deal about how shipbuilding will be sustained through the commercial market and the third-nation market, including the market for warships, but I am afraid I have seen no evidence to suggest that we are able to compete in what is a very aggressive global market for commercial shipping. I think that the shipbuilding industry in this country will be primarily dependent on Royal Navy orders placed in the United Kingdom, because of the sovereign requirement for us to have warship building capability.

Mr Mike Hancock (Portsmouth South) (Ind): Can the Secretary of State explain why it was decided to transfer the existing work that was commissioned in Portsmouth away from the yard, so that the employees there will have no opportunity to complete the construction of the aircraft carriers? Can he also assure us that the MOD will not seek to claw back any of the money that is made available to Portsmouth through the city deal?

Mr Hammond: Let me respond first to the question about the aircraft carriers. Today BAE Systems announced its plan for rationalising the industry, as it must do under the TOBA in order to sustain warship building capability in the future. The challenge for us is to bridge

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the gap between the completion of the carrier and the start of the Type 26 programme. By moving three carrier blocks to the Clyde, along with the manufacture of the OPVs, we shall be able to sustain warship building on the Clyde and to maintain its viability into the future.

I should be happy to discuss the city deal negotiations with the hon. Gentleman, who, I know, is well acquainted with the affairs of Portsmouth city council. I understand that the MOD is prepared to make land available as part of an overall scheme which would create investment and employment opportunities in the city.

Mr Ian Davidson (Glasgow South West) (Lab/Co-op): As the Member of Parliament who represents Govan Shipbuilders, I welcome the order that has been placed there for the OPVs. It is a great tribute to the skills, commitment and hard work of the work force, both management and staff. As one of my colleagues observed earlier, Govan shipbuilder is no INEOS.

May I also point out that, given that this is an order from the Royal Navy, it would not have been available to a separate Scotland? Regrettably, the Minister seems not to have placed a firm order for the Type 26 frigates to be built on the Clyde. Will he confirm that that will not happen until we know the result of the referendum? Will he also confirm that work is being transferred from Portsmouth and England to Scotland in order to bridge the gap between the end of the aircraft carrier building programme and the beginning of the Type 26 programme?

Mr Hammond: As I have just said to the hon. Member for Portsmouth South (Mr Hancock), the company intends to transfer three blocks to the Clyde so that the flow of work will be continuous until we are ready to cut steel on the OPVs at the end of 2014.

We will not repeat the mistake that the last Government made with the aircraft carriers of placing an order for a ship that has not yet been designed. That would be like signing a blank cheque to BAE Systems. Much as I admire and appreciate that company’s contribution to both our economy and our defence, I have no interest in signing blank cheques to it.

Mr Gary Streeter (South West Devon) (Con): I congratulate my right hon. Friend on the skilful way in which he has reshaped the aircraft carrier contract and protected the skills base in the United Kingdom. Will he confirm that, in shaping the special package of measures for Portsmouth—which I support—he has not taken work away from Plymouth dockyard, including the maintenance of ships or future base-porting of the Type 26?

Mr Hammond: Funnily enough, I anticipated the possibility of that question from my hon. Friend. I can assure him that nothing that I have announced today will have any direct impact on Plymouth.

Angus Robertson (Moray) (SNP): I thank the Secretary of State for giving me advance sight of his statement, and commend him for making it today. It was originally to be made tomorrow, but I think it right for the shipyard workers and their families to have certainty, and I know that he has done the right thing.

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I am sure that the Secretary of State’s thoughts are with all shipworking families, many of whom are learning just a few short weeks before Christmas that their jobs are on the line. Earlier today, BAE Systems stated that the appropriate place for frigates to be built was Glasgow. Does he agree with that?

Mr Hammond: I am grateful to the hon. Gentleman, because his question has prompted me to acknowledge that my statement was made today in response to media stories which had created speculation that needed to be dealt with. I apologise to the Opposition for having to make the statement on an Opposition supply day.

I am obviously not responsible for the statement made by BAE Systems, but the company’s judgment, on the basis of value for money, is that the Clyde is the best place in which to build the Type 26 global combat ship, and the MOD concurs with that judgment.

Sir Nick Harvey (North Devon) (LD): This is a sad day for Portsmouth, given its proud heritage of supporting the Navy, and the decision has been a bitter pill for the workers there and elsewhere to swallow. We owe them all our thanks. However, was there not a certain inevitability about the coming of a day on which these painful judgments would have to be made? Oversupply of naval shipbuilding capacity is a problem with which successive Governments have had to deal, and the TOBA gave BAE Systems the opportunity to make a commercial judgment. Will the Secretary of State confirm that the judgment was commercial rather than political? While I can see the elegance of placing the OPV contract on the Clyde, will other British shipyards get the opportunity to bid for this? It is a small enough job that plenty of them would be able to handle.

Mr Hammond: No, the contract will be placed under the overall umbrella of the terms of business agreement we have with BAE Systems, and, as I made clear in my announcement, we are effectively ordering the OPVs to soak up money we would have been paying in any case to have these yards standing idle, and in doing so significantly de-risking the start-up of the Type 26 programme by making sure the skills base remains in place in Glasgow.

I share my hon. Friend’s view, however, that there is a certain inevitability about the announcement we have made today. Governments have put off the moment, and the carrier order represented a pretty massive 130,000-tonne postponement of the moment, but we cannot alter the inevitable fact that we do not have a large enough Navy to sustain a multi-yard shipbuilding industry in the UK.

Mr John Denham (Southampton, Itchen) (Lab): The record will show that the last Labour Government secured south-coast shipbuilding with a share of the destroyer order and then of the carrier programme. Today’s crisis has been coming for some time. Does the Secretary of State’s statement not confirm both that no effort has been made by the Government in the past three years to win extra orders for the Portsmouth shipyard and that work will be transferred from Portsmouth to other shipyards, hastening its closure? Does the Secretary of State understand why many in southern England feel they have been sold down the river today by a Government whose attention has been elsewhere?

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Mr Hammond: No, and, frankly, travelling around the world in support of UK defence exports as I do, I should not be lectured by someone who was a Minister in the last Government, which completely neglected the UK defence industry—failed to travel and failed to engage with potential customers around the globe. That is a completely ludicrous suggestion from the right hon. Gentleman. It is not the Government’s job to win orders, whether for warships or aircraft. It is the Government’s job to support the industry in doing what it has to do, and we have been doing just that, and I can tell the right hon. Gentleman that I myself and my colleagues have visited countries as diverse as Brazil and Australia in pursuit of naval shipbuilding orders to support those yards.

Oliver Colvile (Plymouth, Sutton and Devonport) (Con): A strong Navy is good for both Portsmouth and Plymouth. May I urge my right hon. Friend to ensure that any changes to the TOBA will not hamper or do damage to Devonport in my Plymouth, Sutton and Devonport constituency? Will he also look at whether the other vessels that are being commissioned could potentially be base-ported in Plymouth?

Mr Hammond: No decision has yet been made about the location of the base port for the vessels I have announced today. Just to be clear, what this announcement will do is effectively suspend the TOBA for the duration of the period when the OPVs are being built and then see its final demise upon the placing of the order for Type 26 global combat ships. I hope we have seen the very last TOBA payment being made to the industry by the MOD.

Katy Clark (North Ayrshire and Arran) (Lab): Politics is about choices, of course. What impact has the funding of the Trident replacement had on the decisions that have led to the announcements of job losses today?

Mr Hammond: None. The Trident programme is a capital programme. The constraining factor in terms of the Royal Navy is far more around operating costs and crewing than the capital costs of platforms. We have to make sure we have a Navy that is sustainable and that we can afford to operate and crew in an increasingly tight market for engineering skills, where we often have to pay premium rates to get people with the appropriate skills. There is no point in building platforms we cannot afford to put to sea.

Mr Andrew Tyrie (Chichester) (Con): The Secretary of State appears to have resolved a massive problem that he inherited, and he deserves our congratulations for that, although the closure of the Portsmouth yards will be a big blow for many of my constituents. Can he give an initial estimate of the likely scale of the compulsory redundancies and will he reiterate the assurance that he has already given once, that none of those jobs were lost to keep jobs in Scotland at a politically sensitive time?

Mr Hammond: I thank my hon. Friend for his comments. On the last point, the analysis of where best to build the Type 26 ships, which will have to be built to a very tight budget and a very tight timetable, was made by the company—endorsed by the MOD, but made by the company. I can tell him, as I think I said in the statement—

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or, certainly, as the Prime Minister said earlier on—that 940 job losses are anticipated at Portsmouth between now and the end of 2014 as a result of the decision to end shipbuilding. About 11,000 jobs in the dockyards and the supporting infrastructure will remain.

Sammy Wilson (East Antrim) (DUP): There is a great affinity, of course, between Northern Ireland and Scotland, and many people will feel for those in the shipbuilding industry who are losing their jobs. Will the Secretary of State give us an assurance that, through procurement policies and the promotion of UK industry, everything will be done to keep the shipyards in Scotland viable, and does he agree that this decision shows that Scotland is far better-off within the United Kingdom than in having some kind of pseudo-independence?

Mr Hammond: The hon. Gentleman is exactly right about that last point. If Scotland were not a part of the United Kingdom, I would certainly not have been able to make the statement and announcement I have made today.

Mr Mark Hoban (Fareham) (Con): This is a sad day for Portsmouth, and many of my constituents work in the dockyard. My right hon. Friend will know that the shipbuilding facility is in the heart of the naval dockyard. Is it possible to look at the footprint of the naval dockyard to see how more land might be released from it to expand the commercial port and create opportunities for jobs and growth in the commercial sector?

Mr Hammond: I am grateful to my hon. Friend, and he is right that the shipbuilding hall that will now become unused as a result of the announcements today is inside the secure dockyard perimeter. There have been discussions about how that could be carved out, and how security arrangements could be changed to accommodate its use. This is, of course, primarily a matter for the company that owns the shipbuilding hall, but I can confirm to my hon. Friend that we are looking at all options to support employment-generating activity both in the dockyard and on MOD land adjoining it.

Mr Frank Roy (Motherwell and Wishaw) (Lab): This is a catastrophic day for the families of 835 shipbuilders, and the reality is that there will be more job losses. How many jobs does the Secretary of State estimate will be lost in the service sector for the shipyards?

Mr Hammond: I have not got an estimate of the number of jobs in the wider economy, but I can say this to the hon. Gentleman: when the carrier project was announced and the Type 45 destroyers were being built, everybody—including, I believe, the hon. Gentleman—understood that we were benefiting from a surge of work that was very welcome but that was never going to be sustainable in the long term. Of course the day when that work comes to an end is regrettable, and the consequent redundancies are difficult, but this is not something that has come unexpectedly; it is something that has long been understood and anticipated, and the announcement we have made today is good news for the Clyde, and I would have thought the hon. Gentleman would have wanted to welcome it.

Dr Julian Lewis (New Forest East) (Con): Despite the Defence Secretary’s criticism of the contracts, does he accept that the restoration of carrier strike capability to the fleet is an absolute strategic necessity, and does he

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also accept that one reason for the loss of Portsmouth as a shipbuilder is that the last Government reduced the total number of frigates and destroyers from 35 to 19—and, regrettably, this Government have done nothing to reverse that?

Mr Hammond: My hon. Friend is factually correct: the last Government did, indeed, reduce the total number of destroyers to be built in the Type 45 programme, largely because of the hole that was opening up in the aircraft carrier budget due to the delay in the project that I mentioned earlier. He is right, too, that we can talk all day about the history of the placing of the order for these two very large ships—the largest ships the Royal Navy will ever have had—but the fact is that we are getting them: they are being built, and we are proud of them and we are going to make excellent use of them in projecting UK naval maritime power around the world.

Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op): The Secretary of State has repeatedly said that this day was expected, so what work has been done to look at diversification into other industries, particularly in the marine renewables sector, for these skilled workers? To follow up the point made by my hon. Friend the Member for Motherwell and Wishaw (Mr Roy), if that estimate of the knock-on effect has not been obtained, when will it be obtained?

Mr Hammond: As the hon. Lady probably knows, estimates of effects on the wider economy are never precise, although estimates can be made. I am happy to write to tell her our best estimate, but it will be just that—the best estimate. She will know that in Scotland the responsibility for wider industrial support and the promotion of employment opportunities rests with the Scottish Government, and I would expect them to be actively engaged in this programme.

George Hollingbery (Meon Valley) (Con): I thank the Secretary of State for his statement, although of course it is not welcome news for a number of my constituents who work at the Portsmouth dockyard. Mr Speaker, I hope that you will allow me a moment to pay tribute to the efforts of my hon. Friend the Member for Portsmouth North (Penny Mordaunt), who has worked tirelessly on this subject. She has spent an enormous amount of time trying to secure the future of shipbuilding in the UK and at meetings I have attended with her it seems that she has secured at least some change, in that the importance of the commitment to the new offshore patrol vessels should not be underestimated. She and I argued not only that we should build more warships, but that there should be regeneration support for the Solent area should the worst happen. We have got the former and it sounds as though we will get the latter. If so, will the Secretary of State ensure that the many small and medium-sized enterprises based in places such as my constituency and the others around Portsmouth are also able to access such support?

Mr Hammond: First, I am happy to join my hon. Friend in paying tribute to the tireless work that has been done by my hon. Friend the Member for Portsmouth North (Penny Mordaunt), who, since I have known her, has talked about almost nothing but the shipbuilding

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industry in Portsmouth. Let me confirm for him that we will do everything we can to ensure that the support package for Portsmouth will be put together in a way that genuinely diversifies the local economy. That is what is needed now, and that includes support for SMEs. I will make sure that my right hon. and hon. Friends in the Department for Business, Innovation and Skills are aware of his comments.

Thomas Docherty (Dunfermline and West Fife) (Lab): Given that BAE Systems has announced that there will be job losses at Rosyth and given the Secretary of State’s wider comments about ship maintenance, I am sure that he will be happy to have an urgent meeting with one of his Ministers and me to discuss the future of Rosyth. May I press him to say what will happen if Scotland chooses to become a separate nation in September next year? Will the Type 26 order stay on the Clyde?

Mr Hammond: The Type 26 order will not be placed until the design is mature, which will not be until towards the end of next year, and so the hon. Gentleman’s question is premature. A significant number of workers who are nominally based on the Clyde are being bussed on a daily basis to Rosyth to boost the work force during the carrier assembly phase, so the announcement made by BAE Systems should be read in that context. My understanding from Babcock is that the yard at Rosyth has a bright future with private sector work—offshore work—as well as with the programme to assemble both the Queen Elizabeth and the Prince of Wales, which itself will keep the yard busy until 2020.

Sir Edward Leigh (Gainsborough) (Con): Has Whitehall finally learned the lessons from what, from a public accounts point of view, must be one of the worst politically driven, stop-start contracts in our history? Will the Secretary of State assure us that never again will the Treasury insist on delaying a contract for one or two years to save money and end up with a cost of hundreds of millions of pounds more? Just so that the taxpayer knows exactly how much this has cost him, will the Secretary of State repeat what the carriers were supposed to cost originally and what they are now costing us, and when the planes were supposed to be flying operationally from them and when they will actually fly?

Mr Hammond: It is always a brave person who says that Whitehall has learned the lessons. I can certainly give my hon. Friend this commitment: as long as I am Secretary of State for Defence, we will not be placing any contracts for things that we have not designed and we will not be driving cost into projects by making announcements of delay that are simply driven by the exigencies of poor budgeting and poor financial control. He asked me to repeat the numbers. When the project was announced in 2008 it had a budget line attached to it of £3.6 billion, but of course when the previous Government first proposed the aircraft carrier project the budget was much less than that, at £2.25 billion. Nobody I have met, in the industry or in the Navy, ever believed the project could be built for £3.6 billion. There was a degree of fantasy accounting going on, the reasons for which I will leave my hon. Friend to speculate upon.

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Pete Wishart (Perth and North Perthshire) (SNP): More than 800 jobs have been lost across Scotland today as a result of the Secretary of State’s announcement. He is absolutely right to say that we cannot play politics with this and we have to put aside the constitutional issues. One way in which he could do that, if he is sincere and honest about it, is to say today that he will respect the decision of the people of Scotland next year, and that regardless of which way they decide, he will honour all existing work and contracts.

Mr Hammond: What the hon. Gentleman has not heard is that the contract for the Type 26 cannot be placed until the design is mature, and that will not be until the end of 2014. The Scottish National party is nothing if not glass half empty; what I have actually announced today is that thousands of jobs have been saved, but he chooses to present it as hundreds of jobs have been lost.

Tracey Crouch (Chatham and Aylesford) (Con): Shipbuilding in Chatham ended 30 years ago and although the dockyard is a diverse business hub today, its closure left scars of devastation and deprivation on the town. When the Secretary of State is putting together his support package for the areas sadly affected by today’s announcement, will he look at the history of the closure of Chatham dockyard, learn the lessons and make sure that proper investment is made to ensure that these areas are not blighted as, unfortunately, Chatham was blighted?

Mr Hammond: I would be very happy to look at the history of Chatham. As my hon. Friend says, Chatham’s historic dockyard is now a thriving and vibrant location, attracting investment and employment, and that is what we want to make sure also happens in Portsmouth. Of course the point about Portsmouth is that it will continue to be a major naval port, with large-scale maritime support and maintenance activity going on; it will not become a historic port in the sense that Chatham has become one.

Dr Alan Whitehead (Southampton, Test) (Lab): Does the Secretary of State accept that shipbuilding on the south coast has already been consolidated by the removal of defence-related shipbuilding from Southampton to Portsmouth, by agreement? Does he also agree that the contract for parts of the carrier to be built in the naval dockyards in Portsmouth was very much part of that consolidation? Does he therefore accept that the removal of the aircraft parts manufacturing will be regarded as a substantial betrayal of all that consolidation effort? Does he consider it wise strategically to extinguish shipbuilding permanently on the south coast, leaving just one site for UK defence-related shipbuilding?

Mr Hammond: The hon. Gentleman is right to say that consolidation of the shipbuilding industry is not a single event; it is a process that has been going on for decades, and the absorption of VT by BAE Systems was part of it. I am afraid that the inexorable logic, given the size of the Royal Navy and the budget we have for building new ships, is that we can support only one naval shipbuilding location in the United Kingdom—anything else is fantasy economics.

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Mr Andrew Turner (Isle of Wight) (Con): One strength of the Isle of Wight’s economy is its historic involvement with shipbuilding; a number of my constituents work in the Portsmouth dockyard and many companies on the island are part of the supply chain. What assessment has been made of the impact of this announcement on the Isle of Wight’s economy?

Mr Hammond: I must confess to my hon. Friend that I have not assessed the impact on the Isle of Wight economy specifically. I know, however, that the local enterprise partnerships and local authorities have been aware of these challenges for some time. If it will help my hon. Friend, I will dig out what assessments have been made by others and draw his attention to them.

Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP): Successive UK Governments have failed Scotland and have failed shipbuilding, against a background of more than 100 ships being built in Norway last year. The little that remains in Scotland, as we know from Lance Price’s diaries, is due only to a strong SNP and our independent state of mind. Does the Secretary of State agree with that reality?

Mr Hammond: No. The SNP’s policies would drive shipbuilding out of Scotland finally and would be the last nail in the coffin of the industry. Today, we have announced that the Clyde will effectively become the focus of the whole of the UK’s warship building industry, that we will move the remaining carrier blocks around to support that industry, and that we will place new contracts to support the yard and ensure that it maintains the skills to build the Type 26 class, and all the hon. Gentleman can do is stand up and carp. I think that people will draw their own conclusions.

Mr Tobias Ellwood (Bournemouth East) (Con): Labour claims to support the British shipbuilding industry but, if memory serves, it was Labour that cut the Type 23 fleet by three, cut the Type 45 fleet by six orders and slowed down the new carrier order. Does the Secretary of State agree that if we are to assist our shipyards, one way to do it is to commit to operating both aircraft carriers rather than mothballing one of them in Portsmouth harbour?

Mr Hammond: Clearly, that decision will be made in the 2015 SDSR. My personal view is well known: I believe that having spent the best part of £3 billion on building the carrier, the £70 million-odd a year that will be required to operate it looks like good value for money.

Jim Shannon (Strangford) (DUP): I welcome the Secretary of State’s statement and his obvious commitment to shipbuilding. What assistance will there be to encourage the retention of shipbuilding skills through apprenticeships and will the opportunity for such apprenticeships be available to all the regions of the United Kingdom of Great Britain and Northern Ireland?

Mr Hammond: I cannot answer for any wider initiatives that my right hon. and hon. Friends in the Department for Business, Innovation and Skills might be introducing. The deal to which I have alluded today is a city deal that specifically relates to Portsmouth and Southampton, and therefore by definition it will make funding available for job creation and regeneration only in those areas.

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Steve Brine (Winchester) (Con): I thank the Secretary of State for his statement. He knows that there will be grave concern in my Winchester constituency about the shipbuilding element. Those further down the supply chain will be listening to his statement keenly, no doubt wanting to ask many questions and, I must say, given what is happening in Hampshire, choking on their lunch hearing the SNP representatives complaining about the announcement. May I echo the other comments that have been made and urge him to leave no stone unturned not just in Portsmouth but across the wider region in the pursuit of regeneration of the yard and the jobs it supports, even as far up as Winchester?

Mr Hammond: As a south-east MP, I understand well that not all of the south-east is affluent with high employment. There are areas that depend on specific industries which are as vulnerable as other areas anywhere in the country. I will endeavour to ensure that the points that my hon. Friend has raised are taken fully into account.

Peter Luff (Mid Worcestershire) (Con): I commend the Secretary of State, the Minister for defence equipment—the Under-Secretary of State for Defence, my hon. Friend the Member for Ludlow (Mr Dunne)—the Chief of Defence Matériel and all those involved for making the best of a very difficult situation. Will my right hon. Friend clarify the purpose and capabilities of the three new very welcome offshore patrol vessels?

Mr Hammond: They will be more capable than the existing River class, as they will be able to take a larger helicopter and will be 10 metres longer. They will be able to undertake a full range of duties, including not only fishery protection but the interdiction of smuggling, counter-piracy operations and the protection of our overseas territories.

Mr Julian Brazier (Canterbury) (Con): I, too, pay tribute to my hon. Friend the Member for Portsmouth North (Penny Mordaunt) for her doughty struggle to get a good city deal for her constituents and for the vision for the OPVs that to my knowledge she has been outlining for at least two years. Will the Secretary of State confirm that the OPVs will to some extent provide a force multiplier for our frigate fleet? Some of the roles carried out by frigates do not require full frigate capability, so the OPVs could be a way of partially expanding that capability.

Mr Hammond: At the risk of causing her to blush, I am happy once again to praise my hon. Friend the Member for Portsmouth North. I should say to my hon. Friend the Member for Canterbury (Mr Brazier) that no decision has yet been taken about whether the old River class vessels will be retired after the new OPVs are brought into service. That decision will have to be made in SDSR 2015 based on the ongoing budget challenges of maintaining additional vessels at sea. That will be a decision for the Royal Navy.

Bob Stewart (Beckenham) (Con): Most people suggest that our biggest defence capability is not in maritime patrol aircraft. I am no expert—although I can see that there are many naval experts in the Chamber—but could this new River class OPV, with its enhanced

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length and helicopter deck, also be used to cover the gap between 240 nautical miles, the distance a land-based helicopter can go out from our shores into the Atlantic, and the 1,200 nautical miles for which we are treaty responsible? Could it perhaps play some sort of MPA role in that area?

Mr Hammond: I have not looked at the specification in detail, but I do not envisage that the thing will be able to take off and fly. I understand the point that my hon. Friend is making, however, and we are conscious of the gap in maritime patrol aircraft capability. It is one issue that will be addressed in SDSR 2015 and we will manage the gap in the meantime through close collaboration with our allies. We are considering all the options, including, potentially, the use of unmanned aerial vehicles in a maritime patrol role in the future.

Neil Carmichael (Stroud) (Con): I congratulate the Secretary of State on salvaging a sustainable shipbuilding future for this country from the wreckage left by the previous Government. Looking to the future, and bearing in mind his comments about engineering, does he agree with me that we should be encouraging young people to think about entering the defence services as engineers to develop new technologies, including in electronics and composite materials?

Mr Hammond: Absolutely. I must say to my hon. Friend and for the record that there are huge opportunities available across the defence industry and in the defence establishment for young people with engineering skills. I am glad to say that all the evidence suggests that my right hon. Friend the Secretary of State for Education’s reforms are having the effect of reawakening the interest of young people in the STEM—science, technology, engineering and maths—subjects. Increasing numbers are taking them up and that is good news for the future of British industry.

Jason McCartney (Colne Valley) (Con): David Brown Gear Systems from Lockwood in my constituency has secured a design contract for the new Type 26 global combat ship. As well as confirming the new time scale for the Type 26s, will my right hon. Friend say when we will know how many vessels will be ordered?

Mr Hammond: I have not confirmed the new timetable for the Type 26. It was always our intention that we would mature the design fully before we placed a contract, in order to avoid the mistakes of the past. The current planning assumption is that we will order 13 vessels.

Mr Philip Hollobone (Kettering) (Con): When we talk about aircraft carriers, we tend to focus on their construction, but, of course, when they become operational they will require trained crews. With which navies are we co-operating to train the requisite personnel and might there be expanded opportunities in places such as Portsmouth for onshore training in the run-up to deployment?

Mr Hammond: A certain amount of training can be done synthetically onshore, but I am grateful to my hon. Friend because he gives me the opportunity to reiterate publicly and on the record our gratitude to the United States navy and the United States marine corps,

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who are assisting us in keeping alive our carrier skills during a period when we are not operating fixed-wing aircraft off UK carriers. We have pilots and deck officers embedded in the US navy and the US marine corps and we will develop our fleet of F-35B aircraft, with the first operational squadron based in the United States at Eglin air base. It will return to the UK in 2017 as a trained squadron ready to stand up immediately on its arrival. Without that support from the US, we would be struggling to get back into the carrier business. We should be immensely grateful.