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Mr Betts: That has been true so far, but the positions in Scotland and in Wales are going to change. They will have more tax-raising powers and will be held to account. Otherwise, we will have a body that simply spends and gives out the largess, but is not held accountable for raising the money in the first place.

The Committee tried to deal with some difficult issues. We recognise that we may not have got absolutely all the details right. We felt, on balance, that there was a very clear case that devolution would encourage greater growth, particularly in cities. That applies to counties as well, but there are very clear figures for cities. Unlike other countries where the GVA of their major cities tends to be above the national average, with the exception of London and Bristol, the GVAs of the major cities in this country are actually below the national average. There is a fundamental problem there. Devolution does not necessarily guarantee more growth, but it removes some of the current restrictions on decisions being taken at a local level that can make growth take place.

George Hollingbery (Meon Valley) (Con): I am grateful to the Chair of the Select Committee with whom I served for some time, although I did not take part in this report. One problem of devolution as he describes it, particularly on the issue of GVA in cities, is potentially the buoyancy and predictability of taxation and revenues. I would have thought that if this was done too rapidly and without some sort of mechanism from central Government to iron out fluctuations, there could be some very severe problems.

Mr Betts: I was going to come on to equalisation. Some areas have a greater ability to create and get the benefits of growth than others. This was a difficult issue, and we looked at it. I see the former Minister the hon. Member for Bromley and Chislehurst (Robert Neill) in his place. We thought that what had been done with the business rate retention scheme, or at least the partial retention scheme, was actually quite a good model: a starting point where a certain amount of tax is collected and transferred to a local authority in exchange for the grant that is currently given. The extra receipts that come in through growth would be kept in that area. Some receipts might in future be disproportionate, perhaps because of a very large increase in rateable values that are not directly linked to the efforts of an authority, so there should be a resetting arrangement every so often to take account of that.

We thought that was quite a careful way of doing it. We have probably gone further, in that we recommend that the totality of business rates be kept at local level and there should be a right within a group of authorities, a combined authority or the Greater London authority to set business rates as well—and obviously the element of any increase in the business rate level should not be taken back by central Government. It is a complicated issue, but we thought that the Government had basically got it right in their business rate retention scheme, which could be used as a model for the totality of business rates, or for stamp duty or capital gains tax, bearing in mind the fact that stamp duty is much more a London issue and therefore slightly more complicated. We recommend the idea in principle, but we recognise that it needs to be looked at in the way the hon. Member for Bromley and Chislehurst mentioned.

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We tried to deal with equalisation. We suggested that an independent body be set up to deal with problems of resetting and other issues where there might be a conflict between central and local government. The Government dismissed that and thought that they could do all those things. We thought it would probably be useful to have a body like the Office for Budget Responsibility in the local government sphere.

In principle, we are recommending that a framework be set out for how more powers could be devolved, with local authorities setting out their governance arrangements, how they will be fiscally responsible and the sort of strategy they have for using any powers that are devolved to them. We recognised that progress would probably be made more quickly in some areas than in others and that initially the GLA and the combined authorities would probably be best placed to take on those powers. We see them very quickly taking on place-based budgets, strategic planning and housing, and the sorts of health arrangements proposed for Greater Manchester—I will be careful to go back to that with my hon. Friend the Member for Wigan (Lisa Nandy) present. Indeed, the Government intend to introduce primary legislation to allow those sorts of powers to be taken by the combined authorities. We also recommended the devolution of 100% of business rates, setting the multiplier on business rates, stamp duty and capital gains tax, and flexibility with council tax bands as well.

Although all local authorities could go there, we thought there were some changes that could immediately be made to the powers available to all local authorities, including the complete freedom to set council tax. It is quite staggering that the one tax that local authorities have got—the one that is supposedly theirs—is one for which any increase by more than the Secretary of State thinks is appropriate has to be put to a referendum. There is no other tax in this country for which we have to have a referendum to increase it. Those sorts of freedoms could be given straight away. We thought there could be further freedoms by pushing the commissioning of the Work programme down to all local authorities and that controls over fees and charges could be freed up. Why should the Secretary of State fix fees and charges? They should be fixed at a more local level.

Mr Allen: My hon. Friend will know that the report from the Select Committee on Political and Constitutional Reform, which I chair, is tagged to today’s debate. We talk about the democratic aspect of this issue, which may reassure some of our hon. Friends and other hon. Members in the Chamber. Does he accept that although we might get a benign Government who wish to push power away from Whitehall, there may be Governments who want to take it back? Does he accept what I hope is the strong case made by my Committee that there needs to be some entrenchment of the independence and rights of local government? Otherwise, that possibility could come true in time.

Mr Betts: Yes, and I congratulate my hon. Friend and his Select Committee on the work they have done; indeed, we have worked together on a number of these aspects. He is absolutely right: there ought to be some fundamental commitment to the rights of local authorities to have these devolved powers. The worry is that everyone

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feels that this is a great thing now, but in five years’ time it could be reversed. There needs to be a degree of certainty about the direction of travel we are moving in.

Bob Stewart (Beckenham) (Con): Will the hon. Gentleman give way?

Mr Betts: This will be the last intervention; then I will conclude.

Bob Stewart: Once these powers have been devolved, what happens if a local authority started behaving in a mad, mad way? Would national Government have any oversight in that instance, or is there none?

Mr Betts: It is possible for a Secretary of State to have reserve powers to intervene in extremis, as indeed the Secretary of State has powers to do now. [Interruption.] I hear a little whisper from my hon. Friend the Member for Nottingham North (Mr Allen) about what happens when the central Government behave in a completely irresponsible way—who can deal with them? At the local level, the local electorate can take a view.

Robert Neill: It might be worth bearing in mind the fact—for the benefit of my hon. Friend the Member for Beckenham (Bob Stewart)—that even with significantly greater devolution, the local authority would still have to behave within the principles of public law, acting in Wednesbury reasonableness terms, and be subject to judicial review if it behaved wholly irrationally.

Mr Betts: I am sure lawyers will not be out of business any time soon on this matter The hon. Gentleman is absolutely right. In our recommendations on extra borrowing powers as part of a devolution package—including the housing revenue account and using tax increment financing more actively as local authorities have complete control over business rates—we make it clear that all the borrowing has to be done within the prudential borrowing rules. That is absolutely clear.

There is one other major issue: the control total for total managed expenditure that central Government use. The Government have already had to accept that if the Scottish Parliament decides to raise more money and spend it, that has to come outside the total. If Scotland can vary it, there cannot be a total managed expenditure that is absolutely fixed, because it cannot be cut elsewhere to compensate for Scotland’s increase. The principle has been accepted, and the Treasury has to relax more about allowing local authorities to raise money for investment purposes at local level outside the controlled total.

Finally, let us return to what the Prime Minister said about devolution in Wales:

“That means those who spend taxpayers’ money must be more responsible for raising it.”

That is a fundamental point. It is why fiscal devolution, as well as spending devolution, is essential. As the Select Committee said:

“The point has been reached for the Government (and policy makers in other political parties) to make it clear whether they are committed in principle to large-scale and more comprehensive fiscal devolution in England.”

We as a Select Committee are, and we believe that all those on the Front Benches should be, too.

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4.42 pm

Damian Collins (Folkestone and Hythe) (Con): I congratulate the Select Committee on its report and the hon. Member for Sheffield South East (Mr Betts) as Chairman on his excellent speech introducing it. He is right that there is a consensus between the political parties on the need for, and role of, greater devolution. In my view, that should include devolution of powers not just from central government to local and regional government, but ultimately from local government to communities as well. I shall touch on that in my remarks.

The topical issue in this debate is about the northern powerhouse, the Manchester area and the devolution of powers from central Government to that Greater Manchester authority on matters including economic development and infrastructure, and health and social care. I am sure we will hear more from hon. Members from that region as the debate proceeds. In my region of Kent, however, many people looking at that level of devolution would probably welcome it and like to see it in their area, too.

The Select Committee Chairman rightly highlighted the number of city and county areas in the country that are of comparable size to other devolved areas of government. Kent, for example, has a similar size of population and parliamentary representation as Northern Ireland, which is a clearly defined area. If devolution can be managed in Northern Ireland, I think it can be managed in an English county authority, particularly one with more than 1.5 million people, as well. I would like to see this form of devolution—incorporating the planning of major economic projects, major investments and major infrastructure projects. We can take a county-wide view, lobby the Government for money, plan for the future and have the power to manage more of the investment ourselves and to create our own priorities, particular for transport infrastructure.

The debate about the integration and local management of health and social services also reflects something that many hon. Members would recognise and agree with for their own communities—the fact that greater integration between the management of those two resources is essential. We need to consider the experience of patients either being treated in the health service or receiving social care in their community so that they end up on one single pathway of care that can be managed by different bodies. The more they are integrated and the more their budgets are managed together, the better the results will be.

As we all know from our constituency case work, when a vulnerable person needs urgent and expensive medical care, we know exactly how that should be dealt with and it is often easy to provide for it, whereas when someone needs less expensive intervention at a lower level to support independent living at home, the money may be harder to find. I believe that if we adopted a more strategic approach and viewed such cases alongside each other, we would deliver not only better value for money for the taxpayer but better outcomes for patients.

Mr Redwood: Does my hon. Friend agree that we also need an England level of decision making when it comes to strategic railways, strategic roads and major health policies? We already have that in Whitehall Departments, but is there not a fundamental injustice if

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Members of Parliament from other parts of the United Kingdom can vote on such issues when they are England-only issues handled by England Ministers?

Damian Collins: I agree that powers and decisions should not be forced on English communities by MPs who are not affected by the outcomes of their votes. However, I think that there is a case for devolution of the kind that we have seen in the Greater Manchester area to large English authorities—county authorities such as Kent county council, for instance—which should be able to take a strategic lead. My right hon. Friend is right about major infrastructure projects. Local enterprise partnership boards, for instance, are often better placed than someone in Whitehall to know which road and which rail network should be made a priority for funding and investment. Local leadership of that kind is greatly to be welcomed.

Mr Allen: Does the hon. Gentleman accept that if all that we do relates to the question of English whipped MP votes for English laws, we may well recreate the worst features of the Whitehall system rather than devolving power to where it can be used more effectively at local levels?

Damian Collins: I think that there are two important debates to be had, and that it would not necessarily be helpful for them to become entirely enmeshed. There is a debate to be had about English votes and English laws, which is very important to the settlement for the whole United Kingdom. As one who believes in the Union, I think that we must get that settlement right. We need to look at it again, and we are doing so. There is another debate to be had about the role of devolution to city regions and larger strategic authorities in England, which might cause some regions to look with envy at others and say, “We wish we had some of those more devolved powers.”

In some respects, that debate is more specific. I think that it should be led by city and other local regions, presenting their own proposals, and that there should be an active dialogue in which the presumption is that devolution should and could be possible for those regions. As I said earlier, I think that health and social care should be a priority, alongside economic development and infrastructure. That is why I was particularly pleased by the announcement about Greater Manchester.

Many local authorities are already considering how services can be better integrated, and, in my area of south-east Kent and in Dover, the Kent Health Commission has examined the issue in some detail. GPs in Folkestone and Dover have been working on a pathway of proactive health care enabling more joint decisions to be made by GPs and social services. Such a system often leads to better-quality interventions, better advice for patients, and fewer occasions on which patients are required to go to a major hospital because of a failure in their treatment and care pathway. Obviously that is not only inconvenient for the patient, but a more expensive and often less effective solution. What I am proposing are common-sense reforms.

We should look beyond the city regions to the county areas. We should consider the role that could be played by more strategic authorities in not only receiving powers from central Government but managing the relationships

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between county and district authorities, and parish councils as well. In Kent we have three tiers of local government, county, district and town parish councils. We often hear the challenging cry, “Who is in charge?” It can be frustrating when so many powers are split between authorities, or it is not clear which is the lead authority.

I think that a degree of simplification and clearer structures under the umbrella of a strategic authority would make sense. We see that in part already with district councils working together to share resources on the environment and waste management and on housing allocation and provision. In east Kent we have seen the East Kent Housing group bringing together different districts and boroughs to work together on common housing strategies. That is a sensible use of resources and will deliver a better quality of service for local residents, and we should see more of it.

Could there also be scope to look at other central Government agencies working with a strategic authority in areas such as Kent? For example, we already have local flood management run in part by the Environment Agency and by the county council. There are also major strategic national projects that are of great significance to my community but on a scale that makes it right for central Government to take the lead. For example, in respect of the completion of the sea defences at Dymchurch on the English channel coast in my constituency, investment that has already been spent and that is currently planned amounts to around £130 million. That is clearly a significant capital investment. Many other schemes are managed routinely by the Environment Agency, the local authority and the local drainage boards. Do we really need three different bodies to manage some of that work? Could it not be better managed by devolving it to a local strategic authority that could oversee some of the work currently done by Government agencies operating within a national framework? Could not such work be done better locally? Those are issues we should look at, too.

I said at the beginning of my remarks that I wanted to look at the scope for devolving powers to communities. We have seen this in a number of areas, such as the devolution, effectively, of the management of schools to academies, so that schools can now manage their own budgets and, indeed, roll them over. That was a significant reform. There are head teachers in my constituency who say that gives them greater certainty in planning for the future, and they are perfectly able to manage their budgets and are doing so very well.

There are other areas of devolved government, too. In Kent there has been a particular success in devolving youth service provision to local communities. That is contracted out. I declare an interest as chair of the Folkestone Youth Project. It receives a budget from the county council, and I believe it delivers a better and more flexible youth service than was delivered before—it is designed around the people who use it and it is not run by the county council. It is not necessary for the county council to run that. It may be responsible and commission and provide the resources, but the communities can design it. We are already seeing that in library provision on a voluntary basis, where villages and parishes are coming up to take over the provision of their local libraries. Often they can design and run that service more effectively than the council could.

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Mark Pawsey (Rugby) (Con): My hon. Friend is talking very eloquently about the need to devolve powers to communities. Does he agree that neighbourhood planning represents an opportunity for communities to express their preferences in respect of how they see their communities developing over time?

Damian Collins: I agree with my hon. Friend and believe that having a good local plan is the best guarantee a local community has that it can design its future in line with its own aspirations and ambitions. That is a process that councils work on in different ways, but I believe that a strong and robust local plan and good neighbourhood plans are a very important way of designing the services that people want and allocating them as communities want. It is something they should pursue.

I shall not take up any more time as other Members wish to speak, but I just want to reiterate the fact that I think the devolution of power from central Government to English county regions should be considered, as well as for major city regions. The major county regions such as Kent are just as capable of taking on those powers as major city regions. We should also consider creating more strategic authorities that look to centralise powers between districts and borough councils within those strategic authorities. We should look not just at devolving power from the centre but at how those local authorities might work together, and, wherever possible, at devolving further power to the communities themselves. That is the general approach we should follow. I welcome the Select Committee report and the important debate it has started.

Several hon. Members rose—

Madam Deputy Speaker (Mrs Eleanor Laing): Order. The hon. Member for Folkestone and Hythe (Damian Collins) has spoken for approximately 10 minutes, which is just about right in a debate such as this, and fits in with the amount of time available to us. If everybody has the courtesy to speak for approximately 10 minutes, it will not be necessary to impose a formal time limit. I hope we can manage without such a time limit.

4.54 pm

Graham Stringer (Blackley and Broughton) (Lab): I would like to start by disagreeing with my hon. Friend the Member for Denton and Reddish (Andrew Gwynne), who said in an intervention on the Chair of the Select Committee, my hon. Friend the Member for Sheffield South East (Mr Betts), that decentralisation was not an aim in itself. If democracy and local democracy is an objective—and I believe it is—then decentralisation is an objective. To allow local people to vote for people to take decisions that affect them directly, and for the people who are elected to raise local taxes to pay for those services, is a clear objective. There is absolutely no guarantee, in any system of national or local democracy, that this will lead to efficient services or economic growth, but at the heart of the matter is the principle that we should be able to vote for the people who take decisions using public money raised through taxes. I therefore believe that that is an objective.

I am not on the Select Committee, but I have read the report and I have been left with two conflicting emotions. First, I found the report depressing, although not because

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it is not a good report; it is a good report and it goes into a lot of detail. I was elected—as I suspect my hon. Friend the Member for Sheffield South East was—to a local authority more than a third of century ago. At that time, local authorities had complete control over the level of the business rate and over their other rates, and they could set levels of expenditure. It is a measure of how far we have moved that we now think it an advance to have a share of the local business rate. That is a depressing thought. On the other hand, I am optimistic about some of the Government’s proposals and some of the activities in our major cities and counties where agreement to devolve powers has been reached. There seems to be a movement to reverse many decades of centralisation.

There is one thought that lies behind a lot of the Government’s thinking and behind the thinking of other Members, even though it might not be expressed. It is that central Government somehow do things better than local government. I have never seen any evidence of that. Let us consider the waste of money on the NHS computer. I do not have the exact figures, but I believe that about £12 billion has been wasted—a mere £12 billion. That would probably be sufficient to fund the Government grants to run Manchester and Birmingham for about a decade, and that is just one example of a failed computer programme. It is extraordinary that central Government can sit there and think that they are more effective than local government. There is no evidence whatever for that.

Mr Betts: Thinking slightly cynically, may I ask my hon. Friend whether he thinks that Treasury Ministers and shadow Treasury Ministers are interested in pushing more spending powers down to local level because they think that they can get better value out of that arrangement and that if there is more austerity to come, local government would probably manage it better?

Graham Stringer: Sometimes that is absolutely true. It is sometimes the objective of central Government to pass on the responsibility for “difficult decisions”, which can often be code for “cuts”.

In the light of the great achievements of cities such as Sheffield, Birmingham, Manchester and Newcastle—the cities that this country’s wealth was built on—we have taken that money and power and centralised it. This has led to an increase in the north-south divide. London has such a booming economy because of its geography and because of the City of London, but also because the expenditure in local government has been centralised, and about 90%—we can argue about the final decimal point—of the expenditure on transport has been spent in London and the south-east and not in the other regions. That in itself leads to economic growth. There is also an increased intensity of investment in hospitals and science in the golden triangle of Oxford, Cambridge and London.

On that basis, I very much welcomed the statement about the devolution to Manchester, the powerhouse of the north and the combined authorities, which would give control over the skills budget and over transport, allow the re-regulation of buses in Greater Manchester, give control over the housing budget and allow a look at the social care budget, so that local people would take decisions locally. A lot of the criticism, including from my hon. Friend the Member for Wigan (Lisa Nandy), is that nobody has been consulted about a mayor for that

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process, but let us look at what the combined authority was faced with. All those local authorities—Labour, Lib Dem-led and Conservative-controlled—believed that more decisions should be taken locally, which, incidentally, would also lead to more efficient services. The Government’s position is that they are willing to hand over control of that money but that because a lot of those services, particularly transport and skills, are provided at a county level, there should be an elected mayor. One could either recreate the Greater Manchester county council, which used to deal with many of those services, or have an elected mayor, and the Government prefer an elected mayor. The position facing the leaders of the 10 authorities was: do we accept this—and we wanted this kind of thing when I was leader of Manchester city council, a long time ago —accept what is offered by the Government and plug the hole of the democratic deficit, or do we not?

Lisa Nandy: I am grateful to my hon. Friend for raising this issue about the mayor. He says it is a directly elected mayor but, unfortunately, it is not; the mayor that is envisaged will be appointed immediately and will serve until 2017, or possibly 2019, without facing an election. In the meantime £13.5 million-worth of public money has been spent and, according to Ministers, there are currently no plans for public involvement or scrutiny in this process.

Graham Stringer: I do not disagree with my hon. Friend about that, although we do disagree on other parts of this devolution. The gap between what we have now and an elected mayor is too long. Appointing a mayor is almost a contradiction in terms; mayors should be elected and then they should take the responsibility that the electorate give them, having stood on a manifesto. I would prefer the 10 leaders, who do have an elected mandate, to continue. Having an appointed mayor is a halfway house—a solution that is not really a solution—and it would be better to move earlier to an elected mayor and not have an interim situation. Having made that criticism, I do not think it spoils the whole broth—the essential elements of the decentralisation.

The next part of the decentralisation that seemed to cause some difficulty to some of my hon. Friends, and to some other right hon. and hon. Members, is the devolution of the health budget, so that health and social care can work together in Greater Manchester and deliver better services. When it was announced on the “Today” programme—six days ago, I believe—the presenter said, “This will mean that local councillors will get their grubby hands on the health service.” That represents not only an appalling statement by a supposedly neutral BBC presenter, but an attitude of contempt for local democracy. There is absolutely no guarantee that when locally elected councillors, working with the clinical commissioning groups, get together the service will be better, but the expectation must be that it will be, because when decisions are taken locally, the decisions are usually better. That is not always the case and it is not inevitable, but usually when people of good will try to make things better and they can see the detail on the ground, we get a better service.

I have been fighting the Healthier Together proposals in Greater Manchester, which are all about bringing care for the elderly and the ordinary services together. I have been fighting them not on principle, because the

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principle of what they are saying is right, but on detail and procedure. In every case, we go back to NHS England. I would much rather discuss my disagreements over detail with people who are elected locally and with local clinicians than with some distant bureaucrat in London. I do not believe that this measure is being imposed; it is being negotiated by properly elected local government leaders. One objection that may be made before a general election—I had better be up front about this—is that Labour councillors should not be sitting down with the devil of a Conservative Chancellor. Well, I think they should. It would be an absurd position if any elected leader of any district or city said, “I will not accept something that I think is good for my area because the person who is proposing it is of a different political colour.”

There are still many details to be decided and some obvious pitfalls. We need to ensure that at least the amount of money that was scheduled to go into the NHS actually goes in and is transferred to Greater Manchester. If that money goes across but there is a deficit, we come back to that most difficult decision—I will finish on this point because I know many Members wish to speak—which is the closure of a hospital. If care for the elderly works in combination with the NHS and many people who should not be in hospital are taken out of hospital, hospitals may have to be reduced in size. If that happens, who would Members like to take that decision: somebody sat in Whitehall or locally elected people who have to face the electorate daily? That is the toughest decision, and I would prefer it to be made by local people, which is why I am pleased to support the proposals for Greater Manchester. I hope that this Government and the next one get more enthusiastic about devolution.

Several hon. Members rose—

Madam Deputy Speaker (Mrs Eleanor Laing): Order. I had every confidence that the hon. Gentleman could add 10, get over the hour and get to the right number, but I appreciate that he had a lot to say. Let us try a bit harder for the 10 minutes.

5.7 pm

Robert Neill (Bromley and Chislehurst) (Con): It is a pleasure to follow the hon. Member for Blackley and Broughton (Graham Stringer). I agree with his analysis of the right approach to Greater Manchester, but I will come back to that in a moment.

First, let me address the broad thrust of the report, with which I very much agree. It is an excellent report, the Chair of the Select Committee made an excellent speech on it, and I struggled to disagree with anything in it. I hope that all parties will take the report on board.

We have a real opportunity to create a cross-party consensus on this matter. All too often in this House, devolution is spoken of in terms of legislative devolution —of votes for laws and structures. That is critically important, but without significant fiscal devolution, it is effectively meaningless. If we can get around that point, we would have a sensible basis on which to build. We need to recognise that this Government have done a lot already. I congratulate the Secretary of State and his

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team—I might be seen as being a little biased here—on having reversed what was nearly a 50-year trend of centralism.

The hon. Gentleman made the point that, when he was elected, there was much more control, and that is true. I was first elected to a London borough in 1974—I would like to think that I lied about my age, but I did not. By that stage, power was already being removed, and that had been a process throughout the post-war period. Therefore credit must go to this Government for having reversed that trend so significantly. I am talking here about the power of general competence, removing capping and replacing it with the consultation of residents via a referendum, which is an important step forward, and breaking down ring-fencing. Those are important and significant changes. I particularly welcome the further steps that were taken around devolution to Greater Manchester. I am a little disappointed that one or two Members were carping about the approach.

I am a firm believer in the idea that, from the point of view of local government, the first thing to do is to get the power devolved. For heaven’s sake, do not worry about the detail until the power is devolved. It is the tendency to allow the best to be the enemy of the good that has bedevilled local government in its relations with central Government over the years. It has been all too easy for the civil servant or the Minister, with every respect, to be told, “The local authorities cannot agree among themselves, so it is better that we keep the power centrally.” The same is said to Members of this House. However, if the principle of devolution and the transfer of power and finances is agreed, local authority leaders have the ability, with good will and common sense, to sort out the exact arrangements for themselves. In that respect, the leaders of all parties in Greater Manchester have been markedly more pragmatic than those in this House sometimes show themselves to be through the arguments that they deploy.

Lisa Nandy: Does the hon. Gentleman agree with me, as somebody who is a Member of Parliament in Greater Manchester, that the public might also be involved in the conversation between local authority leaders and the Government that he has talked about?

Robert Neill: Local authority leaders are elected via their local authorities. We can talk about the time frame for having a directly elected mayor, but I am afraid that we are again allowing process to get in the way of the principle of fiscal devolution, which is the most important thing. When one looks at local authority systems in other countries where there is significantly more financial devolution, of which France is a very good example, the public participation at elections is significantly higher because people realise that their vote makes a difference. That is the main objective that we should be aiming for.

As a Greater London Member of Parliament, I also welcome the devolution package that was announced by the Chancellor and the Mayor of London. It does not go quite as far as the Greater Manchester package, but it is extremely valuable. It is worth noting that it was a Conservative Mayor and the Labour-led London Councils that agreed, in a pragmatic fashion, on a set of 10 principles for how London local authorities would use the extra devolved powers and the even greater devolved fiscal power that was recommended in the

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London Finance Commission report, which I hope will be adopted by the next Government—I hope of my complexion—in the next Parliament. Again, the hugely important point to make is that when local government is pragmatic, it delivers better.

The Prime Minister gave me hope in his speech in June. The Financial Times reported him as saying that

“devolving power and money from Whitehall to the cities…is the future. The debate now is about how far and fast it can go.”

I hope that in the next Parliament, we will see a significant increase in the amount of public spending that is devolved. We have made a valuable step, because some 70% of council income is now raised locally. That is a big improvement on where we were. However, council income is not the same as total spend.

That is why the pooling arrangements between health and adult social care in Greater Manchester are an important step forward. Anyone who has served on a top-tier authority, whether it is a county, a unitary, a London borough or a metropolitan district, will know that adult social care is one of the principal cost pressures. The ability to align it more closely with the health service makes obvious sense financially and in terms of better and more effective service delivery. As has been observed, local authorities are often better placed to nuance the delivery arrangements to reflect the needs of the population.

The Chairman of the Communities and Local Government Committee made a perfectly fair point about where we should go from here. I think that we should start to look at the further devolution of property taxes. That is the most obvious thing to do. We have made a start with the local retention of the increase in the business rate. He was kind enough to make observations about the methodology that was put in place. He was perfectly right that we always envisaged the methodology as being capable of improvement and refinement. It would be easy to increase the locally retained share. I welcome the fact that the Secretary of State talked at the Local Government Association conference last year about raising it to the high 80s or 90s. The Prime Minister has spoken in similar terms. Personally, I hope that we will move to make all the additional business rate retained in the next Parliament. We should aim, within not too short a period, to re-localise the whole of the business rate.

Mark Pawsey: My hon. Friend is making a strong case for increased devolution, which is exactly what we heard on the Select Committee. He has been a Minister in the Department, so what does he think are the obstacles within the institutions of government that prevent that devolution from taking place? Why has it not happened before now?

Robert Neill: There are two things. One is a practical matter that we must address seriously, which is the need for equalisation arrangements. As the Chairman of the Select Committee fairly said, we have a model already in place that could be adjusted to deal with that. I therefore do not think that we should allow the need for a measure of equalisation to fall in the way of further devolution. The question of risk of local authority failure is sometimes raised, but I think that it is overstated, first because of the public law constraints that are already there and, secondly, because in truth if we believe in

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devolution we must accept that sometimes, very occasionally, a local authority will fail. That is what democracy is about. Allowing failure as a result of a democratically elected body’s decision, provided there are sensible reserve powers that can be put in place, as the Chairman of the Select Committee properly and sensibly set out, is a sensible way forward. We could easily deal with that.

The final problem is the institutional inertia of a system in which so much has come to this place over the years that initiative at a local level is often stifled. The most talented in politics and business see London and Westminster as the centre of operations rather than driving forward their careers at a local level. In France, it would be perfectly natural for the mayor to be a significant political player. The combined authorities in France referred to by the Chairman of the Select Committee work exceptionally well and have done for some 30 years. They have delivered on social care and on major infrastructure improvements. That is a sensible and pragmatic way forward that can be tweaked to reflect areas and on that basis there is no reason why we cannot also consider similar but not exactly identical arrangements for the shire counties. My hon. Friend the Member for Folkestone and Hythe (Damian Collins) is absolutely right that they are capable of significant devolution too.

This is a most important debate. I am glad that we have had some thoughtful and constructive speeches and it is a good report. This is a piece of work that we must continue in the new Parliament, as we cannot continue with the current set-up. The Government are entitled to congratulations for what has been done so far, and I hope that it is work on which we can build.

5.17 pm

Austin Mitchell (Great Grimsby) (Lab): I want to speak as a partial and not wildly enthusiastic supporter of the Select Committee’s report and as a very long-standing advocate for devolution. In 1974, with the late Richard Wainwright, I formed the campaign for the north, back in the days of Redcliffe-Maud, beyond recall, in a first example of the Lib-Lab pact. When the Labour Government had the Prescott proposals for regional government, I was an enthusiastic supporter of the campaign for Yorkshire. It was unfortunate that the then Prime Minister, who was more enthusiastic for invading small countries than he was for giving us devolution, so watered down the proposals that they were not worth voting for. In the end, they were duly not voted for in the north-east.

That is my history of campaigning for devolution, but that does not make me enthusiastic about the caution of the Committee’s report or about the proposals for Greater Manchester. They seem to me to be something of a deathbed repentance by a Government who have centralised continuously in a country that is over-centralised already. We must be one of the most over-centralised countries in the world. We are more over-centralised than Monaco or Luxembourg, two capitals without countries. Cobbett’s Great Wen has always drained ability, money and investment away from the rest of this country and concentrated them on London and the prosperous south-east. That process has gone on for far too long. It has been heightened by this Government and needs to be reversed so that the rest of us can have a chance. It might be a mistake to start building the

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northern powerhouse on the wrong side of the Pennines—the wet side—rather than the hard-working, intelligent and serious side, but I do not begrudge regional devolution to Manchester, because what Manchester thinks today, Yorkshire certainly thought yesterday, and it deserves better than what it has been given.

What is proposed is not really devolution, but another example of Conservative tinkering with local government, which has been going on for so long. Their attitude to local government reform is like the hokey cokey—you put your whole self in, your whole self out, and then you shake it all about. They created the metropolitan counties, then they abolished them, and now they are bringing them back. They created Humberside, then they abolished it, and now they are effectively bringing it back.

What we need is serious thinking—the Select Committee has begun this, but it really needs to be done by both parties and into the next Parliament, when it will become more relevant—about what the framework of devolution should be and what exactly should be devolved. We need to think about what powers should go to local government, because we have to transfer them down from the centre to where the people can handle and control them democratically, because they know their needs far better than Whitehall does. That should be the process of devolution, but this is not it. This is another piece of tinkering, with an elected mayor—an eventually elected mayor, as my hon. Friend the Member for Wigan (Lisa Nandy) pointed out—sitting on top like the fairy on a wedding cake, with inadequate powers and no democratic control. That is not real devolution for Manchester. We have to think seriously about what real devolution is.

What is proposed is a coalition of 12 boroughs with minimal powers and financing and an elected mayor. I do not know whether the £6 billion will be enough to cover the cost of the health service or just enough to distribute blame downward when things go wrong, but certainly the powers and the financing are inadequate. There is no elective democratic accountability, because control is indirect through the coalition of boroughs, and that is not effective control at all.

If what is proposed is devolution at all, it is asymmetric devolution that will end up creating a patchwork of devolution, with different powers all over the country, a kind of one-winged bird that can flap but cannot fly. As other Members have pointed out, it leaves out large areas of the country. For example, the best and most important part—Grimsby—has nothing to gain from it. Huge rural areas such as Lincolnshire and north Yorkshire have nothing to gain from it. They all want more power, but they are outside this new system.

Therefore, we must first ask what we can learn from this Manchester situation for Yorkshire and then ask how we can create a national framework for devolution for those areas that want it. I am not saying that devolution should be forced on people, because it is more important to the north and to Yorkshire than it is to the south, to which all blessings flow anyway, but we must ask what example we can set that other areas will want to follow. What can be the framework for English devolution to turn this unitary state, in which some powers have been devolved to Scotland, Wales and

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Northern Ireland, into one of devolution all round in which Yorkshire can show the way? We could call it “devo-tyke”—I do not see why not, if we can have “devo-Manc”.

On the table at present are proposals for city devolution—city regions for Sheffield and Leeds and a big Newcastle-Tyne-Tees area—plus minimal proposals for Humberside. I would like to see greater Yorkshire as a devolved region. That would include Sheffield, Leeds and both sides of Humberside, because our interests on the south bank lie to the west rather than to the south. They lie with Yorkshire, and we are Yorkshire’s gateway to Europe. Greater Yorkshire would provide a firm, strong base which would be able to take on a variety of powers and functions over which we could have an elected government, which would control those functions for the purposes of the people—in other words, democratic accountability and democratic control—and which should have revenue-raising powers to finance what it wants to do.

A bigger area can take a broader view and be a firmer and more effective base than a smaller, more parochial area. That is the way we should go. The current proposals are a beginning, but no more than a beginning, which we need to follow up and build on in the next Parliament so that power passes from London, to which it has been so remorselessly transferred over the years, to the regions and to the people so that they can control their own destiny. In that way we will get the synergy and energy of democratic control of government functions in the north, where it belongs.

5.26 pm

Mr John Redwood (Wokingham) (Con): We are debating devolution in England, but if we are to have more devolution in England, we first need devolution to England. We must make sure that there is an English level of decision making for the strategic matters, and English Ministers who can then decide which matters could be properly devolved within their strategic framework.

If we take the case of transport, it is predominantly or wholly an English Department, yet it is treated as if it were a Department of the Union. But our Ministers have no control or influence over the roads of Northern Ireland or Scotland. They deal predominantly with English issues. In the new looser federation that we are going to create in the next Parliament, we need to identify the need for England to have rights and opportunities that equal these powers that the other parts of the country have already gained or will gain in the more generous devolution settlements now being offered to Scotland, Wales and Northern Ireland.

There is a good case for the English Transport Department to devolve some more powers to unitary, county and borough councils in the country. On the issue of railways, for example, we have a very expensive nationalised industry, which decides on the track, the track maintenance, the track investment and the principal train routes and is responsible for the signalling and most of the stations. These are very important issues for local communities. They are massive budgets, but I found it extremely difficult as a local representative to get the ear of Network Rail and to get the right attention paid to the railway line in my area, even though my voters are producing a great deal of tax revenue which is

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going into Network Rail. A case can be made that there should be more devolved power to counties, boroughs, unitaries and maybe even to MPs over railway budgets, which can have a very important impact on the face of the town, the nature of the countryside and the commuter and freight services available.

We must be careful not to devolve too much. For the roads system, it is right that there is a strategic highway network of motorways and larger trunk roads which is controlled at the England level, masquerading as the Union level, and that those decisions should be properly taken by an English Minister responsible to this House, spending moneys collected in the normal national way and going through the national budgets. I hope that in due course we will have a proper English devolved budget, just as Scotland, Wales and Northern Ireland do.

In my area, we have a motorway that is a local road, and the council is responsible for it. It is a very useful and good motorway, but it stops at the boundary with Oxfordshire and Reading. Most of us want it to go over the river and on to more useful places as part of our economic growth and development. We are making a huge contribution in our area, with a lot of extra housing and jobs, and we need more road space, but Oxfordshire will not allow us to put a bridge over the river and take the road on to other parts of our burgeoning area and up towards Oxford. That may be a case where a devolved power should be given back. I think that my unitary borough would be happy to surrender control of the motorway in return for a promise from a Government Minister to finish the job and make the motorway go to other places so that it could take more of our traffic. At the moment, a very large amount of traffic has to go through the neighbouring constituency of my right hon. Friend the Home Secretary in the small and beautiful village of Sonning, which has a single-track bridge over a beautiful stretch of the river. That takes a massive amount of commuter and freight traffic that ought to go on a motorway-standard bridge, away from a place of such great beauty, but we cannot do that because of the way in which parts of local government relate to one another. Those are two examples: one where we could devolve more once we had the right powers in England, and one where we might want to devolve less to get a better strategic answer at the national level.

The health service is also primarily or wholly an English Department. It is called the Department of Health, but it should really be called the Department of English Health because its Ministers do not run the health service in Scotland, in particular—although in the recent debates on Scottish devolution some people seemed not to understand that and to think that Scotland’s vote would somehow have an impact on their health service when it has been devolved to the Scottish Parliament. If we are going to pursue devolution, English Ministers should ask the question that my right hon. Friend the Chancellor has asked, and started to answer, in the case of Manchester. If it makes sense for Manchester to have more control over health budgets at local authority level to try to deal with the big border issues between social care and health, it must make sense for other parts of England to have exactly the same type of thing.

All my life in active politics and in government, as a local government Minister and in other roles such as Secretary of State for Wales, I was very conscious that there were always border issues between the UK-wide

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nationally controlled health service and local government, dealing with social care. Both sides were prone to blame each other. The health service would say, “We could get our costs down and put more people through our hospitals if only local government did a better job on providing care facilities for people who should leave hospital,” and local government would say, “Our budgets have been starved because so much money goes to health, but perhaps that isn’t the right priority, because it is a lot more expensive to keep someone in a hospital bed for a few extra days when they do not need the urgent care any more than it is to provide them with good care in a care home without all the medical staff and additions that you have in a hospital.”

There has always been that problem, and I look forward to seeing the more detailed work and the results of the negotiations, because it would be good if there could be a new solution. Once again, however, we need to make sure that the right things are defined at the England level, because it is still meant to be a national health service, although there are now going to be several different national health services because of Scottish and other devolution. In relation to England, I think that a lot of our voters in England want there to be national standards, a national level of service, national protocols and national agreements, so quite a lot needs to be settled by an English national Minister sitting in the English Health Department. However, we can see whether we can devolve certain things. It would be really good to have a new and novel solution to the cross-border issues between social care and health care.

The third Department that is already clearly an English Department is the Department for Communities and Local Government—the origin of this debate. The Select Committee has produced an interesting report to influence English local government Ministers. They must make sure that they have unrestricted English control over English local government, and I am sure that many of them, in this Government and successor Governments, will be interested in exploring the big issue of how many more things can reasonably be left to councillors and their serving officers to decide. I look forward to there being more things and I have suggested one, namely railways, but we need to be realistic and understand that people also want a national agreed level of service. They also want to know that, when a decision in one place has a consequence on other places, people above the fray of the locality will be making the decisions. Not all the decisions will go downwards; some will have to go upwards.

Above all, we need justice for England. We need English votes for English issues and to make sure that England has a voice and can decide the things that apply only to England.

5.35 pm

Lisa Nandy (Wigan) (Lab): I congratulate my hon. Friend the Member for Sheffield South East (Mr Betts) and his Committee on such an important report and on giving us the opportunity to have what I hope will be a much more thoughtful, detailed and nuanced debate about recent devolution proposals.

I want to reflect in particular on what is happening in my area of Greater Manchester. I am a passionate advocate of real devolution to people, communities and

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those who serve them. Before I entered Parliament, my experience of almost 10 years working with children and young people in some of the most challenging circumstances told me that we will not deal with the most intractable problems this country faces if we do not move away from a deficit-based model of dealing with people towards an asset-based model. That requires decisions to be taken much closer to people, with greater local accountability and people and their communities in the driving seat on decisions that affect them, their families and their lives.

I particularly welcome some of the decisions that are being devolved to Greater Manchester, including on transport, skills and the Work programme. Such issues are critical to solving our intractable problems. One of the great fallacies is that it is possible to solve local problems at national level. Too often, national policy fails not just because it does not identify the right solutions, but because it does not define the problems properly. That is because those problems differ not just from region to region, but from local area to local area, within constituencies as well as among them.

Devolution gives areas such as mine in Wigan and across Greater Manchester a considerable opportunity to draw on our strengths. It will give us the chance to move away from handing out big block contracts to the small number of private companies that are currently the only ones able to bid and compete for them, and instead to work with the charities and community groups that are the lifeblood of our local area and to draw on the talent throughout regions such as mine.

Given how incredibly centralised this country is, it is incredible that there has been so much local and regional success over the years. A particular example from my own region that springs to mind is when, finally, after years and years of pushing and lobbying, the regional development agency, working in partnership with Government and the media companies, managed to get the BBC to relocate to MediaCity. That has been an absolutely stunning success for many of my constituents and the region. It has brought a completely fresh perspective to the way in which our public debate is conducted, because the guests and presenters now come from a much broader area than a small few miles around the capital.

I am very concerned, however, about what has unfolded in Greater Manchester over recent months. The people of Greater Manchester have been treated with contempt, because they have been cut out of the process. Real devolution is based on the principle of consent, not contempt. My hon. Friend has said that one of the reasons he is so committed to the agenda is that it can re-energise the democratic process. I absolutely agree with him, but the problem in Greater Manchester is that, from the very day the process was leaked to the media and then announced at a press conference, the public have been entirely cut out of the conversation. I want to say, particularly to Ministers, that that cannot be allowed to continue. There is a significant opportunity to bring benefits to areas such as mine and others across the country, but not if the public continue to be cut out of the conversation.

We were denied a referendum about this plan, which came out of the blue, to impose a mayor who will be appointed, not elected, for between two and four years.

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Cutting the public out of the conversation was not a good start. When the people of the city of Manchester were given a referendum a few years ago, they said that they did not want an elected mayor, although the result was quite close, but my constituents in Wigan have never been asked that question. They may have voted for it, and if we had been given some detail about how the mayor would be held to account, I might even have campaigned and voted for it, but the truth is that we have been cut out of the conversation.

We will continue to be cut out of the conversation because the Government have confirmed to me that not only will the mayor be appointed immediately and rule until 2017, but that the term may be extended until 2019 by the same local authority leaders who negotiated the deal. That reminds me of Tony Benn’s five questions for the powerful, the most important of which are:

“To whom are you accountable? And how can we get rid of you?”

He said:

“If you cannot get rid of the people who govern you, you do not live in a democratic system.”

It is 2015, not 1815: people deserve the right to elect the politicians who wield enormous power over their lives.

I am not confident that the situation is going to get better. In a series of recent written answers, the Minister has confirmed that no thought whatsoever has been given to the ongoing scrutiny by or involvement of the public in these decisions. I had to ring three Departments to get the Greater Manchester health and social care devolution memorandum of understanding”, before the Government realised that it had been published by the first Department I had rung and pointed me to an obscure place on its website to find it. The document says this about April 2015, which is next month:

“Process for establishment of shadow governance arrangements agreed and initiated”.

My question is: by whom and with whom? From the document, it looks as though local authority leaders, clinical commissioning groups and NHS England will make up some kind of shadow governance arrangements, but we do not have any more details, even though it is all supposed to happen in the next four weeks. I must tell the Minister that he should be very concerned about that, given that every hon. Member has referred to the importance of local democracy and accountability. We have 10 local authority leaders and a huge range of appointed officials from CCGs and NHS England, with an appointed mayor, but no room for direct elections for another two to four years.

The consultation by the Department for Communities and Local Government ran for three weeks from the middle of January to the beginning of February. There were 12 responses, of which 10 came from the local authority leaders who negotiated the deal in the first place. I must say to my hon. Friend the Member for Blackley and Broughton (Graham Stringer) that I very much share his concerns about the Healthier Together process: we were both heavily critical of its consultation process, but that sort of public engagement makes Healthier Together look like an absolute dream.

This consultation asked for the impact on communities, but according to the Minister’s own Department, it was not advertised, so there were no responses from the public. The document did not make a single mention of

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health care or the national health service; yet one week after it closed, we were told via a leak to the

Manchester Evening News

and then in a press conference that billions of pounds of public funding were being transferred. In the meantime, £13.5 million of public money—our money—has been spent on transforming Manchester town hall to get ready for the new bureaucracy. This is not the way to build power-sharing with people.

Mr Redwood: Would the hon. Lady agree with all this if the new mayor were directly elected to a quicker timetable?

Lisa Nandy: The right hon. Gentleman has helped me brilliantly to segue into what must happen next. The truth is that for Greater Manchester, this is where we are. We have been handed this model and, as many hon. Members have said, there are opportunities for the region if we can get it right, and it is important that we do not make the same mistakes again. The Government tell us that they are committed to rolling out devolution arrangements around the country, and we must get that right for the people of Greater Manchester. We need clarity about the role of local councillors who currently do not have the tools and resources they need to hold the leadership to account. When we devolve power upwards to combined authority level, the issue becomes even more pressing and critical. The local councillor is the link between people in my constituency on different streets and different communities around Wigan, and decisions that are taken miles away in Manchester town hall. As someone recently said to me in Wigan, “If I can’t hold any of these people to account, it’s the same to me wherever they are sitting.” We need clarity about the role of local councillors, and we must ensure that they have the tools and resources they need to hold power to account.

The memorandum mentions the principle of subsidiarity. I share a commitment to that, but we deserve to know what it means in practice. For example, there are huge benefits to be had from rolling together health and social care, and in my local area in Wigan that is what the local authority and CCGs have been doing because we face a wide variation in health and social care challenges across Greater Manchester. Mine is an older borough that contains lots of people with chronic health conditions and real geographical challenges—we are one of the biggest boroughs in Greater Manchester. The risk is that when we level up those decisions, we end up with serious problems because we ignore pressing issues in different local areas.

We should have, and deserve, direct elections if people are to make decisions that affect our lives, particularly if we are to concentrate power in the hands of one individual. A potential four years before anyone gets a say over who takes those decisions is ridiculous and shows utter contempt. Many people have said that this is not a London-style mayor. They are right, because at the very least the Mayor of London is directly elected and has to account to the Greater London authority, in public, for their decisions. There are no plans in Greater Manchester for similar scrutiny arrangements, which shows a complete and utter lack of respect for the public.

Finally, there is a huge gap around civil society, and I understand why this debate looks like a conversation between national and regional politicians from which the public have been excluded. Charities, community

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groups—nobody has been spoken to or consulted, and they do not have access to the information and data they need to hold power to account. The risk is that we are replicating the worst features of national Government at regional and sub-regional level.

This is not a binary choice between unaccountable power structures in London and unaccountable power structures in Manchester. We can do so much better than that: real accountability and real challenge in the system; meaningful tools to hold people to account; no more backroom deals; and real power sharing. The people in my region are our best asset. Let us build our public services with them, not without them.

Several hon. Members rose—

Madam Deputy Speaker (Mrs Eleanor Laing): Order. Again I implore hon. Members for 10 minutes to mean 10 minutes more than are currently on the clock—it is easy to count.

5.48 pm

Martin Vickers (Cleethorpes) (Con): I will do my best to keep to your time limit, Madam Deputy Speaker.

This has been a welcome and interesting debate, and I repeat the thanks to the Select Committee for its report which contains helpful and useful recommendations. It is always welcome to take part in a debate with my own MP, the hon. Member for Great Grimsby (Austin Mitchell), although I was slightly concerned about the number of times that he referred to Yorkshire rather than Lincolnshire.

The Scottish situation has developed with more and more powers being devolved. That is perhaps regrettable in many ways, but we can be thankful that it has spurred on the debate about how we devolve powers in England. Like most of my constituents, I regret the fact that the settlement with Scotland now means Scottish MPs have far too much influence over decisions. I welcome the comments of my right hon. Friend the Member for Wokingham (Mr Redwood) in that respect.

There has been considerable devolution under this Government, and my own area has benefited greatly. Like the hon. Member for Great Grimsby, I was present a couple of weeks ago when the Hull and Humber region growth deal was signed. There is no doubt that that is particularly beneficial.

I note that paragraph 15 of the Select Committee report states:

“The power to raise, retain and spend money locally—fiscal devolution—is back on the political agenda. Local government wants more of it.”

I agree on unleashing more and more powers to our cities and towns. I emphasise the word towns: too much rhetoric in recent months has referred to cities. People in towns up and down the country feel somewhat left out. Towns make a major contribution to the national economy, and constant reference to cities has not been helpful.

On the present structures of local government, I am not entirely sure that they are particularly well designed to cope with more powers and responsibilities. In many cases, local government is in fact more efficient than central Government—the squeeze on budgets in recent years has delivered many necessary efficiencies. I was a local councillor for 26 years; 14 of those were on a

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district council and 12 on a unitary council. I wholly recommend the latter: unitary authorities are vastly superior. We have to recognise that district councils are dying. They are sharing more and more of their powers and responsibilities—joint chief executives, shared officers and shared delivery of services—and we have seriously to ask whether there is a role for the two-tier system in the future. My view is that a move to unitary top-tier authorities, supported by parish councils, is the way forward.

Reference has been made on a number of occasions to combined authorities. I share the misgivings of others that they are not particularly democratically accountable. I have yet to find an elector who has said to me, “I’m not going to vote for so-and-so, because I don’t think their contribution to the combined economic authority has been particularly helpful.” The reality is that we need a figurehead at the head of a unitary authority. I have always been in favour of elected mayors—I stress elected. A clearly identifiable person responsible and directly accountable to the electorate is the best way forward.

The report states:

“Enhanced local democracy offers the best possibility of a step towards addressing the challenges of the wider democratic deficit caused by the over centralisation of England.”

I am not, as I said, entirely convinced that combined authorities are the way forward. The relationship between unitary authorities and parish councils is crucial. Unitary authorities are the best way of creating a clearly identifiable structure that the electorate can identify with. We have all experienced the confusion in the minds of voters about who is responsible for various services. We have to recognise that people identify with their towns or villages and their counties. However, in many cases, counties, such as my own county of Lincolnshire, are geographically too large to cope with one local unitary authority. Authorities with 70, 80, 90 or 100 councillors are far too large. All parties have difficulty recruiting good-quality candidates to be councillors. We need slimmed-down authorities.

In my own area—the hon. Member for Great Grimsby referred to this—we suffered County Humberside for too long. We were dumped in it against the wishes of just about everyone in the locality, and suffered it for about 20-odd years. I have concerns about its possible re-creation, as we seem to be edging towards that. I acknowledge the hon. Gentleman’s comments, but I point out that it is the view of the Labour authority that a combined authority, which I would regard as a stepping stone to a larger unitary authority, should be to the south of the Humber. I think any edging towards the re-creation of Humberside is totally inappropriate. We seem to have an inferiority complex on the south bank about Humberside. The reality, however, is that the strength of the local economies, voluntary organisations and the councils themselves on the south bank are the equal of those on the north bank. Having said that, because of overwhelming public opposition, I do not think that is the way forward.

I urge the Minister to address the issue of perhaps edging towards more unitary authorities with elected mayors, and perhaps even to commit a future Conservative Government to moving in that direction.

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5.56 pm

Simon Danczuk (Rochdale) (Lab): It is a pleasure to follow the hon. Member for Cleethorpes (Martin Vickers). I congratulate my hon. Friend the Member for Sheffield South East (Mr Betts) on both his speech and his excellent chairmanship of the Communities and Local Government Committee. Wherever he or I end up after the general election, I shall be pleased and privileged to say that I served under his chairmanship. It is something I have learned much from.

Some people dream of becoming a politician because they love the fame and the glamour; some because they picture themselves as the next Gladstone or Churchill; and some, let’s face it, because they quite like the sound of their own voice. But I was different. I came into politics because I want fiscal devolution—that is the reality. It may come as something of a surprise, but it is true. Fiscal devolution sounds like an obscure and impenetrable topic, but for me it speaks to one very simple principle: that decisions should be taken as close as possible to the people who are affected by them. Belief in fiscal devolution has therefore always come down to simple faith: faith in local people, faith in local decisions and faith in local elections—and a healthy scepticism of central Government and Whitehall.

It seems that the public share that faith. The Local Government Association asked members of the public who they trusted to make decisions about their local areas: local councillors, MPs or Government Ministers. With apologies to those on the Front Benches, I can reveal that 72% of the public went for their local councillors, 11% for MPs and only 7% for Ministers. I can reassure hon. Members that I do not believe this is a reflection on their competence or integrity. I certainly do not think I have become less trustworthy since I left Blackburn council and took my seat in this place, although some hon. Members may disagree. It is not about personalities at all; it is simply that local people prefer decisions to be taken by their local representatives on the ground, rather than by remote mandarins in the capital. Many of my constituents would not understand why people who could barely point to Rochdale on a map should be taking decisions about their town. It is an understandable frustration. In principle, I want to see decisions made at a local level. The public seem to agree, but all hon. Members know that decision-making powers count for very little when they are not accompanied by control of the purse strings.

I have two young children. Often it is fun to let them make decisions about where we should go or what we should do, but I would never dream of giving them my credit card, because that is where the real power lies. For too long, central Government have treated local government as a wayward child—happy to devolve some powers, but never letting go of the credit card. I can understand that instinct. After all, it is not so long ago that a quarter of the world was quite literally run from this postcode. It must be quite a wrench for civil servants to consider giving up the power they have left. However, just as we left behind the era of empire, we should now abandon the era of the mighty central state.

Despite progress over recent years, the UK remains one of the most centralised countries in the world. Even here in London, our most autonomous city, only 7% of the taxes raised are kept by the Mayor. That compares with 50% in New York and 70% in Tokyo. In fact,

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the economies that are prospering at the moment, from the USA to Germany, are those with high levels of local and regional devolution. That is a point made in our report, which finds a connection between fiscal devolution and economic growth. Devolution is an idea whose time has come, and it is time that this country joined the modern world.

If devolution is the aim, how do we get there? That is the question, and I believe that the Committee’s report provides a good place to start looking for answers. Hon. Members will be familiar with the recommendations, but I would particularly like to lend my voice to the idea that we need to balance the desire for local authorities to keep as much money as possible with the recognition that money must also be fairly distributed across the whole country. I would also endorse the idea that fiscal devolution should happen within the local government structures that already exist. We do not need an English Parliament, creating yet another layer between people and power.

I do not want to go into detail about which spending powers should be devolved; that is for another time. What I would like to do is try to set out some broad principles. First, the process of devolution should not be uniform. The British state has often seemed obsessed with rigid uniformity, when the opposite is often more appropriate. If we look at Scotland or London, we see that devolution can often be quite messy. Instead of smooth sides, there are often sharp edges, but that is not something we should be too worried about. The mess of devolution breeds the innovation and energy that are the drivers of growth and prosperity. Nor should we be concerned if devolution happens at different rates in different areas.

That brings me to my second major point. With great spending power comes great responsibility. We need to make sure that the governance is in place to cope with new powers. This is something I have real concerns about. The Select Committee has recently seen a number of local authorities regarding serious failings, not least Rotherham council. One has to ask whether we would devolve more power to such an authority, yet there are clearly some local authorities, such as those in Greater Manchester—or Greater Rochdale, as I would prefer to call it—that want and deserve more control. The key will be to make sure that local councils can handle the powers that are devolved to them and that we manage to monitor their performance.

That brings me to the recent issue of devolved NHS spending in Greater Manchester. I should say from the start that I welcome the increased governance being given to the city region through a directly elected mayor, although I understand the concerns raised by my hon. Friend the Member for Wigan (Lisa Nandy). Elected mayors are something I have long campaigned for. However, I have a number of reservations regarding the latest announcement. The key to devolution is that the right powers are given to the right level at the right time. I have real questions about both the level of government and the timing.

Devolution on such a scale should be part of a long process and kept separate from party politics. To make such an announcement in the middle of an election campaign seems irresponsible and makes me question the motivation behind the decision. It seems to me that the announcement was designed to show that the Chancellor

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can appeal to northern cities in a way that some of his colleagues clearly cannot. The decision should not be driven by personalities, but by clear evidence and arguments. This cannot simply be a case of securing the legacy of Howard Bernstein, the chief executive of Manchester council; it must be about much more than that. Finally, I am worried that the decision will mean yet another structural revolution in health provision in Greater Manchester, when what we need is a focus on outcomes. This example goes to show that someone can be committed to devolution, as I am, but also cautious about going too far, too fast.

To conclude, I am sure that there will be disagreement in this House in the coming years about fiscal devolution. People will question individual settlements, powers and decisions; however, I hope our report shows that we can have those disagreements within a framework of consensus about the principle behind it. Personally, I favour a plan that is ambitious but also gradual. I do not want to see huge amounts of power and money thrown at local authorities that are not ready for it. That would not be good for local government or for the principle of devolution. I want to see a pragmatic approach that goes as fast as we dare, but does not overreach what is possible. I am not clear exactly how that will look, but I am comfortable with this unknown. The process needs to be organic, which will mean some confusion at points, but I am clear about what kind of country we will have once we devolve more fiscal powers: a country that is more open, free, democratic and prosperous. That is why we should all back this report.

6.6 pm

John Pugh (Southport) (LD): May I begin by apologising to you, Madam Deputy Speaker, and to the Chair of the Committee for missing the start of this debate? I shall read the Chair’s wise remarks in Hansard with intense concentration tomorrow. We have kept to the general rule of estimates day, which is a bit like “Fight Club”: the one thing we do not do on estimates day is mention the estimates, such as the £750 million on the Order Paper, which, like everybody else, I shall ignore.

The devolution we find easiest is devolving trouble—cuts, problems, hard choices. Wherever there is a good story, such as money for school dinners suddenly, we in this place rush to take the credit in one form or another. Behind it all there seems to be no genuinely guiding principle or absolute constitutional demarcation. In effect, we yo-yo between having ring-fenced, dedicated funds and giving direction where we want credit and there is money, and going back in harder times to rolling everything into some incomprehensible formula, when we want to dodge blame for cuts that are in the offing. In other words, we have no principle that we are following. We let councils make big, painful decisions on social care and housing, and then we fiddle around with their bins when we want to. I therefore warm to the idea of a genuine constitutional settlement—or at least a concordat for each Parliament—that lets each level of government know what it is supposed to be doing.

The assumption, shared across the Chamber in this debate, is that local government should try to do more and central Government should try to do less. That means in effect that local government has to have enhanced power and hopefully—and importantly—capacity. Clearly that is not generally the case, because some units are

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simply far too small, and even big units such as mets and unitaries have to band together to do new and bigger tasks. A solution might be a wholesale local government reorganisation. That is a brave choice that few Governments consider for long, so instead we have devolution on demand. However, we do not quite get it by demanding it; it has to be what the previous Government used to refer to as “earned autonomy”.

In effect, what happens is that central Government lays down some sensible conditions, such as evidence of co-operation, economic independence, officer ability and so on, and occasionally some silly conditions, such as elected mayors. But however central Government lay down those conditions and whatever they are, there are three hitches with the end result. First, it creates a patchwork quilt across the country, which some Members clearly do not think is a problem. Secondly, it leaves some areas completely and utterly orphaned—what, I ask often, will happen to places such as West Lancs, which are not in any city region whatever? Thirdly, it means that the whole issue of fair funding becomes a bigger nightmare and even more imponderable. As the right hon. Member for Wokingham (Mr Redwood) said, England still loses out at the end of process by comparison with the regions of Scotland and Wales.

There is one unexpected consequence, however, and I want to draw people’s attention to it today. It appears to me that existing local authorities are not best shaped to deliver the new agendas. Their boundaries often have little relationship with economic, transport or strategic priorities. My own borough of Sefton provides quite a good example in that it has hugely different priorities at either end. It has a seaside town at one end and Liverpool’s major dock at the other. The future of one end is bound up with the River Mersey and Liverpool, while the other end looks to the River Ribble and Lancashire.

How can one authority with limited representation on the city region fight for the interests of both? In a sense, it is diluted. Sefton has made a virtue of its oddness, which is down to two town halls, although at one stage it had five. It has often boasted that diversity is its strength. I have constantly pointed out that that did not work particularly well for Yugoslavia. Sefton has had two boundary reviews that have clearly indicated the severe problem here.

I conclude that if there is to be devolution on demand, there must be scope for local government reorganisation on demand, but there has been little scope for that recently. Were a clear case to be made, I think it could be positively helpful. We must have a permissive approach; otherwise, devolution—in the wrong shape and with the wrong organisations—will end up just as unpopular as centralisation.

6.11 pm

Andy Sawford (Corby) (Lab/Co-op): It is a pleasure to respond to this interesting and constructive debate. In common with other hon. Members, when I am out and about visiting school and community groups, groups of elderly residents and so forth, I am often asked what it is like in Parliament and people share their disdain for how Parliament behaves, particularly at Prime Minister’s Question Time, for example. I regret that members of

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the public do not so often encounter debates such as this one, in which interesting contributions are made from all sides and a measure of agreement is reached about devolution, along with some significant differences about how to devolve power and how to engage the public in the debate.

The report that has provided much of the focus of today’s debate makes a strong and passionate case for further devolution in England. I found it telling that none of the submissions to the inquiry opposed further devolution. The case for localism in the UK is overwhelming, and the case for further devolution within England—the great unfinished business of Labour’s long-term commitment to devolution across the UK—is overwhelming, too.

The report identifies a shared consensus that we have reached a “high water mark” of powers maintained in Whitehall, and I agree with that assessment. The report identifies three key features through which changes can be made to the way in which local government is funded and to the powers it possesses. I agree with the first recommendation that

“any system of devolution should recognise need while balancing incentives for local areas to build up their economies.”

The debate has provided an interesting airing of the tension in the report between those two aspects, which I commend to anyone looking at how best to grapple with it. I agree, too, that

“power should be devolved to groups of local authorities, covering a recognisable large-scale area, that can demonstrate how they share, and work together as, a functioning economy.”

Thirdly, I agree that

“a strong, locally agreed governance model”

is required, as my hon. Friend the Member for Rochdale (Simon Danczuk) strongly suggested.

The report, I think rightly, does not prescribe a particular governance model, unlike this Government who are determined to force metro-mayors on English cities—without, as my hon. Friend the Member for Wigan (Lisa Nandy) said, any proper public consultation. In fact, following public consultation some years ago, that very idea was rejected.

We broadly welcome all three proposals. I congratulate my hon. Friend the Member for Sheffield South East (Mr Betts), the Chairman of the Communities and Local Government Committee, and the other members of the Committee, many of whom have spoken, on their excellent work in producing this report, and indeed on all the excellent work they have done over this Parliament in scrutinising the work of the Department for Communities and Local Government as thoughtful advocates for localism.

I am disappointed that we have had to wait eight months for the Government’s response to this report. Why are we having this incredibly important debate just four weeks before this Parliament dissolves? Could it be that the Government have something to hide? It is noticeable that on the equalisation and redistribution recommendations, the Government response does not refer at all to the importance of having a needs-based element to the funding.

This Government have paid lip service to localism, but the rhetoric has not often matched the reality. Far from feeling empowered by this Government, councils feel emasculated. They have been consistently attacked

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by the Secretary of State, who vents his opinion on everything from the level of reserves councils should hold to how often the bins should be collected. At the same time, councils have been subjected to the biggest cuts of any part of the public sector, despite being recognised at the beginning of this Parliament as the most efficient part of it.

There is much talk of savings and efficiency, but we know that the reality in many communities around the country is of councils trying to do their very best, but now having to make serious cuts that impact on people’s lives. Core funding reductions in local government are an average real-terms cut of 40%, but the cuts were not spread fairly. Some areas have had huge cuts. Reductions in spending have hit areas with the highest needs hardest, and projections for 2017-18 suggest that by that time there might be a difference in cuts of nearly £1,000 per head between the least and worst-affected communities.

On many occasions we have debated the figures that the Government use to illustrate local government spending power, so I shall not focus too much on them today, other than to say that no one and nobody—not the Local Government Association, not the National Audit Office, not the Select Committee and not the Public Accounts Committee—believes that the Government provide a true reflection of the levels of resource available to local authorities, of the deep unfairness of those cuts and of the challenges that presents. This provides an important context for understanding devolution, but let me say that I think it makes the case for devolution even stronger. We must be thoughtful about how we implement it at a time when councils are under such huge strain.

I cannot agree with the assessment of the hon. Member for Cleethorpes (Martin Vickers) that the districts are dying. I see districts doing incredible work. My own local authority of Corby is doing great things in our local area—building new council houses, backing regeneration and working with me to improve the local labour market by trying to cut bad practice by agencies. Our districts are doing great work, as are all levels of local government, but they are faced with really difficult times.

What councils want, aside from a Government who treat them with respect, is fairer funding, to which Labour is absolutely committed. Councils also want help with longer-term funding settlements, as the report makes clear, so that they can plan ahead. Labour is committed to that, too. Thirdly, they want more devolution of power and funding so that they can work with other public services to get the most out of every pound of public funding.

Mr Redwood: Does the hon. Gentleman’s party have plans to devolve the right and the duty to raise more revenue by local government? If so, by which taxes and what powers?

Andy Sawford: I am not surprised that the right hon. Gentleman wants to tempt me down that path. What I am setting out today is a very radical plan for devolution of £30 billion of funding. Of course we recognise that there is a case for fiscal devolution, and we will allow local authorities and combined authorities to retain 100% of business rates. That is a welcome step forward in fiscal devolution, with which the right hon. Gentleman’s party is yet to catch up.

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A Labour Government will introduce a proper recognition of needs into the funding formula—we are committed to that. How can it be right for the 10 poorest authorities to be hit hardest, while some authorities such as Wokingham have seen their budgets increase? The right hon. Member for Wokingham (Mr Redwood) will doubtless have different conversations with his local authority, which has benefited from a budget increase, from those of many other hon. Members whose areas have faced huge cuts.

We will take steps to allocate resources much more fairly across local government. Over the medium term, we will give councils greater ability to make long-term plans by introducing multi-year funding settlements. This is supported by local government: we have heard those calls; we support them and we will act. We will devolve power down to local councils and communities—devolving decision making on transport investment and on bus regulation, for example. If those powers are good enough for people in London to exercise at a more local level, they are good enough for the rest of the country.

The public will know that Labour has a strong track-record of devolving power. We passed the Scotland Act 1998 and the Government of Wales Act 2006, and only a future Labour Government will be committed to an English devolution Act that will reverse a century of centralisation. Members have talked about the great early years of some of our cities, which provided pioneering solutions to the problems they faced in the 19th century, but also about how those powers subsequently drifted back to the centre. We intend to reverse that.

Our devolution Act will secure devolution for local communities in England, transferring £30 billion over five years and passing down power and resources for transport, skills, employment support, housing and business support. That is three times as much money as the current Government have said they will devolve in the next Parliament. We will also devolve business rates to city and county regions and combined authorities so that they retain 100% of the additional money that is raised, which constitutes an important fiscal devolution.

The current Government’s talk of devolution relates to limited powers for a small number of larger cities. I agree with those who have called for devolution throughout the country, to all the villages, towns and cities that we represent and that want an opportunity to take more powers and funding so that they can make decisions locally. For all the rhetoric about empowering northern cities, it is worth reminding ourselves that areas such as Liverpool and Manchester—some of the most deprived areas with some of the greatest needs—have faced the biggest cuts in the country. There is nothing empowering or localist about taking with one hand and giving far less back with the other. As was pointed out by my hon. Friend the Member for Wigan, we need to involve people in this devolution, because they currently feel that decisions are made too far away from them. It is important for communities to be involved as we hand over power and resources.

We will join up commissioning between councils and the NHS through health and wellbeing boards to provide “whole person care” by means of a care budget for people with long-term conditions such as disability and frailty. I shall say something about the Manchester proposals in a moment. We will devolve commissioning

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for employment and skills so that those services are properly joined up. My hon. Friend the Member for Wigan said she felt that the public had been cut out of the conversation in her area, and that consent was needed for this devolution. She was absolutely right. We want to ensure that, as authorities come forward and explain how they will work together to take their new powers and make the most of them, they engage the public in that conversation.

I was extremely disappointed when my local county council announced its intention to explore a partnership with two neighbouring county councils. That did not make much sense to me, but I was more worried by the fact that neither the districts nor the public had been engaged. That is no way in which to build public consent for a radical devolution of power.

We have heard from some Members who represent county areas. I agree with their criticism that the Government have no plan for devolution to counties and county regions. They seem to have a blind spot when it comes to huge areas of the country. If we are given the opportunity to change the position, we will do so. We will offer economic devolution to every part of England.

The Government’s announcement that they will devolve the NHS budget to local authorities in Manchester is particularly topical, and many Members have been exercised about it today. After five years of making savage cuts in council budgets and five years of fragmenting and privatising, the Chancellor of the Exchequer has waited until five weeks before the end of the current Parliament to endorse—in many respects—Labour’s plan to integrate the NHS and social care. Moreover, as we heard from my hon. Friend the Member for Wigan and other Members, he has rushed into it without a proper consultation. The Government are really not doing this in the right way.

A key issue on which Members have commented is motive, which is what makes many of them suspicious. A Government who have, for instance, forced the part-privatisation of ambulance services on people in Greater Manchester are not a Government to be trusted with our NHS, and we question their motive when they make an announcement like this just before an election. Local leaders in Greater Manchester—who have worked with this Government and, in the interests of the people whom they serve, will work with the next—have said that they want an opportunity to develop NHS and social care integration. The leader of Manchester county council, for instance, played a big role in Labour’s local government innovation taskforce, which has championed ideas about the proper integration of health and social care.

The people of Greater Manchester want to be able to get on with the job of developing whole person care. However, before any final deal is signed, important questions about the new arrangements need to be answered. For instance, how much money is on offer, and will it be enough? Members have rightly speculated on the possibility that this is another example of the Government’s devolving the axe by handing over any responsibility for ensuring that a proper NHS and social care service can be provided in an area, and allowing local leaders to take the blame when that service does not meet public expectations.

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We must all be vigilant in the face of the danger that the Government are trying to devolve an NHS funding crisis that they have themselves created, not least through their cuts in social care. Labour will offer a better deal. We will offer the NHS and councils more money, raised through our new mansion tax That will allow them to build an NHS that starts in people’s homes, looking after them there and ending the culture of 15-minute care visits. There will be money for the extra nurses, GPs, home care workers and midwives whom we need. Rather than creating new bureaucracies—that is a worrying aspect of the new structure—we will move quickly to devolve more power to councils and councillors.

Democratic accountability is very important, and local leaders must be seen to be in the lead, but we must also think about what additional means of holding people to account may work in different parts of the country. We believe that local public accounts committees could provide a way of including civil society. As other Members have said, we want to engage the public directly, but we can also engage them through civil society organisations.

Mr Betts: I agree with my hon. Friend that many questions about the deal in Greater Manchester need to be asked and answered, and locally elected Members of Parliament should be involved in that process. Is it not crucial, however, that if we are to join up health and social care, there should be accountability to local elected politicians for the spending of the money? Is that important issue not embedded in the whole process?

Andy Sawford: I entirely agree. There is an opportunity here. NHS England and the Department of Health at Richmond house are not necessarily providing the strongest form of accountability to the public when things go wrong. Any Labour plan for real devolution will be intended to create a much stronger feeling that those who provide local public services are accountable. That applies especially to our NHS, which we value so much, and which we need to protect from five more years of a Government who want to underfund, break up and privatise it.

Under this Government, people in cities and towns throughout our country are feeling the pain of the longest cost of living crisis in a century. That is why we need a Labour Government to spread power and prosperity across England, so that the economic recovery benefits all working people and not just a wealthy few.

6.27 pm

The Parliamentary Under-Secretary of State for Communities and Local Government (Kris Hopkins): I welcome the debate and the report, and I share the central tenet of the speech that we heard from the hon. Member for Sheffield South East (Mr Betts). I agree that the role of local government and local leaders must be at the heart of any debate about English devolution.

Many reports have followed the Select Committee’s report. The Government published a Command Paper on the implications of English devolution in December, and we have now published our response to the Committee’s report. One reason for the delay in its publication is the publication of a number of other reports which we thought it appropriate to consider. However, I should have liked our response to be published earlier, and I apologise to members of the Committee for the fact that that was not possible.

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I welcome the Committee’s support for the basing of decentralisation and further devolution on existing structures and groups of authorities rather than on a top-down reform of structures. Local areas are best placed to make decisions about joint working and stronger partnership. We will take further steps, which will include encouraging the establishment of combined authorities when they are appropriate.

We have undertaken the biggest ever transfer of powers away from Whitehall through devolution deals, to grow the economy in a balanced way and enable Britain’s cities and communities to be engines for growth. As several Members have pointed out, this is the first Government for a long time to halt the constant move towards centralisation and provide a path back to the empowerment of local people. We have removed centrally imposed regional policy, replacing it with local enterprise partnerships which define their own boundaries and priorities and bring together local business leaders with locally elected leaders. We have given local areas a very substantial share of increases in their local tax base, with areas keeping up to 50% of the increases they deliver in business rates and all council tax plus the new homes bonus, and we have made it clear that we want to go further. The Prime Minister has said a Conservative Government would enable authorities to retain some 66%, and the Secretary of State has said he would like to see 90% retained by 2020.

Mr Redwood: Where health expenditures and money is being offered to local government and local government representatives, what powers will they have to switch money either out of the health budget into the social care budget or out of the social care budget into the health budget?

Kris Hopkins: As I understand it, the accountability for the spend of that money will remain with the NHS and it will be a negotiated position with the local authority. As has been said, the key thing is that the money associated with social services will be driven and directed by local government, but the idea that local authorities, the NHS and the clinical commissioning group come together and shape the services required for their local people is a major step forward. The better care fund has been a path to some of this, but this step itself is fundamental.

I would like to point out some of the things that we have achieved. We have abolished the inspection regime and targets for councils. That regime was extremely costly and imposed huge burdens on local authorities. We have reduced ring-fencing for councils and have created new community rights, giving local people a greater say in shaping their community. We have enabled more decisions about social housing to be taken locally, making the system fairer and more effective, and we have reformed the planning system to cut red tape and interference from central Government, shifting the focus for local authorities to report to their local communities. Through neighbourhood planning, we have helped local people to play a strong role in shaping the areas in which they live and work and in supporting local development proposals.

We have also taken more ambitious steps through growth deals and recent devolution deals further to incentivise local leadership and growth. Some 28 city deals have been negotiated with the largest and fastest-growing

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cities and their wider functional economic areas outside of London. We should also recognise that 39 local enterprise partnerships will have £12 billion of local growth funding devolved to them over the next five years, with £6 billion having been agreed under the first wave. They are having a direct impact. They are locally led and locally driven, with local people making choices about where the money should be spent—on better roads and public transport, greater support for local businesses to train young people and enhance skills, faster broadband and more homes.

Annette Brooke (Mid Dorset and North Poole) (LD): I wholeheartedly agree with the Minister about the benefit the growth funds are bringing to LEPs, but does he share my desire that there should be more democratic accountability for the spending of all this money?

Kris Hopkins: LEPs are a partnership between the local authorities and the business leaders who sit inside those groups, and it is up to them to negotiate that position and drive out the delivery of those services. I am confident that these emerging relationships—some of them are very strong at the moment; some still have a way to go—are giving a massive return on the limited amount of money we have to spend as a consequence of the economic situation we found ourselves in.

Mr Allen: I congratulate the Minister and his Government on the list of the measures to decentralise power that he has read out, but does he accept that any Front Bench may come forward with such a record of achievement in this area which could be imperilled by some future Government, and that the answer is to build in the rights and responsibilities of local government, and to entrench them beyond easy repeal on the whim of some future Government?

Kris Hopkins: The hon. Gentleman makes a good observation about the opportunity for a Government who are not as positive and decentralising as this one to follow another path, but I think that if local authorities are bold and understand what they want and ask for it, we will deliver that for them. I think that once they have been empowered they will be very reluctant to give up those powers.

The Government have built on the success of these approaches relating to enterprise zones and city deals to negotiate devolution settlements with cities. In November the Chancellor announced that Manchester will be taking advantage of greater devolution of powers and shortly will have its own directly elected, city-wide mayor.

Lisa Nandy: Will the Minister give way on that point?

Kris Hopkins: I did anticipate that.

Lisa Nandy: I am grateful to the Minister for giving way. I question his use of the term “shortly” to mean two to four years, but I also say to him that if this agenda is genuinely about empowering people across entire city regions, it is important to get the language right. He just talked about cities and about Manchester, but my constituents in Wigan would not recognise that that relates to them. It is important that we get the language right and make sure people understand that this sort of deal could, if we do it right, bring significant benefits to city regions, not just to cities.

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Kris Hopkins: I think I got off lightly, because I appreciate that language is important when we are talking about identity. Certainly, the Greater Manchester area has been extremely engaged in this issue for a long time, and I welcome the path it has taken. I just want to correct the point about two to four years. Elections are anticipated in 2017, and we want to see that. Primary legislation needs to be put forward to deliver that. The models for then holding the mayor to account will be debated in this House. There will be an opportunity for every Member who is re-elected to participate in the process, and I am very confident that we will have a democratically held to account mayor driving forward a very extensive range of services, including transport, housing, planning, skills, policing, welfare support and, of course, health.

Other cities have been engaged in this, including Sheffield city region, and there are continuing talks about Leeds. We believe there is scope for decentralising more funds, but the key is making sure that local authorities have an opportunity to grow their own local economy, and we have assisted in that through business rates retention and the new homes bonus.

Graham Stringer: Select Committee recommendation 49 starts:

“Growth in one area of England does not mean reduced growth elsewhere.”

Frankly, I did not understand the Government’s response to that recommendation. Can the Minister confirm that he agrees with the Select Committee recommendation, and that growth in one area will not mean less borrowing powers or less resources for another part of the country?

Kris Hopkins: That is certainly not my intention. My intention is to see every part of the country grow. The Chancellor has gone out there and supported the northern powerhouse, and we have gone to every corner of this country to make sure that this works. At the end of the day, however, growth will be locally led and individual areas will need to be supported in this process, but many will seize the opportunity to grow their local economies.

We have heard some good contributions from Members and I want to comment on them.

Mr Betts: I read out a quote by the Prime Minister, which I presume the Minister agrees with, about proposals for increased fiscal devolution in Wales. So far, he has not talked about fiscal devolution at all. The Prime Minister said:

“That means those who spend taxpayers’ money must be more responsible for raising it. This is devolution with a purpose”.

Does the Minister agree with that in principle, and if so, if it applies to Wales, why does it not apply to Manchester, London or Sheffield?

Kris Hopkins: It applies to England at this moment. We have given local authorities the ability to raise money, to drive their local economies and to build more houses and be rewarded for doing so. The decisions associated with that expenditure are now being taken at local level.

The tone of the debate has been really good, despite one or two glitches in some contributions. On the whole, people realise the enormous power that local government has and the massive contribution that it makes to society and to delivering public services. The

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report produced by the hon. Member for Sheffield South East recognises that the movement towards more decentralisation and ensuring that people at local level are more accountable is the way forward. That is certainly the desire of this Government.

My hon. Friend the Member for Folkestone and Hythe (Damian Collins) talked about a northern powerhouse, and about his desire to see his county step up and seize the opportunity for more devolved powers. He was right to say that. In contrast, the hon. Member for Corby (Andy Sawford) seemed to believe that it was up to central Government to come up with a plan for a local area. It is not about that. It is about groups of local authorities having the confidence to follow what they see as the route to economic growth. It is about their making those choices and coming to us. Our door is open to the authorities that make those choices.

My hon. Friend was right to recognise that the move from the better care fund towards more integration in our social care is extremely important. There is an issue with demographics, given the enormous growth in our elderly populace, and we have a responsibility to ensure that we deliver quality services efficiently. He also talked about waste, and about community housing policy. Those are two key areas in which local authorities can make decisions.

The hon. Member for Blackley and Broughton (Graham Stringer) brings an enormous amount of knowledge and expertise to the House and I congratulate him on his 30 years of public service. He has faith in local government; in fact, he has more faith in local government than he does in central Government. I, too, have huge confidence that local government can deliver what is needed. He mentioned the use on the radio of the term “grubby hands”. I, too, thought that that was appalling. People working in local government give up a huge amount of their time to make a contribution, and they do so out of choice. I applaud the work of many local authority leaders and councillors, and I think that the BBC should apologise for that comment.

The hon. Gentleman was right to observe that the health deal was negotiated—and will be negotiated further—with local leaders. I have confidence that the democratic process will win, and that people will seize these opportunities. The hon. Member for Wigan (Lisa Nandy) has pointed to a lack of involvement by local people in that process, but the councillor who is the leader of Wigan is a local person, and those 10 people came together in a pragmatic way—as my hon. Friend the Member for Bromley and Chislehurst (Robert Neill) said—and made a choice about this. We will also put in place primary legislation to ensure that there is a directly elected representative. The journey in Manchester has not happened just in the past four weeks. It is not something that has appeared just before the general election. It has been going on for a decade-plus.

Lisa Nandy: Can the Minister tell me why the three-week consultation that he ran in January did not mention the NHS once?

Kris Hopkins: The deals associated with the health authority still have a long way to go. The principle of joining the services together is the right one, and I have confidence that those 10 local authority leaders will be accountable for that devolved spend.

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I know that the hon. Member for Great Grimsby (Austin Mitchell) is a passionate Yorkshireman. He talked about “devo-tyke” and “devo-Manc”, and he was right in what he said. As a Yorkshire MP myself, I recognise—as do Opposition Members—that there is an opportunity here. Sheffield has seized it and Leeds is having a conversation about it. This is up to local leaders. I remember this conflict from the time when I was a local leader: it is not easy for the different tiers of government to come together as one body, regardless of politics, to make choices about how to grow their economies and ensure that those in their most deprived areas can change their lives and become prosperous. I applaud the work of the all-party parliamentary group on Yorkshire and North Lincolnshire, which has come up with some really good ideas on how to achieve these aims.

I want to go back to Wigan, just for a moment. I do not want to rub it in—well, actually, I do want to rub it in a bit, to be quite honest!

Heidi Alexander (Lewisham East) (Lab): Get on with it!

Kris Hopkins: I am getting on with it. The hon. Member for Wigan said that the new plans were not the way forward, but let us just think about the journey that we have made. We have moved from having an unelected regional development authority, a top-down obsession with centralisation and a target-driven system to a situation in which we have individuals making choices about the path that they want to take to economic success. That is the right way to do it. This is not about creating more bureaucracy or creating more politicians for the sake of it; it is about local people making a choice about devolution and seizing those powers and opportunities. That is a principle that everyone in this House can support.

Question deferred until tomorrow at Seven o’clock (Standing Order No. 54).

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Ministry of Defence

Defence and Security Review (NATO)

[Relevant Documents: Third Report from the Defence Committee, Towards the next Defence and Security Review: Part Two–NATO, HC 358, and the Government response, HC 755.]

Motion made, and Question proposed,

That, for the year ending with 31 March 2015, for expenditure by the Ministry of Defence:

(1) the resources authorised for use for current purposes be reduced by £618,573,000 as set out in HC 1019, and

(2) further resources, not exceeding £426,760,000 be authorised for use for capital purposes as so set out, and

(3) a further sum, not exceeding £426,834,000 be granted to Her Majesty to be issued by the Treasury out of the Consolidated Fund and applied for expenditure on the use of resources authorised by Parliament.—(Mel Stride.)

6.46 pm

Rory Stewart (Penrith and The Border) (Con): I should like to begin by talking about the House of Commons Defence Committee’s report. The key element in the report, and in what I hope will be my relatively brief remarks, is that Russia poses a significant and substantial threat to Europe. That argument has been made in great detail by the Defence Committee and, in the months since the report was published, it has become increasingly evident that it is correct.

I remind the House that, while we were working on the report, we had a statement from the Foreign Secretary that he had been assured by Lavrov that Russia would not invade Crimea. Four days later, Russia invaded Crimea. We then heard a number of specialists and analysts say that Russia would not go into eastern Ukraine, but it then did so. We also heard people say, after the Malaysian airliner was shot down, that that would be the moment at which Russia would back off because it was embarrassed by what it had done. Russia did not back off. People then made it clear that Russia would not extend its activities to Mariupol or Odessa, but as we can now see, separatists with Russian support are moving towards those two cities.

What does this mean for the United Kingdom, the Ministry of Defence, NATO and defence spending? The House of Commons Defence Committee’s report focuses on two things: the conventional threat posed by Russia, and the threat that we describe as next generation warfare, ambiguous warfare or the asymmetric threat posed by Russia. Although those two things are related, it is worth analysing them separately.

On the conventional threat posed by Russia, the report argues that, through its Zapad exercise in 2013, Russia showed its ability to deploy almost 70,000 troops at 72 hours’ notice. The current estimate is that it would take NATO almost six months to deploy that number of troops. Russia has also displayed its ability to fly nuclear bombers to Venezuela and to exercise for a full amphibious assault on a Baltic state. It has upgraded its nuclear arsenal and it is committed to spending $100 billion a year on defence. All of that is taking place in the context of a decline in NATO defence spending.

Dr Julian Lewis (New Forest East) (Con): I thank the Chairman of the Committee for giving way so early in his speech. One of the reasons that he has had to

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consider only two aspects—namely, conventional and unconventional warfare—is that our strategic nuclear deterrent is still in place, and if either the Opposition or the Conservative party has anything to do with it, that will remain the case. Does my hon. Friend agree that it would be madness to think about disposing of our deterrent and ending our continuous at-sea deterrence? Is it not strange that there is not a single Member present who represents the party that proposes that we should abandon that continuous at-sea deterrence—namely, the Liberal Democrat party?




Oh, the hon. Member for Colchester (Sir Bob Russell) has just appeared. I hope that he disagrees with his party on that matter.

Rory Stewart: That is an invitation to go into exactly this theme: in terms of responses to the Russian conventional threat, we have planned, for 20 years, for fighting enemies in places such as Iraq and Afghanistan. We have planned on the basis of such expeditionary warfare. The planning assumptions at the base of Future Force 2020 or the strategic defence and security review were about being able to put 6,600 people—or 10,000, in the past—into the field and maintain them there for enduring stability operations. We have not really thought about taking on an enemy such as Russia. In the national security strategy, the threat of what we have seen done by Russia was marked down as a tier 3 or bottom-level probability.

That means a lot of things: it has implications, of course, for nuclear weapons; it has implications for many capacities that we have got rid of in Britain over the past 20 years, such as our ability to exercise at scale —in the mid-1980s we used to be able to exercise with 130,000 or 140,000 people, whereas last year we were exercising with about 6,600 people, at a time when Russia was exercising with about 70,000; it has meant that we got rid of our significant capacity in wide-water crossing—that is engineering; it has meant a reduction in armour, because we did not expect to be fighting tank battles; and, more relevantly to the question posed by my hon. Friend the Member for New Forest East (Dr Lewis), it has also meant that we need to think much more seriously about ballistic missile defence, and about chemical, biological and radiological and nuclear.

Mr John Redwood (Wokingham) (Con): I accept my hon. Friend’s Committee’s recommendation that as a minimum we have to spend 2% of GDP, but even at that level how many of these missing things could we put back into our capabilities?

Rory Stewart: That is a very good question, which I hope to be able to deal with towards the end of my speech. The assumption of spending 2% of GDP on defence, which is essential because we organised an entire NATO summit around the idea of doing that, is of course the hope that as the economy grows, defence spending will grow and we can make the necessary five-year planning, which will return confidence to the armed forces and allow us to make some of these investments. The question is a good one, because we would still face significant constraints in relation to Trident and to operating our aircraft carrier. If we wanted to make significant investments in restoring armour capacity, even 2% of GDP would be pushing it.

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Mr Jim Cunningham (Coventry South) (Lab): I apologise for coming in late. About 30 years ago, when Denis Healey, as Defence Secretary, looked down the road at the defence needs, he said that modern warfare for the future would rely more on conventional weapons than nuclear weapons and that sort of thing. On the hon. Gentleman’s other point, although we may not have planned for any war with Russia, I imagine the United States has, because it plays “war games”, for want of a better term, and examines various scenarios. What does he think about that? Does he know anything about that?

Rory Stewart: The hon. Gentleman rightly says that we have not been focused on Russia, and the United States certainly has more capacity, but it is striking that even the US significantly reduced its capacity to deal with an adversary such as Russia. There has been a lot of criticism within the entire Pentagon administration about the focus on counter-insurgency warfare, and a man called Colonel Gentile ran a huge campaign to try to get the US to focus more on conventional threats. Britain has got rid of a lot of our Russian analysis capacity. One thing my Committee’s report pointed out is that we got rid of the Advanced Research and Assessment Group, which did the basic Russian analysis, we sacked our Ukraine desk officer and the defence intelligence service reduced its Russian analysis. The same has been happening in the United States, although it is now building this capacity up rapidly, but when we go to Supreme Allied Commander Europe and look at the American capacity, we see that that Russian capacity is being built up from a very low base again, which is troubling.

I do not wish to speak for too long, because I know many Members wish to contribute, so let me return to the basic framework of my argument: conventional; unconventional; and what we should be doing. I have set out the conventional, so what should Britain be doing? The Committee believes we should be looking to exercise at a larger level, so we should begin to return to some of the kinds of exercises we did in previous eras, which involve exercising at least at a divisional level. Encouragingly, NATO is beginning to look at an exercise at a level of 35,000 people—we would like to see more of that, and we would like politicians and policy makers to be involved in that. We would like to see all-armed exercises. We are going to be looking closely at Norway 2018, which seems to be a big opportunity to do this.

We have to look carefully at this very high readiness taskforce. One thing the Committee recommended was the setting up of a deployable force under SACEUR like the allied rapid reaction corps, which could go out and respond rapidly within 72 hours to a Russian threat. It was a very good sign at the Wales summit that that commitment was made, but the details need to be improved dramatically. The framework nations are struggling to provide 5,000 people and they need to produce one brigade standing up, one currently in exercise and one standing down. We have not yet seen what is happening with the enablers. We need to see whether they will be able to move forward with ISTAR––intelligence, surveillance, target acquisition and reconnaissance—and whether they are going to have the cyber-capacity connected. Here is another question, perhaps for the Minister: France has committed as a framework nation, but are we certain that it is committing its troops uniquely to

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SACEUR or are we in danger of a situation in which people are double-hatting? In other words, are the French retaining the ability to deploy their brigade to Africa when it suits them, so that this very high readiness taskforce will then be a second-order call?

But it is on asymmetric warfare that we need to focus most of all, because although Russian tanks crossing the border into Estonia would be a high-impact event, we estimate at the moment that it is a low-probability event. It is not one we should ignore, because of course were Putin to do it, we really would not know what to do. Were Putin to roll tanks across and take over even a mile or two of Estonia, NATO would be in a very serious problem. As the Swedish general Neretnieks has pointed out, it would be very difficult—it would require very considerable political will—to get Russia out of that situation. But the most likely move is asymmetric warfare first.

Ms Gisela Stuart (Birmingham, Edgbaston) (Lab): On that point about capacity, it is interesting to note that in 1989 there were 5,000 US battle tanks stationed in Europe, whereas now there are 29. The capacity is not there, even if we look just at what the Americans are providing, never mind our failure to provide.

Rory Stewart: That is a significant point. It is true that, ultimately, the theoretical NATO capacity dwarfs that of Russia, but a lot of this stuff is extremely difficult to deploy; many nations are very reluctant to pay the money required to exercise; a lot of this money is absorbed in pension schemes; and our problem is that we are defending an enormous, multi-thousand-mile border, where Russia could, should it wish, cause trouble all the way from the Baltic to the Caucasus. We have to deal with that entire area, which may be very difficult to do, even with the 3.3 million troops we currently have in NATO.

Mike Gapes (Ilford South) (Lab/Co-op): The hon. Gentleman referred to Estonia. Clearly, under article 5 of the NATO treaty all the other 27 member states would have an obligation to respond to an armed attack on Estonia, but there is a level of ambiguity, given the hybrid warfare that the Russians are engaged in and have been engaged in—cyber-attacks and others. Given that Putin does not necessarily wish to invoke a major military conflict, how does NATO deal with those hybrid attacks?

Rory Stewart: The hybrid attacks are exactly what I was getting on to: the asymmetric and next-generation warfare attacks. As the Labour former Chair of the Foreign Affairs Committee has just pointed out, the conventional attack is a low-probability, high-impact event. Much more probable is this asymmetric, hybrid warfare. In other words, we are more likely to find cyber-attacks of the kind we saw in Estonia in 2007, and separatists popping up claiming that they are being abused or that minority rights are being abused in places such as Narva, in eastern Estonia. As we saw, 45% of the Russian population of Latvia supported the Russian occupation of Crimea in a survey at that time. So what are we supposed to do? The answer is: it is really difficult and we absolutely need to raise our game in three areas. As has been indicated, those are cyber, information warfare and special forces operations.

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John Woodcock (Barrow and Furness) (Lab/Co-op): I thank the hon. Gentleman for giving way. The Defence Committee, which completed its report on deterrence just before he assumed the Chair, made it clear that in the event of a cyber attack we should be prepared to say to a potential adversary such as Russia, “We will not necessarily wait for 100% proof before we enact counter-measures.” We should do that despite the fact that it might have tried to create some uncertainty and ambiguity over the exact emanation of such an attack.

Rory Stewart: The hon. Gentleman is absolutely right to raise that point about cyber-attacks. Crucially, very few of us in this House—I certainly include myself in this—understand cyber in detail. We are taking it on faith that we are developing a significant cyber-capacity. It is extremely difficult for us to be confident about what we are doing in this regard. I have two questions on cyber that I would like to put to the Minister. One is to do with NATO’s cyber-capacity. The members of the Committee visited the cyber-centre in Estonia and discovered that there were only two UK personnel posted to that site. It was very difficult to be confident about what deterrent effect that kind of cyber would involve.

My second question is to do with doctrine. Are we prepared to threaten a cyber response as a way of deterring a Russian cyber-attack? In other words, if Russia were to mount a cyber-attack against a NATO member state, would we respond with a cyber-attack in kind?

Sir Gerald Howarth (Aldershot) (Con): I agree with everything my hon. Friend has said, particularly with regard to the importance of cyber. He will remember that in the SDSR 2010 one of the Secretary of State’s “up arrows”—areas in which we need to invest—was cyber-security, where we set aside £650 million over four years. Part of that was cyber-attack.

Rory Stewart: That is very important. The thing about cyber-defence that is difficult for us as a Committee to deal with—given that when we look at cyber we are often told that much of it is the job of the Intelligence and Security Committee—is just how good it is. Clearly, the Government have committed a lot of money to it, but at the same time, many Members come to us having spoken to the Ministry of Defence which is concerned about our cyber-capacity, and are not confident that we have really got to where we want to be or that we fully understand what the technology is.

The second issue is around information operations. It is very clear that the basic problem for Russian minorities in the Baltic states is the fact that they watch Moscow television. We need to ensure that we have the ability to project television into the Baltic states in the Russian language that is entertaining and engaging, that the minorities in those areas are prepared to watch, and that counters propaganda not with propaganda but with the truth. Such broadcasts must provide an objective, truthful and honest conversation about what is going on in the world and, above all, that is able to draw attention to the things that Putin is doing. That means that centrally we must invest in the BBC World Service. We spend a lot of time talking about this, about Russian-language television, but the reality is that we have yet to

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see the evidence from this Government, or from the United States, that the real investment is being made to create a genuinely watchable, attractive Russian language service that could be watched by Russian minorities around the edge of NATO.

The final and most difficult thing is dealing with special forces, insurgents, “little green men” and exactly the kinds of events that we saw in Crimea and eastern Ukraine. The reason that that is the most difficult of all is that it is a challenge of understanding not only for us and the Ministry of Defence, but also for the Foreign Office and the intelligence agencies. If Putin does something, the first question will be one of interpretation or understanding. He will operate under the thresholds. As the hon. Member for Ilford South (Mike Gapes), who was the Labour Chair of the Foreign Affairs Committee, pointed out, Putin will not initially do something that crosses the article 5 threshold. Let me provide a couple of examples to illustrate the threats. If, for example, the Polish electricity infrastructure were to go down, there might be an immediate claim that it had been taken down by a Russian cyber-attack. Britain would need very rapidly to be in a position to know whether that was in fact the case and to determine how to respond. In order to do that, we would need to have what we currently do not have—namely, the people on the ground in Poland with the necessary relationship with the Polish electricity Minister to get to the bottom of the matter very quickly and to pass the information through to us. We lack intelligence and information at every level from the strategic political level all the way down to the ISTAR level of watching Russian kit moving around.

Mr Brooks Newmark (Braintree) (Con): My hon. Friend is quite rightly focusing on the clear and present threat of Russia, but when looking at asymmetrical war, we should also be looking at the threats from the middle east and considering how to deal with those challenges. There are also cyber-threats from China and North Korea. We should be cognisant not just of the Russian threat but of other areas of the world that pose a direct threat to the UK.

Rory Stewart: That provides me with a good way to drive towards a conclusion. As my hon. Friend has just pointed out, the kind of threats that Russia or Putin can bring will be very unpredictable. I will be humiliated by what Putin does over the next five to 10 years. It is very difficult to guess what he will do next. What is clear about Putin is that he has been thinking very hard, since at least 2008, about how to unsettle or unbalance NATO. He will be pulling levers and pushing buttons that we cannot yet anticipate.