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3.9 pm

Mr John Spellar (Warley) (Lab): It is a pleasure to address Westminster Hall for the first time from the Front Bench as a deputy member of the Labour party's Foreign and Commonwealth Office team. It is also a pleasure to face the Minister, who strikes the right balance between being properly partisan-I heard him shouting and bawling from the Back Benches when he was in opposition-and always being seen as competent and, even more significantly, fair-minded. Perhaps I can compromise him further with his Whips Office by saying that there is a compromising picture of him and me opening Paula Radcliffe way in his constituency. I can assure him, however, that normal service will resume in later exchanges on the Floor of the House.

It is also a pleasure to respond to my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh), who once again showed her qualities as a tenacious campaigner. She has turned a marginal seat, which was previously not held by the Labour party, into a safe seat, and that is based on the enormous service that she has given her constituents. She has demonstrated again today her engagement with them and the battles that she has fought on their behalf.

My hon. Friend has not only raised an important issue, but paid proper tribute to members of the Ahmadi faith, their contribution to community life in her constituency and their success in founding businesses and being part of economic life in her constituency and the country. My hon. Friend is right to be proud of that success, but as I often tell groups and individuals in my constituency, we can also be proud of the fact that we live in a country where such success is possible. There are a whole number of reasons for that, and we must fight to defend our values and customs so that such things remain possible and groups can succeed.

People of different faiths, beliefs and races can live peacefully side by side in this country. I was very much taken by the contribution of my hon. Friend the Member for Scunthorpe (Nic Dakin), who spoke of a group that had led a campaign against a mosque. Its members recognised that they had been wrong, but more importantly, they felt that it was right to convey that to the Ahmadi community. I am not sure how many other countries that would happen in. It is particularly telling that even those who have sometimes had prejudices and strong views can recognise when they have made a mistake. That is not true of everyone by any means, and there will always be a minority in society who are bigoted and driven by hatred, but the great majority of people in all communities want to live peacefully. We must work to ensure that we maintain such values and maintain that sort of country. At the same time, it strongly behoves us as individuals, political parties and state authorities to react vigorously against those, from whichever community, who would disrupt society and seek to divide it.

My hon. Friend the Member for Hayes and Harlington (John McDonnell) rightly said that there are two aspects to the debate. One clearly involves the situation and relations in this country, and I will return to that in a minute. The other is the situation in Pakistan. There is also the issue of how we handle the relationship between the two.

Obviously, it was disturbing to hear the contributions from my hon. Friend the Member for Mitcham and Morden and other colleagues, who told us how certain
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groups are trying to disrupt peaceful relations, stir up hatred, damage people's businesses and even move towards physical violence. From the examples that we have been given, that seems to be a problem mainly in the Metropolitan police area, and I certainly hope that the Metropolitan police will take it up fairly urgently. As my hon. Friend the Member for Hayes and Harlington said, it is important to nip these things in the bud-to deal with things at an early stage, to establish norms and isolate those who are trying to cause the difficulty.

I remind the hon. Member for Carshalton and Wallington (Tom Brake) that, leaving aside newer legislation, the concept of actions liable to cause a breach of the peace is long established in legal principle. In that respect, the proprietors of a shopping centre, who may have rights within it, can work in collaboration with the Metropolitan police and/or the local council's antisocial behaviour unit. There is an excellent case for joint action to send the message, "This is not the sort of behaviour that we will tolerate in the public space in our borough or in London." We should have a strong attitude of zero tolerance towards those who would seek to stir up sectarian strife.

The second aspect that has been raised is the situation in Pakistan. I associate my party's Front-Bench team with the comments that the Minister has made in answer to questions over the past few months, and specifically in response to the horrific attacks on 28 May and 3 September. They were very much echoed in comments made by the previous Foreign Secretary, my right hon. Friend the Member for South Shields (David Miliband), when he was shadow Foreign Secretary. In a quote that has been previously raised, he rightly said:

That clearly reflected the previous Government's ongoing policy in March 2009, when the previous Member for Harlow, who was a Foreign and Commonwealth Office Minister, clearly laid out the then Government's position, which the subsequent coalition Government have followed very well. He said that his ministerial colleague had raised

he was referring to contacts and notes-

He said that the UK had pressed


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which has been mentioned in the debate. He said that the UK had

He added that in July 2008-this was not just a response to immediate events, but part of an understanding of the ongoing problems-the UK and its EU partners had called

I want to press the Minister a little with regard to the specific event, and the occasion in May when he described the attack on the mosques in Lahore as

and added:

It is not just a matter of getting agreement at national level in Pakistan; it is also a matter of recognising the significant role of provincial and local governments in protecting minorities in Pakistan. Therefore, national agreement and understanding is important, but things must go deeper, through the structures of the Pakistan Government.

John McDonnell: The most disappointing aspect of the attack this year was the fact that according to the Human Rights Watch report, the Ahmadi community and others in Pakistan had approached the Chief Minister of Punjab in advance to seek enhanced security for Ahmadi mosques. That was not provided and the mosques were vulnerable as a result, with the attack resulting in so many deaths. I concur with my right hon. Friend in trying to ensure that the message should be given not just to the Pakistani Government, but should be implemented at provincial level.

Mr Spellar: My hon. Friend ably reinforces my point. I am sure that the Minister will take that on board. I hope that the steps that have been suggested will be taken, so that the message will get across at different levels in Pakistan.

The debate rightly touches on relations with Pakistan, a country with which we have long and deep links, which is a major player in an important region and a partner in responding to terrorism. Furthermore, as has been obvious during the debate, many of our citizens take a deep and informed interest in its affairs. That is shown by the huge response in the UK-not just from the community that originates in Pakistan-to the floods in Pakistan. As far as I am aware, the UK has been the second biggest donor, both in the response of individuals and in the Government response to the distress caused by the floods. That has been so throughout the country.

I was at an event a few weeks ago in my constituency and there were some major figures there from the Pakistani community-as well as from the other communities: Hindu, Sikh, Christian and probably a
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considerable number of non-believers in any faith. They made major donations to assist those whose lives have been so disrupted. It is clear that the bonds between our countries are strong, but I stress that is not to do with recreating a position based on a colonial past. Even so, we should not be averse to raising human rights issues. Nor should we make the perhaps slightly lazy assumption that in a vibrant, dynamic country such as Pakistan there is monolithic uniformity of opinion. It is undoubtedly far more nuanced and sophisticated.

It is interesting to note that an independent survey showed that about 90% of Pakistanis believe that religious extremism is the greatest single threat to the country. It seems a shame that, as someone commented, the extremist 3% seem to be holding the other 97% to ransom. It is important, therefore, that Pakistan should not be isolated from the mainstream of international community, and very important that ordinary Pakistanis should remain in contact with the outside world, and should understand that we do not believe they all follow the views of a rabid, vociferous minority.

My hon. Friend the Member for Mitcham and Morden rightly stressed the efforts of the Taliban to destabilise Pakistan by inciting hatred and violence towards minorities, and the Ahmadi minority in particular. However, we should recognise that the Taliban are not very concerned, either, about their fellow Sunni Muslims. In fact, they probably hold them in greater disregard than they do other groups. They are an extremist group and are prepared to use extreme violence to impose a backward view. They are a threat to the stability of the country as well as to minorities, with the present case being the worst example of that at the moment. We should remember in this and other contexts that intolerance of others' beliefs and sectarian violence rarely stay within the bounds of a country; they spread across frontiers. That is what is happening and that is why we need to respond in Britain.

The Minister has a number of questions to respond to from hon. Members who have taken part in the debate, but I ask him also to outline what steps are being taken by the Foreign and Commonwealth Office to convey our strong concern to the authorities in Pakistan at national, provincial and local level. I assure him of our support in getting that message across.

3.26 pm

The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Alistair Burt): It is a pleasure to serve under your chairmanship, Mrs Brooke. I thank you for presiding over the debate, and I thank colleagues who have taken part. I begin, of course, by thanking the hon. Member for Mitcham and Morden (Siobhain McDonagh) for her contribution and for raising this important subject. As the right hon. Member for Warley (Mr Spellar) said, her commitment to her community-both the section of it to which the debate relates, and all others-is noted in the House, and brings her recognition wherever she goes. It is another part of her work that she does commendably in the House, and we thank her for bringing it to the House's attention.

I am grateful to the right hon. Member for Warley for his kind remarks. We do indeed go way back. We are both members of the Whips' brotherhood, albeit on opposing sides of the House. We have both been around
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for a while. I appreciated the right hon. Gentleman's work in Government. He was a good Minister and easy to talk to. Coming to open a road in my constituency of course marks him out as a special colleague, and I thank him for that. If I remember rightly, I think that I ran the 10 km race on that occasion-

Mr Spellar: There are differences between us.

Alistair Burt: I was going to say that ministerial engagements prevented him from running; but it was a good occasion and I thank the right hon. Gentleman for his comments, which I reciprocate. Although properly partisan we are able, we hope, to put such things to one side when we need to. This is one of those occasions.

In foreign policy there are many areas in which a change in Government makes little difference to what are conceived to be British interests. As to human rights and related matters I think the House can be assured that the view of the House, the Government and the country is reflected in Government. There may be nuances from time to time, but the things that we hold valuable are shared between us. The House will find the Minister and the Opposition speaking together in our condemnation of the attacks that are the subject of the debate and in our concerns about what can be done in the future.

Human rights and the treatment of minorities are obviously of major concern to the hon. Member for Mitcham and Morden in seeking the debate, and they are important to us all. She made a powerful and at times distressing case when she discussed circumstances affecting her constituents, and events in Pakistan. Her concerns for her constituents were echoed by the hon. Members for Hayes and Harlington (John McDonnell) and for Scunthorpe (Nic Dakin) and by other hon. Members who spoke.

The United Kingdom Government are concerned about the ongoing discrimination against the Ahmadi Muslim community in Pakistan and around the world. I am grateful for the opportunity to talk to hon. Members about it. We welcome the news about the all-party group and will keep in touch with that. The hon. Lady and her fellow officers will know that they need only make contact with us and we shall respond. She recognises, through the establishment of the group, the importance of the community to many hon. Members in the House of Commons who have relevant constituency interests. I will certainly draw the Home Secretary's attention to the remarks have been made today concerning events that take place in the UK. I will move on to the matters affecting home affairs later, but there is no doubt that the matter has resonance both for our foreign relations responsibilities and for what happens in the UK.

I would like to put our relationship with Pakistan in perspective before dealing with the hon. Lady's specific points, because it is important, and the right hon. Member for Warley referred to that, too. The Government are committed to a long-term, productive and friendly partnership with Pakistan. Our two countries share many strong ties: our history, the deep familial roots in our 1 million-strong British Pakistani diaspora, extensive business links and close cultural connections.

As we have heard, Pakistan is currently dealing with major domestic challenges. The recent devastating floods have caused an immense amount of damage and misery
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for more than 20 million people-misery on a scale that is difficult to contemplate in the UK, as the area affected is the size of our country. It is one of the worst disasters the world has ever seen. The UK has been at the forefront of the international response to the crisis, committing £134 million for urgent humanitarian relief and to help people rebuild their lives.

Siobhain McDonagh: Several Members have mentioned the amount of money that the British population have contributed to the relief effort in Pakistan, but we should also put on the record the work of the Ahmadis' own charity, Humanity First, in raising funds and providing services in Pakistan during the floods.

Alistair Burt: The hon. Lady anticipated my next point, which is about the voluntary contributions, but I would not have mentioned that charity specifically, so I thank her for mentioning it. In addition to what the Government have spent, as the right hon. Member for Warley has said, the response from the community across the UK generally, whether or not they have relationships with Pakistan, has been remarkable- £60 million from different communities up and down the country-and those with family connections have been especially involved. We will continue to do that work. The right hon. Gentleman mentioned the European Union, and it is important that we work closely with it. Recently, my right hon. Friends the Foreign Secretary and the Prime Minister attended a European summit at which they took the lead in pressing the European Community to do still more to improve trade agreements to enable the Pakistani Government not only to get over the immediate hurdle of the floods, but to look forward to re-establishing their economy and to have the right infrastructure to be able to do so. The EU was able to take our lead and produce more trade concessions, which will give significant assistance to Pakistan in the future.

Pakistan is also suffering from the scourge of terrorism. More than 3,000 Pakistanis died last year as a result of terrorist attacks. Those attacks and the groups that perpetrate them pose a grave threat to Pakistan and to the stability of the region and beyond, including the UK. I would like to repeat the words of the Prime Minister when he paid tribute in August to the resilience of the people in Pakistan in facing that threat. We are committed to working with Pakistan to defeat this threat. It threatens both our countries.

Human rights are at the core of our foreign policy. We raise our concerns about human rights wherever and whenever they occur, without compromise and will continue to do so. As the Foreign Secretary made clear in a recent speech, we will improve and strengthen the work of the Foreign and Commonwealth Office on human rights. That will be underpinned by British values and by our support for democratic freedoms, universal human rights and the rule of law. That approach will be based on realism; we will never overlook human rights abuses and will always strive for progress, but we will be practical in our approach and flexible about what might work best in different contexts, which is only sensible.

The multiplicity of links between the UK and Pakistan means that we engage with each other on all subjects-counter-terrorism, security policy, immigration, trade,
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development, education, the rule of law and human rights. As I have outlined, that last subject is critical to the conduct of UK foreign policy. It is as relevant to our relationship with Pakistan as it is to our relations with the rest of the world. We do not shirk from our responsibilities in highlighting our concerns about human rights, including to our friends.

Pakistan has made important progress in improving human rights. The ratification of the international covenant on civil and political rights and the convention against torture and other cruel, inhuman or degrading treatment and punishment is an important step in enshrining inherent rights in law, although we hope that the Government will look to remove or redraft the current reservations that they have lodged against both treaties. It is important that those instruments are fully implemented to help to ensure the human rights of all Pakistanis.

However, Pakistan continues to face significant challenges in those areas, and we remain committed to working with the Government of Pakistan to address them. One of the most important challenges is discrimination against, and persecution of, those of a particular religious belief, whether Christians or Sikhs, as is sectarian violence between Sunni and Shi'a Muslims. It is vital that the Government of Pakistan uphold the fundamental rights of all Pakistani citizens, regardless of their faith or belief. Pakistan can only benefit if all its citizens are able to play a central role in society. We regularly reinforce that point for our colleagues in the Government of Pakistan at all levels, and they have now established a Ministry for Minorities, which has active leadership and has brought about some positive changes. A remaining critical challenge, as has been mentioned today, is the reform of Pakistan's blasphemy legislation to ensure that it is properly implemented. Misuse of those laws is the basis for much of the discrimination suffered by religious groups in Pakistan, as the hon. Lady made clear.

Tom Brake: On discrimination, are the FCO and the Department for International Development in a position to monitor effectively whether the aid for Pakistan is being delivered equally across all communities?

Alistair Burt: The short answer is yes, and I know that because the point has come up before. If I may, I will deal with that towards the end of my remarks.

The Ahmadiyya community in Pakistan is 4 million strong. Following the creation of Pakistan in 1947, the community played an important role in the development of the new country; Pakistan's first Foreign Minister was an Ahmadi, and many prominent members of both the army and the civil service followed their faith. However, since the mid-1950s Ahmadis have faced increasing levels of discrimination, culminating in the passage of constitutional restrictions on their way of life: in 1974 the Pakistan Parliament adopted a law declaring Ahmadis to be non-Muslims, and in 1984 a further ordinance was passed, forbidding Ahmadis to refer to themselves as Muslims or to "pose as Muslims." Pakistanis themselves must take the lead in legal reform of the constitutional and legislative constraints on Ahmadis. The Government of Pakistan have a responsibility to protect all their citizens, regardless of religion or belief. The structural nature of that discrimination helps to create an environment of intolerance that manifests itself in horrific attacks.

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I turn now to the attack on Lahore that was the subject of many of the remarks made by the hon. Member for Mitcham and Morden. The attacks against the two Ahmadiyya mosques in Lahore on 28 May, which killed 93 people and injured more than 100, prompted a worldwide response and rightly generated widespread indignation in the UK, both from parliamentarians and the general public. The attacks, unfortunately, were among many that violent extremists have carried out against both minority and majority Muslims over the past few years.

The Foreign Secretary, as has been acknowledged this afternoon, was swift in his denunciation of the attacks. Shortly after, the British high commissioner in Islamabad raised both the attacks and the wider discrimination against the Ahmadiyya with the chief Minister of Punjab, Shahbaz Sharif. I echo the point, made by the right hon. Member for Warley, that it is important that we engage at both federal and provincial level, which we do, in order to make our points on human rights. It is essential that the message gets though everywhere.

Senior officials from the British high commission in Islamabad had regular contact with officials from the Ministry for Minorities on the matter long before the attacks took place, and continue to do so. What more, then, can we do to help end the difficulties faced by Ahmadis in Pakistan and elsewhere? Most importantly, we must engage robustly and regularly with the Government of Pakistan, and we do. Following the attacks, I met with members of the Ahmadiyya community from the UK. I had the honour of meeting the national president, Rafiq Hayat, and members of the community in my office, and I am grateful for his insights on the issue at the time. He was able to give me at first instance evidence of discrimination and attacks on the community. As a result of that, in answer to a question from the hon. Member for Carshalton and Wallington (Tom Brake), I contacted the Home Secretary and briefed her about the matter so that she was able to take it into her calculations and her concerns about extremism in the United Kingdom. I shall ensure that a copy of today's debate goes to her, with emphasis on the remarks that have been made.

Mary Macleod (Brentford and Isleworth) (Con): Would my hon. Friend agree that MPs are best placed to show leadership on this issue in our local communities, and to speak out against any persecution of Ahmadis?

Alistair Burt: My hon. Friend is absolutely right. On such issues, it is clear that those of us in leadership positions have a responsibility to speak out. She put that clearly.

Indeed, I thought my hon. Friend the Member for Battersea (Jane Ellison) also got it right when she said that, for most of us, differences in doctrine between those of different faiths, including majority faiths, are never a justification for violence or discrimination. We all have different views on many things. None of us should be able to use those differences of view as an excuse, for that is what it is, to discriminate or commit violence against others-or, if not physical violence, to use the language of abuse which all too quickly can be turned against a group of people. We have seen that in our own society and community and, sadly, worldwide.

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As my hon. Friend said, we do not really care about those differences. What we care about are tolerance and the principles of respect for different views, protection under the law and freedom from fear. Those are the things that matter to people in the UK, and within that we allow people to hold their different views. If those principles are transgressed, we are all violated to some degree, and that is why we will continue to speak out so clearly.

I shall draw to the attention of my right hon. Friend the Home Secretary the matters raised here that affect the UK, because they indicate a degree of fear and concern in the Ahmadiyya community that must be recognised and discussed in those places where that community might be under threat. This debate has done a valuable job in bringing forward the issues affecting people in this country as well as abroad.

I conclude by going back to the Pakistan side of things and saying a little more about the matters raised by the right hon. Member for Warley. Together with our EU colleagues, we have a regular human rights dialogue with the Government of Pakistan in which the continuing mistreatment of religious groups features strongly. I have been disturbed to hear about reports from the leadership of the Ahmadiyya community of discrimination which continues to be suffered both here and abroad, and we mention them when speaking to those we deal with from Pakistan. They are aware of the knock-on effects in the UK of comments and discrimination in Pakistan.

I speak regularly to Shahbaz Bhatti, Pakistan's Federal Minister for Minorities-most recently, just last week. The work that he is doing to reform the blasphemy laws is incredibly important, and we support him wholeheartedly in it, but I do not think that any of us have any false expectations. We recognise just how difficult it is to deal with such laws in a culture that has been turned against minorities and against the Ahmadiyya community. Despite the strenuous efforts of many in that Government to say and do the right things, it is hard to get such things through.

Trying to change the blasphemy laws provides perhaps the best opportunity for a change in attitude. I have raised the treatment of Ahmadis in Pakistan with the Pakistani Minister and, through him, have been monitoring the progress of the case against those accused of the Lahore bombings. The Government of Pakistan must ensure that the investigation and legal process are open, transparent and credible.

I spoke to the high commissioner for Pakistan at lunch time, to inform him of this debate and to get an assurance from him that he takes these matters extremely
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seriously. He wanted to communicate to me just how seriously his Government take these issues and this case, and I put that before the House.

I commend the recent report by the all-party group on human rights on their recent investigation into the treatment of Ahmadis in Pakistan, and I note its recommendations. The members of that group will be pleased to learn that the British high commission in Islamabad has been funding a project to increase the capacity of law enforcement officials, Government representatives and civil society to implement and monitor proper procedure in blasphemy cases. That is a way in which we can use the Foreign Office budget directly and practically to build capacity, and to assist those who would like to see change to achieve it.

The hon. Member for Carshalton and Wallington discussed media reports that aid for the victims of the flooding in Pakistan is being denied to some religious groups. That is very disturbing. The UK is committed to ensuring that the aid that we provide reaches those who need it most. Access to aid should not be predicated on religious or political belief, which is a principle to which all humanitarian organisations and non-governmental organisations delivering UK aid subscribe. The Department for International Development closely monitors how our aid is distributed and undertakes strict checks on the organisations that we fund, to ensure that our aid is spent properly and delivers the intended results. I welcome the commitment by the Government of Pakistan to ensure the equitable distribution of aid to those in need, and look forward to their adhering to that principle.

Discrimination against or marginalisation of any group because of their religion or belief is not acceptable. The UK is consistent in condemning all such instances when they occur, and I know that hon. colleagues on both sides of the House support that. The Government are aware of and critical of the discrimination faced by the Ahmadiyya in Pakistan. We are committed to working with the Ahmadiyya community, NGOs and the Government of Pakistan on the issue in a spirit of openness and understanding. Accordingly, I thank the hon. Member for Mitcham and Morden for bringing the matter to the House, and assure her that she will have our support in taking it forward in the future.

Annette Brooke (in the Chair): I thank all the contributors to the debate.

3.46 pm

Sitting suspended.

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Mutual and Co-operative Rail Franchise Bids

4.29 pm

Gavin Shuker (Luton South) (Lab/Co-op): It is a pleasure to undertake this debate today. I thank the Minister of State for the communication that I have had with her office in the past few days. We are talking about an important subject. We all like to grumble about the railways. Hon. Members are not exempt from that; indeed, I could tell the story of my last disrupted journey, which was this morning. However, the very difficult privatisation of the early 1990s, brought about by the Minister's predecessors, sought to privatise a network in 40 weeks. That meant severe growing pains and a sharp learning curve. Other countries are travelling down that path over several decades, which is perhaps a salutary lesson to the present Government about the path and speed of change. However, we all accept that a new order is emerging, and it is right to accept that aspects of the industry today are the envy of Europe.

In the past 10 years, the combined measure of reliability and punctuality has risen from 78 to 91.5% and satisfaction has risen from 72 to 83%, with more passenger journeys now undertaken than at any point since the second world war. Yet, as we come into the constrained spending context of the comprehensive spending review, as the Department closes its consultation on rail franchising, and as customer expectation will rise in light of the massive fair increases of RPI plus 3 proposed by the coalition Government, a re-examination of provision on the UK's passenger railways must surely be prioritised.

So, how do we improve rail? It is my assertion today that co-operative and mutual ventures across the industry can raise the bar. They can model accountability and effective public engagement, and improve services. When looking at franchising, which is the bedrock of the passenger network, it is necessary to set it within the context of the industry, which means briefly discussing the infrastructure manager-Network Rail.

Network Rail's board structure, with about 100 members, is perceived as clunky and ineffectual in providing effective control. In 2004, the then Transport Committee stated:

In July 2008, the Committee returned to the theme of Network Rail, and found its governance "inadequate". Network Rail provides a vital public service and was created as a public interest company, limited by Government guarantee, but genuine accountability, which is essential for driving up standards across the railways, is vital and should be expected in return for the large sums of money that the body receives from the taxpayer.

The Co-operative party has been key in developing a mutual model for Network Rail through "The People's Rail" campaign, and as a Co-operative MP I welcome that contribution. The campaign contests the assertion that true accountability could be ensured by our all having the right to become individual members of Network Rail. As a genuine mutual venture, Network Rail could be structured in such a way that we all had a voice. A democratically elected members' council with power over the appointment and pay of Network Rail's board could drive up performance and accountability and, dare I say it, tackle a culture of excessive bonuses.

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Mr Gareth Thomas (Harrow West) (Lab/Co-op): I apologise to my hon. Friend for missing the very first part of his contribution. Is there not a similarity between what he proposes for Network Rail and the model that the coalition Government have endorsed as the way forward for something that was introduced by us-foundation hospitals? Exactly that type of structure has been designed to help to hold to account the senior management of our hospitals.

Gavin Shuker: I thank my hon. Friend for his intervention, with which I completely agree, and I associate myself with his comments. What we have seen from the coalition Government is a desire to look at innovative models across public services, and I believe that railways should not be exempt.

As I was saying, a democratically elected members' council with the power of appointment and pay over Network Rail's board could drive up performance. Co-operative and mutual structures deliver organisations that act in our interests. Who would be a better boss of the rail network than the passengers and the British public themselves?

Moving on to the bulk of my remarks on rail franchising, in a reply to a question from my right hon. Friend the Member for Tooting (Sadiq Khan) in the House on 22 July, the Minister said:

However, it is clear that there are still some barriers to entry, despite the stated desire of the coalition to explore innovative models of public service delivery. We in the Co-operative party would like to see those models given all the opportunities that are before them.

The system as it stands does not make allowance for the arrival of mutual and co-operative ventures. First, bidders are required to pass a number of detailed financial tests during the bidding process. ASLEF has said that a mutual bid would not be able to meet the performance bond requirement, and has called on the Department for Transport to review the performance bond criteria. Surely that is an area for examination. Secondly, bidders are understandably required to show experience of operating transportation systems. Can the Minister provide an assurance that the interpretation of that requirement is wide enough to ensure that mutual models in which individual members have extensive experience of running transport services-even the ones that they currently work on-but in which there is a new team coming together, perhaps under a new brand, are able to bid on a level playing field? Thirdly, the fact that no franchise has yet been awarded to a mutual ownership model on the railways itself serves as a barrier to entry.

To bring about the innovation that could drive up levels of service and accountability across the industry, will the Minister carefully consider the arguments for awarding the first mutual franchise during her time as Minister? Perhaps she could start by meeting representatives of ASLEF. The union has been preparing a mutual bid to run the east coast main line rail franchise when invitations to tender are announced in 2011. It believes that the co-operative principles of sustainability and accountability should be brought front and centre in the provision of passenger rail in the UK.

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A common perception is that co-operatives are small and therefore unable to step up to the financial requirements of such a large franchise. However, the Co-operative Group has a turnover of more than £10 billion, and the east coast franchise turnover is only £550 million. The Go! Co-operative is one of the most recently established train operating companies, and down the track, as it were, it seeks to run open-access train services. That co-operative has already been authorised by the Financial Services Authority to raise the required funds, and I am sure that the Minister will want to welcome that initiative. I encourage her to take the time to talk to representatives of Go! Co-operative and to understand, in real time, both the challenges and the opportunities that are presented to people who enter the franchise system.

Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op): Does my hon. Friend agree that the strength of mutuals is that they can represent the interests both of those working in the organisation and those who use its services?

Gavin Shuker: Absolutely. I thank my hon. Friend for that intervention, and I would like to associate myself with her comments. It is true that when different stakeholders, including the people who work on the railways, are brought together, that always results in a much better service. Rail franchising is a key aspect of mutuals' activity on the railways, but there are other ventures, too, to consider.

Enterprises that are owned and controlled by those who have a vested interest in their success should not be confined to the running of the railway itself. Many services that work alongside the main business add value to the traveller experience. Services such as cleaning, catering, customer service and training would be greatly improved by local accountability that allowed the services to respond flexibly to changing needs. The Cleaning Co-op based in Bristol has already won contracts to work with Birse Rail, CrossCountry and Virgin Trains. It provides cleaning services to Oxford and Bristol universities, local schools and the NHS. As a result of its unique structure, it not only provides a highly professional service but has a high staff retention rate and a motivated work force. It is highly valued by its clients, who are also its partners. The Cleaning Co-op is one example, but there are many successful retail, catering and training co-operatives, all of which could add to the traveller experience in a mutualisation of rail franchising.

Mutualism has much to offer in the governance of Network Rail, the system of rail franchising and the services that enable a decent passenger experience. I hope that the Minister will speak about the positive contribution of these talented, professional and visionary co-operatives. As we all recognise, UK rail faces significant challenges in the years to come. There is a requirement to show that passengers are getting a fair deal. There is a desire to see profits reinvested in better services. What better way to reassure passengers that the railways have their interests are at heart and that the staff who serve them truly have a seat at the table, than to see mutual operators on our railways?

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4.39 pm

The Minister of State, Department for Transport (Mrs Theresa Villiers): It is a pleasure to serve under your chairmanship today, Mrs Brooke.

I congratulate the hon. Member for Luton South (Gavin Shuker) on securing the debate and providing us with the opportunity to discuss an important issue, namely the potential involvement of mutuals and co-operatives in the rail franchising process. The issue is of concern to a number of hon. Members and has been the subject of a range of parliamentary questions.

I would like to make it clear that the coalition Government support the creation and expansion of mutuals, co-operatives, charities and social enterprise. We fully appreciate and recognise the brilliant work done by the co-operative, mutual and not-for-profit sector in many areas of policy and public life. In fact, we want to see such groups playing a bigger role in delivering public services and in helping us to tackle the key social problems that we face in modern Britain.

I want to be clear: the Government would treat a rail franchise bid from a mutual or a co-operative in exactly the same way as they would treat a bid from a competitor in the commercial sector. If a mutual, co-op or any other not-for-profit organisation can meet the accreditation criteria, it may bid for a franchise. If it offers the best deal for the passenger and the taxpayer, it can win the franchise. I cannot promise to bend the rules for mutuals and co-operatives, but I can promise to treat them fairly and objectively, judging their proposals on the same basis as those of their commercial competitors.

Before I deal with how the accreditation and procurement process works, I will respond briefly to the points made by the hon. Member for Luton South on Network Rail-not obviously the subject of today's debate, but important none the less. I hope, Mrs Brooke, that you will allow me the latitude to respond.

The hon. Gentleman is right that we need to reform Network Rail. I am glad that there is growing consensus around that-before the previous general election, the Government seemed to think that there was no justification for reform, so I welcome his voice joining those of us who think that we need mechanisms to make Network Rail more accountable. He is right that we need to take care to get any reform right-we want not to rush into it, but to think carefully about the best way to deliver results for passengers and taxpayers.

I recognise and, to an extent, share the hon. Gentleman's concerns about the Network Rail decisions on bonuses in recent months. I am pleased that the company has suspended its management incentive plan, which I hope we see reformed in the future. We are determined to make Network Rail more accountable and more efficient. Our work is informed by that of Sir Roy McNulty, and I have no doubt that our discussion today and the speech by the hon. Member for Luton South will also form an interesting part of the McNulty review.

In order to address the issues raised by the hon. Gentleman about mutuals, one first needs to consider the general rules on rail franchising. As the hon. Gentleman acknowledged, rail franchises deliver an essential service. There are 1.2 billion passenger journeys made every year. The train operating companies are, at the moment, substantial businesses-they each have a turnover in
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excess of £100 million per annum and they provide employment to hundreds and, in some cases, thousands of people.

The Government have a twofold interest in rail franchises. First, we need to protect the passengers' interests and to hold train operators to the demanding obligations of service delivery placed on them by their franchise contracts. Secondly, we need to protect taxpayers' interests, by obtaining value for money from the franchise contracts and for the considerable sums spent on the railways.

The hon. Gentleman will appreciate that, while some franchises pay a premium and others receive a direct subsidy, all operators benefit from the Government grant made to Network Rail to maintain and renew the infrastructure. He will appreciate that considerable sums are at stake when a franchise is let and that, in letting a franchise, we trust the operator with serious and important responsibilities in relation to our economy and transport system. Therefore, the greatest care is needed to ensure that we do the best that we can to make the right decisions on whom we award a franchise to.

A key issue for the hon. Gentleman was clearly the accreditation process used to assess whether a bidder can qualify to take part in a franchise competition. The Department for Transport has recently completed a consultation on rail franchising-it closed on Monday-and I take the opportunity to thank all those who took part. Until the consultation responses have been properly considered, I cannot say with certainty whether the reforms that we will undertake will involve changes to the accreditation process. Although this is not the primary focus of the consultation, we are happy to consider whether ways can be found to make the process of letting franchises less complex and expensive to carry out. Whatever reform we adopt, however, it must still ensure that the process is fully compatible with objective public procurement principles and regulations. I am sure that the debate will provide useful input for the decisions on whether reform to the accreditation process is needed, to be considered alongside the consultation responses.

The procurement process has two main elements: first, accreditation; and, secondly, the formal bid stage. The appropriateness of potential bidders is considered at the first stage. The accreditation process is designed to achieve a manageable field of bidders, which can be expected to submit attractive, competitive and realistic proposals. Keeping the number of operators that can proceed to the formal bid stage to a manageable number reduces cost for Government and industry. The winning bidder must be capable of delivering a high-quality service at the price it has undertaken to pay. The procurement methodology needs to comply with European Union procurement law and treaty principles, including equal treatment, proportionality and transparency.

The legal entity signing the franchise agreement is required to be a limited company formed for that purpose, but the accreditation process assesses the financial standing and technical capability of the parent organisation, so it would be open to a mutual or co-operative to establish a special purpose vehicle in order to run a franchise in the same way as commercial parent groups do now. Bidders are assessed to ensure that they have a level of financial standing proportionate to the size of the franchise concerned, in order to provide assurance as to the stability of the potential operator. The Government
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need to be confident that each bidder will have sufficient financial capacity to meet the working capital needs of the franchise business. We need to assess with great care whether the bidder will be able to absorb the risks that we seek to transfer to it, which at the moment means obtaining the performance bonds that the Department needs as security in the event of a franchise default.

The hon. Gentleman has made a passionate plea on behalf of co-operatives and mutuals. I value their work, but I would be very reluctant to compromise on rules that require us to make a careful assessment of the financial capacity of those that bid for rail franchises, because of the accompanying potential risks. Having said that, we are looking at the whole process of the franchising system as part of our response to the consultation. A key aim of the franchising process must be to protect the interests of passengers and taxpayers, so it is essential that we have safeguards in place to avoid letting the contract to an organisation that, ultimately, finds that it cannot cope. The most recent example of franchise collapse, that of National Express East Coast, shows that it is possible to deal with that situation without disruption to services. However, such collapses are clearly unsettling for passengers and the work force, and leave the taxpayer with the considerable cost of stepping in to run the railways as the operator of last resort.

I hear what the hon. Gentleman says, but financial credibility checks and standards are important, and likely to become even more so in the future as we move to longer franchises, as proposed in our consultation. We will need to make longer-term judgments on the credibility of bids and on the capacity of the potential franchisee to deliver major investment, which we hope will make a considerable difference to the quality of experience for passengers under the proposed new franchise model.

I turn now to the hon. Gentleman's questions about the experience assessed when looking at franchise bids. The current rules require bidders to demonstrate a track record of operating transport systems, not necessarily in rail. Recent competitions have said that it should cover a period of at least two years. However, a completely new organisation might be able to meet that requirement by showing that its management team and work force have such a record. The issues discussed by the hon. Gentleman could be taken on board in the assessment of whether the potential bidder had the right track record to give us confidence to take their bid seriously.

A new and small organisation may have less experience than other bidders and will, therefore, find it harder to get through this stage, especially if it is interested in one of the larger, more complex franchise opportunities. My officials have an open door policy for people who want to get into the rail franchise market. I am happy to meet the delegation from ASLEF that the hon. Gentleman mentioned. It is useful to put it on the record here that if there are others-whether they are commercial operators, mutuals or not-for-profit organisations-that are interested in bidding for a rail franchise, we are willing to talk to them, and my officials are happy to advise them on how to grapple with what everyone accepts is not an easy process.

The hon. Gentleman advocated waiving or reforming some of the requirements in the case of a bid by a mutual. Removing the financial standing and technical capability factors or compromising them would import
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some real risk to franchisee financial resilience. That is my anxiety about what he advocates. If we were to waive the experience requirements in relation to a mutual, we would have to make the change for all potential bidders. That would reduce our ability to consider the track record of the major franchise operators that are currently in the market. The EU rules on equal treatment and non-discrimination mean that we have to treat all bidders the same and assess them against the same criteria. Therefore, anything that we do to help a mutual or co-op would also have to be offered to a commercial operator. If we were to relax the requirement on a track record, we would not be able to assess the previous experience and performance of the only groups that currently hold franchises. There would be public anxiety if the track record of train operators could not be considered in the award of new franchises. Moreover, the existing process is a further incentive and addition to the other regulatory mechanisms. We must keep performance levels high. To get through this difficult process, I encourage any mutual or co-operative that is considering bidding to approach my officials to get further advice.

The hon. Gentleman referred to the Go! Co-operative. I am delighted that we have that as an example of a co-operative that has expressed interest in running open access services. I gather that it would like to operate services linking main lines to some smaller market towns. I am told that it has identified a route from Yeovil Junction to Oxford for its first proposed services and that it hopes to commence operation during 2011. That is a welcome initiative. It is not for me to say whether it will get its paths or even get the operation off the ground. None the less, I very much welcome its involvement in the rail industry. There are also examples of small community-based companies running services, such as the Wensleydale railway in North Yorkshire, which has taken on a branch line from Northallerton to Redmire and is running passenger services.

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I want to touch briefly on one last area. The voluntary and not-for-profit groups are already successfully engaged with the UK's railways: I refer to community rail partnerships. The Government are very supportive of such partnerships and the work that they do. They have successfully brought additional passengers to many lines and helped to build up services and make better use of redundant property. For example, the Devon and Cornwall rail partnership works with the train operator in selling tickets at a number of locations. It encourages rail use by making it easier for the public to buy tickets. Partnerships such as South Fylde, Leeds to Morecambe and the Clitheroe line have produced impressive promotional material. Others such as the Bittern line in Norfolk have run successful promotional events. Almost all partnerships see the voluntary sector involved in improving and maintaining station facilities. There are numerous examples of local enthusiasts devoting huge care and attention to station gardens and floral displays. Right across the country, from Penmere in Cornwall to West Runton in Norfolk and Green Road in Cumbria, we see the visual evidence of the value of the work done by the voluntary and not-for-profit sector on our railways.

To conclude, the Government fully recognise and value the contribution made to the rail industry by the community-based and not-for-profit sector. I was interested to hear the hon. Gentleman's example of co-operative cleaning services. I have no doubt that there are other areas in which mutuals and co-operatives will get involved in rail supply services. Rail franchise procurement processes can present a daunting challenge to any organisation, particularly those that have not operated a similar contract before. That is why my officials offer an open door policy for potential bidders. If a mutual or co-op expresses an interest in running a rail franchise, we will not place extra barriers in their path. They will be subject to the same rules and requirements as commercial operators. If they can meet the accreditation criteria, they can bid for a franchise. If they offer the best deal, they can win a franchise. It is as simple as that.

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4.57 pm

Guto Bebb (Aberconwy) (Con): When I requested this debate on the future funding of S4C, I had not anticipated that events would move so quickly. It is fair to say that for many in Wales, the future funding arrangements for S4C have been a very visible and easily understood example of the hard choices that we as a country now face in dealing with the deficit and the debt problems. This coalition must get to grips with those issues and the mess that the previous Labour Government left us with.

No one can deny that S4C has an important place in the cultural landscape of Wales. It is important to be aware that the way in which the channel came into being is a key reason why its future funding arrangements are extremely important for many people in Wales. After all, it is the only Welsh language broadcaster in the world. Let me give a bit of historical context. The channel was launched in 1982 following a long and very public campaign, which was supported by all strands of Welsh society. It is worth noting that the decision to establish S4C was taken by a Conservative Government back in 1980.

Despite all the doubts that were expressed about the viability of a Welsh television channel, it is important to note that initially S4C proved to be a great success. The success of the channel in the early years was very much a reflection of the fact that there was a mix of Welsh programmes during the peak hours and Channel 4 programming that also attracted non-Welsh speakers. There is no doubt that the initial few years of S4C were very successful. There was a period in the 1980s and 1990s in which audience figures were often in excess of 150,000 for peak-time viewing.

Hywel Williams (Arfon) (PC): On a point of order, Mrs Brooke. May we adjourn the debate for a moment because there is a Division in the main Chamber?

4.59 pm

Sitting suspended for a Division in the House.

5.10 pm

On resuming-

Guto Bebb: As I was saying, Mrs Brooke, S4C's initial period was successful, but it is important to note that it was more than just a television channel. The establishment of S4C unleashed creativity across Wales that led to the creation of a Welsh independent television sector, which prospered not only in Cardiff but in west Wales and Caernarfon in north Wales. That was undoubtedly a successful period for the channel, and that sustained period of success resulted in changes to S4C's funding arrangements in 1991 that established a link with the retail prices index. That link has been questioned recently, and has been in the news.

Alun Cairns (Vale of Glamorgan) (Con): Is my hon. Friend aware that the document that S4C presented to the Department for Culture, Media and Sport on the request for budget savings said that the link with RPI went back to 1982? Is he not surprised that the document
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contained such a factual inaccuracy? Is it not indicative of the quality of the document submitted to the Department?

Guto Bebb: That might be surprising. The point that I want to make is that I believe that the RPI link has been a double-edged sword for the channel in many ways. In my view, the RPI link was crucial to giving S4C operational independence, because it created a feeling that the broadcaster would be independent of Government intervention. Anybody who believes that a public broadcaster should be free to broadcast whatever it desires would obviously welcome that link and the freedom that it gave S4C to pursue its own requirements. In many ways, therefore, the RPI link was a positive thing.

However, S4C had to pay a price for that link. The problem with a funding arrangement allowing for year-on-year increases was that it created a growing feeling that the channel and its management were becoming divorced from the people whom they served. When S4C's viewing figures fell, the channel felt that there was no need for S4C to respond, because regardless of whether it was successful and getting the required audience figures-although in many cases it was-it was almost immune to the realities of falling audience share, because year on year its budget would increase.

Although I believe that the RPI link gave S4C a degree of independence from Government, which is crucial, it also created a comfort zone for the channel, so I do not mourn the loss of the RPI link in determining how the channel is funded. However, little did I know when I was putting together my notes that the RPI link would be the least of the issues that we would discuss today.

Owen Smith (Pontypridd) (Lab): I am enjoying the hon. Gentleman's history lesson about S4C's funding, but as he said, we have been overtaken by events today. There are more pressing matters of funding that need to be addressed, and that is what my intervention is about. Is it not true that regarding S4C, today's announcement was a shambles in terms of detail? A rather more interesting and important problem with the documentation is that two versions of the comprehensive spending review are currently available, one of which includes figures about S4C and how much funding it will receive from DCMS and the licence fee. There is a suggestion that £70 million will come from the licence fee-

Annette Brooke (in the Chair): Order. Interventions should be brief.

Owen Smith: It is a question for the Minister, in that case. Can he tell us what the figures are?

The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (Mr Edward Vaizey): You cannot question me.

Owen Smith: Well, then, it is a question for the hon. Member for Aberconwy (Guto Bebb). Would he like to answer a question about the figures?

Annette Brooke (in the Chair): Order. I think that this intervention has been long enough.

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Guto Bebb: I believe, obviously, that one reason for having this debate is that the Minister is here and can respond in due course. The fact that there was a leak last night was problematic, but I am sure that the Minister will respond in due course.

Albert Owen (Ynys Môn) (Lab): I congratulate the hon. Gentleman on securing this debate on this important day, although I know that he did not plan it to coincide with the announcement. He said that independence was important and allowed diversity in Welsh media broadcasting. Does he therefore agree that giving ownership to the BBC will diminish S4C's independence in future? Before the general election, the then shadow Secretary of State, now the Secretary of State, said that plurality was the most important thing. Will the developments harm or increase plurality?

Guto Bebb: I am coming to the question whether the decision to link S4C to the BBC will affect its independence.

5.16 pm

Sitting suspended for a Division in the House.

5.23 pm

On resuming-

Annette Brooke (in the Chair): May I point out that interventions should be short? Mr Guto Bebb, you must watch how much time you are leaving for the Minister to respond when accepting interventions.

Hywel Williams: On a point of order, Mrs Brooke. This debate is hugely important for Wales, and for once Welsh MPs have the opportunity to say something of significance at a time when doing so will have some effect. Is there any way it is within your powers to award us double injury time, given that we have had so much disruption?

Kevin Brennan (Cardiff West) (Lab): Further to that point of order, Mrs Brooke. This is a very important debate because one of Mrs Thatcher's great reforms was to try to ensure that the Welsh language was not a party political matter and that it was put in a place where we could all agree consensually on the subject. Now that the Government have decided to play fast and loose with the Welsh language in this way, is it not appropriate that we should have a longer period to debate the subject? That would allow all hon. Members who have come along to show an interest in the issue the opportunity to contribute their thoughts.

Annette Brooke (in the Chair): Order. I am sure that hon. Members who have been in the House for some time are aware of the limitations of the Chair. Of course, any hon. Member here could have applied for an hour and a half Adjournment debate and they could still do so in the future-a course of action I would recommend. Obviously, all the time lost from the Divisions will be added to the end of the debate. I call Mr Guto Bebb.

Guto Bebb: I shall just finish responding to the intervention by the hon. Member for Ynys Môn (Albert Owen). Yes, the plurality and the independence of S4C are important; I will ask a question on that subject at the end of my speech.
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The fact that the RPI link has gone means that we are in a much more serious situation. I would like to point out that the issue of the audience figures became very important during the review of funding for S4C. The RPI issue contributed to a lack of regard for the audience figures, but we still need to clarify the fact that some of the S4C audience figures that have been bandied around are not particularly accurate. I have my own concerns about the fact that the Broadcasters' Audience Research Board viewing panel in Wales is possibly not sufficient to provide a proper audience figure.

Mr Mark Williams (Ceredigion) (LD): I congratulate the hon. Gentleman on initiating this important and timely debate. On the point about viewing figures, would he acknowledge that one of the great successes of S4C that should be recognised-this is not borne out by the viewing figures-is the work that is being done in relation to young people's and children's television? That work is very important to the Welsh-speaking communities that many of us represent, and it is not acknowledged in the figures.

Guto Bebb: The hon. Gentleman jumps ahead of me. That is exactly the point I was going to make. In addition to the question marks we have over the BARB panel in Wales, my family are a very good example of why there are problems with the viewing figures. It is true to say that S4C has made an important decision to invest in the content of children's television, and I think all hon. Members in the Chamber would welcome that. In my family, seven people live at home; five watch a lot of S4C and two unfortunately do not watch a lot of S4C. The two people who do not watch a lot of S4C are counted in the figures, whereas the five people who do are not included because they are children. My twin boys, who are six years old, would certainly be very annoyed that their viewing habits, which involve Cyw, are not included in the figures. So there are question marks over the S4C audience figures-specifically, the serial viewing figures. In addition, we should not deny that there are serious question marks over the audience figures at peak times.

David T. C. Davies (Monmouth) (Con): Would my hon. Friend not acknowledge that if the figures are as large as S4C sometimes makes out, it should be raising more than £3 million from advertising, which is roughly just 3% of its total budget-as of today, anyway?

Guto Bebb: That is an interesting contribution. The viewing figures are a cause for concern in many ways. There are good reasons to defend some of them, but we have a situation in which occasionally as few as 19% of programmes manage a figure of more than 10,000 during peak time viewing. That is a real concern. As a result, there has been a serious discussion about whether S4C can justify the funding that it receives. I believe passionately that S4C can justify that funding.

Mr Wayne David (Caerphilly) (Lab): The hon. Gentleman is being very generous in accepting interventions. Whatever we might think about the viewing figures or the funding formulae that have been used in the past, today's announcement has been made without any consultation
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whatsoever with S4C. He surely must agree that that is reprehensible and possibly leaves the matter open for a judicial review.

Guto Bebb: The hon. Gentleman should possibly allow the Minister to explain what sort of discussions have taken place. If there have been no discussions, I am sure that will be made clear in no time at all.

Mr David: What is the hon. Gentleman's view?

Guto Bebb: My view is obviously that any decision of this nature should involve a degree of consultation. We need to be aware of the fact that there is a question mark over the matter, when the viewing figures indicate that the contribution of the channel to the Welsh language is not as important as it should be. So, we are where we are and we need to think carefully about the way forward.

Paul Flynn (Newport West) (Lab): Although the hon. Gentleman's points are fascinating, we should go back to why S4C was set up. I was very much involved in the matter at the time because I was chairman of the Broadcasting Council for Wales. S4C was set up by Mrs Thatcher as a volte-face. She was reading Irish history at the time, and there was a very strong reason why she decided that S4C should be put in place: it was to avoid linguistic divisions in Wales. S4C was established to provide a full service for both communities in Wales-those who speak English predominantly and those who speak Welsh. We cannot judge the value of S4C purely on the basis of the number of viewers it has; there is a much deeper reason why it exists.

Guto Bebb: I acknowledge that there were deeper reasons for establishing S4C, but we must also recognise that the channel needs to serve the people of Wales, whether they are Welsh speakers, Welsh learners or non-Welsh speakers. There are question marks over whether the viewing figures are disappointing at times and whether the channel is doing what it should be doing. The feeling that the channel has moved away from the people it is supposed to serve is demonstrated, I believe, in the campaign that we have seen during the past few weeks in response to the potential threat to the channel. Even the Welsh Language Society, which no one could doubt is committed to the channel, is arguing for fair funding and a new S4C, because it believes that the current channel is perhaps not performing as it should.

When we talk about S4C, we often mention the wider cultural and economic implications, but it is interesting to note that the channel's economic contribution has changed considerably over the past 20 years. The way that it once created new industries in parts of west and north-west Wales has certainly changed dramatically, and the loss of the Barcud studios in Caernarfon is an indication of that change and shows that the economic argument needs to be looked at again.

It is crucial that we move on and consider the future challenges that we face. Last night it was announced that the BBC would be taking over the funding of the channel, so there is now a need for clarity on the nature of the proposed settlement. We should acknowledge that the Department for Culture, Media and Sport has
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accepted the argument for having S4C, which I appreciate. It is likely that the channel's funding will be transferred to the BBC from 2014, so I would like to ask the Minister a few questions on what we have heard in the media and from the Chancellor this afternoon.

Will the funding for S4C be safeguarded within the BBC, and by what mechanism? It is all very well saying that the money will be forthcoming from the BBC licence payer, but by what mechanism will the S4C budget be protected within that licence fee? We are all aware that during the past four months the BBC has announced a 17% cut in its programming for S4C, with very little consultation, so I would like some clarification on that point. With regard to my earlier point on plurality and editorial independence, if there is a change in the funding mechanism for the channel, it is imperative that there is clarity about editorial and programming independence. I am sure that the Department can respond to that point.

Despite what I have said about S4C's economic contribution, the channel does play a key role in supporting the cultural industries in Wales, especially independent television producers. If a pot of money from the BBC licence fee is to be made available for S4C, would the Minister clarify whether it will be ring-fenced for the independent producers, rather than swallowed by the BBC? Finally, we need assurances on the future funding for the channel, because if the decision for the BBC to take responsibility for that funding is to go ahead, I would like to know where we will stand not only in 2014, but in 2016 and beyond.

Hywel Williams: Before the hon. Gentleman concludes his remarks, would he tell Members whether he agrees with the scale of the cuts-25%-that have been reported? What is his opinion on that matter?

Guto Bebb: I have made it fairly clear to many constituents that I believe that a cut in S4C's funding can be justified, as long as it is in keeping with the general cuts that the Department is facing. Having spoken with numerous television companies in Wales, I believe that the feeling is that, with greater efficiency, a cut of around 20% is manageable, but that anything more would be problematic. I hope that the cut will be about 20%, and no more than 25%.

I could ask the Minister many more questions, but I think that he has probably realised from the debate that there is a degree of concern about the transparency of the announcements, which I believe is no fault of the Department-the BBC got hold of the story. However, we need some clarity on the announcement. I have asked several questions, but I should be delighted if he would expand on those and comment on the critical issues that have been raised by other Members. Ultimately, we need to remember that we are all here because we are convinced of the need for a television channel broadcasting in Welsh and feel that, whatever settlement is made as a result of today's announcements, it should be a long-term settlement, not a short-term response to a current fiscal crisis.

Annette Brooke (in the Chair): Before calling the Minister, I remind Members that the debate will finish at 5.47 pm.

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5.35 pm

The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (Mr Edward Vaizey): It is an honour and a privilege to serve under your chairmanship, Mrs Brooke. I congratulate my hon. Friend the Member for Aberconwy (Guto Bebb) on securing this timely debate, which has allowed Members to consider the future not only of S4C, but of Welsh language programming and its funding levels. I want to put on the record the Government's support for Welsh language programming and S4C's continuing role in it.

Jonathan Evans (Cardiff North) (Con): On that point, I point out to the Minister that S4C's headquarters are based in my constituency and that I have met its executives to discuss the situation on a number of occasions. I have advised them to engage with him. I have a copy of a statement made by S4C's chair:

Would the Minister like to deal with that statement?

Mr Vaizey: I will use my hon. Friend's intervention to make it absolutely clear that my hon. Friends have been assiduous in putting the case for S4C, and they have been not a little successful in doing so. If anyone is to be accused of contempt for S4C, it is certainly not Conservative Members in Wales; as my hon. Friend the Member for Aberconwy noted, S4C was established by a Conservative Government. I do not want to make the debate any more heated, so I will not comment on the chair's specific remarks-my hon. Friend the Member for Cardiff North will have to forgive me, but discretion is the better part of valour. I will point out, however, that we are not a "London Government" but the Government of the United Kingdom, and we have to make decisions with the interests not only of the Welsh people at heart, but of the people of the whole United Kingdom.

Hywel Williams: Would the Minister tell Members when the chairman of S4C and the Welsh Assembly Government's Minister for Heritage were informed of the Government's decision?

Mr Vaizey: I cannot give the hon. Gentleman an answer off the top of my head, but I will do so as soon as my officials make that clear to me. Alternatively, I can let him know in writing, or by answering a written parliamentary question.

Several hon. Members rose-

Mr Vaizey: I remind hon. Members that I have only 10 minutes in which to make my case.

Paul Flynn: Before the Minister rewrites history, I remind him that the Conservative Government turned down the idea of a fourth channel in 1979. Mrs Thatcher changed her mind under duress because Gwynfor Evans was touring Wales and claimed that he would starve himself to death if there was no fourth channel. She had been reading Irish history at the time and did not want a martyr in Wales, which could have caused all kinds of problems. It was not an act of generosity or good sense on the part of the Conservatives.

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Mr Vaizey: We can spend the debate looking backwards or forwards. I want to look forward, as I believe that S4C has a bright future under the Government's proposals. As so much of our discussions come down to funding, I will make it clear that in the financial year 2011-12, S4C will receive £90 million, which is a substantial sum of money. By 2014-15, the channel will receive a total of £83 million, which is still a substantial sum of money. My hon. Friend the Member for Aberconwy referred to S4C's £3 million of commercial income, which he felt was a low sum of money. Nevertheless, it is £3 million, and S4C has £27 million in reserve, which is available to spend on its statutory duty. To my mind, that is a substantial sum of money for securing the future of Welsh programming.

Alun Cairns: I congratulate the Minister on the figures that he just announced, because they are a significant pledge of support to S4C. How do they compare with the cuts that the Department and the Government have had to make as a result of the financial position that we inherited? Will all of that money be output-focused and spent on independent production companies? Will the BBC in any way be able to siphon it away under the suggested arrangement?

Mr Vaizey: My hon. Friend makes very important points. Overall, the Department agreed with the Treasury a 24% to 25% cut, so S4C is not being singled out. In fact, in mentioning the BBC, he reminded me that if we take the £90 million, the £3 million of commercial income and the £27 million of reserves, we still have not counted the equivalent of £20 million of free programming that is already available from the BBC for S4C. That is a substantial sum.

Given the important representations made by my hon. Friends over the past few weeks on the future of S4C, and the interest that the people of Wales take in the future of S4C, I know that parts of this debate will play on the news tonight in Wales. People in Wales will be watching this debate, perhaps on BBC Parliament, and I want them to know about the £90 million next year, the equivalent of £20 million in programming from the BBC, £3 million in commercial income and £27 million in reserves. I have enough faith in the people of Wales to believe that they will look at the funding figures for S4C and think that they are generous, so for the Opposition to depict this move as an attempt to undermine S4C is an outrageous travesty of the truth. [Interruption.]

Annette Brooke (in the Chair): Order. If the Minister is not taking interventions, he is not taking interventions.

Mr Vaizey: I was not taking interventions because I wanted to finish my point, but I will take one now.

Hywel Williams: May I point out that the Chancellor today announced that the funding for the London Olympics of £9.3 billion will be maintained, that there will be capital spending on Tate Modern, the British Museum and the British Library-all in London-and that the Arts Council England and Sport England budgets will be reduced, but only by 15%? Those institutions are of huge cultural significance to the United Kingdom
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in general and specifically to England, yet a similar institution in Wales, S4C, is being cut by 25%. How can the Minister defend that position?

Mr Vaizey: The hon. Gentleman knows that the 25% cut is the same as the Department's cut, and he will no doubt be delighted, given how he wants to portray the situation, that culture is a devolved matter for Wales. However, let us also discuss future arrangements. [Interruption.] I want to move on to a new point.

People have talked about a lack of consultation. The BBC will not take over responsibility for S4C until 2013-14. The Welsh Affairs Committee has announced an inquiry into S4C, so there will be plenty of time for people to make representations about the situation. [Interruption.] Let me set out a few markers so that when interventions are made by the Opposition they can be made in a timely and forensic fashion.

First, the editorial independence of S4C will be guaranteed, regardless of the fact that it will be funded by the BBC. In response to my hon. Friend the Member for Vale of Glamorgan (Alun Cairns), absolutely 100% of the content budget will be spent on independent production, as it is at present. That, of course, is the content budget, and S4C obviously has an administration budget as well. The BBC will not be in a position to siphon off money for promotion on BBC channels. It will be for the BBC and S4C, in the two years that they have to put the arrangement in place, to talk through the exact details of how the money will be used.

Ian Lucas (Wrexham) (Lab): On a point of clarity, will the changes that the Minister is rattling through at the moment require legislation?

Mr Vaizey: As the hon. Gentleman knows, the public bodies Bill will include a clause to break the retail prices index link. I have no doubt that he and his colleagues will be able to get on their feet during its passage and state what the Labour party's position is. Will Labour Members table an amendment to retain the link with inflation, and to insulate S4C from the difficult financial decisions that many other bodies are planning to take?
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If not, what is the Labour party's position? Is it to restore the funding of S4C to 2010-11 levels and take it up to what it might have been in 2014-15? Does it not support the BBC taking responsibility for the funding of S4C, although it remains independent?

Kevin Brennan: Sophistry.

Mr Vaizey: The hon. Gentleman calls that sophistry. I call it simple, direct questions. Opposition Members are playing politics when they know full well that S4C has a very generous funding settlement, has substantial reserves, has a place in the heart of the Welsh people, and has huge support from Conservative Members of Parliament in Wales who have lobbied Ministers assiduously on behalf of S4C. If that is sophistry, I would like to know what is not.

Ian Lucas: The Minister talked about S4C and the BBC consulting over a two-year period. When will the legislation be brought forward? Will that be a matter of weeks?

Mr Vaizey: We are introducing a public bodies Bill, and under the coalition Government, Parliament has plenty of time to debate Bills in a way that was impossible under the previous Government, who seemed to find the guillotine almost as attractive as Robespierre.

I look forward to hearing Labour Members making their points, and I leave the debate with this reassurance for hon. Members. The Government are committed to Welsh language programming, we are committed to the future of S4C, and we have put in place a generous settlement for S4C. I have been bowled over by the energy and enthusiasm of my Welsh colleagues and their defence of S4C. It will be interesting to hear the Select Committee inquiry under the excellent stewardship of my hon. Friend the Member for Monmouth (David T. C. Davies). We are moving forward with a bright future for S4C.

Question put and agreed to.

5.47 pm

Sitting adjourned.

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