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House of Commons

Thursday 8 December 2011

The House met at half-past Ten o’clock


[Mr Speaker in the Chair]

Oral Answers to Questions

Business, Innovation and Skills

The Secretary of State was asked—


1. Tristram Hunt (Stoke-on-Trent Central) (Lab): What recent steps his Department has taken to support the manufacturing sector. [85391]

The Secretary of State for Business, Innovation and Skills (Vince Cable): The Government are taking action to support and grow modern manufacturing in the UK by encouraging higher levels of innovation exports, business investment and technical skills.

Tristram Hunt: In the last few weeks, five ceramic and brick companies have gone bust in the UK, including the Jesse Shirley bone china works in my constituency. The energy-intensive industry measures announced in the autumn statement did little for our pottery industry. Can we now have some movement from the Government on capital allowances for the ceramic sector, which is a vital part of our manufacturing industry?

Vince Cable: I will look at the specific issue of the ceramics industry. I know that the hon. Gentleman was involved in promoting an anti-dumping action. We considered the matter carefully, and there were not sufficient grounds to support the rather disproportionate action advocated by the European Commission. Indeed, the Chinese market share has remained pretty unchanged over the past decade. However, we will certainly consider what else can be done to help the industry.

Mr Laurence Robertson (Tewkesbury) (Con): Is the Secretary of State aware of the excellent cutting-edge technology in my constituency in the aerospace industry? Is he also aware that one of the biggest problems that the industry has is attracting young people into manufacturing? What can he do to encourage that?

Vince Cable: I was in the west country just over a week ago looking at the aerospace industry, which is a considerable success story. My hon. Friend is quite right that one of the constraints is the need for skilled manpower, which is why in our rapidly growing apprenticeship programme we are setting aside funding specifically for advanced apprenticeships in engineering skills of the kind that firms in his constituency need.

Mr Adrian Bailey (West Bromwich West) (Lab/Co-op): There is an increasing body of evidence to show that small manufacturing companies are not only having difficulty in accessing finance to expand but are discouraged from applying for it because of a lack of confidence in

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the ability to sell any increased production. What is the Secretary of State doing to persuade the Chancellor that the time is right for a stimulus in the demand side of the economy as well as provisions for the supply side?

Vince Cable: A stimulus to demand is coming from two sources. One is rapidly growing export markets in emerging markets, where our export growth is very substantial. Manufacturers, including small and medium-sized enterprises, are taking a substantial part of that. In addition our monetary policy, which is supported by the Bank of England, with low short and long interest rates, quantitative easing and credit easing, is supporting demand.

Matthew Hancock (West Suffolk) (Con): In his efforts to support manufacturing, will the Secretary of State agree that high executive pay that rewards not success but failure can inhibit growth, and that dealing with it is an important part of supporting manufacturing, financial services and other parts of the economy?

Vince Cable: My hon. Friend is absolutely right, and the point is very well made. There is now a remarkable consensus. We have had evidence to the inquiry that I initiated into executive pay from, among others, the CBI, showing a high level of social responsibility and an acknowledgment that much executive pay has been disproportionate and unrelated to performance in the past. We intend to reform that.

Mr Iain Wright (Hartlepool) (Lab): Mr Speaker,

“Germany has had an industrial strategy as well as an economic strategy. Applied with huge consistency of purpose. This has greatly helped German industry plan for the future. Let us compare this with the position in the UK…In terms of industrial policy there are serious deficiencies.”

Those are not my words, but those of Lord Heseltine in a speech only a couple of weeks ago. Given yesterday’s dire figures from the Office for National Statistics, which showed the biggest output drop in manufacturing since April, and three times the fall forecast by analysts, is it not time the Secretary of State listened to Lord Heseltine and provided a comprehensive well-planned industrial strategy for the long term that supports British manufacturing and helps it become more competitive?

Vince Cable: I often wonder which Opposition Front Bencher will be courageous enough to talk about manufacturing, reminding the House that we lost 1.7 million jobs in manufacturing in 13 years of a Labour Government, and manufacturing’s share of the economy shrank from 18% to 10%. We are addressing that, and I certainly listen to Lord Heseltine, who has an office in my Department. We frequently interact, and he has some very good suggestions.

We are pursuing support for innovation through the advanced technology innovation centre, pursuing support for advanced apprenticeships, on which we are doing a great deal, and co-financing private investment through the regional growth fund and the Green investment bank, which is due to start. As I announced yesterday, we are also considerably increasing support for supply chains using a new £125 million fund.

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Employment Law

2. Brandon Lewis (Great Yarmouth) (Con): What recent progress his Department has made on its employment law review being undertaken as part of the red tape challenge. [85392]

13. Mr Marcus Jones (Nuneaton) (Con): What recent progress his Department has made on its employment law review being undertaken as part of the red tape challenge. [85405]

17. Julian Smith (Skipton and Ripon) (Con): What recent progress his Department has made on its employment law review being undertaken as part of the red tape challenge. [85410]

The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey): We have made excellent progress with our employment law review. Our radical package includes streamlining the employment tribunals system, doubling the qualifying period for unfair dismissal, promoting early conciliation and mediation, and simplifying compromise agreements. We have also called for evidence on TUPE and collective redundancies as part of our wide reforms.

Brandon Lewis: For many years, small and medium-sized enterprises in particular have felt that they are caught in the stranglehold of gold-plated red tape when it comes to growing and employing more people. Will the Minister give grounds for optimism to companies that want the freedom to employ more people and grow, particularly with reference to TUPE, which he mentioned?

Mr Davey: The Government’s strategy is to ensure that we are not gold-plating. I am sure that my hon. Friend will have been pleased that on 23 November we published a call for evidence on the TUPE regulations, which he mentioned. It is available on the Department’s website and I encourage all right hon. and hon. Members to respond.

Mr Marcus Jones: I recently met local business people at a constituency event sponsored by the Federation of Small Businesses, and they told me that they were apprehensive about taking on additional employees because of the culture of employment tribunals, to which employees can take even the most spurious claims without any personal risk whatever. What can the Minister do to address that issue, which, if tackled, would encourage more employers to take on extra staff?

Mr Davey: We have listened to both employer and employee concerns about the cost and complexity of going to employment tribunals, and believe that our reforms will make a positive difference to both parties. We have set out our conclusions and our response to the “Resolving Workplace Disputes” consultation. Critical aspects of our new approach include a major new emphasis on mediation and a new pre-claim conciliation service by ACAS, and, finally, a fundamental review of the rules and procedures is now being undertaken by Lord Justice Underhill.

Julian Smith: Compensated no-fault dismissal could be a great fillip to very small businesses and the employment market. Will the Minister outline the timetable for the Government’s call for evidence and reassure the House that he is completely open-minded on the policy?

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Mr Davey: As my hon. Friend knows—the Chancellor announced this in the autumn statement—we will be publishing a call for evidence on the case for and against a new compensated no-fault dismissal for micros. The Government have an open mind on that, but we are especially keen to ensure that there are no unintended consequences. My hon. Friend will be mindful that the unfair dismissal law was introduced by a previous Conservative Government to improve industrial relations.

Jim Sheridan (Paisley and Renfrewshire North) (Lab): As part of the sham review of employment legislation, has the Minister had any consultations with the trade unions or others who believe in effective employment legislation? If he has, what was the outcome? If he has not, why not?

Mr Davey: My right hon. Friend the Secretary of State and I regularly meet Brendan Barber from the TUC. People from the trade union movement widely responded to the “Resolving Workplace Disputes” consultation, and we have looked at those responses.

Fiona O'Donnell (East Lothian) (Lab): The Minister will be aware that those who work with children and vulnerable adults can play a vital role in their protection. What is he doing to ensure that new employees, who often see problems with established bad practice, are protected if they decide to become whistleblowers?

Mr Davey: There is already whistleblowing legislation; I believe that it was passed by the previous Government. We would therefore advise employees in the situation that the hon. Lady describes to look at that.

Ian Murray (Edinburgh South) (Lab): The Secretary of State and the Minister are obviously at loggerheads with Downing street over their proposals on changes to employment law, and have been forced to consult on no-fault dismissal. Lord Heseltine believes that such a measure would

“make life rougher and tougher for large numbers of people”;

Citizens Advice described it as a rogue’s charter; only 6% of SMEs consider employment law as a factor when employing people; and the Secretary of State himself has said that there was already a “reasonably good balance” between rights and flexibility in Britain. So why is his Department—the Department for no growth—trying to make it easier to fire rather than hire people?

Mr Davey: The truth is that the Government are making it easier to hire people. We understand the importance of fair, efficient and flexible labour markets. We will protect those because that is in our country’s interest. I should tell the hon. Gentleman that we are working very closely with colleagues across the coalition on all aspects of our employment law review. This coalition is more together than the Labour party was when it was in government.

Innovation and Research

3. Dr Julian Huppert (Cambridge) (LD): When he plans to publish his innovation and research strategy. [85393]

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14. Graham Evans (Weaver Vale) (Con): When he plans to publish his innovation and research strategy. [85406]

The Minister for Universities and Science (Mr David Willetts): With permission, Mr Speaker, I propose to answer this question with question 13—

Mr Speaker: I am reluctant to argue with Two Brains, but I think the link is with question 14.

Mr Willetts: Thank you, Mr Speaker.

I am pleased to announce that the Government have today published our innovation and research strategy for growth.

Dr Huppert: I thank the Minister for publishing that statement. In 2004 I was awarded a DTI Smart award for innovation. That excellent scheme supported small companies in developing risky innovative products, but over the years the financial support available was watered down and success rates fell. Will his strategy reverse that and support SMEs that have not been supported by the Technology Strategy Board?

Mr Willetts: Indeed, and I believe that my hon. Friend’s proposal was for a biotech company that collected virgin female fruit flies, which I am sure was an excellent example of curiosity-driven research. I can confirm that we are bringing back the Smart awards scheme on a nationwide basis, properly financed.

Graham Evans: Fostering research and innovation is absolutely essential to growth and to rebalancing our economy, and I am proud that the Government are doing so much to support Daresbury science innovation campus in my constituency, including the announcement of a new enterprise zone. Can the Minister outline what support will be provided for small and medium-sized businesses in this area?

Mr Willetts: I recognise the strong support that my hon. Friend gives Daresbury, which I visited with him only a couple of months ago. Indeed, we will put more funding into Daresbury because of its excellent role in national computing infrastructure, and we will support small businesses in particular through the infrastructure and innovation plan that we have launched today.

Mr David Lammy (Tottenham) (Lab): Does the Minister accept that we can have no research and innovation without UK postgraduates? His strategy says nothing about the decline in taught postgraduate courses or the implications of fees at postgraduate level in the UK.

Mr Willetts: We are committed to postgraduate education in the UK, and of course we will continue to review the implications for it as our higher education reforms come through, but at the moment we are seeing an increase in the number of postgraduate students in the UK—a record of which we can be proud.

Chi Onwurah (Newcastle upon Tyne Central) (Lab): Eighteen months into a Government supposedly focused on growth, we finally have a paper focused on innovation—the engine of growth. We welcome it and will consider it carefully. However, we have seen that this Government’s

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fine words are not matched by action. The director of the CBI recently described their action on solar panels as the

“third smack about the head”

for investors in renewables. In China, the US, India, Germany and Finland Governments are taking action to create large-scale technological and market opportunities in renewables, ICT, pharma and nanotechnology. What real action will the Government take as a result of the report?

Mr Willetts: The report that we are publishing today is a list of the actions that we have already taken and the further actions that we are proposing to take. That includes technology innovation centres, including specific provision for renewables. It also includes the reintroduction of the Smart awards, which were run into the sand under the previous Government, and a research and development tax credit that will be worth more than £1 billion to companies large and small.

Exports (SMEs)

4. Gordon Henderson (Sittingbourne and Sheppey) (Con): What steps his Department is taking to help small and medium-sized businesses to access export markets. [85395]

The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk): UK Trade & Investment has set out a new export strategy of some £45 million, which will double the number of small companies helped each year. The strategy includes five financial products, bespoke services for middle-sized firms and a collaborative approach to accessing new export markets.

Gordon Henderson: I welcome that assurance from the Minister, but an exporter in my constituency has for years been obtaining certificates of origin from our local chamber of commerce, using a formal declaration from his supplier. Recently he applied for a new certificate, but was told that one could not be issued without a declaration from the manufacturer of the goods. That is causing my constituent a big problem, because his supplier is loth to provide details about his manufacturer for fear that my constituent might obtain his goods direct. What can my hon. Friend do to make it easier for exporters to export—and when changes are made to the rules, can exporters at least be given adequate notice?

Mr Prisk: I am concerned about the instance that my hon. Friend mentions. The rules on certification of origin have not changed, but they are subject to local management and interpretation. It sounds as if that might be the problem. I am keen to help all exporters, so perhaps my hon. Friend will submit further details to me and I will look personally into the matter.

Mr Gareth Thomas (Harrow West) (Lab/Co-op): The Government have cut by 25% the funding for small and medium-sized enterprises to attend vital overseas trade shows to help them win new business. How will that help exports?

Mr Prisk: As I said at the beginning, the new export strategy enables us to double the number of companies that we reach and support. In addition, five new finance

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products have been put on to the market. We have commitments of £242 million for those products, so there is a positive layer of action, and we can make real progress in the years to come.

Mr Chuka Umunna (Streatham) (Lab): At a previous Question Time, the Business Secretary was right to say that, historically, SMEs have not been as involved in exporting as larger companies. With that in mind, earlier this year he launched the export enterprise finance guarantee scheme, a programme run out of his Department, and we were told that that would help lots of SMEs to access export finance. Will the Secretary of State tell us how many companies have been helped by the scheme since it was announced with a great fanfare 10 months ago?

Mr Prisk: Sadly, the hon. Gentleman will have to make do with the Minister of State rather than the Secretary of State. We have been able to deliver some £242 million across the five products, and we have also been able to ensure that with the pilot, the export enterprise finance guarantee scheme, in which there have been a number of changes, we have been able to deliver some £2 million. It is important to bear in mind the fact that the export enterprise finance guarantee scheme is a pilot; the other four are actually full products.

Mr Umunna: The answer to my question is that just four companies have benefited from that export scheme. That is another example of the failure of the Minister’s Department to improve access to finance for small businesses. Of course access to finance in general helps SMEs to grow and expand into different export markets, and we were told that Project Merlin would ease credit conditions for small businesses—but net lending to businesses by banks has contracted in nine of the past 12 months under this Government. Merlin failed, so they are now giving credit easing a try, but the effectiveness of credit easing is dependent on whether the banks choose to participate. What guarantees can the Minister give us that they will participate in the scheme and increase net lending to businesses as a result?

Mr Prisk: In the first three quarters, the numbers on net lending stand at £66 million. [Interruption.] What I am trying to say to the hon. Gentleman is that we are committed, through Merlin, to ensuring that lending this year is greater than last year. He needs to be careful in this area, because, as he knows, such schemes are subject to demand. [Interruption.] He asked about credit easing, and I will come to that point. I say to the hon. Gentleman that the £20 billion that the Chancellor has put forward is substantially important and will bring about an important increase. What the Opposition need to remember is that we are actually delivering an increase in lending this year over last year. They did not deliver that. We are, and that is the difference.

Life Science Discoveries

5. Margot James (Stourbridge) (Con): What steps his Department is taking to support the commercialisation of new discoveries in life sciences. [85396]

The Minister for Universities and Science (Mr David Willetts): The UK life sciences sector employs 170,000 people with a turnover of £50 billion, but it is facing

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enormous challenges, which is why the Prime Minister launched an ambitious new life sciences strategy on Monday. That includes a £180 million catalyst fund to aid commercialisation of new discoveries. We have also improved the regime for clinical trials in the interests of patients and opened up the NHS to innovation.

Margot James: I very much welcome the life sciences strategy published by the Government earlier this week. What plans does my right hon. Friend now have to support the development of geographic clusters that will foster collaboration between industry, the NHS and academia?

Mr Willetts: My hon. Friend has absolutely described what a cluster is; I congratulate her. We support them. They are important for innovation and growth. Indeed, in the proposals published today, we are talking about making it easier for groups of institutions to come together to bid for funding from research councils, and also our enlightened Treasury has agreed that in future there will not be VAT on cost-sharing arrangements in which groups of institutions come together to share services in the interests of efficiency.

Mr Barry Sheerman (Huddersfield) (Lab/Co-op): The Minister will know that in life sciences and many other areas of innovation there are lots of small companies, often in partnership with universities. Will he comment on the fact that many of those partnerships tell me that with the demise of the regional development agencies they have no access to a large amount of money held in Europe, essentially for innovation? There are billions of pounds that they cannot access.

Mr Willetts: The catalyst fund that I referred to in my previous answer is aimed specifically at getting financial support to new start-ups, and will help finance them through the so-called “valley of death” before they can get commercial funding. At the Competitiveness Council in Brussels on Tuesday, I argued that European research funding should be more easily accessible for small and medium-sized enterprises. The best way to achieve that is by cutting bureaucracy and the complexity in the current arrangements for accessing European funding. That is what I urged on the Commission.

Bank of Credit and Commerce International

6. Keith Vaz (Leicester East) (Lab): What recent steps he has taken to ensure that the liquidation of Bank of Credit and Commerce International is complete. [85397]

The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey): My right hon. Friend the Secretary of State wrote to the BCCI liquidators about the progress of the BCCI liquidation earlier this year, following his meeting with the right hon. Gentleman. I understand that a closure plan has been published on the liquidators’ website at www.bcci.info. This website is updated as and when there are any developments in the liquidation.

Keith Vaz: It is now 20 years since the bank went into liquidation, in which time the liquidators, Deloitte Touche, its solicitors, Lovells, and other professionals have received

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£1.2 billion in fees. Will the Minister thank the Secretary of State for writing that letter and ask him whether he would be prepared to secure his place in history, or at least to act as Santa Claus to the victims of BCCI, so that finally this bank can be closed and the liquidators will cease to bleed it of the last remnants of its money?

Mr Davey: I think that my right hon. Friend already has his place in history. The right hon. Member for Leicester East (Keith Vaz) knows that the BCCI creditors have been repaid more than 85% of what they were owed at the outset of liquidation, and a final dividend—estimated to be about 3%—is expected to be paid in April or May 2012. He will also know that control of the BCCI liquidation is a matter for the liquidation committee, and ultimately the courts, not for the Secretary of State, and that the liquidators are trying to bring this long period to an end.

Business Start-ups

7. Harriett Baldwin (West Worcestershire) (Con): What steps he is taking to assist unemployed people to start new businesses. [85398]

The Minister of State, Department for Business, Innovation and Skills (Greg Clark): The new enterprise allowance is now available nationwide and is providing access to business mentors and financial support to help unemployed people start their own businesses. On 14 November we launched My New Business, a service on the Business Link website, providing help for everyone looking to start a new business.

Harriett Baldwin: As QinetiQ in my constituency has restructured, many of the brilliant brains employed there have started new businesses in a range of different areas. May I invite the Minister to Malvern to help back my campaign for phase 4 of the Malvern Hills science park as a further incubator?

Greg Clark: It would be a delight to visit Malvern. I know that my hon. Friend is trying—successfully, given the number of high-tech businesses there—to market Malvern as a cyber-valley. We know that silicon valley has prospered because of the links between existing high-tech firms and new ones, and I know that that is what she wants to achieve.

Gordon Banks (Ochil and South Perthshire) (Lab): What guarantees can the Minister provide that the banks will actually lend to newly formed businesses run by previously unemployed people? They are not lending to existing businesses, so why should they lend to new ones?

Greg Clark: As the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford (Mr Prisk), said earlier, the intention is—and the banks are delivering on this—that they increase lending to small businesses year on year. That is part of the loan guarantee scheme announced in the autumn statement, and we are determined to deliver on it.

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Regional Growth Fund

8. Esther McVey (Wirral West) (Con): What assessment he has made of the effect of the regional growth fund on private sector investment. [85399]

The Secretary of State for Business, Innovation and Skills (Vince Cable): In April we announced that the regional growth fund would conditionally support 50 projects, amounting to £450 million of Government investment and leveraging an estimated £2.7 billion of private sector investment. In October we announced that 126 projects would receive conditional funding of £950 million, leveraging an estimated £6 billion of private sector investment.

Esther McVey: I welcome the regional growth fund, in rounds 1 and 2 of which, companies on Merseyside, including Stobart, Pilkington, Liverpool Vision and Trinity Mirror, have done very well. Wirral Investment Network, a business network for smaller companies, wants to know by what routes it can apply to the regional growth fund.

Vince Cable: Our estimate is that roughly a third of all regional growth fund money is going to SMEs, and there are several routes through which it goes. First, there are packets of SME loans, one of which was in Liverpool, while another is in Plymouth. Indeed, I saw that one a couple of weeks ago, and it is going extraordinarily well. There are specifically tailored schemes—for example, the RBS-HSBC scheme linked to asset finance—and programme bids, as in Manchester, all of which are targeted at SMEs.

Mr Geoffrey Robinson (Coventry North West) (Lab): The Secretary of State will be aware that in the last round an SME in Coventry was turned down for a major investment from the regional growth fund. Despite the fact that the council and, more importantly, the local enterprise partnership were in full support, the company was turned down—I am not particularly grumbling about the decision, disappointed though we were, of course—on the grounds that the ownership was wrong. Will the Minister put in place better criteria for sifting schemes locally and regionally? The company wasted an awful lot of time and money in preparing its bid.

Vince Cable: I would certainly be happy to look into the background of that particular case. As the hon. Gentleman knows, we have an impartial process. Applications come to Ministers and then go through Sir Ian Wrigglesworth and Lord Heseltine, who sift and assess them properly. There is a new round for the regional growth fund, and if the project that the hon. Gentleman mentions can be reworked, we would certainly be very happy to look at it.


9. George Freeman (Mid Norfolk) (Con): How he proposes that his Department’s investment in graphene will be spent. [R] [85400]

The Minister for Universities and Science (Mr David Willetts): Graphene is the thinnest, lightest, strongest and most conductive material known to man. Its discovery in Manchester in 2001 is testament to our strong science base and opens up a wide range of possibilities. That is

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why we have committed £50 million to create a new UK graphene hub to focus on its commercialisation. The Engineering and Physical Sciences Research Council and the Technology Strategy Board are now developing a detailed business case, which will be submitted to the Government shortly. We expect funding to start next year.

George Freeman: I welcome that announcement. Does the Minister agree that the investment of £50 million in a world-class hub is testament to the Government’s serious commitment to a rebalanced economy and a regional growth strategy? Will he agree to place a sample of graphene—like this—in the Library for the edification of us all?

Mr Speaker: The use of such props is on the whole discouraged, but we will let the hon. Gentleman off on this occasion.

Mr Willetts: I do not think that that is quite life science—nor is it supposed to be life-size, because it is one atom. I have some graphene in my office, and I would be very happy to show it to people who want to know what has been discovered. I absolutely agree with my hon. Friend. As a result of the Chancellor’s announcement, we are now able to invest in labs that will ensure that researchers can develop and research the applications of this important material.

Mr Speaker: May I appeal to Members not to pass that rather unglamorous specimen around the Chamber? The hon. Member for Mid Norfolk (George Freeman), to whom I have been generous, should secrete his graphene away, and behave with the tact and discretion for which he was previously renowned.

Graham Stringer (Blackley and Broughton) (Lab): I beg to disagree, Mr Speaker. Graphene is very glamorous, and it is a fantastic discovery, made in Manchester. The Minister will be aware from his appearances before the Science and Technology Committee that there is a huge imbalance between the public investment in science in the golden triangle between Oxford, Cambridge and London, and investment in the rest of the country. Is this not a great opportunity to invest the vast bulk of that £50 million in Manchester, where the two Nobel laureates discovered graphene?

Mr Willetts: The hon. Gentleman makes a clear case. Of course, the issue is now being investigated by the EPSRC and the TSB, but we recognise the crucial role that Manchester played in the discovery, and I am sure that its role will continue.

Mr Speaker: Of course I readily concede that something unglamorous can also be very important. I call Penny Mordaunt. [ Laughter. ] Order. I am delighted that the House is in such a good mood.

Radar Satellites

10. Penny Mordaunt (Portsmouth North) (Con): What assessment he has made of the benefit to UK business of the investment in low-cost radar satellites announced in the autumn statement. [85401]

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The Minister for Universities and Science (Mr David Willetts): Yes, we have made an assessment of the benefits to business of investing in low-cost radar satellites. This is an important investment of £21 million, which we hope will enable business investment to follow on, including possibly in my hon. Friend’s constituency.

Mr Speaker: I was referring to the item, not to a human being. I call Penny Mordaunt.

Penny Mordaunt: Thank you, Mr Speaker.

Earth observation satellites are critical in helping developing countries manage humanitarian and environmental crises. Does my right hon. Friend see merit in giving such countries British technology or satellite time—provided it is the best for the job, and it usually is—rather than having ring-fenced funding to purchase such services from a third country?

Mr Willetts: That is a very interesting idea. It is absolutely right that British satellite technology plays a greater role than is recognised in ensuring that we have information about the sites of disasters. Earlier this year we chaired the disaster monitoring committee, which ensured that satellite images were immediately available after the tsunami in Japan and after disasters elsewhere in the world. There are certainly imaginative ideas through which this role could be enhanced.

Adult and Community Learning

11. Sajid Javid (Bromsgrove) (Con): What steps he is taking to promote adult and community learning. [85402]

The Minister for Further Education, Skills and Lifelong Learning (Mr John Hayes): The Government are enthusiastically committed to adult and community learning. That is why we have protected the £210 million a year adult safeguarded budget. On 1 December we announced our intention to devolve its planning and accountability, so that local people are at the heart of deciding the learning offer. We will pilot different community learning trust models in 2012-13.

Sajid Javid: The Minister has been an excellent advocate of adult community learning. May I ask him how his pilot on community learning trusts is working at the moment? In particular, how has he engaged local communities to improve adult community learning?

Mr Hayes: We know, as W B Yeats knew, that education lights a fire that burns brightly. It certainly burns brightly in the hearts of Ministers. We have much to do in respect of adult community learning, which was derided by the last Government as mainly holiday Spanish. That was how the former Secretary of State described it. We will work with local communities. The first meeting to discuss models and timings will take place one week from today, and we intend to publish a prospectus in spring 2012. We are delivering.

Kevin Brennan (Cardiff West) (Lab): The Minister and I have jousted about Yeats before, and I should tell him that he did not share the Minister’s politics, which might disappoint him. There is a danger of his policy becoming a fig leaf around adult and community learning.

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Will he undertake to work from the centre with other ministerial colleagues, particularly for older people in care homes because of the incredible impact that adult and community learning can have on health outcomes for those older people?

Mr Hayes: One reason why I, along with the Secretary of State, have defended adult and community learning is due to its effect on things such as physical well-being, community health, mental health and so forth. It is certainly true that we will need to take those things into full account in respect of the offer. I give that answer mindful that the hon. Gentleman, who was my predecessor, was himself a champion of adult and community learning.

Green Investment Bank

12. Glenda Jackson (Hampstead and Kilburn) (Lab): What recent progress he has made on the Green investment bank. [85404]

The Secretary of State for Business, Innovation and Skills (Vince Cable): The development of the Green investment bank is making good progress. Prior to its establishment, the Government are planning to invest in projects from April 2012, including in renewable energy and the non-domestic energy efficiency and waste sectors. We will announce the process for deciding the location of the bank shortly.

Glenda Jackson: There are reports that the Government have dramatically lowered their funding for this potentially innovative venture, so when, if ever, will what threatens to become a mere piggy bank be open for business?

Vince Cable: Those reports are simply incorrect. The Government’s commitment was for £3 billion, and that remains the case. We expect the bank will have leveraged in another £15 billion by the end of this Parliament. That is our commitment, which we will stick to. I am relieved that Hampstead and Kilburn are not adding their names to the list of cities hoping to attract the Green investment bank.

Mike Crockart (Edinburgh West) (LD): I welcome the Secretary of State’s statement of a few moments ago. May I press him to tell me and the poised Edinburgh Green investment bank bid team when he will publish the criteria for deciding the location for the bank and what those criteria are likely to contain?

Vince Cable: We shall set out the process in the next few days. There are a great many bids from different cities and, indeed, some quite small towns around the country, all of which must be assessed properly and fairly.

Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op): Will the Secretary of State confirm that investment in wind turbine technology is a potential recipient of Green investment bank funding? Gamesa has been considering locations in various parts of the United Kingdom for a major scheme with which it is proceeding, and has identified Leith, which is in my constituency, as a possible location. Will the Secretary of State work with the Scottish Government to try to bring this important facility to Scotland and to the UK?

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Vince Cable: That is exactly the kind of project that the bank will be considering, and a team of people are already preparing projects for submission.


15. Robert Halfon (Harlow) (Con): What steps he is taking to ensure that apprenticeships offer a route to higher-level skills. [85407]

The Minister for Further Education, Skills and Lifelong Learning (Mr John Hayes): We are committed to expanding the proportion of apprenticeships that are at advanced and higher levels. Provisional 2010-11 data show that the number of advanced-level apprenticeships has risen by about two thirds. We have allocated some £19 million to support the development of new higher apprenticeships, which will dramatically extend the range of opportunities for apprenticeships up to degree level, and will create at least an additional 19,000 apprenticeships at the higher level.

Robert Halfon: Will the Minister support the parliamentary apprentice school which I founded with the charity New Deal of the Mind, and will he consider the similar idea of establishing a Government apprentice school using public contracts? Figures from the House of Commons Library show that if just one apprentice were hired for every £1 million public procurement, 280,000 apprenticeships would be created instantly and youth unemployment would be cut by a quarter.

Mr Hayes: I take the view that Government have a role and that procurement has a role as well. For that reason I have established a ministerial champions group for apprenticeships involving 14 Departments, we have explored the development of kitemarking for good employers who use apprenticeships and supply the public sector, and we have provided streamlined informational skills for companies that want to supply Government.

My hon. Friend has been a great champion of apprenticeships, and has even taken on an apprentice himself. Let me again urge all Members to take on their own apprentices.

16. Mark Lancaster (Milton Keynes North) (Con): What plans he has to encourage small and medium-sized businesses to offer apprenticeships. [85408]

The Minister for Further Education, Skills and Lifelong Learning (Mr John Hayes): As you can see, Mr Speaker, I am irrepressible.

We have recently announced a new financial incentive of £1,500, which will help up to 40,000 small employers who have not previously engaged in the programme to take on a young apprentice. We are taking radical steps to speed up and simplify the process for employers, and to remove unnecessary paperwork and bureaucracy.

Mark Lancaster: While the Minister’s talents are obvious, some of us have hidden talents. I, for instance, am a pyrotechnician, and ran the family firework company for many years. We were always keen to take on apprentices, but it was hard to keep them in a long-term skilled job, and the paperwork involved in taking them on in the first place was very extensive. What can be done to help the situation?

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Mr Hayes: As my hon. Friend will know, the number of apprenticeships has risen by 70% in his constituency. That does credit to him, and, as I think he will acknowledge, still greater credit to me.

My hon. Friend asked what more we would do. We will strip out all unnecessary health and safety requirements, we will introduce those incentive payments to compensate small businesses, and I am determined to streamline every stage of the process. Tackling youth unemployment is a top priority for the Government: that is why we are focusing the apprenticeship budget on young people, which is where it can make the most difference.

College Enhanced Renewal Grant

18. George Eustice (Camborne and Redruth) (Con): What progress his Department has made in assessing applications by further education colleges for phase 2 of the enhanced renewal grant. [85411]

The Minister for Further Education, Skills and Lifelong Learning (Mr John Hayes): In August, I was delighted to confirm that the Government would make an extra £100 million available for a two-year college capital investment programme. The programme was launched by the Skills Funding Agency in September, applications were invited by November, and the agency is aiming to announce decisions on the enhanced renewal grant before Christmas. Speedy action, Mr Speaker: alacrity, combined with perspicacity.

George Eustice: Cornwall college in my constituency has recently used a new technique to refurbish and reclad one of the old buildings on its estate at a fraction of the cost of a rebuild, and would like to repeat the process on some of the rest of its estate. Does the Minister agree that procedures of that kind should be given priority?

Mr Hayes: My hon. Friend, who is a great champion of his local college and a great local Member of Parliament, has written to me about that very matter. I have his letter here. I am pleased to say that I have arranged to speak to him on Monday about the details of his question, and I can also tell him that as soon as I became the Minister we announced new capital funding. I do not say this with any joy—I say it more in sorrow and anger—but what a contrast with the last Government, who presided over a capital funding debacle.

Business Taxation

19. Mr Edward Leigh (Gainsborough) (Con): What assessment he has made of the effect on the growth of small and medium-sized enterprises of planned reductions in the level of taxation; and if he will make a statement. [85413]

The Secretary of State for Business, Innovation and Skills (Vince Cable): Many SMEs will benefit from lower corporation tax, reforms to research and development tax credits, relief of business rates, increases in employer national insurance contribution thresholds and tax advantages in the 22 new enterprise zones.

Mr Leigh: We already have the longest tax code in the world. Does the Secretary of State accept that what business wants are not more allowances from the

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Government but across-the-board tax cuts so that they can get on with running their own business in their own way?

Vince Cable: Many businesses, as I have just said, receive substantial tax cuts, which is absolutely right. As the economy progresses, there will be more, and there is also an exercise in tax simplification, the results of which will be announced at the beginning of next year.

Topical Questions

T1. [85416] Sajid Javid (Bromsgrove) (Con): If he will make a statement on his departmental responsibilities.

The Secretary of State for Business, Innovation and Skills (Vince Cable): The Department has a key role in supporting the rebalancing of the economy and business, to deliver growth while increasing skills and learning.

Sajid Javid: May I thank the Minister for Further Education, Skills and Lifelong Learning for visiting my constituency of Bromsgrove and opening a £3.5 million extension to North East Worcestershire college? Will he update the House on what other investment plans he has for colleges up and down the country, and how that will promote young people’s life chances?

The Minister for Further Education, Skills and Lifelong Learning (Mr John Hayes): I said a few moments ago that we have made £100 million available. It will be spent quickly, and that will affect colleges across the country. I should like to thank my hon. Friend for being such a generous host when I visited NEW college in his constituency. My hon. Friend the Member for Redditch (Karen Lumley) was in attendance as well, because the college serves both constituencies. On that occasion, I had an opportunity to ride a Harley Davidson motorbike, and like that bike, the career of my hon. Friend the Member for Bromsgrove (Sajid Javid) is powerful, speedy and impressive.

Mr Speaker: We are all intrigued by the Minister’s exploits, I am sure.

Shabana Mahmood (Birmingham, Ladywood) (Lab): It is exactly one year on from the Government’s trebling of tuition fees to £9,000, and we can clearly see the disastrous impact of that decision. UCAS applications are down by 15%, and the Government have had to introduce the chaotic core and margin model to make up for the fact that they got their sums wrong. Is the Minister for Universities and Science aware that he has created a perfect storm for our world-class higher education sector, and why is he prepared to put our world-leading reputation at risk?

The Minister for Universities and Science (Mr David Willetts): Our reforms will ensure that universities are well financed, and that there is more funding available for access than ever before. Perhaps the hon. Lady would explain to the House why she proposes to double fees and, at the same time, reduce the funding available for scholarships and access money.

T2. [85417] Simon Hughes (Bermondsey and Old Southwark) (LD): It is clear to me that the more young people and adults hear the actual facts about the

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funding for universities, the more likely they are to apply. Given that there are five weeks left before the conventional cut-off date for applications, will the Minister tell the House what the Government propose to do to make sure that young people and adults, whether full or part-time students, understand the benefits of applying to university.

Mr Willetts: I thank my right hon. Friend for the excellent work that he has done on this important subject. I can report to the House that 90% of schools and colleges have been visited by graduates explaining the facts of the system. In addition, they are reaching out to parents evenings. Every hon. Member has received a copy of the DVD that has gone to every school with the information that shows that no student has to pay up front to go to university.

T4. [85419] Mr Dennis Skinner (Bolsover) (Lab): When the Secretary of State was talking about the running down of British industry, he failed to mention that, in the 1980s, the Thatcher Government employed MacGregor to come over here and close large parts of the steel industry, and he almost destroyed the whole mining industry. Does the Secretary of State not realise that, surrounded by all those Tories, he is a mini-MacGregor of his day, carrying out the dirty work of the Tories and overseeing the demise of the rest of British industry? He does it not for the money that MacGregor got but for a ministerial car and a red box.

Vince Cable: After the hon. Gentleman’s previous contribution, I set up a visit to his constituency, which will take place, I think, in the first quarter of next year. I can discuss these matters in depth with him then, which I think is rather more than my Labour predecessor did. The hon. Gentleman has been a Member for a long time, but he has overlooked the fact that in the 13 years of Labour Government there was a decline in manufacturing output averaging 0.5% a year.

T3. [85418] David Rutley (Macclesfield) (Con): Returning to 2011, what steps is my right hon. Friend taking to create the conditions for the pharmaceutical and life sciences sectors in the United Kingdom, including AstraZeneca in Macclesfield, to be able to compete more strongly in the global marketplace?

Mr Willetts: The life sciences strategy we produced earlier this week aims to rise to the challenge my hon. Friend identifies. In particular, there is an imaginative proposal under which 20 compounds that have been identified by AstraZeneca but are not currently being commercialised will be open to research by others, with a view to using them to create the medicines of the future.

T5. [85420] Julie Hilling (Bolton West) (Lab): Bolton university is excellent at recruiting and retaining large numbers of students from disadvantaged backgrounds. It is worried, however, about the future of the widening participation premium, which makes up 6.7% of its teaching grant. Can the Minister reassure them that that premium will be fully funded in 2012, 2013 and beyond?

Mr Willetts: We have to look at the Higher Education Funding Council for England teaching grant year by year, so no assurances can be given about the total teaching grant at this stage. That has never been possible

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under any Government. What I can tell the House is that the total amount of money going into access funding has increased significantly because of the increase in fees. It is now running at a higher level—£200 million higher—than ever before.

T6. [85421] Stephen Phillips (Sleaford and North Hykeham) (Con): I am sure that my hon. Friend the Minister for Further Education, Skills and Lifelong Learning will agree with me not only about his own irrepressibility but also about the importance for economic growth of our meeting the training needs of businesses. What measures is he taking to reduce red tape and excessive micro-management in respect of further education colleges —a trend that so characterised the last Government—in order that they can respond to our economic needs?

Mr Hayes: The Foster report described the last Government’s policy as a galaxy of bureaucracy, oversight and inspection. By contrast, we are cutting red tape, streamlining funding systems, and giving colleges greater discretion to respond to the demands of employers and the needs of learners. I have recently published a document setting this out in detail. Copies are available in the Library of the House—and signed copies by application.

T7. [85422] Naomi Long (Belfast East) (Alliance): Northern Ireland is the only region where employment law is devolved, an anomaly that in the past has led to the Northern Ireland position being largely ignored in the formulation of UK policy both in the transposition of European Union employment directives and in national agreements. Will the Minister assure us that he will work with the Minister for Employment and Learning in Northern Ireland to provide a framework in which Northern Ireland interests can be addressed in any future developments in this area?

The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey): The hon. Lady is absolutely right: our Department looks at the majority of employment law for the rest of Great Britain but not for Northern Ireland. However, I can assure her that officials from my Department are in regular contact with their counterparts in the Department for Employment and Learning in Northern Ireland. Examples of that include frequent conversations during the consultation on resolving workplace disputes, and close working between the employment agency standards inspectorate and the equivalent team in Northern Ireland. Indeed, we are currently working with it to understand the impact of the agency workers directive, and we will continue to do so.

T9. [85424] Mark Menzies (Fylde) (Con): Will the Minister update me on what efforts are being taken to attract inward investment into enterprise zones such as that in Warton in my constituency?

The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk): We have made good progress on enterprise zones. I know that locally there is a team working together with UK Trade & Investment on specific live commercial projects, and I am hopeful of real progress in the next few months.

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T8. [85423] Gordon Banks (Ochil and South Perthshire) (Lab): Last week we heard how Project Merlin had failed and was going to be bailed out by credit easing. How many banks have signed up to credit easing, how many small businesses will be helped by that, and will it be more successful than the business growth fund was?

Vince Cable: The Merlin project certainly did not succeed in its central objective, which was to achieve growth in gross lending by banks. There has been a contraction in net lending for a variety of reasons, not least the fact that many companies are holding more cash. Credit easing will be commenced soon. The Treasury will maintain a metric of performance by individual banks, and this will lower the cost of capital for many of their customers. The cost of borrowing and covenanting, as much as access, has now become the central concern.

John Pugh (Southport) (LD): Will the Minister explain how revising TUPE will actually create more jobs, as opposed to facilitating outsourcing?

Mr Davey: My hon. Friend will know that there are mixed views in the business community about whether or not the current TUPE regulations are gold-plated, which is why we have called for evidence. We have not published a consultation with specific proposals as we want to have evidence from all stakeholders, so that when we make our proposals in a future consultation they will be well evidenced.

Mr John Denham (Southampton, Itchen) (Lab): May I draw the Secretary of State’s attention to the £150 million worth of entirely private investment that Associated British Ports wants to spend now to equip Southampton for the next generation of container ships? Instead of creating and supporting 2,000 or more jobs, this project is mired in red tape in the Department for Environment, Food and Rural Affairs and its agencies. Will he speak to his colleagues to try to get this vital project under way?

Vince Cable: Yes, I will certainly do that—that seems a very helpful intervention. As the right hon. Gentleman knows, logistics, including ports, were a major part of our work in the growth review. A lot is now happening to open up British ports and invest in them, and I will certainly pursue his inquiry.

Neil Carmichael (Stroud) (Con): I am very much looking forward to welcoming the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford (Mr Prisk), who is responsible for business and enterprise, to the festival for manufacturing in my constituency to celebrate what we have achieved in the constituency, and to promote more investment and employment. But one area that we need to focus on is the supply chain, so what are the Government planning to do to help with that?

Mr Prisk: I am pleased to say that not only will I be able to attend the Stroud manufacturing festival, which is an excellent example of the initiatives taken by those on this side of the House, but the Government have put in place a £125 million supply chain initiative. It builds on the work we have done in the automotive sector, it is

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a great opportunity and I hope it will be one of those areas where the Labour party will set aside the posturing and work with us positively.

Michael Connarty (Linlithgow and East Falkirk) (Lab): I have been raising the issue of small businesses’ failure to be paid by large contractors. The Minister of State, Department for Business, Innovation and Skills, the hon. Member for Hertford and Stortford (Mr Prisk) was good enough to write to me, but he said that more than 50% of the problem occurred because there continued to be a problem with effective customer management on the part of the supplier. In other words, the large companies were to be managed by the small company. Is it not time that we actually did what the Electrical Contractors Association has called for and make it compulsory for 30 days’ payment to be in every single contract for a small supplier?

Mr Prisk: In fact, the Labour party tried to do that at the very beginning—in 1998, I believe—and failed. What we are doing is using our procurement powers to make sure that government sets the standard. I think that that is the best way, but I am always happy to look at unreasonable behaviour by large corporations and I would be happy to look at any further details that the hon. Gentleman can provide.

Tessa Munt (Wells) (LD): The county of Avon was abolished in April 1996. The Somerset village of Shipham was never part of Avon and has always been in Somerset, so it is a constant irritation to my constituents that post, including that from all Government agencies and any organisation using the Royal Mail’s database, is addressed to Shipham in Avon. When complaints are made to the Royal Mail’s headquarters, they elicit the reply, “We like to give users an historical perspective.” That is complete tosh. The Royal Mail does not update its database and will not correct inaccuracies in the address details. Will the Minister wade into this ancient, decades-old dispute on behalf of the long-suffering villagers and get this bizarre—

Mr Speaker: Order. I think we have got the thrust of it.

Mr Davey: I am very grateful for my hon. Friend’s question. She will be aware that her constituents in this village share their concerns about postcode issues with many other residents in many other constituencies across the UK. I have raised this matter in the past with Royal Mail, and it believes that the costs of changing its systems would be disproportionate. Of course I will raise her point, but I do not want to raise her expectations.

Jim Shannon (Strangford) (DUP): The responsibility to promote adult and community learning in Northern Ireland is a devolved matter. Has the Minister considered linking with Northern Ireland’s Department for Employment and Learning to provide a strategy for the mutual benefit of both the UK mainland and Northern Ireland?

Mr Hayes: I do have regular discussions with my counterparts in the devolved Administrations. The point that the hon. Gentleman makes is an excellent one and I shall take action on it following questions today.

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Karen Bradley (Staffordshire Moorlands) (Con): I am afraid that I am going to take the Minister back to the issue of postcodes, as many of my constituents contact me with their frustrations about the very wide range of postcodes in Staffordshire Moorlands, which leads to problems with insurance, cold weather payments and the emergency services failing to find people. So would he be able to meet me and local representatives to discuss the possibility of creating and setting up a Staffordshire Moorlands postcode to deal with these problems?

Mr Davey: I am always happy to meet hon. Members and I am sure we can arrange that. Ahead of that meeting, however, I want to ensure that the hon. Lady and her constituents who will be accompanying her do not have raised expectations. Royal Mail is struggling with its financial position. We are turning around Royal Mail—it was a disastrous financial case when we had it from Labour—and, as Minister, I would not want to impose extraordinary and disproportionate costs on it. I shall certainly meet the hon. Lady, however.

Chris Bryant (Rhondda) (Lab): The Labour Government introduced the artists resale right, which has made an enormous difference to many artists in this country. The law requires that it is introduced for the estates of deceased artists from 1 January next year. When I last asked the Secretary of State about it, he said that he

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could not confirm that it was going ahead and he still looks as bemused as he did then even though it is his responsibility, but the Arts Minister has told me that it will go ahead as long as I do not mention it to anybody else. Will the Secretary of State please now inform us exactly what is happening on the artists resale right?

Mr Davey rose

Chris Bryant: The Secretary of State.

Vince Cable: I believe it will go ahead; I have made further inquiries since the hon. Gentleman’s original question.

Martin Vickers (Cleethorpes) (Con): The Secretary of State visited my constituency in July, closely followed by the Minister of State, Department for Business, Innovation and Skills, the right hon. Member for Tunbridge Wells (Greg Clark), clearly recognising the need to boost the local economy. Since that time, we have had two enterprise zones, regional growth fund successes, a new road scheme and the halving of the Humber bridge tolls. My constituents are asking: what next?

Vince Cable: I think there is an expression that goes, “post hoc ergo propter hoc”. It is not just a coincidence.

Mr Speaker: I once used that on “Any Questions”. I say to the Secretary of State that it does not work.

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Water White Paper

11.31 am

Mary Creagh (Wakefield) (Lab) (Urgent Question): To ask the Secretary of State for Environment, Food and Rural Affairs if she will make a statement on the water White Paper.

The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Richard Benyon): Making sure that we have enough water for everyone will be one of the major challenges this country will have to deal with in the years ahead. Today’s publication of “Water for Life” recognises that water is essential for economic growth and that we must protect the environment for future generations.

The White Paper is a blueprint for action. It outlines plans to modernise the rules that govern how we take water from our rivers; it explains how we will improve the condition of our rivers by encouraging local organisations to improve water quality and ensure we are extracting water from our environment in the least harmful way; it announces plans to reform the water industry and deregulate water markets to drive economic growth; it enables business and public sector customers to negotiate better services from suppliers and to cut their costs; it removes barriers that have discouraged new entrants from competing in the water market; it asks water companies to consider where water trading and interconnecting pipelines could help to ensure secure water supplies at a price customers can afford; it enables water companies to introduce new social tariffs for people struggling to pay their bills and seeks to tackle bad debt that ordinary householders have to bear the cost of to the tune of £15 a year; and it tackles the historic unfairness of water infrastructure in the south-west.

The White Paper is the Government taking leadership on an issue of critical importance to our economy and our environment. It is a bold vision for the management and harnessing of an increasingly scarce but vital resource and I welcome this opportunity to discuss it with hon. Members today.

Mary Creagh: I start by thanking the Secretary of State for her note explaining why the market-sensitive parts of the White Paper were briefed to the stock exchange this morning and expressing my disappointment that she is not giving us her views on this.

We have just had the driest 12 months since records began 100 years ago. That has affected water quality, restricted boating activity and seen wildfires destroy valuable habitats. Last month, the Department for Environment, Food and Rural Affairs granted Anglian Water a drought permit, a highly unusual move for the autumn, when reservoirs are normally filling up. Last Thursday, the Environment Agency’s drought prospect report revealed that south-east England is at high risk of drought next year with some restrictions possible on customer supply. Ensuring a safe, affordable and continuous supply of water while protecting the environment and managing unpredictable rainfall is a major challenge. The White Paper is of intense interest to the public, who are worried about rising bills as real incomes fall and household budgets are squeezed. It builds on Labour’s Cave and Walker reviews, which we commissioned, and takes an evolutionary approach.

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We welcome the proposals to introduce greater competition for business and public sector customers and to establish a cross-border market between England and Scotland for water and sewerage services. We also welcome the fact that water efficiency measures will be part of the green deal, as proposed by my hon. Friends the Members for Ogmore (Huw Irranca-Davies) and for Liverpool, Wavertree (Luciana Berger) during the passage of the Energy Act 2011. However, the White Paper is silent on how the water sector will reduce its carbon footprint and encourage energy from waste, and the proposals on the removal of historical abstraction licences, which cause such damage to our environment, are given an end date of 2025, which is far too late.

Last week’s autumn statement announced £40 million a year to help 700,000 households in the south-west pay their water bills. Will the Minister tell the House when the £2 billion capital investment in the south-west that South West Water invested be paid off and how long the £40 million subsidy will continue for those customers? How will he ensure that those proposals for South West Water meet EU state aid rules? We know that bills in the south-west are, on average, £157 higher than those across the rest of the country, reflecting the botched Tory privatisation of 1989, which left 3% of the population paying for 30% of the country’s coastline and the £2 billion investment in new sewerage services. Does that money set a precedent for other areas of the country to receive help to offset capital investment costs? The cost of the Thames tideway tunnel is now estimated to be over £4 billion, so can Thames Water customers look forward to receiving similar help with their bills?

More than 2,250,000 pensioners, single adults and families spend more than 5% of their disposable income on water bills. The Government’s proposals to help people with rising bills elsewhere in England and Wales are weak and unclear. How does the Minister propose to force water companies to ensure that those eligible people receive help with their bills when that will come straight off the companie’s bottom line? What sanctions will there be for water companies that consistently fail to help people with their bills? Has he decided whether to fund Water Sure through public expenditure, as mentioned in the consultation in June, and, if so, what will the cost be per annum? Has he rejected the idea of match funding for company social tariffs in the south-west and modifying sewerage charges for non-household sectors?

Today’s water White Paper is more than six months late, and it is a curate’s egg—good in parts. We will work with the Government to ensure a fair deal for water customers, whatever part of the country they live in.

Richard Benyon: I am grateful to the hon. Lady for the welcome she has given to large elements of the White Paper. She is right that it builds on work that has been done over many years. I am grateful to Professor Cave, Anna Walker and to David Gray for his report on Ofwat, which informed the White Paper, as have the contributions of many stakeholders, other organisations and Members of the House.

The hon. Lady made a slightly predictable and lame remark about why I am dealing with the issue today, rather than the Secretary of State. We have a style of management in this Government that encourages people to take control of the issues. It is a highly motivational

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style that I recommend to her, because it encourages greater understanding of the issues. The Secretary of State and I have spent many hours preparing the White Paper and have immersed ourselves in the detail.

The hon. Lady is wrong to suggest that there is not enough in the White Paper on reform of the abstraction system. The abstraction rules go back to the early 1960s and do not take into account changes to our climate and weather patterns, and it is important that we have new and clear rules that take us into the future. We will consult in 2013 on our long-term approach to a transitional system of changing abstraction that will work and be sustainable in every sense.

There are urgent measures that we need to take forward, because in constituencies similar to mine, much-loved and much-valued rivers, which are vital to our eco-systems and to the general health of our environment and to the way in which we value it, are running dry. The White Paper sets out clearly how the Environment Agency will work to bring forward speedily measures that change how we abstract water, so that we return water as quickly as possible to river systems, and our catchment approach, which we announced in March, will soon start to benefit water quality and pollution. I urge the hon. Lady to support that measure, which involves many local people, is effective and tackles the urgent situation that we face, brought about by the current low rainfall and the impending drought, unless we have a proper, wet winter.

The hon. Lady mentioned South West Water. We believe that the announcement in the Budget, on which the Chancellor gave more detail in the autumn statement, sets out a way of righting a long-term wrong. It is to the credit of this Government that they have tackled it, because Members from all parts of the House have raised the issue for a great many years, and we are dealing with it. I am not going to pretend to her or to the House that the announcement will create the equivalence that people in the south-west might feel they deserve, but it is a considerable contribution and is separate from what we are doing to assist those on low incomes throughout the country to pay their bills.

We are consulting on the guidelines that we will produce for companies’ social tariffs, and I recommend to the hon. Lady the details in the White Paper on the excellent work that several water companies are doing to make it easier for people to pay their bills, and on the work that the companies are doing with organisations such as Citizens Advice and others.

The hon. Lady asks how long the payment announced by the Chancellor will continue. In an almost unique announcement, I can tell the House that it will continue beyond the end of the spending review and, in fact, until at least the end of the next spending review. Of course, it will be for Ministers then to decide what happens after that.

The hon. Lady talks about other high-cost items and their impact on people’s bills, and refers to the Thames tideway tunnel, which, as she rightly recognises, imposes a high cost on Thames Water customers. The cost of the project is of great concern to Ministers and to the Government, and we are looking at it very closely. We remain supportive of the scheme, however, and page 55 of the White Paper shows the Government’s clear support for it. The Thames is one of the most important rivers

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running through an iconic city, and we need to ensure that it is clean. We believe that this scheme offers the best solution.

The hon. Lady asks me about the guidance on tariffs. Water is a monopoly industry, and the monopoly industries are highly regulated by three regulators, so Ofwat will continue to set prices and to be an independent regulator. We will give clear guidance on where we think it should be going, but the relationship will remain the same and its responsibility will be to keep bills affordable.

Several hon. Members rose

Mr Speaker: Order. What are required now are short questions and short answers, because we must move on. That is the way it has to be done.

Tony Baldry (Banbury) (Con): Birmingham has a greater length of canals than Venice, and the country as a whole has an extensive canal network, so what assessment has my hon. Friend made of its potential to link those parts of the country with above-average rainfall with those parts that need more water?

Richard Benyon: I have looked very carefully at that issue, and as my hon. Friend will know we are in the process of a very exciting change in how we manage our waterways, in transferring British Waterways to the charitable sector. There remains the opportunity to use our canals to move water around, but the sad truth is that water is an extremely heavy substance, and it is very carbon-intensive to move it very far. The economic assessments that I have seen state that to move water much more than 30 miles is uneconomic, but through a range of different measures we start to see that, with interconnectors, we can incentivise water companies to use a variety of means to move water from neighbouring areas to theirs. Then, we can start moving a trickle of water from areas of high rainfall to areas of low rainfall.

Mr Ben Bradshaw (Exeter) (Lab): I welcome the fact that the Government are implementing the part of Anna Walker’s review that will bring relief at last to consumers in the south-west, although I note, of course, that our bills will still be more than £100 more than in any other part of the United Kingdom. Will the Minister say a little more about infrastructure? The thing that puzzles many members of the public is that we live in a wet, temperate climate with lots of rainfall, and yet we constantly talk about having droughts. What more can the Government do to increase the capacity of reservoirs and other infrastructure to avoid that happening?

Richard Benyon: I thank the right hon. Gentleman for his words. Of course, he is right. We want to encourage water companies to continue to invest. A key element of the White Paper is to send a very clear message to the investor community that we value the nearly £100 billion of investment in our infrastructure over the past 22 years and want to see more of it in future. There have been two intentions in that direction: first, not to spook investors by giving the wrong indications about how we want to proceed on competition; and secondly, to say to the investor community, “This is a place of safety and security where you can invest for the long term.” We will still require greater infrastructure and elements of construction that will make our economy and our environment more resilient to the kinds of weather changes that are happening.

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Andrew George (St Ives) (LD): Like the right hon. Member for Exeter (Mr Bradshaw), I welcome the Government’s approach to South West Water customers and to the social tariff proposal. However, does my hon. Friend acknowledge that the ability across companies to respond to the advantage that is given to them as regards social tariffs will vary from company area to company area, and will he keep that under review? After all, this is a White Paper, not a Bill.

Richard Benyon: The hon. Gentleman is absolutely right. We hope to legislate in the near future on a number of these matters, not least that of South West Water, which does require primary legislation. The guidance that we are consulting on will be made available when the results of the consultation are known in January—in the new year, to be precise. We will very much take his concerns into account. We want company social tariff schemes that really work and get to those who are in water poverty.

Caroline Lucas (Brighton, Pavilion) (Green): I welcome the publication of the White Paper, although I am disappointed that in some respects it is not more ambitious, particularly as some of the measures that we need could be very simply achieved. To give one specific example, are there plans to include a mandatory requirement to have rainwater harvesting in all new homes, and if not, why not, given that it is a very simple measure that could nevertheless have a significant impact?

Richard Benyon: There are great incentives to be given in the construction of new homes. In terms of the wider debate on development, sustainable development will put the onus on developers to show that the construction of these dwellings will have as minimal an impact as possible on the environment. This will be a real driver towards using water-conserving measures such as greywater schemes, sustainable drainage systems and a whole host of others that we will be bringing forward as this process goes further.

Mr James Gray (North Wiltshire) (Con): One reason for over-abstraction from rivers such as the source of the Thames and the Malmesbury, the Avon and the Kennet in my constituency is that the law prevents planners from considering water and sewerage availability when agreeing unwanted out-of-town developments and large-scale developments such as those around Swindon. Will the Minister have discussions with his colleagues at the Department for Communities and Local Government to consider whether planning law could be changed to avoid over-abstraction from rivers such as mine?

Richard Benyon: That is a matter of great concern to me. The River Kennet flows through my constituency, and when I stood in it in Marlborough the other day, it was as dry as the carpet on which I am standing. It is a very real problem, and the projections for population growth across this country in the years to come indicate that we have to address it now. We are setting out in the White Paper a vision that will precisely encompass the concerns so accurately voiced by my hon. Friend. We need to ensure that there is an adequate water supply so that our rivers and taps can continue to flow, and we are trying to link up those two very important requirements.

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Mr Barry Sheerman (Huddersfield) (Lab/Co-op): The Minister will be aware that it took David Walliams’s sponsored swim down the Thames to remind our constituents how filthy some of our rivers are. Tens of thousands of tonnes of sewage are still pumped into the Thames. Protection for the quality of our rivers comes from the Environment Agency, but everyone is saying that the Environment Agency is being run down and that it does not have the capacity to be vigilant and ensure that our environment is safe.

Richard Benyon: I have the highest respect for the Environment Agency. The people who work there are true professionals and are absolutely committed. I have had no indication from them that they are unable to deal with water quality issues, as described by the hon. Gentleman. I agree with him that the main river flowing through our capital city is in a disgraceful state. Not only should it be our ambition to see it cleaner, but we have to comply with international treaties. It behoves us to take the tough decision to restore its quality. However, that will not happen with the exclusion of other rivers that are also suffering quality problems.

Stephen Phillips (Sleaford and North Hykeham) (Con): Lincolnshire, where my constituency sits, is one of the driest counties in the country, somewhat counter-intuitively. Water is therefore of great importance to my constituents and in particular to those who farm. Will the Minister assure the House that there are no proposals in the White Paper that will adversely affect the farming industry?

Richard Benyon: One of the core principles that motivates us in DEFRA is food security. We are deeply indebted to the farming community for the innovation that it has shown and for its ability to cope with changing weather patterns, while continuing to produce quality food. During the drought last year, we engaged with abstractors, many of them from the farming community. We found that the Government have many tools at hand to deal with the problems now. There was some very innovative work by the Environment Agency, the National Farmers Union and other organisations on that. The White Paper addresses the urgent and available methods, but also considers a new, changeable abstraction scheme for the long term that encourages farmers to continue to produce food.

Thomas Docherty (Dunfermline and West Fife) (Lab): I think that there will be concern at the failure to separate the retail arm of competition for non-domestic customers. May I press the Minister to set out the timetable for the introduction of a zero-threshold market for all non-domestic customers?

Richard Benyon: That is a clear priority. We hope to have a water Bill to take those methods forward. We looked closely at the recommendations of the Cave report and those from a number of other quarters about retail separation. We are making substantial changes on competition, but we were not persuaded of the need for wholesale reorganisation and separation. We want to ensure that the water sector remains open to increased investment. We hope to make changes with a water Bill in the next Session of Parliament.

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Roger Williams (Brecon and Radnorshire) (LD): I welcome the commitment in the White Paper to tackle water quality on a water catchment area basis. I notice that the Teme, Wye and Severn catchment areas straddle the England-Wales border. I ask the Minister to work closely with Ministers in the Welsh Assembly and other agencies to ensure that water quality is improved as quickly as possible.

Richard Benyon: I have visited that catchment area and know that there are serious issues to be tackled. We work closely not only with ministerial colleagues in Wales, but with the Environment Agency and the new Countryside Council for Wales. I assure my hon. Friend that cross-border issues will be dealt with to reflect the needs of catchments. We will work with all concerned to ensure that that is successful.

Paul Flynn (Newport West) (Lab): If the Government are abiding by their promised timetable, 8 December is part of early summer. Is it not true that this White Paper is not only late, but lame and limited? It appears to disregard altogether the immense potential of water resources to generate clean, sustainable energy.

Richard Benyon: I am saddened that the hon. Gentleman is not as welcoming of the White Paper as others have been. We originally planned to introduce it in July and I recognise that it is a few months late. However, I am sure that he would have preferred for us to take a bit longer and get it right rather than rush it. We produced a natural environment White Paper in June, which informed the issues that we are taking forward in this White Paper. We have consulted closely with people across the water sector and in the wider DEFRA family. I think that it was better to take a few months longer and get it right.

Nadhim Zahawi (Stratford-on-Avon) (Con): I welcome the White Paper. Will the Minister confirm that the reason it was released to the City first was that it contains market-sensitive information? There is genuine anxiety in Stratford-on-Avon and throughout the country about over-abstraction. What can he say to my constituents to allay their fears?

Richard Benyon: My hon. Friend is right: we released only the parts of the White Paper that were market sensitive to the stock exchange, after informing Mr Speaker. I gather that there is precedent for such a move and I am grateful for the general support for it. My hon. Friend’s constituents, like mine, are right to be concerned about the impact that over-abstraction is having on their environment. That is why we are making a reasoned change to the abstraction system in the long term and tackling urgently the problems of over-abstraction in certain areas where rivers are dangerously low or even running dry.

Mr Andrew Love (Edmonton) (Lab/Co-op): The Minister has confirmed his commitment to the Thames tideway tunnel investment of £4 billion. Will he also confirm the other major investment in the Thames Water area at Deephams in my constituency? How will the Government continue to protect the consumer from the increased bills that will be occasioned by that major investment?

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Richard Benyon: Deephams is vital to the infrastructure that we need. The hon. Gentleman is right to suggest that it will have an impact on people’s bills. It is the job of the Government, working with Thames Water and Ofwat, to ensure that that cost is as low as possible. There is a large contingency in the Thames tideway project, which every experience of large-scale environmental projects shows is necessary. I hope that we can work with Thames Water to ensure that these infrastructure projects are produced at as reasonable a cost as possible and with as little impact on charge payers as we can achieve.

George Eustice (Camborne and Redruth) (Con): I, too, welcome the measures outlined in the White Paper to deal with the affordability of water bills in the south-west. As the Minister said, this issue has been discussed for more than a decade and nothing has been done. It is good finally to see action. In respect of the concerns about whether this sets a precedent for the Thames tideway project, does he agree that a major difference is that the population of the Thames Water area is far greater than that of the South West Water area, so the overall impact of the infrastructure improvements on bills will be far lower?

Richard Benyon: It is no comfort to my constituents or the constituents of other hon. Members in the Thames Water area to say that their bills are likely to go up. However, when they do go up, our projection is that they will be at about the national average. My hon. Friend’s constituents will continue to pay bills of about £100 over the national average. We have made a considerable investment to try to right the wrong that they have lived with for a long time. It is never easy, but I assure him that I will continue to work with Ofwat and others. I am grateful for his contribution and that of other hon. Members from the south-west in this difficult process. I hope that it is appreciated that we are getting somewhere.

Chris Bryant (Rhondda) (Lab): With all this talk of dryness, I feel as though the Rhondda is living in a different world—perhaps not for the first time—because the issue that affects us most is still flooding, in particular where there is dry ground and water comes straight down off the mountains. One thing that has helped enormously is that Dwr Cymru, Welsh Water, has, with its unique structure, been able to work more co-operatively with the Welsh Assembly and others. Will the Minister ensure that nothing compromises that unique structure?

Richard Benyon: I commend that company. I was with its chairman just the other day discussing this issue. We have to learn how water companies cope with large quantities of water in high rainfall areas, but also how we can work with them to achieve greater connectivity with other water companies. If we see water flowing from area to area, it will benefit the hon. Gentleman’s constituents through the bills that they pay and encourage water to go to the stressed areas of the south-east.

Dr Thérèse Coffey (Suffolk Coastal) (Con): The microclimate in Suffolk Coastal is quite similar to that of north Africa, and farmers are used to using irrigation in producing crops. There are also big abstractors of both river and ground water. I welcome large parts of the White Paper, but I am a little worried by recommendations 3.39 and 3.43, which I am concerned will put farmers in my constituency out of food production.

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Richard Benyon: I am very happy to discuss the details of that with my hon. Friend and with farmers from her constituency, because that outcome is not our intention. We want farmers’ businesses to be secure for the future. If the Government had not taken responsibility for this issue by taking forward a clear vision of an abstraction regime that is fit for the future—it has been a problem for a long time that there has not been such a coalescing of ideas—farmers in her constituency would have been in a much worse condition.

Stephen Mosley (City of Chester) (Con): The Minister has just mentioned Welsh Water. Will he remember that it also serves customers on the English side of the border, for instance in Chester? In areas where there are disputes between DEFRA and the Welsh Assembly Government—for example, on the Consumer Council for Water—will he ensure that customers on the English side of the border are not forgotten?

Richard Benyon: I will of course ensure that they are not forgotten. I am looking forward to going up to the north-west to see the new interconnector, which will provide water from places such as north Wales to an area that was water-stressed last year. We have to recognise that drought is not exclusive to the south and east but is now a feature in other parts of the country, including my hon. Friend’s constituency.

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Core Cities

12.1 pm

Hilary Benn (Leeds Central) (Lab) (Urgent Question): To ask the Secretary of State for Communities and Local Government if he will make a statement on the powers and finance he intends to devolve to local authorities.

The Minister of State, Department for Communities and Local Government (Greg Clark): I am grateful for the opportunity to answer.

I have laid in the Library today a copy of a document that the Government are publishing entitled “Unlocking growth in cities”, and I have laid a written ministerial statement. The document outlines a new framework for the relationship between our larger cities and central Government.

England’s largest cities—many of the issues in question are devolved matters—are the economic powerhouses of our country. We are offering them a menu of new powers that we want to explore as part of a series of bespoke “city deals”. The ability to do that comes from an amendment that was introduced into the Localism Bill, which was promoted by the core cities group and attracted all-party support. It allowed powers to be devolved to cities in future, and I believe it is important to act on it.

Our cities have great potential to contribute more to growth, and to enable them to do that we want to free them from Whitehall control in a number of areas, with the aim of stimulating growth. The first wave of deals that we propose will be with the eight largest cities and their surrounding local enterprise partnerships. As with any deal, cities will have to offer something in return for their new powers and funding. They must guarantee that they can provide strong and accountable leadership, improve efficiency and outcomes, and be innovative in their approach.

The bespoke approach of recognising the differences between cities and allowing licensed exceptions is a new idea to put cities back in charge of their own economic destiny and enable them to seize the opportunities for growth. It represents a big shift in how Whitehall works, with the presumption being that powers should be handed down wherever cities make a convincing case.

It is important to say that today’s document sets out a series of indicative options for the transfers of control that could be considered as part of each deal-making process. The list is not intended to be a statement of policy or represent an automatic entitlement for cities. It is neither prescriptive nor exhaustive, but it might help the House if I give some examples of the content of the document.

We want to bring an end to the current system of requiring cities to bid to different Whitehall departments for different pots of cash, whether for roads or housing. Instead, we want to explore whether they can get one consolidated capital pot, to direct as they see fit. We want them to have the ability to set lower business rates for certain types of company. We already have very successful business improvement districts, and sometimes firms in a particular sector across a wider area may benefit from the same degree of flexibility.

There will be a £1 billion boost to the regional growth fund to create jobs, and we will encourage cities to bid for that money to help clusters of businesses in their

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area, so one bid could help several small companies. We know that many small businesses find the system of taking on apprentices daunting, so cities will be able to set up city apprenticeship hubs, which will help local employers and local people to make the most of the opportunities offered by apprenticeships.

We want to improve the way in which services work together in cities, to make it easier for people to get back into work instead of being passed from one service to another—from Jobcentre Plus to the town hall to a careers adviser. That can be done under one roof, and we want to make that possible. We also want to offer powers over infrastructure to unlock investments in improving transport, housing and broadband. Currently, transport projects can be delayed because cities have to go through the Whitehall machinery, but they may have the capacity to make some of the decisions themselves. Cities should also be able to have more of a say on their priorities for housing and regeneration, instead of having to go through the Homes and Communities Agency.

Cities will be able to bid for a share in a £100 million capital investment pot to spend on ambitious broadband infrastructure projects. We expect bids to include a range of projects, including superfast broadband for strategic business areas and city-wide high-speed mobile connectivity.

As I said, we want to start with the eight core cities that proposed the amendment to the Localism Bill, but I wish to be clear that our vision extends to the whole of urban Britain. I will be open to suggestions from other cities about how they can make use of the powers that the Bill, now the Localism Act 2011, gives them.

The powers that we are proposing will help to allow our cities to be the economic, social and cultural magnets that they have the potential to be, and places where people aspire to live. Our cities have too often been straining at Whitehall’s leash, and they now have an opportunity to seize the powers that are available to them. I hope that the conversation and negotiations that we will have in the months ahead will be fruitful, and I commend this statement to the House.

Mr Speaker: Yes, I notice that the Minister refers to his “statement” to the House, and his observations did somewhat exceed the time limit allocated to Ministers for dealing with urgent questions—so much so that one wonders whether he might have considered making an oral statement in the first instance.

Hilary Benn: I am grateful to the Minister for his reply, but it should not have taken an urgent question to bring him to the Dispatch Box this morning. Once again, a major policy announcement affecting local government, this time made in the Deputy Prime Minister’s speech in my constituency this morning, is all over the national and regional media, who were clearly pre-briefed yesterday, whereas the House should have been told first today.

The efforts of councils and communities up and down the country make the biggest contribution to our cities, and it is the Government’s job to help them do so. At least the Deputy Prime Minister acknowledged today that areas once synonymous with urban decay were “dramatically revived” thanks to Labour’s investment. However, when we examine the “unprecedented transfer of power” that he has talked of, in fact we find

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unprecedented cuts, as confirmed in this morning’s local government settlement, on top of the cuts already resulting from the scrapping of regional development agencies. Those cuts are substantial, front-loaded and unfair.

Will the Minister explain why the 10% most deprived local authorities, which include the core cities of Manchester and Liverpool, are facing reductions in their spending power nearly four times greater than the 10% least deprived authorities? There is only one way to describe that, and it is as balancing the books on the backs of the poor or, when it comes to job losses, on the backs of women, who have lost twice as many jobs in local government as men since the coalition was formed. How many more public sector jobs will be lost in the core cities in view of the revised Office for Budget Responsibility forecast published last week?

When does the Minister expect the new powers for the core cities to be confirmed? He has assured the House today that they will be available regardless of the outcome of the mayoral referendums, so when does he propose to extend them to other councils?

On the devolution of local funding, we developed single pot funding, a good idea that is now being taken forward. We welcome that, but will the Minister tell the House by how much the Government have slashed local capital spending in the core cities? Is that not why we now face an “infrastructure deficit”? Those are not my words but those of the Prime Minister.

How will reducing the affordable housing budget by nearly £4 billion unleash the power of local councils, including the core cities, when it means that they will find it much more difficult to provide the homes that their people need?

Councils will welcome a role on apprenticeships, although many already play a role, but why are local authorities, including the core cities, excluded from playing a part in the Work programme? Surely they should have a role in helping people to find jobs, which is an urgent task up and down the country.

On the changes to local government finance announced by the Deputy Prime Minister today, which will affect all councils, will the Minister give the House an assurance that no local authority will lose out financially? Will there be effective redistribution from the most well off to the least well off? How much of the increase in business rate revenue do the Government plan to keep for themselves? How exactly is that localisation?

On the business rate discounts, to which the Minister referred, who will decide where and to which industry they can be offered, and will he assure us that that will not just result in better-off areas being the ones that can attract new businesses?

The Opposition support strong and innovative local government, which should have the powers it needs to do that job, but no amount of warm words will hide two very uncomfortable facts: the Government are cutting unfairly and their failed economic policy is undermining the growth of our core cities and all local communities, when what they really need is a change of course.

Greg Clark: I accept your words, Mr Speaker, that, such is the replete quantity of announcements that we are making, I might have made a statement on them.

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However, I am pleased to be able to respond to the right hon. Member for Leeds Central (Hilary Benn).

The intention of the proposals is to begin a series of negotiations with cities—we have not made a definitive announcement of powers that will be vested in one city rather than another. I thought it reasonable to publish a document to encourage cities across the country and see what others have suggested.

The right hon. Gentleman mentioned RDAs, but he will know that local enterprise partnerships in each of the cities are making major contributions to our reform. It is significant that when people were invited to make a proposal on how they should organise themselves economically, local businesses and local authorities proposed core cities as a preferable alternative. I am not aware of any consensus on the retention of RDAs.

On the local government finance settlement, to which the right hon. Gentleman referred, he will know that this is the second year of a settlement announced last year. I can confirm that the figures are exactly the same. The average reduction in spending power is 3.3%, which is less than last year’s reduction, and there is the protection of a maximum reduction of 8.8%.

In terms of fairness, we have again advantaged the deprivation and needs component of the formula to ensure that it has a greater weight compared with the system that we inherited.

On jobs, the right hon. Gentleman will know that to rebalance the economy it is important that we have private sector job creation. That is the agenda that the local enterprise partnerships are putting forward, and each of the core cities is clear that that is what is needed. They have a great capacity to create private sector jobs. Our future jobs are likely to come from knowledge-intensive industries, of which cities are ideally placed to be the hosts. In cities, people are in close proximity with one another and can share knowledge and insights. Cities will be the cradles of growth in future, and it is right that private sector job creation should be the key to that. He will also know that the Office for Budget Responsibility independent report on the autumn statement projected an increase in private sector jobs of 1.7 million in the years ahead.

We will negotiate case by case on what each city would like to be part of the single pot. It is important that we recognise that the needs of Liverpool are perhaps different from those of Bristol or of Leeds.

The right hon. Gentleman asked who should approve the discounts available in business rates. That is clearly a matter for the local authorities representing the whole of the city area. When there are industry-specific arrangements, we would expect a ballot of those industries, as with business improvement districts, which can have a higher levy.

The proposals we are making today are consonant with the discussions that we have had with each of the core cities during months past. I hope that the right hon. Gentleman and his colleagues, having been instrumental in providing this power, will join the leaders of all parties in the cities to ensure that we can give them the tools they need to unlock growth in their areas.

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Mr Stewart Jackson (Peterborough) (Con): The Minister’s reply to this urgent question shows that this Government are serious about civic renaissance. Will my right hon. Friend make efforts to speak to his colleagues in the Treasury about supporting tax increment financing and residential estate investment trusts, and about the development of more detailed special-purpose vehicles to access private sector capital to drive regeneration, not just in large cities, but in smaller ones such as Peterborough?

Greg Clark: My hon. Friend is absolutely right. One power that we are keen to see devolved to cities is a greater ability to invest in infrastructure, which can unlock growth and lead to financial prosperity. We have consulted on suggestions for tax increment financing and will propose our response shortly, but it is clear that cities want to be in the vanguard of using such powers.

Mr Nick Raynsford (Greenwich and Woolwich) (Lab): The Minister talked about the devolution of business rates, but he did not respond to the question that my right hon. Friend the Member for Leeds Central (Hilary Benn) asked him on Government plans to retain part of the revenue from them. If the Minister is serious about localism, will he tell the House whether the Government will consider options for devolving all business rate revenue to local government and not allowing a clawback by the Treasury?

Greg Clark: The right hon. Gentleman will know that the Government have consulted on precisely that. It is important that there is a strong connection between an authority’s business rate receipts—all authorities; not just cities—and its policy behaviour in respect of businesses. The direction in which we are headed is very clear, but the precise technical details will be made clear in days to come.

Lorely Burt (Solihull) (LD): I welcome today’s announcement, particularly the repatriation of business rates. Real localism means people having their own money to spend how they decide locally. How many savings will be made by reversing Labour’s Whitehall centralisation, under which so much taxpayers’ money was lost in administration costs before it ever got to front-line users?

Greg Clark: There is recognition that whatever the intentions behind the regional agencies, whether RDAs or regional arrangements more generally, they had become instruments—or, as it were, embassies—of Whitehall in the country. Our preferred approach is to devolve powers to cities so that they can revive their reputation of being able to determine their own future and stand proudly in the world as beacons of investment.

Mr Graham Allen (Nottingham North) (Lab): As Chair of the Select Committee on Political and Constitutional Reform, I strongly welcome the principle and philosophy behind today’s announcement and the co-operation with the core cities in moving the proposals forward. All parties should ensure that they are on the right side of the ambition of local government for greater independence. Is the Minister aware that local government in this country is one of the few in any of the western democracies to remain a creature of statute?

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Will he consider pushing localism much further towards genuine independence, as is enjoyed in other western democracies? The Local Government Association is currently looking at that and might well campaign on it in the new year.

Greg Clark: I commend the work of the hon. Gentleman and his Committee. He is right that we want to improve the standing of local government and its ability to be recognised as having—in effect—a constitutional significance that cannot simply be brushed aside. As he will know, our reforms in the Localism Act 2011 move considerably in that direction to establish a general power of competence for local government, so that it no longer exists to do those things that it is told to do by Parliament and central Government. Instead, the default should be the other way around: councils should be able to do things unless they are explicitly prevented from doing them by Parliament. The Act is a huge step in that direction, but I look forward to the report from the hon. Gentleman’s Committee—it will be taken very seriously in the Government.

Julian Smith (Skipton and Ripon) (Con): This is a great opportunity for northern cities such as Leeds to seize back control from London. Does the Minister agree that Leeds is doing the right thing by attracting inward investment, sovereign wealth funds and other sources of capital, and not relying on money from Whitehall?

Greg Clark: My hon. Friend is absolutely right. One of the things that was suppressed under the old regional arrangements was the identity of cities internationally, and one of the proposals that we make in the document is that UK Trade & Investment should work even more closely with cities to promote the identity of cities such as Liverpool, which is world renowned and should be given particular prominence in UKTI’s work around the world.

Mr Ben Bradshaw (Exeter) (Lab): I was pleased by the Minister’s clear statement that these new powers would not be restricted to the biggest regional cities, but applied—as he said—to all urban areas. But how on earth is that compatible with one of the first decisions that this Government made, which was to take away Exeter’s unitary status?

Greg Clark: I know that there has been an extensive debate, and great opposition in the area, about that issue, but it was settled. Rather than change administrative boundaries, which could bog down this process and waste time, our choice has been to respect existing administrative boundaries and, within that, transfer powers.

Guy Opperman (Hexham) (Con): Will the Minister outline how his core cities plans will impact on business rates and investments to boost the economy of Newcastle and the north-east?

Greg Clark: The connection between business rates and investment should of course be a virtuous circle. It should be possible to invest in major infrastructure projects knowing that they will attract business, so establishing a clear connection between the activities

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and behaviour of the council and the rewards for that. The proposals that my right hon. Friend the Secretary of State for Communities and Local Government will make on the reform of business rates, combined with the access to single capital pots, will provide—for the first time—the ability as of right for cities to invest in their infrastructure, attract businesses and reap the rewards of doing so, and so enter that virtuous circle.

Jonathan Ashworth (Leicester South) (Lab): The Minister has announced some very interesting measures, but I am not entirely sure that they will compensate for the huge cuts our cities face. It is very disappointing that Leicester is still not considered a core city. We are the pre-eminent city in the east midlands, we have a very successful mayor in Sir Peter Soulsby—a former Member of Parliament—and I am sure that the city could benefit from some of the proposals announced today. Will the Minister add Leicester to the list of core cities?

Greg Clark: The hon. Member for Nottingham North (Mr Allen) looked somewhat askance at that, but I think that rivalry between cities is healthy. Cities should have an identity, and verve and competitiveness should be encouraged. As I said to the right hon. Member for Leeds Central (Hilary Benn), I will not rule out the inclusion of any cities that can make a good case for taking on some of these powers. I would certainly expect Leicester to be pre-eminent among those cities.

Dr Thérèse Coffey (Suffolk Coastal) (Con): I grew up in the city of Liverpool and I am sure that fellow Scousers will welcome these proposals, but I now represent a seat in Suffolk, which does not have a city but is bigger than most of the cities that my hon. Friend has mentioned. What is stopping the transfer of these powers to shire counties, and why are they being restricted to cities at present?

Greg Clark: My hon. Friend knows that our agenda for decentralisation extends across the country to authorities of all types—indeed, the Localism Act enacts those powers—but it is right to recognise that our cities have particular challenges and opportunities. Just as cities around the world have prospered from having a policy focus, it is right that we should consider the challenges of urban Britain and, by transferring powers to cities and encouraging them to realise their potential, we should help our cities to do what cities in other countries do, which is to match or exceed the national average of prosperity. Too often, our cities are below the national average in income, and we want them to improve their position.

Tony Lloyd (Manchester Central) (Lab): The Manchester region will welcome the direction of travel that the Minister spells out, but does he recognise that the fundamental partnership between the previous Government and my city—and other northern cities—which saw such dramatic changes, was premised on the fact the Government ensured that resources were adequate? Will he guarantee that we will see a proper resource base for our core cities?

Greg Clark: The reforms give more control and more direct ability for authorities to have the resources that they need to invest. One of the features of the system

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that we inherited from several Governments is that too often our great cities, which have an international standing and reputation, have had to look up to Whitehall to plead for assistance when they have the capacity and resilience to invest and reap the rewards themselves. That is the change that we want to secure and these proposals are a step towards that.

Stephen Williams (Bristol West) (LD): The Minister has visited Bristol and he will know that the city of Bristol is not the same as Bristol city council. A pot of money will be welcome to help to solve the city’s transport problems, but power over the entire urban area would be more welcome. Will the Minister endorse the case for an integrated transport authority for the county that used to be Avon?

Greg Clark: This is one of the proposals that I expect to come from Bristol. The Government recognise, in this document, that cities include their surrounding area, and indeed that is how local enterprise partnerships defined themselves. One of the criteria for the deals is to ensure that all the connections in the area in and around the city are reflected in what is proposed, so I expect that to be part of the discussion that we will have with the authorities in my hon. Friend’s area.

Mr Gordon Marsden (Blackpool South) (Lab): What the Minister’s paper shows, in what it says about LEPs and skills, is that Ministers are having to reinvent the wheel on what RDAs did. Belatedly, they are giving powers to LEPs, wasting 12 months in the process. Does he accept that, as Members on both sides of the House have said, these powers and opportunities should also be available to second-level towns, coastal towns, rural areas and suburban areas on the edge of cities? Will he also look at the need to combine a skills strategy with localism in those areas—something that his colleagues in the Department for Business, Innovation and Skills and across the Government have so far failed to do?

Greg Clark: That is explicitly referred to in the document. We want to give the opportunity for cities to engage in skills strategies and help to equip the next generation of workers to enable businesses to prosper. I have been clear in what I have said: while we are starting with the core cities, this should by no means be seen as an exclusive process and I want to extend these principles beyond that.

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On the point about the ability to do this through LEPs, I think that the identity and strength of cities were submerged under the regional structure that we inherited. Having swept away the regional approach, we are giving life to the potential of these cities, as is being increasingly recognised.

Martin Vickers (Cleethorpes) (Con): I welcome the Minister’s announcement and the continuing devolution of powers to our local authorities. Like the hon. Member for Blackpool South (Mr Marsden), I represent a coastal constituency, and my constituents will be concerned that investment will be sucked into our cities to their disadvantage. Will the Minister assure me that other measures will be introduced that will help constituencies such as mine?

Greg Clark: My hon. Friend knows that coastal cities have been a particular focal point for the Government. As a considerable presence in his area, he will want to encourage his authority to make use of some of the powers that are generally available. It is right to recognise the importance of cities and what they can do, but one of the contributions that they can make is to revive the prosperity of areas even outside the city boundaries, and I am sure that that will be the case in and around the Humber.

Nick Smith (Blaenau Gwent) (Lab): May I press the Minister on the point that local authorities should surely be included in the Work programme? They could play a great part in helping people to get jobs.

Greg Clark: The document makes an explicit proposal that local authorities should be able to participate in the Work programme. It is relevant for them to be able to bring local insights to bear, the better to get people from welfare into work.

Robert Halfon (Harlow) (Con): I welcome these moves from Fabian centralisation to local democracy, but will my hon. Friend consider extending these devolved powers to core new towns such as Harlow, especially given that we are now an enterprise zone?

Greg Clark: I am delighted by Members’ requests to extend these powers beyond the cities. It is music to my ears. I would be delighted to have such compelling propositions and requests from cities and new towns and indeed from other parts of Britain. We are starting with the core cities, but we want to go further.