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I want to touch on one point about the positive-negative case. It is often said that those who support the UK are negative about Scotland and those who support separation are positive about it. I argue the opposite. The people of Scotland are talented enough, creative enough, ambitious enough and innovative enough to be successful in the UK. It is for the separatists to tell us why they think that Scots are not.

We heard from the hon. Member for Banff and Buchan (Dr Whiteford), the successor to Alex Salmond, that a single-question referendum is her preference, so let us stop the games and get on with the substantive arguments. Another SNP Member is here, the hon. Member for Angus (Mr Weir), and I am willing to take an intervention if he can tell us whether, if he put in a submission to the Scottish Government’s consultation, it was for one question or two. I am happy to take an intervention if he wishes.

Mr Weir: I thank the hon. Gentleman, but if he had listened when I intervened on the hon. Member for Livingston (Graeme Morrice) he would have heard that my preference was for one question.

Anas Sarwar: There we have it: two SNP MPs saying that they have put in submissions, both saying that they would prefer one question. Perhaps they could get on the phone to their leader and pass on the message that he should stop being so feart and just get on with the referendum and let Scots make the choice.

I have one minute on the substantives of the economic debate, so I will be very quick. I genuinely believe that Scotland’s influence is greater as a permanent member of the United Nations Security Council and NATO, not for prestige, but to fight tyranny and repression around the world. We benefit from membership of the G8, where a Scottish leader, as Prime Minister of the UK, tackled the global economic crisis to stop a recession becoming a depression.

Scotland’s compassion is better demonstrated by being a partner in the Department for International Development, which is headquartered in Scotland, employing 490 people, with a budget of £7 billion. What would happen to those jobs if we were a separate country? We benefit from shared infrastructure, defence and foreign affairs, as does shipbuilding on the Clyde and jobs. We would not be in that position if we were a separate country.

We benefit from sharing the risks and rewards. We saw the collective strength of the UK in bailing out Scotland’s banks. Would that have been possible if we were a separate country? We benefit from the fact that we are a larger single market—our current biggest business partner is England. If we became a separate country, it would become our biggest competitor. We also benefit from being part of the strongest monetary union in history. Leaving would mean that we would have to have our own currency, join a weaker euro or leave a foreign country to set our interest rates and our borrowing and spending limits.

I could go on and on, but I see you, Mr Robertson, nodding at me to finish. Let us end the games about what a referendum will look like and get on with the big choice and have the debate. After the referendum, let us get on with making Scotland a fairer and more prosperous place.

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12.7 pm

Mr William Bain (Glasgow North East) (Lab): It is a pleasure to serve under your chairmanship once again, Mr Robertson. I congratulate my hon. Friend the Member for Livingston (Graeme Morrice) on securing this important and timely debate, coming as it does in the week when support for separating Scotland from the rest of the UK has fallen to as few as three in 10 people.

Mr Weir rose—

Mr Bain: I will give way to the hon. Gentleman a little later; I want to make progress first.

I commend my hon. Friend the Member for Livingston and other hon. Members who have participated this morning in helping to ensure that the discussion on Scotland’s constitutional and economic future is informative and comprehensive, as we head towards what the Scottish people want—a clear, decisive, legal, single-question referendum on whether to stay within the United Kingdom or leave for good.

There are three points that the debate this morning has crystallised in the minds of hon. Members and those we represent. At a time of economic uncertainty in the eurozone, with economic demand predicted to fall this year and 16 million people out of work, it would be an act of folly to separate fiscal, monetary and financial policy in the way that Scottish National party members have proposed. Both the eurozone and our economies are faced with a classic liquidity trap. Keynes was very clear that fiscal, monetary and financial policy must not work against one another in such circumstances. We in the Opposition have huge concerns about how the Government are avoiding any flexibility on fiscal policy to stimulate demand and kick-start growth at home. It is a failure of policy, not a failure of the state of which we are an integral part.

The overwhelming evidence from respected economic commentators, such as Martin Wolf and John Kay in evidence to the Select Committee on Scottish Affairs, is clear and unambiguous: separation would lead to higher borrowing costs for a separate Scotland. Even under the SNP’s purported split of oil and gas revenues, with 90% being apportioned to a separate Scotland—not the universally accepted position under international law—the national debt inherited by a separate Scotland would be 70% of GDP.

On a per capita split of oil and gas revenues, debt would rise to 80% of GDP by 2014. On the deficit, even using the SNP’s preferred measure, including a geographical split of oil and gas revenues, the average deficit would have been 4% over the past five years. Three leading credit agencies have indicated that Scotland would not inherit the UK’s credit rating on separation, which would increase borrowing costs.

The First Minister says that, with the oil and gas revenues, Scotland would be the sixth richest country in the world, but to achieve that the great centraliser would have to become the great nationaliser, and there is no prospect of even the present First Minister expropriating the assets of overseas oil and gas companies to which he is in such thrall.

Michael Connarty (Linlithgow and East Falkirk) (Lab): Is my hon. Friend aware of what was said at the meeting of the UK oil and gas industry group a few days ago—that it is likely that the gas price, because the US is

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about to go into surplus in gas and the price is falling, may be set in the North sea area at a much lower level than now, which would undermine the revenues coming from the North sea to any future Government of the UK or Scotland?

Mr Bain: Indeed, that is a powerful point. This year’s report by the National Institute of Economic and Social Research concluded that Scotland would be a significantly indebted nation on separation, with a substantial trade deficit, no insurance from risk sharing and no further fiscal transfers, which would leave us over-dependent on those very fluctuating oil and gas revenues. The strain would have to be put on borrowing or tax hikes to fund current spending.

As the economist, Brian Ashcroft, pointed out recently, the only tools available to a separate Scotland to manage aggregate demand would be of the limited fiscal variety remaining under the terms of a currency union treaty with the United Kingdom; so if inflation took off, there would have to be tax rises, a fall in public spending, or a combination of the two—hardly a recipe for economic stability or social fairness.

Those campaigning for separation never tell us what the size or role of the state would be in a post-separation world. They are keen to promise voters everything from higher benefits and pensions to lower taxes, but never with any viable fiscal prospectus to underpin such aspirations. Their ambition is to have Irish levels of taxation, but Scandinavian-style public services. That is a cruel deception to sell to the electorate, and that fatal flaw in the argument has contributed to the fall in support for separation in recent months.

Mr Weir: Will the hon. Gentleman give way?

Mr Bain: I will make this point and then give way to the hon. Gentleman.

Without a central bank to print money and control the money supply, a separate Scotland would find itself with higher long-term borrowing rates and higher interest payments on Government debt, whether with the Bank of England as lender of last resort or even with a less structured relationship with sterling. Those problems with rising costs of borrowing would manifestly worsen if oil and gas revenues continued to fluctuate as predicted. Martin Wolf wrote in the Financial Times on 19 January about the higher borrowing costs that a separate Scotland would face:

“It would need to lower its debts quite rapidly. This would require even greater austerity than in the UK as a whole. Given its close ties to the rest of the UK, Scotland could not get away with taxing corporations or skilled people more heavily than its neighbour. So the bulk of this extra austerity would surely fall on public spending.”

The First Minister came to London a few months ago and, as my hon. Friend the Member for Glasgow North (Ann McKechin) said, boasted to the Institute of Directors that he would always align income tax rates in a separate Scotland with those of the United Kingdom. He now says that his key fiscal policy would be to cut corporation tax to 20%. However, the Institute for Fiscal Studies said in its green budget report this year that increasing corporate tax competition between the nations of the UK would increase business compliance costs and lead to a race to the bottom on tax rates and

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revenues collected. The Scottish Government’s own figures reveal that lowering corporation tax by just 1% results in a loss of revenue for the Scottish taxpayer of between £67 million and £83 million a year. So the First Minister is prepared to throw away up to £166 million of taxpayers’ money a year on a punt that Laffer curve economics works, when the evidence from the United States is that it fails every test of economic fairness.

Whatever happened to that young radical who interrupted a Tory Budget in 1988 to protest against the reduction in the top rate of tax by Lord Lawson? Whatever happened to his dream of a land of bountiful plenty with freedom from London rule? He wants London to regulate Scotland’s banks, insurance, mortgages and pensions, and to set Scotland’s interest rates—with no reference to the needs of our economy—and income tax rates. We are told that Scotland would have equality in the world, but that is instead a manifesto for complete economic instability.

With business investment slumping, the construction sector on its knees, infrastructure crumbling and our green jobs sector without the capital that it needs, how on earth can the First Minister believe that Scotland’s future lies in lining the pockets of the banks and big business, by promoting a fiscal climate that would encourage short-term profit taking instead of long-term investment? If he cannot identify crony capitalism as being as much a part of the problem in Scotland’s economy as it has been in the rest of the UK, no wonder he can never be part of the solution.

As my hon. Friend the Member for Livingston has said, having to join the euro would also damage Scotland’s economy. The evidence from most credible experts is clear: if Scotland were to be admitted to the EU as a new state, having left the United Kingdom, it would have to make an in-principle commitment to membership of the euro. That would mean compliance with the Maastricht convergence criteria, with further spending reductions to follow. The destination would be clear, and it would be bad for job creation and growth in Scotland.

At a time of uncertain economic prospects in the UK, we need strong fiscal and monetary union to support job creation and diversification of the Scottish economy. Scotland Office figures from January 2010 show that net fiscal transfers from the UK to Scotland over the two decades to 2008 were of the order of £75.8 billion, and, even factoring in every penny from oil and gas revenues, there was a net transfer of £30 billion over the same period.

We need a central bank that can fully support the Scottish economy, without ifs or buts. The best means of securing that is by maintaining the fiscal and monetary union that has been successful within the United Kingdom for three centuries. Some nationalists claim co-ownership of the Bank of England, even in the event of separation, and the Finance Secretary laughably even claimed to have the right to appoint a member to the Monetary Policy Committee, but that is the politics of denial. In quitting the United Kingdom’s fiscal and monetary union, Scotland would also abandon the unconditional guarantees provided to it by that financial system, including the Bank of England’s role in ensuring macro-economic stability for Scotland.

Paying another state to set interest rates and prop up part of the banking system, without a collective institution that could be held democratically accountable by Scotland’s

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elected representatives, would be the worst of all worlds. Scotland’s parliamentarians would not be able directly to scrutinise or influence the Chancellor’s decision on the fiscal mandate or the definition of financial stability under the Financial Services Bill, which is vital in the precise remit that the Financial Conduct Authority will have in relation to our financial system. We would lose the potential to influence the Chancellor’s decisions on income tax, even though the First Minister has said that he would always follow them. There would be no influence over major macro-economic issues such as the Bank of England’s inflation target, set by the Chancellor in consultation with the Governor.

Labour Members consider it clear that Scotland benefits from fiscal, welfare, monetary and financial union with the rest of the UK. When other countries across Europe are bringing down obstacles to co-operation, it would be absurd for us to erect new barriers at home. We would survive as a separate state, but our ambitions should be higher than that for the people of Scotland. If we are to thrive and prosper, strong devolution within the United Kingdom, while meeting the current huge economic challenges together, is the best solution. I hope that the Minister will reflect the message that we have heard this morning and increasingly from the Scottish people about their future: we are far weaker as separate states, and far better together.

12.20 pm

The Parliamentary Under-Secretary of State for Scotland (David Mundell): As always, it is a pleasure to serve under your chairmanship, Mr Robertson. I congratulate the hon. Member for Livingston (Graeme Morrice) on securing this debate on the economic consequences of Scottish separation, and on his detailed and positive case for why Scotland would be better off remaining part of the United Kingdom. I also want to thank all hon. Members who took part in the debate, including the hon. Member for Strangford (Jim Shannon) who set out the positive Unionist case and talked about the support for Scotland staying within the United Kingdom that comes from other parts of the United Kingdom.

The hon. Member for Edinburgh North and Leith (Mark Lazarowicz) identified the increasingly perplexing issue of the separatists arguing on the one hand that everything would be different in a new Scotland, and, on the other, that everything would be the same—if we are in any way worried about any particular aspect of separation.

The hon. Member for Glasgow Central (Anas Sarwar) gave his usual erudite exposition of the issues, and was commendably brief. The nub of the matter is that we must get on with the debate about whether or not Scotland should remain a part of the United Kingdom, and about what would be better for Scotland.

The hon. Member for Glasgow North East (Mr Bain) made a persuasive case for Scotland remaining part of the United Kingdom. I will not repeat his points; suffice it to say that—other than his criticism of the Government—I agreed with everything he said.

The contribution of the hon. Member for Banff and Buchan (Dr Whiteford) was brave because she mentioned independence—something that, as I understand it, is not encouraged nowadays in the Scottish National party. Then both she and the hon. Member for Angus (Mr Weir)

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went on to say that they supported a single-question referendum. I am glad that they said that here in this debate.

Mr Weir: I cannot understand both Unionist parties’ obsession with that issue. The SNP has made it clear that it is in favour of a single question. It is for others to put forward an argument for a second question.

David Mundell: The hon. Gentleman must convey that message to Mr Salmond. If Mr Salmond is in agreement with members of the Scottish National party, he has the opportunity to proceed now with a single-question referendum. It is he who is prevaricating on the issue of the referendum, and not this Government, who have offered to facilitate the SNP manifesto commitment to a single-question independence referendum.

Mr Weir: The Minister is missing the point completely. The referendum is for the Scottish people. There has been a consultation, of which we are awaiting the results, as to whether or not there is demand for a second question. It is about not the First Minister driving that demand but whether there is demand from the Scottish people.

David Mundell: I tend to agree with the editorial of the Daily Record, which often, in my experience, reflects the views of the Scottish people. It has described Mr Salmond’s current tactics as a

“desperate-looking ploy that has left Salmond isolated and open to public ridicule.”

That is the case. Although separation is the Scottish Government’s policy and not ours, we have made it clear that, as a Government, we are prepared to facilitate a legal, fair and decisive referendum to settle this issue.

Michael Connarty: Is not Mr Salmond feart of having a single-question referendum?

David Mundell: I am sure that many people will make that analysis. The UK Government referendum consultation showed a strong majority in favour of a single question and robust reasons why that should be the case. Seventy-five per cent of respondents agreed with the UK Government that a single question would ensure a decisive outcome. The support for a single question is clear and growing, and today’s Scottish papers—if the SNP takes any notice of them—confirm that.

All three pro-UK parties have made it clear that they support a single-question referendum. Even the SNP officially support a single question. Both campaigns in Scotland are in favour of a single question. Margo MacDonald and the Greens have now joined the call for a single question on independence. The coalition Government are offering the Scottish Government the opportunity to deliver a legal referendum by giving them the legal power that they do not currently hold. We are offering to deliver the SNP’s manifesto commitment.

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The SNP won a majority at the 2011 Scottish Parliament election on the basis of a manifesto commitment to an independence referendum, not to further devolution, and it is on that single question that it can claim to have a mandate. Independence is of course the founding principle of the SNP; this is its big chance to hold the referendum that it has pledged to hold in successive manifestos. If the SNP now does a U-turn and demands a second question on the ballot paper, it will be an up-front admission of defeat and an acknowledgement that the First Minister believes that he cannot win a single-question referendum on separation.

Tom Greatrex: The hon. Member for Angus probably let the cat out of the bag when he talked about the Scottish Government’s and SNP’s consultation. When the results of that are analysed, does the Minister think it would be interesting and useful to see how many contributions asking for a second question came after the May local government elections, and how many came from SNP councillors and SNP members on a standard format?

David Mundell: That will indeed be an interesting analysis. It is quite clear that the SNP and the First Minister are prevaricating on the question of the referendum. We have been calling for talks with the First Minister to be resumed so that Scotland’s two Governments can work together to deliver a legal, fair and decisive referendum. We need to get the referendum process agreed as soon as possible, so that we can get on to the real debate about Scotland’s future and whether Scotland should remain part of the UK.

Anas Sarwar: Did any SNP parliamentarians, or the SNP itself, put in a submission to the UK Government’s consultation, and if so, did they ask for one question or two?

David Mundell: The SNP did make a submission to the UK Government consultation and we welcomed it. As SNP members have stated, the SNP’s position is to have a single-question referendum. The Daily Record editorial today said:

“Salmond should stop playing games and start campaigning on the issues if he still believes he has a chance of realising his lifelong dream of independence. We need a proper decision as soon as possible. Then Scotland’s leaders can get back to more pressing matters”,

such as the economy, employment and education. That is the UK Government’s position.

In stark contrast with the Scottish Government, we are committed to getting the referendum process agreed and to getting on with the real debate. We have announced a programme of work that will set out in the period leading up to the referendum the benefits of remaining part of the United Kingdom. I am convinced, as are many Members here, that we will convince the people of Scotland that we are better together as part of the United Kingdom.

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Community Banks

12.19 pm

Guy Opperman (Hexham) (Con): The case for local community banking and the break-up of the Royal Bank of Scotland to create a series of local banks has never been stronger. Since the global financial crash, the merits of a vibrant system of local banks have become apparent; it is the issue of our time. We need to look at finding new ways to unlock the finance that households and small businesses need. We need new local banks that will promote competition, reinvigorate community lending, improve the finances of small and medium-sized enterprises, and encourage local saving. They would work on the principle of using local credit to support manufacturing and start-ups, and they would not leave the disadvantaged at the mercy of loan sharks and money changers.

Local banking works. We should bear it in mind that 70% of German lending to SMEs is via local banks. And we wonder why the German economy is doing better than ours. The experience of other countries that have a thriving local banking sector—countries such as Germany, the US and Switzerland—has demonstrated that smaller, locally focused institutions are the ones that provide economic resilience. Studies of the humble German savings banks—or Sparkassen, as they are called—which form a network of 430 independent but mutually supporting local institutions, show that they have made modest but steady profits through both boom and recession. By comparison, the mighty Deutsche Bank has plunged from huge profits to calamitous losses.

In this country, we have a missing tier of banking. Let us consider the period between December 2007 and December 2011, which saw a sharp decrease in lending by the large commercial banks in Europe. In that period in Germany, large commercial bank lending fell by 18%; in Switzerland, it fell by 34%; and in the UK, it fell by 17%. During the same period, however, lending by local savings banks rose; the German savings banks saw lending rise by 18% and the Swiss cantonal banks saw lending rise by 22%. But in the same period the UK saw neither a rise nor a fall in lending.

John Stevenson (Carlisle) (Con): I am grateful to my hon. Friend for giving way and indeed for securing this very important debate. Does he agree that what we need in the UK is a two-tier banking system? We need the large banks nationally, but we also need—as he is suggesting—smaller banks operating at a local level. Having a two-tier system would be beneficial to our economy overall.

Guy Opperman: I completely agree with my hon. Friend and I entirely applaud the Government’s approach—by way of the Vickers report—to addressing the problems with the larger banks. Everyone can see that there is a fundamental problem with large banks and their failure to lend. The fact is that they are almost operating as a monopoly; the largest six banks run the show completely.

The other end of the telescope and the other end of the problem is the lack of local banking. My hon. Friend talks about a two-tier banking system and I

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agree that, instead of having a single monolithic and almost monopolistic banking structure in which only the five or six big banks lend money, we need the larger banks—of course—but we also need the smaller banks operating at a local level.

Quite frankly, we have lacked that system in this country. Ever since the 1930s, approximately, the banks and building societies in the UK have become ever larger as some of them have been swallowed up by their neighbours and by their more predatory rivals. Consequently, we have gone from having a large variety of banks and building societies to having fewer and fewer banks and other organisations working in the banking community. Of course, that has the effect of reducing competition, reducing the ability for a new entrant to gain access to the market and reducing the ability of businesses to gain access to credit.

I must stress at the outset of my speech that the present crisis in banking and in bank lending is not in any way the fault of local branch staff. I assure the House that those staff are just as frustrated as I am at their inability to run accounts as they used to in the old days. I come to this particular debate with a background in business and with two years of experience as a constituency MP in Northumberland, where I have repeatedly seen decisions on lending being made by a Hexham bank manager, or another local Northumberland bank manager. Those decisions then become part of the responsibility of the credit risk team whenever there is any difficulty with the account.

If an individual SME has a problem with its account, such as a bad debt or a problem with cash flow, it is almost impossible for it to go back to the same manager and argue the case that it is a viable, proper business going forward. That is because the decision-making process has been taken away from the individual local bank manager in Hexham, Ponteland or wherever. What happens now is that the decision is not even taken in Newcastle or anywhere else in the north-east but by a credit risk team that is many miles away. I have attempted to go to those credit risk teams to make a case, but of course it is almost impossible to do so. That system must change. Again, I make it clear that what I am saying today is not a criticism of local bank staff who are working throughout the country. It is a criticism of the board members in London, who seem to have totally forgotten their fundamental role.

I was interested to see that the Leader of the Opposition has commented on banking in the last few days. Like the Church, we always welcome new converts, given the past record. However, the necessary reform of the banks is being left to this Government, as we bring the banks to heel with the Vickers report, clear up the LIBOR mess and implement a much stronger system than the light-touch regulation that we saw before.

Change will not happen without competition. Yesterday the Leader of the Opposition was extolling the need to create more competition for our banks. However, on 23 April in the Financial Services Bill Committee the Opposition voted to prevent competition in banking. I was present for that debate, which saw the Opposition introduce amendment 28, which would have deleted clause 5 of the Bill, thereby deleting the requirement for enhanced competition. So I must ask the question: how can one be in favour of local banks while stopping competition?

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The Leader of the Opposition is also out of touch if he thinks that the answer to this banking crisis is to force banks to close some of their high street branches. That is hardly what the voters in my part of Northumberland are crying out for; that much is certain. Residents in Haydon Bridge and Haltwhistle who are losing their local bank branches will tell the Leader of the Opposition that the problem with the banking sector was casino banking and greed, and not—as we heard from Labour this week—having too many local branches. My constituents want to see local branches providing a local service.

Chris White (Warwick and Leamington) (Con): I congratulate my hon. Friend on securing this debate. I would like to know his thoughts on how our local communities can hold these banks to account. Although having local community banks is an excellent idea, if we create smaller banks out of RBS how can we ensure that the local communities will have control over those banks’ priorities? In my constituency, industries such as the green energy industry and the video games industry have big potential for growth. How can local communities ensure that local banks are given the mandate to tailor themselves to local business needs?

Guy Opperman: The reality is that Hampshire, for example, has done what I am talking about and set up the Hampshire bank, or Hampshire Trust. It is backed by the local chamber of commerce and by local authorities. It is regulated, so it is possible to have a county bank that is regulated, but on a lighter-touch basis—I use that phrase again—than the larger banks such as Barclays or HSBC. Moreover, if we broke up RBS, which I will come on to discuss, the individual shareholders would have a say in a local county bank.

How do we create local banks? First, one must address the barriers to entry, which are considerable. Metro Bank has recently been established in London and the south-east, but only at huge cost and only after overcoming many hurdles. The example of the Hampshire bank shows that county banks can be created. I see no reason why we cannot do the same in Northumberland, or in the wider north-east region, and set up “The Bank of Northumberland” or “The Bank of the North-East”.

However, the truth is that a banking licence is notoriously difficult and costly to obtain. To try to remedy that situation, along with my hon. Friend the Member for Chichester (Mr Tyrie), who is the Chairman of the Treasury Committee, I met the chairman of the Financial Services Authority, Hector Sants, at the beginning of March. My hon. Friend and I sat down and tried to explain the problems to Mr Sants, and I am pleased to say that under this Government the FSA is considering trying to reduce the barriers to entry for smaller local banks.

On 12 March, the FSA’s chief executive wrote to me:

“We are conscious of the balance to be struck between ensuring high standards at the gateway, and the importance of allowing innovation and appropriate levels of access for new firms.”

He added:

“there has been public debate about the potential advantages of new entrants in the area of small, regional banks focused on servicing the SME sector. In such cases we will be proportionate

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in our approach and would invite all firms with a viable business model and appropriate levels of resources to a pre-application meeting to help guide them through the application process”.

In those circumstances, and with the background of a banking crisis, we need to look at the elephant in the room that is the Royal Bank of Scotland. The Government are understandably impatient to sell the 83%-nationalised bank, but the health of the public finances ultimately depends on the health of the economy, which itself rests on the stability and usefulness of the banks.

The taxpayer bail-out and the subsequent problems of RBS are well documented, and it now seems clear that the chances of the Government selling RBS as it is, and making a profit, or anything like one, are but a dim flicker at the end of a long tunnel. What the Government did with Northern Rock was undoubtedly the best option and the only real one, but RBS is different. I see RBS as an opportunity—as the Americans often say, “Don’t waste a good crisis.” We have a unique opportunity to seize the moment, and to ensure that RBS is managed for the benefit of the taxpayers, who own 83% of it, thereby transforming the banking sector. I suggest that we do not sell RBS as it is, but break it up, decentralise the branch management and use it to form the basis of devolved local community banks—imagine a local bank for every city or county—linked, where possible, with the local authorities and chambers of commerce.

Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op): I had not intended to speak—I just wanted to listen—but for clarity, will the hon. Gentleman say whether he is suggesting a form of mutualisation of RBS?

Guy Opperman: In real terms, the current RBS would go back to the people on a local basis, and if the hon. Lady listens I will explain how the shares could be devolved.

We would end up, I suggest, with dozens of little banks like 3i. The 3i Group plc is a large FTSE 100 company that started out as a Government business bank, as a support mechanism to get the country out of the 1930s depression. The new banks would be governed locally, with lending decisions made by managers who understood the local economy better than anyone at a London head office ever could. The managers would be embedded in their local economy, and could base their judgments on knowledge of people and businesses without being overruled by a credit risk computer or centralised targets. Their success would be intertwined with the success of the local economy.

I suggest that breaking up RBS is only half the solution. The next fundamental question is: what do we do with the Government shares? We could sell them, but I disagree with that proposal. We should give all 45 million people on the electoral roll the Government-owned RBS shares, making every voter a shareholder of a local bank created from the devolution of the RBS branches. Each local bank would coincide with a county or city council, and in my patch that would create a bank of Northumberland, with every adult in the county as a shareholder. Each bank’s lending powers would be limited to persons and businesses within its council boundary, and with residents as shareholders, the bank’s administration could be run by the existing council, to save costs and dovetail with existing infrastructure. If

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the plan went ahead, the 45 million shareholders would dwarf the 10 million that were created in the 1980s through the sell-off of BT and British Gas. It is crucial to remember that the Government did not bail out the banks—the public did. Their hard-earned money kept the banks afloat, and it is now time for them to share some of the rewards.

As well as giving taxpayers an effective rebate in the form of shares, the move would help to restore confidence in the banking industry, and boost the economy. The public is rightly fed up with a system that has become overwhelmed by small vested interests, a London-centric base and personal greed. What better way to repair that than by giving every voting member of the public a stake and a say in our state-owned bank? I accept that people could sell the bank, but the force of having 45 million British taxpayers holding banking shares could help transform the economy even if individual shares were sold. The alternative—there is one—is to give the shares and the branches to local authorities, which would be localism in its purest form, with state banking returned to a position of support for local communities, building on the German, Swiss and US models.

I am grateful to the Speaker for the opportunity to put my case today, and I thank the New Economics Foundation think-tank for its support. The endowment of local community banks, constrained not to lend beyond county borders and able to provide support for local businesses, is an important part of supporting local economies and communities across the country. With a mission to recycle savings locally and expand credit for productive loans that benefit the local area, but on a sound commercial footing, the strength of the case for reinstating a system of community banking is ever increasing. I suggest that we do not need to replace the commercial banking sector, because we can offset it and balance it out with a new system of banking. That would certainly introduce competition into a sector that is crying out for it, and transform banking in this country.

12.45 pm

The Exchequer Secretary to the Treasury (Mr David Gauke): It is a great pleasure to serve under your chairmanship, Mr Robertson. I congratulate my hon. Friend the Member for Hexham (Guy Opperman) on securing this important debate. He raised some interesting and important points to which I hope to respond.

First, let me make it clear that the Government believe that it is important for consumers to be able to access an appropriate range of financial products and services, and that we are committed to fostering a strong, diverse and competitive banking sector. To achieve that, we must ensure that consumers can apply competitive pressure and hold their banks to account for the services they offer. In a competitive market, customers should be able to vote with their feet and switch their custom to banks that provide the best products and services for their needs. The Government are, therefore, committed to fostering diversity and promoting competition in the banking sector.

To help with the delivery of those aims, the banking industry has committed to introducing a fast, safe and hassle-free switching service, which will ensure that by

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September 2013 customers can switch accounts within seven days. That is further to transparency measures that are already being implemented more widely in the personal current account market, including making charges clearer on customers’ monthly statements, and providing an annual statement of charges for each customer.

As well as people having the freedom and information to switch banks according to their needs and wishes, it is important that new firms are free to enter the sector. I am pleased that we have seen a number of new entrants into the current account market in recent years, including Metro Bank, and it is essential that the regulatory regime facilitate that wherever possible. That is why the Chancellor announced in the banking reform White Paper that the Bank of England and the Financial Services Authority will conduct reviews of the prudential and conduct requirements for new entrants to the banking sector, to ensure that the requirements are proportionate and do not pose excessive barriers to entry or expansion for new, and prospective new, entrants. The conclusions of those reviews will be published in the autumn when the FSA and the Bank of England set out the detail of the new supervisory models for the Prudential Regulatory Authority and the Financial Conduct Authority, and the FSA and the Bank of England have committed to introducing the changes in advance of the new regulatory structure, where possible.

The Government are also committed to promoting mutuals and fostering diversity in financial services. By promoting financial mutuals, the Government are ensuring that consumers have an alternative model, which can provide competition to the shareholder-owned banks. Last Thursday, we set out the Government’s vision for the building society sector in “The future of building societies”. The document, which has been warmly welcomed by the sector, confirms the Government’s support for the distinctive alternative offering provided by building societies. It outlines the Government’s intention to remove unnecessary barriers to growth, and to help create a more level playing field with banks. In addition, in January the Prime Minister announced that the Government will introduce a co-ops consolidation Bill, which will raise the profile of the co-operative alternative and make it easier to adopt it as a corporate form. By ensuring there is an environment in which building societies can not only survive but thrive, the Government are facilitating a mutually owned source of competition for the big banks for many generations of home owners and savers, and supporting building societies with ambitions to expand their business models: for instance, into providing vital lending to small businesses.

Promoting diversity in financial services goes wider than banks and building societies. Credit unions can act as an excellent alternative, providing affordable financial services to people who would not otherwise be able to access them. This Government have taken action to help promote credit unions and their role of offering financial services to their communities. We have removed unnecessary burdens by bringing into force a legislative reform order giving a much wider group of people the ability to take advantage of the benefits of credit union membership. We have brought Northern Ireland’s credit unions under the regulatory oversight of the FSA so that from April, for the first time, the deposits of Northern Ireland credit union members will be protected

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by the Financial Services Compensation Scheme, enabling members to save with credit unions with confidence. We have also announced a credit union expansion project, which will invest £38 million to help credit unions modernise and grow in order to offer a real alternative to high-cost credit providers. Through all those actions, the Government are creating an environment where credit unions can offer an alternative and compete with banks to serve families and businesses that need to save and borrow for their future.

My hon. Friend discussed the Royal Bank of Scotland and advocated its playing a role in supporting the creation of local community banks. The Government’s shareholdings of RBS are managed on a commercial and arm’s-length basis by UK Financial Investments Ltd, a company wholly owned by the Government. UKFI’s overarching objective is to protect and create value for the taxpayer as shareholder, with due regard to financial stability and promoting competition. UKFI’s role is to manage the investments, not the banks. The banks retain their own independent boards and management teams to manage the banks commercially without interference from shareholders. Like all banking service providers, they must balance customer interests, market competition and other commercial factors when considering their strategy, so the Government do not tell RBS or any other bank where to operate branches.

On shares for the people—my hon. Friend explained his proposal in detail—UKFI will consider the full range of alternatives for investment and make its recommendations based on market conditions, an assessment of investor demand and value for money considerations. However, the ultimate decision to proceed with any transaction will rest with the Chancellor.

My hon. Friend also described the difficulties that local business can face in accessing finance from banks. I assure him that the Government recognise that small and medium-sized enterprises are fundamental to economic recovery. That is why the Chancellor launched two credit easing schemes in March 2012. The national loan guarantee scheme reduces the cost of borrowing for SMEs by 1%, and the business finance partnership will invest £1.2 billion through non-banking lending channels. Together, the schemes support SMEs in accessing cheaper finance while diversifying the range of finance resources available, stimulating the non-bank lending sector. At Budget 2012, the Government also extended the enterprise finance guarantee, which will enable over £2 billion of lending over the next four years to businesses with insufficient collateral or track record.

We continue to help UK businesses access the finance they need. That is why the Chancellor and the Governor of the Bank of England announced the new funding for

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lending scheme at Mansion House on 14 June. The scheme will support credit for the whole economy by making it easier for banks to lend to businesses and families. In return for additional new lending across the whole economy, the scheme will reduce bank funding pressures, which have been increasing due to instability in the international financial markets. We are working closely with the Bank of England on the design of the FLS and will release further details shortly.

As I mentioned in my opening remarks, the Government believe that it is important for consumers to be able to access an appropriate range of financial products and services and are committed to fostering a strong, diverse and competitive banking sector, a point raised by my hon. Friend. I hope that it is clear to him from the initiatives I have described that we are pursuing a substantial agenda in that area through both regulatory and non-regulatory means.

The regulatory landscape is changing, just as customers’ needs are, and the financial services sector will need to continue to evolve to take account of that. At the same time, it is important that it continues to meet the needs of ordinary customers, an issue that I know is close to my hon. Friend’s heart.

I thank my hon. Friend once again for raising these important issues and bringing them to my attention and that of the House, and I thank my hon. Friends the Members for Carlisle (John Stevenson) and for Warwick and Leamington (Chris White), and the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson), for their contributions.

Guy Opperman: Clearly, the disposal of RBS, in whatever shape or form, is ultimately for the Government and the Chancellor of the Exchequer, having considered a full range of alternatives, market conditions and value for money. If it is not commercially viable to return RBS to the private sector, will the option of returning it to a local banking organisation, as I have described, be considered?

Mr Gauke: My hon. Friend is absolutely right that that is a decision for the Chancellor of the Exchequer. All I will say at this point is that I am confident the Chancellor will want to consider all options, particularly in the circumstances my hon. Friend describes. Numerous factors would need to be taken into account in any decision, including value for money for the taxpayer.

The Government are clear that banks and building societies should serve the economy. I assure my hon. Friend that the issue will continue to receive the highest level of attention from Government. We are grateful to him for raising so many important issues in this debate.

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NHS Services (Trafford)

12.58 pm

Paul Goggins (Wythenshawe and Sale East) (Lab): I am pleased to be able to hold this debate. I am particularly pleased that my hon. Friend the Member for Stretford and Urmston (Kate Green) is with me. I hope she will have the opportunity to catch your eye later in the debate, Mr Robertson, and make a short contribution. I am also pleased to see the Minister of State, Department of Health, the right hon. Member for Chelmsford (Mr Burns) in his place, as I know that he takes a particular interest in the NHS in Greater Manchester. I look forward to hearing what he has to say in response to my comments and my hon. Friend’s.

This is a timely debate. It is expected that in the next few weeks, a major consultation will be launched in Trafford on proposed changes to the provision of hospital services in the borough. That is, rightly and understandably, attracting huge interest in the community in Trafford and elsewhere. Last week, 5 July, was the 64th birthday of the national health service. That has particular resonance in Trafford, as it was at Park hospital, now Trafford General hospital in the constituency of my hon. Friend the Member for Stretford and Urmston, where the story of the NHS began. That was the NHS’s birthplace. Aneurin Bevan went to that hospital on that day in July 1948 to launch the national health service, which remains the best health service anywhere in the world.

Last Saturday, my hon. Friend and I joined hundreds of local people in Trafford on a march and rally organised by the campaign to save Trafford general hospital. Many parts of the community were represented, including the two main political parties in Trafford—they were both represented in good numbers—and it was evident that the affection for and commitment to the national health service in Trafford remains, just like everywhere else in the country, as strong as ever.

I think that Aneurin Bevan would be truly shocked, 64 years on from that historic day when he launched the national health service at Park hospital, to learn that the life expectancy of a man who lives in the poorest part of the Trafford borough is 11 years shorter than that of a man who lives in the wealthiest part of the borough. The gap for a woman is six years. That is a gross inequality in health. Our main objective, irrespective of party, must be to reduce such massive and gross health inequalities in our communities.

The Minister of State, Department of Health (Mr Simon Burns): The right hon. Gentleman makes an extremely valid point, in the light of which I have no doubt that he will welcome the fact that, for the first time—and, ironically, under a Conservative Government—there is enshrined in primary legislation a duty on the Secretary of State for Health to work to minimise health inequalities.

Paul Goggins: As I have said, Members of all parties should work together, although the legislation the Minister refers to contains many other elements about which I am a great deal more sceptical. In any event, tackling health inequalities should be at the forefront of our minds. If the national health services in Trafford are to be redesigned, that needs to happen in a way that helps us to tackle inequalities that blight lives and bring them

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to a premature end. We need a system of integrated care in Trafford that is capable of dealing with those issues and that can help us to tackle, in a meaningful way, the difficult problems of heart disease, diabetes, cancer and stroke that blight so many lives and bring them to a premature end. That has to happen. Frankly, the debate about integrated care in Trafford has gone on for long enough. We are signed up to it and it needs to come to fruition.

This time last year, there was great concern in Trafford about the future of Trafford general hospital. There had been serious financial problems at the trust and there was real fear in the community that those who run the NHS and who make decisions intended to privatise the hospital. I am pleased that, eventually, that did not happen and that Central Manchester University Hospital NHS Foundation Trust acquired the Trafford trust, so that Trafford general hospital, Stretford memorial hospital and Altrincham hospital are all still part of the NHS family. That has been widely welcomed throughout Trafford, but it is clear that further changes are on the way. It is vital that we have a full and frank consultation to inform the process of change that will, no doubt, ensue.

One particular issue—and the main focus of this debate—is the likely impact of changes to hospital services in Trafford on the nearby hospitals in the city of Manchester. If the consultation proposes to replace the accident and emergency department at Trafford general hospital with an urgent care centre, there is concern about the implications for Manchester hospitals, particularly Wythenshawe hospital, which is part of the University Hospital of South Manchester NHS Foundation Trust—UHSM—in my constituency.

Many Trafford residents already use hospitals outside the Trafford borough for their NHS treatment. Indeed, I estimate that about 130,000 of the 230,000 people who live in Trafford consider Manchester Royal infirmary in central Manchester and Wythenshawe hospital in south Manchester to be their local hospitals—the hospitals they have easiest access to. It is also true that, if someone suffers a major trauma, a stroke or a serious heart attack, they would not be taken to the A and E unit at Trafford hospital, even if they were a Trafford resident; they would go instead to one of the local teaching hospitals in either Manchester or, perhaps, Salford.

The end result of the geographical link between Trafford residents and hospitals in Manchester—and, indeed, of the requirements of the complex conditions from which people suffer—is that more than half of Trafford residents who need to attend an A and E unit go outside of Trafford in order to do so. That means 25,000 patients who live in Trafford going to Wythenshawe hospital for their A and E treatment. That is a third of all the Trafford residents who require A and E appointments in any one year.

UHSM estimates that if the A and E unit at Trafford general hospital closed, that would mean 7,600 additional patients at Wythenshawe hospital’s A and E unit in any one year. At present, Wythenshawe hospital treats 88,000 people at an A and E unit that was designed for 70,000 patients, so there is considerable concern at the prospect of patient numbers in excess of 95,000 if the changes are introduced. In addition, half of all unplanned admissions of Trafford residents to hospital are admissions to Wythenshawe hospital. It is estimated that, if the

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changes are introduced and if the A and E department at Trafford general hospital closes, 1,900 additional patients could be admitted, on an unplanned basis, to Wythenshawe hospital. In total, that means an extra 9,500 patients coming in for either A and E or an unplanned admission.

Even if the integrated care system that we all want is able to divert people from hospital and reduce the number of hospital admissions, there would still be significant additional pressure on Wythenshawe hospital. I have seen some estimates of the number of patients who may be diverted from hospital as a result of the changes. Some of the professionals involved in making the assessments predict that, even if the system is successful, a 20% diversion would be heroic. That means that Wythenshawe hospital’s A and E department would need more beds, more theatre time, more examination cubicles, more resuscitation bays and even a new fracture clinic. Although the tariff arrangements may pay for patients’ treatment, the capacity and the facilities will simply not be there, which brings me to the core of my argument: the facilities have to be there if we are to see the kind of major changes that may be proposed. If we do not have additional capacity at Wythenshawe, the consequence will be growing queues and cancelled operations. Nobody wants that to happen.

The case for additional facilities is being made by the UHSM management, but the silence of the response so far from the Greater Manchester cluster is deafening. We need engagement with those who run the cluster, so that we can start to get some proper answers to the problems. It is not as though this is a new issue. Elsewhere in the north-west in recent years, when Burnley’s A and E unit closed down, additional facilities were made available at Blackburn, and, when Rochdale’s A and E department was downgraded, there was investment in the Pennine acute trust. We are asking for the same process to be applied to Manchester hospitals if the A and E department at Trafford general hospital is replaced by an urgent care unit.

As I said, I hope that my hon. Friend the Member for Stretford and Urmston will catch your eye in a moment, Mr Robertson. My constituency next-door neighbour, the hon. Member for Altrincham and Sale West (Mr Brady), who, sadly, cannot be here today, has asked me to say that he fully supports my argument. He has also asked me to say specifically:

“Wythenshawe is the most important acute hospital for most of my constituents and I share the view that any additional demand at Wythenshawe arising from changes elsewhere will need to be properly resourced.”

We are looking today for a guarantee from the Minister that the necessary funding will be made available for the expansion of facilities at Wythenshawe hospital. UHSM should not be expected to take the financial risk to provide those facilities; the money has to come from elsewhere within the NHS.

The Central Manchester University Hospitals NHS Foundation Trust will face similar issues, although perhaps to a lesser extent, because the numbers are not as great. Of course, the relationship between central Manchester and Trafford general is different, because they are now part of the same organisational arrangement. However, the issue will still be there. If more patients are presenting

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at central Manchester for A and E and unplanned admission, there will be an additional burden that runs the same risk of longer queues, longer waiting times and cancelled operations. I am sure the Minister does not want to see that.

I look forward to hearing what the Minister has to say. I hope he is able to give a positive reassurance—indeed, a guarantee—that the facilities that will be required at Wythenshawe if the other changes go through will be made available. It would be wrong for my constituents who live in Manchester to discover that, because of changes in Trafford, they will face longer queues at A and E and operations being cancelled—that would be unfair. We have to see investment up front. We all want the integrated care model to work, but those patients will not disappear into thin air. Many more patients will be looking for their treatment outside Trafford if the A and E department becomes an urgent care centre. I hope the Minister will engage with that issue, and that we can have a positive assurance from him today.

1.11 pm

Kate Green (Stretford and Urmston) (Lab): I am grateful for the opportunity to contribute to this debate, Mr Robertson. I thank my right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins) and the Minister for allowing me to make a few remarks on behalf of my constituents.

The proposals for Trafford will clearly have a direct and significant impact on my constituents. As my right hon. Friend said, they are the cause of considerable local concern, exemplified by the substantial numbers of local people who joined the march and rally organised by the Save Trafford General campaign on Saturday. As my right hon. Friend said, they included politicians from across the political spectrum.

As we have always sought to say to the Minister, we understand that having fewer people go into hospital in the first place and, when they do have to be admitted to hospital, getting them back home as quickly as possible to recover is the outcome that we should all be striving for. We understand and welcome the integrated care approach as a means to bring that about, but that approach, which has been talked about for a number of years in Trafford without significant progress, cannot be delivered without the necessary and substantial investment in front-line community health provision and primary care. That will be even more true if, as we hope and expect, fewer patients will go to hospital in Trafford—or, indeed, in Manchester—and there is a concerted effort to undertake more preventive community health provision to achieve that result.

It is very important that the Minister gives assurances—not to me, but to my constituents—that the necessary investment in community and front-line health provision to produce an effective model of integrated health care and improve health outcomes is guaranteed. We need not only the up-front investment to enable that transition from hospital provision to more community provision, but an indication from the Minister that any savings from reduced hospital admissions and hospital stays in Trafford will be reinvested in front-line preventive care.

I understand that the proposed changes are not primarily financially motivated. We see them as motivated by a desire to achieve the very best health outcomes. None

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the less, it is a concern that the deficit at Trafford general has risen substantially in recent years. It would be helpful if the Minister explained how that deficit has come to grow significantly and how the proposed changes will have an impact on the ability to balance the books. The Minister will be aware that a two-stage transition is proposed for services at Trafford, with an initial reduction to below level 1 emergency care provision over more restricted hours, but ultimately perhaps moving right down to a minor injuries unit in a period of not less than two to three years. Will the Minister assure us that neither the move to option 2b, as it is called, nor the move to option 3, will be implemented unless and until the necessary community provision to make those respective models work effectively has been put in place?

I would like to raise one other matter with the Minister. Clearly, the proposed changes will lead to more patient journeys from Trafford to other nearby hospitals. I understand that the North West ambulance service expects to have additional resources in the light of those extra patient journeys. However, it would be welcome if the Minister offered guarantees that those resources will be put in place. That is a particular concern as the patient transport service, which in a sense backfills for some of the emergency ambulance cover, is out to tender. I would welcome an assurance from the Minister on that.

I endorse my right hon. Friend’s comments on waiting times and service standards at neighbouring hospitals. If the changes go ahead, we need guarantees that they will enhance, not diminish, the standards of health care at Trafford. We look forward to receiving those assurances from the Minister this afternoon.

1.16 pm

The Minister of State, Department of Health (Mr Simon Burns): It is a pleasure to serve under your chairmanship, Mr Robertson. I congratulate the right hon. Member for Wythenshawe and Sale East (Paul Goggins) on securing the debate and the hon. Member for Stretford and Urmston (Kate Green) on her contribution. Like the right hon. Gentleman, she shows a keen and continuing interest in the provision of health care in her constituency and in Greater Manchester. If I do not respond to all the points that they have made—I will seek to respond to as many as possible—I will definitely write to them as quickly as possible after the debate.

As ever with such issues, it is important to not only recognise, but pay tribute to the NHS staff in the constituencies of the right hon. Gentleman and the hon. Lady, as they do so much to improve the health and the well-being of their community day in, day out.

I would like to provide some context to the right hon. Gentleman’s concerns about health services in Trafford. I am sure that he will appreciate that the local NHS, working with commissioners, clinicians and local authorities, needs to determine for itself how best to meet the needs of local people. I am sure that he will accept that it is not for Ministers to intervene at that level. To ensure that all local NHS bodies can do so, we not only protected NHS funding, but actually increased it in real terms, albeit a modest real-terms increase, and that will continue throughout this Parliament. The extra money means better services for patients and, ultimately, healthier communities in the right hon. Gentleman’s constituency

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and beyond. In his constituency, Trafford primary care trust will receive more than £389 million in the current financial year, which is an increase of £10 million on last year. Manchester PCT will receive more than £1 billion, which is up by more than £29 million on the previous financial year.

Those increases come with a significant challenge, which was referred to by the right hon. Gentleman and the hon. Lady. The NHS as a whole needs to spend its money better. Nationally, it needs to find £20 billion of efficiency savings in the next few years to meet the rising demand for services. The right hon. Gentleman’s party made that commitment when they were in government, and we recognised it as the right thing to do and have adopted what has become known in some circles as the Nicholson challenge.

The hon. Lady asked whether the savings will be reinvested in front-line services. I can give her that commitment: all the quality, innovation, productivity and prevention Nicholson challenge savings will be reinvested in front-line services, not only in Manchester, but throughout the country.

It is to their immense credit that the NHS organisations, teams and individual members of staff are on track to meet that target. In 2011-12, the NHS made £5.8 billion in efficiency savings, which is testimony to the hard work that was put in by staff, managers and administrators throughout the NHS. However, let me be clear that by efficiency savings I do not mean savings that flow straight back to the Treasury, lost to the NHS. Instead, I am talking about efficiency savings where every penny will be reinvested to make care better. Of course, some parts of the NHS therefore face tough decisions, and that is true for the NHS in Trafford.

The right hon. Gentleman is concerned about how service changes in Trafford might affect the quality of services for his constituents. I am sure that he is aware that the NHS in Trafford and Greater Manchester has developed proposals for service changes affecting Trafford general, which are planned for public consultation later this summer. Following the consultation, a final decision about the changes will be made by the end of the year, with plans put into practice by April 2013.

The board of the Greater Manchester PCT cluster approved the proposals at its meeting in June 2012, and they will now be considered by the board of NHS North of England on 12 July 2012. I hope that the right hon. Gentleman understands that I do not want to—it would be wrong to—pre-empt or bias the local process before the consultation. However, I will try to address, as best I can, some of his concerns within that straitjacket.

The former Trafford Healthcare NHS Trust was acquired by Central Manchester University Hospitals NHS Foundation Trust in April 2012, so that the trust could move to foundation trust status, which it could not do independently. The acquisition also ensured that the trust was sustainable, so it could carry on providing health services to the people of Trafford.

Sustainability—the guarantee that the NHS will carry on providing high-quality safe services—is at the root of the right hon. Gentleman’s concerns. Trafford is the birthplace of the NHS, where Nye Bevan famously launched it just 64 years and four days ago. Unfortunately, history is not enough. Every corner of the NHS needs

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to be on sound financial footing, so that it is a viable service for years to come. That is what we all want, regardless of which side of the House we sit on.

Clinicians and general practitioners across Greater Manchester have developed proposals for a model of care that maintains high standards and improves value for money. Those proposals are called the new health deal for Trafford. Local people and local NHS organisations have been involved. The right hon. Gentleman might be aware that in 2008 the local NHS started work on a new integrated services model that aimed to deliver more care in the community and reduce admissions to hospitals.

The hon. Lady is concerned and wants the proposals for delivering more care in the community to be put in place properly, so that there is no fragmentation or disruption in the delivery of service. I share her concern and agree that such proposals must be part of driving the NHS to a more integrated programme and a policy of delivery and seamless provision of care. That is a challenge for the NHS, as it always is when moving on a part of the delivery of care, but Manchester is acutely aware of that and is working steadfastly to ensure seamless delivery of care and to meet the new challenges of the most appropriate care for patients in Greater Manchester. The right hon. Gentleman is interested in that model.

At the moment, Trafford provider services, which is part of Bridgewater Community Healthcare NHS Trust, delivers community services across Trafford. I understand that Trafford PCT launched a tender exercise for providing community services in Trafford, which should be completed by August 2012.

Clinical commissioners in Trafford are still keen for integrated care to go ahead. For that to happen, clinical services are being redesigned across Trafford, including the secondary care services provided by Trafford general. At the moment, Trafford general provides a full range of acute services, including A and E, as the right hon. Gentleman mentioned. The local NHS worked on several options for services that the hospital might offer in the future, spoke to clinicians, commissioners and public representatives to identify the right model of care and chose the following model. A and E services will be replaced with an urgent care centre, opening between 8 am and midnight, changing to a minor injuries and illness unit within two to three years; acute surgery will not happen there anymore; some parts of acute medicine provision will be removed but some will remain; and in-patient surgery will no longer be provided at Trafford general. The hospital will still provide elective orthopaedic surgery, including the development of an elective orthopaedic centre of excellence, day-case surgery, out-patient services, diagnostics and rehabilitation.

As I mentioned earlier, these proposals were approved by the Greater Manchester PCT cluster in June 2012. I understand that the PCT intends to submit them to the strategic health authority for approval and for a public consultation in which everyone will be able to have their say. I understand that the national clinical advisory team has reviewed the proposals and supports the clinical case for change. I also understand that a series of public events were included in the whole process, so that people could find out more and voice their concerns.

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There were regular meetings with local health overview and scrutiny committees, and local Members of Parliament have been briefed on what is and was going on.

Paul Goggins: I agree that full and frank public consultation is essential, but people need to have all the information. The Minister promised me earlier that he would write to me with further details that he is not able to cover in his speech. Will he undertake now to look in detail at the case made by UHSM for the additional facilities at the accident and emergency unit and elsewhere, at an estimated cost of £11.5 million, and will he comment on that?

Mr Burns: I will try to do better for the right hon. Gentleman by commenting on that in the remaining three minutes. I have an answer.

The consultation process has to be carried on within the setting of my right hon. Friend the Secretary of State’s four tests. The right hon. Member for Wythenshawe and Sale East is concerned about the impact of the proposed changes at Trafford on other hospitals, particularly Wythenshawe hospital. Local commissioners have assessed the potential impact of the changes in developing their proposals. However, the proposals are still at an early stage and have yet to go to public consultation. I am informed that local commissioners will continue to look at this issue. Ultimately, when the consultation is over and the responses have been considered and a final decision is made locally, if the local authority overview and scrutiny committee does not share the analysis and agree with the decisions that have been taken, it is open to it to write to my right hon. Friend the Secretary of State to request that he refer the decisions to the independent reconfiguration panel.

The right hon. Gentleman mentioned the £11.5 million for expansion of A and E at Wythenshawe hospital. I can give no such guarantees on that, for the following reason. Local commissioners have assessed the impact of the proposed changes at Trafford on other hospitals, including Wythenshawe. However, the plans are still at an early stage and are yet to go fully to public consultation, which will happen shortly. I am informed that local commissioners will continue to review the impact of the changes on other hospitals, including Wythenshawe. In that respect, I can give a commitment, but I cannot go the whole hog, as the right hon. Gentleman would like me to, and commit £11.5 million, or whatever other figure might arise, because that is not in my gift. These are local decisions freed from ministerial interference, which I think the right hon. Gentleman would agree is the right way forward.

The right hon. Gentleman, the hon. Lady and other hon. Members met Trafford PCT on 6 July 2012 to discuss the proposals. I hope that they found the meeting useful and helpful, and I hope that the right hon. Gentleman and other hon. Members in the area affected by the consultation continue to speak to the local NHS. I urge the right hon. Gentleman and his colleagues, constituents and everyone else who is interested in strengthening and improving the local NHS provision of service in Trafford and Greater Manchester to contribute to the consultation process, so that all views and opinions can be considered and that the decision can flow as a result of direct involvement by those people.

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Illegally Tethered Horses

1.30 pm

Julian Sturdy (York Outer) (Con): It is a pleasure to serve under your chairmanship today, Mr Robertson. I am delighted to have secured a debate this afternoon on an issue of great concern to many of my constituents. The problem of illegally tethered horses, however, is not restricted to York or the wider Yorkshire region but is found throughout the country, predominantly although not exclusively in rural areas.

To some, the problem of illegally tethered horses might seem mundane, but try telling that to the farmer whose crops are being destroyed, to the innocent car driver whose life is endangered by an escaped horse or to the property owner whose land is taken over by tethered horses. At the core of the issue is a simple but profound point of principle: that no one should be above the law. Nor should people have their lives negatively affected by those who have little regard for such laws.

Unfortunately, the illegal tethering of horses is seen as an acceptable and traditional activity among much of the Traveller community. In the vast majority of cases, illegally tethered horses belong to Traveller families or communities who seem to have little respect for the safety or property of others when tethering their animals wherever they like. As the Member of Parliament for York Outer, I have witnessed an increased build-up of horses on the verges of dangerous roads, and I am sure that other Members present have their own examples, which they might bring to bear.

To touch on some examples from my constituency, back in 2009 a local resident in York was driving along the A64 when an illegally tethered horse broke free and collided with her car. The resident suffered a broken wrist and could not work for nine weeks. The horse, sadly, suffered fatal injuries in the accident. York’s The Press, my local paper, quoted the resident involved:

“Had my partner…and I not been in a 4x4 hire car, we would have died instantly...I was off work for nine weeks but the psychological effects lasted much longer and also, what pain must that horse have been in?...They should be removed”.

The wider context of animal welfare is also involved.

Another case highlights the real risk to life faced by innocent bystanders when horses escape from their illegally tethered locations. On 29 March this year, a 39-year-old man was driving on the A166 near York when a horse strayed on to the road and collided with his transit van. Again, the police suggested that, had the gentleman been driving a small car, he would have been killed. To give an idea of the frequency of such incidents, only one day earlier another collision took place, this time on Malton road. Injuries were incurred by the innocent motorist and, once again, the horse suffered fatal injuries. Today I was told that only this weekend, on Sunday, the police were called out to deal with loose horses on Fulford road.

While the case studies of horses tethered on the roadside might involve the most life-threatening incidents, it would be a mistake, as I mentioned, to limit today’s debate to horses on the roadside. Another local case from my postbag highlights the vast damage that illegally tethered horses can cause for farmers. My constituent Mr David Shaw owns land in Osbaldwick, within sight

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of a Traveller site there. Mr Shaw’s land has been taken over by illegally tethered horses, which have caused a great deal of damage to fences, crops and the land itself.

Likewise, another constituent, who wishes to remain anonymous, frequently encounters horses tethered on local private property, again causing damage and problems. To quote from a recent e-mail to me:

“We live on the outskirts of York and have encountered persistent problems with tethered horses for over 15 years”.

Ian Swales (Redcar) (LD): I congratulate my hon. Friend on securing this debate on an important issue. May I make him aware that this is not only a problem in rural areas? In the north-east, more and more horses are being tethered on our green spaces in urban areas. In many cases, the horses, too, are illegal. Only a couple of weeks ago, I attended a horse-chipping event organised by the British Horse Society, which was at least trying to bring such horses into legal ownership while still illegally tethered.

Julian Sturdy: I entirely agree with my hon. Friend and, as I said at the beginning, although the problem might seem to be suffered predominantly by rural areas, they are not alone, because I know for certain that urban areas throughout the country suffer as well. He is absolutely right about the chipping of horses, which I will go on to discuss, because I want to direct a few questions at the Minister.

Mrs Madeleine Moon (Bridgend) (Lab): The hon. Gentleman has talked a lot about illegally tethered horses. Will he also discuss the problem of fly-grazing? In my constituency, and stretching the length of south Wales, we have had tremendous problems with vans appearing, often late at night, and being opened to dump horses in a farmer’s field. The horses are left there, sometimes for days, with many needing medical attention. The local authorities incur huge costs for vets’ bills, passporting and, ultimately, removing and selling the horses, and any sale does not bring in the money spent by the local authority on removing and looking after them.

Julian Sturdy: The hon. Lady is absolutely right about fly-grazing. The problem in my patch is more to do with tethered horses, although I know of local farmers who have suffered from fly-grazing. Overnight, on crops of cereals, horses can suddenly appear and be there for a number of days; it is difficult for the farmers to round up the horses or disperse them. In my constituency, the problem tends to be on areas that are not properly fenced, but I know of other farmers in other areas who have had their fences cut in the middle of night and horses let in, so that the crops are grazed and irreparably damaged beyond the cost of replacing them. She is also right to mention animal welfare, because a lot of the animals that appear on fly-grazing sites suffer from welfare issues, which need to be picked up properly; but that cost does sometimes fall on the local authority.

Mrs Moon: The responsibility for the horse, once it is illegally placed on someone’s land, rests with the landowner unless the local authority helps and supports some of the cost. That financial cost—not to the perpetrator but to the poor victim—is an issue that really needs to be addressed.

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Julian Sturdy: I entirely agree with the hon. Lady, who makes a valid point. As I develop the argument, I will proceed to the problem of the landowners bearing the brunt of the cost.

To return to the example of the farmer in my constituency who suffered irreparable damage to hedges and crops, his e-mail continued: “Two elderly farmers” have been intimidated

“by the owners of the tethered horses. These farmers live in fear of those people responsible for the horses and feel they cannot approach them.”

I hope that all Members agree that, whether the illegal tethering of horses is on the roadside, the village green or someone’s private land, it not only causes practical problems and disturbances for local residents but also represents a complete and utter lack of respect for the law and the wider community. Frankly, how some people have the nerve to take over someone else’s land without permission is beyond me. On a simple point of principle, that is fundamentally wrong.

Thus far, of course, I have frequently referred to the law, which it might be helpful to clarify for the purposes of this afternoon’s debate. The law on illegally tethered horses is currently contained in the Animals Act 197l, which gives power to landowners to detain stray livestock, including horses, and to recover expenses incurred when doing so. Similarly, on the specific concern about horses tethered on roadside verges, I am grateful to the Department for Transport for confirming that under section 155—

“Penalties in connection with straying animals”—

the Highways Act 1980 states:

“If any horses, cattle, sheep, goats or swine are at any time found straying or lying on or at the side of a highway their keeper is guilty of an offence”

unless it is

“part of a highway passing over any common, waste or unenclosed ground.”

My reason for outlining the relevant legislation so clearly is to highlight that reasonably clear and robust national legislation exists. In essence, the law is easy to understand. It states unequivocally that the tethering of horses on the highway or private property is a crime, and therefore punishable. The question that lingers is why so little action is taken when such offences are committed. The law exists, but sadly the will to enforce it is lacking. That is particularly the case with the Horse Passport Regulations 2009, which make it an offence for horse owners not to apply for a passport within six months of an animal’s birth.

In response to a written question in November 2011, the Department for Environment, Food and Rural Affairs confirmed that a mere six owners had faced prosecution as a result of not complying with that law. Yet, unsurprisingly, many of the horses involved in collisions with cars seem to be unregistered with DEFRA, thus making it all the more difficult to trace and track their owners. I would be grateful if the Minister outlined how his Department seeks to ensure full compliance with the law, and whether there is a specific plan to deal with horses owned by the Traveller communities to ensure that they are registered under the passport scheme, to which my hon. Friend the Member for Redcar (Ian Swales) also referred.

I return to the problem of enforcement. In response to my parliamentary representations on the matter, the Under-Secretary of State for Transport, the hon. Member

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for Lewes (Norman Baker), made it clear in a letter that enforcement responsibility lies with local authorities, and stated:

“The local authority could, therefore, detain stray horses found on any local authority owned land”.

On private land, initial responsibility lies with the landowner to request that straying animals be removed, and if that approach fails, the police can be called. However, as we all know and as has been mentioned, the time and cost of the court battles and legal action that often follow falls on the landowner. Nevertheless, it is clear that enforcement responsibility lies with the local agencies of the police and the council.

Having clarified who is responsible, I must raise the issue of my own local authority, City of York council. The council has clearly failed to act decisively on tethered horses. I have long called for the council simply to confiscate any illegally tethered horses and to return them only when the owners have accepted responsibility, faced a fine, and registered the horse in accordance with law. The fines levied would cover the cost of looking after the animals, and the action could be carried out in conjunction with the RSPCA.

To my mind, that is a pretty fair-sounding and simple plan of action. If someone illegally parked their car, the same action would be taken. Yet, a response sent to me by City of York council in June informed me:

“The Council does not have the facilities to remove or stable horses and is therefore not able to remove horses from private land. However, the support workers who visit the”

Travellers’

“site each week continue to work to educate travellers about…caring for their horses. This includes working closely with travellers to try and prevent horses being grazed inappropriately on private land or in places where they can stray onto the road.”

Ian Swales: My hon. Friend is touching on an important point about impounding facilities, and he mentioned cars. Local authorities usually have well-organised dog pounds. Does he believe that local authorities should be required to have facilities, or to buy facilities to be used to impound horses?

Julian Sturdy: I thank my hon. Friend for his intervention, and I agree with him. That must be the way forward if we are to solve the problem logically and fairly for everyone, and at the same time keep the welfare of the animals in mind. I would like local authorities to look at the matter.

Mrs Moon: The hon. Gentleman may find it interesting to know that throughout the length of south Wales we have found that it pays the Traveller community to abandon their horses. When they have done so, the local authority takes the horses into care and pays for veterinary bills and passporting, and then tries to sell them because no owner can be found. The horses may be sold for £200, but the veterinary bills and impounding may have cost £15,000. The matter is much more complicated than simply impounding a horse for the owner to recover. The owner waits until a horse is sold, and then buys it back really cheaply.

Julian Sturdy: I thank the hon. Lady for her intervention. I understand that there are complex arguments in the process, as I will explain. The problem also varies in

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different regions. In and around York and Yorkshire, the tethered horses seem to be valuable assets to the Traveller community. Whenever bailiffs have been used—there is a bailiff company operating around the country that gives 24-hour notice on a certain site where horses have been illegally put—they remove the horses and store them on a site at a cost to the private landowner, and almost always the fines have been paid and the horses have been returned because the Traveller community see those horses as a valuable asset and want them back. The situation may be different in other areas, and it will depend on different communities, so I understand that the position will vary from region to region.

Nigel Adams (Selby and Ainsty) (Con): Will my hon. Friend expand on where the market is for those horses? I am at a loss to know what they are used for. They do not look like horses that can be ridden. Does he have any evidence for what happens to them, where the trade is in them, and what the market is for them? That information would be useful.

John Robertson (in the Chair): Before the hon. Member for York Outer (Julian Sturdy) resumes his speech, I advise him that he needs to give the Minister time to answer his questions.

Julian Sturdy: Thank you, Mr Robertson. I will take no more interventions.

If I am brutally honest, I do not know the answer to my hon. Friend’s questions. He made a good point, and we should investigate it. Again, the answer will vary from region to region, but it is a valid point that needs investigating.

Let me make it clear that I have nothing but the utmost respect for minority and diverse groups and nationalities in our country. Such diversity is what makes this country so great. I would never seek to diminish or insult the traditions of Travellers or their way of life. However, it is outrageous for any section of a society, regardless of the sensitivities involved, regularly to disobey and breach the general law.

As I have outlined in the case studies mentioned earlier, such callous disregard is not only unfair but dangerous. City of York council is simply not willing to enforce the current law in relation to illegally tethered horses. As I said a moment ago, it is merely willing to try to prevent such instances. I am afraid that this is another sorry example of the silent, law-abiding majority being ignored and disregarded while we pander to those who take advantage of politically correct nonsense.

Interestingly, in response to inquiries by a local councillor, Mark Walters, a City of York council solicitor admitted that lack of council action on the matter could lead to the authority being liable both for negligence and for a breach of statutory duty. Therefore, I have a number of questions for the Minister, which I hope he will be able to respond to. First, will he join me in demanding that local authorities apply the laws and rules of this land fairly and equally to all parts of society? Secondly, does he agree with my proposal that, wherever possible, illegally tethered horses should be confiscated by local agencies and returned only after action has been taken against the irresponsible owners?

Thirdly, will the Minister outline the work undertaken by DEFRA to monitor the issue of illegally tethered

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horses, and say how the Department is working with local authorities to tackle the matter effectively? Finally, does he have any words of encouragement for those farmers and landowners whose lives are being affected by long, drawn-out battles to evict Travellers’ horses, or indeed communities that may have set up illegal activities on their land?

In conclusion, the issue of illegally tethered horses affects a great number of people in a great number of ways. In every case, however, an innocent, law-abiding person is either endangered or taken advantage of. This issue is a cause of deep anger and frustration for many individuals up and down the country who want to see robust action taken. I hope that the Government will encourage such robust action, and that the law in this area will be implemented—as it should be—fairly and universally.

1.51 pm

The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Richard Benyon): I congratulate my hon. Friend the Member for York Outer (Julian Sturdy) on securing this debate, and on the enormous amount of work that he has done in understanding the problem and its impact locally. He is right to raise the issue with the House today.

The practice of dumping horses on another person’s land, whether public verge or a farmer’s private property, is abhorrent. If horses are dumped—or fly grazed, as the hon. Member for Bridgend (Mrs Moon) said—or tethered in a way that fails to account for their needs, significant animal welfare issues arise. In the most serious cases, the owner can be prosecuted under the Animal Welfare Act 2006, and if convicted can be fined up to £20,000 and sent to prison for up to six months. That, of course, presupposes that we find and identify the owner of the horse, and I will come on to talk about that problem in response to points raised by my hon. Friend.

The Royal Society for the Prevention of Cruelty to Animals reports that the number of horses in its care has doubled over the past 12 months—it currently looks after more than 600 horses. I congratulate the work of all animal and horse welfare organisations such as the RSPCA, World Horse Welfare and Redwings horse sanctuary. They often find themselves in the front line, picking up the tab and dealing with the issues that arise when a horse is dumped.

Horses are often dumped in places that are clearly visible to the public. Welfare organisations often receive numerous phone calls, and they then have to visit the horse, assess the situation, contact the owner—if that is possible—and explain the legal position. On the Redwings website I found detailed and helpful guidance about what a landowner needs to do if a horse is dumped on their land, which includes the requirement to notify the police at an early stage.

The public assume that charities can simply take the horse, but that is not the case. Unfortunately, in reality the owner of a horse often has a legal right to its return, particularly if there are no significant welfare issues. In some cases it is difficult to identify the horse and its owner, which delays a landowner’s ability to move the horse off their land. Biosecurity can be threatened—that is a major issue in the farming community—and farmers risk losing payments where stewardship land is involved.

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I understand, however, that Natural England will look carefully at the circumstances of each case that has a stewardship agreement, and I have yet to hear reports of where a flexible approach has not been taken under such circumstances. I am fully aware of the problems caused to farmers, and it is unacceptable that they often need to use their own money to clear up the mess left by others who, as has been said, sometimes threaten and intimidate them.

My hon. Friend asked what DEFRA, and others, are doing about this issue, but there is no simple solution to the problem. On the rare occasions when the owner of a dumped horse can be identified, a relatively simple way forward can be found. In the main, however, that is not the case, which in part has been caused by a reduction in the value of a particular type of horse.

As my hon. Friend said, powers contained in the Animals Act 1971 can be used by any landowner—including local authorities—if animals, including horses, are allowed to stray on to their land. That includes the power to detain straying livestock on private land, and it provides powers for individual landowners to take ownership of the animals. The Highways Act 1980 also allows action to be taken, including the recovery of costs when livestock stray on to the highway. Once again, however, we have the problem of how to recover costs from the owner of an animal if they cannot be identified.

I record again my gratitude for the work of welfare groups in this area. The RSPCA and Redwings work together in troublesome areas to raise management and welfare standards, and they have done extraordinary work. Work undertaken by the National Equine Welfare Council to co-ordinate such initiatives at national and local level has made significant achievements. The work done by the RSPCA with Travellers at the Appleby horse fair is another example of the progress being made.

Ian Swales: May I add the British Horse Society to the Minister’s list of organisations? It is doing fantastic work in north-east England on this issue.

Richard Benyon: Absolutely, and I was coming on to mention other organisations that are doing wonderful work. Rather than the Government creating a requirement on local authorities to have adequate stabling and consider matters of cost—we create many such requirements across the piece—problems of this nature tend to exist in particular localities. During my seven years in the House, I cannot recall receiving a letter on this issue from a single farmer or landowner. Quite a few Travelling communities live in or pass through my constituency, but there are other places—some represented by colleagues present in this debate—where this is a hot-spot issue. Under such circumstances, I wish to ensure that all Government agencies, including my Department but chiefly local authorities and organisations such as those I have listed, work together to focus on the issues involved.

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Nigel Adams: Fly-grazing is a huge issue in my constituency, and I met one of the Minister’s colleagues to discuss it. It would be useful for the Minister’s Department to remind local authorities that they have obligations. One Traveller site in my constituency is controlled by the local authority. No animals are supposed to be on that site, but when it was visited a couple of weeks ago, horses were found tethered inside the camp. If local authorities have obligations, surely we should remind them to meet them.

Richard Benyon: I know that my hon. Friend speaks regularly with his local authority, and I suspect that it will have a Traveller liaison or welfare officer, or dedicated staff who should be conveying their concerns on issues of animal welfare to the people involved. I assure him that our Department takes animal welfare extremely seriously; we talk regularly with the Local Government Association and I will happily raise his point to ensure coherence across local authorities, and the development of best practice.

Mrs Moon: One point is that responsible owners will have their horses passported. We are talking mostly about irresponsible owners who do not passport their horses, and it is therefore difficult to track ownership. In the Republic of Ireland, there is a requirement not only to passport a horse but to say where it will be lodged, and that gives people the capacity to track it. We have several passporting schemes, none of which are connected, and therefore it is difficult to track those passports.

Richard Benyon: I understand the hon. Lady’s point, and I will take it back to my colleague, the Minister of State who has particular responsibility for these issues, to see whether we can amend the horse passporting regime in the way she suggests.

I welcome the work done by the National Farmers Union task and finish group to gauge the scale of the problem, ascertain the best remedies under existing law, and identify where amendments to the law would enable the problem to be dealt with more effectively. Many dumped horses, however, are traded by people who tend to operate outside the law, so finding effective remedies will not be easy.

I assure my hon. Friend the Member for York Outer that I will seek more information about initiatives from around the country, and consider whether there is a role for central Government to improve, facilitate and evaluate those schemes to ensure that we understand the benefits of best practice. The aim would be to enable councils and other landowners to take better control of the situation. I also assure my hon. Friend that DEFRA Ministers will, together with colleagues in the Department for Communities and Local Government and the Home Office, consider how we can secure a more joined-up approach to this matter across Whitehall.

2 pm

Sitting adjourned without Question put (Standing Order No. 10(11)).