The Prime Minister: My hon. Friend makes a good point. While it is disappointing not to get a budget deal at the first time of asking, this will give European leaders further time to reflect on public opinion in their own countries. I think that many people across Europe in all those countries that are significant contributors to

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the EU—and maybe even some that are not net contributors —will agree that it is right that when difficult reductions are being made in budgets at home, the same should happen in Brussels.

Sheila Gilmore (Edinburgh East) (Lab): Does the Prime Minister agree that his negotiating hand in Europe would be stronger if there was not constant debate here, particularly among his own Back Benchers, about an in/out referendum?

The Prime Minister: I think what matters is that we need to explain very clearly to our European partners that we are committed members of the European Union. We think the single market is vital for Britain’s national interest. We stand behind, and have helped to arrange, some of the key successes for the European Union in recent years, such as the oil embargo against Iran, the enlargement of the EU and the completion of the single market—those are all British initiatives. But I think it is perfectly acceptable to explain to partners in Europe that we are not satisfied with every aspect of our relationship —we are prepared to stand up and defend Britain’s national interest.

Mr Peter Bone (Wellingborough) (Con): Does the Prime Minister notice the difference between coming back from this European summit and coming back from some of the others? There is hardly anyone on the Opposition Benches to support their leader, but on the Government Benches, the Conservative party is united in supporting the Prime Minister.

The Prime Minister: I take it from that that even Mrs Bone is satisfied by the weekend’s activities, and that makes me a happy man.

Nick Smith (Blaenau Gwent) (Lab): Voters in Blaenau Gwent support the EU, but do not want us to be a soft touch. They want investment in infrastructure projects in Wales and in research spending, and they want a big reduction in farm subsidies. Will the Prime Minister support continued investment in infrastructure projects in Wales?

The Prime Minister: Yes, I do support infrastructure investment in Wales and I do support the EU having cohesion and structural funds, but those funds have to be affordable. As I have said, I think that the better-off countries have to be honest about those countries that joined the EU as part of enlargement with a realistic expectation that some of their infrastructure was going to be brought up to scratch and, crucially, that they were going to be connected with the rest of the EU, when, of course, some of them have had previous economic connections heading in other directions. We should stand by those commitments.

Mark Pritchard (The Wrekin) (Con): I congratulate the Prime Minister on standing firm on round one of the negotiations, but the budget talks underline how, over nearly four decades, the United Kingdom has lost its independence and the House of Commons has lost

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its sovereignty, given that any subsequent budget deal proposed by Her Majesty’s Government can be effectively vetoed by 26 other member states.

The Prime Minister: Where I agree with my hon. Friend is that I think there have been too many occasions where issues have gone to qualified majority voting rather than majority voting, and so the veto, as it were, has been given away in too many areas. Where I would not agree with my hon. Friend is that I think that Britain does benefit from our membership of the single market. It is important, in our national interests as a trading nation, that we do not only have access to that market, but help write the rules of that market. In that regard, I think the single market is very important for the UK.

Mr William Bain (Glasgow North East) (Lab): Can the Prime Minister tell us whether his coalition of allies on Europe includes both the Mayor of London, who believes that an in/out referendum on EU membership would be a bad idea, and his Education Secretary, who believes we should be quitting the EU altogether?

The Prime Minister: The hon. Gentleman is a little bit out of date, as the Mayor of London has chosen a visit to India to make it clear how much he supports my policy.

Mr Robert Buckland (South Swindon) (Con): As an enthusiastic European, may I congratulate my right hon. Friend on continuing to engage closely and constructively with our colleagues, and on building coalitions and consensus? May I urge him, in the months ahead, to carry on working particularly closely with the German Government to make sure that the progress made this weekend can be consolidated?

The Prime Minister: I will certainly continue to do that work. On the issue of the EU budget, I think there is a good reason why that coalition should stick together and push hard for a budget that, yes, is about growth, but comes in far lower than where it is today. I will work very hard to try to make that happen.

Helen Goodman (Bishop Auckland) (Lab): I am afraid that I am still not quite clear what the Prime Minister’s view on a referendum is. Is it that he thinks it is not a good time now because of the problems in the eurozone, or does he take the view that it would never be right to have an in/out referendum?

The Prime Minister: My view is that Britain should be looking for a different and better settlement between Britain and the EU. That is something we can push for, because Europe is changing. The single currency is driving change in Europe. When we have achieved that new settlement, we should seek fresh consent for it—and, yes of course, that could include a referendum.

Chris Heaton-Harris (Daventry) (Con): I also congratulate the Prime Minister on gaining so much support in these negotiations—this, not signing off the accounts of the Commission recently and other negotiations have shown to those living in the Brussels bubble that it is not business as usual when they deal with Britain.

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May I urge him to continue pushing for reductions in the various headings and especially to look at the EU quangos being set up?

The Prime Minister: I thank my hon. Friend for his remarks. He makes a good point. Given what we have done in the UK, such as abolishing or merging about 200 quangos and cutting central Government Departments’ own spending by about 30% in some cases, there is clearly room in the EU—not just in the Commission but in the other institutions—to find proper savings in cost and bureaucracy. We should continue pushing at that. The seven-year multi-annual financial framework provides the one moment when we really have the opportunity to drive home the advantage and make those cuts.

Bill Esterson (Sefton Central) (Lab): One more time, then: does the Prime Minister agree with those in his party who want a referendum, or does he agree with those in his party who do not want a referendum?

The Prime Minister: I think I have already made the position clear.

Mr Philip Hollobone (Kettering) (Con): My constituents are appalled that the European Commission should propose a budget with no administrative savings whatsoever, at a time when every Government in Europe are trying to cut back on unnecessary expenditure. Given that these people are clearly living in a parallel universe, what chance is there that they will advance administrative savings before the next budget round?

The Prime Minister: I am afraid it is worse than my hon. Friend says. According to so-called heading 5 —administrative costs—between 2007 and 2013 the EU was spending €56.5 billion under that heading, but the proposals from the Commission and the presidency of the Council were to increase that figure to €62.6 billion. Far from just freezing the figures, they were looking to increase them. That is one reason why I think it is perfectly possible to make a cut in their proposal. That is not unrealistic or tokenistic, or just some populist urge; it is a proper way of saving several billion euros and getting an affordable budget.

Gemma Doyle (West Dunbartonshire) (Lab/Co-op): The Prime Minister cannot even galvanise a coalition of opinion in his own party, so I am not sure how he expects to galvanise a coalition of countries. Given that his own opinion is as clear as mud, how will he deal with the constant debate on his own Benches about an in/out referendum?

The Prime Minister: This Government are not frightened of standing up for Britain in Brussels. The last Government gave away part of the rebate and got absolutely nothing in return; they joined up to the bail-out fund for absolutely no reason; and they gave away our opt-out from the social chapter and got nothing in return. They just turn up in Brussels, give in and show absolutely no backbone.

Martin Horwood (Cheltenham) (LD): I, too, commend the Prime Minister for his statement. Does not his commitment to negotiation and building alliances with

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other Governments demonstrate real British leadership in Europe, in contrast to the tub-thumping opportunism from the Labour Front Bench?

The Prime Minister: I agree with my hon. Friend. It was an extraordinary performance from the Leader of the Opposition to come here one day and tell us he was one of Britain’s leading Eurosceptics, only to go to the CBI and say that he was more pro-European than Tony Blair. He has been shown up as a complete opportunist.

Mr John Baron (Basildon and Billericay) (Con): Our letter in June, signed by 100 Conservative Back Benchers, called on the Prime Minister to legislate in this Parliament for a referendum in the next Parliament on our membership of the EU. The Prime Minister declined but said that he wished to continue discussions. In congratulating the Prime Minister on standing up for Britain, may I ask if he would allow us to have a meeting to discuss this matter, further to our letter?

The Prime Minister: I am always happy to meet my hon. Friend, who I know has strong views on this issue. He favours an in/out referendum and voting out, which is where he and I do not agree. I am happy to have that conversation with him, but I think it makes much more sense to look at the new settlement we would like to achieve within the EU before seeking consent for it. I do not think that legislating in advance is the right way forward, but I am happy to discuss it with him.

George Eustice (Camborne and Redruth) (Con): I welcome the statement. The Prime Minister has been absolutely consistent on this issue for two years. Rather than walking away from our allies, as some urged him, he stuck with them and expanded the alliance for a real-terms freeze. Does he agree that if we were to limit the scope of structural funds and reduce the deadweight costs of recycling between richer countries, we could not only reduce the EU budget, but allow countries such as Britain to have more money to spend on their own independent regional policy?

The Prime Minister: My hon. Friend makes an extremely important point. If we can encourage the better-off countries in Europe to take that approach, we can do exactly as he says and restrict the EU budget, but ensure that those countries that joined the EU with an expectation that they would get structural and cohesion funds to update their infrastructure can get those funds. That is important.

Chris Kelly (Dudley South) (Con): I congratulate my right hon. Friend on once again doing the right thing by the hard-working taxpayers of Dudley South, unlike Labour. Is bamboozling and attempting to bully Heads of Government during such negotiations while depriving them of food and sleep for days at a time really any way to run a union of nation states?

The Prime Minister: I thank my hon. Friend for his support. He makes an important point about the working methods of the European Union, where meetings seem to be held at extremely late hours—although I have to say that, having gone to European Councils for two and a half years, there is certainly no experience of being starved of either food or drink.

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Margot James (Stourbridge) (Con): I congratulate the Prime Minister on the excellent progress he has made in forming an alliance of net contributors both in the run-up to and during the budget negotiations. Does he welcome, as I do, the closer relationship with Germany, which Der Spiegel has aptly dubbed “Merkeron”?

The Prime Minister: I am grateful for my hon. Friend’s support. I think it is a bit premature to raise this new spectre, as it were, but I certainly enjoy working closely with the German Chancellor, and there are many areas—not just the EU budget—where we agree very forcefully.

Mrs Anne Main (St Albans) (Con): I do not think I have a particularly odd postbag, but I have never had one letter, e-mail, conversation or text that has encouraged me to ensure that we keep up the EU wine budget, ensure that the bureaucrats have a comfy lifestyle and increase their budget left, right and centre. The Brussels sprouts and turkeys of Europe will not be voting for Christmas. I congratulate my right hon. Friend on his firm stance and say more power to his elbow. I believe that my constituents are typical.

The Prime Minister: I am grateful for my hon. Friend’s support. On this side of the House at least we will go on arguing for a tough settlement.

Christopher Pincher (Tamworth) (Con): Does my right hon. Friend recall the warning given by Aneurin Bevan—one Labour figure who knew how to stand up in Britain’s interest—who said that it is dangerous to send a British Foreign Secretary

“naked into the conference chamber”?

With respect to retaining our veto as a weapon in our negotiating armoury, does the Prime Minister think the Leader of Opposition could benefit from a bit of Bevan?

The Prime Minister: I think the Leader of the Opposition could benefit from a little bit of time with his socialist colleagues in the European Parliament, because they have done so much to try to undermine all of us who want to see a tough budget settlement. They are calling for a 5% increase, getting rid of all the rebates and having a financial transactions tax. That is what the socialists stand for in Europe and if the Opposition do not agree, they should have the courage to do what we did and leave their group.

Gavin Williamson (South Staffordshire) (Con): I want to know from the Prime Minister whether he thinks we would have given away all our rebate or just most of it if the Leader of the Opposition had been in charge of our negotiations.

The Prime Minister: I do not think our rebate would last long with the Labour party. Tony Blair—the last Labour Government—gave away the rebate, in return for which they thought they had secured a promise for reform of the CAP, but they got absolutely nothing in return. It was a terrible piece of negotiation, and one, I am afraid, for which we are still paying the price.

Dr Sarah Wollaston (Totnes) (Con): Far from being isolated in Europe, the Prime Minister has plenty of allies. Does he feel it was at all helpful to be able to go to

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Europe and demonstrate the strength of feeling of this House? Will he set out when this House—and more importantly the British people—will be able to see his proposals for a new settlement on our relationship with Europe and when the British people will be able to give their consent?

The Prime Minister: I do not think that anybody in the EU doubts the very strong views of this House of Commons and of the British public about our relationship with Europe and the fact that we should not be having big increases in the EU budget. That is well understood and this Government reflect that very clearly, unlike the last Government, who endlessly gave away our money. I have explained that I will be saying more this year about the new settlement that we are seeking in Europe.

Guy Opperman (Hexham) (Con): People in Northumberland will be delighted that it is this Government who are keeping the rebate, stopping the budget rise and working with the fiscal sensibles in Sweden, Holland and Germany. Does the Prime Minister agree that fiscal restraint and constraint are gradually becoming the prevailing argument in Europe?

The Prime Minister: My hon. Friend makes an important point. We must work hard to keep this alliance together, because there are many countries and parties in Europe that want to see an even bigger EU budget. Sadly, that includes the socialist party, which Labour belongs to. It is campaigning and fighting for an increase in the budget. This is what the leader of the European socialists says:

“If the EU budget is decided on the basis of Van Rompuy’s latest proposal—or an even worse compromise—it will be a budget of broken promises.”

That is the policy that Labour is signed up to, and it is only this Government who are preventing it from happening.

David Rutley (Macclesfield) (Con): I congratulate the Prime Minister on taking a strong lead, on putting the spotlight firmly on economic growth and on placing trade on the EU agenda. Will he tell the House what steps the EU is taking to tackle the burden of Brussels-backed bureaucracy, just as this Government are doing here in the UK in relation to historical home-grown regulations?

The Prime Minister: I am afraid that the answer to that is not nearly enough. There is some good news, which is that, at the last European Council before this one, we secured a commitment from the European Commission to examine existing regulations and to try to remove the most burdensome of them. It was disappointing, however, that at this Council, the European Commission would not brook any idea of reducing its bureaucracy or its budget. As I have said, the proposals being put forward were to increase the budget of the central administration, not to reduce it.

Neil Parish (Tiverton and Honiton) (Con): I congratulate the Prime Minister on standing up for Britain and on having strong allies in Europe. The Council of Europe is beginning to see the light in regard to expenditure, but the culture of the European Commission is always

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to spend more and more. If it is good enough for this Government to cut back on Whitehall, why is it not good enough to cut back on the European Commission?

The Prime Minister: My hon. Friend makes an important point. That point was made not just by me but by a number of other leaders of Governments. We were talking about the tough pension changes, budget changes, administration changes and cuts that we have had to make, and it is just not acceptable for Brussels to continue as though nothing has changed.

Mr David Burrowes (Enfield, Southgate) (Con): Before the European Council, the shadow Chancellor kept going on about the Prime Minister being weak and isolated. Following the Prime Minister’s strong leadership on budget reform, in alliance with countries such as Germany, Holland and Sweden, who in this House does my right hon. Friend now think is weak and isolated on Europe?

The Prime Minister: First, may I congratulate my hon. Friend on his absolutely superb piece of Movember fundraising? He would not look out of place in a spaghetti western, and I am sure that a number of film studios near Enfield will want to call on his services. So excited was I by his facial hair, however, that I have forgotten his question—[Laughter.] Ah, yes! He is absolutely right. The last Labour Government gave away our rebate, and if they got back in again, they would give away the other half.

Jane Ellison (Battersea) (Con): May I congratulate the Prime Minister on the important work that he did this weekend, particularly the alliance building? It is clearly absurd of the EU to say that there can be no cuts in the central administrative budgets when, up and down this country, councils such as mine in Wandsworth are finding ways of doing it at local government level. Surely it is inconceivable that it cannot be done at EU level.

The Prime Minister: My hon. Friend is absolutely right. I have set out in my statement and also at the European Council a number of specific steps that could be taken on pay bills, on pensions and on automatic promotion. Frankly, however, perhaps the best way of getting the Commission to engage in the reality is to give it a cut that it has to achieve and then challenge it to do so. That is what we have done with some Government Departments. We have said to them, “Okay, you know your Department and your departmental spending better than anyone. Here is the sort of reduction you need to achieve.” There is not an organisation or business in the world that has not had to budget for a 10% or 20% reduction over the past few years, and we should ask the Commission to do that.

Neil Carmichael (Stroud) (Con): This statement certainly demonstrates that the building of an effective alliance on the European Council really can deliver some results. Through good leadership, that is clearly benefiting this country. Does the Prime Minister agree that the next big thing to do is to make sure that we have a truly competitive Europe and that the alliance that he has created should be used as a powerful mechanism to demonstrate what we need and how to get it?

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The Prime Minister: My hon. Friend is entirely right. That is why we spent so much time putting together the so-called like-minded group, particularly over single market issues where we have not only the traditional allies of Denmark, Holland and Germany, but the Baltic states, the Nordic states and now the Italians and the Spanish, along with others including the Hungarians and the Czechs. They all support single-market and growth-oriented measures, which is very encouraging.

Mr Marcus Jones (Nuneaton) (Con): Can my right hon. Friend reassure us that he will never agree to any new EU taxes, particularly to an EU-wide financial transaction tax?

The Prime Minister: I can certainly give my hon. Friend the assurance that we do not support new EU taxes. One of the ways in which particularly the left in Europe has endlessly tried to argue for higher budgets for more spending is by altering the so-called “own resources” and coming up with new taxes. We oppose a financial transactions tax. Some countries may well go ahead and introduce it in any case. If they do, as far as I am concerned, that is their own decision and we will not take part in it.

Andrew Jones (Harrogate and Knaresborough) (Con): The current multi-annual financial framework has a commitment of €994 billion; the van Rompuy proposal cuts that to €973 billion. Does my right hon. Friend agree that this is progress, but still not good enough?

The Prime Minister: My hon. Friend is entirely right. The Commission initially came up with a proposal that was over a trillion euros. One problem has been the need to argue against a proposal that is clearly wrong and wrong-headed and bring it back to some sort of sanity before it becomes possible to argue about getting a proper outcome for the budget. It is not often that we hear politicians say this, but what is lacking in some cases is a Treasury approach of going through these budgets rather than having people like the permanent staff all sitting around in the Commission and in the Council protecting their own budgets rather than looking at the savings that should be made.

Andrew Bridgen (North West Leicestershire) (Con): Did my right hon. Friend see the headline in last Friday’s Der Spiegelonline, which read “Cameron leads revolt of the net contributors”? Of particular interest was the second online comment, which read “Wir sind heute alle Engländer! Danke Herr Cameron”—today we are all British; thank you, Mr Cameron. I do not think that we are at all isolated in Europe.

The Prime Minister: It is impressive to see Conservative MPs speaking German in the House of Commons. I am impressed by my hon. Friend and I take what he said as a compliment.

Jason McCartney (Colne Valley) (Con): I praise the Prime Minister’s tough and principled stance at the EU summit. Those are not just my words—they are the words of some of my constituents who e-mailed me over the weekend. They had just been on a cruise around the Baltic, where they spoke to many citizens who were also fed up with being fleeced by the EU. As

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the Prime Minister goes back to the summit in the future to negotiate and get control over this bloated EU budget, will he realise that he has the full support not only of the British people, but of hard-pressed taxpayers in the EU, too?

The Prime Minister: I am grateful for my hon. Friend’s comments. He makes an important point—that we should use the time between now and the resumption of this European Council to try to make sure that the voice of people in Europe who want a tougher budget is actually heard, not just in Britain, but in other countries, particularly the net contributors.

Jessica Lee (Erewash) (Con): My constituents, the good people of Erewash, are keen to know that the great British rebate, initially secured under Margaret Thatcher, remains safe in the Government’s hands. Can my right hon. Friend offer some reassurance that this important aspect of the budget remains a priority at the negotiating table?

The Prime Minister: My hon. Friend is absolutely right. It must remain a priority for Britain to make sure that there cannot be changes to our rebate. What happened at this European Council is that the disagreement about the spending figures dominated the discussions, so we did not really get on to the whole conversation about rebates and the so-called own resources and income side. I was very clear, however, that when we get to that discussion, there cannot be changes to the UK rebate.

Stephen Mosley (City of Chester) (Con): The Commission and many EU countries have a vested interest in always increasing EU budgets. Has the Prime Minister given any consideration to whether there might be a better way of agreeing EU budgets in future?

The Prime Minister: My hon. Friend makes an important point, to which I referred to earlier. When a rotating president was responsible for trying to put the budget deal together, at least we felt that European taxpayers were getting more of a look-in than we do now that it is being done by the European Council and the European Commission. I think we need to make sure that the voice of the people of Europe, who want to see tough budgets, is properly heard. There may be more that Parliaments can do in scrutinising European spending and helping to come up with some sensible savings, which we can then take to the Council table and get agreed.

Mr Speaker: Order. I am extremely grateful to the Prime Minister, the Leader of the Opposition and other colleagues. The fact that 53 Back Benchers were able to take part in 44 minutes of exclusively Back-Bench time is a comment on succinctness.

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5.10 pm

The Secretary of State for Environment, Food and Rural Affairs (Mr Owen Paterson): With permission, Mr. Speaker, I shall make a statement on flooding.

The House will be aware of the exceptional rainfall that has been experienced over the last few days, and will also be aware that as a result some areas across the United Kingdom have been flooded and others continue to be at risk of flooding. The Environment Agency currently has 197 flood warnings and 291 flood alerts in place in England and Wales.

Tragically, three people lost their lives over the weekend. Two were men whose cars were caught up in flood water in Somerset and Cambridgeshire, and the third was a woman who was killed in Devon by a falling tree. I am sure that the whole House will wish to express its profound sympathy to the families and friends of those who have lost loved ones.

Heavy rainfall is not unusual at this time of year. However, we experienced bands of low pressure over the weekend, bringing often intense rainfall on catchments that are now saturated. Areas in the south-west of England, Wales and the midlands received 20 to 30 mm —over an inch—of rain in most places, and up to 50 to 60 mm—over 2 inches—fell in 24 hours elsewhere. Persistent rain will continue to affect much of northern England, south-east Scotland and north Wales today.

As a result of the rain, there has been significant river and surface water flooding in Cornwall, Devon, Wiltshire, Worcestershire, the midlands, Yorkshire and Wales, and there is a continued risk of significant flooding in parts of north-east England and north Wales. More than 900 properties have been flooded, of which up to 500 are in the south-west, more than 200 in the midlands and more than 100 in Wales. A great many people have been evacuated, and the numbers may well increase given the further rain forecast for today and early tomorrow.

The Under-Secretary of State, my hon. Friend the Member for Newbury (Richard Benyon), visited Malmesbury in Wiltshire on Sunday, and saw for himself the damage caused by the flooding to homes in the centre of the town. I visited Northampton on Friday and Exeter and Kennford earlier today, and saw some of the devastation caused by the flooding there. I spoke to families who had had to leave their homes with their children in the middle of the night, and people who had flood water a good way up their walls. I really do want to praise the local Environment Agency and council staff, because this was a real example of partnership working in action.

I also feel desperately sorry for the residents of Kempsey, in Worcestershire, whose properties were flooded when the local pumps failed. The Environment Agency will be carrying out a detailed investigation into what happened.

Many areas, such as the Somerset levels, have experienced significant flooding of farmland. That has had a major impact on local farmers, who have lost grazing land and crops. In Somerset, which is still an area of serious concern, the Environment Agency is already working with the community to review the floods that have happened during 2012, and to consider how flood water could be better managed. The flooding has also disrupted

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road and rail networks. Many roads were closed, particularly in the south-west, in Solihull, across north Yorkshire, in Gloucestershire—including the M5—and in other areas, including County Durham and Teesside.

The main concerns for Network Rail have been the routes between Exeter and Taunton and between Exeter and Yeovil. The route between Exeter and Taunton was badly affected, with parts of the track under 2 feet of water. Buses have replaced trains in a number of areas. Some routes have reopened, although there may still be delays to some journeys. I saw some of the damaged track for myself, and since my visit I have discussed these issues with my right hon. Friend the Secretary of State for Transport.

I extend my sincere thanks to the many people who responded so magnificently to these events. They include staff of fire, ambulance, police and other rescue services, local authorities, the Environment Agency, the voluntary sector and local communities. I appreciate how hard everyone has been working, and how difficult it is for those whose homes and businesses have been affected. I assure the House that the Environment Agency and its local emergency partners, including local authorities, are working round the clock and doing all they can to prevent flooding in areas currently at risk. My officials have been working closely with other Departments throughout the recent events.

Protecting our communities against flooding is a vital priority for the Government, and I am pleased to say that over the past few days nearly 50,000 properties have been protected by recently built flood defences. The Environment Agency issued flood warnings to over 93,000 properties, and such warnings are often crucial in giving people time to protect their properties or move precious belongings to somewhere safe. More than 1.1 million households have now signed up to the Environment Agency’s flood warning system, and I encourage others at high flood risk to do the same.

Nationally held flood rescue equipment was deployed to support local partners in Devon and Cornwall; six high-volume pumps were used and four boats were deployed, managed locally by the fire and rescue service national co-ordination centre. As flood waters recede, we will move into the recovery effort, which will need support from across central, regional and local government, as well as from businesses and voluntary organisations. I know that local communities are pulling together as recovery operations begin in earnest.

The Secretary of State for Communities and Local Government will be activating the Bellwin scheme of emergency financial assistance to help local authorities with the immediate costs associated with protecting life and property in their areas. The scheme will reimburse local authorities for 85% of their eligible costs above the threshold. Government officials will also discuss recovery arrangements with local authorities in the areas affected.

The recent flooding has been a tragedy for those affected, and I finish by paying tribute to the wonderful community spirit that I, the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Newbury, and Members across the House have witnessed as communities rally round to support people in need. I shall, of course, keep the House informed of any further significant developments.

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5.17 pm

Mary Creagh (Wakefield) (Lab): I thank the Secretary of State for his update.

I begin by paying tribute to the emergency services that worked to evacuate homes, rescue those who were stranded and keep people safe this weekend. I echo the Secretary of State’s thanks to staff of the Environment Agency and local councils who worked all weekend—and throughout the night on Saturday—clearing rivers and ensuring that flood defences were activated.

Hon. Members from across the House will wish to send their condolences to the family and friends of the three people who tragically lost their lives. With two months’ worth of rain set to fall in the north of the country today, we are not yet in the clear. The communities affected face months of disruption and upheaval. People who were cleaning up after the July floods have been flooded again, and some have been flooded more than once this week. Pubs that were looking forward to their busiest period are throwing out carpets and cancelling bookings.

The Department for Environment, Food and Rural Affairs classes areas as being at low, medium or high risk of flooding. Have this week’s floods triggered the medium-risk threshold that activates the Cabinet Office civil contingencies secretariat? Will the Secretary of State tell the House how many schools, roads, railways and businesses have been affected across the country so far, and how many people have been evacuated? How many acres of productive farmland are under water, and what estimate has he made of crop losses to farmers?

The Secretary of State mentioned the Somerset levels, which rely on drainage boards. The Environment Agency, however, is already consulting on changes to flood management, pump houses and maintaining river courses. Will he guarantee that those operations will be protected in future? What contact has he had with the Department for Education to ensure that children whose schools have been flooded continue to be educated? What contact has he had with the Secretary of State for Communities and Local Government on the recovery effort? Is he aware that there is no statutory obligation on fire services to respond to flood events, and does he share my concern that the current round of cuts to fire and rescue authorities, particularly in metropolitan areas, is reducing our resilience to flood events in future years?

The Secretary of State’s predecessor, the right hon. Member for Meriden (Mrs Spelman), told the House in a written statement in June that central Government would cover 100% of local authority costs under the Bellwin scheme, yet today the Secretary of State has announced that just 85% of their costs will be met in the case of the latest floods. Why is that?

Councils have just one month after a flood incident to lodge with the DCLG a claim for reimbursement under Bellwin. However, Bellwin covers only the costs of immediate action to safeguard life and property, such as evacuation and rehousing, not the capital costs of road repairs. Just three of the 20 areas flooded last summer have reached the Bellwin threshold to receive any money at all from the Government. Have the Government made any payments to those three councils for the costs of the June and July floods? If, as I suspect, they have not, when can councils expect that money?

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What measures has the Secretary of State put in place to help the other 17 councils whose claims did not meet the Bellwin threshold? Whether the Government cover 85% or 100% of the costs, their failure to help 17 of the 20 councils affected in the summer is no help at all. What funding will he put in place for major capital expenditure on damaged roads?

After the 2007 and 2009 floods, the Government set up the flood recovery grant as a one-off payment to councils to help households seriously affected by the floods. This Government have chosen not to help communities in that way. Why is that?

What support will the Government give to those who are under-insured or uninsured? The answer has to be more than warm tweets from the Prime Minister. As we move from response to recovery, flood-hit communities are growing more and more anxious about the availability and affordability of flood insurance. The Secretary of State’s predecessor told the House in June that

“we are at an advanced stage in intensive and constructive negotiations with the insurance industry”.—[Official Report, 25 June 2012; Vol. 547, c. 26.]

Yet the Association of British Insurers has stated today that a deal on the future of flood insurance has “stalled”. We were promised a deal in the spring, and then by July. It is now November. What has happened? If the deal is not done by the time of the autumn statement in just nine days, the risk of people being unable to insure, mortgage and eventually sell their home will rise exponentially. We must not have whole communities blighted because the Chancellor refuses to negotiate in good faith. When will he get a grip on the issue?

We know that every pound invested in flood defences saves £8 in costs further down the line, yet this Government have cut capital spending on flood defences by 30% from the 2010 baseline. They are spending less on flood defences now than we were five years ago in 2007. As a result, 294 flood defence schemes have been deferred or cancelled. Will the Secretary of State resist any pressure from the Treasury to cut flood defence spending in the next comprehensive spending review?

Last Monday in Westminster Hall, the Under-Secretary of State for Communities and Local Government, the hon. Member for Great Yarmouth (Brandon Lewis), told Members that

“while the flooding incidents of this summer were locally significant, we did not witness the devastating effects of previous years.”—[Official Report, 20 November 2012; Vol. 553, c. 93WH.]

Communities that have been devastated by flooding should not have to listen to Ministers telling them that their experience is not nationally significant. Today and this weekend, we have once again had a reminder that floods are the greatest threat that climate change poses to our country, and flood-hit communities deserve not to have to go through that terrible experience again.

Mr Paterson: I thank the hon. Lady for echoing my tributes to the Environment Agency, councils and all those who have worked so extraordinarily hard in recent days. I thank her also for expressing her sympathies to those who have lost relations and friends.

The hon. Lady asked detailed questions about the picture on schools, roads and crops. It is too early to

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tell, because the current weather is carrying on, and I think we had better review those questions when it settles down.

The hon. Lady mentioned local councils. We are co-ordinating the matter carefully and meeting DCLG on a regular basis, including on the subject of fire services. She mentioned the Bellwin scheme, which we have continued in exactly the same vein as the previous Government. There is a 0.2% threshold, and we have said that we will pay up to 85% of costs. We will keep that under review and keep assessing the situation as it develops.

The hon. Lady mentioned flood insurance. Today’s story is complete nonsense. The first meeting I had on taking office was with the ABI. We have had constructive and detailed discussions with it since, and there was a senior level meeting as recently as the end of last week. I am looking forward to receiving the ABI’s latest suggestions. We are determined to arrive at a replacement for the statement of principles that provides universality, is affordable and does not put a major burden on the taxpayer. I would like to remind the hon. Lady that the statement of principles covers 2003 to 2013, and we inherited absolutely nothing from the previous Government on this issue.

The hon. Lady mentioned spending on flood defences, and there is a complete canard about this reduction; our reduction is 6% over the whole spending round compared with what Labour spent over its spending round. I would have thought that she would have been pleased that our partnership scheme is really working, and a range of schemes that were just on the threshold and did not make the cut will now go ahead. In the last major incident, in 2007, 55,000 homes were flooded but this time the figure is 5,000 to 6,000. That is still traumatic for those households, and I repeat that my real sympathies are with those affected. I stress that we are continuing with a major programme of flood defence schemes to reduce the number further.

Miss Anne McIntosh (Thirsk and Malton) (Con): Today’s tragedy is truly of national proportions, but the response has been so much more effective after the Flood and Water Management Act 2010 came into effect. Will the Secretary of State revisit the damage done in September to the roads and bridges in north Yorkshire, which has now been made 10 times worse today? Will he also examine the impact on the community of operating theatres potentially closing at the Friarage hospital in Northallerton, as well as of school and road closures? There is something the Government could do to ease the impact of surface water flooding: introduce the regulations on sustainable urban drainage long before the deadline of 2014, which marks a huge delay from what was originally proposed.

Mr Paterson: My hon. Friend mentioned various local issues relating to schools and roads, and I can tell her that we are meeting colleagues in other Departments on a regular basis. As the local MP, it is appropriate that she should raise those issues with those Departments, but I am happy to discuss them with her separately. On the issue of sustainable drainage systems, we intend to have an implementation date of April 2014, but this has turned out to be extremely complicated and we will have to work this out in detail to make sure we get it right.

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Mr Nicholas Brown (Newcastle upon Tyne East) (Lab): Will the Secretary of State, together with his colleagues in government, examine the case for making targeted use of flood recovery grants for those in the most unhappy of circumstances?

Mr Paterson: I am very happy to look into that. If the right hon. Gentleman would like to write to me detailing a specific example, I am happy to take it up.

Stephen Gilbert (St Austell and Newquay) (LD): Not only are hundreds of homes in Cornwall flooded now, but they were flooded two years ago. What plans does the Secretary of State have to ensure that flood insurance remains affordable and available for communities such as mine in Cornwall, that have been devastated again and face the risk of not being able to get insurance?

Mr Paterson: We are clear that we want to arrive at a scheme that is affordable and is as comprehensive as possible, but that is not a burden on the Treasury. This is a real conundrum and we are determined to find a solution. We hope that we will find something that is better than the existing statement of principles.

Mr Ben Bradshaw (Exeter) (Lab): The Secretary of State talks about something that is not a burden on the Treasury, but no country in the world has a free market in flood defences, as he knows very well. However, I thank him for coming to Exeter today and, through him, his Minister, for keeping in touch with me by phone over the weekend. The Secretary of State will know that Exeter narrowly escaped a flooding disaster over the weekend. It tops the south-west Environment Agency’s list of priority schemes for upgraded flood defence. The city and county councils have come up with money to help fill the shortfall left by his Government’s cuts. Will he now get together with the Environment Agency to come up with a scheme urgently, so that Exeter is safe in the years to come, given the greater threat of climate change?

Mr Paterson: I thank the right hon. Gentleman for his comments and his question. I pay tribute to his constituents, who have rallied round magnificently in very difficult circumstances, particularly all those in the services whom I met today. I met his council leaders and stood on the bridge looking at the scheme, which has protected 6,000 properties in the heart of Exeter. We should pay tribute to that scheme, which is most effective. I was interested to learn that councils are thinking of taking up our offer of a partnership and are working with the Environment Agency, topping it up and making a scheme that is targeted at the local requirements. Such schemes will be decided on in the coming months.

Sarah Newton (Truro and Falmouth) (Con): Those who have suffered terribly from flooding in Cornwall are uppermost in my mind. Will my right hon. Friend join me in paying tribute to the partnership between the emergency services in Cornwall, which do such a magnificent job, and the Environment Agency in particular, which introduced, with the Government’s help, a new programme that defended many homes and businesses in Truro from flooding?

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Mr Paterson: I am very happy to join my hon. Friend in paying tribute to the Environment Agency and everyone in those different services and councils who have worked so hard on the ground and made an enormous difference.

Mr David Anderson (Blaydon) (Lab): The Secretary of State quite rightly praises the work of the emergency services. What will we do going forward given that fire services in places such as Tyne and Wear are having their budgets reduced by 35%, 1,500 local authority workers in Gateshead have been sacked and the Environment Agency in the north-east faces a 20% cut in resources? How will we manage these situations then? When will he stop putting ideology before practicality?

Mr Paterson: We have provided £2.5 million to fire authorities to help on this issue. Under very difficult circumstances—I do not want to make tiresome political points, but we inherited them from the previous Government—we have managed to hold up the investment in flood defence schemes. We are looking at a 6% reduction over the whole spending period compared with that over the previous spending period, which under the current circumstances shows the priority we are giving to these schemes.

Bill Wiggin (North Herefordshire) (Con): Will my right hon. Friend carry out a full investigation into why maintenance is not always done properly, as that causes most of the flooding in my constituency? Will he also ensure that the Bellwin thresholds work for small county councils as well as for large ones?

Mr Paterson: Several Members have raised the question of keeping drainage channels clear. If my hon. Friend has specific examples, I urge him to take them up with his local officers in the Environment Agency, who understand the matter. If he does not like that, perhaps he will grab me directly after the statement.

Yvonne Fovargue (Makerfield) (Lab): Many people in my constituency trying to renew their yearly household insurance policies, which include protection against flooding, are now having difficulties because the statement of principles expires in seven months’ time. Does the Secretary of State not agree that the closer we get to June 2013 without an agreement, the more people will be left without that vital insurance or with paying a much higher premium through no fault of their own?

Mr Paterson: The hon. Lady is absolutely right. We want a solution to this conundrum, which is why we have been meeting the ABI regularly and why we are determined to get a good solution. There is no point in rushing into a scheme that will not work. Getting a balance is a difficult conundrum and we are determined to get it right.

Mr Laurence Robertson (Tewkesbury) (Con): I thank the Secretary of State for his statement. He is well aware of the effects flooding has on my constituency. Is it not time to develop a national strategy to ensure that the culverts, ditches, drains and waterways are regularly maintained and cleared? Is it not also very important to stop building houses in flood risk areas? Will he assure

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me that no inspector appointed by this Government will force councils such as Tewkesbury to build houses where it is inappropriate to do so?

Mr Paterson: My hon. Friend is absolutely right—making sure all those channels are kept clear is part of the management of them. In recent days, we have seen complete and total saturation of the land and no matter how clear some of the channels have been kept, there has been nowhere for the water to go. He is quite right to mention the channels—several Members have raised that point with me—and I will talk to the Environment Agency about it.

Diana Johnson (Kingston upon Hull North) (Lab): Hull had 14,000 homes affected by the flooding in 2007 and the former Secretary of State said to me on the Floor of the House:

“I am proud that we have found a way forward with the insurance industry that, above all, guarantees that universal and affordable insurance remains available to all, including to her”—


“constituents.”—[Official Report, 25 June 2012; Vol. 547, c. 30.]

Was she correct or incorrect to say that?

Mr Paterson: We are quite clear as a Government that we want to come up with a scheme that is affordable, as universal as possible and not a burden on the Treasury. We are working towards that, as was my right hon. Friend the Member for Meriden (Mrs Spelman), my predecessor.

Mr Ian Liddell-Grainger (Bridgwater and West Somerset) (Con): I am grateful that the Secretary of State mentioned the Somerset levels and glad that the Minister of State, Department for Environment, Food and Rural Affairs, my hon. Friend the Member for Somerton and Frome (Mr Heath), is in his place. One of the problems the levels have had is that successive Governments have refused to spend money on the pumps that are brought in to try to clear them, and they are having to be brought in more and more. Will the Secretary of State, after the statement, please look urgently at upgrading the pump system across the Somerset levels, which cover my constituency and that of my hon. Friend?

Mr Paterson: I am grateful to my hon. Friend for that question. I took a train through the levels this afternoon on my way back, and they looked like the Irrawaddy in spate. I must say that it is a huge challenge for any pump system to keep that huge volume of water clear. If he would like to write to me, I would be more than happy to take the matter up with local Environment Agency officers.

Bill Esterson (Sefton Central) (Lab): I note that the Secretary of State did not answer part of the question on development on floodplains. Developers in Formby and Lydiate in my constituency want to build on farmland that often floods. Will he ensure that the Chancellor and the Secretary of State for Communities and Local Government do not prevail in their desire to force through development in areas, such as my constituency, that already have a significant problem with flooding?

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Mr Paterson: I am grateful to the hon. Gentleman for giving me the chance to clarify this. The national planning policy framework is absolutely clear that development should be located away from flood risk wherever possible.

Jessica Lee (Erewash) (Con): Does my right hon. Friend agree that one of the consequences of the current flooding is the impact on transport links? The train I took to London last night was slightly delayed due to flooding, but severe disruption in the east midlands followed. Will he confirm that he is of course liaising with colleagues in the Department for Transport on the matter?

Mr Paterson: I am happy to confirm that at official level we are working and talking with Department for Transport officials on a daily basis. One of the first calls I made after leaving Taunton today was to the Secretary of State for Transport, who had already been on the case to get the Exeter line reopened. We hope to see services resume tomorrow.

Helen Goodman (Bishop Auckland) (Lab): Unpredictable weather events are one of the main consequences of climate change. Does the Secretary of State not understand that if he continues to resist the scientific evidence and refuses to take sensible policy measures to prevent climate change, his successors for years to come will have to come to this House to make statements such as the one he has made this afternoon? [Interruption.]

Mr Paterson: I wish I had such extraordinary powers. The fact is that we have to react and adapt to the weather, and that is what the Government are doing.

Nigel Adams (Selby and Ainsty) (Con): In recent months, and this weekend, constituents of mine have woken up to flooding. Today, loss assessors are visiting constituents in the village of Saxton and bridges are still closed in Cattal. On Saturday I visited a Kelfield farmer, Richard Bramley, some of whose land is in a floodplain designed to help protect the village of Cawood. Thankfully, the flood defences worked, but Mr Bramley has lost more than £50,000-worth of crops. As flooding is becoming increasingly frequent, does the Secretary of State agree with Mr Bramley and me that the management of the water system does not appear to be keeping pace with changing weather conditions?

Mr Paterson: That is why we are putting this huge sum of money into flood defence schemes and encouraging partnerships with local government and, on the ground, with individuals and farmers, such as the one my hon. Friend cites, working with local drainage boards and councils to ensure that there is a co-ordinated approach.

Grahame M. Morris (Easington) (Lab): I would like to thank the Secretary of State for not blaming Opposition Members for the weather and join him in paying tribute to the emergency services, especially the fire and rescue services in the north-east, particularly in Durham and Teesside, who have been doing such a terrific job. Does he share my concern that in areas such as my constituency we are gradually losing resilience due to cuts in front-line fire and rescue budgets at a time when floods are becoming an increasingly common phenomenon?

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Mr Paterson: I was in Northampton on Friday and talked to the senior fire officer there. I echo the hon. Gentleman’s congratulations, as have we all, to those in the fire service and others who have been working so hard. The reaction I got from Northampton fire brigade was that they have been thoroughly involved in evacuating a number of people, and I am sure that we will see the same sort of dedication in the north-east.

Jacob Rees-Mogg (North East Somerset) (Con): May I join the Secretary of State in mourning the deaths of the three people, particularly the gentleman in Chew Stoke who was washed to his death in spite of the very valiant efforts of the fire brigade to rescue him? May I thank the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Newbury (Richard Benyon), who has assured Bath and North East Somerset council that it will be given every help following the floods? May I raise an issue that has been brought to my attention by constituents who are concerned that silt is not being dealt with because of esoteric wildlife issues, and ask whether this policy will be reconsidered?

Mr Paterson: I am grateful to my hon. Friend for his comments and wholly endorse them. The issue of keeping watercourses clear has been raised by other Members. I am absolutely clear in my own mind that the purpose of these watercourses is to get water away, and I will be discussing the issue with the Environment Agency.

Ian Lavery (Wansbeck) (Lab): The Secretary of State dismissed the discussions between the ABI and the Government on flood risk insurance as utter nonsense. He said categorically that the Government face a conundrum. Perhaps he can tell the House what that conundrum is.

Mr Paterson: I am glad to clarify my earlier comments if the hon. Gentleman wants me to. What I said was nonsense is the concept that the talks had stalled. Only at the end of last week we had, at the most senior level, a very constructive meeting with the ABI, as has been going on in recent weeks. We are quite clear—I will repeat this again—that we want to get to a system that is affordable, that is as comprehensive as possible—

Ian Lavery: What is the conundrum?

Mr Paterson: I will explain the conundrum to the hon. Gentleman if he will stop interrupting. We also want a system that is not a burden on the Treasury. That is not an easy series of demands to meet. We are absolutely determined to keep working in a constructive manner with the ABI, and we are currently waiting for it to come back to us. However, no doubt to the hon. Gentleman’s disappointment, I am not prepared to negotiate on the Floor of the House of Commons.

Julian Smith (Skipton and Ripon) (Con): Having been hit particularly badly earlier in the year and now with these floods, North Yorkshire county council is very worried about capital expenditure not being included in the compensation scheme. Will the Secretary of State arrange for civil servants in his Department to have a direct conversation with the council, which is having trouble getting an answer on this?

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Mr Paterson: Probably the best thing would be for my hon. Friend to have a meeting with my hon. Friend the Under-Secretary to go into the detail of the case.

Jeremy Lefroy (Stafford) (Con): What consultations is my right hon. Friend having with local councils and the Highways Agency to ensure that existing roads that do not have sufficient surface water drainage capacity will be made a priority for investment?

Mr Paterson: As I said, we are having daily meetings with other Ministries such as the Department for Transport. I talked to the Secretary of State for Transport this afternoon, and we will continue in that vein. If my hon. Friend is concerned about a particular road, he should write to the Secretary of State to take it up directly with him.

Mr Nick Gibb (Bognor Regis and Littlehampton) (Con): I thank the Secretary of State for his statement and for his reassurance on the renewal of the statement of principles. On 11 June this year, Bognor Regis and Littlehampton were severely affected by flooding, with hundreds of homes flooded following 36 hours of intense rainfall. West Sussex county council, as the lead statutory authority, is about to publish a detailed report into the implications of those floods. Will he ensure that Southern Water is encouraged and enabled by the regulator to allocate all the capital that is needed to upgrade surface water drainage systems so that weaknesses in the current system are strengthened and people can feel safe in their homes?

Mr Paterson: My hon. Friend raises a very important point—the key role played by water companies, which have an absolutely essential task in managing water. The Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Newbury and I will be happy to discuss the particular case that he mentioned.

Mel Stride (Central Devon) (Con): May I thank my right hon. Friend for this morning visiting Kennford, a small village in my constituency that has been overwhelmed by the flooding, and affording me the time to discuss the situation with him? Will he join me in thanking in particular Martin Weiler and his team at the EA, who have done such extraordinary work in the village in reassuring people, providing information, and so on?

Mr Paterson: I am sorry that my hon. Friend could not be there in person, but I much appreciate him ringing me in the car as I arrived. I would like to pay tribute to Martin Weiler, his team and all those from the Environment Agency whom I met and spent time with when I went to Kennford. I want to stress how completely awful it was to see those houses in Kennford. There was a thick black line about three feet off the ground, everything in people’s downstairs rooms was completely wrecked and all the electrical appliances were gone. All of that happened in an extraordinarily short amount of time—people were hit by the rapidly rising water over the course of about an hour on Saturday evening. It was shocking and I pay tribute to all the local agencies that I met, the local councils and the local community for how they are pulling together.

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Neil Parish (Tiverton and Honiton) (Con): I thank the Secretary of State and Ministers for keeping us informed by phone about the problems. I have had flooding in Bampton, Tiverton and Cullompton, and the canal has broken its banks at Holberton. Feniton has now flooded in 2007, 2008 and 2012. One of the problems is that, although the local authorities have resisted more houses, the inspector has allowed them, despite flooding in the village. We need to ensure that inspectors have the same views on flooding as the Government and local authorities.

Mr Paterson: I pay tribute to my hon. Friend’s constituents, who are stoic under these very difficult circumstances. I stress that the NPPF is absolutely clear on this: it is the intention that developments should not happen on floodplains. He is absolutely right to raise the issue and he should bring it to the attention of all those involved in planning locally.

Craig Whittaker (Calder Valley) (Con): One of the biggest challenges for residents in Calder Valley who suffered from flooding over the summer is ongoing insurance for both business and residents. On the scheme to replace the statement of principles to ensure there is affordable insurance for those properties most at risk, will the Secretary of State update the House on whether the Government will consider assisting the industry by providing a temporary overdraft, to be paid back with interest, for the proposed not-for-profit scheme, which, of course, would not be a burden on the taxpayer?

Mr Paterson: I am grateful to my hon. Friend for trying to tempt me into negotiating in public but, as I have said many times today, we are involved in a long negotiation with the ABI. We had a very constructive meeting at senior level last week, are waiting for its counter-proposals and I am afraid that I cannot go into the sort of detail that he has asked me to on the Floor of the House.

Stephen Mosley (City of Chester) (Con): Given your first-hand experience of this flooding, what advice would you—sorry, Mr Deputy Speaker; I mean the Secretary of State—give to those who seek to build on floodplains?

Mr Paterson: I am not sure what plans you have, Mr Deputy Speaker, but I would strongly advise all those who are considering developments around the country to look very hard at the NPPF, which says that developments should not happen on floodplains wherever possible.

Mr Robin Walker (Worcester) (Con): I thank the Secretary of State for his statement and, in particular, his concern for residents in Worcestershire who have been flooded. Worcester city suffered badly in 2007 but, partly as the result of improved flood defences, I have yet to hear of a home being flooded there and hope that that will not happen. My constituents are concerned about their ability to get insurance, as are local businesses. May I offer my strong support to the Secretary of State in his attempts to get a deal with the insurance companies as soon as possible?

Mr Paterson: I am grateful to my hon. Friend. I was in his city on Friday evening at a dinner for one of his parliamentary neighbours and discussed the issue with

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people who may have been constituents of his. He is right that we have to work through this negotiation and get a good deal on insurance that is satisfactory to all parties.

Mr Adrian Sanders (Torbay) (LD): In addition to those that the Secretary of State has already praised, will he mention South West Water, the transport companies, which have done a great job today, and, crucially, the local media? Will he also address the public concerns in Devon about the resilience of our infrastructure, particularly Cowley bridge, which controls rail in and out of the county to Paddington, the Clennon valley pumping station in my constituency, which deals with most of the sewerage in Torbay, and roads throughout Devon that were cut off from the rest of Devon at some point over the weekend?

Mr Paterson: I went to Cowley bridge to look at the damage to the railway line and I am pleased to say that it will be mended by tomorrow, which will be a triumph for those involved, because I was told that something like 200 tonnes of aggregate had shifted. The hon. Gentleman is right to raise a number of detailed issues, and they will have to be worked through by local councils and agencies. I was impressed by the resilience of all those affected by events in recent days and I have every confidence that they will see their way through this situation.

Harriett Baldwin (West Worcestershire) (Con): West Worcestershire has had the benefit of six new flood defence schemes since 2007. They have protected 360 homes and more than £8 million has been spent on them. Sadly, the Kempsey pump failed on Sunday morning, and I pay tribute to the engineers and emergency workers who came out in the middle of the night to fix it. When the investigation discovers the cause of the incident, will the Environment Agency seek compensation from the manufacturers of the pump, and how will it get that compensation to the home owners whose homes were flooded? How will the situation resolve itself in the long term in respect of the insurance for those homes?

Mr Paterson: I am grateful to my hon. Friend for raising the situation in Kempsey. It was sickening that, according to my knowledge, the pump failed at 4 am. The scheme was designed to protect 70 properties, but 20 of those were damaged. A detailed investigation into what happened is taking place. I congratulate the Environment Agency on getting the pump going again. I believe that it had tripped out. There will be detailed results from the investigation and we will take the matter further when we see them.

Neil Carmichael (Stroud) (Con): I congratulate and thank the agencies in Gloucestershire for dealing so well with the various transport challenges and the localised flooding. Will the Department consider further attenuation schemes, which have some attraction in my constituency?

Mr Paterson: My hon. Friend raises a good point. During my train journey back from Taunton today, I saw graphically the extraordinary volume of water that has landed in such a short time. The areas that have been set aside as soaks have become completely saturated.

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He is right that having such small-scale schemes down the road can be very helpful and we will certainly look at that.

Simon Hart (Carmarthen West and South Pembrokeshire) (Con): What discussions is the Secretary of State having with his colleagues in the Welsh Government, given that the management of Welsh rivers has a profound effect on the risk of flooding in England?

Mr Paterson: My hon. Friend makes a good point. Rivers do not respect political boundaries. We are keeping in touch with all Ministries and Government agencies.

Mr Peter Bone (Wellingborough) (Con): I thank the Secretary of State for coming to the House and informing us in such detail of what is happening and what he has been doing over the past few days. Flooding is occurring on the embankment in Wellingborough. Northamptonshire’s fire brigade and local councils are doing an excellent job. Like other Members, I ask the Secretary of State to look again at the issue of building on the floodplain, because regional spatial strategies forced councils to have residential homes in areas where they opposed them.

Mr Paterson: I went very close to my hon. Friend’s patch on Friday and saw the scheme that worked incredibly effectively in protecting Northampton town. The Nene was tamed. He rightly says that the huge wet area was saturated. I saw a permanent caravan site that had been badly flooded and a large number of people had been evacuated. I pay tribute to all the agencies in his area that I met: the Environment Agency, the police, the fire service and the local council. He is right that it is completely barmy to build on floodplains. I want to drill it in to everyone who is listening that the NPPF makes it very clear that that is a bad idea and that it should not happen.

Mr Deputy Speaker (Mr Nigel Evans): I thank the Secretary of State for making that statement on such an important issue.

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Points of Order

5.53 pm

Mr William Bain (Glasgow North East) (Lab): On a point of order, Mr Deputy Speaker. Have you received any intimation from the Secretary of State for Work and Pensions or the Under-Secretary of State for Work and Pensions, the hon. Member for Wirral West (Esther McVey), who has responsibility for disabled people, that they intend to deliver a statement to this House, either this evening or tomorrow, about the outrageous decision to close the Remploy factory in Springburn in my constituency, with the loss of 46 jobs, which was announced today? Do my constituents not deserve clear answers on what went wrong in the tendering process, why they have been so badly let down at this final stage, and how the Government will strain every sinew to get them replacement jobs?

Mr Deputy Speaker (Mr Nigel Evans): Thank you for that point of order. I have received no information that any Minister intends to make a statement on that issue or any other issue today. Should that alter, the House will be informed in the usual way. As far as tomorrow is concerned, we will have to wait until tomorrow.

Diana Johnson (Kingston upon Hull North) (Lab): On a point of order, Mr Deputy Speaker. During oral questions in July 2010, I was told by the then Secretary of State for Environment, Food and Rural Affairs, the right hon. Member for Meriden (Mrs Spelman), that she was proud that she had found a way forward with the insurance industry on flood insurance. Today, we see that the Government have done no such thing. My constituents were relying on the word of the Secretary of State in the House of Commons and they now feel very let down. What can be done to correct the record?

Mr Deputy Speaker: That sounds to me more like a matter of debate than a point of order. The hon. Lady is a senior Member of the House and will know the tools that are available to her to pursue the matter.

John Robertson (Glasgow North West) (Lab): On a point of order, Mr Deputy Speaker. I am speaking on behalf of the shadow Home Office team, in my role as shadow Parliamentary Private Secretary, with regard to the answering of named day questions tabled by my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper). Questions 126091, 126092, 126093 and 126106 were tabled at the end of October for answer within two working days. They have still not been answered. Will you, with the help of Mr Speaker, help to get those questions answered so that Her Majesty’s Opposition are able to fulfil their duty to scrutinise the Government?

Mr Deputy Speaker: It is unusual for one Member to raise a point of order on behalf of another and I do not wish to encourage the practice. There is nothing to inhibit Front-Bench Members from the official Opposition in making their own points of order. That said, questions for written answer on a named day should receive some kind of answer, preferably a substantive one, on the day that is named, and a full answer should be provided in a reasonable time. If the right hon. Member for Normanton,

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Pontefract and Castleford (Yvette Cooper) cannot get satisfaction by raising the matter with the Minister concerned, she should inform the Procedure Committee of her problems.

Grahame M. Morris (Easington) (Lab): On a point of order, Mr Deputy Speaker. This is the first opportunity that I have had to apologise to you and the House for any suggestion or perception that I breached parliamentary procedures by failing to make reference to my entry in the Register of Members’ Financial Interests, which states that I participated in a study tour of Venezuela, before I asked a topical question of the Foreign Secretary during Foreign Office questions on 4 September. I have made no secret of my visit. In fact, I have written to newspapers and blogged about it extensively. If I breached procedures, it was unintentional and I place on the record my apology.

Mr Deputy Speaker: The House will have noted what the hon. Gentleman has said. It is worth putting it on the record, however, that the resolution of the House of 12 June 1975, which was last amended on 9 February 2009, excluded supplementary oral questions from the requirement for declaration. It appears to me that a topical question is a supplementary question. It is up to Members to judge whether an interest is of a nature to justify a declaration at such times, but the House’s rules do not require it. The hon. Gentleman has now made such a declaration.

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Small Charitable Donations Bill

Consideration of Bill, as amended in the Public Bill Committee

New Clause 1

Annual Report

‘(1) The Treasury must, within 24 months of the Act coming into force and annually thereafter, prepare a report on the Gift Aid Small Donations Scheme (GASDS) and lay it before the House of Commons.

(2) Each such report must provide details of—

(a) the number of charities benefiting from the GASDS in—

(i) England;

(ii) Wales;

(iii) Scotland;

(iv) Northern Ireland;

(b) the number of charities benefiting from the GASDS that are—

(i) registered with the Charity Commission, Office of the Scottish Charity Regulator, or the Charity Commission for Northern Ireland, as appropriate;

(ii) exempt charities;

(iii) excepted charities;

(c) total expenditure on the GASDS; and

(d) the level of identified fraudulent claims in the GASDS.’.—(Cathy Jamieson.)

Brought up, and read the First time.

5.58 pm

Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op): I beg to move, That the clause be read a Second time.

Mr Deputy Speaker (Mr Nigel Evans): With this it will be convenient to discuss the following:

New clause 2—Post-legislative review—

‘The Government shall, within 24 months of this Act coming into force, undertake a review of the operation and administration of the Gift Aid Small Donations Scheme and lay a report of the review before the House of Commons.’.

New clause 3—Complementary gift aid for small donations to small charities—

‘(1) Smaller charities, community amateur sports clubs or recently established charities, which do not meet the eligibility criteria in section (1) shall be eligible to apply to HM Revenue and Customs for complementary gift aid for small donations.

(2) “Small donations” for the purposes of complementary gift aid shall be as provided for in section 3 and the Schedule.

(3) That maximum donations limit for complementary gift aid shall be £5,000.

(4) The “connected charities” conditions in sections 4 and 5 shall also apply for charities making claims for complementary gift aid for small donations.


(a) HM Revenue and Customs may stipulate the supporting verification it may require from relevant agencies or authorities or designated persons in respect of any claims for complementary gift aid for small donations to small charities;

(b) such agencies, authorities or designated persons may include charity commissions, local government officers, police or police and crime commissioners, members of relevant professional bodies or others designated by devolved administrations in agreement with HM Revenue and Customs for these purposes.

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(6) This section shall come into force on 6 April 2014.’.

This would provide for a separate scheme of supporting payments from HM Revenue and Customs, in the spirit of gift aid, to smaller or newer charities including those formed in response to a particular event.

Amendment 9, in clause 1, page 2, line 7, leave out subsection (6) and insert—

‘(6) The “specified amount” for a charity for a tax year is (subject to section 2(1))—

(a) £5,000 for a charity eligible for the full specified amount; or

(b) £2,000 for a charity eligible for the reduced specified amount.’.

This amendment is consequential on amendment 8.

Amendment 8, in clause 2, page 2, line 11, leave out subsection (1) and insert—

‘(1) A charity is an eligible charity for a tax year if—

(a) it has made a successful gift aid exemption claim in at least three of the previous seven years. In such cases, a charity will be eligible for the full specified amount; or

(b) it has made successful gift aid exemption claim in the previous year. In such cases, a charity will be eligible for the reduced specified amount.

This amendment introduces a probationary period for charities that do not have the claims history required in subsection (1)(a) of this clause. It allows them to benefit from a reduced specified amount until a claims history has been established. This also removes the requirement for a start-up period.

Government amendment 24.

Amendment 32, page 2, line 14, at end insert ‘or

(c) the charity is a “small charity”;

(d) the charity has been established for a specific event or project which has concluded.’.

This amendment extends the meaning of eligible charity to small charities and those established for specific events or projects.

Government amendments 25 and 26.

Amendment 10, page 2, line 26, leave out paragraph (a).

This amendment is consequential on amendment 8.

Government amendment 27.

Amendment 11, in clause 4, page 3, line 9, leave out paragraph (b) and insert—

‘(b) are eligible for the same rate of specified amount (subject to section 2(1)) for the tax year.’.

This amendment is consequential on amendment 8.

Amendment 12,  page 3, line 15, leave out paragraph (a) and insert—

‘(a) the specified amount (subject to section 2(1)), divided by’.

This amendment is consequential on amendment 8.

Amendment 13, in clause 6, page 4, line 41, leave out paragraph (b) and insert—

‘(b) if less, the specified amount (subject to section 2(1))’.

This amendment is consequential on amendment 8.

Amendment 14, page 4, line 45, leave out paragraph (b) and insert—

‘(b) if less, the specified amount (subject to section 2(1))’.

This amendment is consequential on amendment 8.

Government amendments 28 and 29.

Amendment 15, in clause 9, page 6, line 20, leave out paragraph (a) and insert—

‘(a) two or more charities (“connected eligible charities”) are connected with one another in a tax year and are charities eligible for the same rate of the specified amount (subject to section 2(1)) for the tax year, and’.

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This amendment is consequential on amendment 8.

Amendment 16, page 6, line 37, leave out paragraph (b) and insert—

‘(b) if less, the specified amount (subject to section 2(1))’.

This amendment is consequential on amendment 8.

Amendment 21, page 7, line 10, at end add—

‘(8) The Treasury must, within 24 months of this Act coming into force, prepare a report assessing the impact of—

(a) the connected charities provisions; and

(b) the community buildings provisions

on the ability of charities to benefit from the Gift Aid Small Donations Scheme and lay it before the House of Commons.’.

Government amendment 31.

Amendment 33, in clause 18, page 12, line 20, at end insert—

‘“small charity” means a charity whose gross income for a tax year is no more than £25,000.’.

This amendment defines a small charity as one whose gross income for a tax year is no more than £25,000. This figure is consistent with that given for lower-income charities in the Charities Act 2011 and the Office of the Scottish Charity Regulator’s Routine Monitoring Policy.

Cathy Jamieson: I look forward to further interesting debates on the proposals—we had interesting debates both on Second Reading and in Committee. This large group includes significant proposals, although a number are consequential on acceptance of the main amendments.

We discussed a number of the significant proposals on Second Reading and in Committee. They follow a pattern. I thank the Minister—it might be one of the few times I do so—for listening to some, but not all, of the concerns raised in Committee. At the time, it was not always clear that he would introduce amendments or deal with other things, but I thank him for listening. Crucially for the charities, if not for the Opposition, he has responded to points that the charitable sector raised with us.

Today we have once again heard concerns from the wider charity sector about the reported deficit of more than £300 million in 2011, which it has brought to public attention. That shows the current difficulty of getting donations and income into charities while at the same time they are facing increased burdens on the services they provide—not that the sector sees its services as burdens. Hopefully, more charities will benefit from the Bill now than would have benefited from it when we debated it in pre-legislative scrutiny, on Second Reading and in Committee.

We had long debates in Committee on some clauses and amendments. I am sure the House will be relieved to know that I have no wish to repeat them verbatim—that would be unhelpful—but it is worth noting that the same issues came up in Committee time and again, which suggested that further work needed to be done to amend the Bill. We also need to continue to scrutinise what the Bill will do in the light of subsequent amendments.

There is an extensive list of proposals in the group, and I want to refer to a number of them. It would be wise of me to put on record that we have tabled new clauses 1 and 2 because they would deal with a number of concerns that the Opposition and the charity sector have raised throughout the Bill’s progress. Perhaps the Government have acknowledged—in their amendments in Committee and on Report—that the original Bill was not drafted as tightly as it might have been, or in a way that ensured as much fairness and equity as possible.

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It is therefore right and proper that we return to the issue of formally reviewing the Bill after a two-year period. The Minister said many times in Committee that he was willing to look again at the measures and acknowledged that he wished to amend the Bill—we will discuss that later. However, when the Chancellor first announced the scheme, he said he wanted it to deliver

“gift aid on the contents of the collecting tin and the street bucket”—[Official Report, 23 March 2011; Vol. 525, c. 962.]

He also pledged that the reforms would be “bureaucracy-lite”. That theme has run throughout our discussions.

The Bill will doubtless benefit a number of charities and community amateur sports clubs, which is welcome, but the Government need to reassure charities that they are committed to making the Bill the best it can be. Given that many of the concerns that have been outlined will not result in changes to the Bill before Royal Assent, we can know how well the scheme is performing in practice only if there is a formal review. In any event, it would be good practice to review legislation after a period of its operation. That theme ran through a number of proposals that the Opposition tabled in Committee.

The Minister will note that we are trying in new clauses 1 and 2 to add extra detail to the report that we originally asked for in Committee. Let me say a few words about why a detailed report is so important. I do not want to go through all the arguments again, but we heard in Committee that anywhere between a third and a fifth of charities would benefit as a result of both the strict eligibility criteria and the community buildings and connected charities provisions, which we have debated extensively at various stages. The corollary to that is that a significant number of charities will be unable to benefit. The scheme could therefore be divisive, favouring some types of charities over others. That theme also ran through the debate.

Attempting to solve one problem often produced unintended consequences and difficulties—I am thinking of our debates on churches, and on large versus small charities—and that is why we ask in the new clauses for a breakdown and a review that gives more detail. That is important. New clause 1 mentions registered charities, exempt and excepted charities, and charities in different regions. That would mean that we can fully understand the impact of the scheme once it is in operation and redress any inequalities as soon as possible.

We spoke extensively in Committee about the complexity of the Bill. As we heard, it is estimated that 160 pages of guidance on Her Majesty’s Revenue and Customs website will be needed to explain it. There are 80 pages on registering for gift aid, so perhaps we can agree that the Bill is more complex than we would like it to be. Not just the Opposition and the charity sector understood that and raised such particulars; the Minister, in the sixth sitting of the Bill Committee on 23 October, admitted that the rules were complex in response to one of my hon. Friends. He said:

“I readily admit that this part of the Bill is complex and that we do not know exactly how it will work until it comes into practice.”––[Official Report, Small Charitable Donations Public Bill Committee, 23 October 2012; c. 207.]

In another Committee sitting, he said that

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“the very nature of trying to capture issues such as connectivity—whether it is here where we are dealing with charity, or in other laws where we are dealing with trusts—is complex.”

He has also said that:

“Clearly HMRC is like any organisation; mistakes can always be found.”––[Official Report, Small Charitable Donations Public Bill Committee, 25 October 2012; c. 223-5.]

I make those points simply to reinforce the rationale for building into the process a formal review, because of the nature and complexity of the Bill and the amount of guidance that will be required. At one point in Committee, I said that if a charity had £1 for every word of guidance needed, there would be a fairly significant donation to good causes. It is important that the Bill requires a formal review, so that we can understand the provisions and ensure that we keep tabs on the costs of the scheme.

In the Minister’s deliberations in Committee, he often spoke of having to be a good guardian of the public purse. I would have thought that it would therefore be only right and proper for the Government to commit formally to reviewing the costs of the scheme after an appropriate period—reviewing the spending, because the Minister said that as many charities as were eligible would be able to take part in the scheme, and to ensure that the money was equitably distributed, identifying any problems in the regions of the different nations that make up the UK.

There are a number of concerns about the data on which we begin the process. The Minister was good enough to write to the Opposition to answer a number of the questions we raised in advance of the debate. He mentions in his letter amending the matching rate; amending the eligibility period to two years; introducing a power to amend the eligibility criteria in future; and changing the powers in some of the clauses. He goes on to give some information about organisations that can claim gift aid but are not covered by Charity Commission data. He gives figures, and that is helpful, although—as is often the case in these scenarios—the answers to questions immediately prompt a series of other questions. Some of the responses that we have subsequently had from the charity sector suggest confusion in some areas, and I hope that the Minister will be able to clear that up. He could also help us to establish that baseline from which the success or otherwise of the scheme could be judged in the future.

For example, in the Minister’s letter he suggests that 60% of the organisations claiming gift aid in 2009-10 were registered charities. I am not entirely sure what that 60% represents. Was that 60% of the 68,357 charities to which gift aid repayments were made in 2009-10? That figure comes from HMRC’s own release. If that is the case, it would suggest that just over 41,000 registered charities were claiming gift aid in that year, which of course means that some 40% of the total were claiming other types. It would be helpful if the Minister could clarify the point and reassure us.

The Minister also indicates in his letter that HMRC does not hold data on the number of charities making gift aid claims. That is a bit confusing because HMRC has been able to provide some statistics and figures, so it seems that it does hold some underlying data, if perhaps not all of the data that we have sought. It would be helpful to have some clarity on that point. Does HMRC not hold up-to-date data on the number of registered charities or have we somehow misunderstood the Minister’s

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letter? If so, the charitable sector is saying that it too could have misunderstood, and that does not bode well for good communications.

It would be helpful if we were able to ensure that we have such provision in the Bill. As we know, Ministers come and Ministers go. This Minister is relatively new in post and it is good to see that he is still here to reap the benefits and take the plaudits when the Bill passes—as it no doubt will—but another Minister may come along in due course who may not have paid quite so much attention to the Bill and perhaps has not fully appreciated the amount of attention to detail from this Minister and the commitments that he made in Committee. For that reason, it would be helpful to have something on the face of the Bill, as outlined in new clauses 1 and 2.

I fully appreciate the fact that the Minister has tabled some amendments, to which he will speak in due course. Depending on what he has to say, those amendments may make some of the amendments that we have tabled superfluous or redundant, but it is important to place on record our reasons for tabling them.

A whole series of consequential amendments flow from amendments 8 and 9, which provide for a sort of probationary period for charities before they qualify. The Minister will no doubt already be thinking that his amendments on the claims history would give more benefits to some charities than our amendments. That may well be the case, but the counter-argument would be that under our amendments charities would be able to benefit sooner.

The Minister will also remember that in Committee we tabled several amendments pushing him to reconsider various aspects of clause 2. We did that because the sector essentially felt that the three-year history of successful gift aid claims and the requirement that charities must have been in existence for at least three complete tax years before they could benefit from the scheme were overly onerous and out of proportion to any risk of fraud. The Government have tabled some amendments in this area and I take that as a sign that they have listened to our concerns and taken steps in the right direction.

6.15 pm

Martin Horwood (Cheltenham) (LD): Is it the hon. Lady’s understanding that Government amendment 31, which seems to allow some flexibility for subsequent changes of the rules, nevertheless—according to the explanatory statement in the notes—insists that previous gift aid claims have to have been made, which of course may well preclude large numbers of the very small charities that the Minister presumably wants to help? Therefore it will still work against the interests of some of the smallest charities, and I am personally very disappointed that an amendment with more flexibility has not been tabled.

Cathy Jamieson: I thank the hon. Gentleman for making that powerful point, and we will come back to it later when we discuss other amendments. Whatever happens, I would hope that the Minister sees the point that the hon. Gentleman raises as a reason for ensuring that, at the very least, a review clause is built into the Bill. We would want to know whether a continuing number of small charities continued to be unable to access the scheme and gain benefits. Indeed, at some

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stage we will discuss the whole question of charities set up in response to particular circumstances—for very worthy causes—that may not be able to benefit at all from the scheme because the need will have been met and they will have moved on by the point at which they become eligible even to apply.

The idea behind the scheme is to boost the income of small groups that rely on bucket donations, and the hon. Gentleman has pointed out very succinctly that there are many such groups which simply will not be able to take advantage of the scheme, including those which do not have the resources to apply for gift aid or are just starting out. Our amendments seek to help those charities by removing the requirement for the start-up period and instead introducing a qualification period. We had some debate on this in Committee and our amendment would allow charities—new or established —without that claims history of gift aid to claim for a reduced amount of £2,000 after one year of claims history and then to claim for the full £5,000 once they had built up a three-year history.

As we have already heard, there are concerns that the Government’s requirements will be a significant barrier to participation for many charities that have not previously registered. They will also exclude organisations to which even an additional £500 would make a huge difference in income. Instead, it would tend to favour the bigger, more established organisations that may have the finance and fundraising departments to make gift aid claims. Many of the smaller, ineligible charities will already have been registered with the official regulator for three years. They will have had to submit accounts and pass the fit and proper person test, which is pretty robust. For some charities, their major fundraising may be from non-eligible sources, such as donations from trusts, events and charity shops, and they will not have been able to claim gift aid for the required three years even if they have significant income from small donations through collections which would be eligible for this scheme. For trustworthy established charities to be forced to wait a number of years before making claims reduces the incentives for registering.

The sector gave us a couple of examples. I will not go into all the detail, but one example was Wansbeck CVS, which has just set up a small grants fund in memory of a community development worker. It is designed to give small grants to local charities, but it had not been previously registered for gift aid. Under the current proposals, only donations received years after it registers for gift aid will be eligible. That is one of the examples of possible problems we were given.

We suggested that introducing a qualification period would go some way towards allowing charities that stand to benefit most from the scheme to be able to claim a reduced amount of £2,000 after only one year. That would at least allow them to cover their administration costs for claiming, while giving them an incentive to fundraise further and claim for standard gift aid. We tabled the amendments to try to provide a way forward that would balance the risk of fraud, identified by the Minister in Committee, with the ability to give a boost to the scheme for charities that need all the help they can get in tough times.

Amendments 17, 18, 19 and 20 relate to community buildings, on which points have been raised consistently during this process. The Minister will recall that in

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Committee we tabled a number of amendments to try to change the community buildings provisions substantially. We believe that they are seriously flawed and unfair to charities that would find themselves disadvantaged and unable to benefit. Many in the sector were disappointed that the Government did not give any ground, and I am disappointed that they have not used the opportunity of the Report stage to reconsider, as the Minister has done on other matters.

I suspect that the Minister will not move on these provisions, but if we cannot have a wholesale change to the Bill at this stage, I hope that the Government will at least be persuaded to look again at one particular aspect of the community buildings provisions. Clause 6(3) defines the community building amount as

“the sum of the small donations that are made to the charity in the community building in the tax year by group members while it is running charitable activities in the building”.

Even before Second Reading, that point was raised consistently as one that had the potential to cause difficulty for some organisations. In an attempt to solve the problem in relation to churches—the Minister rightly and understandably wanted to find a solution—we have a scenario in which it will be very difficult for other charities to take advantage of this part of the scheme, and that will potentially cause more problems than it solves. As we have heard previously—it is worth reiterating the point—clause 6(6) goes on to define a group member as:

“a member of the group of people with whom the charity is carrying out the activity”.

We heard a number of examples relating to that point, most vividly from my hon. Friend the Member for Leeds East (Mr Mudie), who spoke about a potential scenario with regard to a charitable group involving Alzheimer’s patients and asked whether it would only be those within the group who were able to make donations.

We have an issue with the principle here. We are concerned that for a great number of charities the beneficiary and the donor groups are likely to be two separate constituencies of people, and we do not want that to become a discriminating factor in whether charities can access the scheme. Indeed, it seems to us to be the exception rather than the rule that funds would be raised during the course of charitable activities by those benefiting from them. If we set aside churches and the collection plate, there are many scenarios where it would be entirely inappropriate for the bucket to be passed around the 10 or more members sitting there while the charitable activity was being undertaken. For example, during counselling work or work that provides activities for young people, or in which young people are involved, that would simply not be sensible.

The nature of fundraising is highly dependent on the type of activity and an organisation’s beneficiary group. The requirement in question would disadvantage the types of charities in respect of which it would not be appropriate or possible to raise funds in this way. Notwithstanding the debates we had in Committee, we still have concerns about whether such provision will go against the benefit principle of gift aid where gift aid is not available and where a donor receives personal benefit. In Committee, the Minister was at pains to say that that was not the case. However, we still have some concerns

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about the wording in the Bill, so this is another area where it would be important to have some review and some consideration about whether the Bill will work as it is intended to.

I will not repeat what was said in all the debates, but in Committee we heard that it would be difficult for such charities as Victim Support and the Alzheimer’s Society to benefit from these schemes, which is why we have tabled these amendments. Once again, the charitable sector—most recently the Charity Finance Group, the National Council for Voluntary Organisations, the Institute of Fundraising and the Charities Aid Foundation—has stressed that point. Such organisations are concerned that the only donations that will count will be those made within a community building. Although some changes have been made, there are concerns about whom the provision would actually apply to, because the people participating, not including staff or volunteers, might be vulnerable people.

I appreciate that I am speaking at some length, but we have a number of important and significant amendments. In my notes, my shorthand for amendment 21 is that it is a review amendment. It may seem that all Opposition Members talk about is review, review, review, but I hope that I have begun to lay out exactly why we feel that the provision to review is important. Although we have tabled an amendment that focuses on the part of the community building provisions I have just been talking about, however, I do not want the Minister to think that we have given up on all the concerns we had on other aspects of the community building provisions.

From our debates in Committee, the Minister will recall our concerns about clause 7. The clause states that charities must run their charitable activities “in a community building” for them to be eligible for top-up payments. We had a wide-ranging discussion about whether charitable activities could be run from community buildings, whether they had to be in community buildings and the relationship between the organisation setting up and those participating. The Bromsgrove scouts became a touchstone—how the provision would effect the Bromsgrove scouts became the main discussion point. We also heard from charities such as the Royal National Lifeboat Institution, which runs its charitable activities—this has been mentioned on a number of occasions—at sea, and a large number of charities that run their activities in the community, such as Victim Support and the Alzheimer’s Society. They often hold their counselling sessions or work in homes or in other community spaces, and we heard concerns that those organisations should not lose out.

We also raised concerns in Committee about clause 8, which specifically excludes from the scheme properties used for residential purposes, limiting the ability of care homes and hospices to access it. In Committee, the Minister stated that patients in hospices would still be registered at their homes, as he understood it, for the purposes of the Bill. People go to a hospice at a sad stage in their life, but to all intents and purposes their home is elsewhere and therefore a hospice should not count as a residence. He gave us some assurances on the care home sector, but there are still some concerns.

I gave the example of organisations providing residential provision for young people possibly for 52 weeks of the year. To all intents and purposes, such provision might form young people’s home for a time. There remain

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concerns in that area. The sector is also concerned that this approach might be a bit short-sighted, failing to take into account not only the ageing population and possible changes in hospices’ and care homes’ functions but the possibility, notwithstanding the best will of the Minister, that the legislation might exclude people from benefiting.

6.30 pm

In addition to the community buildings provisions, clauses 4 and 5 aim to prevent charities from fragmenting so as to be eligible for more money under the scheme. Clause 5 defines the meaning of “connected charities” and stipulates that they are deemed to be “connected” if

“at least half of the trustees of one of the charities are…trustees of the other charity,…persons who are connected with persons who are trustees of the other charity, or…a combination of both.”

Once again, the Committee discussed at length how in small communities volunteers often sit on the boards of several local charities. The concern is that, although their work might not be connected, the charities could be deemed to be connected for the purposes of the Bill and, therefore, not eligible for the full top-up payments. Even more problematic was the possibility of charities being deemed connected if a man sits on one board, and his wife or sister sits on another.

Clause 5(7) states that

“a charity is not to be regarded as connected with another charity at a time for the purposes of subsection (1) unless, at that time, the purposes and activities of the charities are the same or substantially similar.”

Our concern is that, in trying to create fairness in one area, the Government might—in the community buildings and connected charities clauses—have created areas of inequity between the different charitable causes. The reason for amendment 21, on providing for a review of the community buildings provisions, is to take account of these concerns. They have been consistently raised and have not gone away, notwithstanding the Minister’s best efforts in tabling further amendments.

Government amendment 28, on the definition of running charitable activities in a community building, shifts from HMRC to the Treasury the power to change the number of people who must be present during a charitable activity. Likewise, Government amendment 29 shifts from HMRC to the Treasury the power to decide whether a building qualifies as a community building. I will be interested to hear why the Minister has tabled those amendments at this stage. He will recall our extensive discussions on this subject in Committee. We probably spent longer on whether HMRC was the correct agency of government to deal with the Bill’s operation than on any other issue. I would be interested, therefore, to hear why he thinks this is important now. Are they technical amendments or does he accept that it would not be right for HMRC to deal with certain of these issues? It would be helpful if he could enlighten us.

Amendments 32 and 33 relate to small charities. I have already touched on the concerns regarding small charities and what I described as pop-up charities—those that deal with a particular need which might not intend to be around for many years and which quickly move to collect substantial amounts of money. The hon. Member for Banff and Buchan (Dr Whiteford) will speak to her amendments in due course, and will want to say more about her rationale then. Whether the Minister accepts them or not, however, they touch on another reason

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why the review clauses are important: they would enable us to review the scheme’s operation, taking into consideration organisations that might be able to benefit but which have been excluded because of how the scheme has been constructed and because of the sheer complexity of the application process for gift aid—there are 80 pages on gift aid and 160 pages of guidance—that organisations must go through to be absolutely certain that they are eligible.

I look forward to hearing the Minister’s response. I stress again that we want the Bill to pass. The reason for the amendments and our consistency on where we think the Bill still requires amendment even at this late stage is that we are relying on the charitable sector to tell us what works and what might be a problem. As I said at the outset, we recognise that the Minister has listened and—to be fair—in some instances introduced further amendments, but I press the case again. He has been good enough to recognise some of the areas in the Bill that need improvement, and he would gain favour with the whole House and the charitable sector if he could recognise the remaining areas that could be further improved and, even at this late stage, accept some of the amendments. That would make the Bill even better. The review clauses would allow us to revisit areas that I suspect will cause charities the most difficulty. We want people to benefit, not lose out, from these measures, so I hope that he will accept at least some of our amendments.

Susan Elan Jones (Clwyd South) (Lab): It is a privilege to speak in this debate. As hon. Members present at the time will know, we had some good, positive and, indeed, consensual discussions in Committee. Labour Members are keen to see the Bill passed, because we recognise that much of it is an extension of what previous Labour Governments did. That is why we want to get it 100% right. Things such as the compact for the voluntary sector and the immense growth and development of gift aid happened on Labour’s watch, and we are keen to see that trend continue in the Bill.

Certain groups will rightly be especially pleased with the Bill. It is fair to say that the dioceses, Churches and faith groups welcome the Bill, as do we, and it is right that we support those groups and the tremendous work they do in communities across the country. A range of other charitable groups will also benefit.

I am pleased with certain changes in the matching principle: I am not a betting person, but, on this occasion, 10:1 is clearly better than 2:1. Nevertheless, we are asking the Minister to listen to the voice of the national charities’ voluntary organisation, the Institute of Fundraising, as well as the Charities Aid Foundation and other groups, which are saying, “If you are prepared to improve the Bill in certain ways, as you have been, please think again about having the link with gift aid, if we really want charities, including those not currently claiming gift aid, to benefit.” I urge the Minister to have at least a little think about that. He and the Government have gone some way towards accepting some of the changes that those groups wanted. Let us get it 100% right. I urge him to consider those other changes too.

I want to look at the issue of reviewing the legislation, about which my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson) spoke with great eloquence. We know that many things in the Bill will work, but if the development of community and voluntary sector

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groups over the last 10 to 20 years is anything to go by, we know too that fundraising has changed dramatically. What worked yesterday will not work today, and what will work tomorrow will probably not have worked today. It will change over time. That is why we ask the Minister to consider having a review.

Mention has been made about the way donations are made, and I am confident that more mention will be made of it. What interests me is that if one made a £10 cash donation, there could be benefits under this Bill, but not if the same donation was made on a mobile phone or with a bank card. As someone from generation X—I have not actually checked, but I think I am—that strikes me as a little odd, but let us think about the new donors we want to cultivate in generation Y, as I think it is called. If we are to build a new philanthropic culture that encourages younger and newer donors, we must at least be open on that point. I urge the Minister to look carefully at that provision, which I know has already been mentioned by my hon. Friend the Member for Kilmarnock and Loudoun, and I know it will be mentioned later. I urge him to reconsider and to support the concept of an ongoing review so that future charities Ministers and other Ministers can look at this legislation and say, “Let us make it work for today’s generation.”

Dr Eilidh Whiteford (Banff and Buchan) (SNP): Let me begin by declaring an interest. Until relatively recently I was a trustee of two charities registered in Scotland and I remain a trustee of the Parliament Choir, which also has charitable status.

I acknowledge the progress made on the Bill in Committee and the steps people have made across the House to come up with constructive solutions to the acknowledged weaknesses of the legislation in its original form. I hope the Minister will take on board some of this evening’s amendments, not least the two in my name in this group—amendment 32 and the consequential amendment 33. My amendments are designed to provide a mechanism to allow smaller and project-specific charities to benefit from gift aid top-up payments without having to have made a successful gift aid exemption claim in three of the last seven years, or two of the last four—I am conscious that the Government have tabled an amendment to improve that part of the legislation. For the sake of clarity and simplicity, I propose that a “small charity” be defined as one with a gross annual income of £25,000 or less. As with other amendments in the group, the aim is to bring more small charities within the ambit of the legislation, which is a shared aim across the House this evening.

The reason I urge the Government to look closely at my amendments is simply that smaller charities often do not benefit from gift aid, and in some cases do not even register for it. The very charities that this Bill is intended to benefit are among those that are least likely to be registered for gift aid or to have claimed it regularly even when they are. As the proposals stand, an eligible charity has to have been registered with Her Majesty’s Revenue and Customs for a minimum of three years, made a gift aid claim in three of the past seven years, and not had a penalty imposed in making a gift aid claim. We know that around 100,000 organisations are registered with HMRC for gift aid, but only 65,000 claim

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each year, which is a significant gap. They include not just general charities, but excepted charities, such as churches, exempt charities, such as museums and foundation schools, and community amateur sports clubs. At the moment, many small charities are not registered with HMRC and do not have a three-year track record of making gift aid claims, which particularly affects charities run solely by volunteers—those that do not have professional staff, including fundraisers, or the time and resources that other, more professionalised charities do. Such charities are often involved in the very projects that attract the largest active community involvement and support, which in my view are exactly the sorts of activities that we should use the Bill to incentivise in our civil society.

6.45 pm

Notwithstanding the proposal to decrease the three-year registration period, any time limit will mean that charities engaged in short-term or fixed-term fundraising will have little incentive to register for gift aid with a view to taking part in the new scheme. Whether it is fundraising to replace the windows in a listed community building or raising funds for special equipment for a disabled youngster, any one-off projects raising relatively modest sums of money over a short period will find it difficult and unduly cumbersome to benefit from the scheme. Even the Government amendments this evening will not meet the needs of short-term appeals. Indeed, charities that receive only cash donations and do not fundraise in other ways will have no opportunity to claim gift aid even if they would like to.

Although I fully accept that any definition of a “small charity” will be to some extent arbitrary, I want to explain to the House why I have suggested £25,000 as an income level and assure Members that I did not just pluck that number out of the air. It is already the threshold that the Office of the Scottish Charity Regulator uses for the treatment of smaller charities in reporting and monitoring. There is a recognition that reporting and monitoring need to be commensurate with the size of an organisation, and the burden of compliance needs to be proportionate too. Charities with an income below £25,000 per annum have to submit an annual return, but do not have to submit the supplementary monitoring returns and annual accounts required by larger organisations.

Similarly, in England and Wales, the Charities Act 2011 contains numerous mentions of “lower-income charities”, which are for the most part—but not exclusively—defined as having a gross income of £25,000 or lower. That definition is used to determine the requirements for auditing and annual reporting—for instance, in part 8 of the 2011 Act, which deals with charity accounts, reports and returns. As the registration of charities has not commenced in Northern Ireland, the situation is somewhat different there, but there are nevertheless distinctions drawn between very large and smaller charitable organisations. As the greatest risk that needs to be managed in this Bill is the potential for fraud, defining a “small charity” in a way that is consistent with the accountability practices and processes already in use by charity regulators would be a useful step forward.

Before I conclude, I want to pick up a point that the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) made about connected charities. As someone who represents a rural constituency, I absolutely concur

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with what was said earlier. In rural communities, the trustees of the local village hall will often be drawn from the trustees of the various groups that use it. There is every likelihood that the same people or their spouses will appear on the Kirk session, and they might well be on the school-parent council too. Therefore, the cohesiveness of those small communities—where some people are extremely active in a range of activities and where a lot of entertainment is very much home grown and home run—will potentially be affected. I urge the Minister to look carefully at how the Bill’s important safeguards will play out in remote rural communities, where such cohesiveness is still very much part of the fabric of daily life.

To put this debate in context, 60% of all charities active in Scotland—around 14,000—have a gross annual income of less than £25,000, with almost 9,000 having an income of under £5,000 a year, more than 2,000 whose income is between £5,000 and £10,000, and just over 3,000 with a gross annual income of between £10,000 and £25,000. Those smaller charities represent a disproportionate number of charitable organisations, with 47% of all charities in Scotland—almost half—having a gross income of less than £10,000 a year. Published information from the Charity Commission shows a similar picture in England. In June 2010, there were 73,000 registered charities in England and Wales with an income of less than £10,000, representing 45% of the sector. Given those proportions, it is incumbent on all of us to look at how we can strengthen the Bill for the smallest charities and ensure that they are able to benefit from the legislation, as was originally intended. According to the National Audit Office, 67% of the charities across the UK generate only 1.4% of charitable income. Let us bear it in mind that the Bill is supposed to support those smaller charities. I urge the Government to look carefully at the amendments tabled by Members on the Opposition Benches, including amendment 32.

Gemma Doyle (West Dunbartonshire) (Lab/Co-op): Charities are facing challenging circumstances, with falling financial support from the Government and falling regular donations as a result of the squeeze on people’s spending. This is a tough environment for any charity to work in. Furthermore, the reliance on the charitable and voluntary sector is increasing, as we are seeing from the number of food banks that are springing up and the greater reliance on homelessness services.

We owe it to charities to help them out when we can, and I must admit that the Chancellor’s announcement of these proposals was one of the few parts of the Budget that I welcomed. Now that we have had a chance to look at the details, however, we see that there are still some outstanding issues. We will of course support the Bill on Third Reading, but I still have concerns about accessibility for many of the charities that could benefit most from it.

Offering charities the chance to take advantage of a gift aid top-up is of course welcome. My constituency is facing a number of serious challenges, but we are fortunate to have a thriving charitable and voluntary sector that does much good work throughout the area. I am thinking of the small charities run by a handful of local volunteers, such as Home from Home in Dumbarton, and the Clydebank Asbestos Group, which has a very wide reach but relies on a small team of dedicated volunteers,

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as well as the slightly larger ones with some staff, such as Y Sort-It in Clydebank. They all contribute so much, working alongside the services offered by the local authorities to help with a range of issues.

As I am sure other Members will recognise, it is often many of the smaller charities which are getting by on tiny incomes that help so much with the provision of local services. Many of them do not have steady income streams or the time and manpower—or, often, the womanpower—to administer complex donation rules. They rely on simple methods of fundraising, such as bring-and-buy sales and collecting donations in buckets on the street. Those small activities all add up.

I am sure that, like me, many of those smaller charities will be pleased with the effect that the proposals could have on their incomes. They remain concerned, however, about the restrictions that could make them ineligible. The Government need to ensure that the rules will work for charities and not against them. As my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson) has comprehensively set out, we need the Bill to help charities out, not to add to the burden of bureaucracy.

Bureaucracy can be a headache for small charities. Compliance with the rules is essential—they are there for a reason—but they can pose real difficulties, particularly for the smaller charities. A Treasury spokesperson said the Government’s proposals were intended to reduce the administrative burden on charities, but I am not sure that that is what they will do. It is possible that the bigger charities, not the smaller ones, will benefit.

The Government’s amendments are helpful; they are heading in the right direction. The original proposals could have resulted in the smallest charities losing out the most, because placing so many conditions on the new top-up would have made it difficult for those charities to take advantage of the scheme. I am pleased that the Government seem to have recognised the problem with the three-year criterion, and that they are moving towards a two-year period instead. That will widen the benefits to include more charities. However, the proposals will still favour the larger charities that have a history of gift aid claims over the smaller ones that rely on bucket donations.

Similarly, the Government’s amendments do not properly reflect the needs of newly established charities, which will naturally not have any history of gift aid claims. The hon. Member for Banff and Buchan (Dr Whiteford) said that her amendment would acknowledge the fact that, although many charities are proactive in their work, there are those that react to events. A charity might be set up to react to a natural disaster, for example; another might be set up in memory of a loved one. Newly established charities often receive a significant proportion of their donations at the very beginning, and their donations might subsequently tail off. Under the current proposals, they would not be able to claim top-up payments related to those important initial donations.

Our amendments are intended to help those small and new charities by removing the lengthy start-up period and replacing it with a probationary period. That would provide a real benefit. It would allow all charities without a claims history, whether new or established, to benefit from the top-up scheme while keeping the protections in place. It is important to

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have protections against fraud, but I believe that our proposed probationary period would be sufficient in that regard. I therefore encourage Members to support our amendments.

We need to ensure that we get the scheme right. The Government’s own “Giving” White Paper, published last year, made it clear that they wanted to work more with business and charities to make it “easier and more compelling” for people to give time and money, and so make the change that they want to see. Our amendments would make it much easier for the Government to meet their aims.

New clauses 1 and 2 would ensure a proper review of the impact of the measures on access to the scheme. The charity and voluntary sector deserves to have the rules properly reviewed, with a report being laid before Parliament so that all Members can see how accessible the scheme is. I hope that, in the spirit of openness and transparency that the Government say they are in favour of, all Members will consider supporting the new clauses.

The simple principle of giving charities the extra bit of help that is contained in the Bill is very much welcome, but the proposals could and should go further. As the Bill stands, thousands of small charities could lose out. Our amendments would take a few steps towards giving charities that extra support, and I hope that Members will support them.

Mark Durkan (Foyle) (SDLP): As other hon. Members have already said, many practical concerns and suggestions were aired and shared by members of the four parties represented when we discussed the Bill in the Public Bill Committee. It is important that we use the Report stage to return to a number of those issues. I do not intend to rehearse all the arguments that were made in Committee. This is not the time for “Here are our best bits” or for simply making our pitches again. However, it is important to reflect on the fact that the Minister indicated that he was listening to some of the points that were made in Committee, even if he refuted many of the others. That is reflected in some of the Government amendments that he will no doubt speak to later. I welcome the fact that further progress has been made, just as I welcome the fact that, in Committee, the Minister tabled an amendment to clause 2 as a direct response to an issue that I had raised on Second Reading. I appreciate his doing that.

There is still a basic problem with the Bill. The original Budget promise made by the Chancellor of the Exchequer was widely welcomed across the House, and certainly in the charity sector. People expected something along the lines of what they thought had been promised—that the equivalent of gift aid would be available, with certain conditions, to charities, without them having to fulfil all the gift aid criteria and the necessary processes attached to them.