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House of Commons

Monday 23 February 2015

The House met at half-past Two o’clock


[Mr Speaker in the Chair]

Oral Answers to Questions


The Secretary of State was asked—

Armed Forces Covenant

1. Mr Marcus Jones (Nuneaton) (Con): What progress he has made on strengthening the armed forces covenant. [907667]

The Minister of State, Ministry of Defence (Anna Soubry): I am incredibly proud of the fact that it was this Government who enshrined the covenant in law. We should all be extremely proud of that, and of the work we have done.

I wrote to all the local authorities that signed the covenant. I have been overwhelmed by their response, and by the outstanding work that many are doing in delivering on their pledges. We must now ensure that that work continues throughout the United Kingdom.

Mr Speaker: I believe that the Minister’s justified pride is accompanied by a desire for a grouping.

Anna Soubry: I am grateful to you, Mr Speaker. Incidentally, I received a letter from Gedling, whose contents I may share with the hon. Member for Gedling (Vernon Coaker).

10. Charlie Elphicke (Dover) (Con): What progress he has made on strengthening the armed forces covenant. [907676]

12. Jack Lopresti (Filton and Bradley Stoke) (Con): What progress he has made on strengthening the armed forces covenant. [907678]

14. Mike Weatherley (Hove) (Con): What progress he has made on strengthening the armed forces covenant. [907680]

Mr Jones: The Veterans Contact Point armed forces centre, which is based in my constituency, does vital work to support veterans, many of whom have found the transition from the armed forces to civvy street extremely difficult. Will my hon. Friend visit the centre to see the excellent work that is being done by a vital charity that supports people throughout the Coventry and Warwickshire area?

Anna Soubry: Yes, indeed. I look forward to visiting it on, I believe, 9 March. I have seen the website of that excellent charity, and I pay wholehearted tribute to the work that is being done by a wide variety of people. I note that the local council has reduced the charity’s rent in recognition of its commitment to the covenant. As I have said, we must now roll out that work throughout the United Kingdom.

Charlie Elphicke: Some people leave the armed forces suffering from mental health conditions. What action has been taken by the Government as a whole to help people who are suffering from those debilitating conditions?

Anna Soubry: We have invested an extra £7.4 million in precisely that sort of work. I pay tribute to Stockton-on-Tees borough council, which—along with other councils

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in the north-east—has been doing outstanding work, and whose chief executive has written to me. Councils are working across the piece, bringing together all the relevant bodies and people, and delivering good mental health services to veterans in particular.

Jack Lopresti: Is there a follow-up system to ensure that when people leave the armed forces they do not fall by the wayside when it comes to medical provision?

Anna Soubry: It is critical that we get that right. At present, such services are delivered only at a local level. Many councils are involved, including those in the Greater Manchester combined authority, which signed the covenant at the end of December. All those councils are doing outstanding work which they are determined to continue, on a completely cross-party basis. They are working with a number of parties, bringing in health authorities, hospital trusts and clinical commissioning groups. What is beginning to happen in councils must now be replicated throughout the United Kingdom.

Mike Weatherley: What progress has been made in regard to the commitment to an armed forces charter based on the covenant that was made by the United States and others during the NATO summit?

Anna Soubry: That is a good point. We need to proceed with that commitment. It was a great honour for me to go to the United States, meet other veterans Ministers, and share best practice. A number of countries are particularly interested in our work in delivering on the covenant, and, because other countries do things in different ways, we learn from each other. NATO has provided us with a very good device to enable us to share that best practice and, as I have said, to learn from each other.

Mr David Hanson (Delyn) (Lab): I am sure the Minister will welcome the fact that Flintshire county council, which is in my area, has signed the covenant, but what assessment has she made of the number of services charities that understand what it means in practice?

Anna Soubry: That, too, is a good question. The short answer is that it varies. It is clear from the website of the charity mentioned by my hon. Friend the Member for Nuneaton (Mr Jones) that a huge number of charities have signed up and are delivering across the country. Progress is sporadic, because not everyone “gets it”, but others absolutely do “get it”, and some great work is being done out there.

David Wright (Telford) (Lab): I am pleased to say that Telford & Wrekin council has signed the covenant on a cross-party basis. What has the Minister done internally, within the Government, to ensure that individual Departments are delivering on the covenant? The Ministry of Defence is doing a very good job, but it is important for other Departments to commit themselves as well.

Anna Soubry: I am really pleased that the hon. Gentleman says we are doing a good job, because I think we are, and he is absolutely right. We now must make sure others do not just sign up, but actually start to deliver. On the work the Secretary of State for Work and Pensions, for example, has been doing with jobcentres,

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I recently went to my own jobcentre in Beeston—not for reasons connected with 7 May, I quickly add—and looked at the work it is doing with reserves and veterans. That is sporadic; not every jobcentre or Jobcentre Plus “gets it”, to put it in that way, but increasingly they do and that is invariably because of the good work of Members of Parliament and local councils.

Andrew Gwynne (Denton and Reddish) (Lab): I am incredibly proud of the fact that Tameside was the first council in Greater Manchester to sign the armed forces covenant, followed very quickly by Stockport, and the Minister is absolutely right to commend the work of the Greater Manchester combined authority, the first whole city region in the country to bring together councils and public bodies across the area for the armed forces covenant, but what is she doing to make sure that in other parts of the country local authorities are committing time and resources and making sure the same services are available to our armed forces personnel so that we do not have a patchwork quilt?

Anna Soubry: I am grateful to the hon. Gentleman. I have an excellent letter here from the leader of Wigan council, Lord Smith, extensively detailing all the great work being done. One of the tasks I want to do in the remaining weeks of this Government is to make sure the covenant team with the MOD brings all this work together and gives more advice to local authorities on sharing best practice, because it is stacked full of ideas. There is £30 million available to deliver on many of these projects, and I am pleased to say many are taking that up as well.

Sir Bob Russell (Colchester) (LD): The armed forces covenant had, of course, the full support of Her Majesty’s Opposition, but does the Minister accept that this is still very much a work in progress? Not all local authorities understand it. Only last week Essex county council refused to continue a support package for the needs of one military family moving with their child from another part of the country.

Anna Soubry: The hon. Gentleman makes a good point and I have to say my own county council in Nottinghamshire did not understand the covenant when it came to a soldier constituent of mine coming down from Catterick who needed to have a place for his child. I reminded the county council of the covenant. That is the sort of work that local MPs can do when these cases come to us through our casework. It is about making sure we share best practice. There is masses more work to be done, and it would be nice to think I might be able to continue after 7 May, Mr Speaker, but that takes us into different territory.

Gemma Doyle (West Dunbartonshire) (Lab/Co-op): The Minister of State says that other people do not get it. I am not sure that she gets it, because why else would she be consulting on removing the principle of no disadvantage from the armed forces covenant? I refer of course to the consultation she has commissioned through her officials that Woodnewton Associates is carrying out. She looks confused; I am surprised if she does not know that her own officials are carrying out this consultation. Is that because the Government are still refusing to test their own policies against the principles

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of no disadvantage? A Labour Government will test our policies against the armed forces covenant, and we will not drop the principle of no disadvantage, which this Government are apparently thinking about doing.

Anna Soubry: Of course the hon. Lady forgets that she has got to win an election, and there is every chance she will not do so. Let me make it absolutely clear: as far as I and the rest of the team here are concerned, this is news to us and we are absolutely committed to the principle of no disadvantage. [Interruption.] It is in the covenant, and chuntering from the sidelines achieves nothing.

Reserve Forces

2. Daniel Kawczynski (Shrewsbury and Atcham) (Con): What steps he is taking to promote service in the reserves. [907668]

8. Andrew Stephenson (Pendle) (Con): What steps he is taking to promote service in the reserves. [907674]

The Parliamentary Under-Secretary of State for Defence (Mr Julian Brazier): In the quarter to December, 1,490 personnel joined the Army reserve, an increase of 147% on the equivalent quarter last year. Colleagues will have seen the multimedia campaign showing the range of opportunities the reserves offer. We have unblocked the enlistment pipeline, more than 420 employers have signed corporate covenants and the civil service is setting an excellent example as a supportive employer, too.

Daniel Kawczynski: A constituent, Reservist Rifleman Ben Taylor, was awarded the Queen’s gallantry medal for saving the lives of eight comrades in Afghanistan. With hundreds following in Rifleman Taylor’s footsteps every month, does my hon. Friend the Minister agree that the Chief of the General Staff’s blueprint for reaching our target is achievable?

Mr Brazier: I thoroughly agree with my hon. Friend and I join him in congratulating Rifleman Ben Taylor. With the upturn in recruitment, and with retention improving too, the trained strength of the Army Reserve has gone up 560 over the past 12 months to 20,480. That is above our target for the year end, and I am confident that the plans of the new Chief of the General Staff—who, incidentally, was also a rifleman—will be achieved.

Andrew Stephenson: On Friday, I held my fourth Pendle jobs and apprenticeships fair, at the Colne municipal hall. I was delighted that the Army was one of more than 20 organisations that took a stall, at which it promoted regular and reserve opportunities. Will my hon. Friend tell us more about the steps that the Ministry of Defence is taking to recruit more reservists in the north of England?

Mr Brazier: I congratulate my hon. Friend on his initiative. The north of England provides the greatest proportion of our soldiers, regular and reserve, and the relaunch of the Army recruiting campaign’s reserve component last month involved a major event in Liverpool, as he knows. There will be more in the north. Following the Secretary of State’s announcement in October of

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the intention to restore a post-nominal award to recognise long service in the reserves, I should like to take this opportunity to confirm that such an award will be restored for those of all ranks who achieve 10 years’ service.

Ms Gisela Stuart (Birmingham, Edgbaston) (Lab): The new 77th Brigade, which will focus on psych-ops, is expected to recruit about 40 % of its members from the reserves. According to press reports, however, by Christmas only about 20 had been recruited. When does the Minister think he will achieve the full complement?

Mr Brazier: For obvious reasons, some of the detail of the recruiting in that area will not be published in the House, and I am sure that the hon. Lady—my hon. Friend, if I may call her that—will understand those reasons. There is, however, a big upturn in recruitment right across the reserves, as the figures I gave the House earlier indicated.

Mr Frank Roy (Motherwell and Wishaw) (Lab): Over the past two years, the MOD has spent £16.4 million on television advertising for recruitment purposes. Was that money well spent? How many recruits resulted from that large spend?

Mr Brazier: We cannot say what proportion of recruits resulted from it, but we can say that there has been a surge in recruiting, and that it was up 147% on the quarter last year, as the figures I have just given the House show. Additionally, although we are not going to publish the figures on cyber-recruiting, I can say that they are running ahead of the reserves average as a percentage.

19. [907686] Mr John Baron (Basildon and Billericay) (Con): Government answers show that the average age of an existing reservist infantryman is in the mid-30s. Given that we have added only 500 reservists in the two years that this plan has been in place, and that that has led to capability gaps and false economies, has not the time come to rethink the plan and to stop trying to get our defence on the cheap?

Mr Brazier: Over the past 12 months, we have added more than 800 to the reserves. That followed a long period—a whole generation—of decline. We make no apologies for revising the age requirements for ex-regular soldiers to join the reserves in order to share their knowledge and expertise. We are looking for people with key skills and it is a waste to lose people with specialist skills in areas such as intelligence and medicine. Dare I say that my hon. Friend, with his years of experience, might have something to offer to the reserves?

Mr Kevan Jones (North Durham) (Lab): We have had months of failing IT systems, targets being revised downwards and recruitment to the reserves stalling. In addition, we learned last week that recruitment to the regulars was not meeting its targets. Will the Minister confirm the speculation that is going on within the Ministry of Defence and the Army that an alternative plan to scrap the current target of 30,000 is being drawn up?

Mr Brazier: There are no plans, and no such planning is going on, to scrap the target. The number I gave earlier, of 1,490 people joining the reserves in just one

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quarter, indicates that things are now moving sharply in the right direction. That figure relates to the Army Reserve, but the Royal Naval Reserve has been ahead of target all the way through and the Royal Air Force Reserve is also doing well, with 150 joining in a quarter.

Armed Forces: Home Ownership

3. Henry Smith (Crawley) (Con): What steps he is taking to increase home ownership among members of the armed forces. [907669]

6. Stephen Hammond (Wimbledon) (Con): What steps he is taking to increase home ownership among members of the armed forces. [907672]

The Secretary of State for Defence (Michael Fallon): I am delighted that the forces Help to Buy scheme, launched just 10 months ago, has already helped 2,600 military personnel on to the property ladder, and a further 1,400 approved applications are awaiting the completion of the property purchase. Those 4,000 fully approved applications are broadly equivalent to the entire military presence at Colchester, and the vast majority of them—more than 80%—are for those from non-officer ranks.

Henry Smith: I am grateful to my right hon. Friend for that answer. Does this scheme not just prove the good work that this Government have been doing in ensuring the improvements to armed forces accommodation, in terms not only of service accommodation but enabling people in the armed forces to buy their own properties?

Michael Fallon: Yes, this scheme enables military personnel to have the opportunity to buy their own home and benefit from the increased domestic stability that home ownership brings, bringing a more realistic life choice for those who have chosen to serve their country. We also recognise the importance of continuing to offer subsidised accommodation of a good standard to service personnel who are not yet ready to own their own home, which is why we have committed that from next April no service family will be allocated a house that does not meet the Government’s decent homes standard.

Stephen Hammond: I congratulate my right hon. Friend on the success of this scheme, which shows how potent the Government’s Help to Buy schemes are. Will he ensure that he gets all military groups to work with the new Mayor’s land commission to ensure that any unused land can be brought forward for housing purposes?

Michael Fallon: Yes, I will certainly do that. Of course, under Labour the great recession meant that the prospect of buying a first home was no more than a pipe dream for many thousands of hard-working taxpayers. That is why we launched Help to Buy, which enables those who work hard and get on to enjoy the financial security that they deserve.

Defence Equipment Plan

4. Oliver Colvile (Plymouth, Sutton and Devonport) (Con): What progress his Department has made on delivering its defence equipment plan. [907670]

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The Parliamentary Under-Secretary of State for Defence (Mr Philip Dunne): For the third consecutive year, the defence equipment plan demonstrates a realistic and affordable plan to invest £163 billion on new equipment and support for our armed forces over the next 10 years. The delivery of this plan has been independently assessed by the National Audit Office, through the major projects report. The best way to illustrate progress is to compare the report for 2009, when in-year cost overran by £4.5 billion, with cost underspends in 2014 of almost £400 million. My hon. Friend may recall who was responsible for the chaos of defence acquisition in 2009 and who is responsible for the competence we have brought to that department since.

Oliver Colvile: I thank my hon. Friend for that answer and for the announcement made on Friday about the Type 26s. What is the timetable for the building of the Type 26 frigates? When will there be an announcement about the base porting, which we hope will be in Plymouth?

Mr Dunne: My hon. Friend is a vigorous champion of the merits of Devonport, in his constituency, as home to seven of the Royal Navy’s Type 23 frigates. The Prime Minister did indeed announce on Friday, as confirmed in a statement to the House this morning, that a demonstration phase contract worth £859 million to invest in detailed design work, shore-based test facilities and long-lead items for the first three Type 26 global combat ships will sustain 1,700 jobs. The current planning assumption is that 13 Type 26 vessels will replace the current frigates on a one-for-one basis, aligned to the current split in base port allocation, with the first coming into service in 2022.

Mr Barry Sheerman (Huddersfield) (Lab/Co-op): It would be churlish of me not to welcome the recent contract that has been awarded that will benefit David Brown’s, a great employer in my constituency. Does the Minister agree that this Government’s failure to invest in men and equipment means that we are a laughing stock around the world? Our defence capacity is derided by the President of the United States, and President Putin knows very well that we are too weak to be a powerful defence force in Europe?

Mr Dunne: I do not recognise the hon. Gentleman’s characterisation of the defence equipment plan or, indeed, the capability of our defence industry to support it. This country remains the second largest defence exporter in the world. If our capability was so derided, as he says, how come we sold defence equipment worth nearly £10 billion last year?

Christopher Pincher (Tamworth) (Con): Last October, the Government announced the largest Army order in 30 years for the latest set of armoured vehicles. Will the Minister outline the potential for greater procurement from UK firms, which would benefit firms in the midlands, including Elite KL in Tamworth?

Mr Dunne: I am proud to confirm that the Scout contract was the largest vehicle contract for the British Army since the Falklands war, and more contracts have now been let through the supply chain for that vehicle. The number of UK jobs secured through the programme is expected to be some 2,400 across more than 160 suppliers.

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Two-thirds of the suppliers are UK-based, including several in the midlands, and from all parts of the country.

Angus Robertson (Moray) (SNP): Three of my constituents from RAF Lossiemouth were killed and a fourth was seriously injured when two Tornadoes collided above the Moray firth. That occurred nearly 20 years after the Ministry of Defence recommended the installation of collision warning systems. Is it really true that only eight out of 100 Tornado aircraft have had such a system installed, that they are not fully operational and that there are no concrete plans for such a system to be installed in the Typhoon fleet?

Mr Dunne: The hon. Gentleman has raised that subject many times in this House. He knows full well from the answers that I have given him to parliamentary questions that, when our Tornado fleet has a traffic collision avoidance system installed, it will be the first combat jet fleet anywhere in the world to have such a system. Civil airline fleets have been provided with such systems with success, but introducing such a system into a combat jet environment is exceptionally complicated. I can confirm that currently eight aircraft have been fitted with a system. We are working to iron out some of the residual issues with that system as we install it across the Tornado fleet.

Sir Nick Harvey (North Devon) (LD): May I echo the warm welcome for the signing on Friday of the demonstration contract on Type 26? But are the original assumptions from the 2010 strategic defence and security review still valid, or has anything significant changed?

Mr Dunne: As my hon. Friend is well aware, we are anticipating that a strategic defence and security review will take place following the general election later this summer, so all the planning assumptions that were introduced in the 2010 review will be reconsidered in 2015. As I mentioned earlier, as far as the frigate contract is concerned, the current planning assumption is for a like-for-like replacement of the Type 23 class.

Alison Seabeck (Plymouth, Moor View) (Lab): That was a very interesting comment from the Minister given that the Prime Minister recently announced that both carriers would be operational. Clearly, it also has implications for the equipment programme. Is the Minister saying that he intends to build 13 frigates for carrier support?

Mr Dunne: I just explained in my answer to the previous question what the planning assumption is for replacing frigates. I can reconfirm to the hon. Lady that within the equipment plan is the capital cost of constructing both aircraft carriers, and they are coming in on time and on budget, in stark contrast to what happened under the previous Government.

Armed Forces: Diversity

5. Mike Freer (Finchley and Golders Green) (Con): What steps he is taking to promote diversity in the armed forces. [907671]

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The Minister for the Armed Forces (Mr Mark Francois): The Ministry of Defence is committed to creating a more diverse work force, better able to represent the nation it serves and defends. That is why we are developing a comprehensive defence diversity and inclusion programme to increase the diversity of the whole work force, both military and civilian.

Mike Freer: I thank the Minister for that answer, but will he reflect on the comments of the Chief of the General Staff who said this month that

“recruitment from the black, Asian and minority ethnic communities has been improving…but it is nowhere near where it needs to be.”

What steps is the Army taking to ensure that it reflects the society that it protects?

Mr Francois: I thank my hon. Friend for his support for the Chief of the General Staff’s initiative, but as the CGS has made clear more needs to be done. For instance, a significant amount is already being done to increase the diversity of the Army, such as targeted recruitment campaigns and high-profile engagement events aimed at the Sikh and Muslim communities, including the establishment of an armed forces Muslim forum.

Several hon. Members rose

Mr Speaker: Order. In calling the right hon. Member for Mid Sussex (Sir Nicholas Soames) on the subject of diversity, I note for the benefit of the House his past and possibly current presidency or patronship of the Rare Breeds Survival Trust.

Sir Nicholas Soames (Mid Sussex) (Con): That is very helpful, Mr Speaker. Thank you so much. My right hon. Friend the Minister will be aware of the extraordinary gallant and distinguished service by Sikhs to this country down the generations. Does he not agree that it is high time to do away with the political correctness that infects some of this thinking and raise a Sikh regiment to serve in the country and make up a very serious gap in our armed forces?

Mr Francois: My right hon. Friend is nothing if not a survivor, as have been his illustrious predecessors who have served in this House. With regard to his specific suggestion, he is one of a number of Members of Parliament who have made the suggestion to me recently. We have passed the proposal on to the Chief of the General Staff, who is now considering the issue, and we are awaiting the CGS’s comments. The idea might well have merit.

Rory Stewart (Penrith and The Border) (Con): Following on from the comment made by my right hon. Friend the Member for Mid Sussex (Sir Nicholas Soames), will the Minister specifically consider the notion of a Sikh company within the reserves as a starting point? There seems to be much more possibility within the reserves to begin what seems like an excellent idea.

Mr Francois: I thank the Chairman of the Select Committee for his additional suggestion. I said earlier that the idea might have merit, and we are considering as one specific option the possibility of a reserve company that would inherit many of the proud traditions of Sikh regiments in the British Army going back many years.

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My hon. Friend the Minister responsible for the reserves is leading on that aspect and he, too, remains in contact with the CGS on the matter.


7. Stephen Metcalfe (South Basildon and East Thurrock) (Con): What steps his Department is taking to assist Iraqi forces in countering ISIL. [907673]

9. Mary Macleod (Brentford and Isleworth) (Con): What steps his Department is taking to assist Iraqi forces in countering ISIL. [907675]

13. John Woodcock (Barrow and Furness) (Lab/Co-op): What recent steps armed forces have taken against ISIL in Iraq; and if he will make a statement. [907679]

15. Richard Benyon (Newbury) (Con): What steps his Department is taking to assist Iraqi forces in countering ISIL. [907681]

The Secretary of State for Defence (Michael Fallon): We are making a major contribution to the coalition. We are conducting infantry training and have trained more than 1,000 Iraqis so far. We are leading on counter-improvised explosive device training and, subject to parliamentary approval, will gift 1,000 hand-held metal detectors. As of Sunday, we have conducted 152 air strikes in Iraq and deployed a range of aircraft to the region, including surveillance aircraft.

Stephen Metcalfe: One of the legacies of our time in Afghanistan is our expertise in tackling IEDs. Will my right hon. Friend tell the House when Britain will begin training Iraqi forces in this capability and what equipment—for example, electronic IED counter-measures such as those built by Selex ES in Basildon—will be made available so that they can better tackle ISIL?

Michael Fallon: I am grateful to my hon. Friend for that question and can tell him that the counter-IED training will begin early next month. UK personnel are already engaged in Baghdad in course design at the coalition headquarters. In conjunction with the metal detector equipment we intend to supply, the training will allow about six Iraqi battalions to have an improved counter-IED capability, as well as creating smaller specialist counter-IED teams.

Mary Macleod: Will my right hon. Friend reassure me and many constituents who have written to me in the past few months that the Government are doing all they can to support and protect minority groups, such as Yazidi Christians, especially women, who face unimaginable dangers from ISIL brutality?

Michael Fallon: Yazidi Christians, particularly women, have suffered more than most at the hands of ISIL. They are not alone. ISIL is a terrorist organisation that brutally beheads and crucifies people, slaughters children, sells women as slaves and has systematically used rape as a weapon. We flew supplies and surveillance missions last year to help Yazidi refugees on Sinjar mountain. Since beginning air strikes last September, we have, with other coalition partners, hit ISIL positions that have

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threatened Yazidi refugees and have assisted the Kurdish peshmerga in pushing back and reclaiming territory from ISIL, which, in turn, helps the Yazidi population.

John Woodcock: Does the Secretary of State think that it is acceptable that none of the service chiefs who gave evidence to the Defence Committee as part of its recent inquiry was willing or able to articulate the UK’s objective or strategic plan in Iraq? What exactly is our plan?

Michael Fallon: Our plan in Iraq is very simple: first, to disrupt threats to the UK mainland and to our interests overseas; secondly, as part of an international coalition, to defeat ISIL, including discrediting its violent ideology; and, thirdly, to mitigate the impact of ISIL and other violent extremist groups on the stability of the whole region.

Richard Benyon: In Iraq, the Brimstone missile provides the UK with a unique capability that minimises collateral damage. What measures are being taken to integrate it with the Typhoon system?

Michael Fallon: Let me pay to tribute to the important work being done at AWE sites in my hon. Friend’s constituency and elsewhere in Berkshire and to the highly skilled personnel working there. I will of course look at his point about integration. We are accelerating the integration of those weapons with Typhoon, which will improve its attractiveness as an export and pick up on some of the lessons we have learnt from the campaign in Iraq.

Mrs Mary Glindon (North Tyneside) (Lab): Does the Secretary of State recognise that the Kurds, who have lost 1,000 peshmerga, are key to isolating and defeating ISIS but are seriously short of the heavy weapons they urgently need. Will he talk with the Kurdistan Regional Government about how the UK can do much more to help them, as one of our closest and most reliable allies?

Michael Fallon: I have met the Kurdish Regional Government and we continue to be in touch with them. We have already gifted heavy machine guns, nearly 500,000 rounds of ammunition and some 49 tonnes of non-lethal equipment. We have also helped transport to the Kurdish region around 300 tonnes of weapons, equipment and ammunition from other eastern European nations, because they tend to use former Soviet equipment. I hope that underlines the amount of help we are giving to the peshmerga, but it is important that we also help the reconstitution of the Iraqi army further south.

Duncan Hames (Chippenham) (LD): What stance does the Secretary of State take in responding to requests from other Governments in the region seeking military assistance to take on ISIL and its affiliates in the way the Iraqi Government did?

Michael Fallon: This is an international coalition, with between 40 and 50 countries involved, and we are one of the 16 that are involved in the air strikes. Indeed, we have so far recorded the second highest number of air strikes—second only to the United States. However, countries in the region and internationally are all helping in different ways—for example, with logistics or by providing bases. The hon. Gentleman is right that we

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need to continue to reassure other countries in the region that we are committed to their security. That is why we signed the recent naval base agreement in Bahrain and why, for example, I talked this morning with His Excellency the Qatari Defence Minister.

Ian Lucas (Wrexham) (Lab): The Secretary of State is of course aware that ISIL is operating not only in Iraq, but in Syria and, unfortunately, now in Libya. Will he clarify what role the UK and its armed forces are playing in those theatres?

Michael Fallon: The House has not given its authority for military operations to be conducted in Syria at the moment. However, we are preparing plans to help train moderate Syrian opposition forces outside Syria, and we are now drawing up plans to participate in that training at a number of sites outside Syria. The situation in Libya is equally disturbing. It now looks as though ISIL has several footholds along the Libyan seaboard, so we are also considering what further role we might play there.

Mr James Gray (North Wiltshire) (Con): The Kurdish peshmerga have indeed done a magnificent job in halting Daesh and regaining some ground from it. I am proud that we have given them 40 heavy machine guns and that we have 46 members of 2nd Battalion the Princess of Wales’s Royal Regiment training them in Sulaymaniyah, but I have heard that we are reducing the amount of support we are actually giving them. Will the Secretary of State please outline in detail what extra help we can give the peshmerga forces in Kurdistan?

Michael Fallon: We are not reducing our effort; on the contrary, we have the RAF flying Tornadoes virtually day and night—a huge effort—from Cyprus. We have nearly 600 service personnel involved in this battle against ISIL, including more than 140 personnel in Iraq. It is important to help the peshmerga, but it is also important to help the reconstituted Iraqi army.

Liz Kendall (Leicester West) (Lab): What are the Government doing to identify ISIL’s funding sources, and have they taken any action, such as sanctions, against those they have identified?

Michael Fallon: The hon. Lady is right that ISIL needs to be defeated not just militarily, but diplomatically and politically with all the instruments at our command, and cutting off its financial sources of support is extremely important. We are working with our international partners to ensure that those financing streams can be cut off, and that proper sanctions can be applied where we can identify exactly where the funding is coming from.

Strategic Defence and Security Review

11. Sir Peter Luff (Mid Worcestershire) (Con): What budgetary assumptions he is making to inform the strategic defence and security review. [907677]

The Secretary of State for Defence (Michael Fallon): The Government’s priority remains the delivery of the 2010 strategic defence and security review. The next SDSR will not begin until after the election.

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Sir Peter Luff: Does the Secretary of State agree that all the major parties in the coming election should commit to a real-terms increase in the defence budget and to the 2% NATO target, because only in that way can we hope to keep our nation safe in an increasingly hostile and menacing world?

Michael Fallon: Since the 2010 SDSR, our planning assumption has been that real growth in the defence budget, with 1% growth on equipment, is required to deliver the highly capable and adaptable armed forces that we set out in Future Force 2020. The scale of our current operations in Kabul, the middle east and Sierra Leone underline the value of the flexibility that we encouraged in that review. So far as the future is concerned, we are spending £34 billion this year; we will be spending £34 billion next year. It is time we heard from Labour whether it will match that spending or whether it plans to cut it.

Sir Gerald Howarth (Aldershot) (Con): I congratulate the Defence Secretary on highlighting the real and present danger posed by Mr Putin’s Russia to the stability of Europe and the threat posed by ISIL. Does he agree that it would be folly for the United Kingdom to cut its defence expenditure below the minimum requirement of 2% that NATO has set?

Michael Fallon: I am grateful to my hon. Friend. I have set out our planning assumptions for the current defence budget, but I still think we ought to hear exactly what the Opposition’s plan is. Are they going to match our £34 billion a year, or are they going to cut it? Is it match or cut? [Interruption.]

Mr Speaker: Not very statesmanlike. Mr Jones, you aspire to be a statesman. I have sought to encourage and nurture your ambitions. [Interruption.] No, he says from a sedentary position. Don’t be so unambitious, man, for goodness’ sake.

Falkland Islands: Military Threat

16. Mr Philip Hollobone (Kettering) (Con): What recent assessment he has made of the potential implications of deployment of Russian-made military aircraft to Argentina for the UK’s defence footprint in the south Atlantic. [907682]

The Minister for the Armed Forces (Mr Mark Francois): The Ministry of Defence undertakes regular assessments of current and potential military threats to the Falkland Islands to ensure that we retain the appropriate defensive capability. There is currently no suggestion that there will be any need to vary significantly our capability in the south Atlantic, but contingency plans are in place to do so if required.

Mr Hollobone: To what extent is Russia re-establishing relations with Argentina, and to what extent might that pose a military threat to the Falkland Islands?

Mr Francois: Let us be clear. The Government are clear about British sovereignty of the Falkland Islands, and in March 2013 the Falkland Islands referendum reaffirmed the islanders’ overwhelming wish to remain British, with 99.8% voting in favour. We should always

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defend the right of the Falkland islanders to determine their own political future. I believe the question may refer to media reports that the Argentines were proposing to purchase Su-24 aircraft from the Russians, although this proposal came as a surprise even to the Argentine Defence Minister and was swiftly denied by the Argentine Government. Nevertheless, we are not complacent and the Ministry of Defence undertakes regular assessments of potential military challenges to the Falkland Islands to ensure that we retain appropriate defensive capabilities, but it seems that the Russians did not tell him.

Mr James Arbuthnot (North East Hampshire) (Con): Does my right hon. Friend accept that the defence of the Falkland Islands would be made much more difficult if we failed to spend 2%, at least, of our gross domestic product on defence? If we encouraged all parties, including Labour, to do that—

Mr Kevan Jones (North Durham) (Lab): And yours.

Mr Arbuthnot: And ours, indeed. Then we would be standing by the encouragement and the commitments that we made at the NATO summit only six months ago.

Mr Francois: There are currently about 1,200 UK military and civilian personnel in the Falklands Islands. They support a range of air, sea and land capabilities, including Typhoon aircraft, support helicopters, offshore patrol vessels, air defences, and a resident infantry company. My right hon. Friend is an established former member of the Defence Committee—indeed, its former Chair—and the whole House will have heard what he said.

Service Personnel: Police Cautions

17. Mrs Madeleine Moon (Bridgend) (Lab): How many service personnel were dismissed from the Army, demoted or otherwise penalised as a result of having received a police caution between 2008 and 2011. [907683]

The Minister of State, Ministry of Defence (Anna Soubry): Initially, in reply to the hon. Lady’s campaign, I said that the figure was 1,500, but we have made further inquiries because our aim is to contact everybody. We now think that the figure is nearer to 1,200—1,000 in the Army. As we make those inquiries, it is important to appreciate that not everybody who was penalised in some way had that happen as a result of their receiving a police caution—other matters may have been involved as well—so we are exploring all that.

Mrs Moon: The Minister will be aware that at least 58 of those personnel were discharged from the armed forces. On a rough calculation of losing, say, a £25,000 salary for just one year, compensation of over £1.25 million would be due. What assessment has she made of the cost to the defence budget of the military law-breaking and cover-up that was involved?

Anna Soubry: As I have explained, we are identifying all the individuals so that we can contact them and advise them accordingly. I have made it very clear that

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I want to see action by the three armed forces to anticipate what may come forward so that we do not suffer any more delay and there are no injustices.

Topical Questions

T1. [907707] Yvonne Fovargue (Makerfield) (Lab): If he will make a statement on his departmental responsibilities.

The Secretary of State for Defence (Michael Fallon): My immediate priorities remain our current operations against ISIL and Ebola, as well as the commitments reached at the NATO summit and the delivery of Future Force 2020. We are building our reserve forces and investing in the equipment that our armed forces need to keep Britain safe.

The House may also want to know that the solider reported as missing last week has now been located and is being returned to his unit.

Yvonne Fovargue: Will the Secretary of State assure the House that Britain is playing a key role in Ukraine and that we have not been relegated to a mere junior partner in negotiations?

Michael Fallon: We have been playing the leading role politically in ensuring that Russia is subject to a proper degree of sanction for the actions it has been taking, and we will continue to press the case for further sanctions if Russia’s aggression is not halted. We are playing a key role politically and diplomatically in trying to bring the conflict to an end.

T2. [907708] Stephen Hammond (Wimbledon) (Con): Further to that answer, will the Secretary of State update the House on his assessment of the recent militaristic threats of action in Ukraine by Russia?

Michael Fallon: Ahead of the second Minsk meeting, Russia stepped up its military support to the separatists. It transferred hundreds of heavy weapons, including rocket launchers, heavy artillery, tanks and armoured vehicles. It maintains hundreds of regular soldiers, including special forces in Ukraine. Since the latest Minsk agreement, we have seen the ground offensive at Debaltseve, leading to the withdrawal of Ukrainian forces, and the denial of access for OSCE monitors—both flagrant breaches of the Minsk agreement. What matters now is that Russia returns to what it agreed at Minsk and implements it as soon as possible.

Vernon Coaker (Gedling) (Lab): Does the Defence Secretary agree that episodes in recent months in which RAF jets have been scrambled to escort Russian bombers close to our airspace, aircraft from our NATO partners have been asked to help locate a suspected Russian submarine off the west coast of Scotland, and the Royal Navy has been seen escorting a Russian warship in the English channel are very serious and risk a very serious incident? Will he tell the House how is he meeting these ongoing challenges and assure us that gaps in our military capability such as the lack of maritime patrol aircraft do not hinder us in any way in responding to such events?

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Michael Fallon: These are indeed serious issues and serious threats. So far as the incursion of Russian aircraft around British airspace is concerned, we have successfully intercepted all of those potential incursions and they have been shadowed by our quick-reaction aircraft based at either Lossiemouth or Coningsby. Our Royal Navy has picked up and shadowed the transit of Russian ships through the channel. We will, of course, respond, though not in the sense of being provoked; we will ensure that any potential incursion into our airspace or maritime area is properly dealt with.

So far as maritime patrol aircraft are concerned, of course we will look at that capability again in the new review, but we share capabilities with our NATO allies. We helped to lift French troops into Mali and, in return, we share other capabilities with NATO allies.

Vernon Coaker: I thank the Defence Secretary for that answer. He will, of course, be aware of ongoing events in eastern Ukraine and concerns about the stability of other areas in the region. He recently talked of Russia seeking to “test” NATO, so, while our response needs to be calm and considered, it also has to make strategic sense. What is the Defence Secretary’s latest assessment of the implementation of the ceasefire agreement, especially in the light of the deadly incident in Kharkiv yesterday; and what role is Britain playing, as a leading member of NATO, to reassure our partners of the fortitude, resilience and involving nature of that alliance?

Michael Fallon: It is pretty clear that the ceasefire agreement is not being properly respected. Russia needs to get back to the terms of that agreement and ensure that the fighting stops, that the heavy armour and other equipment I have referred to are withdrawn and that the territory of Ukraine is therefore respected. We have already been supplying non-lethal aid to Ukraine, as the hon. Gentleman knows, and we are continuing to consider what further help to provide in terms of training that might help to reduce the number of casualties and fatalities and build up the capability of the Ukrainian forces, which have been subject to an awful onslaught.

T3. [907709] Mr Andrew Robathan (South Leicestershire) (Con): May I also congratulate the Defence Secretary on his forthright warning about an expansionist and aggressive Russia under President Putin representing a real and present danger to the Baltic states and, therefore, to NATO and European peace? May I be the third former Defence Minister from the previous SDSR to urge the Defence Secretary to use the current SDSR to improve defence capability rather than reduce it? May I also reassure him that there is a huge groundswell of opinion on the Benches behind him in support of an increase in defence spending and certainly not in support of a cut?

Michael Fallon: I hope that my right hon. Friend, who served with distinction as a Minister in my Department, will recognise that, by investing in two aircraft carriers, committing to a replacement of the Type 23s, investing in armoured vehicles, purchasing fighters and commissioning new offshore patrol vessels, we are improving our defence capability. It is because we sorted out the

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defence budget that we are able to invest in new equipment in a way that the previous Government could not possibly have done.

John Cryer (Leyton and Wanstead) (Lab): On the basis of a previous answer, can the Secretary of State give an absolute assurance that none of the British military activities in Iraq will be allowed to drift across the border into Syria?

Michael Fallon: The hon. Gentleman knows that we have authority under the terms of the motion passed in this House to act in Iraq but not in Syria. That, of course, enables other members of the coalition to help the battle against ISIL in Syria; indeed, it frees up some of their capacity to do so. It is important that ISIL is defeated in both countries. ISIL does not respect the borders to which the hon. Gentleman refers.

T5. [907711] Robert Jenrick (Newark) (Con): The RAF has been using precision munitions effectively in Iraq, which, as far as is possible, are good at minimising collateral damage. Further to the earlier comments by the Secretary of State, will the Minister reassure the House that that important capability will not be lost when the Tornado combat jet is retired in 2019?

The Parliamentary Under-Secretary of State for Defence (Mr Philip Dunne): Further to my right hon. Friend the Secretary of State’s answer to an earlier question, I can confirm that—as it happens, yesterday—I witnessed a contract signature for the investment of a further £165 million to integrate Brimstone precision munitions on to Royal Air Force Typhoons, which will enable this unique air-to-ground strike capability to enter service on our Typhoon fleet in 2018, before the Tornadoes come out of service in 2019.

T8. [907714] Douglas Carswell (Clacton) (UKIP): What assurance can the Minister give that the costs of the new Type 26 global combat ship will not rise ever upwards? How much clout does his Department have in avoiding some of the mistakes of the past?

Mr Dunne: I am grateful to the hon. Gentleman for asking that question, because he invites me to draw another comparison with the way in which this Government have sorted out the manner of our defence procurement, in stark contrast to the previous Administration. We are undertaking detailed analysis and taking contract negotiations to a much greater degree of granularity before entering contracts so that we know what we are buying and we remove risk from layers of prime contractors, following the model that we introduced in the aircraft carrier renegotiation last year.

T6. [907712] Richard Benyon (Newbury) (Con): As civil nuclear developments expand the market for skilled nuclear engineers, what steps is the Minister taking to ensure that we maintain the skills levels of the hundreds of nuclear engineers at the Atomic Weapons Establishment in Berkshire?

Mr Dunne: The facility in Berkshire is extremely important—part of it is in my hon. Friend’s constituency—and I have led cross-Government talks to consider how we ensure that demands for nuclear engineering skills

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across defence and civil sectors are successfully managed by recruiting, training and retaining appropriately skilled engineers. Next week, I will host an event in Downing street to raise awareness of degree courses in nuclear engineering.

Mr Russell Brown (Dumfries and Galloway) (Lab): Ministry of Defence police officers and their colleagues in the defence fire and rescue service are currently subject to the state pension age; yet their counterparts in the Home Office and the Department for Communities and Local Government can retire up to seven years earlier. Does the Minister think that is fair?

The Minister of State, Ministry of Defence (Anna Soubry): We are in the process of working with other colleagues in the Government to conclude that matter, and I very much hope that we can make an announcement very soon. I pay tribute to the fire service and the MDP, both of which do an outstanding job.

T7. [907713] Nick de Bois (Enfield North) (Con): In addition to the training that my right hon. Friend mentioned earlier, will he tell the House what equipment the British Government are providing to the Kurdish peshmerga, and whether they are providing any equipment on behalf of other countries to assist their fight against ISIL?

Michael Fallon: May I wish my hon. Friend a very happy birthday?

As I said, Her Majesty’s Government have gifted some 40 heavy machine guns with spares and some 480,000 rounds of 12.7 mm ammunition, in addition to 49 tonnes of non-lethal assistance, which was directly supported with training on machine guns. Most of the requests for equipment we have received are of types that British forces do not normally use, but through our strategic air transport capability, we have been able to work with other countries to deliver more than 300 tonnes of weapons, ammunition and equipment from mostly east European—

Mr Speaker: Order. So many distinguished colleagues; so little time to hear them.

Mr Frank Roy (Motherwell and Wishaw) (Lab): Will the Secretary of State explain why the House is not allowed to know how many people were recruited from an online source?

The Parliamentary Under-Secretary of State for Defence (Mr Julian Brazier): There has been no attempt to refuse to answer that question. All Army recruits, regular and reserve—100%—come through online applications. We have published the numbers of enlistments. [Interruption.] The number I cited earlier—1,490—was the number of Army reservists. I will write to the hon. Gentleman with other numbers. There is no secret about this at all: all Army recruits come through the online system.

Mr Speaker: Put a copy in the Library.

T9. [907715] Andrew Jones (Harrogate and Knaresborough) (Con): Will my right hon. Friend join me in paying tribute to our fast jet airmen, who help keep our skies safe and are dealing with the increasingly frequent Russian incursions?

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The Minister for the Armed Forces (Mr Mark Francois): I do indeed pay tribute to them. This Department works in the recesses too, and last week I went to Royal Air Force Lossiemouth and met our fighter pilots, who help defend the skies against any incursion from wherever it may come. They are incredibly impressive and they now include female pilots too. “Top Gun” was on television last night. I have seen the real thing and it is more impressive than the movie.

Keith Vaz (Leicester East) (Lab): Six hundred British citizens have travelled abroad to support ISIL and we have heard the anguished pleas of the parents of three young London girls who have gone for similar reasons. What further steps are we going to take to stop British nationals travelling in that way?

Michael Fallon: As the right hon. Gentleman knows, the Home Secretary is producing further proposals to ensure that we continue to prevent the radicalisation of our young people in mosques and schools, and to introduce further passport controls where necessary to discourage the movement of young, radicalised Muslims to Syria.

Mr Charles Kennedy (Ross, Skye and Lochaber) (LD): Given the very welcome commitments that the Prime Minister made in Scotland just last week about ongoing defence expenditure, bases and so on, will the Government confirm that those commitments extend to the all-important and long-standing BUTEC—British underwater test and evaluation centre—submarine range in and around Kyle of Lochalsh and that it has a viable future, given that defence will loom so large at the general election?

Mr Dunne: I confirm that the UK Government have no plans to close the British underwater test and evaluation centre on the Applecross peninsula and at Kyle of Lochalsh. In fact, QinetiQ, supported by the Ministry of Defence, has plans to invest £22 million in its research and testing facilities up there, which, of course, would not have happened had Scotland been independent.

John Woodcock (Barrow and Furness) (Lab/Co-op): Can the Secretary of State say more about the circumstances in which the deserted soldier in Syria was found? What steps can he take to prevent a recurrence of that situation? Does he understand the frustration that must be felt by many in our armed forces who want to do more to fight ISIL, but who see the Government not doing enough?

Michael Fallon: We are, as I said, making a major contribution to the fight against ISIL, with nearly 600 service personnel involved, not just in Cyprus but in Irbil, Baghdad and elsewhere in the Gulf. We are fully involved in this struggle. I would prefer not to comment on the soldier who has been located and is being returned safely to his unit until he has been fully debriefed.

T10. [907716] Charlie Elphicke (Dover) (Con): May I support the Defence Secretary’s warning about the danger that Russia poses to world peace? We should look at supporting brave Ukraine before Mariupol is put under pressure or falls.

Michael Fallon: We have increased our assistance to the Ukrainian armed forces. Following the start of the crisis in spring last year, we have provided non-lethal support, including personal protective equipment and

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other supplies. We are helping with defence reform and modernisation. We are considering providing further non-lethal assistance to enhance the capacity of the Ukrainian armed forces to reduce casualties and fatalities and to build their resilience, for example through further training.

Mr Barry Sheerman (Huddersfield) (Lab/Co-op): If the Secretary of State is so pleased with our present defence capacity, will he say when was the last time an American President begged a British Prime Minister not to run down British forces any further?

Michael Fallon: I have made it clear throughout this Question Time that far from running down our forces, we are investing in them for the future. We are investing in aircraft carriers, armoured vehicles, new frigates, offshore patrol vessels and fresh equipment of all kinds. What we have not yet heard is whether the Labour party would match our £34 billion of spending or cut it.

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Dr Liam Fox (North Somerset) (Con): There are four drivers and constraints on the defence budget: the international security environment, including what is happening in Ukraine; commitments already entered into, including upgrading our nuclear deterrent; the overall fiscal position; and our international obligations and moral authority. Does the direction of travel of any of those four things justify our defence spending falling below 2% of GDP? Is this a case, if ever there was one, for a proper cross-party consensus in Britain?

Michael Fallon: Only because we sorted out the budget mess that we inherited have we been able to invest in and modernise our defence equipment. I fully agree with my right hon. Friend: we would be in a stronger place if there was more consensus. We have yet to hear whether Labour would match our £34 billion or cut it. Is it time we had an answer?

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Tax Avoidance (HSBC)

3.35 pm

Ed Balls (Morley and Outwood) (Lab/Co-op) (Urgent Question): To ask the Chancellor of the Exchequer if he will make a statement about the HSBC tax evasion scandal.

Mr Speaker: Order. I do not wish to be pedantic, simply accurate, but I think the wording of the urgent question was “avoidance”—the tax avoidance scandal. The point is on the record.

The Chancellor of the Exchequer (Mr George Osborne): The allegations about tax evasion at HSBC Swiss are extremely serious and have been the subject of extensive investigation by Her Majesty’s Revenue and Customs. Money has been recovered for the Exchequer, and HMRC continues to be in active discussion with our prosecuting authorities. The chief executive of HMRC and the Director of Public Prosecutions have confirmed that they have the necessary resources to carry out their work on this matter, and if they need more resources they will get them.

The House should know, however, that in each and every case the alleged tax evasion—both by individuals and the bank—happened before 2006 when the shadow Chancellor was the principal adviser on tax policy and economic affairs to the then Labour Government. News that the French had got hold of the files with the names of the bank accounts became publicly known in 2009 when the shadow Chancellor was sitting on the Government Benches, and the files were requested and recovered by HMRC before May 2010, when he was a member of the Cabinet.

The right hon. Gentleman has written to ask me five questions about my responsibilities. I will answer each one directly, and in return he can account for his own responsibilities. He asked about what he calls the selective prosecution policy pursued by HMRC, and whether that decision was made by Ministers. Yes, that decision was made by Ministers, and the Inland Revenue’s overall approach to prosecuting cases of suspected serious tax fraud was set out in the Official Report on 7 November 2002, column 784W, in an answer by the then Chancellor of the Exchequer, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown). That was confirmed again when HMRC was created in 2005—again by the right hon. Gentleman. I have increased resources for tackling tax evasion, and as a result prosecutions are up fivefold. I have answered for my responsibility on that question; perhaps the right hon. Member for Morley and Outwood (Ed Balls) will answer for his and tell us whether he drafted that policy.

Secondly, the right hon. Gentleman asked when I was first made aware of the HSBC files, what action I took, and whether I discussed them with the Prime Minister. I first became aware of the existence of the files in 2009 when a story appeared in the Financial Times. I was shadow Chancellor at the time so I could take no action, and I could not discuss it with the then Prime Minister because I was not on speaking terms with him. That is what I knew. The right hon. Member for Morley and Outwood was a Cabinet Minister. When he heard about these revelations, did he speak to the Prime Minister about them?

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Thirdly, the right hon. Member for Morley and Outwood asked why we appointed Stephen Green to the Government. We appointed him because we thought he would do a good job as trade Minister, as did the Labour party, which welcomed the appointment. The trade job was not Stephen Green’s first public appointment. That was when he was appointed by the previous Government to be not just a member of the Prime Minister’s business council but its chair—a post he continued to hold after the existence of the HSBC files became public and after HMRC negotiated to recover them under the previous Government. I have explained why we appointed Stephen Green. Perhaps the right hon. Member for Morley and Outwood will explain why he appointed Stephen Green.

Fourthly, the right hon. Gentleman asked about discussions with Stephen Green on tax evasion. I can confirm that the Cabinet Secretary and the director general of ethics at the Cabinet Office carried out the background checks for ministerial appointments that were put in place by the previous Government. Stephen Green’s personal tax affairs were examined by HMRC on behalf of the House of Lords Appointments Commission, again using the procedures put in place by the previous Government. Those are the procedures we followed when we appointed Stephen Green. What procedures did the right hon. Gentleman follow?

Finally, the right hon. Gentleman asked me why I signed a deal with the Swiss authorities in 2012. He does not need my explanation. Listen to what the shadow Chief Secretary at the time, the hon. Member for Newcastle upon Tyne North (Catherine McKinnell), said:

“We support the agreement signed by the UK and Swiss Governments to secure billions in unpaid tax.”––[Official Report, Finance Public Bill Committee, 26 June 2012; c. 655.]

She is right: billions of unpaid tax never collected under a Labour Government. Under this Government, tax evasion is at the top of the G8 agenda. We have collected more money and prosecutions have increased five times over. Ahead of the Budget, I set the Treasury to work on providing further ways to pursue not just the tax evaders, but those providing them with advice. So anyone involved in tax evasion, whatever your role, this Government are coming after you. Unlike the previous Government, who simply turned a blind eye, this Government are taking action now and will do so again at the Budget. So I am happy, any time, to answer for our record on tackling tax evasion. Now, let him account for his.

Ed Balls: Finally, the Chancellor has been dragged to the House to answer questions about the HSBC scandal, which broke a full two weeks ago. At a time when the living standards of working people are squeezed, when our public services are under pressure, when HSBC is paying out high bonuses and when the amount of uncollected tax has gone up under this Government, we need proper answers, not another Chancellor sweeping these issues under the carpet as we have heard today. [Interruption.] I think the hon. Member for Northampton North (Michael Ellis) should listen to these questions and then the Chancellor can tell us whether he actually has any answers. Don’t you agree, Mr Speaker?

Detailed information was passed to this Government in May 2010 about 1,100 HSBC clients—[Interruption.]

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Mr Speaker: Order. These exchanges are not, frankly, to the advantage of this House. They will be conducted in a more decorous atmosphere. I say to Members on both sides who are calculatedly trying to whip it up and are shouting at the tops of their voices, some holding very senior positions in this House: cut it out or get out.

Ed Balls: We know when they shout that it is because they have something to hide, Mr Speaker. That is the truth.

First, let me ask the Chancellor about what he knew and when. Two weeks ago, Downing street announced that no Minister found out about the HSBC issues until two-and-a-half weeks ago. At the weekend, the Chancellor said that he should not be involved in the tax dealings of any individual bank. Today, he has told us he knew in 2009. If he knew about systemic abuse on this scale in 2009, why did he not act when he became Chancellor? That is the first question.

Secondly, given that the Chancellor says he knew about this in 2009, why, five years on, has there been only one prosecution after the provision of 1,100 names? We know that in November 2012 HMRC confirmed that the Government had adopted a selective prosecution policy. Let me ask the Chancellor: given he knew what was happening at HSBC, did he confirm he wanted a selective prosecution policy in these cases?

Thirdly, why in 2012 did the Chancellor sign a deal with the Swiss authorities that has prevented the UK from actively obtaining similar information in the future? The agreement states that the UK and Swiss Governments will

“not actively seek to acquire customer data stolen from Swiss banks”.

Why sign up to a declaration that clearly impedes HMRC’s and the Government’s ability to act in the future? Two weeks ago, they told us it was because they did not know, but we now know that the Chancellor has known for six years. Why did he sign that deal?

Fourthly, if the Chancellor and the Prime Minister knew what was happening at HSBC in 2009, why, one month after the Government received these files, did they appoint the chair of HSBC during the period in question as a Conservative peer and Minister? What due diligence did the Government carry out in advance, and did the Prime Minister and the Chancellor see the details? Fifthly, did Lord Green have any involvement in the Swiss tax deal when he was a trade Minister? Did he ever advise the Treasury on it? Did the Chancellor discuss what happened at HSBC with Lord Green in the almost three years he was a Conservative Minister? Two weeks ago, the Prime Minister was unable to answer that question. Did the Chancellor discuss the Swiss deal and those past events at HSBC with Lord Green, who was appointed as a Minister after this scandal came to light?

It is not good enough for the Chancellor to shout and bluster, and to try and sweep these questions under the carpet and claim he did not ask the questions. Since the Government were given the files, he has been the Chancellor for five years. Is it not clear either that he and the Prime Minister were negligent in failing to act on the evidence the Government received, including about HSBC and Lord Green, or, just as with the appointment of Mr Coulson, that they deliberately turned a blind eye?

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Mr Osborne: Well, I do not think that performance will save the shadow Chancellor’s political career. Every single question he asked I had already answered. The whole House can see that the person bringing this question to the House is the person with the most to answer for, and that he has no answers. He has nothing to say about the fact that every single one of these alleged offences occurred when he was the principal tax adviser to the last Labour Government, and nothing to say about the fact that the HSBC files came to light while he was in office. He said I admitted I knew about them in 2009. I read the Financial Times—it was in the newspapers; he was in the Cabinet and did absolutely nothing about it. He said that the information was provided to the Government in May 2010.

Ed Balls indicated assent.

Mr Osborne: He nods his head, but the information was provided in April 2010, when there was a Labour Government and he was in the Cabinet. He has nothing to say either about the agreement with the French authorities restricting the use that could be made of this information—an agreement that we are now busily trying to change.

None of these things has the shadow Chancellor admitted to or apologised for, and none of it is of any surprise to Government Members, because the Labour party was the friend of the tax avoiders and the tax evaders when it was in office. When we entered office, City bankers were paying lower tax rates than those who cleaned for them; foreigners were not paying capital gains tax; hedge funds were abusing partnership rules; and the richest in our society routinely did not pay stamp duty at all. We have put at end to all of that, and we will take more action in the Budget. All we have on the Opposition Benches is a bunch of arsonists throwing rocks at the firefighters who are putting out the fire that they started.

The shadow Chancellor comes to the House fighting for his political life. He asks about tax evasion, but he was the principal tax adviser when tax evasion occurred. His economic policy is in tatters, and he cannot name a single business supporter of his business policy. His tax avoidance campaign has turned into a war with his own window cleaner. Now he has lost the confidence of his colleagues and his leader, but he lost the confidence of the country a long time ago.

Mark Garnier (Wyre Forest) (Con): Will the Chancellor confirm that British taxpayers will receive more money back from tax evaders as a result of civil actions than they would through criminal actions?

Mr Osborne: When we can pursue criminal prosecutions, of course we do so, but that is a matter for the independent prosecuting authorities. Frankly, the suggestion from some on the Labour Benches that the Chancellor of the Exchequer should direct the prosecutions of our independent prosecuting authorities shows how far they have gone from the constitutional principles of government. We set the overall resourcing for HMRC and pass the tax laws, but we have independent prosecuting authorities. The shadow Chancellor goes on about the policy, but the policy was set out by the right hon. Member for Kirkcaldy and Cowdenbeath in 2002 and repeated in 2005.

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Frank Dobson (Holborn and St Pancras) (Lab): Does the Chancellor agree that obtaining financial advantage by deception is a criminal offence even when carried out by bankers? Does he recognise that HSBC has 556 subsidiary companies in tax havens? We know what has happened with one of them, but when will there be an inquiry into the other 555?

Mr Osborne: Some very serious allegations have been made about HSBC Swiss and its role in knowingly advising people on tax evasion. Of course, our prosecuting authorities will want to look into the matter, but the House needs to know that the information that was received from the French authorities under the last Government—[Interruption.] This is important, and it is relevant to the right hon. Gentleman’s question. The information was received as the result of a negotiation with the French authorities about what use it could be put to, and the French agreement struck by the last Government said that we could use it only for prosecuting or pursuing individuals with regard to their tax affairs. We are currently in active discussion, which I think will come to a fruitful end, to get the French to allow us to pass some of that information to the Serious Fraud Office and other prosecuting authorities, to address the concern that he rightly raises about the potential or alleged role of banks in the affair.

Jeremy Lefroy (Stafford) (Con): Will my right hon. Friend explain to the House how many tax avoidance schemes that he inherited in 2010 he has had to close down?

Mr Osborne: More than 40 tax avoidance schemes or loopholes have been closed. Of course, we have also introduced an anti-avoidance and anti-abuse rule, which the Labour Government had 13 years to introduce. Now Labour Members are saying that we should be stiffening the penalties under that anti-abuse rule, but—[Interruption.] I will tell Members who was in charge. The shadow Chancellor was in charge for 13 years and did absolutely nothing. We came in, closed the loopholes, introduced the anti-abuse rule, got rid of the abuse of partnerships by hedge funds, got rid of the abuse of stamp duty by the richest in our society and started collecting the tax that should have been collected long ago.

Mr Mike Weir (Angus) (SNP): The revelations about HSBC are just the latest in a long line of misdeeds by our banks, which are undermining confidence in the system throughout. Too often, HMRC seems to be on the back foot. The Chancellor said that if it required more resources it would be given them. Will he commit those resources to a proactive investigation of the role of banks, and some of the larger accountancy firms, in both tax avoidance and tax evasion?

Mr Osborne: The amount collected by HMRC as a result of abuse of this kind has risen from £17 billion to £26 billion. That is partly because we have put additional resources into tackling tax evasion and aggressive tax avoidance. We have done a great deal. However, I am the first to say that there is more to be done, and, as I said in my statement, more will be done in the Budget.

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Ian Swales (Redcar) (LD): Does the Chancellor think that corporate entities that advise on tax evasion or enable it to take place should themselves be subject to criminal prosecution?

Mr Osborne: Yesterday the Chief Secretary referred to a policy that the Treasury has been considering for the purposes of the Budget, involving the penalties that should be paid by those who actively facilitate tax evasion. As I have said, we are considering that policy, but the hon. Gentleman will have to wait for the Budget.

Mr David Winnick (Walsall North) (Lab): If the position is now so clear and has now been dealt with, why did the former Tory treasurer say only the other week that “everyone” was engaged in tax avoidance? He meant the rich. Is not the situation summed up very well by an American woman, Leona Helmsley, who ran hotels? She said—and it apparently still applies in this country to a large extent—

“We don’t pay taxes. Only the little people pay taxes.”

That illustrates the divide between the vast majority of people in our country and the rich.

Mr Osborne: We have taken steps to deal with precisely the abuses to which the hon. Gentleman has alluded, such as the use of vehicles to avoid paying stamp duty, the creation of partnerships so that hedge funds do not pay the proper amounts, and the fact that foreigners did not pay capital gains tax. Disguised income is another abuse that we have sought to clamp down on—and, by the way, the Labour party voted against our action in that regard. As more abuses come to light and more contrived schemes are discovered, we take action to deal with them, but I have to say that we have had very little support from the Labour party.

Steve Baker (Wycombe) (Con): When objective members of the public review these exchanges, they could be forgiven for thinking that there was little to choose between our parties. Will the Chancellor confirm that he has instituted not just the general anti-abuse rule, but follower notices and accelerated payments, and will he also confirm that our party has dealt with this issue far more robustly than the Labour party?

Mr Osborne: My hon. Friend is absolutely right. The accelerated payments scheme means that if tax is in dispute, we ask for it up front, and if people can prove that we have got it wrong, they get the money back. That is the rule with which the vast majority of our citizens must comply at present, but it was not complied with by those who were very well off. We introduced the accelerator, and as a result we are collecting hundreds of millions of pounds of tax that was previously not collected. As my hon. Friend says, that is further evidence of the gulf between what the Labour Government did during the 13 years for which the shadow Chancellor advised them, and what we have done in the last five years.

Helen Goodman (Bishop Auckland) (Lab): The Chancellor described the steps taken by the civil service before the appointment of Lord Green, but will he now answer this question? Did he ever discuss this matter with Lord Green, and did the Prime Minister ever discuss it with Lord Green?

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Mr Osborne: I said in my statement that the proper procedures had been followed for the appointment of a Minister, and that the Cabinet Secretary and the director general of ethics in the Cabinet Office had been involved. I am not privy to the tax affairs of any individual citizen, and it would be a gross abuse of our constitution if I were. Our procedures allow HMRC to talk to the House of Lords Appointments Commission, and it did so on this occasion, so those procedures were followed. Any Labour Members who ask questions about our appointment of Stephen Green to the post of Trade Minister could be asked questions about their decision to appoint him as chair of the Prime Minister’s business council, and to retain him in that post after the revelations that appeared in the Financial Times in 2009.

Julian Smith (Skipton and Ripon) (Con): Many small businesses and taxpayers in north Yorkshire will be shocked by the time line that the Chancellor has just described. Will he clarify once again what the last Government knew and when?

Stephen Pound (Ealing North) (Lab): What a creep!

Mr Osborne They don’t want to hear about their record in government, Mr Speaker. Every single alleged offence happened when the Labour Government were in office. The information became publicly known when the Labour Government were in office. Lord Green’s first public appointment was as chair of the Prime Minister’s business council under the Gordon Brown Administration. The information was received from the French authorities under the last Labour Government. So I think the whole House—and, indeed, my hon. Friend’s constituents, who pay their taxes—would like the shadow Chancellor to get up and express a little bit of humility and contrition for the mistakes made when he was in office.

Mr Andrew Love (Edmonton) (Lab/Co-op): Since 2010 the Chancellor or Treasury Ministers have met HSBC 56 times. Was tax avoidance or tax evasion ever discussed at those meetings, and what was the outcome of those discussions?

Mr Osborne: First of all, it is not surprising that the British Government—Conservative, coalition or Labour—would meet one of the country’s largest institutions and banks. So that it is not a matter for surprise. I am happy to write to the hon. Gentleman about any details we have about particular meetings.

David Mowat (Warrington South) (Con): In 2005, at the height of all of this, the then Chancellor told the CBI dinner that he supported a “light” and “limited” approach to regulation including tax administration. What does the Chancellor think the previous Chancellor meant by a “light” approach to tax administration, and can he confirm that we have cleared it up?

Mr Osborne: Well, we have taken a much more aggressive approach. As a result, prosecutions are up fivefold. I have the following parliamentary answer from the then Chancellor, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), and this is what he told the House:

“Where serious tax fraud has been committed, the Board”—

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the Inland Revenue board—

“may accept a money settlement instead of pursuing a criminal prosecution.

The Board will accept a money settlement and will not pursue a criminal prosecution, if the taxpayer, in response to being given a copy of this Statement by an authorised officer, makes a full and complete confession of all tax irregularities.”—[Official Report, 7 November 2002; Vol. 392, c. 784W.]

That was the approach of the right hon. Member for Kirkcaldy and Cowdenbeath to tax policy. [Interruption.]The shadow Chancellor says it was before 2000, but the revelations were made in 2009, and the last time I checked there was a Labour Government in late 2009 and early 2010.

Emily Thornberry (Islington South and Finsbury) (Lab): Will the Chancellor finally seriously consider the issue of corporate liability for the criminal actions of employees? This would mean that banks could themselves be prosecuted. Would he like a copy of Labour’s policy review on tackling serious crime and white-collar crime that I launched two years ago? I have a copy here; he can have a read of it. I suggest a change in the law.

Mr Osborne: Unfortunately for the hon. Lady, the Labour party had 13 years when they had a Labour Chancellor standing at this Dispatch Box able to introduce all these things she talks about. As I have said, we are looking very seriously in the Budget at what further action we can take to tackle not just those who evade their taxes, but those who facilitate that evasion.

Jacob Rees-Mogg (North East Somerset) (Con): Does this question itself show the danger of eliding tax avoidance and tax evasion? There is no obligation on anybody to pay more tax than the law requires and even the most respectable families have schemes of arrangements to minimise things like death duties, whereas tax evasion is a very serious criminal offence which should be come down on with the full force of the law.

Mr Osborne rose—

Ian Lucas (Wrexham) (Lab): That’s the Tory party!

Mr Osborne: The hon. Gentleman says that that’s the Tory party, but, as it happens, I think my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) is referring to the newspaper accounts of the Labour leader. I am not going to get drawn into that. Of course there is a difference in law between tax avoidance and tax evasion, although the shadow Chancellor managed to mess it up in the question he put today, but I have said as well that aggressive tax avoidance is something we also need to clamp down on and stop, and we have taken many actions to do so.

Kevin Brennan (Cardiff West) (Lab): The Chancellor said he was answering all the questions, but, as I heard him, he left out the second part of the question about the deal with the Swiss authorities, which was why was a deal signed which prevents the UK from actively obtaining similar information in the future. Will he tell our constituents why the Government decided to do that deal?

Mr Osborne: I can confirm that the agreement we have signed would not prevent us from receiving the so-called Lagarde list in exactly the way that we have

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been doing. Also, thanks to the Prime Minister’s leadership at the G8, we will now have an automatic exchange of information with Switzerland from 2017. That is one of the most important steps forward in tackling tax evasion. The answer is—




The shadow Chancellor is again not listening to the answers that he is getting across the Dispatch Box; the problem is that all his questions have been answered. The answer is that our agreement with Switzerland would not prevent us from receiving the Lagarde list.

Duncan Hames (Chippenham) (LD): Should we not design greater resilience into our tax base instead of engaging in endless games of cat and mouse with firms of tax advisers?

Mr Osborne: The hon. Gentleman asks a good question. There are two approaches. The first involves introducing into our domestic law things like the general anti-abuse rule, which is more of a catch-all and tries to anticipate changes by accountancy firms and others who devise aggressive avoidance schemes. The second approach, which is not to be underestimated, involves the major international agreement on the automatic exchange of people’s tax information between jurisdictions such as Switzerland and the United Kingdom. That agreement has happened only because the Prime Minister put it at the top of the G8 agenda; no previous leader of the G8 had done so. That is why we will have the automatic exchange of information, which will be a revolution in tax transparency.

Nia Griffith (Llanelli) (Lab): What explanation can the Chancellor give in response to comments by the former tax inspector Richard Brooks that the Treasury and HMRC

“knew that there was a mass of evidence of tax evasion at the heart of HSBC”

in 2011, but that the Government

“simply washed their hands of it”?

Mr Osborne: As I have explained, HMRC received in April 2010 the disc that had all the information on individual bank accounts. It then set about investigating all those individuals and bringing those prosecutions. We have known—[Interruption.] The shadow Chief Secretary to the Treasury says that we have known this for five years. We have known for five years that there was egregious tax evasion 10 years ago under the Labour Government. We have put the resources into pursuing that, collecting the money and passing the international agreements to ensure that it never happens again in our country.

Alec Shelbrooke (Elmet and Rothwell) (Con): Will my right hon. Friend clarify what he believes to be the difference between tax avoidance and tax efficiency?

Mr Osborne: As I said earlier, tax evasion is illegal. Aggressive tax avoidance is something that we are taking enormous steps to prevent. We have passed laws and introduced the general anti-abuse rule to ensure that we are collecting a fair amount of taxation from our population.

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Michael Connarty (Linlithgow and East Falkirk) (Lab): The Chancellor has to realise that this will not wash with the general public and the tax-paying businesses in my constituency and elsewhere, or with the companies that paid their taxes under the arrangement in Switzerland and elsewhere when they transferred their money. The reality is that people want a law under which people will not only have money taken off them but go to jail. If he is not going to introduce such a law, he should step aside and let another Government do it for him.

Mr Osborne: These abuses happened when there was a Labour Government in office. That Government, and the former Chancellor, set in place the selective prosecution policy. We have increased the resources and, as a result, the number of prosecutions has gone up fivefold. There is still one particular barrier, however, to the potential prosecution of HSBC Swiss if it is found to have committed a crime. That barrier is the agreement signed by the last Government with the French Government, and we are currently in negotiations with the French Government to unravel that terrible agreement. Then, our independent prosecuting authorities will see whether there are any cases to bring.

Richard Graham (Gloucester) (Con): It has recently emerged that the Gloucestershire-based business Ecotricity lent its founder £4 million on seriously tax-advantageous terms. Does my right hon. Friend agree that there should be an investigation into whether the transactions between Ecotricity and Dale Vince represent aggressive tax avoidance? Does he also agree that it is possible that Labour has not carried out appropriate due diligence on what might otherwise look like a naked attempt at a thank-you for the £37 million of taxpayer subsidies given to Ecotricity’s onshore wind farm business?

Mr Osborne: I am not going to discuss an individual’s tax affairs, but I would say this: the hypocrisy of the Labour party on this issue is simply breathtaking. Labour Members complain about Conservative party donors and then we hear all these revelations about Labour party donors; they complain about individual accountancy firms and then it turns out that Labour collects hundreds of thousands of pounds of donations from those accountancy firms; and they complain about the alleged tax evasion at HSBC Swiss and every single one of those offences happened when Labour was in government. It is time Labour Members got up and apologised.

Clive Efford (Eltham) (Lab): No one on the Labour Benches is complaining that the Chancellor met people from HSBC 56 times—we are not surprised by that. The question is: was evasion or tax avoidance discussed at those meetings and what was the outcome of those discussions? [Interruption.]

Mr Osborne: I have already answered that question. [Interruption.] I have; I said it is not surprising that Ministers meet one of the largest companies in this country, which employs close to 50,000 people in Britain and, as I understand it, a quarter of a million people around the world. As I also said earlier, I am happy to write about any of the content of those meetings, which were not just with me, but across the government.

Several hon. Members rose

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Mr Speaker: Order. Twenty Back Benchers have contributed to this exchange. As the House knows, my normal practice is to try to facilitate everybody, on both sides of the House, who wants to take part, but I should advise the House that we are time constrained today. We now have a very important statement by the Prime Minister, on which there will doubtless be substantial questioning, and then important matters in the Serious Crime Bill, in which a lot of people are interested and for which, frankly, there is not adequate time. The inadequacy of the time is down to the business managers. It is not a matter for me, but I am doing my best to cope with the situation in the interests of Back-Bench Members.

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European Council

4.12 pm

The Prime Minister (Mr David Cameron): With permission, Mr Speaker, I would like to make a statement on the most recent European Council, which covered Ukraine, the eurozone, terrorism and extremism.

On extremism, let me first address the case of the three British schoolgirls from east London leaving their families and attempting to travel to Syria. All of us have been horrified by the way that British teenagers appear to have been radicalised and duped by this poisonous ideology of Islamist extremism while at home on the internet in their bedrooms. They appear to have been induced to join a terrorist group that carries out the most hideous violence, and believes that girls should be married at nine and that women should not leave the home. Their families are, understandably, heartbroken and we must do all we can to help.

We should be clear that this is not just an issue for our police and border controls. Everyone has a role to play in preventing our young people from being radicalised, whether that is schools, colleges, universities, families, religious leaders or local communities. That is why we have included a duty on all public bodies to prevent people being radicalised as part of our Counter-Terrorism and Security Act 2015. But of course stopping people travelling to join ISIL is vital. When people are known risks, whatever their age, they go on our border warnings index, and we can intervene to prevent travel and seize their passports. But what this incident has highlighted is the concerning situation where unaccompanied teenagers such as these, who are not a known risk, can board a flight to Turkey without necessarily being asked any questions by the airline. We need new arrangements with airlines to ensure that these at-risk children are properly identified and questioned, and the Home Secretary and Transport Secretary will be working with the airlines to bring this about. Whenever there are concerns, police at the border should be alerted so that they can use the new temporary passport seizure powers to stop people travelling.

Secondly, given reports that one of the girls was following as many as 70 extremists online, this case underlines the importance—this was covered at the EU, too—of the work we are doing with social media companies. We have made progress with these companies, which are working with the police and Home Office to take down extremist content online, and at the EU Council we agreed to do this across the European Union. But we also need greater co-operation over contacts between extremists and those who could be radicalised. Internet companies have a social responsibility and we expect them to live up to it.

Thirdly, we need to continue to press for our police and security services to have access to passenger name records for as many routes as possible in and out of Britain and we need that to happen right across the European Union. That was the subject of the most substantial discussion at the European Council as those records provide not just passenger names, but details about how tickets were bought, what credit cards and bank accounts were used and with whom people were travelling. That is vital information that helps us identify in advance when people are travelling on high-risk

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routes, and often helps us identify terrorists. I raised this matter explicitly with my Turkish counterpart in December, and will continue to press to get this vital information wherever we need it.

Until recently, in spite of British efforts to get this issue prioritised, discussions on these passenger name records in the EU had been stuck. But following the terrible attacks in Paris and Copenhagen, it was agreed at the European Council that EU legislators should urgently adopt a “strong and effective” European passenger name records directive. That was probably the most important outcome of this Council. We have to fix this matter. It would be absurd to have the exchange of this information between individual EU member states and other countries outside the EU but not among ourselves. Most people travelling to Syria do not go there directly; they often take many different routes within the EU before getting even to Turkey, so we badly need this information.

The European Council also agreed that law enforcement and judicial authorities must step up their information sharing and operational co-operation and that there should be greater co-operation in the fight against illicit trafficking of firearms.

Turning to the situation in Ukraine, I met President Poroshenko before the start of the European Council meeting. He thanked Britain for the role we have played in ensuring a robust international response at every stage of Russia’s illegal aggression. We were the first to call for Russia to be expelled from the G8. We have been the strongest proponent of sanctions and a vital ally in keeping the EU and the US united. President Poroshenko welcomed the diplomatic efforts that had been made leading up to the Minsk agreements. He agreed that it was essential to judge success not by the words people say but by the actions they take on the ground.

Let us be clear about what has happened in the 10 days since the European Council met. Far from changing course, Russia’s totally unjustifiable and illegal actions in eastern Ukraine have reached a new level, with the separatists’ blatant breach of the ceasefire to take control of Debaltseve made possible only with the supply of Russian fighters and equipment on a very large scale. It is clear what now needs to happen: the ceasefire must be respected in full by both sides; heavy weapons need to be drawn back, as promised; and people must do the things to which they have signed up. All eyes should now be on Russia and the separatists. Russia must be in no doubt that any attempts by the separatists to expand their territory—whether towards Mariupol or elsewhere—will be met with further significant EU and US sanctions. Russia must change course now or the economic pain it endures will only increase.

In the coming days, I will be speaking to fellow G7 leaders to agree on how we can ensure that the Minsk agreements do indeed bring an end to this crisis. We are also looking urgently at what further support we can provide to bolster the Organisation for Security and Co-operation in Europe mission. The International Development Secretary is today committing an additional £15 million to support the humanitarian effort. However, at this moment the most important thing we can do is show Russia that the EU and America remain united

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in being ready to impose ever-increasing costs on its Government if it does not take this opportunity to change course decisively.

Turning to the eurozone, immediately before the European Council started, I met the new Greek Prime Minister, Alexis Tsipras. With him, and then again at the Council, I urged all those involved to end the stand off between Greece and the eurozone over its support programme. We welcome the provisional agreement subsequently reached last Friday evening. Britain is not in the eurozone, and we are not going to join the eurozone, but we do need it to work effectively. The problems facing Greece and the eurozone continue to pose a risk to the world economy and to our own recovery at home. That is why we have stepped up our eurozone contingency planning.

Before the Council, I held a meeting in Downing street with all the key senior officials to go through those plans and to ensure that vital work continues apace—this crisis is not over. Protecting our economy from these wider risks in the eurozone also means sticking to this Government’s long-term economic plan. It is more important than ever that we send a clear message to the world that Britain is not going to waver on dealing with its debts and that we retain the confidence of business—the creators of jobs and growth in our economy. We must continue to scrap red tape, cut taxes, build world-class skills and support exports to emerging markets. We must continue investing in infrastructure. Today’s figures show that in 2014 the UK received a record level of lending from the European Investment Bank to support the infrastructure projects in our national infrastructure plan. I hope that the shadow Chancellor will cheer when we win European money for British infrastructure—for the roads, the bridges and the railways we need.

Today we have the lowest inflation rate in our modern history and the highest number of people in work ever. We have the biggest January surplus in our public finances for seven years, putting us on track to meet our borrowing target for the year. To put it simply, we have a great opportunity to secure the prosperity of our nation for generations to come. We must not put that in jeopardy; we must seize that chance by sticking to this Government’s long-term economic plan. I commend the statement to the House.

4.20 pm

Edward Miliband (Doncaster North) (Lab): I thank the Prime Minister for his statement. Let me start by expressing my deepest sympathy to the families of those killed in Copenhagen in the dreadful terrorist attack that has happened since the House last met. We stand with all of Europe against all those who seek to terrorise and attack our most cherished values and who perpetrate intolerance, anti-Semitism and all other forms of prejudice.

The European Council said that there would be action to step up information sharing and co-operation with our European partners to tackle terrorism. The Prime Minister repeated that in his statement today, but will he tell us exactly how it will happen? He will know that Labour’s Members of the European Parliament supported the speedy resolution of the question of the European passenger name record, which allows information to be shared with European countries on airline passengers. Will he update us on the timetable for agreeing and implementing the measure?

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To counter the threat we face, we need co-operation abroad and vigilance at home. I echo the Prime Minister’s anxieties about the three schoolgirls travelling to the region. Does he agree that in addition to the measures that he has set out, we must also look again at the Prevent programme and strengthen it with a stronger role for local communities and more action directly to challenge the warped ideology and lies that are being spread, particularly through social media?

Turning to the fight against ISIL in the region and the Council conclusions on north Africa, we were all horrified by the barbaric murder in Libya of 21 Egyptian Coptic Christians by ISIL-linked extremists. These latest brutal acts of violence simply reinforce the importance of our efforts alongside our allies to counter the threat posed by ISIL. It was right to take action to protect civilians and prevent a massacre in Benghazi in 2011. Tragically, though, Libya now looks more and more like a failed state. Is the Prime Minister satisfied by the post-conflict planning and work that has been done? Does he agree that for stability to be restored in Libya, the UN-led process towards establishing a transitional Government must be followed? If so, what further steps does he believe the UK and its allies can take to support that approach?

On Greece, we welcome the deal agreed between the Greek Government and eurozone members last week and clearly the next few hours and days are crucial in ensuring its successful implementation. However, given that the four-month extension will run out, what does the Prime Minister think are the prospects of a long-term financing deal so that we do not face this crisis once again?

Finally, on Ukraine, we welcome the joint initiative by Chancellor Merkel and President Hollande for peace in Ukraine and support fully the conclusions of the Minsk agreement. As the United States has said, Russia continues to support ongoing separatist attacks in violation of the ceasefire. It is vital that the international community stands ready to increase the pressure by extending economic sanctions if President Putin refuses to change course. I welcome what the Prime Minister said on this, but will he reassure us that if Russia fails to meet its obligations under the terms of the Minsk agreement in the coming days there is an appetite in other EU countries for a united position on further sanctions against Russia? President Putin must understand that he risks further isolating Russia on the world stage if he continues to display belligerence and aggression in the face of international laws and norms. The world will act.

Anyone looking at the events of the past few months knows that we are living in incredibly challenging times for our security, freedom and values. In the face of those challenges, the right course for Britain is to be engaged in the world and to co-operate and lead in Europe. The attacks in Paris and Copenhagen aim to spread fear and divide our communities. They will fail. They will fail because people across Europe, including in Britain, are united in rejecting extremism. We have faced down these kind of threats before and will do so again.

The Prime Minister: I thank the right hon. Gentleman for his response to my statement and for his questions. Let me try to answer all of them. On the steps taken at the European Council that are material to fighting

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terrorism, I think that the movement on passenger name records is good news. The second thing agreed was about weapons. There is a particular issue with weapons that have been decommissioned and turned into model weapons, as some of those have been reconverted to dangerous weapons and used by criminals. We need more common standards across Europe to stop that happening.

I welcome what the right hon. Gentleman said about the three schoolgirls. We should do everything we can to prevent that from happening in future, as I set out in my statement, and we must do what we can for those girls and their families. On the Prevent programme—he makes this point regularly—I have to say that I think the criticism that it does not do enough to help individual communities is a little out of date. We commissioned a report by Lord Carlile, who is very respected in that area, and he recommended what we are now doing, which is splitting the programme into Prevent, which is about de-radicalisation, and the work done through the Department for Communities and Local Government, which is properly funded, to ensure that we encourage integration. All the evidence shows that the approach we are taking is better than what came before, and frankly I think that we should all get behind it.

The right hon. Gentleman asked some very good questions about the situation in Libya and about the appalling murder of the Coptic Christians on the beach in Libya. He asked whether I was satisfied with the post-conflict situation, and of course I am not. What NATO and our allies did, as he knows, was stop a murderous attempt by Gaddafi to kill his own people. We gave the Libyan people a chance to build a better future, and so far it is a chance that has not been taken. We need to do more to help them in that regard. The most important thing is to put together a Government of national unity, and Jonathan Powell—someone I am sure he is familiar with—is working extremely hard, with the full backing of the British Government, and with envoys from other countries, to try to put that national unity Government together.

The right hon. Gentleman asked about the prospects for a long-term funding deal for Greece. I think that is still some way away. There will have to be give and take on both sides. At the European Council I was struck not only by the gap between the parties, but by the very strong feelings in those European countries that have taken difficult decisions and how little flexibility they appear to want to give Greece, so that is something we need to watch very carefully.

On Ukraine, I very much welcome what the right hon. Gentleman said about sanctions. We need to demonstrate right across Europe and America that we are in this for the long haul and that if Russia continues to destabilise an independent, sovereign country, there will be further sanctions. He asked how much enthusiasm and appetite there is in other European countries. Frankly, that is where we will have to work very hard, and I think that all of us with contacts in different political parties and Governments in Europe can help with that process. It was interesting that even at the European Council there was some attempt to prevent the next round of sanctions from going ahead. Thankfully that was stopped and the sanctions have gone ahead, along with the naming of more individuals, but that is just a sign of how hard we will have to work to keep the consensus together.

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With regard to the right hon. Gentleman’s closing remarks about rejecting extremism and standing up for the values of freedom and democracy that we believe in, and believing that ultimately those values will triumph, I absolutely agree.

Several hon. Members rose

Mr Speaker: I remind the House that, in accordance with usual practice, Members who arrived after the Prime Minister started his statement should not expect to be called to ask a question. I want to accommodate as many Members as I can on the statement but am keen to move on to the next business at, or as close as possible to, 5 o’clock.

Sir William Cash (Stone) (Con): Does my right hon. Friend share my concern about the increasing assertiveness of Germany in the EU, as shown in the language used by Wolfgang Schaeuble regarding the Greeks, for example? Does he accept the assertion made by Mr Prodi on the “Today” programme last week that the Germans are the leaders in Europe? Does he accept that we must step up to the mark and show that we will stand up for the interests of not only the United Kingdom, but Europe as a whole, as we have in the past?

The Prime Minister: When it comes to issues about trade deals, single market issues and many foreign policy issues, Britain plays a key and leading role, as we have done over sanctions on Ukraine. On the question of how the Germans behave towards Greece, that is a matter for them. I know that if I were the German Chancellor and I had lent another country a lot of money, I would want to get it back. I think my hon. Friend and I agree that this is one of the fundamental challenges at the heart of the eurozone and is a permanent reminder of why we are better off outside it.

Keith Vaz (Leicester East) (Lab): Of course, Greece’s problems are of its own making. However, Greece provides a vital service to the rest of the EU because it polices the external borders of the EU. Every month 7,000 illegal migrants cross the border between Turkey and Greece, and if we do not support Greece, that becomes our problem in the future. On the issue of our borders, will the Prime Minister confirm that we will have 100% exit checks by the end of March?

The Prime Minister: On the second point first, I am confident that our border exit checks will be in place by the end of March. That will transform the situation that this Government inherited, where fewer than 40% of people were counted in and out. That will be totally transformed in the future. On what the Greeks, the Italians and others do to man the external frontiers of Europe, it is vital work and we should support them, as we do through Frontex and so on, but we need to make sure that every country lives up to its obligations when people arrive in that country. It is remarkable that when one looks at the percentage of asylum claims within Europe that are still being heard in Germany, France or Britain—not the first points of entry—compared to the numbers being heard in Italy, Greece and Spain, there is still a marked contrast.

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Sir Richard Ottaway (Croydon South) (Con): Russia is ignoring all the rules of the international community. The Russians are unreliable and cannot be trusted. Does my right hon. Friend feel that the diplomatic process has been exhausted? If the answer to that is yes, will he confirm that financial sanctions will be not only extended and deepened, but broadened to cover not just individuals, but the country as a whole?

The Prime Minister: I do not think one should ever say that the diplomatic process is exhausted, because it always makes sense to talk about these matters, but that has to be backed by consequences when diplomatic efforts do not work out. So yes, I agree that we need to see more sanctions if the Russian attitude continues. There is a strong case for bringing forward the renewal of the sanctions, which otherwise would happen later in the year. My right hon. Friend makes a broader point, which is that if anyone thinks that this is an aberration on the part of Russia and if only we understood a little more and listened a little bit harder it would all be fine, we can now see that what happened in Georgia and Transnistria and what is happening in Ukraine is part of a pattern, and the only language that Russia will understand is very tough sanctions and continued pressure from Europe and the US, making our economic weight felt.

Ms Gisela Stuart (Birmingham, Edgbaston) (Lab): Can the Prime Minister update the House on whether progress has been made to enable OSCE observers to have access to all parts of the eastern Ukraine? Without that, we will not get an accurate picture of what is happening on the ground.

The Prime Minister: The hon. Lady is right. Some progress has been made. As I announced in my statement, further resources will be given, but the OSCE has not been able to get to every part of Ukraine and every part of the line of control, so the reports that it is able to give us are partial, rather than complete. As part of the Minsk agreements it is important that it has full access.

Alistair Burt (North East Bedfordshire) (Con): Will my right hon. Friend commend the patient work done by ambassador Michael Aron and British diplomats in Libya, together with Bernadino Leon, the UN special representative, to try to make sure that Libya has the future that its people died for? Does he agree that the imminence and the extremism of the ISIL threat mean that the factions in Libya now have to unite as never before in order to form that national Government and be able to face off the threat that they face from the extremists?

The Prime Minister: My right hon. Friend is correct. What is needed in Libya is a political coming together of the different parties. We obviously have to exclude those that are engaged in terrorism or violence, but we should try to bring together the other parties into a national unity Government because otherwise the danger of fracture, a broken state and ungoverned space that we are seeing with the presence of ISIL will only get worse. So I commend the efforts of our ambassadors. We need to work at this extremely hard.

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Chris Bryant (Rhondda) (Lab): I agree with the Prime Minister’s robust position on Russia. That is why I am so mystified that he still refuses to introduce a Magnitsky Act to ban the people who were involved in the murder of Sergei Magnitsky, and the people who were engaged in the corruption that he unveiled, from coming to this country. The Prime Minister has written me a letter—five letters, in fact. The latest one says that he does not

“comment on individual cases, as groups of individuals.”

Yet he has just stood at the Dispatch Box and announced new sanctions against individuals from Russia, through the EU. Why cannot we do it for ourselves in this House by introducing a Magnitsky Act?

The Prime Minister: Because the hon. Gentleman has been so persistent, and because he has written me so many letters and I have written him so many letters, I have had another look at whether there is a better way of doing things. I think the truth is that what we do, if there is a group of people involved in an appalling crime like this, is put them our warnings index and stop them coming to our country. The advantage is that we can then be even more expansive. Of course we know who—[Interruption.] If the hon. Gentleman wants to ask a question, why does he not listen to the answer? I would have thought that a former man of the cloth had better manners than that; I am trying to answer his question. I am assured that we are actually able to be more expansive. There are people we ban from this country who are not on other countries’ Magnitsky lists. I will write the hon. Gentleman a sixth letter and in that way try to make him happy.

Mr John Redwood (Wokingham) (Con): As the euro area moves towards political transfer and banking union, is there a growing recognition by other EU member states that the United Kingdom will need a new relationship based on trade and friendship because we cannot possibly be part of that political union?

The Prime Minister: There is a greater understanding that as the euro deepens with the banking union and other elements—I would argue that countries will one day need greater fiscal union and burden sharing—there is an understanding, which is discussed around the EU table, that the countries that are not in the EU are going to need some guarantees of their own, because otherwise, for instance, we will have a situation where a qualified majority of EU eurozone countries are able to dictate to the rest of Europe what it can and cannot do, and that would clearly be unacceptable. There is a growing recognition that change is required. That is why it is right, after the election, to go into a proper renegotiation and then hold an in-out referendum.

Douglas Carswell (Clacton) (UKIP): The Prime Minister spoke of increased contingency planning to deal with the euro crisis. Is it still his view that the euro must be held together come what may, or does he have any sympathy with the argument that Greece might be better off out?

The Prime Minister: My view has been consistent—it is that I do not think that Britain should join the euro, and I have been prepared to say “ever” on that basis.

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I put that in my election address back in 1997. It is not my responsibility what the euro does. My argument is very simple: it is in Britain’s interest that we have stability and growth on the continent. That is our argument; it is for the eurozone countries themselves to work out what are the right answers for them. I am very clear, and I have said this to a number of other European countries, that I would not be in the eurozone in the first place.

Rory Stewart (Penrith and The Border) (Con): My right hon. Friend the Prime Minister has spoken very eloquently about the arc of horror spreading from Libya through Ukraine, down to Yemen and South Sudan, and out to Iraq. May I encourage him to focus on the fact that in the end we do not have the solutions, because neither air strikes nor sanctions nor standard training packages are going to deal with these problems? We need to invest much more heavily in the people on the ground who have a deep cultural understanding of these places to begin to provide the options on which we can work, and so we must invest in defence engagement.

The Prime Minister: I would take the argument even further back and say that we are facing not simply a set of countries with broken institutions and extremism, but an extremist Islamist movement that is occurring, obviously, in Syria and Iraq most strongly, but also in Libya, in Mali, and elsewhere. The fact that young girls can be radicalised on the internet in their bedrooms here in Britain and want to travel across the world to join it demonstrates the scale of the problem we have. My hon. Friend is right that this is not simply about investing in defence capacity and the ability to take part in military action; it is about everything from de-radicalisation at home all the way through to the diplomatic and defence engagement that he speaks about.

Andrew Gwynne (Denton and Reddish) (Lab): Last week, the Defence Secretary said that he was worried about President Putin’s pressure on the Baltic states, which are in the EU and NATO, and the consequential testing of NATO that that is bringing about. Will the Prime Minister update the House on whether the NATO rapid reaction force is having the desired effect, and explain whether he thinks that Britain could do more to contribute?

The Prime Minister: The Defence Secretary is absolutely right to refer to the unease and insecurity that the Baltic states feel when faced with such Russian behaviour. When I talk to Prime Ministers from the Baltic states, they make that point very vigorously and talk about some of the trade embargos that Russia puts in place, but they are also incredibly grateful for the support that Britain gives, whether through the readiness action plan we helped draw up in Wales, the 4,000 UK troops who are taking part in exercises in eastern Europe this year or the air policing missions that our Typhoons fly over the skies of the Baltic states. Those things really matter, but we should show real understanding of the insecurity that the Baltic states feel.

Mrs Cheryl Gillan (Chesham and Amersham) (Con): A lot has happened since the European Council and people in Ukraine are concerned that there is a real possibility that the unrest may spread beyond the territory

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currently held by the pro-Russian separatists. I welcome the stand taken by the Prime Minister, together with other European leaders, on sanctions, but could he give a realistic estimate of how rapidly he thinks future sanctions could be introduced, and when does he think Russia will finally get the message?

The Prime Minister: I think the best way to answer my right hon. Friend’s question is to say that that will, of course, depend on what happens next in terms of the Russian-backed separatists and Russia itself. What happened in Debaltseve—after the Minsk agreement was signed—should teach a lesson to anybody who thinks that this is going to be easily solved and that Russia will walk away. Frankly, if we see more behaviour like that, I think the argument at the European Council should be about how quickly can we renew the sanctions that we renewed later in the year anyway, and how quickly can we add to them. Certainly, that is the argument that Britain will make, and many others will make it with us. At the end of the day, as I have said from this Dispatch Box many times, Europe and America have to make the weight of our economic relationship pay against Russia. In the end, Russia needs us more than we need Russia. We need to make that relationship pay and then we can get it to change its approach.

Kelvin Hopkins (Luton North) (Lab): It is reported that the Government have been privately discussing the implications of a Greek exit from the euro. Greek exit will happen sooner or later, and it is inevitable, in my view, that other countries will follow. Has the Prime Minister discussed with his European counterparts the implications of such a wider collapse of the euro and, if so, what has emerged from those discussions?

The Prime Minister: I will be very frank about the discussions I have been having. I thought it was important to chair some discussions here in the UK about what the consequences of Greek exit from the eurozone would be, because there is a chance that it could happen. If it does happen, we would need to make sure that our banks were secure—which they are—that our businesses understood what the consequences of Greek exit would be and that we could support tourists, dual nationals and British people who live in Greece. Those are all important questions that we should consider. Some criticised me for holding those meetings, but, to be frank, I would argue that any responsible Prime Minister in any responsible European country should do exactly that.

There are mixed opinions about the question whether a Greek exit from the eurozone would be followed by other countries exiting, because the spread of bond yields between Spanish, Portuguese and other bonds and Greek bonds has been very different in recent months compared with 2011. I am clear about what my responsibility is: to encourage the eurozone countries to come to agreements that can get their economies to grow and the continent to stabilise, and, back at home, to be very clear that we are ready for any eventuality, including a Greek exit from the eurozone.