Category: Press Releases

Having a referendum on the EU treaty is central to restoring trust in politics, insisted John Redwood last night in the Commons. Being the first to intervene in the debate on the Lisbon Treaty, Mr Redwood demanded of the Foreign Secretary, David Miliband, that he give the country a say on such a reckless surrendering of powers, just as his party had promised to do in the last election.

John Redwoods four interventions and speech, taken from Hansard, follow.

<strong>Mr. Redwood: </strong>Why will the Secretary of State not give us a referendum, given that his party promised one and that all the powers that we worried would be transferred under the constitution are now being needlessly and recklessly given away in this document?
<strong>
David Miliband: </strong>For the same reason that the right hon. Gentleman voted against a referendum on the Maastricht treaty in 1992??namely, that we are a parliamentary democracy and this is an amending treaty.

<strong>Mr. Redwood: </strong>Does my right hon. Friend further remember that during the 2005 election, when some of us said that we needed to debate this huge transfer of powers because it was so important, the Labour party said that there was no need for that debate in the election, because there would be a referendum later? That is why this is such a cheat.

<strong>Mr. Hague: </strong>My right hon. Friend makes a powerful point, because the case for the referendum rests above all on the need for the House and the Government to honour commitments solemnly given. How many times have each of us in the House toured schools and colleges saying to young people that they should take an interest in politics, that their vote makes a difference, and that what is said at election time really counts? What are we to say to them in future??that the fact that they elected an entire House of Commons committed to a referendum was of no account, that the Government regarded that commitment as a technicality to be escaped from rather than a promise to be kept, and that the promises made at election time do not really matter at all?

<strong>Mr. Redwood:</strong> Will the hon. Gentleman tell us whether his party is going to rat on its promise of a referendum by abstaining or by voting against a referendum? The people should know, and I hope that they turf out all the Liberal MPs who have misled them on this issue.

<strong>Mr. Davey:</strong> We are proposing a referendum??on Britains membership of the European Union. I will deal with the question of the referendum in detail towards the end of my remarks, when I will argue that the Conservatives position is the one that is less in keeping with their manifesto promise.

The case made by the right hon. Member for Richmond, Yorks (Mr. Hague)??that the treaty is unnecessary and somehow threatens the sovereignty of the United Kingdom??is frankly absurd. An EU of 27 member states, and growing, cannot operate on the same basis as one that only just served the needs of an EU of 15 states, so arguments for trimming the bureaucracy and making the institutions less cumbersome should be self-evident.

<strong>Mr. Redwood: </strong>Given that the devolved Governments of Northern Ireland and of Scotland wish to have this referendum, cannot they use their powers and devolved money to hold referendums at least in those two parts of the United Kingdom in order to show up the Government and give England a real cause for anger?

<strong>Rev. Ian Paisley: </strong>I wish I could answer yes to that, but I cannot because there are some money limitations and we do not have the authority so far??but we are discussing that matter at the moment. If Northern Ireland wants to express a view on this, I feel that it should be entitled to do so within this United Kingdom. Even if it is only a consultative thing, it does not matter, as the people will be given the opportunity to express their views. I think that Scotland may like to do the same, but I would not dare to speak for Scotland, even though my mother was a Scot from Morningside in Edinburgh.

<strong>Mr. John Redwood (Wokingham) (Con):</strong> If the motion is passed, it will be a bad day for trust in British politics and for those of us who want self-government and democracy in our country strengthened. Ministers insult the intelligence of not only the British people but Members of Parliament. It is obvious to anyone who reads the document that it is largely the old constitution. It is obvious to anyone outside the House that a Member who was elected in 2005 on a promise to hold a referendum on the proposals should vote tonight to do that.

I find it heroic to the point of being bizarre that many Labour and Liberal Democrat Members of Parliament, who were elected in 2005 on small majorities, want to be with the Government in tearing up their promise to the electors to grant them a referendum. It is especially bizarre given that the Conservative party is so much higher in the polls than it was in 2005 and their parties are lower. It is bizarre, given that local content in elections is increasing rather than decreasing. It is odd, given that most Members of Parliament, when interviewed separately, agree with me that they need to do everything possible to build trust and confidence with electors because their party is so unpopular, that many should wish tonight to take action that implies that they intend to snub their electors and make it more likely that the 1,000, 2,000 or 3,000 electors whose support they need to retain will go another way in an election.

Ministers have forgotten, if they ever knew, that only one in five of all voters voted for the Government in 2005. They have forgotten that the Labour party polled even fewer votes in England than the Conservative party did in 2005, a year in which the Conservative party polled very badly. Ministers have forgotten that twice as many people decided not to vote at all in the 2005 general election as voted for the Government, because many of them had no trust in politics already. So how on earth can Ministers argue the indefensible tonight and tell their Back Benchers that it is for the good of their cause that they must snub the electors, tear up their promise and destroy what little trust remains in the Government by saying that there must be no referendum?

Looking at the situation from a party political point of view, my party welcomes the Governments position, because it makes it more likely that we will win those seats. However, as a democrat and as someone who believes that trust in politics desperately needs to be restored, I am unhappy to see both the Lib Dems and Labour in such a strange mode.

As someone who believes that we have already lost too many powers to govern ourselves in a democratic way through Parliament and this Chamber, I am worried to see 60 vetoes on major policy areas being tossed away by the draft proposal, and to see Ministers now accepting that foreign policy and criminal justice will become part of the EU proper in a way that, under the European Court of Justice, will gradually reduce and limit powers. I am also worried to see Ministers pretending that they have protected their so-called red lines, when they have retreated at every conceivable turn.

There was an easy way of preserving our right to self-government in crucial areas such as tax and benefits, foreign affairs and criminal justice, and that was to keep the veto. It did not require great powers of oratory or persuasion, or the building of great coalitions. All that Ministers had to do on our behalf was to veto giving away the veto. It was terribly simple??they had the power, and they willingly and negligently decided to give it away. As a result, if the treaty goes through, our country cannot be sure that we will remain in charge of our own affairs even in those vital areas of foreign policy, criminal justice, and taxation and benefits or that we will be able do what the electorate wish us to do, by keeping our election promises.

The surrender of those powers will be another way in which trust in our politics will be undermined. Already people do not trust politicians in the House, because in so many cases we are unable to do what we say we will, as European laws and regulations prevent us. That will now happen on a much bigger waterfront if those powers are truly surrendered and the Bill goes through.

<strong>Daniel Kawczynski:</strong> Will my right hon. Friend give way?

<strong>Mr. Redwood:</strong> I will not, because other hon. Members wish to speak.

I urge the House tonight not to surrender those powers but to strike a blow to restore trust in politics, and to show the public that we are prepared to stand up to an over-mighty Executive, who do damage to us but give in at every conceivable opportunity in Europe. That is what is destroying politics. We need to start restoring trust.

Not ??a great triumph, but a ??disgraceful sell-out is how John Redwood last night described the Governments forfeiting of the ??10.5billion rebate. Speaking in the Commons debate on the EC Finance Bill, Mr Redwood questioned the Government-generated myths surrounding its EU budget negotiations, explaining how Blair ??completely mishandled them. Mr Redwood also debunked the myth that the budget proposals presented last night would benefit Eastern European member states, since we know that EU spending in those countries had been agreed without sacrificing the UK rebate, and some of it like the rest of EU spending would be wasteful, inefficient, or even vulnerable to fraud. For a Government now unable to afford an agreed pay-rise for the police, and which is borrowing and taxing at record levels, Mr Redwood wondered how it was able to part with such a significant amount of money, let alone dress it up as a success story.

<strong>The speech in full, taken from Hansard, follows. </strong>

<strong>Mr. Redwood:</strong> I shall keep my remarks brief, because once again the Government are not allowing us proper time to deal with the matters before us??clause 1 and the very important new clause 1, which we hope will be moved shortly. However, I cannot let the Chief Secretary get away with the disgraceful arguments that he has produced this evening.

The Chief Secretary first suggested that Mrs. Thatcher used to negotiate and reach compromises, and that that was entirely comparable to the negotiation, sell-out and giveaway that he has again announced to the House. Let us compare the two negotiations. Mrs. Thatcher went to a Community in which the other 11 countries had no interest in letting us keep more of our money. Any one of them could have vetoed her proposal that we should have a rebate. She managed to talk them round from 11-one down to 12-nil in favour, because she had to win by a unanimous vote.

All that the current Government had to do when they went to Brussels was say, ??We have a veto and we are not going to give away what Margaret Thatcher so wisely and brilliantly won for the United Kingdom,?? but they could not even do that. They gave in under pressure and said, ??Oh deary me, no, it would be quite wrong of us to use our veto. Wed love to shell out ??10.5 billion over the first period and much more over subsequent periods, because we now realise that we shouldnt use the veto and were here to give in.?? The Opposition are delighted that the Chief Secretary gave way so much in this debate, but we are unhappy that Mr. Blair and others gave way so much when they completed mishandled the negotiations.

Labour colleagues of the Chief Secretary are present who believe that the sterling equivalent of that ??10.5 billion would be much better spent on public services, which they greatly revere. There are also those on the Conservative Benches, such as me, who believe that, in the light of all the money wasted in public services, that ??10.5 billion should be given back to British taxpayers, who have paid all too dearly for the Governments inefficiency and their bad negotiations in Europe.

The Chief Secretary tells us that we should regard the deal as a negotiating triumph, because although the Government gave away the veto that had been so brilliantly negotiated by a predecessor Prime Minister, they achieved a smaller rate of increase in the budget than the Chief Secretary apparently thinks we achieved 13 years ago. It may be that the Government achieved a smaller rate of increase, but what matters is that the budget increased so much in the early Labour years, after the end of the Tory years, that any increase would be unacceptable. The Chief Secretary cannot get away from the fact that the budget that he is recommending is massively higher than that which was recommended by Mr. Major. For that reason alone I cannot accept it, because it is too big a burden on British taxpayers.

We then heard the myth, which the Government put about, that the proposal is essential for those countries in eastern Europe, which would otherwise be deprived. As my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) pointed out, however, enlargement was agreed without the new variant. If we had dug in and used our veto, enlargement would still have happened, but we would not have had to make a disproportionately large contribution to that increased spending in the territories entering through enlargement. Some of the other rich countries of western Europe should also have continued to make a bigger contribution relative to ours, for the reasons that my hon. Friends have already set out.

<strong>Mr. John Hayes (South Holland and The Deepings) (Con): </strong>I hope that right hon. Friend will not ignore the Chief Secretarys other two specious arguments. The first was that the deal could have been worse if the Commission had had its way??a suggestion that represents the last resort of the scoundrel. The other was that any objection to what has been negotiated is somehow improper and that the House should not scrutinise the deal that was done. That is the Vichy argument, which has been used by malevolent or misguided Ministers for years in selling this country short.

<strong>Mr. Redwood: </strong>I am grateful for those extra points. I should like to make some additional ones, to finalise my critique of the Chief Secretarys position.

The Chief Secretary implied that eastern European countries would be short-changed. That is not true. He also assumed that all the EU spending in those countries will be worth while, but as we know, much of it has been shown to be inefficient, wasteful or even fraudulent by the accounts or by the auditors assessment of them. I fear that there will be more such instances in future years. I am sure that the Chief Secretary will be unable to say now that there will be no more such practices, so we may find ourselves financing more unsatisfactory, unnecessary, inefficient or even fraudulent programmes, which my electors are decreasingly in favour of doing.

Finally, the Chief Secretary said that we must understand that we will get more trade for British companies out of enlargement and the greater prosperity of eastern European countries. Of course we will, but that is not contingent on giving away our veto and our budget position. Indeed, I would argue that the main reasons for getting more trade from those countries will apply to non-EU members as well as to EU members. Those reasons are the free trade in the world as a whole, through the general agreement on tariffs and trade, and the fact that some of those eastern European states have wisely decided to set much lower tax rates and create a much more favourable climate for enterprise than this Government are creating for the British companies that have to compete with them.

The Chief Secretary should not suggest that what was negotiated is a great triumph. It was a disgraceful sell-out, and in contrast to the excellent negotiations that my party carried forward when we first won the rebate, it marked an extremely sad day for Britain. Voters of all kinds will know that that goes along with the money wasted on Northern Rock, ID cards and all the other things, as a symbol of what is wrong with this Government.

<strong>Redwood calls for fundamental change in Governments approach to railway management</strong>

Ministers ought to demand much more from Network Rail in return for the ?3bn-odd Government subsidy, urged John Redwood in the Common yesterday. Residual monopoly in the structure has produced poor service of the kind experienced by commuters over the New Year. Ministers should lay down the level of performance they expect in return for the money, and Mr Redwood suggested that they prioritise the provision of more trains at peak times. The full speech, taken from Hansard, follows.

<strong>Mr. John Redwood (Wokingham) (Con): </strong>We saw a sorry performance from the Government Front Bencher this afternoon. There was a complete lack of analysis of what really went wrong, and a complete absence of remedies to make sure that, in future, money is not wasted and there are not so many delays. There was no real understanding of the structure that the Government created in their new Network Rail company, and there was no real, sincere apology to all the people whose travel arrangements, local stations and rail tracks were disrupted over the Christmas and new year period.

The Government are backed by Labour Members who seem to believe in a couple of myths??in ideological baggage left over from the old socialist period. One of them is the proposition that a nationalised monopoly railway, taking us back to the golden age of British Rail, would be a lot better, and the other is the proposition that fragmentation was the cause of the recent delays and problems. I shall consider those two myths before providing a bit of analysis on what is wrong with Network Rail, how it could be put right in the short term, and how it could be made a lot better through fundamental structural change in the medium or longer term.

Let us deal first with the myths. We are invited to believe that the nationalised monopoly between 1947 and 1993 was a paragon of virtue, which never delayed people, produced extremely good services, and delivered a much better railway for less money. Those of us who have read the history books, and some of those who are old enough to have lived through that period, will know that the reality was very different. Between 1947 and 1993, the nationalised monopoly was in continuous decline. I am not making a party political point. It did not matter whether there were a Labour, Conservative or Labour-Liberal coalition Government; the system did not work.

Over that long period, there was a continuous trend: a fall in the proportion of our freight carried by rail and of passenger journeys by rail. People voted with their feet and their pocket books for the flexibility of road travel. Hauliers came into the market and took the freight business. Indeed, the nationalised monopoly railway stopped competing for most freight business, because it decided that it would not do single-wagon marshalling at all. It decided that it was interested in rail freight business only if it involved complete train loads, and if there were a reasonable number of trains a day, or a week. There were only a few people in the country with enough business to get an offer from the railways to run rail freight.

It was not surprising, therefore, that there was a big decline in rail freight and passenger movements. The decline was accelerated by the gross financial mismanagement that characterised the nationalised railway under all Governments over a long period. During the period in question, huge subsidies had to be put into the railway. Despite those large subsidies, fares rose in real terms year after year, which put people off using the railways. Those on low income were deprived of any realistic chance of access to the railway, because rail travel became prohibitively expensive. It was a double whammy: the system was bad for the taxpayer, who had to subsidise it, and bad for the fare payer, because fares kept rising in real terms.

From time to time, under Treasury pressure, the railway was forced to cut services and to make closures. Sometimes there were a lot of closures all in one go, as in the case of the notorious Beeching cuts. More often, there was a dribble of closures, year after year, as and when Governments thought that they could get away with it. The nationalised monopoly always presented Governments of all persuasions with exactly the same cruel choices: ??Pay up, or we close lines??; ??Pay up, or we close services??; and ??Pay up, Minister, or we will pick on your line for particularly bad treatment.?? That was the brutal political reality that characterised the rows between the nationalised monopoly and Labour or Conservative Governments.

I find it surprising that after all these years of allegedly new Labour, the Labour party has not moved on in its thinking and realised that that was not a particularly good model. It was not even a good model for the people who worked for the railway. The nationalised monopoly kept sacking people, because as it retreated, made cuts and reduced services, it had to take cost out, although the costs still grew unrealistically. An awful lot of people were therefore made redundant into the bargain.

I think that Ministers understand those points, because we are 11 years into a Labour Government and there is absolutely no sign that they wish to recreate a nationalised monopoly. One cheer for that. We have some common ground, and some agreement. I do not expect any Minister to leap to his or her feet this evening and suggest that the record of the nationalised monopoly under Labour Governments was particularly fine. Ministers know that what I say about fares, service quality, delays, reliability and redundancies is all too true of the nationalised railway monopoly. Those on the Front Bench have at last realised that there needs to be a different model, and that a nationalised monopoly is not run by the Government but runs the Government, bosses the Government around and does not deliver for all the money that is put in.

However, many Labour Back Benchers seem to think, fondly, that there was a golden age of nationalised monopoly and, fondly, are misled into believing that their Government might one day recreate that nationalised monopoly. I should like to assure Labour Members that I do not believe that there is any chance of the present Labour Government recreating the nationalised monopoly of their dreams. The Government could not afford to nationalise the train companies, and they know that it would be a disaster trying to run the railways as they were in the 1970s and 1940s under Labour Governments and in the 1960s and 1980s under Conservative Governments. It was the failure of the nationalised monopoly that drove the Conservative Government into fundamental change, which ushered in a new era for the railways.

As someone who was involved in the decision for railway privatisation but who did not recommend the scheme that was chosen, I have no need to defend that scheme. The decision to introduce some element of private capital and some element of competitive choice and challenge did enough to transform the railways. We need turn no further than to the right hon. Member for Kingston upon Hull, East (Mr. Prescott), who has praised the way in which the privatised railway post-1993 moved from retreat and decline to an era of growth and development.

Ministers regularly use figures for the 1993 to 2007 period and, of course, they like using figures for the 1997 to 2007 period, when they can claim more of the credit. Whichever period one chooses, it presents a very different picture from the previous 40 years. It is a picture of growth in passenger travel and in freight transportation. Many of the present problems of the railways are the kind that one wants in a business. They are the problems of too much pressure of demand??more people wishing to use the railways and more people frustrated that better use cannot be made of those fabulous routes across the country and into the centres of our leading towns and cities, which are at present in the monopoly custodianship of Network Rail, the subject of the debate this evening. We seem to have some agreement that privatisation kicked off something that was rather good.

<strong>The Parliamentary Under-Secretary of State for Transport (Mr. Tom Harris): </strong>In spite of myself, I am enjoying the right hon. Gentlemans contribution. It is good to know that we do not have to wait for the publication of his memoirs to see that he disagreed with his Cabinet colleagues on the nature of the privatisation of the railways in 1993. Before he goes on to the consequences of that privatisation, would he mind sharing with the House his specific reservation with regard to the financial structure of Railtrack, the rolling stock companies and the passenger franchising system?

<strong>Mr. Redwood: </strong>My problem with the structure that we chose and with the Governments structure is that I think we left too big a monopoly element in the track. The evil is monopoly??it is not public ownership so much as monopoly. As all the economic textbooks rightly tell us, monopoly does in the customer. It always charges too much and delivers too little. It always looks after the interests of the owners and the senior managers. It does not look after the interests of the customers or even of the more junior employees, who do most of the work. So it is a nasty system, and even public ownership does not tame monopoly sufficiently to get rid its evil consequences.

At the time, I favoured splitting the railway into regional rail companies, which would allow competitive challenge over time, because they would have to re-bid for franchises; so it was not a perpetual monopoly for them. At the same time, it would allow others to come in and build new track or suggest new services, so that there was some element of contestability where the tracks could, in certain circumstances, be used as a common carrier and would not necessarily remain the monopoly preserve of the regional company. The basic structure was to go back to regional companies.

Although I do not think it necessary, reconnecting track and train can make sense. I was a strong opponent of the London underground system developed by the Government, because I thought that splitting track and train in confined tunnels was particularly foolish. I proposed the pro-competitive solution of splitting things into competing companies that owned track and train entire with their own lines; I think that that would still be a better answer, given that the system has gone bankrupt in one major company and is obviously struggling.

<strong>Mr. Harris:</strong> I am grateful to the right hon. Gentleman for giving way once more. Would he like to share his thoughts on the fact that European legislation prevents the ownership of trains and tracks together?

<strong>Mr. Redwood: </strong>I am not an expert lawyer on that issue; nor am I any kind of lawyer. However, my understanding and reading of the situation is that European legislation does not prevent that. That legislation requires more competitive challenge than a nationalised monopoly would allow, so I find myself in the curious position of supporting the thrust of those European regulations and that legislation, because competitive challenge is a good thing.

I turn to the second myth that I want to dismiss before going into the future, where the Minister wants to tempt me. That is the myth, which we have heard throughout this debate, that the particular problems of the constituents of my hon. Friend the Member for Rugby and Kenilworth (Jeremy Wright) and others were caused by fragmentation. That is complete nonsense. If Network Rail had been British Rail recreated, owning the trains that could not run, that would have made absolutely no difference to its mistake over the engineering works at Rugby and Liverpool Street. The same people would still have made the same miscalculation of failing to deliver enough engineers to sort out the complicated project within the deadline.

I am afraid that Labour Members who think that fragmentation caused the problems during the Christmas and new year are simply wrong. The problems were caused by Network Rails gross management miscalculation, and would have happened whether there had been fragmentation or not.

<strong>Jeremy Wright: </strong>I agree entirely with my right hon. Friend. Does he accept that if Network Rails management themselves say that there has been a management failure, there is no need for the Government to look for any other explanation?

<strong>Mr. Redwood: </strong>I agree, and I hope that the Government will not waste money on that. If Network Rail were a business reporting to me, the problem would be so obvious and would be sorted out with a timely and lively exchange with the senior management. I shall come to that when I discuss what power the Government have over that particular creature.

First, however, I should like to dismiss the fragmentation argument. If we compare the rail industry, which has all the problems that we have described??not growing quickly enough, fares too high, inadequate service for many people??with the aviation industry, a successful public transport industry in this country, the contrast is telling. The aviation industry is completely fragmented; on the Labour analysis, it should not work at all??it should be delaying passengers, putting fares up and doing all the bad things that the Labour Members I mentioned seem to expect.

The aviation industry is totally fragmented: there are competing public and private owners of airports, there is a privatised company dealing with air traffic services and a range of competing companies deals with luggage, other services and the retail offer at airports. Furthermore, competing companies own the planes and fly people around.

Aviation is more complicated to control. If there is a mess on the railways, all the signals can be put on red and problems can be sorted out. However, if a mess is made at an airport, a load of planes will stack up without much fuel and things cannot suddenly stop for a couple of hours so that problems can be sorted out. There would be a real disaster on our hands??the aviation system is much more complicated, working in three dimensions with limited runway space for landings. An awful lot of people would be at risk as they flew above the airport without much fuel in their planes.

The system shows that if we trust competition??what the Labour Members I mentioned would call ??fragmentation????we get much lower fares, much faster growth and much better passenger satisfaction. There is a much better range of offerings at a typical airport than at a typical train station. Airports usually offer a more pleasurable experience, except when the Government intervene on the security side. Aviation attracts a lot more people and delivers far more.

The Governments problem is that aviation is a runaway success. They do not like that, as they do not think it green enough and it uses a competitive challenge model. Railways, which they think a greener way to travel, are not a sufficient success. Whether railways are greener is arguable; that depends on how many people are travelling and how old the train is, although they could well be greener in some cases. The Government have problems with the rail industry because a lot of monopoly is still left in it.

Let me turn to the main focus of the debate, which is Network Rail. Ministers would lead us to believe that this business is an independent private sector company??that it just happens to have a different structure from all other private sector companies, that it just happens to be set up by the Government, that it just so happens that the Government own all the shares, and that it just so happens that the Government give it the bulk of its revenue. Ministers must be living in cloud cuckoo land. It is a Government creature??they can do anything they like with it. They can come to this House today or tomorrow and change its whole structure, and nobody will object because all the people on the board, the membership list and so forth are creatures of this Government, put there for some strange purpose??presumably to try to pretend that its borrowings are not properly public sector borrowings but are in some mysterious way private sector borrowings. Of course, they are as public as any borrowings could be, because they all have a Government guarantee. The only reason that Network Rail has been trading without qualified accounts and having access to banks is that it gets a guarantee from the taxpayer.

The companys financial structure is remarkable. It is a rather tiny company, as its net assets are only ?6.3 billion. After all the billions of expenditure and with potentially billions in assets??or so one would have thought, given all these fabulous routes??the companys net asset value is ?6.3 billion. To put it in context, that is just two years worth of the revenue subsidy that the Government tip into the business. However, the business has more than ?18 billion of net borrowings, or net debt, because it has a Government guarantee routing private sector money into it.

Even more remarkable is the revenue account. Last year, 90 per cent. of the operating costs were paid for by a revenue grant. Those who confuse investment and revenue subsidy complicate the debate to no little extent. Yes, the business needs investment, and yes, it is making investment, but it survives only because a colossally high proportion of its operating costs are being paid by a revenue subsidy. That does not happen to the competing road haulage or road passenger industries in the way that the Liberal Democrats imply; they seem to have mistaken investment money for revenue subsidy money.

This business is not efficient or well run, and it is not in robust financial health. It is there entirely because the Government support it with revenue and with guarantees on capital account. Its management do not seem able to make their business more efficient or, despite endless fare increases, to be able to do enough to grow the business so that the revenue strand from the fare payer overtakes that from the Government and becomes the dominant influence in the way one assumes that Ministers would like, given that they too must be rather worried about its huge dependence on revenue subsidy.

We are also led to believe that Railtrack failed because it did not invest enough. If the Minister looks at the figures, he will see that there was a quantum leap upwards in the amount of investment going into the railways after privatisation compared with pre-privatisation performance under Labour, Labour-Liberal and Conservative Governments at the time of the nationalised industry. In the last two years of its existence, before it was so rudely terminated by the Government, Railtrack had invested ?5 billion, and then ?5.3 billion in successive years. That shows that it was making a substantial commitment to the improvement of the railways, bearing in mind the fact that in the last couple of years of the nationalised industry the investment level had been about ?2 billion. The privatised industry managed to invest at two and a half times the level achieved by the nationalised industry in its dying years. If Members wanted to rush to their feet?? although they do not seem to be??to say that that was because there was a Conservative Government, I should say that the investment record under Labour and Labour-Liberal Governments was equally gloomy. There was not a sudden big reduction in railway investment when the Conservatives came to office in 1979.

Quite a lot of the railway investment under nationalisation was ill-judged. It went on glamour projects and on switching traction methods??particularly electrification, where the benefits are somewhat arguable??rather than being concentrated on better types of train, such as lighter or better braking trains, that could be used more frequently on the network, which must be the answer.

I now wish to be a little more creative and say what should happen from here. First, we all want the management of Network Rail to be made accountable for the egregious errors that we all agree have occurred in recent weeks. Those are not new errors, as my hon. Friend the Member for Chipping Barnet (Mrs. Villiers) pointed out. It did not learn the lessons from previous mistakes when engineering works had similarly overrun. As my hon. Friend the Member for Rugby and Kenilworth pointed out, they were eminently foreseeable errors. Those involved had to undertake a survey of quantities. They needed to know how many man and woman hours of good engineering skill they needed, and to understand the complexity of the task ahead of them. The main thing that management should do in such a situation is break the job up into manageable units of work, and create a contingency for things going wrong??people not turning up on new years day because they may be preoccupied, a bit hungover or whatever. Instead, they crammed too much into a limited time, and on two separate occasions they had to come to industry and the travelling public to say, ??Weve overshot. We cant actually manage it.??

Some Labour Members seem to think that it is a sufficient excuse to say, ??Oh well, some of this work entailed private contractors, which again shows that fragmentation was wrong, but it was a mistake to use private contractors.?? It was the call of Network Rail, the Governments own creature, whether to use private contractors or to hire the staff in-house so that they were permanently on its books. That is a matter for Network Rail; I do not have an ideological bias on that. Sometimes it is better to have ones own people in-house, and sometimes it is a good idea to use private contractors. People need to form a judgment based on how often they use them, how much they cost and how competitive the consultants and contractors are.

We pay very large salaries to Network Rail senior executives so that they can decide such matters for us. Ministers should be supervising that process. If senior managers cannot make such judgment calls sensibly??if they get the balance between in-house staff and private contractors wrong, if they get the bills of quantities wrong or if they cannot work out how long a given type of engineering will take??they simply are not up to the job.

The defence of Ministers is to say that that is not really any of their business because they have created an independent private sector company, and it is up to the board of the company and the remuneration committee of the board to take the necessary decisions. My view is very simple, and I think that it is shared by most members of the public. If a business is 100 per cent. owned by the Government, if 90 per cent. of its operating costs are paid for by taxpayers subsidy and if all its borrowings are guaranteed by the public, we should expect our representatives??the Ministers??to hire the best managers, and fire them if they get it wrong, or to find a way of making sure that they do not get it wrong again.

I found the evasive answers from the Secretary of State on the matter of remuneration and bonuses both surprising and depressing. If I were running a private business and my managers had done something wrong, the first thing I would say to them, after one had got to grips with the magnitude of the error, would be, ??Of course, there wont be any bonuses this year.?? I think that they would then say, ??Well, if thats all youre going to do to us, boss, weve got off quite lightly. Can we keep our jobs??? One might hear that sort of thing in the private sector context. Why do we not have that sort of feeling in the public sector? Ministers should have a private but lively conversation with the managers in this company to tell them that this is not only unacceptable, but that there has to be some visible financial penalty on senior managers.

We are talking about people earning exceedingly large sums of money. I do not want to penalise those at the bottom of the heap who did all the work and did not get paid much for turning up on a wet and cold December night, but the people at the top, who have made the misjudgments, have to feel the penalty in their pocketbook. The least that one would expect a Minister to say is that the performance pay element will either be abolished or much reduced, because performance has been sadly lacking in this situation. I do not know of anyone who will write to me saying, ??How disgraceful of you to say that these highly paid people cannot have their full bonuses this year??, given the suffering that people went through when they could not get their trains at Christmas and new year, and when they saw their stations and services so disrupted.

We need Ministers to tackle the rather ramshackle structure of Network Rail and to put in place a serious board with a limited number of really good people who can provide a critical appraisal of senior managers and provide focus through the remuneration committee and board meetings to ensure that such things are unacceptable to the board and, therefore, are less likely to happen in future. It will not help to have 100, 1,000 or 20,000 ??members??, or whatever. That is completely bogus. It is mock democracy, whereas I am a true democrat. If it is to be proper democracy, all 60 million people, or all 45 million taxpayers, have to be involved because we are the stakeholders. We are the ones who are paying the bills. However, that is not realistic. We have representatives to carry out the process for us, and they are called Ministers. Ministers have to appoint a limited number of really good people, who can ride the business hard and ensure that it performs to proper commercial disciplines??if they want to carry on doing things the Network Rail way.

Let us get away from the myth that Network Rail is a completely private sector entity, and let us see Ministers laying down, at least once a year, at corporate plan and Budget time, what they expect for the ?3 billion-odd of Revenue subsidy and what they expect for the several billions of guaranteed investment moneys borrowed on the taxpayer tab. We need to see performance, and there have to be results to show for such a sum of money going into the business. I see no evidence from todays debate, from reading the papers, or from previous debates on the subject that Ministers have seriously entered into the complicated but important task of setting feasible, limited objectives for the expenditure of that money, and determining how they will hold people to account if they do not achieve them.

<strong>Mr. Tom Harris: </strong>On a point of clarification, the right hon. Gentleman may have missed the publication in July of the Governments White Paper, which contained the high level output specification. That specifically states what we expect to buy from Network Rail in terms of performance and efficiencies. It sets out explicitly the statement of funds available. It sounds to me as if he has just described what we have already produced in July. He referred to that being done on an annual basis, however, and we are doing it on a five-year control period basis.

<strong>Mr. Redwood: </strong>The Minister put it very nicely, but of course I have seen the high level outputs. I would not come to such a debate and do the House the discourtesy of not having read a little of the background material.

The Minister outlines the first part of the process, but it is necessary to take the high level outputs and the five-year plan and turn them into something that relates to the half-yearly and annual reporting cycle of a proper company??the Government say that Network Rail is, but I say that it is not. That process has to take place at a more detailed level through the eyeballing of senior management in the ministerial office.

When I was a middle-ranking Minister, one of the main things I did was to have annual corporate plan review meetings with the bodies that reported to me, and those were very serious meetings. I prepared very strenuously for them; I trust that the people on the other side did, too. They were rather foolish if they did not. I used those meetings to say, ??Youll be very pleased to hear from a Minister like me that you are going to get some money, but I really expect you to make that money work very hard. This is how I expect you to make it work hard. These are the rewards for success, and these are the penalties for failure.?? That has to be a ministerial function, and if the Minister is going to insist on doing it through a so-called independent remuneration committee, he will have to hand pick that committee and brief its members so that he knows they are in line with his wishes.

As far as the top people are concerned, it is more important for Ministers to get involved. We need to see performance, and the Minister needs to see it in return for all this money. The money has to be limited. It is a huge task: we have a massive railway that needs injections of cash for growth and development. It is very clear that it is not being well run or managed at the moment.

I want to see medium-term reform. Even with the improvements I have suggested, I am sceptical about how well a Network Rail monopoly would work. I have been honest with the House. I do not think that Railtrack was brilliant, either, but Railtrack and Network Rail are not very different. They have the same principal problem, which is that they are monopolies, and it is difficult to make them responsive.

I have a slight preference for Railtrack because it had more of the disciplines of the market. It was driving efficiencies a bit better??decreasing subsidy and increasing investment. It had to respond to market disciplines on many of its borrowings and activities in a way in which Network Rail does not. The Government have relaxed the constraints on the railway track monopoly and that is why they have problems with overruns, delay, poor service and high costs.

The costs have mushroomed massively since the Government took office. The Government tell us that they have been fighting a battle over the past two years to get them down again, but the costs took off in the early Network Rail period because the disciplines were relaxed.

I would prefer a system whereby track and train were reunited and there was more contestability so that no one in the business felt they had a monopoly right in perpetuity. Of course, one has to give a regional train company, which also owns the tracks, a reasonable run at it or it will not make the necessary investment. One has to give such companies specific guarantees and they have to have a decent opportunity to make investing the capital worth while. However, they must also know that, at some point, they have to try again to maintain the franchise. The quid pro quo is that one has to tell them that they can sell on the capital that they have invested and the capital that they bought and inherited so that they know that, if they are unsuccessful, they will not wipe out their shareholders. There must be a penalty but it must not be so harsh that no one will take the risk or make the venture.

Contestability is also required. The ability to run across other peoples regions and to use the track more intelligently and better is necessary. An independent regulator or adjudicator, who can decide how the track can best be used, is also needed.

At the beginning of my speech, I referred to the tragedy of having fabulous routes that are not used enough. If one flies over southern England in a light aircraft at peak hours in the morning, one sees completely jammed roads, with vehicles bumper to bumper as people try to use cars, buses and motorcycles to get to work, and practically empty train tracks. The way in which the railways are currently run means that few trains an hour can be operated on those tracks. Typically, only 24 trains an hour can run given the existing technology. We need to operate far more than that to deal with peak hour demand. The railway is better for that than for dealing with off-peak demand because frequent services are required to make rail travel attractive. The best green advantages and time advantages of using the railways are obtained at peak times because the roads are congested and therefore polluting more. We need much more peak time rail travel.

How do we achieve that? There is an easy answer in the short term, before the technology and structure are fundamentally changed. If lighter weight trains are used, more of them can be run because they accelerate and brake more quickly. That happens on many networks abroad. In Britain, our system is over-engineered and heavy. Other hon. Members have referred to the complexity and absurdity of many of the rules for taking possession of the track for engineering works. I agree, but there is another set of rules for operating a railway that militates against using modern, state-of-the-art lighter weight trains, which are perfectly safe when used elsewhere and mean that more trains an hour can be operated.

The current engineering director of Network Rail, with whom I have had conversations, accepts that lighter weight trains could make a difference. It would be a great prize, which Ministers might like, if one could run, for example, 40 rather than 24 trains an hour. I hope that they will take seriously the proposition that, if one used trains that can speed up and slow down more rapidly??of course, signalling changes would also be required to deal with that, but they could be made within the system budgets; it would be much cheaper than building new track??a big improvement in the railways could be achieved. My hon. Friends the Members for Rugby and Kenilworth and for Macclesfield (Sir Nicholas Winterton) pointed out that under this Government the railway is going in the opposite direction??unless one lives at a terminus or near a large principal station on a main line, all the expensive works may lead to a deterioration in the service because the fast trains may not stop in ones town or city. The fast trains occupy much track space and time because they need good clearances for a long time for safety reasons as they belt along the main line route. If there are not enough bypasses or additional railway track, they clutter the track and reduce the frequency of the more mundane commuter short-hop services, which may be more important to a good travel system.

I hope that the Ministers will consider, in the investment programme, the balance between the glamorous, fast services to a few major cities and the important daily services that people in Rugby, Macclesfield, Wokingham and all the other places represented in the House this evening need. Those services are also needed to provide a greener and better alternative for peoples travel plans.

Our debate rightly focuses on the unacceptable events over Christmas and new year. Even Ministers agree that the delays were unacceptable and that a mistake was made. They say that they need a further period of reflection and inquiry to discover the mistake. Most of us believe that we know what the mistakes were from what we have read and seen. The statements and apologies made so far imply that the events were caused by a management failure by Network Rail.

I do not believe in public hanging or crude prose, which some people might believe to be appropriate in the circumstances. Far from it. I believe that we get the best out of people through incentive and motivation. However, when errors are so big and their impact is so great, there must be a penalty. I believe that it should be a financial penalty on senior management rather than, ??There, there. Please make sure it doesnt happen again.??

The Government say so often??there are many examples in recent weeks??that they will learn the lessons. I have heard nothing in the debate so far, especially from the Secretary of State, that makes me believe that she has learned any lessons. She has learned no lessons about how to get value for huge sums of public money; how to control a so-called not-for-profit independent private company, which is a creature of the state; how to choose good people and persuade them to do a good job; or how to turn an incompetent Government into a competent one.

I want to live in our great country and enjoy its facilities. I am afraid that so many facilities that the public sector owns are not well run. There is an aura of incompetence about them. When the Minister sums up, he will use all the buzzwords and buzz phrases that are on the pager or in the briefing, along with the civil service line to take, followed by??if ministerial briefings still contain it????defensive??, for when a Minister is under pressure or things are getting bad and, over the page, ??Now youre on your own. Bad luck.?? We want to go beyond that. It would give me great pleasure if the Minister said, ??A lot of what you said is sensible and we will try to work out a better way of employing top managers at Network Rail.?? It would be wonderful if he said that the Government would work much harder to get discipline over spending ?3 billion a year of Revenue subsidy and several billion of investment and break down the high level outputs into management units that make sense and can be built into peoples incentive packages. It would be good if he said that the Government would reconsider the programmes balance because they did not want to end up with people in Edinburgh, Glasgow and London being happy but those in Rugby, Kenilworth, Wokingham, Macclesfield and so on were not being happy because their services had been worsened by the hugely expensive investment programme.

My hon. Friends on the Front Bench tabled a fairly narrow motion because the anger of the country is currently focused on what went wrong at the weekend and over the long Christmas and new year holiday. However, there is also a strong feeling in the country that we would like to be greener??in some circumstances, travelling by train is greener than using other means??but the service needs to be accessible, friendly and feasible. We do not feel that the railway industry is ours, except when it needs someone to pay the bills, and we do not feel that, managed by the effectively nationalised monopoly of Network Rail, it is customer friendly. Apart from events over the Christmas period, it does not appear to look to a future of frequent services, lower fare packages and opportunities to use the trains that people want.

I hope that the Minister will take the opportunity to reflect a little more on the mismanagement, realise that it was not a one-off and that it will happen again unless there is some fundamental change in the Governments approach to railway management.

Yesterday in Parliament John Redwood urged the Europe Minister to see that targets on carbon emissions are not producing the desired results. The exchange with the Minister, taken from Hansard, follows.

<strong>Mr. John Redwood (Wokingham) (Con): </strong>If the EU is making such progress, why is it that several EU countries will not meet their Kyoto targets, and why are carbon emissions going up in Britain?

<strong>Mr. Murphy:</strong> The UK is the first and so far the only country to have set binding targets for reducing carbon emissions. We are leading the way in Europe and throughout the world, but carbon emissions can be reduced only through international co-operation. We cannot set up a patriotic front against climate change, as such change does not recognise the national boundaries and borders that the right hon. Gentleman seems to believe in. In fact, I understand that he opposes the binding targets on carbon emissions.

Last Wednesday John Redwood met Gary Grange and Mike Dalton from the Post Office to discuss the possible closures of Barkham and London Road sub Post Offices.

John Redwood said he would need to know public reaction from the people making up to 400 visits a week to Barkham Road and up to 750 to London Road. He was keen to stress, however, that if the Post Office was to have any chance in persuading Wokingham people this was a good idea they needed to make better arrangements for alternative provision.

The main office in Broad Street, Wokingham, is already very busy. It needs more than seven counter places, and the accommodation for vans, lorries and sorting staff is old and inadequate. John suggested they moved the sorting activity to a new location in better premises with good road access, and expanded the shop whilst modernising it. The back area could be redeveloped for a more suitable purpose and cash released from the project.

John Redwood said: ??ËœIf the Post Office is to close these two offices it needs to ensure the current incumbents are happy with the compensation and settlement, and there is proper alternative provision. Constantly cutting back the network and the staff is not the way to build a profitable and successful business.’

2007 has been a fraught year for many. Here in central Berkshire we have faced floods and cattle disease. Some residents are still tackling the water damage to their properties. We have mourned the loss of members of our armed forces in Iraq and Afghanistan. We have worried over hospital infections and the credit crunch. Many of you have described to me the struggles you have faced.

Christmas comes as a welcome holiday after a cold wet summer and a windswept early winter. It is an opportunity for families to come together, for mothers and fathers to take a few days off from the paid job. Some dreams come true as presents are opened and eyes sparkle with delight. Children perform in plays and carol concerts, choristers voices soar and more of us get to the theatre to see a panto or a favourite play. Many of us take a childlike pleasure in the lights, the sights and the sounds of the season. We can enjoy the happiness of others and forget the day to day responsibilities for a while.

Christians will fill the Churches to celebrate the birth of Christ. Most will get to the shops to lay in the turkey and the puddings, the sauces and the wine for a vintage celebration. Fires will be lit, trees decorated, Santa costumes dusted down and cakes iced. It’s a busy time, a time for love and friendship. It’s a chance to remember that many of the things that bring joy do not need money to buy them. The handmade card, the traditional games, the Boxing Day walk, taking more time and trouble for others can all make Christmas special.

Christmas is a steaming bowl of mulled traditions: the angels and the Magi, Father Christmas and his reindeer, the mid-winter feast with a plumb pudding and the coming of commercial Christmas with the Victorian trees and cards.

I would like to say a big Thank you on behalf of all of us to those who will keep our important services operating over the Christmas season, and for all the efforts they put in all year round. I hope we will extend the hand of friendship to neighbours and to the lonely over the Christmas period. For the few who are on their own on December 25th the feeling of loneliness must be that much greater, and an invitation that much more welcome.

I wish you and yours a very happy Christmas. Forget the mortgage and the bills, the nightmare journey to work and the forms that still have not been filled in. You too deserve a break.

Speaking in yesterday’s Opposition Day Debate on the loss of sensitive, personal data by Her Majesty’s Revenue and Customs, John Redwood highlighted the failure of Revenue and Customs to perform its basic duty of care to taxpayers, and called for a major change in the culture of responsibility and accountability in the public sector.

The full Hansard text of John’s speech is reproduced below:

<strong>Mr. John Redwood (Wokingham) (Con):</strong> I rise to support the wise words of my right hon. Friend the Member for Charnwood (Mr. Dorrell), and the words of my hon. Friend the shadow Chancellor. My right hon. Friend was right to say that, above all, we are debating a cultural issue. It is a matter of grave concern that HMRC does not regard looking after data as its fundamental duty, and that it does not consider that the customers or taxpayers whom it serves have every right to expect the highest possible standards when it comes to protecting the very important and extensive personal data that they are forced to give to the state, on pain of prison, so that taxes can be calculated and levied.

We are discussing accountability. We have held this debate because we think that the Chancellor of the Exchequer did not tell us enough when he first made a statement to the House? let alone today? and that he did not explain all the details that he knew at that time. The doctrine of ministerial accountability has moved on in recent years, and I welcome that. Twenty years ago, a Minister who had presided over such a major disaster would have offered to resign automatically. There would have been no question about that, but I do not think that it is fair or right for a Minister to resign if a junior official goes against the rules or makes an egregious error about which the Minister can know nothing and whose outcome he or she certainly does not seek. If we were looking in this debate at a single error made by a junior official about which the Chancellor knew nothing, there would be no question to answer under the new doctrine of accountability.
<strong>28 Nov 2007 : Column 330</strong>
However, the contention of my hon. Friend the shadow Chancellor is that we are looking not at one error but at a series of them. Some have said that there have been 2,000 errors of a similar kind, although not all on the scale of the most recent one, but my hon. Friend has contended that it is part of the culture, and therefore possibly a fault of the policy, that such things are happening at all.

That is why I asked the Chancellor of the Exchequer whether, in light of recent events, he had made changes to the procedure and policies that govern the handling of data. He answered that he had made one change. The hon. Member for Twickenham (Dr. Cable) and others did not think that that was sufficient, but the implication of the Chancellor’s reply is interesting, as it suggests that he felt that the existing system was not adequate and needed to be changed. In addition, the Chancellor has appointed a committee of inquiry to see whether the system as a whole needs changing and improving, which suggests that the problem did not arise through one official making a mistake but through a systemic failure inherent in the policy.

The most important error to have occurred has not received enough attention. In March, a similar volume of information was sent in a similar manner. Fortunately, the discs did not go missing, but that event should have alerted the previous Chancellor of the Exchequer to the seriousness of the possible problems that such sloppy data handling could cause. If anyone is culpable, therefore, it is the former Chancellor and his junior Minister responsible for these matters, as they did not respond when things went wrong. Could they have responded? Did they know? We now learn that a senior manager in HMRC was well aware of the error in March, and it does not speak well for the leadership provided by the then Chancellor and other Ministers that that official did not pass on the information to the Chancellor’s private office? or, if he did pass it on, that the former Chancellor and the responsible Minister did not understand its significance, and therefore did not take action.

That brings me back to the question of culture. No one on the Opposition Benches with experience of running Departments or big companies? I have had the privilege of doing both? believes that a single person can possibly know every decision, read every e-mail, or be copied into every transaction. That is why I accept that errors will occasionally be made that are not the wish of the person at the top. Since such errors are not inherent in the policy or culture laid down by that person, I believe that he or she should be forgiven. However, the culture at HMRC did come from the top and it seemed to say, We do not regard the sanctity of personal data as crucial. We do not think that should be your No. 1 duty.?

I suspect that if we could see more of the relevant e-mail traffic and memos we would discover that Ministers wanted the merger of Revenue and Customs to give rise to a more aggressive Inland Revenue that got more money out of more people, more quickly. Since the merger, I certainly have received many more complaints from constituents, very often to the effect that HMRC has extracted money on rather bogus arguments, or incorrectly. It has then had to return that money. I suspect that the cultural shift that the then Chancellor orchestrated and sent down the line was that he wanted the new merged organisation to be much better at
<strong>28 Nov 2007 : Column 331</strong>
collecting more money from people and companies. If that is the culture being promoted, it is not easily compatible with one that is customer friendly. In a customer-friendly culture, staff would be told, Your No. 1 priority should be to treat customers well, and that means that you must look after their data.?

Others have said that what has happened demonstrates that the Government cannot be trusted with the wider range of data collected for ID cards. Naturally, I agree: the public are now extremely suspicious of the Government’s ability to handle data and of their trustworthiness in dealing with that information. In the days ahead, Treasury Ministers who want to rescue their ailing position on data handling must demonstrate that they have learned the lessons and that they have put in place a system that will not allow such errors to happen again. However, the evidence from the Chancellor and other Ministers on the Treasury Bench today gives us no sign that we are about to reach that happy situation.

We have been told that one change has been made to the relevant procedure? something to do with the internal post at HMRC. We have heard nothing about encryption, or about reducing the amount of data that can be moved, either on a disc or in some other manner. We have heard nothing about introducing personal couriers to transport such sensitive data, or about reopening discussions with the NAO about how much data are needed and on what basis. My understanding of audit procedure is that it is done by sample, so why on earth were the records of 25 million people sent through the post? Could not a proper sample have been made? We have heard no explanation from Ministers as to why auditors cannot go to the data, rather than the other way around.

It is pathetic that so many days after the scandal was first reported we have not had a straightforward statement from someone on the Treasury Bench about how elementary protections and precautions for data handling and transmission have been put in place. Such defences would be expected in any medium-sized company, let alone a large one. We also need to know why the Chancellor has been so dilatory in coming to the House, and so reluctant to have information dragged out of him. It is apparently fine to share with the world, through the postal system, the unprotected records of 25 million people, but when it comes to data that this House needs? such as where the ??25 billion used for Northern Rock, and the asset protection that has been put in place? we are not allowed to have it. When it comes to information on what action the Chancellor plans to take to deal with the data-handling shambles, we are not allowed it even after a full debate and a statement.

The Chancellor’s Department at senior level knew about the problem on 8 November. We are told that it was two days before the Chancellor was told, so that shows that he had not told his staff that such things were important or mattered to him? otherwise they would have told him immediately and not taken the risk. It then took him another 10 days, until 20 November, to come to the House of Commons to tell us what had gone wrong. That does not speak well of a Government who believe in Parliament and think it central to our national life; nor does it speak well of a Government who claim to care about people’s data. If the Government knew 12 days beforehand that the data might have been
<strong>28 Nov 2007 : Column 332</strong>stolen, and had certainly gone walkabout, why were the public not told and warned then? Why were they not told and warned through the natural route? a full statement to this court of Parliament? That is what should have happened.

The Chancellor’s excuse is that he wanted time to talk to the Information Commissioner. He then tried to blame the banks, although they were told only on the Friday evening. The Chancellor now says that one or two banks wanted a bit more time, but it was hardly sporting of him to take up all the working days of the week, keeping the information to himself, telling the banks only on Friday evening when, no doubt, officials and Ministers wanted to go home and leave the banks with the problem over the weekend.

That reeks of a Government who are after our money but not out to give us service. It reeks of a Government who speak about the importance of democracy but do not treat the House of Commons seriously. It reeks of a Government who claim to value the people of this country but who cannot be bothered to tell them promptly when the Government make a mistake. It is a disgrace and it is high time that Ministers on the Treasury Bench came up with a better defence and some resolute action so that we can be reassured that in future they deserve to handle our data.

Speaking in the House of Commons yesterday, John Redwood first highlighted the failure of Britain’s border controls at keeping out illegal immigrants to the Immigration Minister. Later that day, he also questioned the Secretary of State for Innovation, Universities and Skills on whether the Government’s proposed welfare reforms will see benefits withdrawn from those who refuse a training place or job offer.

The full Hansard text of John’s questions follows:

<strong>Mr. John Redwood (Wokingham) (Con): </strong>These illegal immigrants are here only because our border control failed in the first case. Why does the Minister not strengthen the surveillance of passports and visas when people first apply for entry into the country, and ensure that people we do not wish to see here, or those who are a threat to this country, are not admitted in the first place?

<strong>Mr. Byrne:</strong> I hope that the right hon. Gentleman will forgive me for saying that that is a slightly 20th-century way of looking at border control. If we are to have adequate defences against illegal immigration in the future, we need to strengthen our checks abroad. That is why biometric visas are preventing would-be illegal immigrants from coming to this country before they get on a train, plane or boat for the UK. We have to secure our borders in the UK even further, which is why we are introducing a single border force.

I do not think that we will make real headway against illegal immigration until we stop the cause of it, which is illegal working. That is why we have to increase the penalties for businesses that break the rules. It is also why we have to make it easier for businesses to know whether a foreign national is who they say they are, and whether they have the right to work. That is where ID cards will help.

<strong>Mr. John Redwood (Wokingham) (Con): </strong>Are the Government going to withdraw benefit if someone refuses a training place or a job on offer?

<strong>Mr. Denham: </strong>We have said today? my right hon. Friend the Secretary of State for Work and Pensions has said it? that it has been agreed that there will be pilots for mandatory training. That will come in after six months if a personal adviser is, first, convinced that somebody should undertake a skills health check and, secondly, that it would be directly relevant to them to get training. Although the details have to be worked on, I suspect that it will also take place after somebody has refused to take up the offer of extended support, such as up to eight weeks of full-time training with a training allowance. Most people in the House would take the view that the system should operate to provide people with every possible bit of advice, encouragement and support to go back into training, but there is a point at which somebody has to say, If you haven’t taken the opportunities, you can’t expect not to do anything about it.?

<p><strong>Yesterday during Prime Minister’s Questions, John Redwood raised the crucial question of why there is such a big terrorist threat in the UK. We need to understand it in order to combat it. The government needs to tackle both the terrorists who are wrongly allowed to enter our country owing to insufficient controls at our borders, and the disaffection of some young people legally settled in the UK:<br />
</strong><br />
Mr. John Redwood (Wokingham) (Con): </strong>Why are there so many potential terrorists in Britain today?</p>
<p><strong>The Prime Minister:</strong> We know from the statement made by the head of MI5 that we are dealing with a small but important group of young terrorists who are operating in cells, and we know that there are distinct links in our country with the Asian sub-continent; that is one of the reasons why the numbers in Britain are so high. However, we also know that the measures that we announced last week, not only to win the battle of hearts and minds but to isolate extremists, are the right way forward. The right hon. Gentleman should agree with me that we are making substantial advances in persuading young people that this is not the right way forward and in isolating these terrorist extremists in our country, and we will continue to fight the battle against terrorism.</p>
<p>In the subsequent debate on how to improve our schools, John Redwood advocated giving more freedoms to schools to make decisions for themselves, and more powers to parents to choose the right school for their children:</p>
<p><strong>Mr. Redwood: </strong>Does my hon. Friend agree that the people involved in a school are much more important even than its buildings, and that some of the best schools have old or tatty buildings? Is not the failure of this Government’s strategy that they have no way of changing the leadership in underperforming schools and they have allowed too many such schools to exist for too long?</p>
<p><strong>Michael Gove:</strong> My right hon. Friend makes an important point: among the most important qualities in schools are leadership, motivation and personnel. One of the great virtues of academies is that their leaders? such as Sir Michael Wilshaw at Mossbourne? have the freedom to pay more than the national minimum and to reward good staff with bonuses. They also have the opportunity to recruit and retain the best, and, if necessary, to deal with any weaker teachers. I am sorry to have to say that some of the teaching unions oppose that degree of freedom, but we believe that it is concomitant with the greater freedom in the academy system and that it is necessary to drive up standards, which is our aim.</p>
<p>Unfortunately, there has been a pattern under this Government: instead of change and dynamism, there has been timidity, retreat, paralysis and bureaucracy. We would remove barriers to the creation of new schools.</p>
<p><strong>Mr. Redwood: </strong>If the Secretary of State wishes to show substance, he should talk about the Government’s policy rather than spend the whole time talking about Opposition policy? I know that he has no style. Will he tell the House why the Government do not trust parents to make choices in enough cases and why they do not trust schools to decide how to teach?</p>
<p><strong>Ed Balls: </strong>Let me turn to academies and the exact issue that the right hon. Gentleman raises. At last, we are dealing with a school reform that is mentioned in the motion.</p></strong>

Giving away part of the rebate was reckless and wrong. John Redwood pointed out yesterday in Parliament that Alastair Darling has just added a ??70 billion spending black hole to his ??25 billion Northern Rock black hole, by signing up to the expensive EU budget settlement for the next seven years and giving away part of the UK rebate. All this money will have to be borrowed, meaning large interest bills and ultimate repayment by the taxpayer.

For John Redwood’s speech in full (taken from Hansard) see below.

<strong>Mr. John Redwood (Wokingham) (Con): </strong>In 1984, as a young man, I was the chief policy adviser to the then Prime Minister. One of my proudest moments in that job was when she returned from a difficult negotiation in the European Community where, thanks entirely to her skill, determination and perseverance, she obtained for the UK a most important reduction in the amount that we had to pay into the European Economic Community.

It was a great negotiation because to achieve that rebate, that lady had to persuade all the other member states to her point of view. She could not block the payments that we were making because a Labour Government had agreed them. She knew they were far too high, and it was her consummate skill as a negotiator and politician that slowly persuaded all the other member states, reluctantly and gradually, to the view that Britain was getting an extremely raw deal; it was paying far too much, and justice required that more of the money should be left in the United Kingdom.

As a result, the Government whom she led and those led by her two successors were able to spend more money on British public services chosen freely by the elected representatives? the majority party in this House? or to return more money to the British people to spend on their own families and businesses through tax reduction, which I greatly welcomed. That makes tonight particularly tragic, because a subsequent Prime Minister, Mr. Blair, went to a European negotiation at which all he had to do was say no. He need not have given any of that money away. He did not need any of the skills that Baroness Thatcher required to win us the rebate? he had all the cards in his hand. He merely had to say no unless and until the other members of the European Union saw the justice of the case that he was making.

When the former Prime Minister moved his position, from the excellent one that there was no need to give up the rebate and that it was not negotiable, to the position that it was negotiable, I and many of my right hon. and hon. Friends had misgivings. The Opposition were prepared to listen, however, and see whether it was feasible to negotiate a much better deal on the spending side of the account, whereby the British position would not worsen, while that of all members of the Union would improve if spending could be reduced on agriculture. Such spending gets in the way of efficient agriculture in many member states and prevents developing countries from getting fair access to our markets.

Some of my right hon. and hon. Friends withheld their criticism to wait and see whether the then Prime Minister had some negotiating skills. It beggars belief that he had absolutely no negotiating skills at all. Armed with the veto, he threw it away. Armed with a strong case to win over the new member states and the Nordic member states to the proposition that the common agricultural policy was bad and should be reformed, he was unable to persuade any of them. Tonight, we have a House of Commons with Labour Members almost in denial and about to vote through a disaster for the United Kingdom in the form of an extremely large bill that we cannot afford and do not want.

The Chief Secretary to the Treasury, who opened the debate, showed bravado and obviously implied that he thinks everyone in the country is a fool. He tried to present the Bill as some kind of negotiating success and a way of increasing the rebate. Yes, of course it increases the rebate, because it increases the spending by so much more. It means that Britain will end up paying far more in the seven years of the proposal than if nothing had been given away in the negotiations.

I notice that the Economic Secretary to the Treasury, who is on the Treasury Bench, has no intention of intervening, because she knows that I am absolutely right about the huge expensive. The documents reveal costings of ??7.4 billion at the current euro-sterling exchange rate. Given the parlous state of the national accounts, we know that every penny of that ??7.4 billion will have to be borrowed. If it were borrowed over, say, a 20-year period at 5 per cent.? the Government might be able to do that? there would be another ??7.4 billion of interest on top of the ??7.4 billion of capital that will need to be paid and then repaid over the 20 years of the debt. I leave out the interest on the interest, which would add to the sum even more. On the Government’s own admission in the explanatory notes to the Bill? they are riddled with errors, of course, but I do not think that this figure is an error? the minimum cost to the state and the taxpayer will be ??7.5 billion, which, in practice, will mean ??15 billion or more, because they will have to borrow it and we will have to pay interest on it.

If we look beneath the Government’s guidance, we see that the true bill to the taxpayer and the British Government will be far bigger. This Government have signed up to a set of spending plans that mean that, on average, every year over the seven-year period the United Kingdom will have to pay ??10 billion into the European Union, after knocking off the smaller rebate, which is still in place thanks to Baroness Thatcher. That means that, in practice, there will be an underlying spending increase of ??70 billion over a seven-year period. Using my simple sum, if the Government borrowed that over 20 years at 5 per cent., we are talking about ??140 billion of first-round interest payments and capital repayments, just to see us through the seven years. At the end of the seven years, of course, we know that we would be on another escalator, because our bargaining position would be greatly weakened thanks to the Government’s foolishness in giving away this most important principle and allowing the rebate to be weakened.

We know that the present Government are careless with public money. They say that any Conservative plan to spend a few hundred million or the odd billion on a tax cut would produce a black hole, yet along comes a mortgage bank in trouble and they can suddenly find ??24 billion without batting an eyelid. Now we discover that they can apparently pledge this country to pay ??70 billion over the cycle of the budget proposal. We know that they can propose that only because they intend to borrow every penny of it, just as presumably they are borrowing every penny of the ??24 billion that they have so far made available to Northern Rock.

The Chief Secretary to the Treasury produced several arguments, in the course of a long and rambling speech, for why the budget was a good deal for Britain. There was the strange argument that the rebate was going to increase, whereas we all know that there will be a worsening of the rebate and increased spending. There was then the argument that we should be extremely grateful and welcoming of the fact that, as a result of our much bigger contribution to the European Union kitty, there would be more spending in countries outside the United Kingdom. He implied that he believes that, as soon as a country gets European Union spending, it becomes more prosperous and its growth rate rises. That is a curious argument.

During my time in politics in Britain, I have seen some parts of the United Kingdom receive European Union money. We know that they have been receiving it because, as has been pointed out in the debate, one condition of it is that recipients have to stick the 12-star flag logo all over the sign boards for the projects, whereas I believe that under British law they are not allowed to put a Union flag on anything that we fund directly. Somebody rightly pointed out that the money is ours anyway, because we put more in than we get back. We know that some places have been getting that funding.

If we look, as I have, at the income levels and growth rates in the places that receive that funding, we see two interesting things. First, the poorest parts of the country receive the money. That is not surprising, as the main condition for getting it is that they start as the poorest parts of the country. The other thing that we discover is that, under this Government in the past decade, those areas have also had the slowest growth rates. The money is clearly not kick-starting those parts of the country into greater prosperity; it is part of the problem that is holding them down.

<strong>Julia Goldsworthy indicated dissent.</strong>

<strong>Mr. Redwood: </strong>I see the hon. Member for Falmouth and Camborne (Julia Goldsworthy), a Cornish seat, becoming agitated, but she must know that the Cornish rate of growth has been much less than that of London or the south-east. London and the south-east are not main recipients of European aid, whereas Cornwall is. If receiving subsidy and aid triggered a big increase in the growth rate, one would expect Scotland to have been the fastest growing part of the United Kingdom in the past decade, as it has had so much extra money from all sources. Instead, we discover that Scotland has been about the slowest growing part of the United Kingdom.

<strong>Julia Goldsworthy:</strong> The right hon. Gentleman is correct that there is still a large gap between Cornwall and the rest of the country, not only in GDP per head of population but in income. However, the rate of growth is now faster than the England average.

<strong>Mr. Redwood:</strong> Growth rates in London and the south-east are far greater than that in Cornwall, which demonstrates that European Union money is not managing to do what the hon. Lady hopes. I should be delighted if that money were well spent, but one of the big problems with European Union money is that under the rules, it must be put into schemes that it would otherwise not have been put into? by definition, marginal schemes or even those that are not thought very worth while.

<strong>Mr. MacNeil: </strong>Could not the argument be made that the issue is not actually about subsidies at all? The rate of growth in the Republic of Ireland, for example, has been double that in the United Kingdom. That has happened because Ireland left the United Kingdom and set its own tax structure to suit itself. Perhaps that is not happening in Scotland because Scotland is not independent so that it can compete, match and beat the Republic of Ireland.

<strong>Mr. Redwood: </strong>This is not a debate about Scottish independence, but I agree that cutting the tax rate is a very good way to accelerate the growth rate. The Chief Secretary to the Treasury seemed to think that subsidies to the Irish agricultural sector were the main cause of accelerated Irish growth. There is no evidence from the Irish economy that the agriculture sector has led the growth; it has been led by the service and manufacturing sectors. That is definitely the result of very low corporation tax.

<strong>Mr. Cash: </strong>On the Irish economy, my right hon. Friend might not have been here when I made the point that there is an excellent book by Mr. Roy Foster called Luck and the Irish? demonstrating that the money put in by the European Union has been less effective in increasing Ireland’s prosperity than American money and tax reductions.

<strong>Mr. Redwood:</strong> I am grateful for my hon. Friend’s endorsement of my case. So much European money went into the agriculture sector in Ireland, but that is not the great success story. The success story is in those sectors that have attracted large sums of foreign capital to create new businesses, which in turn have attracted a lot of talented Irish people back to Ireland to discover that it is a place where they can have very good careers.

<strong>Mr. MacNeil:</strong> Some economists argue that the agriculture subsidies not only did not help the Irish economy but hindered it in some ways, because resources were allocated to a less productive sector of the economy than they might have been.

<strong>Mr. Redwood: </strong>Again, the hon. Gentleman makes a helpful and sensible intervention. I hope that Ministers are listening; they might learn from it.

To return to my argument, all too often the projects financed by the European Union are marginal, or, in economists’ terms, sub-optimal? not those that one would choose for oneself. That is the role of the scheme. As the sage from Great Grimsby was saying a few minutes ago, would it not be much better if in some cases we could choose the projects ourselves and spend our own money on them without the middleman? without having to send the cheque to Brussels and then get some of it back after jumping through various hoops to prove that the project is one with which we would not otherwise have gone ahead? It is a rather crazy way to spend money.

<strong>Julia Goldsworthy:</strong> Does the right hon. Gentleman think that there is a benefit to investing in high-risk projects? Those projects often give the opportunity for the greatest returns, although they might not be viable in their own right or have the resources to take on that risk themselves.

<strong>Mr. Redwood: </strong>The hon. Lady should read a history of the 1970s, when we had a Government who thought that backing winners was a good idea, and every one turned out to be a flop or a loser. Maybe we are returning to that in the Government’s latest approach to choosing investment projects and dealing with European Union funding. One begins to worry.

The Chief Secretary’s next argument was that this had not all been in vain. Although perhaps in his more honest moments he accepts that we are talking about a very big bill? at least ??7.5 billion and maybe ??70 billion? he said, Ah, but there will definitely be agricultural reform.? That has already been revealed as a curious opinion given the attitude of the French, who will be in the chair of the European Union when the so-called review occurs. The language of the European Union has already downgraded the review, and the French have made it clear that they do not wish major reforms of the common agricultural policy to occur under their chairmanship. We come back to the question of how to negotiate. I always thought that when negotiating, if one is minded to make a concession in order to gain a concession from the other side, one makes sure not to make one’s concession until the other side makes theirs. That is what good negotiating is about. It is quite extraordinary to make a massive concession for 2007, and then say that in five or six years’ time, somebody might discuss making a concession the other way. Why on earth should they give us anything when we have negotiated in such a stupid way?

<strong>Mr. Oliver Heald (North-East Hertfordshire) (Con):</strong> Does my right hon. Friend agree that the French position is that the major reform of agriculture has already taken place? Further negotiation is not even a glimmer in their eye.

<strong>Mr. Redwood: </strong>My hon. Friend makes a powerful point. As others have revealed in this debate, it is not even clear that the proportion spent on agriculture is falling, although it is certainly clear that the amount spent on agriculture continues to rise. That is the French agenda, which has a lot of supporters in the European Union. I do not believe that the Government have a majority in Europe to support a significant change, and they certainly do not have unanimity on fundamental change, which is what they require.

Even worse, we know that quite a bit of the ??70 billion that we have been asked to contribute will be spent on programmes to which the auditors will not be able to give a clean bill of health. Extraordinarily, the hon. Member for Grantham and Stamford (Mr. Davies) has told us that that does not count, because such fraud, malpractice or misspending occurs in member states rather than as a direct result of European Commission action. However, all that money is spent under European Union rules.
<strong>
Mr. MacNeil: </strong>I am grateful to the right hon. Gentleman for giving way again; he has been very kind. To control misspending, does he agree that there should be a cap on the amount that certain individuals receive, which would mean that people such as the Duke of Westminster, who is a very wealthy landowner, would not receive obscene amounts from the CAP?

<strong>Mr. Redwood: </strong>I do not want to personalise the debate in that rather unsophisticated way. However, I make common cause with the hon. Gentleman in saying that too much money is spent through the CAP. The CAP should be reformed and that money should be repatriated. Too much money is also spent through a lot of other programmes. As the auditors have revealed, regardless of who technically spends the money, it is spent on European programmes, and all too often it is spent wastefully or even fraudulently, which should be a grave concern to us all.

I cannot say to the people of Wokingham, I voted tonight to make sure that you will pay more tax in order to spend another ??70 billion over the next EU budgetary period, and some of that money will be wasted, frittered or even spent fraudulently.? As someone who looks at the auditor’s reports from time to time, I cannot satisfy myself that that money will be well spent from now on and that we should relax. The money would be more likely to be well spent with proper investigation and control if it were spent closer to the people who paid the tax, rather than if it were to go through the intermediation of a remote and bureaucratic system of government on the continent before coming back here or to other member states to be spent by officials.

One of the myths of the EU is that it has a small and very effective bureaucracy. By remote control, the EU employs hundreds of thousands of bureaucrats throughout EU member states. Those bureaucrats might as well work for the EU, because they are doing the EU’s bidding? I am glad that that is not the case, because they would be asked to do even more things with which many of my hon. Friends and I undoubtedly disagree.

I urge all sensible Labour MPs to vote against the Bill tonight. Those who vote for it will vote for more British taxpayers’ money to be spent in faraway places, sometimes on fraudulent, incompetent or badly run schemes. They will vote for this country to borrow yet more money, which it cannot afford, and to pay yet more interest. They will vote for a further deterioration in the way in which this country’s budgets are run by this Government. They will vote for the results of a negotiation that was so maladroit that our previous Prime Minister gave away a wonderful set of opportunities that another Prime Minister had negotiated for us without getting anything in return.

This is an extremely sad day for the United Kingdom. It is a sad day for this Parliament, and it is a day that Ministers will come to rue. Ministers should understand that they are in a big borrowing hole. They have the black hole of Northern Rock, and they have the black hole of this Bill. Labour Members will find that there is less public spending for their constituencies, and Conservative Members will find that there are fewer opportunities to cut the burden of tax on the British people so that we can prosper more.