Commons Sitting of 16 July 1990

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
Oral Answers to Questions
  WALES

    Menopausal Facilities
    Mrs. Gorman: To ask the Secretary of State for Wales what menopausal facilities, other than clinics, are available for women in Wales in national health service hospitals.
    The Parliamentary Under-Secretary of State for Wales (Mr. Ian Grist): Clinics in a range of medical specialties are the main form of provision, but detail on the services provided for menopausal women, either in clinics or otherwise, is not available centrally.
    Mrs. Gorman: I thank my hon. Friend for that answer. I am sure that he will be pleased to learn that East Glamorgan hospital, in co-operation with the Amarant trust, of which I have the honour to be chairman, is about to open the first dedicated menopause clinic in Wales. It will be entirely free for the women in that area. The funds to pay the salaries of the doctor and nurse at that clinic have been raised entirely from the private sector, while the health service is providing the space and back-up facilities. Because of the great demand for the service by women in Wales, will my hon. Friend consider sponsoring training fellowships, so that the well-known Welsh gynaecologist, Dr. Peter Bowen-Simpkins, can undertake the training of more doctors who would like these facilities to be available?
    Mr. Grist: I congratulate my hon. Friend on her announcement and thank her for the interest that she has been able to arouse in the subject and for her chairmanship of the trust. Training goes a little wider than the matters on which I can comment, but obviously we would consider any proposal such as that suggested by my hon. Friend.
    Mr. Roy Hughes: The plea by the hon. Member for Billericay (Mrs. Gorman) for better menopausal facilities in Wales may be laudable, but does the Minister agree that our health authorities are faced with a funding crisis and that there is pressure on them to close wards and whole hospitals? That has caused great anxiety in our local communities. Does the hon. Gentleman appreciate that we are still waiting for an up-to-date list of hospital closures to be placed in the Library?
    Mr. Grist: The hon. Gentleman knows perfectly well that health authorities in Wales are receiving record funding. They have never received so much, nor have they
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    ever been able to treat so many patients. As the hon. Gentleman knows, if his health authority has any proposals on closures, it must present them in the ordinary way when they will be a matter of public record.

    Salmonella
    Mr. Raffan: To ask the Secretary of State for Wales when he expects to publish his Department's report on the salmonella outbreak in Flint; and if he will make a statement.
    Mr. Grist: The Department's report will be published as soon as possible.
    Mr. Raffan: Is my hon. Friend aware of the widespread concern over the delay in the publication of the report, which the Welsh Office originally promised would be in April? Will my hon. Friend be more specific about the publishing date? Will he scotch rumours that the report does not face up to the central issue of the outbreak—the need for one person to be put in overall charge, preferably the medically qualified director of public health medicine?
    Mr. Grist: We shall have to wait for the report's final version before answering the latter part of my hon. Friend's question. The time taken to publish the report was caused largely by the fact that we had to send it in draft form to Delyn borough council and Clwyd health authority, and the borough council in particular replied at considerable length. In addition, we sent out an associated draft guidance circular on public food poisoning, and we are trying to sort out the responses to it. We shall have to wait until we have managed to do those things before publication can take place. I promise my hon. Friend that we shall do it as quickly as possible.
    Mr. Speaker: Mr. Rhodri Morgan. The question relates to Flint.
    Mr. Morgan: It is about salmonella.
    Mr. Speaker: The hon. Member had better read the question.
    Mr. Morgan: I am asking a question about the importance of discovering the causes and effects of salmonella. As a further sign of how important it is, I should like to point out that an outbreak at Ely hospital, a large hospital in my constituency, has resulted in 62 cases of salmonella or suspected salmonella poisoning. I press the Minister on the urgent need for him to find out the exact causes and effects of salmonella. In the meantime, may I say to him how strongly—
    Mr. Speaker: Order. I have let the hon. Gentleman get away with that, but the question was about a report on the salmonella outbreak in Flint.
    Mr. Grist: I have already asked for a report on that matter. I gather that 40 patients are affected, although the hon. Gentleman mentioned 60, but obviously that can be sorted out. It is a matter for South Glamorgan health authority, but clearly it is of public interest, and I shall find out precisely what has happened.

    Water Quality
    Mr. Michael: To ask the Secretary of State for Wales when he last met the chairman of Welsh Water plc to discuss water quality.
    The Secretary of State for Wales (Mr. David Hunt): I met Mr. John Elfed Jones, in his capacity as chairman of the Welsh Language Board on 9 July. I look forward to meeting him and his colleagues in Welsh Water plc on 6 September.
    Mr. Michael: When that meeting takes place, will the Secretary of State take the opportunity to discuss his welcome and long-overdue assurance that we shall have statutory water quality objectives for all rivers and estuaries in Wales? Will he go further and discuss with the chairman of Welsh Water how that will be paid for? Will he give an assurance that the contribution invested by the Government will continue at the same level as in the period just before privatisation?
    Secondly, will the right hon. Gentleman encourage the chairman of Welsh Water and the company to give up the idea of a flat-rate charge, or water poll tax as it is known, and to retain the present system at least until after the next general election, when the long-term future of the water industry will be determined?
    Mr. Hunt: I understand that Welsh Water made clear exactly what its preferred method of charging was early in 1989. It was clearly laid down then and was set out in the prospectus. The hon. Member will know that Dwr Cymru has laid down an investment programme of £1.75 billion over the next 10 years. That is a record level of investment, and it will be maintained. The hon. Gentleman should remember that the last time his party was in office there was a 50 per cent. cut in investment.
    Mr. Livsey: When the right hon. Gentleman next meets the chairman of Welsh Water plc, will he point out that the company is perhaps even more leaky than the Cabinet discussing German matters? One third of the water supply goes down the drain which is a cause of concern for water quality, and which badly affects Welsh Water's profits. Will he ensure that consumers will not have to pay for essential repairs but that money will come from the company's profits?
    Mr. Hunt: The hon. Gentleman raises an important subject which I know exercises the mind of the chairman of Dwr Cymru and his colleagues. The amount of leakage is serious and too high. I know that it will be one of the subjects that I shall discuss with Welsh Water when I meet the chairman on 6 September. It is certainly a problem which needs to be solved.
    Mr. John Marshall: Does my right hon. Friend agree that the best guarantees of improvement in water quality are the National Rivers Authority and increased investment, neither of which would have taken place without the privatisation of the industry?
    Mr. Hunt: I am glad that my hon. Friend mentioned that. I wish sometimes that we could have a more even-handed approach from the Opposition, and that they would pay tribute to the important reforms that we have introduced.
    Mr. Gareth Wardell: When will all untreated sewage be prohibited from entering Welsh coastal bathing waters?
    Mr. Hunt: As soon as possible, all significant discharges of sewage to coastal and estuarial waters will be treated.
    Mr. Wigley: Is not the Secretary of State aware of the tremendous variations in the quality of drinking water in Wales? In such circumstances, it is ridiculous for a uniform charge to be made on the pretext of the same price for the same service, when it is clearly not the same service. There will be a massive revolt against even pricing. Is not it time to nip this in the bud and stop it growing into an enormous problem?
    Mr. Hunt: Welsh Water made clear its preference early in 1989. We are talking about a range of services to be supplied and the method of charging. The hon. Gentleman has overexaggerated the problems that it will cause because many people in Wales had been expecting such an announcement. It is for the director general, Mr. Byatt, to consider charging from the point of view of the consumer.

    Labour Statistics
    Mr. Martyn Jones: To ask the Secretary of State for Wales if he will make a statement on levels of unemployment in Clwyd and north Wales generally.
    Mr. David Hunt: Unemployment in both Clwyd and north Wales has fallen substantially. In May 1990 the unemployment rate in north Wales stood at 5.7 per cent., whereas four years ago it was 15.2 per cent. The rate in Clwyd is 4.9 per cent. whereas it was 14.7 per cent. four years ago.
    Mr. Jones: I thank the Secretary of State for those figures. Leaving aside the fact that they have been fiddled something like 29 times since 1981—each time downwards, apart from once—does the Secretary of State acknowledge that if 1,200 jobs are lost at Brymbo, they will increase the figure for male unemployment by 17 per cent. in Clwyd alone? If the right hon. Gentleman is to have any credibility as Secretary of State for Wales, he must do something about Brymbo, and do it soon.
    Mr. Hunt: The hon. Gentleman knows about the range of activities in relation to Brymbo. The Welsh Development Agency is, with my full support, exploring a number of options to secure the future of that important community. I wish that the Opposition would start to pay tribute to the achievements of the people of Wales in having created a success story which has meant such dramatic falls in unemployment.
    Sir Anthony Meyer: Does my right hon. Friend share my astonishment that the Labour party should choose to raise that issue at this juncture? Is not it a fact that employment in Clwyd is one of the Government's most glittering success stories, and is not that due to the policies that have been pursued by three successive Secretaries of State for Wales in making the maximum use of the instruments available to them? Does my right hon. Friend agree that that is an achievement of which we should all be proud?
    Mr. Hunt: I quite agree. Lord Crickhowell and my immediate predecessor, my right hon. Friend the Member for Worcester (Mr. Walker), laid a tremendous foundation

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    for the future prosperity of Wales. I sometimes wish that Opposition Members would join their colleagues in local government—
    Dr. Thomas: Not all of us.
    Mr. Hunt: I beg the hon. Gentleman's pardon. I sometimes wish that Labour Members would join their many colleagues in local government in working in a positive partnership—as some do—to secure the future of the people of Wales and to improve their conditions even further.
    Mr. Barry Jones: With the long recess imminent, will the right hon. Gentleman tell us whether he believes that the excellent Brymbo work force has a steelmaking future? They have fought so spiritedly and so hard for more than two months and need a word of encouragement about steelmaking from the right hon. Gentleman. We do not want him to be impotent in this instance. The right hon. Gentleman's former colleague in Cabinet, the former Secretary of State for Trade and Industry, did Wales a disservice in his infamous interview with The Spectator. The right hon. Gentleman may know that there are 43 West German companies in Wales and 900 in Britain, and that one sixth of West Germany's manufacturing companies here are located in Wales. Was not the right hon. Gentleman glad to see his former Cabinet colleague go, having done such damage to Britain's interest?
    Mr. Hunt: To answer the only question that falls within the limits of the tabled question, I advise the hon. Gentleman that I have had the opportunity of meeting representatives of the work force at Brymbo and have been able to assure them that I am aware of the tremendous progress that they have made, individually and collectively, in terms not only of the quality of their work, but of productivity. However, it is right not to raise hopes to a false expectation. Suffice it to say that every possible effort is being made to find a solution that secures the future of that community.

    Earnings
    Mr. Flynn: To ask the Secretary of State for Wales what is the average pay in Wales.
    Mr. David Hunt: The average gross weekly pay of full-time employees on adult rates in Wales in April 1989, which is the latest date for which figures are available, was £215.90 compared with £87.20 in April 1979.
    Mr. Flynn: Although we are happy to pay generous tributes to local authorities, the Welsh Office and everyone else who has encouraged the good news on employment in Wales in the past few years, we must not be blinded by the glitter referred to by the hon. Member for Clwyd, North-West (Sir A. Meyer). Is the Secretary of State aware that what has really happened and what masks the reality is that a plague of unemployment has spread over Wales during the past decade? We have slipped to the disgraceful position in the new earnings survey to which the Secretary of State referred of having the lowest average pay of any region in Britain. Will the Secretary of State acknowledge, as his predecessor did not, that low pay does great damage? To be paid a low wage is an insult. It is demeaning and it produces a demoralised work force.
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    When will the Secretary of State return us to the level in Wales of a decade ago? The poverty of unemployment has been replaced by the poverty of those in low-paid jobs.
    Mr. Hunt: The hon. Gentleman did not listen to my reply. The figures that I gave show a 17.6 per cent. real-terms increase in rates of pay since 1979. I recognise that we have problems in Wales, caused by low pay in certain instances and by a low gross domestic product per head, and that we have pockets of poverty. My predecessors and I set a target of raising the quality of life throughout Wales and of spreading prosperity. That is a commitment to which I am securely wedded.

    Welsh Language
    Mr. Nicholas Bennett: To ask the Secretary of State for Wales what recent representations he has received about Welsh language teaching.
    Mr. Alan W. Williams: To ask the Secretary of State for Wales what recent representations he has received concerning the use of the Welsh language in primary schools in Dyfed.
    The Minister of State, Welsh Office (Sir Wyn Roberts): We have received 27 representations about the use of the Welsh language in primary schools in Dyfed since June 1989.
    Mr. Bennett: Does my hon. Friend agree that the best way to encourage Welsh language and culture is through a sensible, balanced and moderate policy which does not involve compelling parents to accept it? Does he also agree that the best way of ensuring freedom of choice for my constituents would be to allow generous exemptions from compulsory Welsh in secondary schools and to look again at the categorisation policy in some primary schools in Dyfed which means that some children are immersed in Welsh at the age of five without the opportunity of learning their mother tongue of English?
    Sir Wyn Roberts: The word "compulsion" is anathema to me, as it is to my hon. Friend. He must recognise that in schooling there is an element of compulsion to learn school subjects. My right hon. Friend the Secretary of State has consulted on exemptions from Welsh in the national curriculum. He is considering the results of that consultation and we shall make an announcement in due course. Categorisation of schools in Dyfed is primarily a matter for the local education authority.
    Mr. Williams: Does the Minister agree that every child has a right to an education in its mother tongue as far as reasonably possible? Does he realise that in Dyfed since last September, when, without consulting parents, the local authority made all schools in rural areas Welsh speaking, thousands of English-speaking infants have been deprived of the right to an education in their mother tongue?
    Sir Wyn Roberts: It is important to understand what happened in Dyfed. Under the Education (No. 2) Act 1986—not the Education Reform Act 1988—the local education authority is required to state its policy on secular education. I understand that consultations have been held with the governors of about 333 primary schools

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    and that only two changes were proposed. There will be consultation with parents during the summer and in the early autumn.
    Mr. Gwilym Jones: Will my hon. Friend confirm that the row in Dyfed has more to do with county policy than with the Education (No. 2) Act or the national curriculum?
    Sir Wyn Roberts: Yes, it is precisely as my hon. Friend says. The dispute arises from the county's policy, which is geared to the 1986 Act. It is an independent authority, but I understand that 27 of its members belong to the party of the hon. Member for Carmarthen (Mr. Williams).
    Mr. Geraint Howells: Does the Minister agree that it was a great shame that the hon. Members. for Pembroke (Mr. Bennett) and for Carmarthen (Mr. Williams) interfered with the teaching of Welsh in one of my schools in north Pembrokeshire? The parents of 50 out of 56 children at that school are in favour of the present policy. Will the Minister advise those two hon. Gentlemen to behave themselves and to act like statesmen?
    Sir Wyn Roberts: I understand that the parents concerned in one school are the constituents of my hon. Friend the Member for Pembroke (Mr. Bennett). Surely the House is not averse to right hon. and hon. Members stating their views or those of their constituents. We are here to try to resolve any difficulties that may arise.
    Mr. Budgen: Is my hon. Friend aware that his answers about the Welsh language will cause dismay and confusion in Wolverhampton? A separate language is a clear sign of distinct racial characteristics, and my hon. Friend's answers, allied with the revelation that members of the Cabinet have been considering the distinct racial characteristics of the German race, flies in the face of all that the people of Wolverhampton have been taught for 25 years by successive Governments and by the race relations industry—that there are no such things as racial characteristics.
    Sir Wyn Roberts: Listening to my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen), I wished that his predecessor as Member of Parliament for that constituency were here, because he was a distinguished Welsh scholar. I cannot agree with my hon. Friend that linguistic differences are the same as racial differences. After all, I can proudly boast that I speak Welsh and German, and I have a smattering of English.

    Family Practitioner Services
    Mr. Coleman: To ask the Secretary of State for Wales what arrangements he has made to finance the family practitioner services budgets in Wales.
    Mr. Grist: More than 90 per cent. of the provision for family practitioner services is not subject to cash limiting. Cash limits for family practitioner committee administration budgets have already been issued and provisional allocations have been made in respect of a proportion of GP practice staff costs and cost-rent schemes. I hope to finalise allocations in the next few weeks, after information received from family practitioner committees has been evaluated.
    Mr. Coleman: Is the Under-Secretary of State aware that there is great anxiety among medical practitioners in
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    Wales over the uncertainty that the Minister outlined again this afternoon about the provision being made by the Welsh Office? Will the hon. Gentleman get the Welsh Office to move more quickly, so that doctors can be doctors, not book-keepers?
    Mr. Grist: Doctors in the hon. Gentleman's constituency may have encountered some problems in receiving initial allocations from their family practitioner committee, which I believe adopted a slightly different policy from some others. The inherited commitments were not available to FPCs until well into the current financial year, and they had to be dealt with first, although there is an allowance for an increased payment above the inherited commitment. Nevertheless, the fact remains that allocations arrived late as a consequence of bunching in the previous financial year.

    NHS Reforms
    Mr. Denzil Davies: To ask the Secretary of State for Wales when he next intends to meet the chairman of the area health authorities in Wales to discuss the Government's national health service reforms.
    Mr. David Hunt: I met the chairmen of the health authorities in Wales on 10 July. I look forward to meeting them again collectively in October.
    Mr. Davies: Is not the reality that few people in Wales support the so-called reforms? They will lead to the worst kind of chequebook medicine and divert real resources that should be used to heal the sick to useless exercises such as form filling and counting pills. Is it not time that those so-called reforms were abandoned?
    Mr. Hunt: No, it is not. I hope that the right hon. Gentleman will recognise that funding for the Welsh national health service has risen from under £500 million in 1979 to more than £1,500 million today. The reforms now seek to target those substantial resources more effectively. The right hon. Gentleman should also consider the clear objectives that ministerial colleagues and I have set the health service in Wales—I shall send him a copy if he likes. Everyone knows that we have set a target to become the best in Europe, and we are well on the way towards achieving that.
    Mr. Rowlands: But if the resources are available and the policies are so successful, why are beds lying empty in hospitals in Merthyr because of lack of staff, while qualified staff are unable to get jobs and, at the same time, the area authority is employing agency staff? In the name of heaven, what has that to do with the reforms? Let us make the present system work more effectively rather than creating stupid and foolish competition within the health service.
    Mr. Hunt: What we are doing is to make the present system work more effectively. No one can dispute the tremendous additional resources that have gone into the health service in Wales. I hope that even the hon. Gentleman will admit that there has been a substantial real-terms increase in the amount of resources devoted to the health service in his constituency. We must now follow the clear target that we have set, of adding years to life and quality of life to years.
    Mr. Raffan: Is my right hon. Friend aware of the widespread recognition in my constituency of the Government's record on the national health service, as seen in the renewal and upgrading of each of our four cottage or community hospitals? People recognise just how much the Government have spent compared with the previous Government who cut—slashed, indeed—public expenditure on the health service. In Delyn we recognise the need for the Government to get value for money in terms of the NHS reforms.
    Mr. Hunt: How right my hon. Friend is. We will always win any argument about resources, because we have put substantial, additional resources into the NHS. We now have to have a meaningful, clear policy towards which we can all work—everyone involved in the NHS. We have now set that target, and we believe that we are the first health service in Europe to do so. The hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) should be proud of that, and not seek to make party political points out of health.
    Mr. Barry Jones: May I congratulate the Secretary of State on reversing his predecessor's decision on Project 2000? I also congratulate the right hon. Gentleman on his decision not to axe the community health councils—another of his predecessor's proposals. However, will the Secretary of State now decide to give the appropriate authorities sufficient funding to enable care in the community to become a reality? I speak for the elderly and the mentally ill and in the cities and towns of Wales, it is clear that all is not well. What will he do to make care in the community a reality, not a Government slogan?
    Mr. David Hunt: Obviously, an announcement will be made about the subject to which the hon. Gentleman has devoted himself. I hope that he will recognise that the point of a consultation exercise is to listen carefully to the points made. After hearing the results of the consultation, I decided not to proceed with reducing the number of community health councils.
    I regard Project 2000 as a vital element in the strategy we have been debating. It is important that that project is up and running in Wales. I recently had the opportunity to meet the nurses, and I told them the importance we attach to Project 2000.

    Young Farmers
    Mr. Ieuan Wyn Jones: To ask the Secretary of State for Wales when he intends to meet leaders of the farming unions in Wales to discuss the problems of young entrants to the agriculture industry.
    Sir Wyn Roberts: My right hon. Friend met the leaders of the unions on 27 June, although this subject was not discussed. He has also agreed to meet them and the young farmers' clubs during his visit to the Royal Welsh show next week.
    Mr. Jones: I am grateful to the Minister for that reply. He and his colleagues will be aware that the number of young people engaged in agriculture has dropped significantly in recent years, and that the number of students attending colleges of agriculture has also dropped alarmingly. I am sure that the Minister will agree that we need a comprehensive range of packages for young farmers, including more starter holdings, low-interest
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    loans, which are available in France, and a milk quota pool for new entrants. As a result of discussions at the Royal Welsh show will the Minister assure us that the Welsh Office will take a bold initiative on behalf of young Welsh farmers?
    Sir Wyn Roberts: The smallholdings, which are available for young entrants to the industry, are not a central Government responsibility, but a responsibility of the local authorities in Wales. During the five years from 1984 to March 1989, the number of smallholdings in Wales remained nearly constant—they increased in total size. A number of measures are being taken to encourage young entrants into agriculture, but some of them are dependent on suggestions from the industry. With regard to the availability of loans, the hon. Gentleman is right to say that loan subsidies are available in some continental countries, but the choice facing us was to have either subsidised loans or capital grants, and we opted for capital grants because they have advantages.

    Earnings
    Mr. Stern: To ask the Secretary of State for Wales if he will commission a survey of incomes in the border counties of Wales.
    Mr. David Hunt: No, Sir. There is already sufficient information available in the new earnings survey details.
    Mr. Stern: I am grateful to my right hon. Friend for that reply. Does he agree that the earnings survey details show a remarkable convergence in average incomes between counties on both sides of the Welsh border? In the light of that, does he agree that there might well be a case for looking again at the economic, financial and other incentives available to individuals and businesses for moving to the Welsh side of the border?
    Mr. Hunt: In Avon, the relevant figure, which we were comparing before, is £241.30, and in Gloucestershire it is £230.10, as opposed to a figure in Gwent of £212.20. Therefore, I do not accept my hon. Friend's initial premise.
    Dr. Thomas: Will the Secretary of State give us an assurance that, as regards Mid-Wales, the activities of the Development Board for Rural Wales will be as fully supported during his tenure as Secretary of State as they were under previous Administrations? Will he ensure that there are sufficient resources for the board's economic and social programme, in view of the potential competition from over the border in Telford?
    Mr. Hunt: As it happens, I was in the hon. Gentleman's constituency yesterday with the chairman of the Development Board for Rural Wales, Mr. Glyn Davies, and I was able to reassure him once again of the importance that I attach to the work of the board, and my strong commitment to its future work.
    Mr. Dickens: When my right hon. Friend answered an earlier question on incomes in Wales, which related closely to this question, he gave an undertaking to the House that his first priority was to improve the quality of life for the people of Wales. We all know that, once he was appointed by the Prime Minister, the House had a good Secretary of State for Wales. If he says that he intends to improve the quality of life in Wales, he will certainly do so.
    Mr. Hunt: I thank my hon. Friend.

    Corlan Housing Association
    Mr. Morgan: To ask the Secretary of State for Wales when he next proposes to meet the chairman of Tai Cymru to discuss the collapse of the Corlan housing association.
    Mr. Grist: My right hon. Friend is meeting the Board of Housing for Wales tomorrow.
    Mr. Morgan: Would the Under-Secretary of State agree that, following the collapse of the Corlan housing association and the Government's determination to give housing associations a greater role, which was previously occupied by council housing, the Government's housing policy in Wales is now in a shambles?
    Mr. Grist: That is an extraordinary statement. I should have thought that for the hon. Gentleman's constituents, for mine and for those of other hon. Members in Wales, the hon. Gentleman should have expressed appreciation for Tai Cymru and for the Wales and West housing association for the remarkable job that they have done in safeguarding the homes of so many of our constituents.
    Mr. Murphy: But does the Minister accept that housing associations, and Tai Cymru in particular, simply do not have enough money to cope with the problems of Welsh housing and that that is really a matter for Welsh local authorities? When will the Government give local authorities the right to spend their own money on building houses for people in need in Wales? When will he put someone representing local government on the board of Tai Cymru?
    Mr. Grist: The hon. Gentleman overlooks the fact that local authorities' gross provision for housing this year has increased by 15 per cent. and that Tai Cymru's has gone up by 42 per cent. Local authorities are allowed to use their allowable money on new build, if they so wish. For instance, one of the hon. Gentleman's neighbouring authorities, Newport, has gone into new build consistently for several years, whereas for some reason, his own local authority seems to have ceased to do so.

  CHURCH COMMISSIONERS

    Arts Council
    Mr. Bowis: To ask the right hon. Member for Selby, representing the Church Commissioners, what discussions the Commissioners have held with the Arts Council about Church property.
    Mr. Michael Alison (Second Church Estates Commissioner, representing the Church Commissioners): None, Sir.
    Mr. Bowis: May I invite my right hon. Friend to encourage the leaders of the Church to discuss with Mr. Peter Palumbo his imaginative proposals for enabling this generation to repair the major national institutions and buildings, be they theatres or churches and cathedrals, as we approach the next century? If he does so, will he suggest looking into the fabric of the buildings and the security of
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    buildings so that we can avoid such intrusions as occurred at Westminster abbey recently, when stained glass windows were broken?
    Mr. Alison: I note, not without sympathy, my hon. Friend's supplementary question. I draw his attention to the comments of my hon. Friend the Minister for the Environment and Countryside in the debate on arts and heritage in the House on 4 July at column 1094, when he expressed his enthusiasm for the idea that something special might be done to help the cathedrals and said that he proposed to address the matter in the forthcoming White Paper. My hon. Friend may therefore be pressing at an open door.
    Mr. Frank Field: Would the Commissioner agree that the greatest contribution that the Church makes to the arts and the development of the arts is in the maintenance of Church buildings? In that regard, will he congratulate the Priory parish in Birkenhead on spending £1 million on restoring its parish church? Does he agree that that contrasts vividly with the dilatory way in which the diocese has dealt with another outstanding church on the other side of the river—Christ church, Bootle?
    Mr. Alison: I note what the hon. Gentleman says. The £1 million that he mentioned is a staggering sum for a local parish to raise. That is in stark contrast to the other parish, and the failure of the diocese to help is manifest in what he said. The Church of England, through its various funds, spends about £70 million a year on the refurbishment and maintenance of parish churches, and that is a considerable sum.

    Community Charge
    Mr. Harry Greenway: To ask the right hon. Member for Selby, representing the Church Commissioners, how much has been spent by the Church Commissioners on assistance with community charge for archbishops, bishops, clergy and others; and if he will make a statement.
    Mr. Alison: An estimated £8.5 million for the year beginning 1 April. The clergy and their spouses have no domestic rates savings to offset against their personal charge liability, and the Commissioners' contribution provides some three quarters of the costs of special stipend increases to help them meet the charge. The extra tax and national insurance on those increases amounts to about £4 million per annum, which is included in the Commissioners' contribution.
    Mr. Greenway: Will my right hon. Friend bear in mind the fact that clergymen, including archbishops, must take on a second home—they cannot own their main home—and are therefore required to pay the community charge twice? Will he press the Government to help them or to absolve them from payment on their second homes? On whom has he put his money for the next Archbishop of Canterbury? That is a matter of much interest.
    Mr. Alison: On the second point, I certainly could not afford a stake on that hazardous betting lottery.
    On my hon. Friend's main question, I share his sympathy for the predicament of clergy who are charged the standard community charge—often twice—on the second homes that they are buying. Such second homes are

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    often indispensable, because the houses that they live in as clergy are tied to the job; they must quit them when they retire. They must buy their retirement houses early to be able to afford them over the lifetime of their ministry. I hope that the Secretary of State for the Environment will take note of this point when he considers the future of the standard community charge, and I shall draw my hon. Friend's question to his attention.
    Mr. Anderson: The right hon. Gentleman will know that, in an effort to reduce the injustices and absurdities of the poll tax, the Government gave a lump sum for the upkeep of Church buildings, which by definition mainly assisted the established Church. Is he aware of any means of compensating the nonconformist Churches?
    Mr. Alison: The hon. Gentleman has pointed out a limitation of the substantial sum—more than £3 million—that the Government made available through English Heritage towards the support of Church buildings. He is right to say that a number of the buildings of the free Churches do not qualify for such help. I shall take careful note of his criticism of that limitation, and inquire whether anything can be done to help the free Churches. I cannot commit myself to an affirmative and positive answer.

    Lambeth Palace
    Mr. John Marshall: To ask the right hon. Member for Selby, representing the Church Commissioners, what has been the Commissioners' contribution to the upkeep of Lambeth palace during the past five years.
    Mr. Alison: As the owners of Lambeth palace, the Church Commissioners are wholly responsible for the upkeep of the buildings, which has cost some £329,000 over the past five years.
    Mr. Marshall: Does my right hon. Friend agree that the people of this country need an Archbishop of Canterbury who will preach evangelical Christianity rather than socialism?
    Mr. Alison: I am entirely in favour of having an archbishop who is conservative all round. If I had to accept a limitation on that, I would prefer him to be theologically conservative, whatever his politics might be.

  HOUSE OF COMMONS COMMISSION

    Management Consultancy
    Mr. Allen: To ask the hon. Member for Berwick upon Tweed, representing the House of Commons Commission, what proposals have been put forward so far in the management consultancy exercise on the House of Commons conducted by Sir Robin Ibbs.
    Mr. A. J. Beith (On behalf of the House of Commons Commission): None, Sir. The House of Commons Commission has asked Sir Robin to offer his advice to it by the beginning of the next Session of Parliament.
    Mr. Allen: Is the hon. Gentleman aware that one of the problems of dragging this place into the 20th century so that it is a modern, professional legislature, is that its lines of accountability are rather blurred, there are few clear budgeting functions and responsibility is split between the
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    Commission, the Services Committee and its subcommittees and the Department of the Environment? Will he undertake to ensure that the Ibbs report covers those matters so that we can be clear about where responsibility lies and about how to get things changed in this antiquated place?
    Mr. Beith: Yes, Sir. I told the House that Sir Robin's terms of reference were to examine whether the responsibilities at present divided between the Commission, the Services Committee, the Department of the Environment and Leader of the House could be brought together
    "with a view to ensuring that so far as possible there is a co-ordinated management and decision-taking structure under the control of the House".—[Official Report, 23 May 1990; Vol. 173, c. 179.]
    Mr. Soames: Does not the hon. Gentleman agree that one of the likely findings of the Ibbs report—contrary to what was said by the hon. Member for Nottingham, North (Mr. Allen)—is that the Palace of Westminster copes in the most remarkable manner with the obligations that are increasingly thrust upon it? Does he also agree that one of the tremendous strains on the House is imposed by a battalion of so-called research assistants, who appear to clog our proceedings greatly?
    Mr. Beith: The Commission would not have appointed Sir Robin if it had thought that it knew all the answers to all the questions that he has been asked to consider. Many people contribute most effectively to making the House run well. Many work within it—not just its employees, but those who assist Members as secretaries and research assistants. We believe that the work that Sir Robin is doing may assist us to have better systems for doing those things well in the future.

    Secretarial Allowances
    Mr. Stern: To ask the hon. Member for Berwick on Tweed, representing the House of Commons Commission, what is the average delay between receipt of a bill for payment on behalf of hon. and right hon. Members out of the secretarial etc. allowance and its payment.
    Mr. Beith: Direct payments to third parties authorised by hon. and right hon. Members to be made out of their office costs allowances are paid each week, normally on a Thursday. Depending on the day of the week on which a claim is received, the Fees Office would normally expect to make payment that week or the following week.
    Mr. Stern: I am grateful to the hon. Gentleman for that answer. I am sure that he will join me in praising the Fees Office for the work that it does with the resources at its command. Nevertheless, it sometimes has to decide which bills are to be paid this week and which are to be delayed. Does the hon. Gentleman agree that it is deplorable that a temporary secretary should have to wait two months to receive the salary for which she has worked, and should still be waiting for her P45?
    Mr. Beith: If the hon. Gentleman has a particular case in mind, I hope that he will bring it to my notice. It is the practice of the Fees Office to seek to ensure that Members' staff, in particular, are paid promptly. The only circumstance that I can think of in which that cannot

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    happen is where a claim is made for payment on the ensuing year's allowance, rather than the allowance for the current year.
    Mr. Wigley: Is the hon. Gentleman aware that that is not an isolated incident? There has been an abundance of cases of delay in payment of allowance, of delay in implementation of an increase in salary and of Members' salaries being lost in the post and not being caught up with for months. That suggests there may be understaffing in the Fees Office, or that the system needs reviewing. One of those possibilities needs to be looked at.
    Mr. Beith: Representations do not seem to confirm the widespread nature of the problem to which the hon. Gentleman has referred—least of all the problem of hon. Members not being paid. However, if cases are brought to my notice, I will certainly ensure that the Fees Office attends to them immediately.

    Trade Union Side
    Mr. Carr: To ask the hon. Member for Berwick upon Tweed, representing the House of Commons Commission, when he last met trade union representatives of the House of Commons staff to discuss terms and conditions of employment.
    Mr. Beith: Negotiations between management and trade union representatives of House of Commons staff are delegated by the House of Commons Commission to the Board of Management and the Administration Committee, and take place within the framework of the House of Commons Whitley committee. Consequently, the Commission's involvement in negotiations is required only on significant occasions such as the breakdown of the agreed disputes procedure or the signing of recognition agreements. The last such occasion—the latter case—was on 10 March 1986.
    Mr. Carr: Has the hon. Gentlman met trade union representatives of staff employed by hon. Members, especially in respect of health and safety provisions? If not, will he do so?
    Mr. Beith: The Commission would certainly wish to be aware if there were problems of which representatives of staff members were aware. There are channels through which these can be brought forward. There is no current case of any dispute between the Commission and any trade union.
    Mr. Beaumont-Dark: Does the hon. Gentleman agree that there is a problem for the Refreshment Department and that it would be better—for security reasons alone—if there were more permanent staff? Does he agree that, because of the wage scales of the refreshment staff in the restaurants, the turnover is very high, and that most people think that what those staff are paid is well below what they could earn outside? Is it not time that we paid people more, got better staff and kept them?
    Mr. Beith: I fully share the hon. Gentleman's wish that the staff of the Refreshment Department should be well paid, and should have security and continuity of employment. I believe that to be in the interests of the House. Evidence to date suggests that the rates of pay in
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    the Refreshment Department are in accordance with those paid outside the House, but the matter is under consideration by the Commission.

  HOUSE OF COMMONS

    Private Bills
    Mr. Skinner: To ask the Lord President of the Council when he expects to introduce plans to change the private Bill procedure; and if he will make a statement.
    The Lord President of the Council and Leader of the House of Commons (Sir Geoffrey Howe): We shall look for an early opportunity to bring forward legislation to implement the proposals in our recently published consultation document, taking into account comments received in response to this consultation.
    Mr. Skinner: I know that the Leader of the House has been very busy lately, what with all the problems surrounding the Secretary of State for Trade and Industry and so forth, but why does he not get on with the job? When I came here 20 years ago, about 10 Bills would receive parliamentary time; now, there are as many as 30. Will not history record that, in 1990, while the Germans were taking over the Common Market and the rest of Europe, this Tory Government were pottering about with Bills about closing pits, running racing circuits and opening crematoria?
    Sir Geoffrey Howe: On the contrary. I am interested to hear that the hon. Gentleman has noticed the upsurge in the number of private Bills being introduced. If he studies them more closely, he will see that they are to do with the promotion of private enterprise in many sectors and are representative of the tremendous expansion of enterprise and activity in this country as a result of the policies of the past 10 years.

    Members' Offices
    Mr. Michael: To ask the Lord President of the Council whether he has any proposals to improve safety and access for hon. Members whose offices are outside the main House of Commons building.
    Sir Geoffrey Howe: The existing pedestrian crossing at the south-east corner of Parliament square is to be upgraded to a controlled crossing as part of a package of measures designed to improve the movement of pedestrians and traffic in Parliament square. This has been agreed between both Houses and Westminster city council.
    Mr. Michael: Before chaos descends on Parliament square and elsewhere, may I ask the Lord President whether he has noted that his previous reply suggested that the main objective of Westminster city council is to accelerate traffic? That will present increasing danger to hon. Members who have offices across the road. Even the so-called traffic refuge seems to be used more as a private motorway for motor cyclists than as a safety resort for pedestrians. It seems that no hon. Members who have offices on the other side of the road have taken part in consideration of this matter. Will the Lord President give fresh consideration to the safety of Members rather than risking by-elections, which might pose a greater danger to his party?
    Sir Geoffrey Howe: I appreciate that some hon. Members feel strongly about this matter, and I have had an opportunity to talk to the hon. Gentleman about it. The Accommodation and Administration Sub-Committee and the appropriate Committee of the other place have looked at the problem, which has also been carefully considered by Westminster city authorities. The object of the exercise is to regulate traffic into and out of Parliament square so as to provide more effective controlled opportunities during which traffic ceases to move. As the hon. Gentleman knows, Westminster city council is investigating the possibility of an additional central refuge.

    Gymnasium
    Mr. Atkinson: To ask the Lord President of the Council when he last paid an official visit to the Westminster gymnasium.
    Sir Geoffrey Howe: I visited the Westminster gymnasium on Monday 16 October 1989 in course of a tour of the parliamentary estate. I did not stay long.
    Mr. Atkinson: I am not suggesting that my right hon. and learned Friend should make unofficial visits to the gymnasium. Is he aware of the growing number of hon. Members who visit the gymnasium and of the long waiting list of staff who want to visit it? Will he lend his considerable weight to current discussions about transferring as soon as possible the facilities in Norman Shaw South to the greatly enlarged premises vacated by the old Cannon row police station?
    Sir Geoffrey Howe: My hon. Friend is right to draw attention to the fact that the present accommodation is considered inadequate for the demands that are placed upon it. Relocation is being considered, and I understand that the Accommodation and Administration Sub-Committee has given approval in principle for the present gymnasium to be relocated in alternative accommodation within the parliamentary estate—in the place described by my hon. Friend.

    Physical Education
    Mr. Harry Greenway: To ask the Lord President of the Council whether he has any plans to grant-aid the cost of courses undertaken by hon. Members who pursue physical education activities; and if he will make a statement.
    Sir Geoffrey Howe: I have no such plans.
    Mr. Greenway: Does my right hon. and learned Friend agree that money spent on grant-aiding hon. Members to undertake physical education would be well spent because it would make us fitter to do our demanding job, reduce the weight of many overweight Members, and make us all more efficient in pursuing our tasks?
    Sir Geoffrey Howe: If my hon. Friend goes on advocating that cause with his customary zeal, I cannot see any case for spending public money on it.

    Members' Staff
    Mr. Allen: To ask the Lord President of the Council what proposals he has for improving the provision of personal staff to hon. Members; and if he will make a statement.
    Sir Geoffrey Howe: The provision of Members' personal staff is a matter for Members themselves. I have no proposals to change the financial and administrative arrangements that govern that provision.
    Mr. Allen: I thank the Lord President for the work that I know he has put into setting up the review into Members' services. Will the right hon. and learned Gentleman ensure that the review takes account of the previous exercises which have been undertaken, in which it was suggested that hon. Members could have an office in their constituency that would be staffed by the House of Commons Commission, so that hon. Members could do their job in this place and in their constituencies to an even greater degree and in even greater depth than they can at present?
    Sir Geoffrey Howe: I appreciate the hon. Gentleman's commendation of the establishment of the Ibbs committee, which is examining administrative matters within the House generally. His supplementary question goes beyond that and would require much wider consideration by hon. Members generally. It would go beyond the present principle of financing secretarial services within the present rules.

    New Members (Induction)
    Mr. Carr: To ask the Lord President of the Council if he will make a statement on the induction procedures for new hon. Members for a general election.
    Sir Geoffrey Howe: New Members will receive, in advance of their arrival at the House, an updated briefing pack describing the services provided by Departments of the House. In addition, Heads of Department and senior Officers of the House are available for consultation. Induction in the Chamber will be in accordance with well-established procedure.
    Mr. Carr: I have had the benefit of most valued advice from fellow Members since my arrival here about five weeks ago. It occurs to me that, in the event of a general election, when many new Members will be attending the House—[HON. MEMBERS: "Labour."] Yes, obviously Labour Members—the lack of any proper method of induction is an anachronism. Would the right hon. and learned Gentleman wish to consider redressing this problem?
    Sir Geoffrey Howe: To sustain the quality of advice that will be given to the many Conservative Members who may enter the House after the next election, I am sure that the hon. Gentleman's supplementary question deserves consideration. If he wishes to raise any matters that come within his own experience, I shall be glad to examine them.
    Mr. Jopling: Is my right hon. and learned Friend aware that, in the United States, Harvard university runs a course every two years for newly elected members of the

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    Congress? Will my right hon. and learned Friend give some thought to whether something of that sort might be appropriate here?
    Sir Geoffrey Howe: That is a novel suggestion in the British context. As it has the authority of my right hon. Friend, I shall examine it with care.

    Stationery
    Mr. Janner: To ask the Lord President of the Council if he will make a statement concerning the recyclability of paper used for the official documents of the House.
    Sir Geoffrey Howe: All the paper that is provided by HMSO for official use in the House of Commons can be recycled. The Accommodation and Administration Sub-Committee has given approval for a number of items of stationery containing recycled paper to be introduced to the House.
    Mr. Janner: How many thousands of tonnes of paper are used by the House during a year, and why is not much more of it recycled, bearing in mind the fact that we should be setting an example?
    Sir Geoffrey Howe: I do not have the figure at my fingertips. As the hon. and learned Gentleman was told on 5 February, all the paper that is provided for official use in the House can be recycled. The Accommodation and Administration Sub-Comittee is considering ways in
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    which recycled material can be used more widely. The matter is under active consideration, as the hon. and learned Gentleman would wish.

    European Legislation
    Mr. Teddy Taylor: To ask the Lord President of the Council what progress has been made in implementing the revised proposals for the consideration of EEC legislation.
    Sir Geoffrey Howe: Having heard the views expressed in the debate on 28 June on the Procedure Committee's report on the scrutiny of European legislation and the Government's response to it, I hope to put detailed proposals for change before the House very shortly with a view to operating the new arrangements from the start of the next Session.
    Mr. Taylor: Does my right hon. and learned Friend accept that, when three rather important directives on milk, meat and cadmium will have to be approved or disapproved by the House this evening in about 30 seconds, it is a bit of an insult to the democracy that many of us believe in? Does he agree that, if we go to the intergovernmental conference and agree to the control of our economy by a central bank, we may as well close this place down?
    Sir Geoffrey Howe: My hon. Friend raises a wide range of questions, which go well beyond the question that I have answered. I hope that he will derive some satisfaction from the fact that the arrangement which the House in general approved will be put in place at a fairly early date.

Federal Republic of Germany
3.34 pm
Mr. Giles Radice: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 20, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"relations between Great Britain and the Federal Republic of Germany and related matters concerning the role of a unified Germany within the European Community."
My application is specific because it relates to the Prime Minister's failure to sack the right hon. Member for Cirencester and Tewkesbury (Mr. Ridley) following his appalling remarks about Germany, published in The Spectator last week. Her failure to act immediately shows that privately she agrees with the right hon. Gentleman's views, if not his language.
The application also relates to the minutes of a confidential Chequers meeting on Germany in March, published in yesterday's The Independent on Sunday. The minutes of the meeting, which was attended by the Prime Minister and the Foreign Secretary, revealed grossly over-simplified and insulting views about the German national character. The Prime Minister evidently thinks that German characteristics include angst, aggressiveness, assertiveness, bullying, egotism, an inferiority complex and sentimentality. I submit that these xenophobic opinions, more appropriate to a football hooligan than to a responsible Prime Minister, have to be repudiated by the House of Commons as soon as possible.
My application is important because it concerns Britain's relations with Germany—our ally in NATO, a
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fellow member of the European Community and our chief trading partner. It is vital that the House takes the opportunity to demonstrate its commitment to good Anglo-German relations as soon as possible.
My application is urgent because the Foreign Secretary is attending the European Community Foreign Affairs Council, which meets today and tomorrow. British trade Ministers will also be present at the Internal Market Council. Ministers representing this country ought to be reinforced by the views of this House. Therefore, it is essential that the House should be given the opportunity as soon as possible to disown the anti-German views of the Prime Minister and to reassure Germany of our friendship and co-operation in the European Community and elsewhere.
Mr. Speaker: The hon. Member for Durham, North (Mr. Radice) seeks leave to move the Adjournment of the House, under Standing Order No. 20, for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
"relations between Great Britain and the Federal Republic of Germany and related matters concerning the role of a unified Germany within the European Community."
As the House knows, under Standing Order No. 20, I have to announce my decision without giving my reasons to the House. I have listened with great care to what the hon. Gentleman said. As he knows, I have to decide whether his application comes within the Standing Order and, if so, whether a debate should be given priority over the business already set down for this evening or for tomorrow. I regret that the matter which he has raised does not meet the requirements of the Standing Order. I cannot, therefore, submit his application to the House.

Points of Order
3.38 pm
Dr. John Cunningham: On a point of order, Mr. Speaker. Since the House last met, a very senior and, we hear, much-loved-by-the-Prime-Minister member of the Government has resigned in the most disgraceful circumstances, due to outdated xenophobia.
You have just ruled that the House cannot debate the matter under Standing Order No. 20. The Prime Minister has neither the guts nor the candour to come here and make a statement. There ought to be circumstances, through either those procedures or other procedures of the House, in which the Opposition have the opportunity to cross-question the Prime Minister about this state of affairs.
As my hon. Friend the Member for Durham, North (Mr. Radice) has made clear, British Ministers are currently embarked upon exercises to try to restore the credibility of the country and the Government in the European Community, NATO and elsewhere. Ought we not to have an opportunity to discuss this matter? Will the country understand that these matters can be discussed in Brussels and Strasbourg but not in the House of Commons when the Prime Minister, who has a duty and responsibility to build up the reputation of the country in a widening and developing Europe, displays attitudes of bigotry and malevolence?
Several Hon. Members rose—
Mr. Speaker: Order. Allow me to put my view on this matter. I have to take into consideration all sorts of matters when taking decisions on Standing Order No. 20 applications. One of them is other opportunities that the House may have for discussion. There is such an opportunity tomorrow at Prime Minister's Question Time and possibly an opportunity later this week on an Opposition Supply day.
Mr. Ian Gow: Further to that point of order, Mr. Speaker. Even if it is not within the knowledge of the shadow Leader of the House, is it not within your knowledge that the Prime Minister will be submitting herself to cross-examination in this place tomorrow and the new Secretary of State will be submitting himself to cross-examination by the House at Question Time on Wednesday? Is it not further the case that Wednesday is an Opposition Supply day when they could perfectly well choose to debate this matter? Indeed, many Conservative Members hope that the Opposition will choose to debate this issue on Wednesday.
Mr. Tony Benn: Further to that point of order, Mr. Speaker. As you know, I also submitted a request for a debate today on grounds not dissimilar from those mentioned by my hon. Friend the Member for Durham, North (Mr. Radice), but he was chosen first to make his application. These are completely new events that have come to light since the House last met. There is the document and the resignation. This is a day, as has been said, when the Foreign Secretary is speaking for us in Brussels, and tomorrow the future of Germany is to be discussed.
It is always open to the Opposition to use their Supply days, but this is an immediate occasion when all the news media in the world are allowed to discuss the issue but not
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the House of Commons. With great respect, Mr. Speaker, we have surrendered our legislative power to Brussels in many respects. Now, evidently, we are to surrender our right to be what we were originally—the great forum of the nation.
I beg you, Mr. Speaker, to defend the right of Parliament to have a voice. There are many different opinions on both sides of the House on these matters; there is not unanimity on the Conservative Benches or on the Opposition Benches. It is not true to say that the only choice is between nationalism and federalism. There are people who take a wholly different view about the future of Europe. It is all very well to say that we can cross-examine the Prime Minister for 15 minutes tomorrow or that the Opposition can change their business for Wednesday when we are supposed to be discussing care in the community. Dare I say it—I demand that the House be allowed to express a view when its survival is at stake and when the media are concerned with what may be exciting but secondary matters compared to the function of the House of Commons.
Mr. Speaker: The right hon. Gentleman is correct: the public may not understand the criteria laid down under Standing Order No. 20—[HON. MEMBERS: "Nor do we."] Hon. Members do understand the criteria and they also know that I am precluded by the Standing Order from giving the reasons for my decision. In fact, they have been stated by the hon. Member for Eastbourne (Mr. Gow).
Mr. Nicholas Budgen: Further to the point of order, Mr. Speaker. I should like to take up the point made by the right hon. Member for Chesterfield (Mr. Benn). An important point arises from the seminar which was held on the racial characteristics of the Germans.
For the past 20 or 30 years, we have all been taught that there are no differences between the nations of Europe, that we are all the same, and that we must all become as bland and as similar as possible. The seminar was based on the proposition that there are distinct racial characteristics and that, from time to time, the nation states may represent a threat to each other. We may have heard such statements in private discussions—rather like kids going behind the bike shed for a smoke—but no one has heard them in public. We are all so shocked by the revelation that there are such things as nation states that perhaps my right hon. Friend the Prime Minister will explain why she talked privately about such wicked things.
Mr. Speaker: That may be so, but it is not a matter for me.
Mr. A. J. Beith: Further to the point of order, Mr. Speaker. Hon. Members will face a difficulty if we try to find out precisely what happened at the seminar. I hope that you can help the House. I think that, if hon. Members tabled questions to find out what advice was tendered at the seminar and whether the leaked reports were correct, the Table Office would refuse to allow them on the ground that they were about advice tendered to Ministers. If we wanted to ask questions about what the entire resources of the Foreign Office were telling the Prime Minister about the state and characteristics of Germany, and if that advice were completely different from and much better put together than the advice at that

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extraordinary seminar, we would not be able to table questions because it would be ruled that we were asking about advice tendered to Ministers.
As it is now apparent that the Prime Minister is seeking some extraordinary advice and is looking mainly for advice that confirms her prejudices, this leaves a gap which makes it difficult for us to challenge what is going on. I wonder whether in some way we can be allowed to table questions on this matter.
Mr. Speaker: That is a hypothetical matter at the moment. If the hon. Member were to table questions, we would look at them.
Mr. Roger King: Further to the point of order, Mr. Speaker. You may have noticed that Her Majesty's Opposition have allowed the Leader of the Opposition to leave the country to travel to the United States on an official visit. Will you confirm that, traditionally, a leader of a major political party who is travelling abroad never indulges in attacking the Government and Prime Minister of his country? Is there anything that you can do to remind the Leader of the Opposition of his responsibilities?
Mr. Speaker: I am responsible for order in the Chamber, not for what any Member of Parliament says when he is away from this place.
Mr. Stanley Orme: Further to the point of order, Mr. Speaker. The unusual feature of this matter is that yesterday the Foreign Secretary discussed on television a memo of a Cabinet meeting at Chequers. He did not deny it but went through it point by point. It is outrageous that the right hon. Gentleman and the Prime Minister do not come to the House so that we can discuss that matter and the resignation of the right hon. Member for Cirencester and Tewkesbury (Mr. Ridley). I do not know whether the right hon. Gentleman has asked to make a statement tomorrow. The House should be allowed to discuss these matters today.
Mr. Speaker: I have no authority to order the Prime Minister to come to the House, but she will be here on Tuesday and Thursday this week and on Tuesday next week.
Sir Peter Hordern: Further to the point of order, Mr. Speaker. This is an unusual turn of events and the House would like to discuss them. As I understand it, there will be an opportunity to do so on Prime Minister's questions and a further excellent opportunity to do so on Wednesday, which is an Opposition Supply day. Should we not ask why the Opposition will not take advantage of that excellent opportunity?
Mr. Robert N. Wareing: On a point of order, Mr. Speaker. You decided, as is your right, not to allow the Standing Order No. 20 request; but many hon. Members have friendships with people in the Federal Republic of Germany and feel grossly embarrassed by the insulting language used by the former Secretary of State for Trade and Industry. In the absence of the opportunity for the House to debate the issue, can you make it known to Dr. Rita Süssmuth, the president of the Bundestag, that the views expressed by the right hon. Member for Cirencester and Tewkesbury (Mr. Ridley) are held not by anything like a majority of Members of the House?
Mr. Speaker: Order. I have not yet had the pleasure of meeting the president of the Bundestag, but I met the East German Speaker this morning and had a conversation with her. I shall be visiting Berlin and Bonn during the summer recess—in a private capacity.
Mr. Tony Marlow: Further to that point of order, Mr. Speaker. Most unusually, I rush to the assistance of the right hon. Member for Chesterfield (Mr. Benn). My right hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) gave the House a graphic warning about the way in which its powers were being taken away by the unelected reject politicians of the Berlaymont building. We know that the Conservative party has a coherent European policy, agreed by all members of the party; we are Europeans and we want to do the right thing, sensibly and cautiously, with regard to Europe.
If we had a debate on this subject, the Opposition would be able to bring forward the myriad strands of their policy on Europe. We know that Opposition Front-Bench spokesmen go grovelling for the nearest crumbs from the Commission's table, whereas the hon. Member for Bolsover (Mr. Skinner) and the right hon. Member for Chesterfield take a diametrically opposite view.
Mr. David Winnick: On a point of order, Mr. Speaker. The minutes of the meeting held on 24 March were confirmed by the Foreign Secretary when he was interviewed yesterday. As I understand it, if a document comes into the public domain it should be placed in the Library. There is no doubt that there was a meeting. It is somewhat of a surprise that the Cabinet discussed the national characteristics of other countries, but the meeting on 24 March was devoted to the German character. The document was leaked—rightly or wrongly. It has now been confirmed that such a meeting took place. Can you, Mr. Speaker, arrange for the minutes of that meeting and all supporting documents to be placed in the Library? If the document has been leaked and can be read in the press, surely we should be able to look at the minutes to see whether there is any conflict between what was leaked to the press and what was in the minutes?
Mr. SpeakerOur rule would preclude that. Our rule is relevant to state papers quoted in the House, but not to papers quoted on television.
Dr. Cunningham: On a point of order, Mr. Speaker. It is my understanding that the Opposition, through the Leader of the Oppostion, would usually have the right to ask a private notice question in these circumstances. Will you consider—while my right hon. Friend the Leader of the Opposition is abroad winning friends for Britain and the Prime Minister stays at home sulking and losing friends for Britain—whether it would be possible for the deputy Leader of the Opposition, my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley), to ask such a question tomorrow?
Mr. Speaker: The rule is clear. The Leader of the Opposition never puts a question on the Order Paper for oral answer, and if he submits a private notice question the factor of urgency is not insisted upon. That is clearly stated in "Erskine May", on page 297. No such privilege is automatically given to any other hon. Member.
Dr. Cunningham: That is what I am asking you to re-examine, Mr. Speaker, because my right hon. Friends and I are very unhappy about the circumstances in which Parliament is being denied the opportunity to discuss this matter. For all any Conservative Member knows, my right hon. Friend the Leader of the Opposition may have been ill at this time or so far away—as he is—that he is unable to return to Paliament in time. The Opposition's constitutional right is being denied. That is what I am asking you to examine, Mr. Speaker, and to report on tomorrow.
Several Hon. Members rose—
Mr. Speaker: Order. Allow me to deal with one point at a time.
I have already considered this matter in some detail this morning. I am quite clear that the concession—the privilege—that is given to the Leader of the Opposition, for the reasons that I have already stated, does not apply to any other hon. Member. Of course, the cause of the Leader of the Opposition's absence at any time—for illness or for any other reason—would be a factor that I should have to take into consideration. However, that does not apply in this case.
Mr. Anthony Beaumont-Dark: If this matter is as important as the Leader of the Opposition says—[HON. MEMBERS: "It is."]—and if it is of such national moment, why has the right hon. Gentleman decided to go to America to sell his country short instead of doing what he would call defending his country at home?
Mr. Dennis Skinner: Do you agree, Mr. Speaker, that, although you cannot tell us the criteria for accepting an application for a Standing Order No. 20 debate, one of the considerations that would be uppermost in your mind would be whether it was a matter that could not be agreed between the usual channels? On this occasion, I think that we can safely say that the matter falls within that category. I expect that the chances are that Members of the German Parliament would have an opportunity to debate this matter if they wished.
As people are now complaining about the Common Market, many of us look forward to hearing why people such as the ex-Secretary of State for Trade and Industry—and other Conservative Members, and perhaps even some Opposition Members—are now changing their views about the Common Market when we told them all this 20 years ago.
Mr. Speaker: The hon. Gentleman is always helpful on matters of procedure. I am, of course, very much in favour of the usual channels coming to agreements about the management of business in this House.
Mr. Andrew F. Bennett: I am sure that the whole house has sympathy with you, Mr. Speaker, in the problems that you face in dealing with Standing Order No. 20 applications. We know that you
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cannot give your reasons to the House, but today you almost suggested that a remedy lay in the fact that questions will be put to the Prime Minister tomorrow. I am sure that you will agree that the opportunity to ask four or five questions in 15 minutes is totally inadequate for dealing with an issue of this gravity.
When you have turned down Standing Order No. 20 applications in the past, you have, on occasions, stated that you might consider an application on the following day unless various things happened. My hon. Friend the Member for Bolsover (Mr. Skinner) has said that there would be an opportunity for the usual channels to rearrange the business so that there would be a debate. Will you give careful consideration to whether, if such a debate does not take place, arranged by the usual channels, you might be sympathetic to a Standing Order No. 20 application being made tomorrow, on the basis not only of the grounds set out by my right hon. Friend the Member for Chesterfield (Mr. Benn), but also because we have failed to debate the subject today?
Mr. Speaker: I consider every application under Standing Order No. 20 on its merits, but if tomorrow I were to grant a debate for the following day, I should be taking the decision away from the Opposition, whose day it is.
Mr. Frank Haynes: Why are we beating about the bush? We all know what has been going on. I have no doubt that the people in Croydon feel just like my constituents in Ashfield. My ears are sore with listening to what has been happening in the past few days. The person responsible lives in the flat upstairs at No. 10. We want her to be here,. We want her at the Dispatch Box so that she can answer to Members of the House of Commons.
Mr. Speaker: I took the opportunity to go to my constituency on Friday and Saturday, and again yesterday where I heard many views expressed about the matter.

BILL PRESENTED

  GAMING MACHINES (PROHIBITION ON USE BY PERSONS UNDER EIGHTEEN)
  Mr. Jimmy Dunnachie, supported by Mr. Alan Meale, Mr. John Hughes, Dr. John Reid, Mr. David Marshall, Mr. Allen Adams, Mr. Thomas McAvoy, Mr. Michael J. Martin, Mr. Robert Litherland, Mr. Stanley Orme and Mr. Thomas Graham, presented a Bill to prohibit the use of gaming machines in cafes, small shops, amusement arcades, snack bars, fairgrounds and other places by persons under the age of eighteen:
  And the same was read the First time; and ordered to be read a Second time on Friday 20 July and to be printed. [Bill 185.]

STATUTORY INSTRUMENTS, &C.
Ordered,
That the draft Weights and Measures (Various Foods) (Amendment) Order 1990 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Wood.]

Orders of the Day

  Finance Bill
  As amended, (in the Committee and in Standing Committee), considered.
  Ordered,
  That the Finance Bill, as amended, be considered in the following order, namely: new Clauses other than new Clauses 2 and 3, Amendments to the Bill, new Clauses 2 and 3.—[Mr. Lilley.]

  Finance Bill
    New Clause 7
      EXPENSES OF ENTERTAINERS
      'The following section shall be inserted after section 201 of the Taxes Act 1988—

      Expenses of entertainers
      201A.—(1) Where emoluments of an employment to which this section applies fall to be charged to tax for a year of assessment for which this section applies, there may be deducted from the emoluments of the employment to be charged to tax for the year—

      (a) fees falling within subsection (2) below, and

      (b) any additional amount paid by the employee in respect of value added tax charged by reference to those fees.

      (2) Fees fall within this subsection if—

      (a) they are paid by the employee to another person,

      (b) they are paid under a contract made between the employee and the other person, who agrees under the contract to act as an agent of the employee in connection with the employment,

      (c) at each time any of the fees are paid the other person carries on an employment agency with a view to profit and holds a current licence for the agency,

      (d) they are calculated as a percentage of the emoluments of the employment or as a percentage of part of those emoluments, and

      (e) they are defrayed out of the emoluments of the employment falling to be charged to tax for the year concerned.

      (3) For the purposes of subsection (2) above—

      (a) "employment agency" means an employment agency within the meaning given by section 13(2) of the Employment Agencies Act 1973, and

      (b) a person holds a current licence for an employment agency if he holds a current licence under that Act authorising him to carry on the agency.

      (4) The amount which may be deducted by virtue of this section shall not exceed 17.5 per cent. of the emoluments of the employment falling to be charged to tax for the year concerned.
      (5) This section applies to employment as an actor, singer, musician, dancer or theatrical artist.
      (6) This section applies for the year 1990–91 and subsequent years of assessment.".'.—[Mr. Lilley.]
      Brought up, and read the First time.
      4.1 pm
      The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Peter Lilley): I beg to move, That the clause be read a Second time.
      Mr. Speaker: With this, it will be convenient to take the following amendments: (a), in line 10, after 'paid', add
      '(whether during the year or subsequently)'.
      (b), in line 21, at end add—
      '(2A) a fee shall be regarded as satisfying the condition set out in subsection 2(a) above if it is calculated on a sliding scale such that the amount of the fee payable increases as the amount of the emoluments increases; including, without prejudice to the generality of the foregoing words, a fee calculated on the basis of a fee of £X per £Y, or part of £Y of emoluments, or a fee calculated as a specified percentage of the first fraction of the emoluments and a different percentage of successive fractions.'
      (c), in line 33, after 'artist', insert
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      'or employment of a substantially similar nature as an entertainer'.
      Mr. Lilley: In Committee, both Conservative and Opposition Members made a persuasive case that we should take a further sympathetic look at the taxation of actors. I acknowledged that in some respects actors taxed under schedule E were in a difficult and perhaps unique position. In particular, my hon. Friends the Members for Beaconsfield (Mr. Smith) and for Richmond and Barnes (Mr. Hanley) emphasised that most actors engage an agent and that the fees that they pay to their agent, at some 10 to 15 per cent. of their income, are often their most important single cost. Those fees do not qualify at present for tax relief under the rules of schedule E.

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      Therefore, I re-examined the matter. As I said in the debate in the House on 27 January, I hoped that the industry would take it upon itself to rearrange its contractual relationships so that the agent's fee never became part of the performer's income and the performer was not liable to tax on it. My talks with the industry, with my hon. Friends and with Opposition Members persuaded me that it would not be easy or, in the industry's view, desirable to make the necessary changes in the contract to bring about that effect.
      Therefore, I announced in Committee that I proposed to introduce on Report a new relief for agents' fees paid by actors and other theatrical artists. The new relief introduced by the new clause will apply to fees paid by an actor, singer, musician, dancer or theatrical artist to agents operating commercially and licensed under the Employment Agencies Act 1973. Fees paid in respect of earnings received after 5 April 1990, and the VAT paid on them, up to a limit of 17.5 per cent. of earnings in all, will qualify for relief. That will give all members of the profession who are assessed under schedule E a significant and worthwhile measure of tax relief. There has been consultation with the industry on the precise form of the relief, so it should properly reflect the special circumstances in which agents' fees are paid by actors. I recommend it to the House.
      The reason why it is possible to introduce such a major concession is that it is directed only at the particular circumstances of actors and other artists. Most types of employment agencies cannot charge fees to people who are looking for work. However, in the case of the entertainments industry, regulations made under the Employment Agencies Act 1973 permit a licensed agent to charge the artist rather than the employer. That exception shows that the fees are unique. The Revenue will consult the industry on the best way in which to implement the new relief. It may be possible eventually to set up arrangements to give the relief at source through the employer, to minimise the paperwork and to enable those qualifying for relief to receive it at the earliest opportunity.
      Meanwhile, if the House approves the measure, and following Royal Assent to the Finance Bill, theatrical artists who believe that they are entitled to the new relief should claim it from their tax office.
      Mr. Chris Smith: I must begin by offering my warm congratulations to the right hon. Gentleman on his promotion to the Cabinet which, I suspect sadly for him, is delayed by two days to deal with the Finance Bill. I congratulate him especially because I always like to see my constituents doing well. As he falls into that eminent and extremely praiseworthy category, I am pleased for him. We shall miss him in our debates on future Finance Bills.
      I hope that when the right hon. Gentleman gets his feet under the table at the Department of Trade and Industry, he will seek to reinvigorate its work, because that is badly needed. The right hon. Gentleman's performance at the DTI will be judged not on the degree of any adherence he may have to the Prime Minister's views on Europe but on what he does for British industry—and for the promotion of manufacturing industry and trade in particular. We wish him well in that all-important task.
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      As the right hon. Gentleman said, new clause 7 deals with the expenses of actors in following their profession. Earlier this year, the Inland Revenue switched its treatment of new and younger actors in the theatre from assessing their tax liabilities on schedule D to a new system under schedule E. The key problem brought about by that switch is that many of the expenses incurred by actors—especially items such as touring allowances, audition expenses and agents' fees—cannot be offset against their tax liability. Under the previous schedule D arrangements, they would have been. The crucial difference is that expenses are permissible under schedule D if they are wholly and exclusively incurred in the performance of a profession. Under schedule E, they must be wholly, exclusively and necessarily incurred. That crucial difference between the inclusion or exclusion of the word "necessarily" causes the problem.
      In an attempt to make the Government see reason, and to ensure that financial penalties are not unnecessarily visited upon the acting profession, the hon. Member for Beaconsfield (Mr. Smith) and my hon. Friends proposed in Committee new clauses to improve the situation. I am sad to say that the Government rejected our proposals, as they did those of the hon. Member for Beaconsfield. However, the Government indicated that they would make one important concession, which is enshrined in new clause 7, whereby when, under particular circumstances, an actor pays an agent to operate in a general manner for him year by year, he will be able to offset his agent's fees against his tax liability. That change is welcome. However, I reiterate the point made in Committee: that is by no means enough because it does not completely tackle the problem.
      Shortly after our debates in Committee, I received a letter from the British Actors Equity Association dated 11 July, which said:
      "Although Equity, as the organisation representing actors and other artists, welcomes this concession"—
      the concession now before the House—
      "the agents' fee represents only a small part of the considerable expenses which our members incur as a result of their professional activities."
      Therefore, although the relief is welcome, the profession believes that it is not sufficient to tackle the problem of the expenses that must be incurred in the course of an actor's work. The Government's concession is not adequate, for example, when considering touring allowances and audition expenses, which will continue to be taxable. Only agents' fees are covered and we believe that that is an insufficient concession by the Government.
      We have tabled amendments (a),(b) and (c) because of other minor deficiencies in the new clause. Amendment (a) deals with the year in which the emoluments are earned. Paragraphs (a) and (e) of subsection (2) mean that fees are not deductible if they are paid after the year in which the emoluments that are being taxed were earned. We believe that that might present a problem for actors if an agent's fee was paid, for example, in the subsequent year—because of the precise wording of the clause that fee would not be deductible. The amendment seeks to put that matter right.
      Amendment (b) deals with fees that are not paid on a lump sum, straight percentage or figure basis, but rather on some sort of sliding scale. It is conceivable, for example, that fees might be paid to an agent on the basis of 20 per cent. of the first £1,000 of earnings, 10 per cent. of the next £4,000 and perhaps £85 per £1,000 or part thereof

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      thereafter. Such a sliding scale is perfectly normal in many parts of the business world and an agent might reach a similar agreement with an actor. It is not entirely clear within the terms of the new clause whether such a sliding scale of fees paid to an agent would be wholly deductible on an averaged basis, year by year, against tax. Our amendment seeks to clarify that.
      Although we appreciate that the Government want to draw the net of the new clause reasonably tight so that only genuine actors and entertainers who will benefit, none the less there are a number of people who, perhaps unintentionally, the Government might exclude by their definition of such people. The most obvious example is a stand-up comic who is clearly engaged in the entertainment business. That person frequently tours for a living and frequently engages an agent to secure bookings. Under the terms of the new clause a stand-up comic would not be included—I do not, of course, want the definition of a comic to extend to hon. Members. To ensure that everyone whom we believe the Government want to assist by the new clause can be so assisted, we believe that amendment (c) should be accepted as it would ensure that the definition is broader than that set out in subsection (5) of new clause 7. Those are our detailed amendments and we hope that the Government will either reassure us on those points or accept our amendments.
      I reiterate that we remain disappointed by the scope of the Government's action. It is a small step in the right direction to provide assistance for new, young actors, who are coming forward in the acting profession and providing some of the essential life blood of the theatrical work in our country, but it is far less than actors want, need or deserve. We are disappointed by what the Government have done, but we welcome the step that the new clause represents.
      4.15 pm
      Sir Michael Marshall: I am grateful for the opportunity to speak in this debate, and I do so with a sense of humility because I recognise that my hon. Friend the Member for Beaconsfield (Mr. Smith) and other hon. Friends put forward a number of the arguments in Committee. I shall now get myself slightly confused as I refer to my hon. Friend the Financial Secretary, alias my right hon. Friend the Secretary of State for Trade and Industry, who has encountered the arguments relating to the new clause. I add my voice to those who warmly congratulated my right hon. Friend the Secretary of State for Trade and Industry. Is it a record to be a Financial Secretary as well as Secretary of State for Trade and Industry? Perhaps, with our mutual love of cricket, we can at some stage, have a detailed examination of that point.
      It would be churlish not to recognise the spirit with which my right hon. Friend approached this difficult problem. In putting forward his arguments today in Committee, the hon. Member for Islington, South and Finsbury (Mr. Smith) has tried to assist in a process in which the House recognises some of the special claims of the acting profession.
      I also declare my interest as a parliamentary adviser to the Society of West End Theatre. In this cause, the theatrical managers are at one with British Equity, the actors' union, of which I am also a member. I declare that interest conscious of the gaze of the hon. Member for
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      Warley, East (Mr. Faulds), who, I suspect, has a far better chance than I of picking up fees for performing. I perform on the radio; his experience covers a much wider spread.
      I must declare another interest because my stepdaughter is currently appearing in a play in Guildford. I shall not advertise the play except to say that it is an excellent play called "The Dressmaker", and is on all week. As I have those interests, I am sure that the House will understand why I have watched with the closest interest and care what was proposed in Standing Committee and what appears before us in the new clause.
      I am sure that my right hon. Friend will understand if I seek to point to some of the remaining practical problems and concerns. My right hon. Friend said—I think that I heard him aright—that those who sought relief in claiming agents' fees should do so as soon as they incurred those expenses. But the Inland Revenue press release of 6 July, which he kindly sent to those following such matters, states:
      "It will not normally be possible to determine finally the amount of relief due until after the end of the tax year when the total amount of earnings assessable under schedule E for the year, and the agents' fees paid out of them, are known. But where during the year it is clear that some relief will be due, tax offices may include provisional relief in PAYE code numbers."
      If my reading of that is correct, what my right hon. Friend had to say earlier was not as helpful as actors may have assumed from his words. Therefore, there will be a squeeze in terms of the time that elapses between when the agents' fees are collected, normally at source, when fees come in, and the time when that relief is due.
      I welcome the fact that, in an earlier paragraph of the same press release, the Inland Revenue said that it
      "is consulting with the theatre industry about the best way to implement the new relief and, in particular, on whether it might in the longer term be possible for the tax relief to be given, at source, by employers in broadly the same way as tax relief for employee pension contributions."
      I hope that my right hon. Friend will take this opportunity to reassure the House that that review will continue. I strongly support relief given at source as much the best way to ease the problem.
      I do not propose to rehearse the arguments that we have heard before about the broader considerations of schedules D and E, but they should be placed in a context that my right hon. Friend understands. I am sure that my right hon. Friend will appreciate that those who are paying agents' fees are, by definition, established, or are beginning to be established, in the profession. The worry for many fledgling actors and actresses is that it usually takes quite a long time to get an agent. Until they are established, they have the problem of getting an Equity card and an agent. A number of performers have no agent. Although they will be eligible for relief when they get an agent, many actors and actresses will get no relief because they are paying no agents' commission.
      The category of people who will be most affected by switching from schedule D to schedule E and who will not be assisted by the new clause are typically those who are employed in the lower reaches of repertory, theatre in education and fringe theatre. That is the very seed-corn of the profession.
      In view of the likely developments in the theatrical profession, it is inevitable that there will be pressure from those representing actors for wage increases to match what will be seen as a legitimate demand to offset what has been lost under the old tax relief. Anything that puts

      697
      inflationary pressure on the bottom end of the fringe, start-up theatre, repertory and touring will bring into question the viability of those branches of the theatre.
      Those aspects will remain, despite the new clause. I ask my right hon. Friend to stick to what was implied in the press releases about the willingness of the Treasury and the Inland Revenue to continue looking into the matter.
      I shall be brief because I know that others wish to speak on this important issue. My right hon. Friend will shortly join another great Department of State where given the application and dedication that he has shown in tackling this matter, I have every confidence he will make a significant contribution. I urge him to make it one of his first tasks at the Department of Trade and Industry to set in hand a study of the impact of the British theatre on our invisible earnings and our direct earnings in foreign exchange. Such a study will not only be valuable in the wider context; it will show that anything that begins to cause increasing difficulties to the profession will undermine a profession which produces a substantial return in sheer, hard foreign exchange. Beyond that, it is part of the cultural richness of our lives.
      My right hon. Friend has tried hard to meet the spirit and the letter of the law, but I hope that he will not give up his efforts to continue with what I believe he will have found to be a meaningful learning experience about the profession in the Standing Committee on the Finance Bill, and I look to him to provide an opportunity for the House to debate the matter in future, and perhaps to tackle some of the problems that I have outlined this afternoon.
      Mr. Mark Fisher: May I add my congratulations to the new Secretary of State for Trade and Industry on his appointment and on the concession that he has made this afternoon. He said that he was sympathetic to the case that was made on behalf of actors, but, as my hon. Friend the Member for Islington, South and Finsbury (Mr. Smith) said from the Front Bench, although the concession is welcome, it goes less than halfway towards meeting the excellent case that actors, Equity and the Theatrical Mangement Asociation have made. By including only actors' agents' fees, he has disregarded a number of expenses which are vital to actors seeking work but which the Inland Revenue almost certainly will not include in the words "and necessarily". The inadequacy of the Government's concession turns on that point.
      Will the Minister say why the Government believe that the cost of letters seeking work, the cost of photographs to promote an actor in search of work, of travelling to and clothes for auditions, of board and lodging when actors are away from home acting in the regions and other areas and of advertising in Spotlight their availability to work should not be included in the schedule? Schedule D included all those expenses and had the support of both sides of the House because it was specifically designed for the circumstances of freelance workers. The circumstances of actors were peculiarly suited to that schedule, but the Government are changing it. They must ensure that the use of the words "and necessarily" cover not only agents' fees but all the other expenses which are necessarily incurred, but which at present the Inland Revenue seems
      698
      determined to say are not really necessary. The Government must justify in this debate the use of those words and their interpretation by the Inland Revenue.
      The Minister is aware of the circumstances behind this debate. Actors are badly paid and their work is insecure. I shall quote a letter that I received from somebody who describes himself as a young actor, although rather coyly he does not give his age. Mr. Bill Britten wrote to me saying:
      "The current average wage for an actor of my age at a provincial theatre is about £160 gross per week. This is low for a highly skilled worker, with three years' training, who must additionally maintain a home in London as well as digs wherever the job happens to be. If you consider that the nature of the profession is such that any actor will almost inevitably suffer periods of unemployment on either side of the job, it seems less still. If you further insist that tax is paid at source and that no expenses can be claimed, it becomes virtually impossible to make ends meet. Since many jobs last only six or seven weeks it is a nonsense to maintain that they are permanent."
      The hon. Member for Arundel (Sir M. Marshall) dealt with the incoherent nature of employment and the different timings of payment that different forms of employment make. Mr. John Cater, a well-known actor, and his wife, Wendy Gifford, a well-known actress, wrote from the New theatre:
      "The average fairly well-employed actor today may well do a telly, a short repertory season, another telly, and a few days on a picture in the space of six months, with unemployment in between. Television pays by the job, films by the day and invariably several weeks in arrears, theatres and labour exchanges by the week. Impossible to tax under Schedule E."
      Mr. Cater and his wife make a good point to which the Minister must respond.
      That unfairly creates two categories of actors—those who have been secure in the profession, and those who have entered it in the past three years. Mr. Hugh Williams, who was appearing in "Hamlet" at the National theatre in March, wrote:
      "in a Cast being paid £200 per week our Horatio (who we shall say has been in the profession for a good few years), may receive in his pay packet £200 (less NI), whereas our Ophelia, a newcomer, will receive £150. Under Schedule D Horatio may claim, amongst other things, his Agent's Commission (£20 per week), his subscription to 'Spotlight' (£2) and Equity (£3), his publicity photographs (£4). Under Schedule E Ophelia may claim nothing."
      Following the concession, she may claim her agent's fees.
      "Before a line has been spoken at that evening's performance, Ophelia is some £30 per week worse off. No wonder the poor girl goes mad."
      That is hardly surprising given that very unfair treatment.
      The Minister must respond to that. He should also say something about the whole root of the Government's cause. He knows that the Inland Revenue pressed for the change on the basis of a test case that is 18 years old—that of Fall v. Hitchen—which was untypical, as it was a long-term contract. It is on that flimsy base that the Government's case rests. As his last act in his present job, the Minister should come clean and recognise that that is not a substantial or typical case on the basis of which to make a tax change that affects the whole profession.
      4.30 pm
      Actors have not been well treated by the Government: the infrastructure of the theatre shows that almost every repertory theatre in the country is in deficit, and all hon. Members accept that actors are badly paid. The Minister will recall that the Department of Social Security changed

      699
      the rules for claimants, and actors are now much worse off; they are now required actively to seek work other than acting work. That makes no sense, not least economically. The Minister and every hon. Member, through taxes, is subsidising the training of those actors. It is a silly system: we pay for their training and then encourage them, when they are out of work, to look for work for which they are not trained or qualified when they are able to do work for which they are trained and qualified.
      Some hon. Members have spoken out on this matter, and the hon. Member for Arundel (Sir M. Marshall) has been at the forefront. Perhaps the hon. Member for Beaconsfield (Mr. Smith) would like to explain to the House why, having moved a sensible amendment in Committee, he did not back it up with his vote, and why he is now supporting a Government concession that he knows does not go anywhere near what his excellent amendment would do.
      The other person who should be accounting for himself is the Minister for the Arts, whose voice has been silent on an issue that affects every actor for whom he has governmental responsibility. I wrote to the Minister, who replied:
      "I am, of course, well aware of the high level of concern in the profession about the possible impact of these tax changes both on individual performers and the live theatre as a whole. I have been in touch with Peter Lilley about this, and understand that he has now written to Michael Marshall saying that he does not see his way to reversing the decision on Schedule E treatment."
      That was the end of the Minister for the Arts' interest. What a disgrace that the Minister responsible has nothing to say, and has done nothing but pass on the concern to the then Financial Secretary when he should be fighting for actors and making a case on their behalf.
      Sir Michael Marshall: Within the privacy of this small group of hon. Members, the hon. Gentleman knows that, because of the way in which ministerial responsibility works in our system, he could not expect the Minister to say more than he said to him in writing. Those who have been in touch with the Minister are well aware of all the representations that he has made, and of the arguments that have gone on. He has been most helpful. I say that speaking with an interest that I have already declared. I hope that the hon. Gentleman will accept my remark in the spirit in which it was put.
      Mr. Fisher: I accept the point, but the acting profession would have expected a statement on the public record from the Minister for the Arts, to the effect that he believes that actors have a good case. He is responsible for the conditions in the theatre, and the payment of performers there is vital. If the Minister for the Arts has not been able to find an opportunity to make a speech on actors' behalf, recognising their strong case, the theatre is being badly served by the Minister responsible for it.
      I accept the point about the division of ministerial responsibility, but I do not accept that the Minister, with his responsibility to the theatre as a whole, could not find an opportunity to say trenchantly that actors have a good case, and that he is strongly pressing that case on the Treasury. That is the least that he could have done: the theatre has the right to be represented in that way.
      Let me end on a more conciliatory note. There is a way out for the Financial Secretary tonight. It is not too late for him to issue guidelines to the Inland Revenue to interpret how it should use the words "and necessarily". If the
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      Minister would say today that he recognises that there is a case for other expenses in addition to agents' fees, and that he will issue guidelines to the Inland Revenue to take into account the list that I gave at the beginning of my speech, he would genuinely receive credit and thanks from the profession. He would fully undo the damage that he threatened to do at the beginning of the Finance Bill, and which—to his credit—he has gone some way to repairing by allowing agents' fees. He must know that there are other genuine expenses that need to be deducted. If he would give the Inland Revenue guidelines, the acting profession would be in his debt and he would have done the decent thing.
      Mr. Chris Butler: The shunting of actors from schedule D to schedule E alters arrangements that have operated satisfactorily for more than 50 years. Despite the consolation prize offered by new clause 7, I have no doubt that the move from one schedule to the other will cause extra hardship in a profession in which wages are notoriously low. My right hon. Friend the Secretary of State for Trade and Industry spoke about new clause 53 in Standing Committee and said:
      "The suggestion that the Revenue has been winnowing out the self-employed is manifestly false. If it has been trying to do so, it has been singularly unsuccessful, as the number of self-employed has increased by no less than 60 per cent. during the Government's life and it is still rising strongly.'' —[Official Report, Standing Committee E, 3 July 1990; c. 541–2.]
      The move against actors is part of a general Inland Revenue campaign against the self-employed. Some of the self-employed secretaries and researchers who work in the House have been harried back into employment. One of my constituents, a self-employed typist, had her business destroyed because the Inland Revenue cast her as employed simply because she did not take her typewriter to her clients.
      Any accountant will confirm that there is a general Inland Revenue campaign against the self-employed and that arrangements that are perfectly satisfactory to both sides in a contract are often altered. The reason for that campaign is that Inland Revenue inspectors earn brownie points if they can identify back tax, and the career of a tax inspector advances in direct proportion to the disincentive that is given to those who show initiative and self-reliance.
      The argument that self-employment is growing and that therefore there cannot be an Inland Revenue campaign is a non sequitur. If the campaign were lifted, the number of people becoming self-employed would grow even faster. I find it strange that a Government who are supposedly wedded to the virtues of self-reliance and initiative are presiding over administrative actions which have a directly opposite effect.
      Mr. Ian McCartney rose—
      Mr. Tony Banks: I add my congratulations to those that have been offered to the new Secretary of State for Trade and Industry on his sparkling political progress—and so young, too. That must encourage some of us. I remind him of the old saying, "Whom the gods would destroy they first make Secretary of State for Trade and Industry." No doubt the right hon. Gentleman is in a good mood, or even in a generous mood, and perhaps we can tempt him a little and persuade him to leave us with something by which we can warmly remember him.

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      Hon. Members have welcomed the concession but it simply does not go far enough. I should declare my interest. In the past I have acted as a parliamentary adviser to Equity and I get the occasional walk-on part at Prime Minister's Question Time. As I say, I welcome the concession but I think that the Minister could go much further.
      The speeches by the hon. Member for Arundel (Sir M. Marshall) and for Warrington, South (Mr. Butler) plainly demonstrated that there is much sympathy for actors. As my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Fisher) said, acting is an uncertain profession. I cannot remember the precise percentage but between 70 and 80 per cent. of all actors in Equity are at any given moment unemployed or resting. Many of them have to take jobs outside the profession in order to sustain themselves while they are waiting for auditions or while they are in rehearsal or promoting themselves. Between jobs they have to do a geat deal of that while hoping that a break will come along.
      Agents' fees are only one part of the expenses associated with the acting profession. I have never understood why it was felt necessary to move actors from schedule D to schedule E. I cannot believe that it was considered that actors constituted an especially attractive group of taxpayers and that they were somehow getting away with something. The change will make their lives far more difficult. When the Financial Secretary replies, I shall be interested to know the source of the original suggestion.
      Unfortunately, I was not a member of the Committee that considered the Finance Bill. Perhaps someone other than the Minister, someone who probably knows far more about these matters than I, can tell me the origin of the suggestion. Was it a ministerial proposition? Was the idea put into the minds of Ministers by the Inland Revenue so as to supplement what the Inland Revenue had done itself? There must be a reason for the change.
      As there is a great deal of dissatisfaction within the acting profession and outside it, we need to know how the suggestion arose. [Interruption.] My hon. Friend the Member for Makerfield (Mr. McCartney) suggests in a muttered interjection that it might have something to do with Ken Dodd and his tickling stick. Perhaps my hon. Friend the Member for Stoke-on-Trent, Central will tickle our fancy with the truth.
      Mr. Fisher: The change stems from a suggestion of the Inland Revenue, which was based on the case of Fall v. Hitchen of 1972. That case concerned a non-typical long-term contract for a performer. The argument on which the change of tax liability is based is therefore feeble and insubstantial.
      Mr. Banks: I am grateful to my hon. Friend. He is clearly learned in the trials and tribulations of the acting profession. He will make an excellent Minister for the Arts when we have the next Labour Government.
      I am sure that it was said in Committee that actors and actresses, by definition, need to spend a great deal of money promoting themselves. That is one of the requirements of the profession. We need only to read the newspapers to learn just how much work they have to do to push themselves forward and to get their names known.
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      As such expenses mst be recognised as incurred by actors and actresses in pursuit of their profession, they should be allowable against tax.
      It is true that many people within the acting profession receive extremely low wages. Few, if any, receive a pension. We are more parsimonious and more mean-spirited with our actors than most European countries. We spend a great deal of time almost living off the reputation of our theatre, including our actors and actresses. We are always telling others how wonderful the British theatre is and about the many people who come to Britain as visitors to go to the theatre because of the excellence of our productions. Surely there should be a quid pro quo. Given the great contribution that the theatre makes to the quality of life and the economic life of this country, the unique position of actors and actresses as a work force should be recognised.
      I hope that the Minister, in the salad days of his time at the Treasury, before he moves on to other and perhaps greater things for a short while at the Department of Trade and Industry, will listen sympathetically to the arguments that are being advanced. He has heard what has been said about a compromise. Perhaps he could issue guidelines to the Inland Revenue so that it can treat sympathetically all actors and actresses. If he will not do that, will he give us an undertaking when he replies that he, or his successor, will carefully monitor the impact of the changes in tax liability for those in the acting profession? If he sees that something is going wrong, and if this becomes clear to others, I hope that he will be prepared to accept representations from hon. Members on both sides of the House. There is a great deal of sympathy for the profession within the House. I hope also that the Minister, or his successor, will consider returning to the House with a provision in next year's Finance Bill that will enable our actors and actresses to receive their just deserts. There are many of us in the House who think that their rewards are thoroughly merited.
      4.45 pm
      Mr. Tim Smith: I start by congratulating my right hon. Friend the Member for St. Albans (Mr. Lilley) on his appointment to the position of Secretary of State for Trade and Industry. He has done an excellent job as Financial Secretary to the Treasury. He steered the Finance Bill through its consideration in Committee with great skill. I have noted the way in which he has always sought to balance the interests of the Inland Revenue against those of the taxpayer. His approach to the new clause exemplifies that. I wish my right hon. Friend well at the DTI. I am sure that all my right hon. and hon. Friends will wish to give him their full support.
      The hon. Member for Stoke-on-Trent, Central (Mr. Fisher) asked me why I withdrew a new clause in Committee. I did so because I was offered what I considered to be an important concession. Indeed, those words were used by the hon. Member for Islington, South and Finsbury (Mr. Smith). He, too, said that it was an important concession. I made it clear that I was not entirely happy about creating special protection for a new category of taxpayers.
      I am inclined to agree with the traditional approach, which is that taxation under schedule D or schedule E is a matter of fact that should be determined on the basis and merits of each case. That is exactly what happened in this

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      instance. The case of Fall v. Hitchen of 1972 led indirectly to the proposals made by the Inland Revenue to tax young actors under schedule E. The more that I considered the proposed change, the more I realised that the issue was not as clear-cut as I had initially thought. I shall explain why I think that the concession goes far enough for the time being.
      First, the standard Equity contract is not like a contract for services. Instead, it contains many of the characteristics of a contract of employment or a contract of service. If Equity feels so strongly about the change which has been introduced, it should take another test case to appeal. Any young, taxpaying actor who is now to be taxed under schedule E should challenge before the commissioners the ruling of the Inland Revenue, which will take effect from 6 April.
      Secondly, Equity should consider the terms of its standard contract. There is an element of Equity saying that it wants to have its cake and eat it. It wants its members to have all the protections that we associate more with employment protection and less with self-employment. I am sure that the House will be aware that actors, exceptionally among the self-employed, pay national insurance contributions under class I. That has always been an anomaly. That exceptional position demonstrates that the issue is not as clear cut as it appeared to be.
      I think that my right hon. Friend the Minister has introduced an important concession. We should now wait to see what happens. For example, a test case might be brought. The other day I spoke to an accountant who has many young actors as clients. He feels strongly about the change in the basis of taxation. I told him that I hoped that he would be bringing a test case on behalf of one of his actor clients, and he said that he would do so. We should wait to see what happens when such a case is brought. It is true that the Fall v. Hitchen case involved a relatively untypical actor and a long-term contract at Sadlers Wells. The standard Equity contract has many of the characteristics that that particular contract had. That may be the reason why Equity is not prepared to take a case before the commissioners.
      Only in the last resort should the House agree to a new clause which creates a special status for a special group of taxpayers. If we do that, another group will be asking for the same treatment. Journalists, for example, might come forward. The Opposition said in Committee that they wanted that to happen. If that happens, representations will not be assessed on their merits.
      The Public Accounts Committee—I note that two of our members of it are present—has discussed—
      Mr. Ian Gow: Why stop at two other members of the PAC?
      Mr. Smith: I apologise to my hon. Friend. The members of the PAC whom I see in their places are my right hon. Friend the Minister, my hon. Friend the Member for Eastbourne (Mr. Gow) and the hon. Members for Nottingham, North (Mr. Allen) and for Islington, South and Finsbury. I am sure that they will all confirm that the Inland Revenue is always seeking, rightly, to limit abuse and to stop people fiddling by misusing the tax rules. There is as much concern about that under schedule D as under any other tax head. We should be well aware of that.
      Mr. McCartney: I apologise for confusing you, Mr. Deputy Speaker, a few moments ago. Three actors wished to lobby my hon. Friend the Member for Newham, North-West (Mr. Banks) on the matter. Therefore, instead of standing up I remained in my place. I suppose that in that respect I fluffed my lines.
      By the end of the week the Secretary of State for Trade and Industry will be fairly fed up with the congratulations heaped upon him by Opposition Members and, with some relief, by Conservative Members. I imagine that he is in much the same position as when he became a father for the first time: congratulations were heaped upon him but after he had been woken up during the night to change nappies and feed the baby, the gilt went off the gingerbread. The Secretary of State has been given the most accident-prone job in British politics. The only consolation that I can offer him is that if there is a general election next year he will be put out of his misery. I wish him well in his new post. I have met him about constituency matters on a number of occasions. Despite the fact that we hold different political views, he served me well.
      I listened intently to the arguments advanced in Committee by the hon. Member for Beaconsfield (Mr. Smith) and others. I was surprised, therefore, when the hon. Gentleman did not vote for the amendments that he moved.
      It is important to compare like with like. We ought to bear in mind the types of concession that we provide for ourselves and compare them with what we shall be taking away from members of the acting profession. As my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Fisher) pointed out earlier, under schedule D, board and lodging, applications for work, self-promotion, clothing, and travel to and from auditions were allowable expenses. Those concessions were needed if people who try to make a living in a difficult profession are to make ends meet. The public see the stars on television and at royal command performances, but the vast majority of actors and actresses are not employed; even when they are employed their salaries are very low. Both before and since I became a Member of Parliament we have made special arrangements for ourselves. We have board and lodging allowances. Hon. Members have to come here from all parts of the country. We cannot find board and lodging out of our parliamentary salary, so we have made substantial financial arrangements to cover that expense. Our allowances amount to more than what many actors and actresses receive during a year.
      We are also given a clothing allowance and an allowance to cover the cost of clothes care, because of the nature of our work. We claim travelling expenses to and from our place of employment. The cost of visits by our families is also covered by the special arrangements. When, however, it comes to the acting profession, it seems that, despite the Minister's concession, we are prepared to withdraw allowances. That will lead to hardship for many people who are already on low incomes. It is hypocritical of hon. Members to provide special concessions for themselves but to withdraw them from the acting profession.
      If we are serious about promoting the theatre, for both cultural and educational reasons and also to attract tourists to Britain, it is vital to provide security of employment. The taxation system must be sufficiently flexible to allow people who enter the profession to remain in it, develop their skills and use them for the benefit of us

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      all. The Government and local authorities spend substantial sums of money on encouraging tourists to come to Britain. The arts are at the forefront of that campaign. It is nonsensical, therefore, that the acting profession should be under attack. My hon. Friends have rightly pointed out that the Government have made a concession. However, actors and actresses do not believe that they have been granted a concession when they find that they have lost £30 out of £160 a week because of changes to the taxation system. A major cut of that kind in their income makes no sense whatsoever.
      A member of the education committee in my local authority is developing the role of theatre within education. If that is to be effective, a nucleus of young actors and actresses is needed who are prepared to work with the local community and develop their skills within the educational curriculum. If we are to encourage young people to enter the acting profession, we must ensure that a pool of young actors and actresses is available to do that work for a number of years and then go out into the wider profession. The new clause will make it impossible for them to do educational work. That will undermine the profession; young actors and actresses will be unwilling to develop the role of theatre within education.
      When the Secretary of State for Trade and Industry gives advice to the Inland Revenue, will he consider the inclusion of a clear definition of what is meant by "necessity"? I hope that he will include board and lodgings, applications for work, self-promotion, clothing, and travel to and from auditions within the definition. It would ensure that the acting profession is in a far better position than it is now, even with the concession.
      Mr. Jeremy Hanley: I, too, willingly congratulate my right hon. Friend on his promotion. The acting profession is powerful and important. Who knows what position my right hon. Friend would have achieved had he given the acting profession all the concessions for which it asked? No doubt he has already been rewarded for the concessions embodied in the new clause. I thank him for the work that he did in Committee. He made an important mark there. All of us marvelled at his breadth of knowledge and at the fluent way in which he dealt with questions from both sides.
      I support the new clause, but I do so with a certain amount of regret. Many hon. Members have referred to the fact that actors in the theatre are among the lowest paid in the profession. Film and television actors can be well paid, but theatre actors earn the lowest of wages. Moreover, the change will affect the newest entrants into the profession—the lowest paid in a low-paid profession.
      I do not wish to repeat a speech that I made in Committee. However, as an accountant I ought to refer to the fact that I understand the Inland Revenue's desire to cut out abuse and its wish that as many people as possible should be on schedule E. However, it is unacceptable and unforgivable to make a young actor pay tax on income that he will never see—the agent's fee. The concession is important. It can mean between 10 and 15 per cent. of a young actor's regular recurring income, not just from the theatre but from other work such as voice-overs, extra parts in films or on television and other work that will be
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      calculated under schedule D taxation. Therefore, it is a substantial concession and it would be churlish to say that I am not grateful for it.
      I will accept this major concession but the wise words of the hon. Member for Newham, North-West (Mr. Banks) must be supported by Conservative Members. He said that we must look carefully at the pattern of employment following the imposition of schedule Eon this end of the stage profession. I have evidence already that certain theatrical producers are not hiring young actors but prefer slightly more experienced actors—schedule D actors rather than schedule E actors—because of the lack of bureaucracy entailed. Also, a young actor will look, rightly, for extra income to compensate for the extra burden of taxation that will be suffered in travelling expenses.
      5 pm
      Travelling expenses have to be sorted out. The cases mentioned in Committee such as Gurney v. Richards must be looked at again. The way in which travelling expenses are dealt with in taxation is unfair. There is no logic between the taxation treatment of a schedule D person and a schedule E person. The Revenue must grasp the issue once and for all. It has ducked the matter, hoping that case law would, bit by bit, take away some of the theoretical advantages to the taxpayer. The issue needs wide consultation within the accountancy profession and the business fraternity, such as the Confederation of British Industry, and with any person who feels strongly about it. There should be a Green Paper to discuss the issue of travelling expenses.
      It is traditional in the House that a Parliamentary Private Secretary should not speak on the subject matter of his Minister's responsibilities. I do not intend to break that tradition and I do not believe that I have done so because I have been dealing with the effect of taxation on actors rather than with actors themselves. If a Minister is not seen publicly to be disagreeing with other Ministers, it is purely because that is the tradition of Government and the House. To accuse a Minister of not trying hard merely because there are no public speeches on the issue is a disgrace and an abuse of the normal procedures. Therefore, I have to defend a certain Minister because of what was said earlier by the hon. Member for Stoke-on-Trent, Central (Mr. Fisher).
      Mr. D. N. Campbell-Savours: Will the hon. Gentleman give way?
      Mr. Hanley: I will not give way because I promised to be extremely brief.
      Mr. Graham Allen: Giving way is another tradition of the House.
      Mr. Hanley: Will the hon. Member for Nottingham, North (Mr. Allen) hold his mouth closed? I do not intend to give way.
      Mr. Campbell-Savours: On a point of order, Mr. Deputy Speaker. Is it not correct that collective responsibility applies to all Members, not only of the Cabinet but of the Government, and that a Parliamentary Private Secretary, although not additionally remunerated, is a member of the Government? Is not it improper for a Minister to use his Parliamentary Private Secretary to indicate a reservation?
      Mr. Anthony Nelson: Further to that point of order, Mr. Deputy Speaker.
      Mr. Deputy Speaker (Mr. Harold Walker): Order. It was not a point of order for me. The matters raised have nothing to do with me.
      Mr. Hanley: A Parliamentary Private Secretary is not a member of the Government. However, he is bound by certain agreements, to which I have adhered. In showing his ignorance, the hon. Member for Workington (Mr. Campbell-Savours) has shown how long it has been since he was a member of any Government and I am sure that his memory will not be refreshed in the coming years.
      The change from schedule D to schedule E is regrettable because it will have a bad effect on the ability of young actors to carry out their profession at its very root. Actors should be encouraged to carry out their work so that, having learnt their art properly, they can move on to the more remunerative parts of the profession. It would be wrong to disagree with the new clause. When the hon. Member for Newham, North-West was temporarily out of the Chamber, I said that there should be a proper study, as he suggested, into the effect of this change on the acting profession. If it appears to be damaging, I hope that my right hon. Friend and his successors will look at the matter again.
      Mr. Lilley: I am grateful for the kind remarks of hon. Members. My mother-in-law is the only person who has not shared their congratulations. She is not happy that her daughter has married someone who has gone into trade. However, she will be relieved to hear the assurances of Opposition Members that it is likely to be short lived.
      I am happy to be judged by the criteria laid down by the hon. Member for Islington, South and Finsbury (Mr. Smith) and will endeavour, as he hoped I would, to do my best for industry, manufacturing and all aspects of trade in this country. I hope that the attitudes I have just attributed to my mother-in-law do not survive, because trade and industry are vital to the country. One of the great industries is entertainment, with which we are dealing now.
      I can, in general, give the assurance sought by the hon. Member for Islington, South and Finsbury that his amendments—which are mainly probing amendments— reveal that the new clause, as drafted, already achieves what he wishes. For example, on amendment (a) I can confirm that the words that he proposes to insert—
      "whether during the year or subsequently"—
      are otiose. The clause already allows for relief in the tax year for which the income is charged to tax, whether or not the fees are paid in the same year of assessment.
      Similarly, I understand the hon. Gentleman's concern as expressed by the second amendment. I am advised by the Inland Revenue that under the normal rules for construing legislation, the reference in subsection (2)(d) of the new clause to fees which are, "calculated as a percentage" is able to include fees that might be calculated on the basis of more than one percentage or by reference to a sliding scale or to a specified proportion on the lines set out in amendment (b). I have been assured that new clause 7 as drafted will enable relief to be given in the circumstances envisaged by the amendment. Therefore, I hope that the hon. Gentleman agrees that the amendment would add unnecessary complexity to the legislation and that he will not press it.
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      On amendment (c), I am glad to say that we have had an opportunity to consult representatives of the industry while preparing the new clause. I understand that they are content with the definition that we have adopted. By referring to "theatrical artist" we have included not only performers such as magicians, who might not fit the description of "actor", but choreographers, assistant designers and directors who are regarded as part of the acting profession and frequently take an acting role in productions. Some of those people pay agents' fees and are engaged under contracts of employment and are affected by the switch to schedule E. I can assure the House that all those categories of theatrical performer, together with stand-up comedians—whether in or out of the House— will be able to claim relief under the new clause.
      Mr. Chris Smith: I am grateful to the right hon. Gentleman for his comments on amendments (a) and (b) and fully accept what he said.
      On amendment (c), I understand that the term "theatrical artist" is wider than the term "actor". What would happen to a magician or stand-up comic who was engaged not at a theatre but on the club circuit as an entertainer? Because that person is not employed at any time in a theatre, would not the term "theatrical artist" be inappropriate and would not he fall outside the terms of the new clause?
      Mr. Lilley: As I understand it, such a person would be included in the new clause. "Theatrical" has a wider use than activities in the theatre. Many hon. Members are theatrical from time to time, and the definition is quite wide. I am assured that there is no difficulty in this respect. Those in the industry with whom we have discussed the matter are content with our definition. If we discover that it does not work properly, my successor will consider it in that light.
      My hon. Friend the Member for Arundel (Sir M. Marshall) mentioned the timing of tax relief. I assure him that we shall, as promised in the press release, continue our discussions to find out whether it is possible to give relief on the same basis as relief for pension contributions. I recognise that the profession would welcome that.
      It would be sensible if I were to return to the fundamental issues that have been raised in the debate. I have discovered that the hon. Member for Newham, North-West (Mr. Banks) is 137 days older than me—
      Mr. Tony Banks: If you don't mind!
      Mr. Lilley: We are both well preserved, despite our great age. The hon. Gentleman asked why the status of actors was changed. There are two reasons. First, a decision in law was made. Secondly, the interpretation of the law that was more generally available to the Inland Revenue required the Revenue to make that change. The decision was not made by whim or fancy of Ministers or the Revenue. It was made in response to an interpretation of the law laid down by the House.
      The hon. Member for Stoke-on-Trent, Central (Mr. Fisher) argued that the case that triggered the decision was old and atypical. The matter is up to Equity. One reason for the long delay in implementing the change was that we were waiting to see whether Equity would challenge the decision and appeal. It did not do so.
      Mr. Fisher: Eighteen years have passed.
      Mr. Lilley: If the hon. Gentlemen cares to look at the chronology of events that I related in Committee—I shall not bore the House by repeating it—he will see that the cases were spread out and he will note that Equity had several opportunities to appeal but did not. I believe that Equity is now considering an appeal. I have already given an assurance that the Revenue will co-operate with Equity in developing test cases which will provide appropriate coverage. I admit that I am not wedded to a particular legal ruling reached by courts in the past. If they reach one that is more satisfactory to the House, so be it; but let us go through the correct legal procedures.
      My hon. Friend the Member for Warrington, South (Mr. Butler) suggested that there was a Revenue campaign to winnow out the self-employed. I assure him that there is no such campaign. The Revenue is under an obligation to implement the laws passed by the House, according to advice by its legal advisers or according to how the courts interpret the law and require it to act. In this respect, the Revenue has a certain amount of discretion in terms of the transitional arrangements which it may in certain circumstances, under its care and management powers, deploy in introducing a changed legal interpretation.
      5.15 pm
      As the hon. Member for Stoke-on-Trent, Central pointed out, the changes have taken a long time. The Inland Revenue has not been precipitate in implementing this decision. I should have thought that, in its generous concession to established artists, it has used its discretion to the full. In effect, it has said that, although the law says that all actors on such a contract are employed—not self-employed—those who, over the past three or more years, have been treated as self-employed may retain that status not just for one or two years but for the rest of their working lives.
      The generosity of this concession to established members of the artistic and acting professions has created the disparity between them and newcomers about which hon. Members have been rightly concerned, and we have tried to allay those fears a little with the new clause. We have a problem because of the Revenue's generosity, not its meanness, and because a protracted period has passed, not because the Revenue has acted precipitately. I hope that hon. Members will not blame the Revenue for the consequences of laws that we in our wisdom, or lack of it, choose to pass. If we do not like the consequences of those laws, it is up to us to change them, and not to rely on civil servants to use a discretion which, rightly, they have not been given.
      The hon. Member for Islington, South and Finsbury said that the key to achieving more generous treatment of new actors lies in the "necessarily" condition on the treatment of expenses. I understand that the issue concerns not just the "necessarily" condition but, as I said in Committee, the phrase
      "in the performance of those duties"
      which rules out many expenses which are allowable against income under schedule E. Auditions, which were mentioned by the hon. Member for Makerfield (Mr. McCartney), and several other items which were mentioned by the hon. Member for Stoke-upon-Trent, Central are not expenses incurred
      "in the performance of those duties"
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      as the law has established the meaning of those words. So long as we leave that test in the legislation, we will not be able to render those costs deductible.
      Mr. Fisher rose—
      Mr. Lilley: I suspect that the hon. Gentleman is going to say that we should replace that phrase with wording that would allow those costs to be deductible. I have been persuaded that that would not be appropriate because it would be impossible to ring-fence it to actors. It would be difficult to do so initially in law, but I am certain that, if it could be done just in the first drafting of the law, countless other professions that incur similar expenses and want similar treatment would, before long, be knocking at our door, and we would find it difficult to resist them. In a new clause tabled in Committee, the Opposition began that process of erosion by joining journalism to the entertainment profession so that journalists could receive the benefits of such an extension.
      Mr. Fisher: Will the right hon. Gentleman explain why agents' fees are incurred
      "in the performance of those duties"
      rather than "in the pursuit of work"? I think that he would agree that the other expenses which my hon. Friends and I itemised are definitely expenses incurred "in the pursuit of work" because unavoidable expenses are incurred. As I understand it, the right hon. Gentleman is making a distinction between "in the pursuit of work" and
      "in the performance of those duties".
      I am not sure that he can justify that in terms of his concession on agents' fees. Will he be a little more sympathetic and look at the possibility of issuing guidelines to the Inland Revenue? If he said that those guidelines should take into account the other expenses in pursuit of work which are unavoidably incurred, he would satisfy all hon. Members.
      Mr. Lilley: I was not arguing that agents' fees meet the present terms and conditions under schedule E. On the contrary, they do not. We introduced the new clause to override the normal expenses rule in the case of agents' fees. We are doing that because it is capable of being ring-fenced. All other professions, apart from entertainment, are forbidden by employment law to charge an employee for the fees of an agent in obtaining employment —they have to charge the employer. Therefore, there are no other people in a similar position waiting to knock at my door, my successor's door or even the door of the hon. Member for Stoke-on-Trent, Central. I assure the hon. Gentleman that, if we did as he suggested, we would open a Pandora's box of demands to widen relief on all expenses. We would find it costly, not especially in the case of actors, as we are not arguing about the cost of relief to actors, but, once one has started on that slippery slope, one would have to extend the provision further and further before very long, as the new clause introduced by the Opposition in Committee illustrated.
      Mr. Tony Banks: That is an argument that one often hears when a case is being put forward. People say, "If we do it for this group, we will have to do it for every other group." That does not necessarily follow. Given that the Inland Revenue is allowed to exercise discretion when considering individual cases or groups of workers, why should it not consider the cases of other groups of workers who might come forward? If they have a good enough case

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      the relief could be extended to them as well. If one concedes that a case is good when it is made well by one group of workers, it does not follow that a Pandora's box is opening up or that we are on a slippery slope.
      Mr. Lilley: The hon. Gentleman underestimates the political pressures that erupt when one creates a precedent. As I have already mentioned, before we have even given a concession to actors, journalists are being linked with them and piggy-backed on to the concession. It would be damaging to determine people's tax status, not by the terms and conditions of their engagement, but by the profession to which they belong. If we try to decide profession by profession whether people are self-employed or employed, we shall rapidly find that we are determining people's tax status by the political lobbying power of their profession, rather than for objective reasons. That would be a dangerous step to take.
      Mr. Chris Smith: In general terms, the principle that the Financial Secretary has just adumbrated is entirely correct. However, taxation law and taxation administration single out a number of professions—North sea divers are an obvious case; postmasters and certain peripatetic doctors are others—whose nature makes them a special case. To a certain extent, the new clause renders actors a special case. So the Minister cannot argue against the existence of special cases. Obviously, we have to be careful about who is judged to be a special case, but it is appropriate to regard some professions as a special case.
      Mr. Lilley: That intervention perfectly illustrates the point that I was trying to make. Only one profession is treated analogously with what some hon. Members are now seeking—definition by law as schedule D—and that is deep divers. That resulted from an anomalous change made in 1978 by the last Labour Government for somewhat obscure reasons, which seemed to have something to do with the strategic importance of the developing North sea oil industry at that time and with the considerable sympathy that the profession evoked because of the high mortality rate suffered by divers. It did not have anything to do with the cost of getting to the place of work, which was one of the issues that we discussed in Committee—even though North sea divers face considerable costs in getting to the sea bed. However, as that is now being used as an argument for actors, and as the actors' profession numbers about 40,000, once it is defined in law that they are entitled to schedule D treatment whether the nature of their engagement is self-employed or not, it will be a much greater precedent for others to demand similar treatment.
      In Committee, I listed the different groups and professions that had approached me and the Treasury relatively recently to demand some sort of concessionary treatment on schedule D. It was a long list. They are already asking for such treatment and having to be fended off. Once 40,000 actors were allowed schedule D treatment by law, year by year we would have to add to the list and before long we would find that anyone who wanted to be on schedule D and could get powerful support in the House would do so. That would erode the tax base considerably and tax rates would have to go up to compensate and we should all be back where we started. That is not a path that I can advise the House to take, any more than I advised the Committee to take it.
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      The Committee largely accepted that we should try to seek a concession which could be extraneously ring-fenced and which would benefit actors, as it affects a considerable proportion of their income. There was agreement that agents' fees are the largest single item that most actors have to pay as a cost, and that they would welcome some tax relief on such fees. Although the clause does not achieve the perfect state that many hon. Members would like, it was right to go that far and no further. Therefore, I commend the clause to the House.
      The hon. Member for Stoke-on-Trent, Central mentioned the stance of my right hon. Friend the Minister for the Arts. My hon. Friend the Member for Richmond and Barnes (Mr. Hanley) rightly illustrated that taxation and the arts are essentially different responsibilities. He is participating in this debate and made a notable contribution in Committee because of his knowledge and expertise in the arts, happily reinforced by family involvement in the arts and a professional knowledge of taxation.
      Mr. Fisher: A beautiful baby.
      Mr. Lilley: So he told us. I can assure the hon. Gentleman that my right hon. Friend, in discussion with the Government, as everyone would expect, made the position of artists and the views of entertainers and others involved in the profession known to me. He explained their circumstances to me and therefore fulfilled his responsibilities to the arts, in the excellent way in which he always fulfils them, while ultimately leaving the decision about taxation to me and to Treasury Ministers, once we were fully informed of the needs and circumstances of those in the entertainment profession. It is utterly wrong to criticise my right hon. Friend in the way that the hon. Member for Stoke-on-Trent, Central did.
      I commend the new clause to the House and I hope that the amendments will be deemed unnecessary by the Opposition.
      Mr. Chris Smith rose—
      Mr. Deputy Speaker: Does the hon. Gentleman have the leave of the House to speak again?
      Hon. Members: Yes.
      Mr. Smith: I simply wish to pick up the last point that the right hon. Gentleman made. We entirely accept the assurances that he has given us on amendments (a) and (b), but we remain a little concerned about amendment (c)—the definition of theatrical artists. However, we accept he Government's assurances that they have acted in good faith. We will wish to study carefully the way in which the Inland Revenue interprets the clause.
      Mr. Fisher: May I take the opportunity to respond to the Minister and to the hon. Member for Richmond and Barnes (Mr. Hanley)? I entirely accept that the Minister for the Arts made positive and full representations to the Financial Secretary—as he then was—as the House would expect. I also accept the point made by the hon. Member for Richmond and Barnes that no hon. Member would expect the Minister to speak against Government policy—that would be one Minister speaking against another. I was trying to make a wider point. While not contradicting the point that the Secretary of State was making about tax, I believe that the Minister for the Arts could have made a positive statement at some stage about the poor treatment

      713
      of actors and the substantial case for their protection. That would not have gone against the Treasury's position, or breached ministerial guidelines. I accept the points that the Secretary of State made about representations, although I believe that the Minister for the Arts could have found some time to make a general statement in support of the acting profession.
      Mr. Smith: My hon. Friend has made an extremely apt and helpful intervention.
      I shall not seek, on behalf of the Opposition, to press our amendments to the vote. We wish new clause 7 all speed on to the statute book. However, we remain a little sad that the Government did not take the opportunity to go further, and to give a better deal to members of the acting profession.
      Question put and agreed to.
      Clause read a Second time, and added to the Bill.

    New clause 1

      ENVIRONMENTAL ASSESSMENT
      '1. Not later than 14 days after the date on which any Finance Bill is read for the first time in the House of Commons, the Chancellor of the Exchequer shall lay an Environmental Assessment before the House of Commons stating the anticipated environmental effects (if any) of each clause of the Bill.
      2. For the purpose of this section the anticipated environmental effects of a provision shall be taken to include its anticipated effects on

      (a) land use in the United Kingdom.

      (b) the levels of pollution of the atmosphere, any body of water, or land, whether in the United Kingdom or elsewhere, as a result of agricultural or industrial activity

      (c) the rate of usage of natural resources (whether in the United Kingdom or elsewhere),

      (d) the rate and types of energy production and use in the United Kingdom,

      (e) encouraging the use of renewable sources of energy or raw materials in the United Kingdom, or

      (f) human and animal health (whether in the United Kingdom or elsewhere)

      as well as such other matters as the Chancellor considers to be relevant.
      3. This section shall have effect in relation to any Finance Bill read for the first time on or after 1st January 1991.'.— [Mr. Chris Smith.]
      Brought up, and read the First time.
      Mr. Chris Smith: I beg to move, That the clause be read a Second time.
      Mr. Deputy Speaker: With this, it will be convenient to consider new clause 4: Catalytic converters—
      '1. After paragraph 5 of Schedule 6 to the Taxes Act 1988 there shall be added the following new paragraph:

      Cars with catalytic converters
      6.—(1) Where a car is made available to an employee for part only of the relevant year, the cash equivalent derived from Table A, B or C after any reduction or increase provided for by paragraphs (2) to (5) above shall be reduced by 10 per cent if the car has been fitted throughout that part of the year with an exhaust emission reduction device, or by 5 per cent if the car has been fitted with such a device for more than one half of, but not for the whole of, that part of the year.
      (2) Where a car is made available to an employee for the whole of the relevant year, the cash equivalent arrived at
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      above (that is to say, after any reduction or increase provided for by paragraphs (2) to (5) above) shall be reduced by 10 per cent if the car was fitted with an exhaust emission reduction device at the end of that year and for the greater part of that year, or by 5 per cent if the car was fitted with such a device at the end to that year but not for the greater part of that year.
      (3) For the purposes of this schedule an "exhaust emission device" means

      (i) a catalytic converter or

      (ii) any other device of a similar nature which the Treasury may from time to time prescribe".

      2. This section shall have effect for the year of assessment 1990–91 and later years of assessment.'.
      5.30 pm
      Mr. Smith: New clause 1 seeks to place a duty on the Chancellor of the Exchequer each year when publishing the Finance Bill to publish also an environmental assessment of the impact that its provisions will have on our environment.
      We hear much these days about how green the present Government seek to appear. The Prime Minister has now made five major speeches on environmental issues. Much to the astonishment of the environmental world, she has been awarded a good conduct prize for her actions in relation to the environment. However, when we look at what the Government actually do rather than what they say, we see that their record on the environment does not, I fear, bear much examination.
      The contrast with what is happening elsewhere in the world could hardly be greater. Many of the countries of the developed world are now realising the importance of environmental issues and the fact that, as a planet, we need to cope with the consequences of the industrial and economic policies that we pursue. That realisation is finding its expression not only in statements from Governments around the world, but also in their actions. At the end of June, when President Bush launched "Enterprise for the Americas", which is a new partnership for trade, investment and growth, he said:
      "One measure of prosperity—and the most important long-term investment any nation can make—is environmental well-being. As part of our Enterprise for the Americas Initiative, we will take action to strengthen environmental policies in the hemisphere."
      He then laid out a detailed agenda for action on, for example, debt for nature swaps for the countries of Latin America. We pressed that issue on the Government in Committee. President Bush also referred to a whole range of trading issues and to the impact that trading patterns can have on the environment of the developing world.
      If we consider environmental taxation policy and what is happening elsewhere in Europe, we discover that, in Italy in 1989, a special tax was imposed on non-biodegradable plastic bags, which was to be paid by manufacturers and importers. At 100 lira per bag, the tax is five times more than the cost of manufacturing the receptacle. In Norway, a charge has been imposed on non-returnable beverage and food containers since 1987. In Sweden, there is a high charge on batteries containing mercury or cadmium, amounting to 3.22 ecu per kilogramme of batteries sold. In Germany and the Netherlands, cars are divided into three categories, according to their air pollution characteristics. The cleaner the car, the higher the tax advantage for the car purchaser.
      Many other examples could be given. It is clear that Governments elsewhere—Governments everywhere—and of all political complexions, are waking up to the need to

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      ensure that environmental considerations are taken into account in their economic policies, and especially their taxation policies.
      Here in Britain, before the Chancellor's Budget, the Labour party proposed a series of proposals for green taxes which the Chancellor could have adopted as part of this year's Budget. We were told in advance that it was likely to be a Budget for savings and, to a limited extent—in fact, it was to a very limited extent—a Budget for the environment. Well, it was not. The Chancellor announced only two minor measures to benefit the environment. The first was a minor adjustment to the differential between leaded and unleaded petrol, making a further difference of less than 1p. The second item was a small increase in the tax to be paid for having the benefit of a company car. Subsequently, it must be admitted that in Committee the Government came forward with a further measure on mileage allowances.
      However, there have been no other proposals, in the Budget, in the Finance Bill, or in the 30 or 40 pages that the Government added to the Finance Bill in Committee, which could be said to have any environmentally beneficial effect in terms of adjustments to the taxation system.
      In contrast, the proposals put forward by the Opposition before the Budget would have provided a ready agenda that would have enabled the Government to take positive steps in the right direction. We proposed, for example, that we should consider reducing or even altogether removing VAT on particularly environmentally friendly products or processes, such as recycled materials or energy-efficient appliances.
      Mr. Campbell-Savours: Does my hon. Friend agree that another advantage of that approach to securing higher environmental standards is that producers are given a choice? A producer can decide to produce a product that he can produce more cheaply, but on which he pays a higher level of tax, or he can produce another product on which he might pay a lower level of tax. Does my hon. Friend agree that that approach will, through taxation, build into the mind of every industrialist the consideration that, if he wishes to reduce his tax liability, he must ever be seeking new technological processes that secure higher environmental standards?
      Mr. Smith: My hon. Friend is absolutely right. Using the taxation system to promote good environmental behaviour offers not only the producer but the consumer a choice. That means that producers will be encouraged—there will be an incentive—to look for alternative products that are less damaging to the environment.
      As well as some carrots in terms of reductions in VAT, we also proposed some sticks with increases in VAT on, for example, items of non-biodegradable or non-recyclable packaging or on products with an excessive or unnecessary amount of packaging. We also proposed to increase VAT on CFCs, although, of course, we should like CFCs rapidly to be prohibited altogether. We proposed a review of corporation tax allowances, with additional allowances for anti-pollution or conservation investment, together with a provision to make non-allowable expenditure on items that create pollution. Therefore, if a company used or created pollutants such as CFCs, it would not be able to offset their costs against corporation tax.
      We suggested that, instead of levying vehicle excise duty at a flat rate regardless of engine capacity, it should be
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      graded so that owners of small cars would pay less duty and owners of larger cars would incur more duty than at present. We proposed also a substantial additional difference between the price of leaded and unleaded petrol. The tax incentive to use unleaded since 1988 has been a success story, because its use has increased from single percentage figures to more than 30 per cent. of all petrol sold in this country. As my hon. Friend the Member for Workington (Mr. Campbell-Savours) said, that clearly shows that using the tax system to alter environmental behaviour can be most successful. However, its effect on unleaded petrol usage appears to have reached a plateau, so we suggested a further boost to try to ensure that the graph continues to climb.
      We suggested also incentives for the fitting of catalytic converters, including zero rating for the purposes of VAT and a concession on the level of car tax where a converter is fitted to a new car. New clause 4, which is linked with new clause 1 for the purposes of this debate, advances a further measure to encourage the use of catalytic converters, in the form of an incentive to the users of company cars to persuade their employers to ensure that their cars are fitted with catalytic converters, by setting the tax levied on the user at a lower level.
      Mr. William O'Brien: I recently asked the Secretary of State for Transport when it will be compulsory to fit catalytic converters to new cars. I am advised that, because of EEC legislation, the Government do not intend to make the fitting of converters compulsory until 1993. Would it not be in everyone's interest for the Government to speed up the legislation and to make the fitting of converters compulsory, rather than leave that to market forces?
      Mr. Smith: My hon. Friend rightly identifies the problem of the three-year time scale before the fitting of catalytic converters is made mandatory. Converters are extremely helpful in removing or reducing exhaust emissions of carbon monoxide, nitrogen dioxide and hydrocarbons. They do not tackle the carbon dioxide problem, but are valuable in a number of other respects. The tax incentives proposed in new clause 4 will ensure much more widespread fitting of catalytic converters over the next two or three years—even before the mandatory provision comes into effect.
      5.45 pm
      We also proposed before the Budget a series of measures relating to company car taxation, to encourage the Government to raise the scale rates at which benefit is assessed, in line with the principles set by the former Chancellor of the Exchequer in his 1988 Budget, when he pointed out that taxation on the benefit of a company car was substantially less than the value of the benefit received. In both his 1988 and 1989 Budgets, the former Chancellor began the process of raising that rate, but the progress that he made has not been advanced to the degree that it should by the present Chancellor in this year's Budget and Finance Bill.
      Those specific proposals for improvements to the tax system would have shifted environmental behaviour in a responsible direction, but none of them was taken to heart by the Chancellor or the Government. New clause 1 seeks to highlight the paucity of the Government's action in relation to the environment in this year's Finance Bill. It

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      suggests that, when the Government decide upon taxation changes each year, they ought to report to the House what will be the environmental impact of those changes.
      That duty would exist whether or not the Government actually did anything in environmental terms, and it would provide a powerful incentive for the Chancellor to sit down and think carefully when drawing up his Budget—in respect of not only the fiscal stance that he intended to take or the amount that he wanted to raise, but the environmental consequences of his actions. The requirement placed on him to think through the environmental issues would be a powerful tool in the hands of those of us who are concerned about our environment.
      Mr. Jim Cousins: Is my hon. Friend aware that the Confederation of British Industry has produced a helpful information booklet for its members on how to conduct environmental audits, not only for the purposes of company accounts but for presenting information about company activities more usefully and constructively? Is that not a good example of the leadership that should come from the Government rather than from the CBI?
      Mr. Smith: I am always delighted to hear that leadership is coming from the CBI. Not only in respect of the environment but in relation to interest rates, levels of investment and other issues, the CBI is increasingly demonstrating the kind of leadership that the Government are lacking. We suggest that the Government should be required to undertake an environmental audit each year in relation to their Budget and Finance Bill proposals.
      Mr. Nigel Forman: Can the hon. Gentleman say who would advise the Chancellor of the Exchequer each year on the technical aspects of any environmental assessment in respect of any individual clause in the Finance Bill?
      Mr. Smith: I do not see any problem in the Chancellor, together with his advisers, sitting down to make a presentation of a sensibly argued case about the likely environmental consequences of particular measures. Doubtless he would also call upon the assistance of his right hon. Friend the Secretary of State for the Environment and his advisers. In order to be helpful in this matter, we have set out in the new clause a series of items that could be looked at each year by the Chancellor in relation to particular items of taxation.
      At present, each year the Chancellor presents us with a Red Book in which he must set out the financial consequences of each of the measures he proposes and their cost. Why is it such an outrageous idea that the Chancellor should present us with a green book as well that sets out the consequences for our planet of his proposals?
      It is too often forgotten by politicians that the environment does not simply refer to specially labelled separate issues that stand apart from the so-called main stream of politics. The environment and environmental concerns should run through all Government policy and everything that the Government are about. Nowhere is that more true than in relation to the economy and taxation. The interaction between the economy and the environment will grow rather than diminish in importance.
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      We believe that our new clause offers a way in which to highlight those issues to ensure that that interaction is properly scrutinised.
      Taxation measures that change environmental behaviour through financial incentive are no substitute for the range of statutory and administrative measures that are also needed to protect our environment. Ultimately, it is regulation on polluting activity, integrated transport policies and energy conservation measures that will secure improvements in our environment in which we can all share.
      However, taxation has its part to play as it can help to make a start to change behaviour. That is why we made a series of proposals before the Budget. That is why we urge on the Government a proper mix of financial incentives and regulation in relation to the environment. That is why we urge the Government to act in an environmentally responsible manner—they should settle their taxation policies so that people also act in that manner. Our new clause goes a considerable way to start that process, and it will ensure that, in future, the Chancellor will take more notice of the environment than, sadly, he has this year.
      Mr. Gow: I enjoyed the speech of the hon. Member for Islington, South and Finsbury (Mr. Smith) and I understand and respect the motives that prompted him to table his new clause. Certainly the six signatories to the new clause are among the most agreeable Members of the House. It is possible, however, even for agreeable people to be mistaken. I do not know which among that sextet will claim to be the draftsman of the new clause, because the drafting is strange indeed.
      Subsection 2(b) refers to "any body of water", which is a breathtaking description of the water around us. Who could have dreamt up such a phrase? There are six paragraphs to that subsection, four apply to the United Kingdom only and two apply worldwide. Who was the environmental genius who managed to distinguish between those paragraphs that apply to all mankind and those that should apply to the United Kingdom only?
      The hon. Member for Islington, South and Finsbury proposed some further discriminatory taxation designed to protect the environment, but I wonder whether the hon. Gentleman is able to assure the House that all his proposals are such that they would not require the consent of folk in Brussels who were described in such picturesque and in some ways extremely attractive language by my right hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley)? I fear that my right hon. Friend's Budget proposals are now constrained more and more by the need to obtain permission from unelected and unaccountable Commissioners in Brussels. I shall give way to the hon. Gentleman if he can give us an assurance that none of his proposals requires the consent of the folk in Brussels.
      Mr. Chris Smith: Of course a number of the VAT proposals require consent across the European Community—not necessarily the consent of the bureaucrats in Brussels, but the consent of the member state Governments. However, the action on catalytic converters could be taken tomorrow, as I understand that agreement already exists on that. One or two of the VAT items would require the consent of the other member states, but some of the other EC countries have already taken steps in that direction.
      Mr. Gow: The hon. Gentleman confirms my worst fears: increasingly the taxation proposals that affect the British people require the consent and approval not only of Parliament, but of unelected, unaccountable folk in Brussels.
      My hon. Friend the Member for Carshalton and Wallington (Mr. Forman), formerly Parliamentary Private Secretary to the former Chancellor of the Exchequer, asked who would fashion the environmental assessment, given that that assessment must be presented to the House by the Chancellor. Mercifully, my hon. Friend the Economic Secretary to the Treasury, himself an expert in all matters environmental, is to reply to this debate.
      Let us go through the Treasury Ministers to find to which of them will be assigned the task of preparing the environmental assessment. Let us first consider my right hon. Friend the Chancellor of the Exchequer. We cannot heap further burdens upon him because he will be too busy in the coming weeks and months having discussions with German Ministers who have studied with close interest the article in The Spectator.
      We then come to my right hon. Friend the Chief Secretary to the Treasury. We are told that in the coming weeks he will be engaged in the important matter—certainly I hope that he will be so engaged—of trying to restrain some of my right hon., and even hon., Friends, presently Ministers in the Administration, from spending more money than they should. Happily I note that my hon. Friend the Minister of State for Defence Procurement has hastened into the Chamber for this debate. He takes a keen interest in environmental matters and he alone of all Ministers will be assisting my right hon. Friend the Chief Secretary. He will do his duty by seeking to diminish spending while some of my other right hon. Friends will be seeking to increase it. We cannot heap an extra burden upon my right hon. Friend the Chief Secretary, especially in the coming important months before the spending plans for 1991–92 are fashioned.
      We have excluded the Chancellor and the Chief Secretary. Who is the next on the list? My right hon. and noble Friend the Paymaster General who, it may be said, as an hereditary earl, is well qualified to prepare the economic assessment. But he also has other duties. He has to try to placate noble Lords in another place—
      Mr. Nicholas Brown: Not on the Finance Bill.
      Mr. Gow: No, not on the Finance Bill. The hon. Gentleman, to whom I shall give way, does not seem to have read his own new clause, which provides that the Chancellor shall lay before the House, no later than 14 days after the Finance Bill has been laid before the House, the environmental assessment—that is a proposal in the new clause. The question my hon. Friend the Member for Carshalton and Wallington asked the House and I am trying to answer is, who will prepare the assessment. My hon. Friend did not answer that question, nor did the hon. Member for Islington, South and Finsbury, and so it falls upon me to try to answer it.
      6 pm
      The list has now come down to my right hon. and noble Friend the Paymaster General. We have not always had a Member of another place as a Treasury Minister. The first Treasury Minister in another place, under the premiership of my right hon. Friend the Prime Minister, was my noble
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      Friend Lord Cockfield, who went on to Brussels. He is one of the folk of whom I am speaking. Perhaps he could be called back from retirement to assist with the preparation of the environmental assessment. Lord Cockfield was sent to Brussels to challenge the Commission, but when he got there he facilitated the Commission's task in seeking to impose its will on the 12 member states of the Community. To whom do we come next?
      Mr. Simon Hughes: Perhaps Lord Cockfield changed his line from one of attack to facilitation because he was persuaded by the merit of the argument.
      Mr. Gow: The hon. Gentleman's own party would be happy to submerge this kingdom into a federal Europe. That view is not shared by Conservative Members.
      Mr. Hughes: We know that.
      Mr. Gow: Yes—that is why I shall not give way again to the solitary representative of the Liberal party. That party once represented Eastbourne, but once only, and we shall not give way to the Liberal party again.
      I am pleased to welcome to our proceedings my hon. Friend the Member for Aldershot (Mr. Critchley), who is an expert in these as in other matters, and to whom I shall give way presently.
      I was just coming to the fourth of the Treasury Ministers—who is he? He is my right hon. Friend the former Financial Secretary. My hon. Friends have been falling over one another in paying tribute to my—is he now my right hon. Friend—[Interruption.] There is disagreement among Treasury Ministers about whether he is right hon. or honourable. My hon. Friends have been falling over themselves in congratulating my right hon. Friend, the former Financial Secretary, on his appointment as Secretary of State for Trade and Industry. I do not join them. I deplore the appointment of my right hon. Friend as Secretary of State for Trade and Industry. The House will not misunderstand me when I say that I deplore it because I deplore the departure of my right hon. Friend the Member for Cirencester and Tewkesbury. I give good wishes to my right hon. Friend the Secretary of State for Trade and Industry and congratulate him, but I deplore his arrival for that reason, and that reason only.
      Can my right hon. Friend the former Financial Secretary be engaged in the environmental assessment? How can he when he is about to go off to the Department of Trade and Industry which, according to some people, is one of the greatest pollutants of the environment?
      Mr. Campbell-Savours: May I help the hon. Gentleman and put it to him that all the work will have been done before the Budget statement has been made, so he does not have to worry himself about such matters? The Chancellor will have the statement in his pocket when he stands at the Dispatch Box because it will have been produced as part of an assessment made prior to the introduction of measures in the Budget. [Interruption.]
      Mr. Gow: I have just been told by my hon. Friend the Member for Bolton, West (Mr. Sackville), who normally sits on the Front Bench, that he wants a vote to be called and so I have been invited to shorten my remarks—
      Madam Deputy Speaker (Miss Betty Boothroyd): Or perhaps make them more pertinent to the new clause.
      Mr. Gow: Even if I am not willing to accept the rebuke from my hon. Friend the Lord Commissioner, I shall, of course, accept the rebuke from you, Madam Deputy Speaker.
      I have been going through the Treasury team, and one Minister remains—the Economic Secretary, who is today, as usual, wearing a green tie and who is to reply to this debate.
      The new clause is unnecessary. The Treasury, in conjunction with the Department of the Environment, already takes proper account of all the relevant environmental matters. I have no wish to heap further burdens on Ministers, particularly Treasury Ministers. Therefore, when my hon. Friend replies, I hope that he will say that an environmental assessment is surplus to requirement.
      Mr. Campbell-Savours: The new clause is one of the most important new clauses that we are debating this evening because, while the hon. Member for Eastbourne (Mr. Gow) spent much of his speech humouring the House, he was, in effect, referring to what I perceive to be very much Labour's policy as it will be at the next general election. Built into the new clause is a proposition that is electorally saleable, certainly administratively practical and environmentally popular. It is the way to go in future, and I suspect that the hon. Member for Eastbourne, if he were more candid with the House this evening, would have found much in the amendment with which he could agree.
      I shall deal with one part of the new clause and produce an example of how, if such matters were not considered when tax policy was framed, things could simply go wrong, damage could be done to the environment, and local authorities could spend lots of money repairing damage and preventing potential damage to the environment. If new clauses such as this already formed part of the existing law, one case would never have arisen—the sale of the Westminster cemeteries in London.
      My example is relevant to the new clause because three of Westminster city council's municipal cemeteries were sold, two of which had been owned by the council for more than 100 years. Graveyards at Hanwell in west London and Finchley and Mill Hill in north London were sold for 15p, together with millions of pounds worth of land and buildings. The relatives of those buried in the cemeteries were not informed.
      The sale of the cemeteries involved two factors. First, the land involved was raped in that it was not properly maintained. Historically the area had been well kept, well maintained and, I understand, well walked by people in the immediate vicinity. Those pathways and walkways were destroyed because of the nature of tax law in Britain.
      Tonight I shall show how those issues interact and how in the absence of a proper tax framework—I shall explain how the law did not cover those matters in the way in which they would be covered by new clause 1—those who wished to pillage land and to speculate were able to destroy a beautiful area of London which had been immensely popular for a century.
      I shall refer to how clauses 65, 66 and 67, on dual resident companies, and clauses 89 and 90, on income and corporation tax returns, would interact with positive tax legislation in the event that an environmental assessment were made of the Chancellor's proposals for tax legislation. I shall demonstrate how the Government lack
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      the will and the way to tackle the problem, thereby giving rise to new clause 1, by reference to the sale of the cemeteries in Westminster.
      It was a callous act. Lady Porter, the leader of Westminster city council, sold the graveyards for 15p. In some cultures, people fight to defend the graves of their ancestors and the immediate environment that surrounds those graves. In this case, some beautiful cemeteries were desecrated as a result of tax law and the absence of any provision such as new clause 1. Lady Porter was happy to sell off hundreds of graves—I am told perhaps thousands—for less than the price of a pint of beer. Those 90 acres of land used to be looked after with respect; they were a fitting memorial and a place for contemplation. Now they are a wilderness because of tax law. The grass and briars grow waist high and the graves that once were tended with care are now choked with thorns and abused by vandals. The hon. Member for Eastbourne nods in agreement; I am sure that he feels as strongly as I do about this matter.
      It is environmental blight on an immense scale. The land, the graves and the memory of the dead are now no more than another counter in a commercial game of poker between the cynical policies of Westminster city council and the financial interests of the owners of the cemeteries. The mischievous, wealthy landowners who have profited by buying and selling graves have used misrepresentation to achieve those profits and offshore, foreign resident companies to preserve their anonymity and to avoid paying tax. Had new clause 1 been on the statute book, the framing of law governing investments overseas would have provided sufficient protection to ensure that the transactions in respect of Westminster city council's cemetery privatisations would never have occurred.
      Despite a so-called in-depth investigation by the district auditor, and despite the supposed investigations of the police fraud squad, the dealers who have blighted the land and insulted our memories continue to live anonymous, well-heeled lives in big houses in St. John's Wood or the Thames valley. They are able to do so because they carry out their transactions through shadow companies based in the Channel islands, Cyprus, Panama or Liberia.
      6.15 pmn>
      Madam Deputy Speaker: Order. I am sure that the hon. Gentleman is a sufficiently clever parliamentarian to relate what he has to say to the clause. I have listened to him very carefully, but he has strayed some way from it. I should be obliged if he would relate his remarks to the new clause, and then he would remain in order.
      Mr. Campbell-Savours: I understand your ruling, Madam Deputy Speaker, and I am sure that you realise that I considered these matters before I came into the Chamber today.
      One section of the new clause deals with land use in the United Kingdom, and I am referring to land use to show that unless environmental impact assessments are carried out on tax law relating to land use in the United Kingdom, inevitably stories such as that relating to Westminster cemeteries will recur. By relating that story, I am illustrating where the tax changes should take place in compliance with new clause 1.
      The district auditor and the police are unable and unwilling to discover who those people are. They are even unable and unwilling to chase up the tax which should be paid on the multi-million pound gains made by those

      723
      wealthy malefactors. I shall reveal for the first time in public who are some of the people behind the dealings and how they have successfully blackmailed Westminster into dropping its policy—
      Madam Deputy Speaker: Order. I have given the hon. Gentleman quite a lot of leeway, but he is rather taking advantage of the clause and of the present debate. He should relate more directly what he has to say to the clause. I understand his great concern, but I hope that he will now speak to the clause before us.
      Mr. Campbell-Savours: I am speaking specifically to the queston of land use in the United Kingdom and the need for an environmental impact assessment to be made by the Chancellor when devising tax policy that affects land use in the United Kingdom. The only way in which I can argue the need for that is by producing an example of where the law has been deficient and showing its consequences. That is what Parliament is about. One cannot simply set one's proposition; one has to explain the basis on which one wishes to argue a case for reframing the law. I should have thought that I was in order, but I bow to your judgment, Madam Deputy Speaker.
      Mr. Gow: Perhaps I can help the hon. Gentleman. He may know that Westminster city council now accepts, and leading counsel has advised, that the sale of the cemeteries by the city council was unlawful. In my judgment, the consequence of that is that in law the cemeteries are still owned by the city council.
      Mr. Campbell-Savours: I should like to think that that is the case, but I understand that that is not accepted by the developers and that Westminster city council is already negotiating a compromise which may well be at a substantial cost after all the environmental damage that has taken place.
      In my view, local authorities should not be able to act in that way. If a provision such as new clause 1 already existed in legislation and there had been an environmental impact assessment of any tax policy changes that the Government were introducing, we should not be in the position that we are in today.
      I ask the Government to take appropriate executive and legislative action to ensure that those people are made to answer for their actions. New clause 1 would prevent the activities of such people in future in so far as they blighted our environment. The graveyards which, as I have said, were beautiful, and which have been the subject of an environmental disaster, were sold on 30 April to a Mr. Clive Lewis, of Lewis and Tucker, in Hanover square.
      Mr. Roger King: On a point of order, Madam Deputy Speaker. I have listened with great interest to the hon. Gentleman, but I find it difficult to identify the exact relationship between the problems with the graveyards of Westminster council and the new clause. Surely, according to the amendment, the Chancellor of the Exchequer is obliged to bring before the House the environmental implications of the Budget. The graveyards affair related to a local authority. It has no bearing on the environmental considerations of a Budget.
      Madam Deputy Speaker: The hon. Gentleman makes a good point. I advise the hon. Member for Workington (Mr. Campbell-Savours) that to give an example is perfectly in order, but to pursue the example as he does in
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      such detail is an abuse because it shifts the purpose of the debate to a different subject. It is perfectly legitimate for the hon. Gentleman to give an example, as it is for any hon. Member, but he is pursuing that example to such an extent that he is shifting the subject of the debate from the new clause.
      Mr. Campbell-Savours: I am tired of Conservative Members raising spurious points of order to prevent the truth from coming out every time that I come into the Chamber to say something that is controversial and causes concern among the general public and to set out the truth. The facts are simple.
      Mr. Roger King: Further to that point of order, Madam Deputy Speaker. I protest at that.
      Madam Deputy Speaker: Order.
      Mr. Campbell-Savours: The hon. Gentleman wants me to be thrown out because I wish to explain matters—
      Madam Deputy Speaker: Order.
      Mr. King: I do not accept that allegation.
      Madam Deputy Speaker: Order. Let us keep it cool. The temperature is very hot outside, but let us keep it cool in here.
      Mr. Campbell-Savours: The truth is coming out.
      Madam Deputy Speaker: Order. I have explained to the hon. Gentleman that it is perfectly legitimate to give examples, but he should not pursue them to such an extent that he shifts the subject of the debate.
      Mr. Campbell-Savours: I understand that, but I find it hard to accept that I am shifting the debate. The words
      "land use in the United Kingdom"
      are on the amendment paper. The new clause is about building into Budget calculations an environmental impact assessment and about the need to report 14 days later to Parliament on what is in the assessment. It refers specifically to land use.
      In my 10 years in Parliament, perhaps on less controversial issues, I have heard hon. Members speak many times at great length, setting out by way of example the reason why they adopt a cause.
      Madam Deputy Speaker: Order. I have allowed the hon. Gentleman to do that. He has set out his example. It is perfectly legitimate to do that. I ask him not to shift the subject of the debate, that is all.
      Mr. Campbell-Savours: I use every debate, as any hon. Member does, to make my case. My argument is based on what happens in a particular case. If it had not been for interventions from the hon. Member for Birmingham, Northfield (Mr. King), I should have been well on in my case. As it is, I am still arguing defensively that I have a case and a right to raise it here in the House. If Parliament wants to shut out the truth, so be it, but the truth will come out.
      The graveyards were sold on 30 April to Mr. Clive Lewis, of Lewis and Tucker, in Hanover square. His home is at 33 Carlton Hill, St. John's Wood. At this point I should say that there is another Clive Lewis, who runs a surveying company called Clive Lewis Associates. He is entirely unconnected with these events.

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      With the beautiful lands of the graveyards came 12 acres of even more beautiful land—building land—three gatehouses, a flat, £10,000-a-year rental from a crematorium, a car park and a nursery plot, together with a cheque from the council for £70,000. Those items were subsequently split up and bought and sold for millions of pounds through companies in various different tax havens. Most of the land is now in the hands of a company called Wisland Investments, which is based in Switzerland and registered in Panama.
      Mr. Forman: On a point of order, Madam Deputy Speaker. I am an old friend and great admirer of the hon. Gentleman and I am very fond of him. He has his eccentric ways. Do you agree that his case is eminently an example of a matter which, if he wishes to go into it in great detail, he should raise on the Adjournment?
      Mr. Allen: Further to that point of order, Madam Deputy Speaker. I do not know whether you were present earlier when the hon. Member for Eastbourne (Mr. Gow) made an entertaining speech about four or five different Ministers and whether they would be capable of producing a report.
      Mr. Chris Smith: He gave five examples, not one.
      Mr. Allen: I bow to my hon. Friend. Entertaining as the hon. Gentleman's speech was, many of us felt that it was wholly irrelevant to the debate. My hon. Friend the Member for Workington (Mr. Campbell-Savours) was speaking about people who have abused the tax system for gain. The relevance of that to the debate has been outlined. If there was an environmental impact assessment of tax proposals, such abuses could not arise. With the greatest respect to the Chair, the items that my hon. Friend has raised are absolutely and strictly in order and certainly—
      Madam Deputy Speaker: Order. That is for the Chair to determine. I remind the hon. Member for Nottingham, North (Mr. Allen) that the hon. Member for Eastbourne (Mr. Gow) was also called to order.
      Mr. Campbell-Savours: Most of the land is now in the hands of a company called Wisland Investments which is based in Switzerland and registered in Panama. The land is environmentally significant to London. It includes natural walkways and is on the edge of the green belt. The land is being environmentally damaged due to the absence of precisely the environmental impact assessment called for in the new clause.
      In order to sound like a credible purchaser, Mr. Lewis initially misrepresented himself to the counsel of the agent of the Western Synagogue in west London. As Rabbi Rosen of the synagogue rightly said, and will confirm:
      "No instruction was ever given to Mr. Lewis. Indeed, it would have been beyond the constitution of the Synagogue to have purchased the land."
      Mr. Lewis insinuated his way into the counsel's confidence by taking in vain the name of the church where his father was an officer. Mr. Lewis was soon the only buyer, and when he declared his interest in the scheme Lady Porter was too pig-headed and her officers too frightened to stop the sale from going through. Right from the beginning, it seems that it was Mr. Lewis's intention to asset strip. New companies were set up to buy the different pieces of land.
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      In particular, a company called Cemetery Assets was set up 13 days before the exchange of contracts to take over the graveyards. The graveyards cost hundreds of thousands of pounds to maintain, yet Cemetery Assets had capital of just a few pounds.
      Much of the other valuable land went to a Cyprus company called Bestwood Property Limited. Again, that company took advantage of British law.
      Madam Deputy Speaker: Order. The hon. Gentleman is taking great advantage of the Chair and the House. I ask him again to relate his comments directly to new clause 1. Otherwise, I shall have to invoke Standing Order No. 41, which requires me to stop any irrelevance that the hon. Gentleman utters. His comments during the past five or 10 minutes were irrelevant to new clause 1. I seriously ask him to relate his comments to the environmental assessment of land and not to do so with the detailed examples that he has used so far.
      Mr. Campbell-Savours: I understand that in Sweden, where one of the beneficial owners and principal investors in Wisland is part resident, the matters that I bring before the House are commonplace. The cemeteries are now in the hands of a Panamanian company, Wisland Investments. For years, the company has sought to conceal its true owners. I can now reveal that one of the investors in the company is a Swede by the name of Bertil Rosquist of Orchard Dene, Riverdale, Bourne End, in Hertfordshire.
      Madam Deputy Speaker: Order. I now ask the hon. Gentleman to discontinue his speech. It is totally irrelevant to the new clause.
      Mr. Campbell-Savours: On a point of order, Madam Deputy Speaker. I have spoken in the House on many occasions in the past 10 years. It may be that you cannot see the connection, but I feel sure in my mind that there is patently a clear connection. It has been drawn to your attention by several of my hon. Friends. You may not be prepared to accept the connection, but there is one, and if, in this mother of Parliaments, we are to be prevented from arguing our case on the basis that Parliament never wishes to consider the real arguments that lay behind our decisions to amend legislation, it will be much the poorer. I can say only that, under pressure from Conservative Members, you have conceded, and I take strong exception—
      Madam Deputy Speaker: Order. I take great exception to what the hon. Gentleman has just said. I have been extremely tolerant since he started his speech. I understand the passion with which he speaks about this matter. He has never been stopped by me. I am sorry to have to stop him now, but I have given him ample warning about speaking directly to the new clause. I ask him to resume his seat.
      6.30 pm
      Mr. Campbell-Savours: I do not refuse to resume my seat, but, on a point of order, Madam Deputy Speaker, may we assume that, for the rest of this Finance Bill, the strictures as they have operated in relation to me tonight will operate for every other speech? If so, over the next two days some Labour Members should spend their time in the Chamber, and every time that, in our view, Conservative Members step out of line—that is what has happened

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      today; representations were made about me—we should object. If that is so, we shall find that the Finance Bill terminates tonight by—
      Madam Deputy Speaker: Order. As long as I am in the Chair, hon. Members will speak directly to the clauses or amendments before us.
      Mr. Ian Stewart: I very much regret the aspersions that have been made against you, Madam Deputy Speaker.
      My hon. Friend the Member for Eastbourne (Mr. Gow) pointed out, in his usual vivid and graphic way, the absurdity that would follow from the implementation of new clause 1. I do not wish to add anything to what he said, but I wish to pick up one point made by the hon. Member for Workington (Mr. Campbell-Savours), not during his strange speech but in an intervention. He said that all the measures in the Budget would have to be checked for their environmental consequences before the Budget statement was made. Presumably, drafts of the Budget would have to be circulated around the globe and Governments of friendly, or perhaps less friendly, countries would have to relay information on the environmental consequences of clause 120 long before the Chancellor announced to the House that it was to be introduced.
      That point adequately emphasises the nonsensical implications of the new clause. If the Opposition's purpose is to debate the usefulness of the tax system for dealing with environmental matters, they have a point that is common ground among hon. Members. I compliment my hon. Friend the Economic Secretary and his colleagues in the Treasury on the way that they have taken effective and practical steps to achieve that.
      By speaking in support of the Government, I should not wish you, Madam Deputy Speaker, to think that I was making a bid for a vacancy at the Treasury and to return to where I spent much of the 1980s. Unfortunately, infirmity prevents me from attempting to do so.
      Over the past few years, it has been shown how the tax system can be used to encourage environmentally friendly measures and to discourage those that are environmentally damaging. I refer in particular to the differential between the price of lead-free and leaded petrol. Some people criticised that differential as inadequate, but it has meant that almost a third of all petrol consumed is lead free.
      I very much approve of the way that the Government have increased tax on company cars and I should like to encourage them to continue to do so, because so far as I can see there is still a substantial gap between the real value of a company car to the recipient and the amount at which it is assessed for tax. That is partly because the value of a car to the recipient has risen rapidly in recent years and it has been difficult for the tax charge to keep up, despite increases in successive Finance Bills. A further reason is that the amount assessed for tax is not a gross but a net figure. If the recipient had to buy, service and maintain his motor car, he would have to receive a substantially higher salary because he would have to pay income tax at the basic rate or perhaps the higher rate. If the value of a company car to a basic rate taxpaper were deemed to be £3,000, he would have to be paid £4,000 so that he could pay 25 per cent. in basic rate tax to be left with £3,000 to
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      spend on his car. A higher rate taxpayer would have to be paid £5,000 extra and, therefore, to pay £2,000 in tax before he had the necessary money left over.
      I encourage Treasury Ministers to continue the difficult and probably not very popular process of increasing the taxation on company cars. I shall probably be lynched by half my constituents for saying that those allowances are unduly generous and have led to more motor cars, and larger motor cars, being bought than would have been the case if the tax system had been neutral on whether cars were provided privately or by employers.
      I do not believe that the motor industry needs that incentive. Several of my constituents work for Vauxhall in Luton. The new Cavalier is an extremely effective motor car which has been taking some market share from imports. Much of the market in imported cars could be regained by domestic manufacturers, even if the number of motor cars sold did not increase as rapidly as it does because of the incentive provided under the generous company car taxation system.
      I encourge my right hon. and hon. Friends in the Treasury to go further and to reduce the company car allowances in years when they feel that it is right to reduce the basic rate of tax. This option is not open to the Labour party because it wants to increase taxation. It will not be in a position, as we have been in one or two years recently, to reduce the basic rate. Those reductions have made it possible to make a larger adjustment to tax concessions such as those for company cars. I hope that we shall again reduce the basic rate and make the position fairer between one taxpayer and another. As things stand, in effect those who do not have company cars bear a higher proportion of the overall tax burden, whereas those who are fortunate to have the cars receive an undoubted financial benefit, which needs further adjustment.
      Hon. Members set a bad example by having a three-tier system for reimbursing mileage allowance. A few years ago, when the new system was introduced—I think in 1984—I found that my mileage allowance went down each month because I had a small car. Those who had large motor cars, which used far more petrol and caused more pollution, found that their mileage allowance was rising. They were rewarded for their greater consumption of fuel and greater contamination of the environment, while I was penalised for doing the same thing on a smaller scale—although I do not complain. I do not understand the anomaly whereby we provide those who have large cars with a mileage allowance more than twice the size of that given to the owners of small cars. In examining the environmental consequences of the motor car—which must figure largely in our thoughts when we are discussing the new clauses—we must realise that we are not setting a good example to the rest of the country. I hope that the time will come when we can change that.
      Mr. Simon Hughes: I shall deal shortly with the important and specific question of cars and car taxation that was raised by the right hon. Member for Hertfordshire, North (Mr. Stewart). I agree with some of his propositions.
      I support, in general terms, the two propositions in the new clauses: that there should be an environmental assessment of proposals put by the Treasury regarding changes in taxation, and that the tax system should be used to give advantage to forms of motoring and technology that are environmentally acceptable.

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      There is nothing new about the proposal that economic policy should be subject to environmental assessment; indeed, my first criticism of Labour's new clause is that Labour has come round to that view so belatedly. I remember taking part in a debate almost as soon as I became an hon. Member—my hon. Friend the Member for Orkney and Shetland (Mr. Wallace) also participated—in which we discussed proposals from the Royal Commission on environmental pollution for an environmental audit and assessment. My colleagues and I have urged that policy mechanism on Government for many years. I would also go further than the Labour party does in its proposals, although I accept that in the new clause it is addressing itself to the specific inter-relationship of the environmental assessment and budgetary proposals in the Finance Bill.
      One of the ideas that have been adopted in other countries is that of environmental assessments of all Government policy. Just as we receive legislation in the House that incorporates a Treasury indication of the economic implications as part of the financial memorandum, so we should have an environmental assessment of all legislation, which should be presented to hon. Members as advice before they assessed their reaction to each specific piece of legislation. That proposal could easily be implemented.
      The hon. Member for Eastbourne (Mr. Gow) asked a fairly rhetorical and somewhat whimsical set of questions about who should carry out the environmental assessment. If he really wants economic matters to be taken seriously by Government, he should address his mind to serious questions, and not to the somewhat irrelevant byways into which he went.
      As part of the structure of Government, there should be a Ministry or office that has the same authority that the Treasury has now. At present, anything that requires implementation requires a Treasury imprimatur to ensure that it comes within the general acceptability of Government public expenditure plans. I do not dispute the propriety of that, but, if Britain is serious about environmental matters, all Government proposals should also go through a similar environmental audit. The only way to do that is to create a Department of environmental protection that has the same authority in government as the Treasury.
      The hon. Member for Eastbourne asked who should do the environmental assessment. It would not be Treasury Ministers, as they have another principal function: they are there to be specifically expert in economic matters. However, they would be aware that no matters—even micro-economic matters—could be put through as Government proposals until they too had been vetted, costed and assessed in environmental terms. The hon. Gentleman is conservative in his view of what Government should do; he justifies it and relishes his conservatism, but I encourage him to be less conservative.
      The Organisation for Economic Co-operation and Development now regularly recommends in its Social Trends an environmental assessment of economic proposals. Many other countries do an environmental assessment. As part of his annual address to Congress, the President of the United States uses indicators other than gross national product and gross domestic product. The
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      ultimate governmental responsibility falls to the Prime Minister, and the Prime Minister's office: it should also be able to assess—if we think that these matters are important—the environmental impact of anything we do.
      If the Government are as serious in practice about environmental matters as they say they are in theory, I would hope that they would be considering the practicalities. We know that the Secretary of State for the Environment has employed an environmental adviser. The Government should be seriously considering including in their expected autumn White Paper the proposal that there should be a Department with the clout to assess the environmental implications of all matters of public policy. The same process should be continued in the Prime Minister's office. That would go much further than the Labour party's new clause, as it would cover all matters of public policy, not just the matters set out here. It would be a test of the Government's commitment to put the environment at the top of the agenda.
      6.45 pm
      I entirely agree with the hon. Member for Islington, South and Finsbury (Mr. Smith) that it is impossible and illogical to regard environmental and economic matters as separate, as they are fundamentally intertwined. Government economic policy in this and every country will inevitably have an impact on the environmental agenda, on our environmental development and on environmental production and pollution. The levers of economics that we choose have a direct effect on the damage we do to or protection that we give our environment: the amount by which we tax resources, whether we tax carbon or whether we tax the use of vehicles—all those matters have a direct interrelationship, and we must recognise that.
      One good development is that this debate has moved on from the debate in the 1980s, when many people thought that green politics and environmental issues were separate from other issues on the political agenda. There is now a ready awareness across the political divide, and among all who consider these matters, that environmental questions touch every area of public policy.
      Mr. Cousins: I have been following the hon. Gentleman's argument closely, but I must express a sense of caution about the creation of an all-embracing Ministry, let alone one that is accompanied by a large central department in the Prime Minister's office. The stock of skills that the country has to enable us to carry out environmental assessments is, sadly, quite limited. We hope that, in the course of time, it will develop but it is limited now. Surely it would be entirely wrong to centralise and limit the impact of those environmental assessment skills by tying them all up in one great Department of State.
      Mr. Hughes: The hon. Gentleman makes an important point, and I shall deal with it, although it merits more debate than we have time for now.
      A great deal of work has been done on other economic indicators of an environmental nature. The hon. Gentleman may know of some—for example, the other economic summit, and the work of such people as Paul Ekins. A great deal of work has been done on the theory of assessing, in economic terms, the impact of environmental matters.

      731
      At the moment in government, there is an illogicality: the Department of the Environment deals with far more than just environmental protection matters. It deals with local government, local government finance, housing and many other matters. My colleagues and I believe that it would be better to have an environmental protection Department that took the responsibility for environmental matters from the Departments where it currently lies. For example, the Foreign Office has some responsibility.
      Mr. Eric Martlew: Will the hon. Gentleman give way?
      Mr. Hughes: No—not until I have dealt with the matter raised by the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins).
      It would be better if all areas of Government dealing with environmental matters came under one Ministry. It is important also to have somebody in the Prime Minister's office or in the Cabinet office because, unless the Head of the Government is persuaded about the importance of a subject, those who try to promote it will not carry the necessary clout. The Treasury is currently at the top of the Government pyramid; if the Treasury says yes, a policy will be approved, and if it says no it will not. However, at the end of the day it is the Prime Minister who would give the green light to policies proposed by an environmental protection Ministry and that is why there must be somebody in the Prime Minister's office to encourage her and her successors and point to the merit of such things.
      Mr. Martlew: I am following the hon. Gentleman's argument. Is he suggesting that the Secretary of State for the Environment should present the Budget? That seems to be the obvious conclusion of the argument that the hon. Gentleman advances.
      Mr. Hughes: The hon. Gentleman has not clearly understood what I proposed. The Chancellor will continue to present the Budget but the Budget and all other Government proposals should come before the House only after they have been through an environmental audit which would be carried out by a department of environmental protection. That would be headed by a Secretary of State of Cabinet rank who would have cross-departmental responsibility in the same way as the Chancellor.
      New clause 4 deals with vehicles. I agree with the general propositions advanced by the right hon. Member for Hertfordshire, North (Mr. Stewart). For too long we have encouraged the use of large and high energy consuming vehicles and commensurately discouraged the use of small vehicles by giving a larger tax benefit to those who use gas guzzlers. That is not a sensible policy on taxation of our resources.
      We have already given great advantages to people by giving them company cars and the tax benefits that flow from that. The company car should be given no advantage over the private car. In all our taxation policies we should seek to encourage the use of cars that are more environmentally acceptable, whether they are company cars or cars that are bought and serviced privately. The right hon. Member for Hertfordshire, North mentioned some of the ways in which the tax system can be adjusted to bring that about. It could be done by graduating vehicle excise licences, fuel could be taxed at different levels or tax
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      credits could be given for adaptations such as catalytic converters. We should not encourage people or companies to use vehicles that are not environmentally acceptable.
      The proposition advanced by the Opposition is limited and muddled. It may be advantageous to give tax benefits to those who fit catalytic converters, but why should it apply only to company cars? Should not we try to discourage the use of company cars rather than encourage it? If we gave a tax benefit only to those who have company cars we would encourage the extension of company fleets. The Economic Secretary to the Treasury nods in agreement. There is an inherent inconsistency in such a proposition.
      I welcome the indications of a few months ago that the Government are starting to address such questions. I am sure that the Minister and his colleagues will have an input to the White Paper proposed by the Secretary of State for the Environment. However, I read rather worrying reports that the Treasury will veto some of the tax implications in the proposals. I hope that the Minister will agree that we must have a consistent policy that deals with all vehicles.
      There are many ways in which the motor car can be made more environmentally acceptable and, above all, of course, we should help the environment by discouraging its use. While it is wise to encourage the fitting of catalytic converters, this proposal is a partial and muddled solution. It shows that the Opposition have a long way to go in thinking through the implications of their belated conversion to green issues and their linking to economic policy. Their conversion is apparently still no more than skin deep.
      Mr. Forman: I shall be brief. The new clause raises important matters and is a legitimate device by which we can discuss green issues, and especially the interaction between environmental policy and economic policy. I commend the new clause for that.
      For straightforward reasons, it is unnecessary to add to the Bill the requirements called for in the new clause. My right hon. Friend the Chancellor has impeccable green credentials and carefully considers such matters when preparing his Budget. He has a reasonable record for introducing environmentally friendly measures. The hon. Member for Islington, South and Finsbury (Mr. Smith) mentioned some of those, but only disparagingly. He talked about the tax differential between leaded and unleaded petrol, the tax scale on company cars and mileage allowances which were adjusted in Committee.
      I would wager the hon. Gentleman that, by the end of this Parliament or some way into the next, when I hope that my right hon. Friend will still be Chancellor of the Exchequer, we shall see a wide range of environmental measures which will go a long way towards meeting the needs of that aspect of our policies. I am confident that my right hon. Friend the Chancellor will continue to do what he judges to be prudent in this area of environmental and fiscal policy.
      When one looks at the proposal on its merits—which is often a dangerous thing to do in the House—one finds an almost fatal flaw. I sought rather politely to raise that in an intervention on the hon. Member for Islington, South and Finsbury. It is not at all clear to me where the hon. Gentleman, if he were a Treasury Minister, would find the necessary competent advice of the type that he suggests. The hon. Member for Workington (Mr. Campbell-Savours) made it clear that we would be talking about

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      advice proffered before the Budget, and one must assume that such expert advice, which is often highly technical and in an area of scientific expertise that is not widely spread in Britain or throughout the world, would somehow be available either in Whitehall or in the Treasury.
      Mr. Campbell-Savours: The hon. Gentleman should be wary of referring to an environmental assessment document that might be produced prior to a Budget, because new clause I says:
      "Not later than 14 days after the date on which any Finance Bill is read for the first time".
      I am sorry to correct the hon. Gentleman, but he might find himself ruled out of order.
      Mr. Forman: I am grateful to the hon. Gentleman. In an earlier intervention, he said that advice would be available in advance of the Budget.
      Mr. Campbell-Savours: I got away with it.
      Mr. Forman: We can agree that that advice would form the basis of the Budget statement.
      My key point is that I do not think that there is a great fund of competent advice in the Treasury. The Treasury is renowned for its formidable advice to Ministers, but I do not think that the environment is one of its strongest areas. Perhaps the Minister will take that into account. I am not at all sure that the well-known and honoured tradition of Budget secrecy would be assisted by inviting people from the Department of the Environment or experts from the inspectorate of pollution or any such worthy body to become more fully involved in the process of Budget formulation in advance of the Finance Bill.
      7 pm
      Mr. Chris Smith: I am grateful to the hon. Gentleman for allowing me to intervene. I have considerable respect for him. I hope that his rise through the ranks matches that of other former Parliamentary Private Secretaries to the Chancellor of the Exchequer. In this instance, however, I believe that he is making a bad point. If, for example, the Chancellor of the Exchequer is proposing in his Budget changes in taxation measures that apply to cars, he will consult the Department of Transport in preparing it. There are no leaks when those consultations take place. Why should not the same principle apply to the Department of the Environment?
      Mr. Forman: The main sources of advice for the measures that the hon. Gentleman outlined in introducing the new clause would have to come from the scientific community, including Her Majesty's inspectorate of pollution. Many people within the scientific community are not covered by the Official Secrets Act 1911, and are not within Whitehall in the same way as officials of the Department of Transport, for example.
      I do not wish to make heavy weather of the argument. I wish only to emphasise that the hon. Member for Islington, South and Finsbury is being rather sanguine about the prospects of achieving the quality and range that would be necessary to make sense of the new clause.
      My objection to the new clause goes further than that. I am unconvinced in principle that it is necessarily wise to introduce what must be a large element of greater complexity into the taxation system. We are all familiar
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      with the argument against additional complexity, even when it is introduced in furtherance of a good cause. Greater complexity introduces inefficiency and distortions, which have an effect on the behaviour of individuals in dealing with the tax system. Above all, it increases what are known as compliance costs, all of which tend to reduce the revenue raised from what it would have been in any given fiscal approach.
      I understand the argument advanced by the hon. Member for Islington, South and Finsbury. I think that it is interesting for the House to have a brief opportunity to discuss the interaction between environment and economic policy, and I think it is important for Conservative Members on another occasion to have the opportunity of hearing what the Opposition think about measures such as a carbon tax or the idea of—
      Dr. John Marek: Will the hon. Gentleman reflect on what he has just said? Surely environment taxes would increase economic efficiency.
      Mr. Forman: There is a case for saying that such taxes would lead to an increase in resources. Much depends on how the concept is understood and measured. It is a difficult concept fully to understand, because resource economics is still in its infancy, as I believe the hon. Gentleman would concede. The ideas that it embraces need much further thought before they are adopted and set out in a Finance Bill.
      I think that the House would be assisted if it had the benefit of a thoughtful and expert speech from my hon. Friend the Economic Secretary to the Treasury, and I am sure that we shall hear one when he replies to the debate. I am sure also that he will tell us that, although the Government are sympathetic to the environment and wish to make proper progress to protect it, they do not accept the new clause.
      Mr. Martlew: I support new clause 1. It seems to be a sensible proposal. It would be desirable if the Chancellor of the Exchequer were obliged a fortnight after the Budget to explain to the House and the country its effect on the environmental problems of the nation. That obligation would concentrate the mind of the Chancellor of the Exchequer on the environmental consequences of the Budget during his preparation of it. He appears now to have regard to political consequences first and then fiscal consequences. The environment lobby seems to have no input.
      Last year's Budget led to no real increase in taxation on cigarettes or alcohol. Would the same policy have been adopted if the Chancellor of the Exchequer had been obliged to tell the House after making his Budget statement, "We decided not to increase the tax on cigarettes, and that will mean X million extra cigarettes smoked this year. That will result in Y deaths and will increase the costs of the national health service by £Z"?
      Similarly, last year's Budget did not lead to a real increase in the taxation of beer, wines and spirits. The new clause would place an obligation on the Chancellor of the Exchequer to explain to the House that his policy would result in so many extra gallons of beer being drunk, along with so many more bottles of spirits, and that that additional consumption would lead to so many extra deaths through alcohol-related diseases as well as percentage increase in the crime rate. That would be the effect of the environmental audit. I doubt whether a

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      Chancellor of the Exchequer would wish to explain the consequences of concessions that were made only for political reasons.
      The Economic Secretary to the Treasury used to be the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food. He will remember especially well the famous 1988 Budget of the right hon. Member for Blaby (Mr. Lawson). The right hon. Gentleman is not in his place, and he will probably be absent for four days of the week because he has found himself another job. The House will remember that considerable pressures were placed on the then Chancellor of the Exchequer by many people and organisations because Terry Wogan, among others, was making a great deal of money by investing in tree planting and enjoying major tax concessions. The right hon. Member for Blaby decided that that must stop. He decided to bring the concession to an end there and then without warning anyone that that was to happen. There was no phasing out of the concession. The relevant clause in the Finance Bill of 1988 was generally accepted, but it was disastrous for the forestry industry. About 9 million saplings were destroyed in the year following the tax change. Tree planting has still not recovered.
      Mr. Keith Mans: Will the hon. Gentleman confirm that the Labour party supported the decision of my right hon. Friend the Member for Blaby (Mr. Lawson) in the 1988 Budget?
      Mr. Martlew: I have already said that it was generally accepted in the House that the decision was a good one. Hindsight tells us that the decision was wrong. If the hon. Gentleman reads the reports of the Select Committee on Agriculture, he will find that that is the Committee's view. If the environmental audit obligation had applied, the problems that followed the decision would have been brought to the attention of the then Chancellor of the Exchequer.
      We are being told that we are facing great problems because of CO2 emissions and global warming. Planting more trees makes a significant contribution to resolving the problem of global warming. The decision of the then Chancellor of the Exchequer in 1988 had a disastrous effect on that aim. The right hon. Member for Blaby opted for the short-term political expedient and ignored long-term environmental consequences.
      We must have an environmental audit. The Chancellor of the Exchequer must have the responsibility of telling us why he has taken certain decisions and the effect that they will have on the environment.
      There is a need for a nitrogen fertiliser tax. It is accepted that putting nitrogen on the soil has many advantages. We grow more and better crops, but we now have a large surplus. A tax on nitrogen fertiliser would dissuade farmers from using nitrogen on the land and would encourage the water industry to remove nitrates from water, which render it unfit for human consumption. If we are living in a world in which the polluter pays, surely a tax on nitrogen fertiliser would be a good start.
      The Government have made concessions over unleaded petrol. That is to be welcomed. However, they did not go far enough in the Budget. There has not, therefore, been any increase in the use of unleaded petrol. I note with dismay that the price differential between petrol and diesel
      736
      has been reduced over the years. Provided that diesel engines are kept in good repair, diesel is preferable to leaded petrol.
      I disagree to some extent with my Opposition Front-Bench colleagues about vehicle excise duty. The Labour party has proposed that larger engine sizes should attract an additional tax. I understand the logic of the proposal, but I believe that it would be far better to phase out vehicle excise duty—the car tax—and increase the price of petrol. I was told in Committee that the price of petrol would have to be increased by 40p a gallon. That is on the high side; it presupposes that everybody has a vehicle licence. I noticed in the House of Commons car park the other day a few vehicles that were not licensed. However, they had a lot of dust on them, so perhaps they had not been taken out of the car park for a year or two. That is very annoying, especially if one cannot find a parking space.
      The Government have been dishonest in not increasing the cost of the car tax for the last four years. Do the Government intend to abolish the tax by keeping it at the same level when inflation is increasing dramatically? This year's car tax will be worth much less than last year's because inflation is at least 10 per cent. The Government appear to be carrying out that policy by stealth. If we really want to reduce energy consumption, we should abolish the car tax and increase the price of petrol. Then the polluter would pay. Those who run cars with big engines and who do a large mileage would pay much more, while those who use their cars for essential purposes only, not for business or leisure, would pay less.
      I understand that Stockholm is considering introducing a system whereby regular car users coming in to the city will have to buy a season ticket for the public transport system and display it on their windscreens. That would result in those who have a season ticket for the public transport system using it. The money raised would be used to provide a better and cheaper public transport system. I believe that a similar policy would be popular in London.
      The Finance Bill does nothing to encourage recycling. Tax concessions have been provided for refuse tips. That is the last thing we need; we ought to reduce dumping by encouraging recycling. Disposable bottles and cans that are not recycled should attract a tax penalty. The money raised ought to be handed to organisations that are prepared to go to the expense of recycling bottles and cans.
      The Finance Bill is a wasted opportunity. The number of ways in which we can help to save the world is strictly limited. I hope that next year there will be a Labour Chancellor of the Exchequer who will put forward green policies. If, however, the election is delayed beyond next year, note will have been taken of the speeches tonight.
      7.15 pm
      Mr. Roger King: Nobody denies that there are fears about the environment. However, new clause 1 takes us no further along the way. It does not help us to tackle the fundamental challenges that we face.
      Many years ago a new industry was created that has become almost self-perpetuating and impinges on all our lives. I refer to the race relations industry. Whenever anyone in Birmingham's local authority wants to do something, there is always a reference to the implications for race relations. In most cases there are no implications for race relations. Nevertheless, behind the inclusion of

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      those words is the implication that several people have been involved in evaluating whether there are any race relations implications.
      Embarking on environmental assessments would lead to a brand-new industry which would provide additional work for bureaucrats and administrators. They would have to examine every facet of our lives to establish the environmental impact. My hon. Friend the Member for Eastbourne (Mr. Gow) asked, in his cogent speech, which Department would have the job of evaluating environmental assessments. I go further than my hon. Friend. A department of environmental assessment would be required. Nothing else would suffice.
      My fear is that as soon as that department had been established at national level, every council chamber in the land would have to take account of environmental assessment as a matter of law. That may or may not be good in some people's eyes, but I believe that it would do nothing to improve the local environment and local amenities and to provide the infrastructure that we need. Every suggestion would be shipwrecked because of environmental assessment. Therefore, it would not be a good step forward.
      New clause 1 charges the Chancellor of the Exchequer with producing an assessment of the environmental effects, if any, of each clause of a Finance Bill. How on earth the Chancellor could do that with all the clauses in the Finance Bill, I do not know. I cannot see that there is any environmental assessment to be made of lodgings for officers in charge of a distillery, or of the power to assess, or of supplies to groups, domestic accommodation, goods shipped as stores, or pool betting duty. An army of bureaucrats would be required to establish that there was no environmental impact.
      In previous years I was instrumental in tabling new clauses for inclusion in Finance Bills. I sought to provide financial encouragement for those who fitted catalytic converters to their cars. Rather than new clause 4, I should prefer a fiscal measure that applied to everybody who buys a car that is fitted with a catalytic converter. The new clause would provide financial encouragement only to fleet owners or their employees. That is wide of the mark. Fleet cars are bought every two or three years. To suggest that, beginning in April 1990, the legislation should be retrospective would create chaos. Cars that are allocated to employees are not necessarily the cars that remain in their use for the entire year.
      The clause says that a 5 per cent. discount would be allowed on personal tax allowances if people used a car with a catalytic converter for part of the year. However, what happens about those who have access to a car pool and take whatever car is available? How could such a system be worked out? It is a recipe for confusion and cannot possibly work. It will not benefit the environment one iota.
      New clause 1 cannot work, because it would be impossible to monitor and evaluate and would require an army of bureaucrats. New clause 4 cannot work because it would be grotesquely unfair and impossible to operate.
      Mr. Elliot Morley: With respect, I do not think that the hon. Member for Birmingham, Northfield (Mr. King) understands the process of environmental impact studies. A great deal of
      738
      data already exists in data banks, computer programmes, analyses and reports. That has been collected over many years. If there are to be environmental impact assessments, that data will have to be evaluated and people may have to be employed to do that. However, that is a small price to pay for improving our environment and ensuring that our fiscal policies are linked to a sensible and sound environmental programme.
      I remind the hon. Member for Northfield that the EEC has produced a directive under which major planning applications will be subject to environmental impact assessment studies. That will be European law. If other countries are aware of the importance of such studies, there is no reason why the concept cannot be extended to financial policy.
      It is an important concept and I support it because we are talking about environmental impact assessments and not simply taxation policy. In some cases, even if people damaging the environment were forced to suffer a tax penalty, they would continue to operate in the same way and simply pay the penalty if it suited them. Environmental impact studies are a more sophisticated way of approaching the matter.
      Mr. McCartney: Local authorities that currently carry out environmental impact assessment studies on, for example, opencast coal include within them the impact of the local economy in terms of new job opportunities and the loss of other job opportunities. Such investigations try to assess what the consequences will be for the local and regional environment and employment opportunities. Local industry and planners welcome such assessment studies.
      Mr. Morley: I am grateful to my hon. Friend for making that point, as it demonstrates yet again that in terms of being sensitive to the financial, social and economic needs of local communities, local authorities blaze the way. The Government seem to be inert in dealing with policies that would benefit local people.
      Many hon. Members have mentioned the advantages of new clause 1 and I do not wish to repeat them. However, I stress that the environmental impact of financial policies will have a great bearing on industry and social life in Britain.
      We have heard a great deal about company car taxation policies. I recognise that tax relief on company cars has benefited the car industry and motor dealers. However, it has been a poor use of public resources. If the tax relief were restructured according to engine size, as has been suggested, car dealers or manufacturers would not be disadvantaged as they would construct cars to meet those requirements.
      It might be worth considering for the next Budget that if we accept that there is a case for tax concessions on company cars—that could be argued for those to whom the car is essential—we should give tax concessions to those who buy season tickets for public transport. If we encourage people to shift from private car use to public transport, it could lead to a tremendous environmental advantage and benefit our infrastructure. There is a strong case for providing a tax concession to those who buy season tickets, whether for the train or bus, because they are doing the environment a favour by travelling to work in that way. It is not unreasonable for them to deserve recognition for that.

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      My hon. Friend the Member for Carlisle (Mr. Martlew) mentioned the proposals in Sweden and I understand that similar proposals have been put forward in Paris whereby those who have the advantage of a city centre parking space will have to purchase a season ticket for that city's public transport system and display it on the windscreen as the price for that advantage. That is a reasonable suggestion. It should be extended to the House of Commons. There are cars in the car park gathering dust. Some people seem to be taking advantage of a first-class facility in the centre of London for storing their antique cars and aging Rolls-Royces. I see no reason why such people should not make a contribution to the public transport system by buying a season ticket.
      The great advantage of the new clause has not been recognised. We have people such as Professor Pearce advising the Government and making some useful suggestions. I do not wish to criticise him, as he is on the right lines. However, it is not good enough to have a tax regime based on a cost penalty for those who are damaging the environment. As I have said, many producers would simply pay that penalty. For example, many of those who come to central London and enjoy the benefit of car parking space would cheerfully pay a road-pricing tax. They would pass it on to their company accounts and then to their customers. It would not do a great deal to stop cars coming to the centre of London. That is why we need something more sophisticated than a simple tax regime. We must have an environmental impact study of the benefits to the environment, the economy and our society.
      I have not heard a good case against the new clause. Although there might be different ways of applying it, one cannot get away from the fact that today there are many pressures on the environment such as global warming, overcrowding on our roads and the collapse of our transport infrastructure. Much of that is related to Government policies, but that can be argued in other places at other times. We can use our economic policies, particularly taxation policy, to encourage certain parts of the economy such as the development of less waste in packaging. There is no reason why those who produce glass bottles and jars designed to be recycled should not have some tax concessions for doing so. It is better for the environment and, in the long term, the economy to encourage people to use recyclable glass containers rather than disposable ones which may have taken a great deal of energy to produce. Such issues can be addressed through a taxation regime.
      It is not good enough to use taxation as a way of penalising the bad and rewarding the good. We must take account of the long-term environmental impact of what we want to achieve and the benefits that will result.
      7.30 pm
      Mr. CousinsThe debate has been extremely depressing, and I do not intend to speak for long and depress myself further. Each of us recognises that there are certain problems which force their way on to the political agenda. We do not have a choice in that matter. Our choice is either willingly to accept these problems on our political agenda and find a framework to deal with them, or to confine them and keep them off that agenda, and deal with them later in less favourable circumstances, using cruder methods than we would have used if we had been willing to deal with them sooner.
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      Many problems do not appear on the balance sheet of society, although they impose long-term costs. The proposals in new clause 1 to put these matters on the public balance sheet must surely be in the long-term interests of everyone. It is foolish to deceive ourselves that we can continue using the world's capital stocks and resources as though they were not finite, given the horrendous costs that will result from the near-exhaustion of those stocks.
      The framework within which we discuss these matters is absurd. We are either treated to a comic display of entertaining irrelevancies or plunged into a swamp in which people refer to administrative mumbo-jumbo as an excuse for not dealing with the problem. As I said in an intervention during the speech of the hon. Member for Southwark and Bermondsey (Mr. Hughes), I do not particularly welcome a scenario in which the stock of skills which can be deployed to assess the environmental impact is contained within civil service rules and within a Ministry. I should prefer independent agencies on which the Government, local authorities, companies and the public could draw. The last thing I would want is that stock of skills deployed in such a way that only the Government within the confines of civil service rules had access to it. It would be worth discussing that important matter, yet it has not been taken seriously in this debate.
      Mr. Simon Hughes: My proposition did not anticipate that the Government would be the sole controller of that expertise. The academic world is vital, and we must retain independent agencies to give advice to everyone. I agree that there is a problem in terms of the number of people to go around, but it should never be proposed that only the Government should draw on that resource.
      Mr. Cousins: I welcome the hon. Gentleman's point. If I may say so in the politest possible way, however, it puts a gloss on some of his remarks, when he placed far too great an emphasis on the creation of Ministries to secure his objective. No doubt he did that with the best of intentions, but he set up the Aunt Sally with which the hon. Member for Birmingham, Northfield (Mr. King) dealt. We must avoid such an idea.
      In new clause 1, we are not talking about taxes to deal with environmental problems; we are asking the Government to consider these issues as part of their normal routine. It would be worth considering the effect on the environment of a variation in income tax. That would not just be an academic exercise. It might point to important conclusions about our taxation system. My hon. Friend the Member for Carlisle (Mr. Martlew) referred to the last glorious Budget of the right hon. Member for Blaby (Mr. Lawson). If the tax concessions advocated in the right hon. Gentleman's Budgets had been studied in terms of their environmental impact, they might have been reconsidered, and the difficulties might have been perceived.
      The Standing Committee on the Finance Bill dealt with the petroleum revenue tax system and taxation of waste disposal sites. Our debates were limited because we did not have the information to determine whether the most efficient, effective and cheapest methods were under discussion. We had no idea of the effect of our proposals on the cost structure of the relevant industries.
      Many hon. Members in this debate and elsewhere have been willing to consider various proposals, for example,

      741
      for carbon taxes, which is an interesting academic idea. I hope that, before we essay that development, there will be careful examination of the environmental and cost implications. By not considering such issues now, the Government are not providing themselves with the information, expertise, knowledge or understanding that would enable them to resist proposals which appear later in a much more crude and much less acceptable fashion. We cannot disregard the interaction between the taxation system and the cost structure of industry.
      My fear after listening to the debate is that we shall manoeuvre ourselves so that we are encumbered by blunderbuss solutions which have unwarranted and unwanted effects on the cost structure of industry. That is why it is necessary for the Government to generate the necessary information now and start subjecting taxation and other proposals to scrutiny. The choice is not whether but when. It is important that, when we enter the era of environmental taxation, we do so against a background of acknowledged expertise, understanding and thoughtful consideration of all the secondary issues and that we do not land our industry with cost consequences that cannot be supported and are not in the interests of our people. The problems are not avoided by not confronting them now. Only by confronting them now and testing everything that we do against those considerations can that bad outcome be avoided.
      Mr. Kenneth Hind: I came into the Chamber for this debate only to hear some of the most utter drivel I have heard for a long time. My colleagues and I are very much aware that there should be environmental assessments of what we do as we move the country forward and develop the economy. There is no need for the clause. The Government are led by a Prime Minister who is driving forward the country's consciousness of green issues—I refer to the London conference on CFCs, to her awareness of the greenhouse effect and of carbon dioxide emissions.
      I do not believe for one moment that any Minister does not consider the environmental impact of what he is doing. For that reason, the clause is totally irrelevant and unnecessary. I shall have a laugh at the Opposition's expense—
      Mr. Campbell-Savours rose—
      Mr. Hind: No, I shall not give way.
      The clause provides that the Chancellor of the Exchequer is required,
      "not later than 14 days after … any Finance Bill is read for the first time in the House",
      to set down his environmental assessment. The Opposition are so short of ideas that the Treasury must provide them with environmental arguments against any new tax proposals that it brings forward.
      Surely, as elected representatives of the country, we have the wit and the sense to be aware of what is happening to the environment and to be able to put forward arguments to deal with such issues. If we cannot, it is pretty pathetic.
      New clause 4—
      Mr. Campbell-Savours: Will the hon. Gentleman give way?
      Mr. Hind: No. We are up against time. I am sure that the hon. Gentleman can make his own speech.
      It is a splendid idea that we should all have cars fitted with catalytic converters, and I believe strongly in it, but why should it apply only to fleet cars and company cars? The clause is nonsense; if it is to have any sensible basis, it should include all cars. Hon. Members have to buy their own cars, as do thousands of people outside the House. Why should they be excluded from the tax concessions advocated here, which would give them the incentive to fit catalytic converters?
      On the grounds that I have given, the new clauses are not worthy of merit, and I advise my hon. Friends to dismiss them.
      Mr. McCartney: The contribution of the hon. Member for Lancashire, West (Mr. Hind) proves that if one wants to participate in a debate it is best to listen to it and to know something about the subject. The hon. Gentleman is a member of the Government's Back-Bench effluent tendency. On occasions he tries to upset Opposition Members and pick an argument. We know the hon. Gentleman well. He comes here and argues against new clause 1 and against environmental assessments. He does not do that in his constituency when planning applications in Up Holland and elsewhere are involved—he jumps up and down screaming in my local newspaper about the need for environmental impact assessments on planning matters in his constituency. He says one thing here, in an effort to move from the Back to the Front Benches, and another in his constituency, because he hopes that he will remain here after the next election.
      Mr. Hind: What is the hon. gentleman talking about?
      Mr. McCartney: The hon. Gentleman knows Up Holland very well.
      New clause 1 fundamentally affects the way in which future Governments will operate. We are dealing not merely with a new clause, but with the whole concept of government at national and local level, and with the impact on the environment of the relationship between the Government and industry. We are also dealing with the way in which local authorities have an impact on local communities and with their relationship to the development of industry and the provision of services in the public and the private sector.
      Our attempts to discuss the issues tonight are about five years behind such attempts in Europe and the United States. Hon. Members on various Select Committees have been abroad to study these issues, and we have seen that environmental impact assessment studies are used more and more in the United States when water and electric utilities are being developed. European Governments are increasingly aware, irrespective of their political persuasion, of the need to provide environmental assessments for their policies. At local authority level, there has been an attempt, albeit imposed by the European Commission, to introduce environmental impact assessments.
      As you now, Mr. Deputy Speaker, as Chairman of Ways and Means, there have been amendments to the private Bill procedure. In future, new private Bills will have to have an environmental impact assessment attached to them; without that they will not be able to proceed. Those are welcome extensions of the use of environmental impact assessment of policies at national and local level, but we must go further. That is why my

      743
      hon. Friends are pushing out the parameters of policy discussion on the environment in Britain by means of the new clause.
      All hon. Members are sometimes faced with environmental issues that impinge on the local economy and on regional environmental considerations. The hon. Member for Wyre (Mr. Mans) is involved with other hon. Members representing constituencies in Lancashire in the issue of long outfall discharges of sewage and attempts by Conservative and Labour county councillors to prevent such a policy being imposed locally because the effect that such discharges will have on the sea and the Lancashire coast is totally unacceptable.
      Hon. Members from both parties in Lancashire and the Labour Lancashire local authorities have argued against such a policy, and have argued for an environmental impact assessment of the cost of introducing such a scheme as well as of the cost to the environment. The use of impact assessments forced the Government virtually to abandon the long fall discharge of sewage on the Lancashire coast. The policy was changed only because of such pressure. Until the assessments were carried out, the Government said that they would introduce the scheme because it was cheaper to treat sewage by dumping it at sea than to invest in inland sewage treatment plants.
      7.45 pm
      Mr. Mans: Does the hon. Gentleman agree that, despite an environmental impact assessment on the scheme that he mentioned, done by the local authority in Wyre, the long sea outfall is still likely to go ahead? Does he agree that merely having an environmental impact assessment had no effect upon that decision?
      Mr. McCartney: Assessments do two things: first, they raise public awareness of the issues. Secondly, Ministers are ill-prepared or unprepared to take the right action when evidence is presented, and the new clause would prevent Ministers from not taking environmental impact assessments fully into account. Hon. Members' experience of such matters should persuade them to support the clause rather than to oppose it.
      We cannot simply rely on taxation as a way of dealing with environmental assessments. It is fine for short-term issues, or to impose certain environmental changes on agriculture or industries such as chemicals. But, in the long term as well as introducing changes in taxation, we have to change attitudes of mind on the way in which we deal with environmental issues. Even when fines of £1 million or more have been imposed by the courts, oil companies in Britain are still not prepared to deal seriously with the issue of discharging oil into places such as the River Mersey. The imposition of huge fines in court is still not deterring some companies. We must therefore change the philosophy and attitude of industry towards the environment in terms of the production processes that affect the environment.
      The new clause is simply a step along the road to changing attitudes in the Government, industry, the local authorities and the wider community. Without the change of attitude, taxation changes will work only in the short term and, in the long term, the processes that debilitate and destroy the planet will continue unabated. We must change our attitudes fundamentally. Therefore, I welcome
      744
      the new clause as part of the argument to ensure that those changes take place in Britain—and throughout the world—before the planet is damaged irrevocably.
      The Economic Secretary to the Treasury (Mr. Richard Ryder): At the outset of what I describe as a lively debate, the hon. Member for Islington, South and Finsbury (Mr. Smith) claimed that the Government do not take account of the effects of our financial policies on the environment and that the new clause is necessary to oblige us to do so. As the hon. Gentleman knows full well, that claim is incorrect. When preparing the Finance Bill every year, we take full account of all relevant factors—environmental, financial, those relating to employment, and a range of others. It would be irresponsible not to do so.
      The new clause would not result in the Treasury paying greater attention to the environmental effects of our policies because we already take full account of such effects during the pre-Budget consultations when we consider all the representations that are made to us by a range of outside bodies, including those representing the environmental lobbies.
      Mr. Campbell-Savours: Is the Minister suggesting that the comments of his hon. Friend the Member for Eastbourne (Mr. Gow) were ill-founded when he assumed that Ministers would not be able to find the time to do all these things? Is the Minister saying that his hon. Friend was simply wrong?
      Mr. Ryder: If we were to accept the new clause, we would necessarily have to provide an environmental assessment along the lines recommended by the Labour party. If those circumstances turned out to be the case, I cannot envisage a more suitable hon. Member to provide us with the environmental dimension of monetary policy than my hon. Friend the Member for Eastbourne (Mr. Gow). He is so well-suited to considering all the environmental aspects of the Government's financial policy as to write a long thesis on the environmental dimensions of monetary policy and especially M0. I should not be surprised if, before the summer was out, my hon. Friend did not send me a clipping from his local paper, "The Eastbourne Trumpet," providing us with an article along those lines. I very much look forward to receiving a copy in the next few months.
      I do not think that the new clause would lead to the House being better informed about the effects of the Finance Bill. It would be an unnecessary claim on the resources of the Government to be obliged to prepare a specific assessment of the environmental impact of each clause. My hon. Friend the Member for Birmingham, Northfield (Mr. King) was right to say that the new clause would lead to extra bureaucracy and would not cast any extra light on Budget changes.
      As the House knows, notes on clauses are already produced and provide a summary of the purpose of Government clauses. They provide most of the technical information that the House requires. As hon. Members know, if they have a specific and detailed question about the impact of any clause—environmental or otherwise—they can ask a Minister to expand on the subject in Committee; they can write to a Minister; they can table a question; or they can bring a delegation to see a Minister.
      In Committee we had some interesting and constructive debates about the environmental aspects of the Budget. Debates on the early clauses related to indirect taxes and

      745
      when we discussed vehicle excise duty, for example, the hon. Member for Wrexham (Dr. Marek) made some valid points . I recall saying two or three months ago that his advice to previous Ministers, in his capacity as shadow economic spokesman, was taken into account when we framed the VED policy. The same applies to any other hon. Member who wishes to take an interest annually in this legislation. I see no reason to believe that the existing arrangements do not allow hon. Members to come to a view on the merits of a clause, and to take all the relevant considerations, including environmental ones, fully into account.
      The Government place—and will continue to place—a high priority on environmental issues. We have taken several steps to benefit the environment, such as action on CFCs, on sulphur dioxide and nitrodioxide emissions, on water quality, and with the establishment of the climatic change centre. The increase in the differential in favour of unleaded petrol in this year's Budget should increase the uptake of unleaded petrol to 40 per cent by next year's Budget. All that has been achieved within four years of starting down this route.
      The Environmental Protection Bill, which has just passed through the House, provides for integrated pollution control, strengthens local authority controls to combat air pollution and to control litter, and includes provisions on waste disposal and recycling. As the House knows, we are preparing a White Paper on the environment, which will be published in the early autumn.
      The Budget measures for unleaded petrol and relief for waste disposal operators will bring worthwhile environmental benefits. The Government are conscious of the importance of the environment, but a whole range of factors must also be considered, including, as my hon. Friend the Member for Carshalton and Wallington (Mr. Forman) emphasised, scientific analysis and the effects on the economy in determining the right response to problems. We are prepared to make tax changes for environmental reasons, where tax is the right instrument with which to do so. Unleaded petrol was an example. We shall continue to ensure that measures are based on the best possible scientific and economic analysis.
      The hon. Member for Islington, South and Finsbury alleged that the car scale increase had been small. He knows that that is not the case. As my right hon. Friend the Member for Hertfordshire, North (Mr. Stewart) pointed out to the hon. Gentleman, over the past three Budgets, the Government have tripled the car scales, having inherited small scales from the last Labour Government. The hon. Member for Islington, South and Finsbury suggested that we should issue a green book at the time of the Budget each year, in addition to the Red Book. Does that mean that we shall also have to provide a crimson book for energy, a purple book for agriculture, and a grey book for education? Where do we stop in producing such documents? The Opposition have not made it clear. But perhaps when the hon. Member for Wrexham replies to the debate, he will do so.
      New clause 4, which has also been tabled by the Labour Front Bench, seeks to provide an incentive to fitting catalytic converters in company cars by reducing the car benefit scale charges where that has been done. That proposal is an unnecessary measure which would
      746
      complicate the tax system, reduce the tax revenue, and introduce a new fiscal incentive for company cars. That is probably unintended, but several of my hon. Friends, including my hon. Friend the Member for Northfield, have pointed out that consequence. However, it would make very little difference to our progress towards the important objective of reducing car and lorry pollution. The House knows—several hon. Members have mentioned it—that the EC exhaust emission standards will require all new petrol engine cars sold in the EEC to be fitted with a catalytic converter by the end of 1992. Company cars are replaced every two or three years on average. As the company car fleet is predominantly composed of new cars, the new EC provisions will bite quickly into the company car sector. For that reason, the Government consider that a fiscal incentive to change over to cars with a catalytic converter is unnecessary in view of the obligations that we have been asked to meet by the EC.
      As I have already described, the proposal would be expensive. With just under 2 million company cars on the road, a cost of about £1 million would be incurred for every 1 per cent. of cars fitted with converters. Much of that cost would be dead weight, for example, as employers begin to buy more cars fitted with catalytic converters in the run-up to 1992. Indeed, some manufacturers already fit converters to all their cars.
      The other defect of the clause is that it has no time limit. It would continue to run even after we met our obligations in 1992 when converters will be compulsory for all new cars. By then, the proposal would cost approaching £100 million for no benefit whatever.
      8 pm
      Mr. Hind: Is not by far the most important point against the proposal that there is no reason for introducing a tax incentive for company cars alone to fit catalytic converters? Surely our aim should be that all cars are fitted with catalytic converters to reduce the fumes from cars. Therefore, people who buy their own cars, who represent a large section of the public, should not be cut out from such a tax benefit.
      Mr. Ryder: I agree with my hon. Friend. I shall deal with that argument shortly.
      The Government believe in principle that benefits in kind should, as far as possible, be fully taxed to provide neutrality in the tax treatment of payments in cash and in kind. The benefit to the employee is not reduced by fitting a catalytic converter to a company car. In general, larger and more expensive cars tend to be fitted with catalytic converters.
      While accepting that the new clause would put back the Government's determined action over the past three years, in particular to reduce undervaluation of company cars for tax purposes, the Opposition have argued that company car taxation should be increased, partly for environmental reasons. In the new clause, they would introduce a new fiscal privilege confined to company cars which would have no counterpart—this is the point made by my hon. Friend the Member for Lancashire, West (Mr. Hind)—for the private motorist who must buy his own car. I amplify not only the remarks made by my hon. Friend but the argument deployed by the hon. Member for Southwark and Bermondsey (Mr. Hughes). Over half the number of cars purchased by individuals go to companies for purposes such as short-term car hire, car pools and driving

      747
      tuition, which are not subject to the scale charges. The new clause would do nothing to encourage that group of purchasers to buy cars equipped with catalytic converters.
      My hon. Friend the Member for Northfield, with his experience of Birmingham, knows that the motor industry is gearing itself up for the new regime that will apply after 1992. It will require more than simply bolting on a catalyst-equipped exhaust. The introduction of catalyst-compatible engines and engine management systems, particularly for smaller cars, will take time.
      "There is no question of providing an incentive to fit catalytic converters. It has to be done. We have agreed it with the EC. There are cases for incentives in certain circumstances, but they should be argued on their merits. I regret that I have to say that I do not think that the case has been proven here. I would rather that the money which would be lost to the Treasury were spent on other environmental concerns."—[Official Report, 11 July 1989; Vol. 156, c. 902.]
      Opposition Members, including Front-Bench spokesmen, will realise that I have just quoted directly from the speech made by the hon. Member for Wrexham in last year's debate on the Finance Bill on the Floor of the House on a similar proposal to reduce special car tax for cars fitted with converters. I say to my hon. Friends and to the House that the hon. Gentleman's arguments deployed then are as true today. For that reason, I urge the House to reject the new clause.
      Dr. Marek: We have had a good debate, with the exception of the speech made by the hon. Member for Lancashire, West (Mr. Hind). The hon. Gentleman came in late, he would not give way, he was bad-tempered, and my hon. Friend the Member for Makerfield (Mr. McCartney) had it absolutely right. Many of us were surprised when the hon. Gentleman told my hon. Friend the Member for Workington (Mr. Campbell-Savours) that he should make his own speech. My hon. Friend tried to make his own speech earlier, but the hon. Gentleman was not present.
      Mr. Hind rose—
      Hon. Members: No.
      Mr. Hind: The hon. Gentleman referred to me. I resent the suggestion that my speech was in any way bad-tempered. It was perfectly good-humoured. Opposition Members reacted badly, perhaps because the arguments that I marshalled against the Opposition's case were penetrating. The only reason why I did not give way to the hon. Gentleman was simply lack of time.
      Dr. Marek: I looked and listened in vain for any argument in the hon. Gentleman's speech. However, he makes his own case, and the House can judge him.
      The Minister dealt at some length with new clause 4, but not with new clause 1. In some ways, that is not surprising. I have some sympathy with what he said about new clause 4, but new clause 1 is the important clause. We have received support from the Minister's hon. Friends on the Back Benches for similar clauses, if not outright for new clause 1. The Minister said that he already takes account of environmental impact with his colleagues when Ministers prepare the Budget. If I remember correctly, he said, "We already take account of such effects."
      What is wrong with the public knowing exactly how Ministers take account of those effects? If Ministers put their fingers in the air to feel which way the wind is blowing, perhaps they should keep that secret, but if they
      748
      take account of such effects in a meaningful and quantitative way, surely it would do the environment good if the public knew exactly how the environment and environmental considerations would be affected by the Budget statement. That is important.
      The Minister asked me to answer a point and I shall do so. He asked whether the Treasury should issue crimson books or purple books for different Departments. I suspect that at the end of the day the speech made by my hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cousins) will prove accurate. Environmental considerations will be forced on to the agenda, not only of parties in the House but of public conversation and therefore of attitudes to the various parties. My hon. Friend was right. That means that we need an environmental assessment of the work of Government.
      The only argument deployed by the hon. Members for Birmingham, Northfield (Mr. King) and for Lancashire, West was that we would need armies of bureaucrats to carry out environmental assessments. It need not go that far. In many ways, the work is already being done by the Government and their Departments. Because we believe in freedom of information, we need to know exactly how they do it, and what account they take of that work, so that the public can make their own assessment.
      New clause 1 is a very timid measure that does not go very far, and hon. Members will be able to beef it up so that the global problems of the environment can be tackled more effectively. New clause 1 asks that the environmental effects of the Budget should be reviewed and that any effects—or anticipated effects—that it may have on, for example, land use in the United Kingdom—and there are six cases—should be assessed. If that has already been done by the Treasury, why can we not know? What is secret about that? Many statistics are already known.
      Mr. McCartney: The Department of the Environment, for the purposes of designating local authorities for the use of derelict land grant, currently does precisely as my hon. Friend says. It designates the area of the derelict land and then stipulates the purpose to which it can be put. It is only when that assessment has taken place that the authority can develop the land and receive project grants. The Department of the Environment states that 20,000 acres of derelict land in the north-west listed in its land bank are suitable for assistance.
      Dr. Marek: My hon. Friend is knowledgeable on these matters. He is right to say that an enormous amount of information is held by the local authorities, but it is also held by the Department of the Environment, the Scottish Office, the Welsh Office, and the Northern Ireland Office. It need not require an army of bureaucrats and administrators for such assessments to be made public.
      New clause 1 will make the Government assess the pollution levels and the effect that the Budget would have on them. It requires an assessment of the rate of usage of natural resources, whether in the United Kingdom or elsewhere, and the effect that the Budget will have on that rate of usage. It also seeks to assess the rate and types of energy production in use in the United Kingdom, and the effect that the Budget will have on them.
      Paragraph (e) urges and imposes upon the Government a general duty to encourage
      "the use of renewable sources of energy of raw materials in the United Kingdom".

      749
      That is a subject on which I hope that there will be no dispute. It is important that the effects of the Budget are assessed in this regard.
      8.15 pm
      New clause 1 asked for an assessment of the Budget's effects on human and animal health, whether in the United Kingdom or elsewhere. That is a sensible and moderate new clause, and not one that would impose an intolerable burden on the Government. It would inform the public and ensure that we had more information on which to base future policy. It would also enable other countries to give greater weight to our views on environmental protection, because they too would have more information on which to base their judgment. Such an assessment must be good for the environment.
      New clause 4 has been criticised, but its provisions would look very well as part of any environmental assessment. The hon. Member for Northfield was wrong when he said that it is defective because people provided with pool cars would not be taxed. If the hon. Member for Northfield—although he is not listening at the present—will study the clause properly, he will see that he is wrong.
      I have some sympathy with the Minister when he says that new clause 4 is unnecessary because, when catalytic converters are required for all new cars, the rate of turnover in the company car sector is such that they will all have them quickly. Nevertheless, the amendment would be an incentive to fit company cars with converters in the remaining years before they are mandatory.
      The Minister was stretching a point when he said that excise tax will remain even when all cars are converted. If I heard him correctly, he said also that the proposed concession would cost about £100 million per year at some future date. It must have occurred to the Economic Secretary that new clause 4 is meant as an incentive for only a number of years, and that any tax relief given this year can be taken away in two or three years' time.
      The right hon. Member for Hertfordshire, North (Mr. Stewart) gave welcome support to new clause 1. He got it slightly wrong about the Labour party being the high tax party and the Conservative party being the low tax party. Taxation as a percentage of GDP is higher now than it was when Labour left office in 1979. I forget the precise figures, but taxation is today about 3 or 4 per cent. higher—so the party that taxes the British people more is the Conservative party, not Labour. Conservative Members try to mislead the public and are not accurate with their use of words. Members of the Government and Back Benchers talk about income tax, sometimes about tax, and at other times about indirect tax.
      At the end of day, one cannot get away from the fact that the lowering of income tax has been more than made up by the increase in value added tax from 8 per cent. to 15 per cent. and a large increase in the national insurance contribution.
      The hon. Member for Carshalton and Wallington (Mr. Forman) largely supported new clause 1. The Liberal party also supported it—although, as usual, rather churlishly. More forthright support would have been welcome.
      Important considerations include whether we look after the environment by regulation or by the judicious adjustment of tax and taxation policy. Minimum standards must be set, but the use of a taxation policy must
      750
      be a club in the bag. We would try to see whether value added tax could be differentiated so that, for example, non-biodegradable and non-recyclable substances would bear a higher rate than substances that were recyclable and biodegradable.
      In the corporate sector, there should be additional allowances against corporation tax for companies making specific anti-pollution or conservation investment. As a straightforward example, it must be wrong that there is just one rate of vehicle excise duty of £100 for a small or big car. Changes could be made there.
      We have long advocated that the price differential between leaded and unleaded petrol should be increased still further and I am pleased that the take-up of unleaded petrol is still increasing. The Government have promised that, by the end of the year, or by next year's Budget, that take-up will have increased to 40 per cent. of the market. I wish them luck, but if they do not achieve that target, I look forward to the price differential between leaded and unleaded increasing in due course.
      If company cars receive a benefit in kind that is untaxed, that should be changed. Most hon. Members believe there are large classes of company cars which do not bear the correct rate of tax and which receive a great untaxed benefit in kind. I hope that the Treasury will consider addressing that in the next Budget.
      I am not arguing that taxation should be increased in aid of the environment—that public debate will be held in the next two years. It is an argument of swings and roundabouts. Taxing for environmental purposes means that incentives are changed to reflect the true cost of any particular goods. Such tax changes are good for the Inland Revenue and also encourage innovations to reduce pollution. We believe that, as a first step, tax allowances should be made in particular areas to encourage conservation of the environment and improvements in the quality of life.
      I thank my hon. Friends the Members for Carlisle (Mr. Martlew) and for Glanford and Scunthorpe (Mr. Morley) for their well-informed speeches, which were listened to with interest. On a slightly churlish note, it is a pity that many of the Conservative Back Benchers who were members of the Finance Committee have not been present. I hope that that will be redressed in our later debates.
      here is an unanswerable case for a new clause similar to new clause 1. For that reason, I urge my hon. Friends to press our new clause to a Division.
      Question put, That the clause be read a Second time:—
      The House divided: Ayes 206, Noes 261.

      Division No. 293]

      [8.22 pm

      AYES

      Adams, Allen (Paisley N)

      Bermingham, Gerald

      Allen, Graham

      Bidwell, Sydney

      Anderson, Donald

      Boateng, Paul

      Archer, Rt Hon Peter

      Boyes, Roland

      Armstrong, Hilary

      Bradley, Keith

      Ashdown, Rt Hon Paddy

      Bray, Dr Jeremy

      Ashley, Rt Hon Jack

      Brown, Gordon (D'mline E)

      Ashton, Joe

      Brown, Nicholas (Newcastle E)

      Banks, Tony (Newham NW)

      Brown, Ron (Edinburgh Leith)

      Barnes, Harry (Derbyshire NE)

      Buckley, George J.

      Barnes, Mrs Rosie (Greenwich)

      Caborn, Richard

      Barren, Kevin

      Callaghan, Jim

      Beckett, Margaret

      Campbell, Menzies (Fife NE)

      Beith, A. J.

      Campbell, Ron (Blyth Valley)

      Bell, Stuart

      Campbell-Savours, D. N.

      Benn, Rt Hon Tony

      Canavan, Dennis

      Bennett, A. F. (D'nt'n & R'dish)

      Carlile, Alex (Mont'g)

      751

      Carr, Michael

      Litherland, Robert

      Clark, Dr David (S Shields)

      Lloyd, Tony (Stretford)

      Clarke, Tom (Monklands W)

      McAllion, John

      Clay, Bob

      McAvoy, Thomas

      Clelland, David

      McCartney, Ian

      Clwyd, Mrs Ann

      Macdonald, Calum A.

      Cohen, Harry

      McFall, John

      Cook, Frank (Stockton N)

      McKay, Allen (Barnsley West)

      Cook, Robin (Livingston)

      McKelvey, William

      Corbett, Robin

      McLeish, Henry

      Cousins, Jim

      Maclennan, Robert

      Crowther, Stan

      McNamara, Kevin

      Cryer, Bob

      McWilliam, John

      Cummings, John

      Madden, Max

      Cunliffe, Lawrence

      Mahon, Mrs Alice

      Cunningham, Dr John

      Marek, Dr John

      Darling, Alistair

      Marshall, David (Shettleston)

      Davies, Rt Hon Denzil (Llanelli)

      Martin, Michael J. (Springburn)

      Davies, Ron (Caerphilly)

      Martlew, Eric

      Davis, Terry (B'ham Hodge H'I)

      Maxton, John

      Dewar, Donald

      Meacher, Michael

      Dixon, Don

      Meale, Alan

      Dobson, Frank

      Michael, Alun

      Doran, Frank

      Michie, Bill (Sheffield Heeley)

      Dunnachie, Jimmy

      Michie, Mrs Ray (Arg'l & Bute)

      Dunwoody, Hon Mrs Gwyneth

      Moonie, Dr Lewis

      Eadie, Alexander

      Morgan, Rhodri

      Eastham, Ken

      Morley, Elliot

      Evans, John (St Helens N)

      Morris, Rt Hon A. (W'shawe)

      Ewing, Harry (Falkirk E)

      Morris, Rt Hon J. (Aberavon)

      Fatchett, Derek

      Mullin, Chris

      Faulds, Andrew

      Murphy, Paul

      Fearn, Ronald

      Nellist, Dave

      Field, Frank (Birkenhead)

      Oakes, Rt Hon Gordon

      Fields, Terry (L'pool B G'n)

      O'Brien, William

      Fisher, Mark

      Orme, Rt Hon Stanley

      Flannery, Martin

      Parry, Robert

      Flynn, Paul

      Patchett, Terry

      Foot, Rt Hon Michael

      Pendry, Tom

      Foster, Derek

      Pike, Peter L.

      Foulkes, George

      Powell, Ray (Ogmore)

      Fraser, John

      Prescott, John

      Fyfe, Maria

      Primarolo, Dawn

      Galloway, George

      Quin, Ms Joyce

      Garrett, John (Norwich South)

      Radice, Giles

      George, Bruce

      Randall, Stuart

      Godman, Dr Norman A.

      Redmond, Martin

      Gordon, Mildred

      Rees, Rt Hon Merlyn

      Gould, Bryan

      Reid, Dr John

      Graham, Thomas

      Richardson, Jo

      Grant, Bernie (Tottenham)

      Robertson, George

      Griffiths, Nigel (Edinburgh S)

      Robinson, Geoffrey

      Griffiths, Win (Bridgend)

      Rogers, Allan

      Grocott, Bruce

      Rooker, Jeff

      Hardy, Peter

      Ross, Ernie (Dundee W)

      Harman, Ms Harriet

      Rowlands, Ted

      Hattersley, Rt Hon Roy

      Ruddock, Joan

      Heal, Mrs Sylvia

      Sedgemore, Brian

      Henderson, Doug

      Sheerman, Barry

      Hinchliffe, David

      Sheldon, Rt Hon Robert

      Hogg, N. (C'nauld & Kilsyth)

      Shore, Rt Hon Peter

      Home Robertson, John

      Short, Clare

      Howarth, George (Knowsley N)

      Sillars, Jim

      Howells, Geraint

      Skinner, Dennis

      Hoyle, Doug

      Smith, Andrew (Oxford E)

      Hughes, John (Coventry NE)

      Smith, C. (Isl'ton & F'bury)

      Hughes, Robert (Aberdeen N)

      Smith, Rt Hon J. (Monk'ds E)

      Hughes, Roy (Newport E)

      Smith, J. P. (Vale of Glam)

      Hughes, Simon (Southwark)

      Spearing, Nigel

      Illsley, Eric

      Steinberg, Gerry

      Janner, Greville

      Stott, Roger

      Jones, Barry (Alyn & Deeside)

      Strang, Gavin

      Jones, Ieuan (Ynys Môn)

      Straw, Jack

      Jones, Martyn (Clwyd S W)

      Taylor, Mrs Ann (Dewsbury)

      Kennedy, Charles

      Taylor, Matthew (Truro)

      Kirkwood, Archy

      Thomas, Dr Dafydd Elis

      Lambie, David

      Turner, Dennis

      Lamond, James

      Wallace, James

      Leighton, Ron

      Walley, Joan

      Lewis, Terry

      Wardell, Gareth (Gower)

      752

      Wareing, Robert N.

      Winnick, David

      Watson, Mike (Glasgow, C)

      Wise, Mrs Audrey

      Welsh, Andrew (Angus E)

      Worthington, Tony

      Welsh, Michael (Doncaster N)

      Young, David (Bolton SE)

      Wigley, Dafydd

      Williams, Rt Hon Alan

      Tellers for the Ayes:

      Williams, Alan W. (Carm'then)

      Mr. Frank Haynes and

      Wilson, Brian

      Mrs. Llin Golding.

      Question accordingly negatived.

    New clause 5

      CHILD CARE VOUCHERS
      '(1) Where an employee makes arrangements for care of his or her children aged under sixteen, and pays for this child care with vouchers provided by the employer which can only be used for this purpose, the provision of these vouchers will not be subject to basic rate tax in the hands of the employee.
      (2) This section shall only apply to vouchers up to £75 per week in regard to child care being provided for a child aged up to five. For children aged over five to sixteen the limit of the value of vouchers which will not be subject to basic rate charge tax will be £1,500 per annum.
      (3) This section shall only apply subject to the provisions of the Taxes Act 1988 section 155A(1)(d) and Taxes Act 1988 section 155A(4) (as proposed in the 1990 Finance Bill).
      (4) The registration requirements under section 20(1)(4) shall apply to this section.'.—[Mr. Beith.]
      Brought up, and read the First time.
      Mr. A. J. Beith: I beg to move, That the clause be read a Second time.
      Mr. Deputy Speaker (Mr. Harold Walker): With this it will be convenient to consider new clause 6—Child care and the self-employed—

      '(1) The Taxes Act 1988, section 74, shall not operate to deny tax relief for child care provision, at basic rate only, and on payments up to £75 per week, where a self-employed person makes provision for child care for his or her children aged up to five. For children aged over five to sixteen the limit of the payments which will not be subject to basic rate tax will be £1,500 per annum.

      (2) This section only applies where—

      (a) the provisions of the Taxes Act 1988, section 155A(1)(d) and the Taxes Act 1988 section 155A(4) (as proposed in the Finance Bill 1990) are satisfied.

      (b) the registration requirement in section 20(1)(4) has been met.

      (c) the self-employed person works full-time at his or her trade, profession or vocation.'.

      Mr. Beith: New clause 5 deals with child care vouchers, and new clause 6 applies a similar principle to the self-employed. It looks as though the about-to-be Secretary of State for Trade and Industry is to reply to the debate. I look forward to that and congratulate him on his sudden and unexpected promotion, and wish him well in his new responsibilities.
      We have been campaigning for better provision for child care in successive Finance Bills. There is some provision for child care in the current Finance Bill, but it is so inadequate that we feel obliged to table the new clause. It is my contention and the view of many groups and organisations that workplace nurseries are only a tiny contributor to dealing with the problem of child care. Such nurseries provide only a small number of employers, whose work force is concentrated on one site, and even if such nurseries became much more widespread among employers, they would not cater for large numbers of parents for whom child care nearer the home is more appropriate. Such nurseries make no contribution to solving the problem of child care for children of school age, after school and during school holidays.
      We have always proposed an alternative approach based on vouchers given by the employer that are free of tax up to a certain level at the hand of the employee if those vouchers are used in registered forms of child care, nursery education or play groups. That idea is widely supported. I was particularly struck to discover that it has gained support in Government circles. Therefore, I shall be surprised if the Financial Secretary, when he replies, does not catch the mood of his party and the feelings of those who are already expressing themselves on the issue.
      The Guardian on Monday 9 July stated:
      "A voucher scheme for nursery facilities to help young mothers wanting to go out to work has been endorsed by the Government's inter-departmental working group on women, chaired by John Patten, the Home Office Minister of State.
      The proposals are likely to be the subject of strong debate within the Conservative Party and Whitehall as the Government tries to reach a consensus on its approach to the family and morality."
      I shall not go into the further reaches and implications of the Government's current studies of the family and

      755
      morality but will concentrate on child care, which has obviously been considered in Government circles and found to be of interest. Perhaps the Government are beginning to react to the widespread disappointment that what initially looked to some people like a major concession on child care in the Chancellor's Budget speech turned out to be so limited in its effect and implications.
      A small number of mothers will be able to continue to use workplace nurseries and avoid the tax that they have been paying up to now on benefit in kind of those nurseries. That is quite right, but many more women will continue to pay for nursery care out of their taxed income. Not merely are they failing to receive a benefit on which they would be taxed; they are paying for child care out of their taxed income.
      The Government have included child care provisions in the Finance Bill because they believe that the changes in the labour market and the need to make use of the skills that women can offer dictate that the Government should make some effort to encourage women back to work and to encourage employers to help women to return to work. They may also have been influenced by the wider issue of principle that, regardless of the needs of the labour market, women should be given the maximum opportunity to deploy their skills in the workplace. I agree with that principle. The Government must have been influenced by that thinking to have introduced such provisions into the Finance Bill. They have been criticised by some of their own supporters for moving away from the level playing field and for opening the door to schemes such as the one for which I am now arguing. However, they have made a very limited move. They must recognise how disappointing it will prove to many women who hoped for a real advance in their opportunities to continue their careers.
      Of course, it is a matter of choice. No one is arguing that the Government should put any pressure on women with young children to go out to work. That must be a matter of choice. Many of the arguments relating to child benefit relate to whether women are able to stay at home when they have young children. We would prefer the regular uprating of child benefit which, among other things, would ensure that those women who choose to stay at home would be in a slightly better financial position than they are at present. However, the Government should provide some encouragement to employers to assist those women who wish to exercise the choice to work, particularly as their children reach school age.
      I have spoken to many employers and employers' organisations, and I understand that there would be a considerable response from employers if it became clear that offering child care vouchers would provide a tax-free benefit to employees. Clearly the Government are hoping that even their limited proposals will invoke some response and that there will be more workplace nurseries. There probably will be some more as a result of the provisions that the Government have included in the Finance Bill, but many employers are already saying that they cannot open a workplace nursery as they have too few employees with a relevant need gathered in any one place. If they were to provide for those employees, it would seem unfair to the majority of their employees who may work in branches scattered around the country. Many of the large retail chains face that problem, as do almost all small businesses. What small employer can hope to set up a workplace
      756
      nursery if he has only a handful of employees, one or two of whom have young children, although their needs are no less because they work for a small business?
      The Government have an opportunity to encourage employers to make provision for child care. We are not putting to the Government a plea for a massive injection of Government funds directly into the provision of child care, although we should like there to be more investment in nursery education. However, we see considerable scope for the activities of the private sector, whether in voluntary sector playgroups, commercial nursery provision or individual registered child minders, who play such a large part in child care.
      There is a wide range of possibilities that could be met by a voucher scheme. I do not understand how the Government can resist the logic of such a scheme, particularly as they have embarked on giving some tax relief for nursery education. Workplace nurseries cannot provide the answer for the vast majority of women who wish to exercise the right to work. Therefore, we urge the Government to adopt the voucher scheme that we propose and say that they should listen to the voices of those—including many Conservative Members—who have advanced that case. Although the hon. Member for Billericay (Mrs. Gorman) is not present tonight, on previous occasions she has advanced that view most strongly, as have others. Ministers privately seem to be expressing interest in such schemes.
      New clause 6 makes a comparable provision for self-employed people. There is a strong case for full-time, self-employed people to have a limited ability to set child care costs against tax. The Government, quite rightly, have encouraged self-employment. Many women are becoming self-employed as self employment offers flexible opportunities for work. Many women work in sectors where self-employment seems a natural development and their expertise can be used in various forms of consultancy work.
      8.45 pm
      Self-employment is sometimes appropriate for women who wish to work only part time while their children are very young and then resume full-time work, taking on more contracts and more work as their children reach school age. There seems no reason why such women should not be allowed to make the same provision as an employer could to set child care costs against tax. I hope that the Minister will consider that ancillary feature of our scheme, which is set out in new clause 6, and will be sympathetic to our case. I see no serious prospect that he will do so at this stage as I do not consider that his last action as Financial Secretary will be to make that major change.
      Mr. Simon Hughes: I was hoping that my hon. Friend would encourage the Minister to do so. We understand that, when she was disturbed at the weekend, the Prime Minister was writing a major speech on the family, or was planning to do so, at Chequers. It may be that the right hon. Gentleman is party to any proposals that the Prime Minister is about to make, and before he moves onwards and upwards he may be able to tell the House that the Government plan not only to talk about these matters, as the Prime Minister often does, but to do something practical to implement policies to encourage that aspect of family economic growth.
      Mr. Beith: My hon. Friend conjures up the slightly frightening prospect that a Government seminar is about to be arranged in which the characteristics of women would be discussed in a misleading and inaccurate way and the contents of which would be leaked.
      I hope that the various moves and discussions within the Government will eventually lead to someone waking up to the fact that workplace nurseries are not a solution and that something along the lines of our suggestion is essential.
      Mr. Paul Boateng: We thank the hon. Member for Berwick-upon-Tweed (Mr. Beith) for enabling us to discuss such an important topic at this stage. However, he is somewhat optimistic if he believes that the new Secretary of State for Trade and Industry will take into account in his response the new wind which the hon. Gentleman discerns to be blowing through the Conservative party. I doubt that, but I am sure that in the fullness of time there will be a translation in the attitude of the former Financial Secretary. We all congratulate him on his appointment.
      I expect that there will be a transformation in the right hon. Gentleman's approach to this topic as child care not only involves education and welfare, but strikes to the heart of our competitiveness with our European partners. As a nation, we have the worst child care record in Europe. Only 44 per cent. of three to five-year-olds in the United Kingdom receive public pre-school education—the second lowest percentage in the European Community. That is bound to impact on our success in obtaining a skilled work force in terms of the educational advantages to children in receipt of pre-school education, and, more importantly, drawing on the pool of skills that women are able to offer in the economy. It is an economic issue and an equal opportunity issue to which no Secretary of State for Trade and Industry can be blind.
      The Government are in the grip of a dilemma. Some in the Conservative party continue to oppose any measure along these lines because they believe that it would weaken and undermine the family, while others appreciate the needs of the economy and of women to be free to make a contribution to economic growth and to the growth and prosperity of their family if they so please. The two are engaged in an enormous war within the Conservative party. That is why we have seen an almost schizophrenic approach to this issue among Ministers. They change month in and month out. I join the hon. Member for Berwick-upon-Tweed in celebrating the current approach of the hon. Member for Oxford, West and Abingdon (Mr. Patten), who chairs the ministerial group on women's issues, and his willingness to consider new ideas such as vouchers with a more favourable mind than is normal in the Conservative party, but we cannot forget that only months ago he said in The Guardian:
      "I don't think the state should step in to help the working mother unless her life has collapsed."
      That was what the Minister said then, but what has happened in the interim? One hopes that there has been a new dawn and an awakening, but one doubts it. The Government's attitude to this issue is one of indecision and uncertainty. The Prime Minister may have been poring over her speech on the family while she dithered and vacillated over the future of her Secretary of State for Trade and Industry at the weekend, but we say that she
      758
      was also dithering and vacillating on child care and equal opportunities for women, and we are not alone in that. The Daily Mail, no less, said of the Government's attitude:
      "The Government takes the view that good old private enterprise needs no prompting. That is the official line. This is dangerously complacent. Our competitors are far better geared to woo the working mother and beat the labour shortage that results from falling birth rates and aging populations. In Europe, there are many more publicly financed nursery places. Here, Margaret Thatcher and her Ministers still dither about how to defuse the demographic time bomb."
      Dithering and vacillation are the hallmarks of the Government. We say that that should end and we look to the Secretary of State for Trade and Industry, in his new role, to play a part in bringing it to an end.
      We find the new clause wanting in several respects. We find it technically deficient and therefore are unable to commend it to Labour Members. Nowhere is a definition of the word "care" suggested. We are concerned that it would be so wide as to include schooling and elements of private schools, as, arguably, schools care for their pupils. It makes no attempt to incorporate section 155A(7), which would have prevented that.
      We are concerned that the new clause would allow payments to a wife to look after children at home to be tax deductible. Even if the registration requirements of the new clause were technically effective—we fear that they are not—those requirements apply only where the carer or the premises in which care is provided require registration. That does not apply to parents looking after children at home, which is a major defect.
      We are also concerned about the reference to section 20(1)(4) in new clause 5(4) and new clause 6(2)(b). That does not exist and cannot be satisfied. We must presume that it is a reference to section 155A(4), which is introduced by clause 21, formerly clause 20. The wrong reference invalidates both new clauses.
      The new clauses refer to basic rate tax. We presume that that means income tax at the basic rate, because under the Finance Bill there is no such thing as basic rate tax. There is certainly no basic rate charge tax, as mentioned in new clause 5(2).
      Nor do the clauses make clear the limits of relief. Is it £1,500 per year for all children aged between five and 16 or for each child? Likewise, there are no provisions to deal with abuse of the classes.
      For those technical reasons, we shall be unable to recommend the new clauses as they stand, but we find another cause for concern that goes to the principle of accepting vouchers without taking on board the wider context in which they are introduced.
      Above all, we are concerned that there should be quality provision of child care. We are concerned to ensure that in increasing the supply of child care there is variety. A parent should not be obliged to take second best. Therefore, we envisage a role for the public and private sectors in child care, but a central role for local authorities in maintaining and improving standards and in co-ordinating child provision. As the new clause would expand provision without guaranteeing that it was of sufficient quality, we shall have to oppose it.
      Mr. Beith: The hon. Gentleman is now dealing with the substance of the new clauses, but I am not sure what he is arguing. Is he arguing that the Labour party would accept

      759
      vouchers if they were so controlled by a local authority that it could determine whether the level of provision was suitable, or is he still opposed to vouchers in general?
      Mr. Boateng: We are not opposed to the principle of vouchers; we believe that it needs careful examination. However, we are opposed to giving vouchers priority at a time when we have not created a context in which their introduction can be guaranteed to produce quality provision. When we are dealing with limited resources, we must see how they can best be spent.
      The unit cost of workplace nursery care is relatively high, at some £4,500 per place, compared with £1,350 per unit spent on under-fives in nursery schools, nursery classes and reception classes in primary schools in the public sector. Those figures reflect the cost-effectiveness of child care provision. We are not satisfied that it would be right to forgo the resources that would be the inevitable consequence of a new clause of this nature while there is still so much to be done, not least in improving the training and status of child minders and those who provide nursery care.
      Some 43,000 child care workers are employed on regular contracts in this country, compared with some 125,000 in West Germany and 150,000 in Italy. Child care workers in the United Kingdom are among the worst paid, with nursery workers earning on average some 70 per cent. of the average manual worker's rate. By comparison, West German nursery workers earn up to 170 per cent. of the unskilled rate.
      The figures for child minders also give cause for concern. In the United Kingdom, their average wage is 46 per cent. of the manual worker's rate, whereas in France it is 71 per cent. of the minimum wage plus holiday pay. In Portugal it is 100 per cent. when the child minder is looking after four children, and in Denmark it is 72 per cent. of the unskilled worker's rate, including holiday and pension rights.
      We have a long way to go to improve training and registration, and to give local authorities the means to take the innovative steps that some have been able to take already—even with limited resources—to bring the public and private sectors together to maximise the quality as well as the quantity of child care provision. Labour local authorities have led the way in that regard. Each of the 25 local authorities with the best provision is Labour controlled. That is a credit to Labour's approach to the issue of child care, which is centred on the child and on enabling and empowering parents to participate fully in the workplace and in a growing economy. That will happen when we can harness fully the resources in our country to a common purpose, geared towards maximising the opportunities of all our people to contribute to economic growth.
      If we are to meet the challenges of the 1990s, to compete successfully with our European Common Market partners and to take advantage of the single market in 1992, it is vital that we get this matter right. A survey for the European Commission called "Childcare and equality of opportunity" found that in Britain there were wide differences of quality and quantity in the available provision. That is not compatible with the concept of the single market. As a result of that survey, there was a recommendation that there should be a Community directive to encourage the development of adequate provision.
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      Although it presents a principle that is worthy of examination, the new clause does not provide a complete answer, and we cannot support it in the Lobby.
      Mrs. Edwina Currie: May I also congratulate my right hon. Friend the Secretary of State for Trade and Industry on his elevation? I am sure that he will do a good job for us, but I suspect, as has been said, that this issue will pursue him to the Department of Trade and Industry, as it is now a major concern for many employers.
      The proposals before us are not at all the answer. They are sweeping, extravagant and, as one would expect from the Liberals, badly drafted. The Opposition think that they are so important that most Opposition Members have gone home. Whatever my right hon. Friend says, I hope that he will not close the door on consideration of this issue at some time in the future.
      There is no doubt that we need more women in the work force in the 1990s. It has been estimated by the Department of Employment that, of the 1 million new jobs likely to be created between now and 1995, about three quarters will have to go to women because of the demographic time bomb. The issue becomes more acute as time goes on, because by 2000, less than a decade from now, about 90 per cent. of all new jobs will have to go to women either those who are not working at all at the moment, or those who are working part-time and who can be encouraged to work full-time and to improve their productivity.
      It helps briefly to set out one or two principles. First, we should not be heading for state-run, state-funded nurseries. That is the way it has been done in the Soviet Union up to now, and it has been a total disaster. We should not propose or contemplate such a system. It is what the Labour party would like and what it often advocates but it would be disastrous.
      We should press employers, including state employers, to carry part of the burden. I share the belief of my right hon. Friend the Minister that, left to itself, the market works very well on such issues. The problem is that the jobs market is often inflationary and simply pushes up pay. One of the most expensive ways to provide child care is to pay employees extra so that they may pay for their own child care. That is inflationary, and would make it much harder for us to reduce inflation to the sort of levels that our international competitors are achieving. We have a supply side rigidity and should be wary of shutting the door on any proposals that might help it.
      Mr. Beith: When the market seeks to address these problems, it has to face the distortions in the system as well. Now, of course, there will be an invitation to workplace nurseries, but it remains the case that, even after all that the Chancellor has done, it would be more tax-efficient to give the woman a car as part of her remuneration, because that is still not fully taxed, than to give her money to pay for child care.
      Mrs. Currie: I suspect that my right hon. Friend the Chancellor has his beady eyes on our cars as well, and that is probably a good thing. I am generally against giving tax relief on any kind of perk. To me, it has to be argued very hard that the tax relief on some kind of benefit, whether or not one dubs it a perk, is better than simply putting all the tax reliefs in the pool and charging everybody less tax. I

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      am, however, bothered by the fact that some of these issues appear to be hampered by what is seen as penal taxation on workplace nurseries, which is covered in the Bill.
      We should remind ourselves of the problems that face single parents. The largest single group of available people who are not working are in that group. There are 1 million single-parent families in Britain, and most, but not all, of them are headed by women. In response to surveys, about 40 per cent. of them have said that, if they could resolve the problem of reliable and affordable child care, they would want to go back to work immediately.
      We know from much research that that is often best for such people and their children. At the moment, if they go for training on the employment training scheme, they get £50 a week per child for child care, but there is little help when they seek a job. That results in a waste of public money. If we could get 250,000 of those single parents back into work, even low-paid work, then, according to calculations made for me by the Library, we could expect to save at least £1 billion a year net. That is also a good Tory principle.
      The Bill contains changes that will affect workplace nurseries. Many people who have used such nurseries would agree that it is the most expensive way to provide child care and the least flexible. The family have a real problem when the children reach school age. It is all very well for small babies, but what happens when the child reaches the age of five? What do the parents do after school and during holidays? If we are effectively to press employers, we must press them to take much more flexible approaches to these issues. These sometimes include part-time work, as well as the provision of child care.
      It seems that there is no evidence yet that the tax disadvantages of vouchers are a deterrent to their use. We are talking about something which is quite new; many of the concepts have not been fully argued. I hope that my right hon. and hon. Friends who are Ministers in the Treasury and in the Departments of Employment and of Trade and Industry will keep a wary eye on the issue and, if they feel that it is necessary in future, will come forward with their own proposals.
      Ms. Hilary Armstrong: We are grateful to the hon. Member for Berwick-upon-Tweed (Mr. Beith) for giving us the opportunity to discuss child care. I am sure that he will forgive me for saying—I do so in the friendliest of spirits—that it was easy for him to introduce the clause because he was not concerned with the problems of priorities that an incoming Government would face. It is priorities that bear upon our position on the clause. The Opposition have had to consider carefully as the next Government where we would place available moneys to ensure that we achieve the objective of increasing the number of places available while not sacrificing quality. Our thinking and proposals are based on that important first principle.
      In a sense, there is a temptation to support the clause on the basis that anything is better than nothing. The Government are offering virtually no strategy for improving opportunities for women or children through a better structure and system of child care. An incoming Government must think beyond the view that anything is better than nothing, and we want to secure the best. Our policy, therefore, is based on getting the best.
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      It is interesting that the Financial Secretary to the Treasury has moved to the Department of Trade and Industry. As the hon. Member for Derbyshire, South (Mrs. Currie) has said, he will come across similar problems in the DTI. I recommend him to examine some of the partnership schemes that Labour local authorities and other parts of the public sector are developing with the private sector, with the support of the DTI. I am hesitant to recommend the right hon. Gentleman to take that course, however, because his reputation goes before him. If I mention good schemes that are providing more opportunities for child care, I am concerned that he will wish to stamp on them when he fully takes up his post as Secretary of State for Trade and Industry. I hope only that I am being over-cynical.
      I commend to the right hon. Gentleman the scheme that is operating in north Tyneside. His new Department has made a significant contribution to the partnership that has developed, which is attracting finance from the private sector in a way which gives control and support for the best quality of opportunity and the widest choice of child care, from child minders to child minders in children's own homes, who elsewhere in the country might be called nannies. Care extends from full-day nursery provision to out-of-school and holiday care for children over five years of age.
      That is precisely the sort of scheme that we in the Labour party want to support. We want to encourage partnership between the voluntary and private sectors and the public sector of the sort that removes from the employer the burden of deciding what is good child care. Most employers are honest and open enough to say that it is not their job to decide what is good child care. They say that they are experts in finance and money-making, not in child care. They argue that they must concentrate on the success of their businesses. They welcome the opportunity of being in partnership with the public sector. I know that the next Labour Government will be examining ways in which they can encourage the sort of partnership that will make available additional places and ensure that they are of the highest quality.
      Even though the Government do not want to do so, they have been obliged to deal with the problem. They read the polls. They saw in The Daily Telegraph a few weeks ago that 87 per cent. of the people surveyed want more money to be devoted to child care so that women could go out to work. They also saw that 88 per cent. of the people surveyed want more money to be provided for nursery education.
      The poverty of the Government's argument is there for all to see. Therefore, they are thrashing around. That is why they made their minimum concession on the workplace nurseries tax. It was not because the Government had worked out a strategy and that the concession was part of it; they did it because they were under pressure. That is the very worst sort of government. If we went down that road, which is what the new clause asks us to do, we should avoid the main question: how is the country to face up to its responsibilities both to children and women, and to ensure that opportunities are provided for them that at least bring us into line with our European competitors?
      9.15 pm
      This is a painful issue for the Government, but the European child care network has provided us with a framework. It says that it is the responsibility of national Governments to set the pace and the parameters and to provide a framework within which various opportunities can be encouraged. However, the Government say that that is nonsense and that we want to force women and children into a particular sort of care. The Government consistently confuse diversity with choice. Of course there is diversity of provision, but much of it is the result of the lack of basic facilities.
      We want parents to be able to choose nursery education for their children, but if only certain parts of the country are able to provide it that is diversity, not choice. We believe that parents throughout the country should be able to decide what kind of care and education they want for their children. In each area, therefore, we shall develop a pattern of care. We shall hold discussions about it with local education authorities, social services departments and parents. We also want to involve industry and the voluntary sector in our plans.
      Mrs. Currie: I am grateful to the hon. Lady for giving way. After a lot of waffle, she is now getting to the meat of the subject. Who is going to pay for all this?
      Ms. Armstrong: I have already made it clear that it will be paid for by means of a combination of both public and voluntary sector funding. The public sector will set the pace, but it will attract money and support from the private and voluntary sector. I do not know whether the hon. Lady has spoken to representatives of industry, but I have spoken to representatives of a number of major industries. This morning, I had discussions with representatives of a number of them, who said to me, "We wish you would impose an employers' levy and make it really easy for us." We do not intend to do that, but three large industrial employers said that to me.
      The Government have shown a lack of will to forge partnerships and opportunities. They cannot make up their mind what they mean by the family or by providing opportunities for children. They are not really sure that they want. to provide women with any opportunities. We have, therefore, ended up with chaos, which is described as diversity. It means that our children will lose out. Instead of giving small concessions, the Government should begin to think seriously about what they intend to do to ensure that this country can move towards 1992. They must be committed to providing opportunities for women and children.
      Mr. Lilley: There have been some astonishing appointments in recent days. I thought that my own was the most surprising until I saw my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) reappointed to the Whips Bench. I then realised that there was no limit to it.
      As my right hon. Friend the Chief Secretary told the Committee of the whole House, the relief for workplace nurseries, which we introduced in the Budget, is a closely focused relief. It is designed to remove a perceived obstacle to the establishment of workplace nurseries and it should, thereby, increase the supply of such places. It is designed to put the tax treatment of workplace nurseries roughly on
      764
      a par with taxation on other workplace benefits in kind. Therefore, it is a minor simplification and deregulation measure.
      It is always difficult to draw the borderlines of tax relief, but I am convinced that, in general, they should be drawn as tightly and narrowly as possible. I agree with the general sentiments expressed in that respect by my hon. Friend the Member for Derbyshire, South (Mrs. Currie).
      The relief that we introduced is not intended as a step towards the introduction of a general child care allowance, which would be hugely expensive. The Opposition have agreed, and the hon. Member for Islington, South and Finsbury (Mr. Smith) is on record as saying, that that would not be a priority use of scarce Exchequer resources for them any more than for us.
      The two new clauses proposed by the hon. Member for Berwick-upon-Tweed (Mr. Beith) concentrate on extending relief to vouchers. That would be expensive as people latched on to it as they have to similar benefits in kind. It would be essentially unfair because it would give relief to those who receive vouchers while others who received cash or spent their own cash on the same facilities would not receive relief. It would be impossible to limit it to vouchers in the way the clause suggests.
      Mr. Beith: The Minister can hardly level the charge that the relief would be unfair when it is the same for workplace nurseries. That is a tax relief available only to those able to make use of a workplace nursery.
      Mr. Lilley: It is simply a supply-side measure. It is not meant to be a relief for child care as such. It is designed to remove an obstacle to the provision of such facilities and allow greater supply.
      Extending relief to vouchers would be perceived as unfair and would inevitably be extended to wider groups. It would also be open to abuse. People would be able to use vouchers as a form of near cash. They would be able to use them to employ members of the family who were perhaps already helping to look after the children from time to time. Therefore, there would be a tendency to use such vouchers to the maximum extent available in order to obtain the maximum tax relief. That is not desirable.
      The new clause dealing with provision for the self-employed is even less tightly focused. In fact, it is open ended and goes way beyond vouchers. It would give tax relief to wives of self-employed people looking after their own children at home or even elsewhere, as I understand the clause. Once such relief had been created for the self-employed, it would be impossible not to extend it to the employed. Therefore, I do not understand why the proposal in the new clause applies simply to the self-employed. I do not think that any responsible party could seriously envisage the massive use of fiscal resources suggested in the two new clauses. Naturally, I shall urge the House to vote against them.
      The hon. Member for Berwick-upon-Tweed said that he had read an article that stated that a ministerial group had endorsed his proposal. I urge him not to believe everything that he has read in the newspapers. I learned that lesson over the weekend, although I am not complaining, because many of the grossest inaccuracies in the newspapers were flattering. The hon. Gentleman said that the Government, as a matter of policy, must encourage women to go out to work rather than stay at home and look after their children. We have always made

      765
      it clear that that is a sensitive and important decision that parents should make, and it is not for the Government to try to bias it one way or the other through the fiscal system.
      The hon. Member for Brent, South (Mr. Boateng) said, rightly, that one should not be profligate in the use of fiscal resources, but he implicitly proposed an expensive public expenditure programme of improved pay for child minders, an increased number of child minders and increased subsidy for child minding. [Interruption.] If the hon. Gentleman said that it was not implicit but explicit, he should be a little—
      Mr. Boateng: It was neither implicit nor explicit.
      Mr. Lilley: That was certainly the logical concomitant of what the hon. Gentleman said.
      My hon. Friend the Member for Derbyshire, South asked what provision the Government thought appropriate for school-age children. Our relief for workplace nurseries applies to workplace nurseries available to school-age children—implicitly, during the holidays. That is catered for in our relief as it stands.
      The hon. Member for Durham, North-West (Ms. Armstrong) left the House bemused as to how she saw her gigantic programme of improved provision being financed. She said that she had met a number of industrialists who thought that there should be a compulsory levy to finance it. That is another way of saying that they would not pay for it unless they were forced to do so. At least they recognise that it would have to be paid for—which, apparently, the hon. Lady did not. I agree, however, that the new clauses tabled by the hon. Member for Berwick-upon-Tweed should be rejected, and I hope that the House will do so.
      Mrs. Currie: Will my right hon. Friend confirm that child care vouchers are exempt from class 1 national insurance contributions? If the hon. Member for Durham, North-West (Ms. Armstrong) and her colleagues get into power, they would make them subject to national insurance contributions, which would cost everyone much more.
      Mr. Lilley: My hon. Friend is correct. That is an added reason why it is inexplicable that the Liberal Democrats should propose increased tax relief for the one form of provision for child care which—not intentionally, but simply because of the nature of the collection and tax treatment of vouchers generally—already has a measure of relief from a fiscal imposition.
      Mr. Beith: That is an odd argument for the Minister to deploy. No doubt, some day he will give us the benefit of his reasoning for the preservation of the separate category of national insurance and income tax. I suspect that, after he has left the Treasury, it will not be long—not because of his departure—before that curious feature of our tax system is removed and we get away from pretending that something that is not dealt with in Finance Bills and can be increased by statutory instrument is, in some way, not a tax. We know perfectly well that national insurance contributions represent a form of income tax.
      We have been treated to one side of the argument that appears to be going on in the Government. It may be that the Minister is preserving an air of total innocence at the machinations that are occurring in his party at the
      766
      moment, but he cannot be unaware that this is an issue of serious debate within his party—let alone more widely—and that the principle whereby employer-funded vouchers obtain tax relief has attracted wide support across the political spectrum. Although we have not tonight heard a voice from the Labour Benches in favour of that principle, some members of the parliamentary Labour party are more sympathetic to it than hon. Members who have spoken. Vouchers are one way to attract into child care provision funds from employers which are not taxed at the hand of the employee. That is a reasonably cost-effective way to encourage the provision of child care.
      9.30 pm
      I can understand the position of the purist, who says that there should be no tax allowances of any kind for this purpose, and that workplace nursery tax relief is equally inappropriate. I cannot, however, accept the Minister's curious distinction between what he regards as well-focused tax relief for workplace nurseries and the rest. Tax relief on workplace nurseries is not especially well focused—the hon. Member for Derbyshire, South (Mrs. Currie) knows that—and will go only to the small number of industries in which it is convenient to provide a workplace nursery, and in which employers have made that level of investment in child care.
      The Minister might more honestly have said that such tax relief is relatively cheap because there are not many workplace nurseries and there are not going to be many more. He cannot honestly say that he has focused resources on the most effective and efficient way to support child care. The voucher system is a more attractive route.
      I listened to the hon. Member for Durham, North-West (Ms. Armstrong) with some care. She is clearly anxious for improvements to be made in child care, and has devoted a considerable amount of time and attention to the matter. At the end of her remarks I still could not reach a conclusion as to how she was going to achieve her objective. If, as she argues, the resources cannot be found for tax relief on vouchers paid for by employers for child care, how on earth does the Labour party believe that it can find the far greater resources needed to fund child care directly—or even half-fund it, on the basis of some sort of 50:50 partnership scheme with large numbers of employers? How could Labour hope to do that within anything like the time scale that we are talking about, when the pressure for women to return to work will be greatest?
      It does not seem to me that the hon. Lady can envisage that the resources will become available—many times more resources than for the type of scheme that I am talking about—to effect the sort of Rolls-Royce improvements that she wants to bring about. Sometimes the best is the enemy of the good. We should all like to have perfect child care, ideal partnership arrangements and the best possible funding, but that will not be in place in time to meet the needs of many women who are now looking for child care or to meet the labour market needs that I mentioned.
      Ms. Armstrong: I do not want to interrupt the hon. Gentleman, but I am arguing that quality should not be reduced. We cannot win the argument for opening up opportunities for women at the expense of quality of opportunity for the child. In five or 10 years' time that

      767
      would cost us financially and in many other ways. I said that we wanted to increase the number of places, but not at the expense of quality.
      Mr. Beith: In that case the hon. Lady should not be supporting tax relief for workplace nurseries, because that can encompass a wide range of quality.
      Ms. Armstrong: Registration.
      Mr. Beith: If she is saying that registration is the key, that is an element in my new clause. I have sought to ensure that only registered child care would qualify for tax relief. That is a limited kind of registration.
      I am bound to conclude that the hon. Lady is arguing for something that cannot be achieved in the time scale of the problem that we are discussing, or in the time which matters to the large number of women who are now concerned with child care. Frankly, they will be looking forward to seeing their grandchildren by the time that we get the scheme that the hon. Lady is talking about.
      Ms. Armstrong: We know how to do it, and we know that it is possible. I have studied the problem and discussed it at great length with people in the European child care network. Other European countries have done it, because they have had a framework and they have built on the commitment and the will that exists. I know that we can do it in this country. In Spain, 13 years ago they had nothing. Now 66 per cent. of their three and four-year-olds are in full-time education and care. If Spain can do it, we can do it, by galvanising all the available resources.
      Mr. Beith: I still think that it is a case of "Jam tomorrow, the day after or possibly the day after that." I believe that more resources will be directed more quickly into child care by the introduction of a voucher scheme. The Minister cannot turn away from that for much longer. He will still be concerned with the issue in his new Department. This is the ideal opportunity. He can be demob happy as the outgoing Financial Secretary. All the Whips are away at a party—that is why the hon. Member for Wolverhampton, South-West (Mr. Budgen) is sitting in the Whip's place on the Treasury Bench. As the right hon. Gentleman's appointment is now fully confirmed and there is no risk that it will be snatched from his grasp, what better chance to kick over the traces and to respond to a feeling that is present in his party, as well as in ours, and to open the way to a voucher system, in which the funds available from employers would be brought into child care without the intervention of the taxman at the point that the provision reaches the pay packet of the employee?
      As the Minister has not shown any willingness to do that voluntarily, I propose to invite him—to drag him— into the Division Lobbies in support of the new clause.
      Mr. Boateng rose—[Interruption.]
      Mr. Speaker: The hon. Gentleman has already spoken once. Does he have the leave of the House to speak again?
      Hon. Members: No.
      Mr. Speaker: Well, I am sorry, but I must now put the Question.
      Question put, That the clause be read a Second time:—
      The House divided: Ayes 15, Noes 179

      Division No. 293]

      [8.22 pm

      AYES

      Adams, Allen (Paisley N)

      Bermingham, Gerald

      Allen, Graham

      Bidwell, Sydney

      Anderson, Donald

      Boateng, Paul

      Archer, Rt Hon Peter

      Boyes, Roland

      Armstrong, Hilary

      Bradley, Keith

      Ashdown, Rt Hon Paddy

      Bray, Dr Jeremy

      Ashley, Rt Hon Jack

      Brown, Gordon (D'mline E)

      Ashton, Joe

      Brown, Nicholas (Newcastle E)

      Banks, Tony (Newham NW)

      Brown, Ron (Edinburgh Leith)

      Barnes, Harry (Derbyshire NE)

      Buckley, George J.

      Barnes, Mrs Rosie (Greenwich)

      Caborn, Richard

      Barren, Kevin

      Callaghan, Jim

      Beckett, Margaret

      Campbell, Menzies (Fife NE)

      Beith, A. J.

      Campbell, Ron (Blyth Valley)

      Bell, Stuart

      Campbell-Savours, D. N.

      Benn, Rt Hon Tony

      Canavan, Dennis

      Bennett, A. F. (D'nt'n & R'dish)

      Carlile, Alex (Mont'g)

      751

      Carr, Michael

      Litherland, Robert

      Clark, Dr David (S Shields)

      Lloyd, Tony (Stretford)

      Clarke, Tom (Monklands W)

      McAllion, John

      Clay, Bob

      McAvoy, Thomas

      Clelland, David

      McCartney, Ian

      Clwyd, Mrs Ann

      Macdonald, Calum A.

      Cohen, Harry

      McFall, John

      Cook, Frank (Stockton N)

      McKay, Allen (Barnsley West)

      Cook, Robin (Livingston)

      McKelvey, William

      Corbett, Robin

      McLeish, Henry

      Cousins, Jim

      Maclennan, Robert

      Crowther, Stan

      McNamara, Kevin

      Cryer, Bob

      McWilliam, John

      Cummings, John

      Madden, Max

      Cunliffe, Lawrence

      Mahon, Mrs Alice

      Cunningham, Dr John

      Marek, Dr John

      Darling, Alistair

      Marshall, David (Shettleston)

      Davies, Rt Hon Denzil (Llanelli)

      Martin, Michael J. (Springburn)

      Davies, Ron (Caerphilly)

      Martlew, Eric

      Davis, Terry (B'ham Hodge H'I)

      Maxton, John

      Dewar, Donald

      Meacher, Michael

      Dixon, Don

      Meale, Alan

      Dobson, Frank

      Michael, Alun

      Doran, Frank

      Michie, Bill (Sheffield Heeley)

      Dunnachie, Jimmy

      Michie, Mrs Ray (Arg'l & Bute)

      Dunwoody, Hon Mrs Gwyneth

      Moonie, Dr Lewis

      Eadie, Alexander

      Morgan, Rhodri

      Eastham, Ken

      Morley, Elliot

      Evans, John (St Helens N)

      Morris, Rt Hon A. (W'shawe)

      Ewing, Harry (Falkirk E)

      Morris, Rt Hon J. (Aberavon)

      Fatchett, Derek

      Mullin, Chris

      Faulds, Andrew

      Murphy, Paul

      Fearn, Ronald

      Nellist, Dave

      Field, Frank (Birkenhead)

      Oakes, Rt Hon Gordon

      Fields, Terry (L'pool B G'n)

      O'Brien, William

      Fisher, Mark

      Orme, Rt Hon Stanley

      Flannery, Martin

      Parry, Robert

      Flynn, Paul

      Patchett, Terry

      Foot, Rt Hon Michael

      Pendry, Tom

      Foster, Derek

      Pike, Peter L.

      Foulkes, George

      Powell, Ray (Ogmore)

      Fraser, John

      Prescott, John

      Fyfe, Maria

      Primarolo, Dawn

      Galloway, George

      Quin, Ms Joyce

      Garrett, John (Norwich South)

      Radice, Giles

      George, Bruce

      Randall, Stuart

      Godman, Dr Norman A.

      Redmond, Martin

      Gordon, Mildred

      Rees, Rt Hon Merlyn

      Gould, Bryan

      Reid, Dr John

      Graham, Thomas

      Richardson, Jo

      Grant, Bernie (Tottenham)

      Robertson, George

      Griffiths, Nigel (Edinburgh S)

      Robinson, Geoffrey

      Griffiths, Win (Bridgend)

      Rogers, Allan

      Grocott, Bruce

      Rooker, Jeff

      Hardy, Peter

      Ross, Ernie (Dundee W)

      Harman, Ms Harriet

      Rowlands, Ted

      Hattersley, Rt Hon Roy

      Ruddock, Joan

      Heal, Mrs Sylvia

      Sedgemore, Brian

      Henderson, Doug

      Sheerman, Barry

      Hinchliffe, David

      Sheldon, Rt Hon Robert

      Hogg, N. (C'nauld & Kilsyth)

      Shore, Rt Hon Peter

      Home Robertson, John

      Short, Clare

      Howarth, George (Knowsley N)

      Sillars, Jim

      Howells, Geraint

      Skinner, Dennis

      Hoyle, Doug

      Smith, Andrew (Oxford E)

      Hughes, John (Coventry NE)

      Smith, C. (Isl'ton & F'bury)

      Hughes, Robert (Aberdeen N)

      Smith, Rt Hon J. (Monk'ds E)

      Hughes, Roy (Newport E)

      Smith, J. P. (Vale of Glam)

      Hughes, Simon (Southwark)

      Spearing, Nigel

      Illsley, Eric

      Steinberg, Gerry

      Janner, Greville

      Stott, Roger

      Jones, Barry (Alyn & Deeside)

      Strang, Gavin

      Jones, Ieuan (Ynys Môn)

      Straw, Jack

      Jones, Martyn (Clwyd S W)

      Taylor, Mrs Ann (Dewsbury)

      Kennedy, Charles

      Taylor, Matthew (Truro)

      Kirkwood, Archy

      Thomas, Dr Dafydd Elis

      Lambie, David

      Turner, Dennis

      Lamond, James

      Wallace, James

      Leighton, Ron

      Walley, Joan

      Lewis, Terry

      Wardell, Gareth (Gower)

      752

      Wareing, Robert N.

      Winnick, David

      Watson, Mike (Glasgow, C)

      Wise, Mrs Audrey

      Welsh, Andrew (Angus E)

      Worthington, Tony

      Welsh, Michael (Doncaster N)

      Young, David (Bolton SE)

      Wigley, Dafydd

      Williams, Rt Hon Alan

      Tellers for the Ayes:

      Williams, Alan W. (Carm'then)

      Mr. Frank Haynes and

      Wilson, Brian

      Mrs. Llin Golding.

      NOES

      Alexander, Richard

      Favell, Tony

      Alison, Rt Hon Michael

      Fenner, Dame Peggy

      Allason, Rupert

      Field, Barry (Isle of Wight)

      Amess, David

      Finsberg, Sir Geoffrey

      Amos, Alan

      Fishburn, John Dudley

      Arnold, Jacques (Gravesham)

      Fookes, Dame Janet

      Ashby, David

      Forman, Nigel

      Aspinwall, Jack

      Forsyth, Michael (Stirling)

      Atkins, Robert

      Forth, Eric

      Atkinson, David

      Fowler, Rt Hon Sir Norman

      Beaumont-Dark, Anthony

      Fox, Sir Marcus

      Bellingham, Henry

      Franks, Cecil

      Bendall, Vivian

      Freeman, Roger

      Bennett, Nicholas (Pembroke)

      French, Douglas

      Benyon, W.

      Fry, Peter

      Bevan, David Gilroy

      Gardiner, George

      Blackburn, Dr John G.

      Garel-Jones, Tristan

      Blaker, Rt Hon Sir Peter

      Glyn, Dr Sir Alan

      Boscawen, Hon Robert

      Goodlad, Alastair

      Boswell, Tim

      Gorman, Mrs Teresa

      Bottomley, Mrs Virginia

      Gow, Ian

      Bowden, Gerald (Dulwich)

      Grant, Sir Anthony (CambsSW)

      Bowis, John

      Greenway, Harry (Ealing N)

      Boyson, Rt Hon Dr Sir Rhodes

      Greenway, John (Ryedale)

      Braine, Rt Hon Sir Bernard

      Gregory, Conal

      Brandon-Bravo, Martin

      Griffiths, Peter (Portsmouth N)

      Brazier, Julian

      Grist, Ian

      Brown, Michael (Brigg & CI't's)

      Ground, Patrick

      Bruce, Ian (Dorset South)

      Grylls, Michael

      Buck, Sir Antony

      Gummer, Rt Hon John Selwyn

      Budgen, Nicholas

      Hague, William

      Burns, Simon

      Hamilton, Neil (Tatton)

      Butcher, John

      Hampson, Dr Keith

      Butler, Chris

      Hanley, Jeremy

      Carlisle, John, (Luton N)

      Hannam, John

      Carlisle, Kenneth (Lincoln)

      Hargreaves, A. (B'ham H'll Gr')

      Carrington, Matthew

      Hargreaves, Ken (Hyndburn)

      Carttiss, Michael

      Harris, David

      Cash, William

      Haselhurst, Alan

      Channon, Rt Hon Paul

      Hawkins, Christopher

      Chapman, Sydney

      Hayes, Jerry

      Chope, Christopher

      Hayhoe, Rt Hon Sir Barney

      Clark, Hon Alan (Plym'th S'n)

      Hayward, Robert

      Clark, Dr Michael (Rochford)

      Heathcoat-Amory, David

      Clark, Sir W. (Croydon S)

      Hicks, Mrs Maureen (Wolv' NE)

      Clarke, Rt Hon K. (Rushcliffe)

      Hicks, Robert (Cornwall SE)

      Colvin, Michael

      Higgins, Rt Hon Terence L.

      Conway, Derek

      Hind, Kenneth

      Coombs, Anthony (Wyre F'rest)

      Hordern, Sir Peter

      Coombs, Simon (Swindon)

      Howard, Rt Hon Michael

      Cran, James

      Howarth, G. (Cannock & B'wd)

      Currie, Mrs Edwina

      Howe, Rt Hon Sir Geoffrey

      Curry, David

      Howell, Ralph (North Norfolk)

      Davies, Q. (Stamf'd & Spald'g)

      Hughes, Robert G. (Harrow W)

      Davis, David (Boothferry)

      Hunter, Andrew

      Day, Stephen

      Irvine, Michael

      Devlin, Tim

      Irving, Sir Charles

      Dickens, Geoffrey

      Jack, Michael

      Dicks, Terry

      Jackson, Robert

      Dorrell, Stephen

      Janman, Tim

      Douglas-Hamilton, Lord James

      Johnson Smith, Sir Geoffrey

      Dover, Den

      Jones, Gwilym (Cardiff N)

      Dunn, Bob

      Jones, Robert B (Herts W)

      Durant, Tony

      Jopling, Rt Hon Michael

      Dykes, Hugh

      Kellett-Bowman, Dame Elaine

      Eggar, Tim

      Key, Robert

      Emery, Sir Peter

      Kilfedder, James

      Evans, David (Welwyn Hatf'd)

      King, Roger (B'ham N'thfield)

      Evennett, David

      King, Rt Hon Tom (Bridgwater)

      Fallon, Michael

      Kirkhope, Timothy

      753

      Knapman, Roger

      Shaw, David (Dover)

      Knight, Greg (Derby North)

      Shaw, Sir Giles (Pudsey)

      Knight, Dame Jill (Edgbaston)

      Shaw, Sir Michael (Scarb')

      Lawrence, Ivan

      Shelton, Sir William

      Lennox-Boyd, Hon Mark

      Shephard, Mrs G. (Norfolk SW)

      Lightbown, David

      Shepherd, Colin (Hereford)

      Lilley, Peter

      Shepherd, Richard (Aldridge)

      Lloyd, Sir Ian (Havant)

      Sims, Roger

      Lloyd, Peter (Fareham)

      Skeet, Sir Trevor

      Lord, Michael

      Smith, Tim (Beaconsfield)

      McCrindle, Robert

      Speller, Tony

      Macfarlane, Sir Neil

      Spicer, Sir Jim (Dorset W)

      McLoughlin, Patrick

      Spicer, Michael (S Worcs)

      Mans, Keith

      Squire, Robin

      Marlow, Tony

      Stanbrook, Ivor

      Maxwell-Hyslop, Robin

      Stanley, Rt Hon Sir John

      Miller, Sir Hal

      Steen, Anthony

      Mills, Iain

      Stern, Michael

      Miscampbell, Norman

      Stevens, Lewis

      Moate, Roger

      Stewart, Allan (Eastwood)

      Monro, Sir Hector

      Stewart, Andy (Sherwood)

      Montgomery, Sir Fergus

      Stewart, Rt Hon Ian (Herts N)

      Moore, Rt Hon John

      Stradling Thomas, Sir John

      Morris, M (N'hampton S)

      Sumberg, David

      Morrison, Sir Charles

      Summerson, Hugo

      Moss, Malcolm

      Taylor, Ian (Esher)

      Moynihan, Hon Colin

      Taylor, Teddy (S'end E)

      Mudd, David

      Temple-Morris, Peter

      Neale, Gerrard

      Thompson, D. (Calder Valley)

      Nelson, Anthony

      Thompson, Patrick (Norwich N)

      Neubert, Michael

      Thorne, Neil

      Newton, Rt Hon Tony

      Thornton, Malcolm

      Nicholls, Patrick

      Thurnham, Peter

      Norris, Steve

      Townend, John (Bridlington)

      Onslow, Rt Hon Cranley

      Tracey, Richard

      Oppenheim, Phillip

      Trimble, David

      Page, Richard

      Viggers, Peter

      Paice, James

      Waldegrave, Rt Hon William

      Parkinson, Rt Hon Cecil

      Walden, George

      Patnick, Irvine

      Walker, Bill (T'side North)

      Patten, Rt Hon Chris (Bath)

      Waller, Gary

      Patten, Rt Hon John

      Ward, John

      Pattie, Rt Hon Sir Geoffrey

      Wardle, Charles (Bexhill)

      Pawsey, James

      Warren, Kenneth

      Porter, Barry (Wirral S)

      Watts, John

      Porter, David (Waveney)

      Wells, Bowen

      Powell, William (Corby)

      Wheeler, Sir John

      Price, Sir David

      Whitney, Ray

      Raffan, Keith

      Widdecombe, Ann

      Raison, Rt Hon Timothy

      Wiggin, Jerry

      Rathbone, Tim

      Wilkinson, John

      Redwood, John

      Wilshire, David

      Rhodes James, Robert

      Winterton, Mrs Ann

      Riddick, Graham

      Winterton, Nicholas

      Ridsdale, Sir Julian

      Wolfson, Mark

      Roberts, Sir Wyn (Conwy)

      Woodcock, Dr. Mike

      Roe, Mrs Marion

      Yeo, Tim

      Rossi, Sir Hugh

      Young, Sir George (Acton)

      Rost, Peter

      Rowe, Andrew

      Tellers for the Noes:

      Rumbold, Mrs Angela

      Mr. Tom Sackville and

      Ryder, Richard

      Mr. Nicholas Baker.

      Scott, Rt Hon Nicholas

      Division No. 294]

      [9.36 pm

      AYES

      Barnes, Mrs Rosie (Greenwich)

      Livsey, Richard

      Beith, A. J.

      Michie, Mrs Ray (Arg'l & Bute)

      Campbell, Menzies (Fife NE)

      Skinner, Dennis

      Cohen, Harry

      Taylor, Matthew (Truro)

      Cryer, Bob

      Wallace, James

      Fearn, Ronald

      Howells, Geraint

      Tellers for the Ayes:

      Kennedy, Charles

      Mr. Alex Carlile and

      Kirkwood, Archy

      Mr. Simon Hughes.

      Lambie, David

      Question accordingly negatived.

    New clause 8

      BUSINESS PROPERTY RELIEF 100 PER CENT.
      'Section 104 of the Inheritance Act 1984 shall be amended by deleting the sub-paragraphs numbered (a) and (b) and by substituting therefor the words "by one hundred per cent.".'. —[Mr. William Powell.]
      Brought up, and read the First time.
      Mr. William Powell: I beg to move, That the clause be read a Second time.
      New clause 8 concerns the relief that I claim should be given against inheritance tax in respect of shares in long-term unquoted, usually family, businesses. I act as an adviser to the Unquoted Companies Group, and the debate is essentially about the taxation of the shares in unquoted companies. [Interruption.]
      Mr. Speaker: Order. Hon. Members below the Gangway should either come into the Chamber or hold their conversations outside.
      Mr. Powell: I pay tribute to the Government for the relief that they have given during the past decade to unquoted companies. There has been a significant reduction in the burden of taxation, especially as it applies to the bottom of the scale. However, when a company's assets are worth £250,000 or more, there is little reduction, if any, in its compulsory tax burden.
      New clause 8 concerns the taxation of business assets. I do not propose to talk about agricultural assets, although I concede that the same principle of the new clause might be expected to apply. If the principle of the new clause is accepted, it will be necessary to extend it to agricultural assets.
      Long-term, unquoted family businesses have an important part to play in the British economy. They already play a major role, and should be encouraged to continue to do so. Unquoted companies fall into two categories. One comprises unquoted companies whose prevailing ambition is to become quoted. I am talking not about those companies, or those that intend to move to a quotation on the stock exchange as soon as it is convenient and expedient to do so, but about companies which do not
      770
      intend to do that. The present tax system encourages them to go to the market for a quotation rather than remain long-term family businesses.
      Many such businesses have existed for generations. Hon. Members will be aware of family companies that have existed for six or more generations. All those companies face a threat because of the burden imposed by inheritance tax. It is a substantial burden for medium sized companies. The inheritance tax can usually only be paid out of the active assets of a particular company as the main assets of the taxpayer are the shares in that unquoted company. To meet the inheritance tax bill it is therefore necessary to sell those shares, and that usually means selling them to a quoted company. The larger the company, the more certain it is that it will be taken over by a quoted company. That is not necessarily of benefit to anyone.
      Unquoted companies have a strong presence in our regions, but quoted companies have not and, unlike unquoted companies, many have metropolitan headquarters. Unquoted companies are not looking all the time for the latest valuation of their shares and their managers are managing not in the interests of that valuation, but in the long-term interests of that company.
      There is substantial evidence to suggest that the inheritance tax acts as a deterrent to the growth of unquoted companies. I know of several companies that have deliberately restricted their activities because, were they to grow further, they would be unable to fund any potential inheritance tax bill without selling company shares. Those companies would pass out of family control into the quoted sector, usually to a rival, and, in all likelihood, would be closed in due course. That has happened over and over again in the past 20 years.
      The Government have been extremely successful in stimulating new businesses—scheme after scheme has enabled new companies to develop. Those new family businesses, however, will last one generation only unless something can be done to mitigate the potential tax burden posed by the inheritance tax.
      It is important to stress that long-term family businesses must select who is to take over within their group. It is possible to make a lifetime gift of assets and, if that has been in existence for seven years, those assets are exempt from the payment of tax. To allow a tax law that involves such a lottery to govern the management of a corporate business is extremely misguided. The suitable person to inherit the assets is not necessarily known until comparatively late in the life of the existing owner of the shares. He or she may die within the seven years and then the tax liability is due.
      The disposal of a company is different from the disposal of a picture or other inheritance, and that is why it is wrong that the selection of a suitable heir should depend upon the whim of whether someone lives for seven years or more. That is not a suitable way to reach such decisions. I understand from discussions that we have had on the Finance Bill—parliamentary questions do not seem to have changed this—that, if the new clause were accepted, the annual cost would be about £20 million a year. I see that my hon. Friend the Economic Secretary agrees. Therefore, it is not the case that huge sums of taxpayers' money would not accrue to the Exchequer if the new clause were passed. But, if it were passed, the prospects of more long-term family businesses growing to their full maturity

      771
      and yielding much greater sums than £20 million to the Exchequer, in corporation tax and so on, would be substantial.
      We are in danger of seeing, yet again, the growth of companies, but of that danger being restricted because the companies are restricted to one generation. We should not allow that. That is why I say to my hon. Friend the Economic Secretary that the time has come for the Government to look afresh at the matter and to bring forward proposals, if they do not like mine, to enable that threat to the existence of such companies to be removed.
      Mr. Nicholas Brown: The hon. Member for Corby (Mr. Powell) has not made a persuasive case. The Register of Members' Interests states that he is employed as an adviser to the Unquoted Companies Group, which I suppose includes companies that would benefit from the handout of £20 million—the figure that is universally accepted as the sum asked for in new clause 8. If the Treasury has £20 million to give away, is that the most appropriate way to do it? Are there not more deserving causes that should come first? That is a reasonable question for the House to ask and the answer from the Opposition is yes; I suspect that the Economic Secretary's answer would also be yes. I do not recommend the new clause to my hon. Friends.
      The hon. Member for Corby mentioned the period of seven years but once, and it may not be precisely clear that that period is significant. Therefore, it may be helpful if I spell out exactly what his proposal would entail. At present, inheritance tax is not payable when a business is transferred, whether by way of a gift of business assets or shares in the company that owns the business, if the transfer survives seven years.
      The new clause addresses the issue of the seven-year period because for transfers on death or where the transfer does not survive seven years, inheritance tax is chargeable at 40 per cent. on the value transferred, subject to relief under section 104 of the Inheritance Tax Act 1984. That relief is a reduction in the value taxed at 50 per cent. or 30 per cent., depending on the amounts, thus reducing the effective rate of inheritance tax to 20 or 28 per cent. The amendment proposes to make that reduction 100 per cent. and so stop inheritance tax being charged on any transfer of businesses. That is an extensive and radical proposal, and certainly not one I could recommend to my hon. Friends.
      The Economic Secretary has no doubt picked up a further point. The new clause talks about the "Inheritance Act 1984", but what is being addressed is the Inheritance Tax Act 1984, a different piece of legislation not specified in the new clause. Therefore, the new clause is technically defective, but that is not the reason to oppose it. We oppose it because it is wrong.
      Sir William Clark: I support my hon. Friend the Member for Corby (Mr. Powell). There is no question but that the Government have done quite a lot for unquoted companies. It was quite churlish of the hon. Member for Newcastle upon Tyne, East (Mr. Brown) to refer to my hon. Friend's consultancy in such a sneering way.
      Mr. Brown: The right hon. Gentleman accuses me of sneering. I was doing nothing of the sort. I referred to the consultancy simply to put it on record. If I had an interest, I would put it on record and I suggest that Conservative Members do the same. We have already had rows across
      772
      the Floor of the House about this very matter. It is not a matter for sneering; it is a question of the accuracy of the record to ensure that people who read the record and follow our debates on television, on the radio and in newspapers know precisely the full extent of Members' interests.
      10 pm
      Sir William Clark: My hon. Friend the Member for Corby was talking about the entrepreneurial expertise that exists in Britain and the number of small businesses that have grown up over the years. The Morris motor company at Nuffield was built up into a tremendously large business. I am not so sure whether that would have happened had there been inheritance tax then. Obviously, under no circumstances could the new clause be accepted this year, but the Government have a good record in cancelling taxation that was introduced by Labour Governments, such as the selective employment tax and development land tax. We have done a tremendous amount to build up small businesses under the business expansion scheme and so on. I agree with my hon. Friend the Member for Corby that those running family businesses are afraid of expansion, because if the value of the business increased and someone died, it would attract inheritance tax. Whether it is discounted at 30 per cent. is immaterial, but it could lead to the curtailment of profit for some of those companies.
      Although the cost of abolishing the tax is somewhere in the region of £20 million, I am convinced that if many of those companies were allowed to expand without the fear of inheritance tax hanging over them, the corporation tax take by the Inland Revenue would probably exceed £20 million.
      Obviously, my hon. Friend's new clause cannot be accepted this year, but the Government should consider it sympathetically as in future we will have to do something about inheritance tax involving such companies and generally as it is acting against the production of wealth in Britain.
      Mr. Ryder: At the beginning of this short debate there was a great deal of noise at the Bar of the House. My hon. Friend the Member for Corby (Mr. Powell) declared his interest as a representative of the Unquoted Companies Group, but it was difficult to hear him, because of the noise.
      I pay tribute to the work that my hon. Friend does for the UCG. I recall a most useful meeting a few months ago with the UCG to discuss a range of issues. As my hon. Friend and the House know, we all want to encourage people of enterprise to set up businesses, but we have never accepted that, simply because the property of an estate is held in the form of business assets, it should escape tax altogether. That would be going to the other extreme.
      There can be a particular problem involving tax on businesses. A taxable estate that includes business assets might not have sufficient liquid resources available to meet the tax. Special rules of business property relief and the similar ones to which my hon. Friend the Member for Corby alluded which apply to agricultural property recognise that. The purpose of business property relief is to ensure that if such circumstances were to arise, the tax bill could be paid without damaging the existence or development of that particular business. It is not intended to give a privileged exemption.

      773
      I share the view of my hon. Friend the Member for Corby and my right hon. Friend the Member for Croydon, South (Sir W. Clark) about the vital contribution that family businesses make to the economy. I am conscious of the need to prevent the tax from restricting their ability to survive and flourish, but the wider question is whether we are doing enough for businesses. When the relief was first introduced under capital transfer tax it was limited to interests in unincorporated businesses and controlling shareholdings and assets used in but held outside businesses. Since then, the relief has been improved more than once. In 1978, the rate was increased from 30 to 50 per cent. and a new lower rate of 20 per cent. was introduced for minority shareholdings in unquoted companies. In 1983, that was raised to 30 per cent., since when the relief has continued to apply at two rates. In 1987, the higher rate was extended to minority unquoted holdings of more than 25 per cent.
      In addition to the improvements to business relief, since 1979 we have done much to improve the tax charge on the business sector more generally—that point was acknowledged by my hon. Friend the Member for Corby and my right hon. Friend the Member for Croydon, South—by specific measures and more general reductions in the level of the charge. In particular, the abolition in 1986 of the lifetime charge on gifts between individuals and in 1987 on those into interest in possession trusts meant that owners of family businesses could hand over their businesses to the next generation without an immediate charge to inheritance tax. Where those owners survive seven years, there is no death charge on gifts.
      That change has been generally welcomed by business men for the freedom and flexibility that it provides. The abolition of the lifetime charge reduced another tax constraint on wealth creation and encourages owners of productive assets to pass them to younger hands rather than to hold on to them into old age. The Government's intention is to encourage that lifetime giving of business assets. The new clause would remove the incentive in the present system because it would give double the present relief for assets held until death.
      In 1988, we replaced the four rates for inheritance tax with a single rate of 40 per cent. Therefore, where inheritance tax becomes payable on family businesses, the effective rate will never be more than 28 per cent., even for a tiny holding in an unquoted company. For most family businesses, the effective rate will not be higher than 20 per cent., and those effective rates are among the lowest of our trading partners.
      It is important to maintain a balance between the tax burden on people whose possessions consist of business assets and those who have other property. As my hon. Friend the Member for Corby knows, these matters are kept under constant review. My right hon. Friend the Member for Croydon, South asked us to ensure that they are reviewed for next year's Finance Bill. I give them both an undertaking that we shall consider what they have said when we prepare next year's Bill.
      Mr. William Powell: I am grateful to my hon. Friend the Economic Secretary for that undertaking and for the way in which he set out the substantial improvements that have been made in the taxation of assets in the past decade.
      774
      The short debate has been extremely useful. When the hon. Member for Newcastle upon Tyne, East (Mr. Brown) reads the record tomorrow, he will see that from the outset I declared my interest in this matter. The hon. Gentleman's speech will be widely scrutinised because the Labour party is trying to pretend that it has changed and that it is not the Labour party of high taxation and destruction of business that it used to be. Hundreds of thousands of unquoted family businesses will read his remarks and realise that little has changed. They will deplore the line that he chose to take in the debate.
      Mr. Nicholas Brown: Let me make two points. First, if I missed the declaration of interest by the hon. Member for Corby (Mr. Powell) at the beginning of his speech, I apologise to him. As was pointed out by the Economic Secretary, there was a lot of noise at the Bar of the House. I shall check Hansard tomorrow—as, no doubt, will the hon. Gentleman—but if I missed what he said I unreservedly apologise to him. My hon. Friends and I believe that it is right for matters to be spelt out and placed on the record in a way that did not always happen when the Bill was in Committee.
      Secondly, if the hon. Member for Corby thinks that he can go around the country attacking the Labour party for opposing the concession that he seeks from the House, he will have to explain why the Government will not give him the concession either.
      Mr. Powell: I agree with the hon. Gentleman's first point: interests should always be declared. It has always been—and will continue to be—my unvarying practice to declare my interest, and the record will show that I did so in my opening remarks. As for the attitude of the Labour party, the hon. Gentleman will have to stand by what he said, which will be greeted with dismay by the owners of unquoted family businesses who were hoping for a more enlightened attitude from the official Opposition.
      I am grateful to my right hon. Friend the Member for Croydon, South (Sir W. Clark) for his support. As my hon. Friend the Economic Secretary said, matters must remain open, and he and Treasury Ministers must expect to receive continuing representations. Although the burden of taxation has been reduced, it still represents a long-term continuing threat to what is a necessary and important part of economic life in this country.
      I beg to ask leave to withdraw the motion.
      Motion and clause, by leave, withdrawn.

    New clause 13

      AMATEUR SPORT (RELIEF)
      'Notwithstanding the provisions of section 505 of the Income and Corporation Taxes Act 1988, a non-profit making body, club or institution which has as its principal purpose the promotion, encouragement or provision of facilities for amateur sport shall be eligible for relief under that section, and consequent classification as a recognised body for the purposes of Part I of that Act.'.—[Mr. Menzies Campbell.]
      Brought up, and read the First time.
      Mr. Menzies Campbell: I beg to move, That the clause be read a Second time.
      The new clause is yet another attempt by hon. Members who have an interest in amateur sport to bring about a

      775
      recognition of amateur sport that would have the effect of admitting it to the kind of tax position that charitable activities now enjoy.
      Two years ago, when an earlier Finance Bill was on Report, we had a most constructive and interesting debate in which a number of former Ministers for Sport took part. Considerable sympathy was evinced by Treasury Ministers towards the proposition then before the House. If my recollection is correct, an undertaking was given that it would be further considered. The First Scottish Standing Committee recently considered the matter, and I observe from the report of the Committee stage of the Finance Bill that it was ventilated there as well. However, in spite of those opportunities and promises of consideration and the sympathy given to the idea, so far it does not appear to have recommended itself to the Government. Certainly they have made no move to make it law.
      I should declare an interest: I am a governor of the Scottish Sports Aid Foundation and a trustee of the Scottish Sports Aid Trust. If what the new clause proposes were to pass into law, I would derive no financial benefit, but my fellow trustees and I would be in a position to give additional assistance beyond that which we now can give to promising sportsmen and sportswomen in Scotland.
      I move the clause with a sense of responsibility and, to some extent, privilege. If I, with others, were successful in persuading the Government to accept the clause, I would regard it as some recompense for the great contribution that sport has made to my life. It has been of great importance to me throughout my life: it has given me great pleasure and continues to do so, although these days it is the somewhat more passive pleasure of observing Mr. David Sole and his 14 Scottish companions winning the grand slam with a display of character and robustness that many people in Scotland felt was a proper reflection of the Scottish character. Mr. Sole and his friends were invited to a number of receptions, such as those at No. 10 Downing street and Edinburgh castle, and they were feted for their great achievement. However, I suspect that they would regard the passing into law of my proposal as a far greater recognition of their efforts than all the receptions and parties to which they were invited.
      Many sports clubs, institutions and associations make a truly valuable contribution to the well-being of the community. They provide opportunities for the young, the middle-aged and the not-so-young to participate in sport, to remain healthy and to have a competitive interest. Nothing could be more in the interests of the community than that such clubs should continue. However, they are not yet eligible for the relief which recognition by the Revenue would afford them. For some such clubs the sums are extremely small in real terms, but in the budgets of the clubs and institutions they are sometimes of great significance.
      I have concentrated on local sports clubs because they are the backbone of amateur sport in Britain. Following disputes in education, the need for local sports clubs has perhaps never been as acute as it is now. For reasons which we need not dwell upon, many schoolteachers now find themselves unable or unwilling to make the commitment and give the time that they previously felt able to give. Consequently, the responsibility for the introduction of young people to a whole range of sports which was previously in part shared by schools and teachers now rests to a far greater extent on the voluntary effort of local amateur sports clubs.
      10.15 pm
      Mr. Beith: I hope that my hon. and learned Friend will commend those schoolteachers who are still giving up their time voluntarily and beyond the call of duty to maintain school sports, not least those who assisted my son and his under-14 team to win today the county cricket championship for his age group.
      Mr. Campbell: I have no doubt that that intervention will be reported in some local newspapers. I have the honour to be the honorary president of the Scottish Schools Athletics Association and know well the contribution that many schoolteachers continue to make to school sports. I fully recognise the force of my hon. Friend's intervention.
      Many of the clubs that I have mentioned struggle to exist. Often they remain in existence only because of the efforts of two or three dedicated people who sometimes work more hours for nothing on behalf of their local club as treasurer, secretary or fixtures secretary than they work in their everyday jobs. The case for sport enjoying charitable status is overwhelming. The new clause seeks to recognise contribution and voluntary effort. It seeks to make that effort yet more effective and to remove from those clubs the responsibility of paying tax.
      The voluntary work and effort that goes into these clubs helps to relieve the financial burden that might otherwise fall on local authorities. It would be right for the House to do more to help those who help themselves to run sporting organisations. If accepted, the clause would make a substantial contribution in that direction. The clause covers the whole of the United Kingdom and would be confined to clubs, bodies or institutions whose principal purpose was the encouragement of the provision of amateur sport. Therefore, it could not be abused.
      The clause makes clear the terms on which a club or institution would be eligible for recognition. It would not follow automatically that it would be recognised. It does not make relief compulsory. The Revenue would have to be satisfied that the club or institution was entitled to the relief that it sought. The Revenue would have the right to determine whether the proposal was being abused.
      Estimates of the cost of the measure vary from £10 million to as much as £50 million. The proper approach to the matter is to say that, whatever the amount, if such relief were to be granted, it would constitute a substantial investment in amateur sport. Whatever the amount of the investment, the dividends realised would be a most generous return and a recognition of the efforts of many voluntary unpaid officials. It would be an expression of the extent to which the importance of sport is acknowledged by the community.
      Mr. Bob Cryer: I am following closely the argument of the hon. and learned Gentleman and I am not unsympathetic to it. He will know that many sporting clubs—for example, cricket clubs—have social facilities, including bars, which generate a good income. Would there be a distinction between a genuine sporting club that did not have that source of income and the fairly well-placed clubs, financially, with social facilities, including bars, which do not really need the relief that the hon. and learned Gentleman is advocating?
      Mr. Campbell: The principal purpose of the club under the new clause would have to be the "promotion" and

      777
      "encouragement … of amateur sport". If there were any suggestion that that was not its principal purpose, the club would not be entitled to relief.
      There is some uncertainty about the income that is derived from bars. There is the view that if the purchase of drink in a bar is confined to the members of the club, it cannot be said, under the mutual trading rules, that the members are making a profit out of themselves. The issue of whether clubs with bars would fall under the provisions which the clause embraces would depend on the extent to which the principal activity of the club was the provision of facilities for the "encouragement … of amateur sport" and whether the social facilities, including the bar facilities, were conducted for the benefit of members and not for another purpose. I hope that the hon. Gentleman will regard that as a sufficient answer to his question.
      Mr. John Carlisle: I take up the question of the hon. Member for Bradford, South (Mr. Cryer) and refer the hon. and learned Member for Fife, North-East (Mr. Campbell) to his remarks about David Sole, of the Scottish rugby team, and the position of amateur rugby clubs and many so-called amateur soccer sides. Does the hon. and learned Gentleman recognise that the new clause may fall foul of his strictures? It can be proved in so many instances in amateur sport, and especially in rugby, that players receive some form of payment. In Wales, in colloquial terms, there is boot money. Professional coaches have been appointed by so-called amateur rugby clubs. I am sympathetic to the aims of the hon. and learned Gentleman, but I feel that he could run into trouble by taking a broad brush to amateur sport and including rugby, which he and I and the rest of the House know is not an entirely amateur sport.
      Mr. Campbell: I hope that the hon. Gentleman will carry his sympathy in a concrete fashion and will support me if there is a Division on the new clause.
      To the best of my knowledge, Mr. David Sole and his colleagues are not professional. As I understand it, they are not in receipt of any funds for their international participation. I know of no rugby football club in Scotland, or anywhere else, that does not have a continuing problem of balancing the books at the end of any year. Had the hon. Gentleman paid his usual diligent attention to the proceedings of the First Scottish Standing Committee, he would be aware of the observations of a former Minister for Sport, the hon. Member for Dumfries (Sir H. Monro), who has an intimate knowledge of rugby football, not least because he is a former president of the Scottish Rugby Union. The hon. Member for Dumfries explained just how considerable are the financial obligations of many clubs, especially rugby clubs.
      The issues are well known to the House. For my purposes, they have been sufficiently well canvassed. I beg leave to have a certain amount of optimism that we shall receive something rather more than sympathy from those on the Treasury Bench and a signal that there is an appreciation of how important the issue is and how important it would be to many amateur sports clubs throughout the country if the new clause were agreed to.
      Mr. John Carlisle: I hesitate to intervene, but I wish to take up the point that has just been made by the hon. and learned Member for Fife, North-East (Mr. Campbell). The
      778
      answer that he gave me a few moments ago did not cover English and Welsh rugby. He paraded his clause as though it applied to the whole of the United Kingdom, as does the Finance Bill, but he concentrated on Scottish rugby. Both the hon. and learned Gentleman and my hon. Friend the Member for Dumfries (Sir H. Monro) have consistently argued that it does not receive the type of payments that I described earlier. Therefore, his clause is flawed, because amateurs may not exist. If his clause were to be accepted by my hon. Friends and some Opposition Members, he would have to define who is an amateur. The majority of sports, especially those seen on television, receive substantial payments. They would therefore fall foul of his clause. On that point alone, the clause is flawed.
      Mr. Campbell: Does the hon. Gentleman think that the British Olympic Association should have to pay tax?
      Mr. Carlisle: The hon. and learned Gentleman sticks to the sport that he knows. However, he began his speech by saying that the new clause would encompass rugby. He referred to David Sole. The hon. and learned Gentleman has a distinguished track record. Therefore, he knows that what used to be known as the British Amateur Athletic Association receives substantial sums of money from sponsors. Individual athletes receive enormous prizes, some of which are money prizes. I hesitate to suggest that the hon. and learned Gentleman may be naive, but he is wrong to ask the House to accept that all amateur sport is truly amateur sport.
      I sympathise broadly with the hon. and learned Gentleman's argument. His new clause may be aimed at the smaller clubs. They need some financial assistance from the Treasury and a more sympathetic ear. Whether that assistance will be provided by this Finance Bill or a future Finance Bill is another matter. Many thousands of men and women give their services voluntarily to sport and do their best to keep many clubs afloat. Many of them are in severe financial difficulties because of the old rating system, and even the new uniform business rate. The Government have offered some relief, but it has not been taken up by local authorities.
      Sport is based on small clubs and to a certain extent on schools. It is tragic that many sports clubs have fallen by the wayside and are not attracting young participants because schools, for the reasons that the hon. and learned Gentleman described, are unable to provide the expert teaching and facilities that are needed. The hon. and learned Gentleman's ideas must be considered sympathetically. When we have been able to define who amateurs are, that sympathy may turn into assistance. However, the broad brush approach that he has adopted in the new clause will not attract much support on this side of the House.
      10.30 pm
      Mr. Brian Wilson: I will not pursue what I can describe only as the casuistry of the hon. Member for Luton, North (Mr. Carlisle) in trying to get bogged down in definitions of amateurism. Clearly, the spirit of the clause leaves it to the judgment of the Charity Commissioners in England, and, presumably, to the Lord Advocate in Scotland, to find out whether the club satisfies the criteria for advancing amateur sport. As the hon. Member for Luton, North knows, if the argument about which club or which members are amateur is to be pursued

      779
      before such a clause is passed, we will be arguing until doomsday, with the desirable side effect, in his opinion, of nothing ever happening.
      In offering his sympathy for the new clause, the hon. Member dispenses a commodity which is remarkably cheap and which has been around for some time on this issue. The issue was debated on 5 July, in Committee on the Law Reform (Miscellaneous Provisions) (Scotland) Bill. On that occasion, the hon. Member for Edinburgh, West (Lord James Douglas-Hamilton), the Under-Secretary of State for Scotland, offered sympathy in abundance:
      "I am not unsympathetic to the aims of the clause but I would prefer to bring the matter to the attention of Treasury Ministers and to discuss it with them."—[Official Report, First Scottish Standing Committee, 5 July 1990; c. 542.]
      We know that some Treasury Ministers have been busy since, but I wonder whether the Under-Secretary of State has had time to discuss the matter with the Treasury Minister.
      The Under-Secretary of State put the cost of the measure for the United Kingdom at £50 million. That is what it would cost the Inland Revenue if it were to be approved. He said that it is not section 505 of the Income and Corporation Taxes Act 1988 which poses the obstruction to the extension of charitable status to sports clubs but the terms set out in the Pemsel case for the definition of charity. Those terms are the relief of poverty, the advancement of education, the advancement of religion or other purposes beneficial to the community. Those definitions are far from set in tablets of stone. They are capable of being amended to take account of changing social circumstances or of desirable social ends. There are manifest grounds for doing so in the present context.
      There is another definition which we have to get round and which has to be cast aside in the argument: that is what has been termed the doctrine of "mere sport". That stems from the Nottage case in 1895, which is one of the benchmark cases in the definition of charities and the exclusion of sport. On that occasion, Lord Justice Lopes said:
      "a gift, the object of which is the encouragement of a mere sport or game primarily calculated to amuse individuals apart from the community at large, cannot upon the authorities be held to be charitable, though such a sport or game is to some extent beneficial to the public … If we were to hold the gift before us to be charitable we should open a very wide door for it would then"—
      horror of horrors—
      "be difficult to say that gifts for promoting bicycling, cricket, football, lawn tennis, or any other outdoor game were not charitable for they promote the health and bodily well-being of the community."
      I would say, "Well, exactly." Those are precisely the reasons why those activities should, in their amateur form, be eligible for charitable status. That may not have been obvious to Lord Justice Lopes in 1895, but to most people looking around society today it should be manifestly obvious.
      It should also be obvious that the £50 million which the Exchequer might lose through this measure would not be a loss in a meaningful sense but an investment. Every £1 million spent on the promotion of amateur sport and encouraging young people to take up healthy pursuits or on equipment and facilities in which to pursue such activities is several pounds saved in terms of anti-social
      780
      behaviour, vandalism and the other activities that young people will find to engage in if such provisions are not available to them.
      Any society that invests in its young people would put much more money into sport and leisure activities than ours does. The Government pay lip service to sport to try to get political mileage out of it whenever the opportunity presents itself. This is an opportunity to put something into sport.
      The "floodgates" about which Lord Justice Lopes was so concerned have already begun to let through a trickle via court judgments. There is an unexpected symbol of liberalism in this debate in the person of Lord Hailsham. In Inland Revenue Commissioners v. McMullen in 1981, he observed that the legal conception of charity and the educated man's ideas about education are not static but evolve with the changing ideas about social values. With one leap, casting aside the views of lower courts, Lord Hailsham and his colleagues were prepared to extend charitable status to the Football Association Youth Trust. It is interesting to note the grounds on which the decision was reached. A report of the case stated:
      "The trust was one which was 'to organise or provide or assist in the organisation and provision of facilities which will enable and encourage pupils of schools and universities in any part of the United Kingdom to play association football or other games or sports' in such a way as ' to assist in ensuring that due attention is given to the development of such pupils as well to the development and occupation of their minds'."
      That is exactly the purpose for which sports clubs, organisations and ruling bodies exist in—I stress—their amateur form. If the spirit of the McMullen case were extended to sport in general, it would meet the aims of the new clause. The Government should make that leap.
      However, there was a caveat. Even in the McMullen case, sport was to be given that status not in its own right but as an adjunct to education. We can again see the elitism. According to the report:
      "Lord Hailsham explained that he was not deciding even that a gift for physical education per se and not associated with persons of school age or just above would necessarily be a good charitable gift."
      The McMullen case was tied specifically to the fact that this sport took place within the school or university context. That is illogical. We are talking about social need and about the social benefit that sport can provide. In many communities, by definition sport takes place at places other than schools and universities. The places that most need sports facilities and active sports clubs and voluntary organisations are unlikely to have universities sitting in the middle of them.
      According to the McMullen judgment, the only place to which charitable status can be extended is within the context of schools and universities. That anomaly should be corrected. The fact that youngsters are out working from the age of 16, without access to higher or further education, should not be grounds for further discrimination against them, the clubs to which they belong and the pastimes that they wish to pursue.
      There is an overwhelming case for extending the definition of charitable status to include sports clubs. As long ago as 1976, the Goodman report recommended that
      "the encouragement of sport and recreation should be recognised as an independent charitable object provided the necessary elements of altruism and benefit to the community are present."
      I stress the word "independent". In the past, sport has occasionally crept in for charitable purposes, as in the

      781
      McMullen case, as an adjunct to education, army efficiency, improving social welfare or even religion. In the McMullen case, the Charity Commissioners and the House of Lords recognised that healthy sport improves the conditions of life, and that was sufficient grounds to extend charitable status to it.
      782
      If the Minister recognises tonight that, alongside other definitions of charity, sport is wholly worthy of charitable status, it would do the Government credit, give some credibility to their posturing support of sport, cost them very little and be an excellent social investment for all of us.
      Mr. Harry Greenway: There is much to be said for the amendment. I do not merely say that because my best man, Adrian Metcalfe, was in the great Olympic team with the hon. and learned Member for Fife, North-East (Mr. Campbell), who moved the amendment, so we have a close link. The hon. and learned Gentleman has put his finger on a most important and fundamental need in our society—to encourage amateur sport more.
      The current membership of the England Schools Football Association is much lower than it used to be. The number of participating schools in the London schools sport's organisations—I know them well, as I am president of two—has declined seriously over the past few years, which reflects the serious decline in sport in schools.
      I am keen on the clause for this reason more than any other. In some areas, only one primary school in eight plays cricket, in others no soccer or other team games are played, often because no teachers are willing to take part in activities out of school. That follows recent industrial disputes in schools, and it is a sad outcome. It is also a result of the movement, especially by left-wing education authorities—[Interruption.] The Labour party must face up to this and not start barracking. Well, they can barrack if they like, but I shall say it.
      The Inner London education authority, in its early days, did a great deal to establish sport—I worked with it throughout its existence, so I know it well—including competitive sport in schools. Then it went through a loony period, when it was dominated by the left wing of the Labour party and it opposed all competitive sport in schools. It set up a committee, headed by its own former senior physical education inspector, Professor Peter McIntosh as he became, which recommended that competitive sport be reintroduced to ILEA schools, but by then it was too late.
      Gifted boys and girls played no sport in London schools for 10 or 15 years because of the way that the Labour party behaved. It is a great tragedy. I remember one superb cricketer at Dick Sheppard School—a West Indian boy of about 15. The only cricket he could play at that school was with a bit of stick in the playground and a painted wicket against the wall, because the school would not allow competitive sport.
      Mr. Boateng indicated assent.
      Mr. Greenway: I am glad to see that the hon. Member nods his head in agreement. It is absolutely true.
      He could have played for England or the West Indies, whichever he qualified for. He was a fine boy, but he was denied cricket. If the new clause is successful, that would not happen again. I feel sure that he would be in Streatham cricket club or one of the many good clubs south of the river—there are many good clubs north of the river, too. Those clubs would be able to put more effort into encouraging youngsters into clubs and into their teams.
      It is imperative to recognise that children are competitive and need competitive sport. These games always take place under the supervision of highly qualified referees, who can curb and control any displays of bad temper. If the English soccer team had been underpinned by the playing of soccer in every school, we, not West Germany, would have been world champions.
      There is no sign that teachers will be paid to take schools out for sporting events. Some of us think that they never should be. Throughout my 23 years of teaching, I
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      took out a team every week and regarded it as part of my professional duties—I loved doing it, too. But many teachers will not do that unless they are paid for it. Perhaps they should be—but I do not think that they will be. So we have to look to the clubs to produce our future cricketers, tennis players, soccer players and rugby players. They need the support that they would get from Government acceptance of the new clause.
      10.45 pm
      Mr. Bob Cryer: The new clause has a great deal of merit. I must declare an interest, in that from the age of 11 or 12 onwards I was a member of a Bradford league cricket club. I have continued to take an interest in cricket to this day. The great days of Yorkshire cricket came about because of the enormous strength of league cricket in that county, which provided a superb nursery for the Yorkshire cricketers who formed the backbone of all the good pre and post-war English sides.
      Things have changed. I support some sort of tax concession for amateur clubs, whether they play cricket, soccer, or rugby league, a slowly growing sport in the north of England which should be encouraged. When I played for Saltaire in the Bradford league, the team was always handicapped because the beautiful ground in which the club played—Roberts park—was established by Sir Titus Salt, who owned the adjacent mill and the surrounding 800 or so houses. He was a strong temperance man, which meant that if the club had wished to do so it could not have sold alcohol to boost its proceeds in order to sustain the game of cricket.
      Some clubs in the various leagues provide a bar and derive a great deal of revenue from it. It would, of course, be up to the Revenue to determine whether the resources of a club came mainly from its bar facilities or from the sporting element; if from the former, presumably clubs would fail to obtain tax concessions. That seems fair.
      Many local authorities cannot afford to provide sporting facilities because their first priority must be to provide adequate wind and waterproof buildings—and textbooks and laboratory facilities to meet the needs of the national curriculum, for which they have a statutory obligation; so sporting facilities inevitably come lower down the list of priorities. Now more than ever there is a need for club facilities, because the schools are in some difficulty. My son, who, I need hardly add, went to a comprehensive school, wanted to play cricket at school throughout his time there, but he could not because the local authority could never produce the money necessary to lay on adequate drainage for the school playing fields.
      Clubs are currently being subverted to a degree, because the Government tell them to go out into the private sector to obtain support. The tobacco companies, for example, are not averse to providing money in an ironic combination in which we all support the use and development of sporting facilities because that generates good health and good physique—and a number of other qualities—but that is often brought about because of the financial aid given by the very companies that want to sell cigarettes, which have precisely the reverse effect, and cause huge costs to the national health service.
      If the provisions make amateur clubs more independent from the possibility of being subverted by dubious outside sponsorships, that is all to the good. If a club is promoting

      785
      either an amateur athletics team, which is to visit, say, a competition in London, it is tempting to receive £1,000 or £2,000 for support in the competition from a cigarette company, and it is hard to ignore such offers and to say, "We're going to stand on principle and won't accept the money." A tax concession will make the clubs that bit more independent, which is a very good thing.
      In the past two or three years, when we have seen soaring house prices and the development of speculative building, sports grounds have come under increasing threat. Clubs often decide to sell all or part of a ground and to reduce their facilities because they have been tempted by the big money that has been made available from that source. That has now diminished to an extent, but it is an ever-present threat.
      Saltaire, the club which I mentioned earlier, is under some threat—as is the park—from a possible trunk road development. The Government will not provide independent legal advice and representation for trunk road inquiries, but there is no reason why clubs should not have not financial comfort but some financial security that would enable them at least to meet such considerations with greater confidence than at the moment.
      Most of the amateur clubs that I know are struggling, week in, week out to make ends meet and to meet the expenses of promoting the sport with which they are involved because they love it. That is the basic reason. They are committed to it and want to encourage youngsters to enjoy the pleasure, skill and exuberance that people find either in participating in or watching sport—of whatever sort, be it rugby league, rugby union, soccer, cricket or hockey.
      The proposal has much merit and I shall be interested to hear whether the Government are to give it sympathetic consideration to the extent of accepting it. As has been said, sympathy is around in fairly large quantities in nearly every debate on tax matters and the House—and, more importantly, the sporting clubs outside—would welcome something more substantial. Provided there is the caveat of a definition that allows the Revenue to seek out the genuine cases, the new clause seems to have a good deal of merit.
      Dr. Marek: I shall be brief but I hope that my brevity will not be taken as a sign of lack of interest. The new clause is important. Both Opposition and Conservative Members agree that something needs to be done to encourage more people to take part in sport and to give them the opportunity to do so. That could be done by giving local authorities more powers and the ability perhaps to undertake more sporting enterprises in their areas. It could also be done by bringing sport within the charity net. That is what the new clause seeks to do.
      We on the Opposition Front Bench see difficulties with wording the new clause tightly enough to achieve the desired aims of the new clause and nothing more and to ensure that there are not too many loopholes. I shall be interested to hear what the Economic Secretary has to say, but I fear that the new clause drafted by the hon. and learned Member for Fife, North-East (Mr. Campbell) needs to be much longer.
      Charity law is in an unsatisfactory state. I know that the Government have proposed measures to reform it. Perhaps sport should be examined carefully as part of any
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      reorganisation of charity law. Sport could perhaps be brought in under a reformed charity law which could require, for example, that accounts would be vetted by the Charity Commissioners. If accounts were not submitted or were not in order, a body would not be allowed to call itself a charity.
      There are many difficulties in charity law. Clearly the law is not good enough at present. However, I do not wish to detract from the Opposition's general sympathy with the intentions behind the new clause. I said that I should be brief and I have been. I hope that the Economic Secretary will be able to give us some solace. If nothing can be done this time, perhaps the whole matter could be examined with a view to giving sport some encouragement in later Budgets.
      Mr. Ryder: I shall follow the example of the hon. Member for Wrexham (Dr. Marek) and be as brief as possible. Sport has always played a central part in my life, as it has in that of the hon. and learned Member for Fife, North-East (Mr. Campbell). However, I have never participated in any sport with anything approaching his distinction.
      As the hon. and learned Gentleman knows, section 505 of the Income and Corporation Taxes Act 1988 exempts from tax most sources of charity income, including investment income and trading income when the trade is exercised as a primary purpose of the charity or is carried out by beneficiaries of the charity. However, there is a further condition. The exemptions apply only if the income is used for charitable purposes.
      As the hon. Member for Wrexham surmised, the new clause is seriously defective in the way in which it seeks to achieve what I assume to be its intention. It attempts to bring certain bodies involved in amateur sport into section 505 of the Income and Corporation Taxes Act 1988 alongside charities. However, that would not be sufficient to secure tax exemption. To achieve that objective, the income of the amateur sporting bodies would have to be used for charitable purposes. It is a well-established principle, as several hon. Members have made clear, that sport and recreation as such are not charitable activities. Therefore, the new clause would have little or no effect as it is drafted.
      The case for providing a tax exemption for sporting bodies of various types has been considered many times in the past, as the hon. and learned Member for Fife, North-East observed and the hon. Member for Cunninghame, North (Mr. Wilson) emphasised with generous use of examples from the past.
      A new clause on associations engaged in encouraging the development of sport or in representational functions was tabled by my hon. Friend the Member for Bury St. Edmunds (Sir E. Griffiths). The hon. and learned Member for Fife, North-East mentioned it. That was two years ago during the Report stage of the Finance Bill. The hon. Member for Vauxhall (Miss Hoey) tabled a similar new clause in Committee.
      The Government receive many requests for tax exemption from a variety of bodies, and I do not deny that amateur sporting clubs are a worthy cause, as are most of the organisations that make such a request. They can all plead that they are deserving causes in one way or another, but the tax system is not, and never has been, a good way of judging their merits.

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      One of the problems faced by those who propose exemptions is defining their targets. In the case of sporting bodies, it is particularly difficult to draw a suitable boundary. Where does sport end and other recreational and leisure activities begin?
      11 pm
      Mr. Harry Greenway: It sounds as though my hon. Friend the Minister may not deal with the important argument of where children are to go if they cannot receive sports coaching and teaching at school. Does he accept that children are in every sense amateurs and that they would be assisted by the clause, were he able to accept it?
      Mr. Ryder: I listened carefully to my hon. Friend, but I am not sure of the relevance of his point to new clause 13.
      Does the definition of sport extend, for example, to chess; bridge, in which the hon. Member for Wrexham excels; fox hunting; tiddlywinks, which is a sport in which my hon. Friend the Member for Luton, North (Mr. Carlisle) excels; or even to synchronised swimming? As a Treasury Minister, I feel unable to pass judgment or to draw the line—and the terms of the new clause provide no help in trying to ensure a clear dividing line between sport and recreational or leisure activities.
      Mr. Wilson: Fortunately, to comply with the spirit if not the letter of the new clause, the Minister does not have to make any such judgment. It is only necessary to accept that the fourth condition, in pencil—that the activity should be to the benefit of the community—encompasses sport or leisure activities. That matter, as with the first three conditions, should be for the judgment of the bodies that control charities. There is no strict dividing line, but none is needed. An organisation's case would be judged, just as in the case of any organisation applying under the other three headings, on its merits. All that is needed is for the definition of activities of benefit to the community to be more generously interpreted, to allow at least sporting and leisure activities to be included.
      Mr. Ryder: If I interpret accurately the remarks of the hon. Member for Cunninghame, North, who is a Labour Front-Bench spokesman, he is asking us to change charity law to embrace sport. I do not know whether his comments amount to a commitment by the Labour party to do any such thing.
      Mr. Wilson: I speak as a member of the Labour Front Bench on Scottish matters, and I assure the Minister that in our deliberations on the Law Reform (Miscellaneous Provisions) (Scotland) Bill, which overhauls the law in respect of Scottish charities, my party supported the principle embraced by new clause 13, with the caveat that the cost implications should be identified before we could make any blanket commitment. It is important to obtain from the Minister tonight the same degree of commitment to the principle involved, rather than get bogged down in specifics.
      Mr. Ryder: The definition of a charity has been established by case law in the courts, which has confirmed that sport is not a charity. The Government stick by the decisions made by the courts and we have no present intention of changing charity law in that respect.
      The new clause would have no cost, but, because of the drafting defects I have described, the cost of exemption for bodies concerned with sport and recreation is difficult to
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      estimate. It would depend on how the definitional problems I have described were resolved. If I were to take a broad definition of sport and recreational activities, the cost could easily be the £50 million a year mentioned by the hon. and learned Member for Fife, North-East.
      Amateur sporting clubs unquestionably provide a great deal of pleasure to people. However, I cannot recommend that my hon. Friends should accept the new clause.
      Mr. Cryer: If the Minister rejects the new clause, is he prepared to introduce regulations on it? Given the massive amount of legislation already approved by the House, I am sure that the Treasury has powers of delegated legislation. It has never baulked at providing definitions when that has suited its purpose. I do not agree with the reasons that the Minister has given for not accepting the new clause, but surely he would be prepared to introduce a draft statutory instrument to encapsulate our ideas on definition. At least that would show that the Government have some sympathy with our argument.
      Mr. Ryder: My answer is similar to that which I gave to the hon. Member for Cunninghame, North—at present the Government do not have any plans to introduce a statutory instrument of the kind envisaged by the hon. Gentleman.
      For the reasons I have given during the course of the debate, I ask my hon. Friends to reject the new clause should the hon. and learned Member for Fife, North-East press it to a Division.
      Mr. Menzies Campbell: With the leave of the House I shall reply.
      In the argot of the summer game, the Minister has played a straight bat. I would have taken his comments about what he described as serious defects in the new clause with a little more enthusiasm had he gone on to say how much he supported the principle and how soon the Government would introduce a clause, which met all his criticisms and which would achieve the result sought by the new clause.
      The Government's reliance upon the law should be put in its proper context. The decision in Pemsel was taken in 1891 and I fancy that the notion of what is or is not the public interest for the benefit of the community has advanced since then. If there is concern about the demarcation between what might or might not fall on the side of charitable activity, the principle of the benefit of the community must be one that is open to interpretation, as is the argument on the promotion of education. I doubt whether amateur, sport would create greater problems than the existing four categories recognised in the decision in Pemsel.
      Whether the payment of rugby players would negate the effect of the clause is a matter of fact and circumstance in each case. If the principal activity of the club in question was to promote professional sport, clearly it would not be entitled to recognition. An obvious example of that argument—perhaps not so obvious to you, Madam Deputy Speaker—is the Greenock cricket club. It presently plays in the western union in Scotland and for this season it has engaged the services of Mr. Gordon Greenidge, a well-known West Indian cricketer. That dub is an amateur club and Mr. Greenidge is being paid because the club has gone out of its way to raise funds for that purpose. The amateur purposes of the club are not in any way affected by Mr. Greenidge's employment. That is

      789
      a clear case where, although someone is employed on a professional basis, the club's primary purpose remains amateur. In each case, it will be a case of fact and degree, just as it must be a question of fact and degree in respect of any activity that falls within the four categories recognised as charitable purposes as a result of the decision in Pemsel in 1891.
      It seems that the matter is of such importance that the House should have the chance to express its opinion, so I shall press it to a Division.
      Question put, That the clause be read a Second time:—
      The House divided: Ayes 26, Noes 145.

      Division No. 294]

      [9.36 pm

      AYES

      Barnes, Mrs Rosie (Greenwich)

      Livsey, Richard

      Beith, A. J.

      Michie, Mrs Ray (Arg'l & Bute)

      Campbell, Menzies (Fife NE)

      Skinner, Dennis

      Cohen, Harry

      Taylor, Matthew (Truro)

      Cryer, Bob

      Wallace, James

      Fearn, Ronald

      Howells, Geraint

      Tellers for the Ayes:

      Kennedy, Charles

      Mr. Alex Carlile and

      Kirkwood, Archy

      Mr. Simon Hughes.

      Lambie, David

      NOES

      Alexander, Richard

      Hague, William

      Alison, Rt Hon Michael

      Hamilton, Neil (Tatton)

      Amess, David

      Hanley, Jeremy

      Amos, Alan

      Hargreaves, A. (B'ham H'll Gr')

      Arnold, Jacques (Gravesham)

      Hargreaves, Ken (Hyndburn)

      Ashby, David

      Harris, David

      Aspinwall, Jack

      Hawkins, Christopher

      Atkinson, David

      Hayward, Robert

      Baker, Nicholas (Dorset N)

      Heathcoat-Amory, David

      Bellingham, Henry

      Hicks, Mrs Maureen (Wolv' NE)

      Bennett, Nicholas (Pembroke)

      Hicks, Robert (Cornwall SE)

      Benyon, W.

      Hind, Kenneth

      Bevan, David Gilroy

      Howard, Rt Hon Michael

      Blackburn, Dr John G.

      Howarth, G. (Cannock & B'wd)

      Blaker, Rt Hon Sir Peter

      Howe, Rt Hon Sir Geoffrey

      Body, Sir Richard

      Hughes, Robert G. (Harrow W)

      Boswell, Tim

      Hunter, Andrew

      Bowden, Gerald (Dulwich)

      Irvine, Michael

      Bowis, John

      Jack, Michael

      Braine, Rt Hon Sir Bernard

      Jackson, Robert

      Brazier, Julian

      Janman, Tim

      Brown, Michael (Brigg & CI't's)

      Johnson Smith, Sir Geoffrey

      Buck, Sir Antony

      Jopling, Rt Hon Michael

      Budgen, Nicholas

      Kellett-Bowman, Dame Elaine

      Burns, Simon

      Kilfedder, James

      Butcher, John

      King, Roger (B'ham N'thfield)

      Carlisle, John, (Luton N)

      King, Rt Hon Tom (Bridgwater)

      Carlisle, Kenneth (Lincoln)

      Knapman, Roger

      Carrington, Matthew

      Knight, Greg (Derby North)

      Carttiss, Michael

      Knight, Dame Jill (Edgbaston)

      Cash, William

      Lawrence, Ivan

      Chapman, Sydney

      Lennox-Boyd, Hon Mark

      Chope, Christopher

      Lightbown, David

      Clark, Dr Michael (Rochford)

      Lilley, Peter

      Clark, Sir W. (Croydon S)

      Lloyd, Sir Ian (Havant)

      Clarke, Rt Hon K. (Rushcliffe)

      McLoughlin, Patrick

      Coombs, Anthony (Wyre F'rest)

      Marlow, Tony

      Coombs, Simon (Swindon)

      Maxwell-Hyslop, Robin

      Cran, James

      Miller, Sir Hal

      Currie, Mrs Edwina

      Mills, Iain

      Davies, Q. (Stamf'd & Spald'g)

      Moate, Roger

      Davis, David (Boothferry)

      Monro, Sir Hector

      Day, Stephen

      Montgomery, Sir Fergus

      Devlin, Tim

      Morris, M (N'hampton S)

      Douglas-Hamilton, Lord James

      Morrison, Sir Charles

      Dover, Den

      Moss, Malcolm

      Dunn, Bob

      Moynihan, Hon Colin

      Durant, Tony

      Mudd, David

      Favell, Tony

      Neale, Gerrard

      Fenner, Dame Peggy

      Neubert, Michael

      Field, Barry (lsle of Wight)

      Newton, Rt Hon Tony

      Fishburn, John Dudley

      Nicholls, Patrick

      Fookes, Dame Janet

      Norris, Steve

      Forman, Nigel

      Onslow, Rt Hon Cranley

      Forsyth, Michael (Stirling)

      Oppenheim, Phillip

      Forth, Eric

      Page, Richard

      Franks, Cecil

      Paice, James

      Freeman, Roger

      Patnick, Irvine

      French, Douglas

      Pattie, Rt Hon Sir Geoffrey

      Gardiner, George

      Pawsey, James

      Garel-Jones, Tristan

      Porter, David (Waveney)

      Goodlad, Alastair

      Powell, William (Corby)

      Gow, Ian

      Price, Sir David

      Greenway, Harry (Ealing N)

      Raffan, Keith

      Greenway, John (Ryedale)

      Redwood, John

      Griffiths, Peter (Portsmouth N)

      Riddick, Graham

      769

      Roberts, Sir Wyn (Conwy)

      Thompson, Patrick (Norwich N)

      Roe, Mrs Marion

      Thorne, Neil

      Rowe, Andrew

      Thornton, Malcolm

      Rumbold, Mrs Angela

      Thurnham, Peter

      Ryder, Richard

      Twinn, Dr Ian

      Shaw, David (Dover)

      Viggers, Peter

      Shaw, Sir Giles (Pudsey)

      Waldegrave, Rt Hon William

      Shaw, Sir Michael (Scarb')

      Walden, George

      Shelton, Sir William

      Walker, Bill (T'side North)

      Shephard, Mrs G. (Norfolk SW)

      Waller, Gary

      Shepherd, Colin (Hereford)

      Wardle, Charles (Bexhill)

      Skeet, Sir Trevor

      Watts, John

      Smith, Tim (Beaconsfield)

      Wheeler, Sir John

      Spicer, Michael (S Worcs)

      Widdecombe, Ann

      Squire, Robin

      Wiggin, Jerry

      Stanbrook, Ivor

      Wilkinson, John

      Stanley, Rt Hon Sir John

      Winterton, Mrs Ann

      Stern, Michael

      Winterton, Nicholas

      Stevens, Lewis

      Wolfson, Mark

      Stewart, Allan (Eastwood)

      Wood, Timothy

      Stewart, Andy (Sherwood)

      Yeo, Tim

      Stradling Thomas, Sir John

      Summerson, Hugo

      Tellers for the Noes:

      Taylor, Ian (Esher)

      Sir Anthony Grant and

      Taylor, Teddy (S'end E)

      Mr. Jerry Hayes.

      Temple-Morris, Peter

      Division No. 295]

      [11.09 pm

      AYES

      Barnes, Harry (Derbyshire NE)

      Meale, Alan

      Beith, A. J.

      Michie, Mrs Ray (Arg'l & Bute)

      Campbell, Menzies (Fife NE)

      Nellist, Dave

      Carlile, Alex (Mont'g)

      Parry, Robert

      Cryer, Bob

      Pendry, Tom

      Dunnachie, Jimmy

      Primarolo, Dawn

      Godman, Dr Norman A.

      Skinner, Dennis

      Graham, Thomas

      Spearing, Nigel

      Home Robertson, John

      Steel, Rt Hon Sir David

      Howells, Geraint

      Taylor, Matthew (Truro)

      Hughes, Simon (Southwark)

      Wallace, James

      Kennedy, Charles

      Kirkwood, Archy

      Tellers for the Ayes:

      Lewis, Terry

      Mr. Richard Livsey and

      Martin, Michael J. (Springburn)

      Mr. Ronnie Fearn.

      Question accordingly negatived.

    Clause 4

      POOL BETTING DUTY
      Mr. Tom Pendry: I beg to move amendment No. 4, in page 2, line 36, leave out '40' and insert '37'.
      Madam Deputy Speaker: With this we may take Government amendment No. 1, and amendment No. 5, in page 2, line 38, leave out '28th May' and insert '5th April'.
      Mr. Pendry: I am aware that amendment No. 4 will not strike much of a chord with the Government. However, their amendment deals with my proposal in amendment No. 5—apart from replacing "5th April" with "6th April"—and meets the points that I made and my hon. Friends raised in Committee on 28 June. We are grateful for that: it seems that at long last there are some genuine football buffs in the Treasury team.
      I first raised the issue on the Floor of the House on 8 May. The Economic Secretary informed me then that he would enter into negotiations with the Football League and the pools promoters, and would make an announcement in the House shortly. He has now done precisely that. I am also grateful to him for giving me notice last Thursday of his intention to meet the points that I had put to him.
      I welcome the Government's sensible move. It is imperative that our football clubs be given as much as possible of the £100 million that the Government propose to provide over the next five years up front, so that they can meet the tough timetable laid down by Lord Justice Taylor for them to adapt their grounds to comply with the recommendations in his report. For some clubs taking part in the UEFA high-risk matches, the deadline could be as close as 1993, and for all first and second division clubs it is August 1994.

      791
      Unfortunately, the Treasury's good sense has not been matched in the Home Department, which has been guilty of appalling complacency and incompetence in its failure to set up the Football Licensing Authority in time to meet its own deadline—a failure that was admitted today in a letter to me from the Minister of State, Home Office, Earl Ferrers. I hope that the Home Secretary will ensure—as a matter of the utmost urgency—that that vital body is set up without delay so that work can begin on ground improvements. Already, I fear, a whole year has been lost from the timetable.
      We would be deluding ourselves—and every football supporter—if we believed that the Government's proposed reduction of the pool betting duty to 40 per cent. would be enough to address the financial problems that face our national game.
      Mr. Beith: As the Minister for Sport is present, would it not help us to consider the pool betting aspect if he intervened at some point—perhaps in the hon. Gentleman's speech—to tell us what on earth is happening about the setting up of this body?
      Mr. Pendry: Normally I would respond to such a question, but on this occasion I must come to the defence of the Minister for Sport. He has been stripped of most of his Football League responsibilities, which have been transferred to the Home Department. This time, at least, we can say that he is not responsible for the debacle. Nevertheless, I take the hon. Gentleman's point.
      As we know, the Government have reduced the betting levy to its 1982 level. The Government inherited from the previous Labour Government the level at which they are now pitching the levy. That move flew in the face of the recommendations of the 1978 Rothschild Royal Commission on gambling which carried out an in-depth study of the game's finances and argued at that time that the 40 per cent. betting levy was too high and that it should be lowered to 37 per cent. My amendment seeks to implement that recommendation.
      The Rothschild inquiry remains to this day the most systematic and thorough investigation into the finances of the game. Its recommendations have been strengthened by the Popplewell report on the Bradford disaster and Lord Justice Taylor's report on the Hillsborough disaster. If funds for football were important in 1978, they are vital now. However, the amendment is not just about funds for football. The House should consider the best way in which such funds should be administered. [Interruption.] Do I have the full support of my hon. Friend the Member for Bolsover (Mr. Skinner)?
      Mr. Dennis Skinner: My hon. Friend seems to want to know what we were talking about. We were discussing sport and I suggested that, according to conversations taking place between the Minister for Sport, who was on his knees, and the new Secretary of State for Employment, who is sitting on the rebel Bench in the place normally occupied by the ex-Prime Minister, the right hon. Member for Old Bexley and Sidcup (Mr. Heath), the former Secretary of State for Trade and Industry has a three-year ban in Europe.
      Mr. Pendry: I never doubted that my hon. Friend was following my speech and making pertinent comments across the Chamber.
      792
      We must act upon the royal commission's support for the establishment of a football levy board accountable to Parliament and with its chairman appointed by the Secretary of State. I readily accept that the Football Trust, which receives its funding from the pools promoters, has done much over the years to help the game, notably by its assistance in installing closed-circuit television at Football League grounds. That was a major factor in combating hooliganism. But surely no hon. Member thinks that that is the body to help bring about the necessary changes envisaged by Taylor and demanded by the Government.
      A levy board is the answer. The idea of such a board did not begin with Rothschild because its roots are to be found in the Chester report of 1968, which envisaged the state of the national game and recommended that a statutory body be set up to channel the money raised from the reduction of the betting levy to the football authorities. Rothschild enthusiastically endorsed that recommendation, saying:
      "There is no other way of achieving the objective of putting Association Football on a permanently sound footing."
      Not surprisingly, that proposal received widespread support in the House and throughout the game. On 13 May 1985 my right hon. Friend the Member for Birmingham, Small Heath (Mr. Howell) argued that such a move was essential. On 3 July 1985 my hon. Friend the Member for Bassetlaw (Mr. Ashton) said that it was the only answer to the problem of financing football. Three weeks later my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman) said it was the only solution. If that was the case before the Taylor report recommended improvements to safety at our grounds, how much more essential is it now? Such reasoning prompted me to table the amendment.
      In June 1986 I introduced a private Member's Bill which sought to establish a levy board. It received all-party backing and was supported not only by my right hon. Friend the Member for Small Heath, but by the hon. Members for Luton, North (Mr. Carlisle), for Broxtowe (Mr. Lester), for Cornwall, South-East (Mr. Hicks), for Staffordshire, Moorlands (Mr. Knox) and for Nottingham, East (Mr. Knowles). As recently as March 1987, my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) told a meeting in Fulham that money must be channelled into the game and that a football levy board should be set up to do it.
      As I have shown, such a board has all-party support and support within the game. On 30 January, when we debated Lord Justice Taylor's report, I said that my only criticism of Taylor was that his report did not fully consider the possible range of options for funding his recommendations. If he had gone into the matter in more depth, he would have found many supporters of my idea within football. I have the minutes of a meeting that I chaired in my capacity as chairman of the all-party football committee. Also involved were the Football Association, the Football League and the Professional Footballers Association. All concluded that a football levy board was the answer. I shall soon bring my remarks to an end, Madam Deputy Speaker, because I am aware of your perspicacity. I appreciate that you have allowed me to follow this line of argument for some time. I referred to the report of the Rothschild commission because I wished to connect the 37 per cent., for which I am asking, with a vehicle which I am sure the Government do not have in mind.

      793
      11.30 pm
      By following the recommendations of the Rothschild commission, the Government would make available to football an extra £220 million over the next five years. That would be an addition of £120 million to the sum which is proposed. That may seem to be overly generous to some hon. Members, who may not be familiar with the latest estimates of the costs of implementing Lord Justice Taylor's proposals. I ask those hon. Members to reflect that, when the Government announced their decision to reduce the levy to 40 per cent., it was believed that the bill would be about £130 million. Since then, further research undertaken by the football authorities has revealed that to bring grounds up to the standards outlined in the full Taylor report four or five times that sum will be required.
      There must be a transformation of the conditions that are offered to football supporters and not merely the meeting of minimum standards. Anything less would be to repeat the mistakes of the past, which were so heavily criticised by Lord Justice Taylor in his report. The condition that the Government should place on football for increasing revenue should be that it makes its grounds community grounds.
      The House should be aware that the financial demands that are placed upon football do not stem solely from the demand for ground improvements. There is a crisis within the game that stems from the rocketing of the bills for the policing of matches in recent years. Charges for policing increased by 13 per cent. in 1987–88, and again by 23.2 per cent. in the season 1988–89, to stand at a record £4.1 million. However, arrests at or near grounds have declined quite markedly over the past three years.
      On 19 June, I asked the Under-Secretary of State for the Home Department to tell me the total charge that was levied on clubs for policing during the 1989–90 season. The Minister stated that such information was not collected centrally by the Government and that the Football Trust had not yet published a figure for that season. I can tell the Government and the trust that the total bill for the policing of league matches last season was £6,205,000. That figure was supplied to me by the Football League, and it is a staggering 50 per cent. increase on the previous record figure. That must call in question whether the funds that are made available to football by the Government are sufficient to meet the demands of Lord Justice Taylor. How can clubs make the necessary investment in ground improvements, given their limited resources that are already stretched to the limit, if they have to meet appalling bills for policing? More money is needed immediately, and the amendment would release that money.
      I recognise that I shall not budge the Government. I suppose that my colleagues on the Opposition Front Bench would have heart attacks if I were to press the amendment to a Division and won the day. I am convinced, however, that next year one of my colleagues will be moving from the Treasury Front Bench an amendment similar to the one that I have moved and I am sure that it will pass into law. I shall not conclude without once more congratulating the Government on meeting amendment No. 5, which stands in my name, and in so doing meeting my wishes and those of my hon. Friends who argued so convincingly in favour of such a provision in Committee.
      Mr. Beith: The hon. Member for Stalybridge and Hyde (Mr. Pendry) put forward a convincing case for an amendment that would still leave the rate of pool betting duty significantly above that of corporation tax. He does not suggest a ludicrously low level of tax. The revenue forgone would be used for football improvements of the kind set out in the Taylor report. That seems to be eminently reasonable when one considers the task that faces football clubs, both large and small. Some of the larger clubs will face significant bills. That is without considering the plight of clubs such as Hibernian football club as it tries to pick up the pieces after Mr. Wallace Mercer's daring bid to have only one club in Edinburgh, or Berwick's struggle to finance the building of a new stand, having had to cancel all matches on windy days in case the stand blew down on spectators. It received that direction from the county council. That kind of problem may not yet be experienced by other football clubs.
      Substantial costs are involved. They fall particularly heavily on those clubs that are not at the hardest commercial end of football—the ones that do not have the money to spend on players so as to attract the largest crowds. Few clubs are now able to do that. Therefore, I hope that the Government will consider sympathetically this attempt to extend the helpful proposals that they introduced in the Budget.
      Dr. Marek: I do not believe that we shall divide the House on the amendments. I am pleased that the Economic Secretary, who I know takes a great interest in football, changed the date, after receiving representations from the Opposition. The Government amendment provides that the date 28 May should be deleted and that 6 April should be inserted in its place. I thank the Economic Secretary for the change. It will benefit football.
      My hon. Friend the Member for Stalybridge and Hyde (Mr. Pendry) made a pertinent point when he referred to football duty being 40 per cent. He proposes that it should be 37 per cent. The Government have increased taxation. As a percentage of gross domestic product, it is now about 38 per cent. In 1979 it was only about 34 per cent. A high taxation party is in office. Football pool duty was raised to 42.5 per cent. from 40 per cent. Therefore, I accept my hon. Friend's point that football pool duty is simply being reduced to what it was when the Government first took office in 1979. However, I am glad that it is being reduced. One wonders whether that reduction will be sufficient to enable football clubs to improve their grounds, but we are grateful for small mercies. I am glad that the Government have tabled the amendment, and I hope that it will be passed speedily into law.
      Mr. Ryder: The hon. Member for Stalybridge and Hyde (Mr. Pendry) has worked hard for sport for many years. I thank him for his kind and generous remarks about the Budget announcement about football and our subsequent decision on backdating, to which the hon. Member for Wrexham (Dr. Marek) has just referred.
      I promised in Committee that the Government would table an amendment to backdate the cut. Our amendment differs only slightly from amendment No. 5 and has exactly the same effect. It differs by only one day. Amendment No. 4 is the main Opposition amendment. It would reduce pool betting duty to 37 per cent. I am not persuaded by the hon. Gentleman's argument. I was aware that the Rothschild Royal Commission on gambling

      795
      recommended in 1977 a cut in pool betting duty from its then level of 40 per cent. to 37 per cent. Lord Justice Taylor, in his report on the Hillsborough disaster, considered Rothschild's proposal but, even so, the suggestion in his report was for a cut to 40 per cent., not 37 per cent. That is why we chose 40 per cent. in the Budget. It will release about £100 million over five years towards the cost of meeting the Taylor recommendations. It is a significant help to football grounds all over the country. I recognise that football will still have to find further money from its own resources, but it is right to strike a balance between self-help and the sort of help that the Government can provide with the assistance of the taxpayer.
      In view of what I have said, I hope that the hon. Member for Stalybridge and Hyde will not press his amendments, particularly the last one to which I have alluded.
      Mr. Pendry: I recognise that the Government are not enlightened enough as yet to meet the requirements of amendment No. 4. However, time will prove me right, and I believe that it will not be long before the House recognises the full weight of my argument. Nevertheless, I congratulate the Government on amendment No. 1. I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.
      Amendment made: No. 1, in page 2, line 38, leave out '28th May' and insert '6th April'.—[Mr. Ryder.]

    Clause 11

      BAD DEBTS
      Mr. Chris Smith: I beg to move amendment No. 38, in page 7, line 9, leave out 'two years' and insert 'fifteen months'.
      You will probably recall, Madam Deputy Speaker, that on 15 May we debated in Committee on the Floor of the House what was then clause 10 and is now clause 11. It relates to VAT relief for bad debts on VAT. Prior to the Budget, for the majority of traders, VAT had to be accounted for to Customs and Excise on the basis of VAT invoices issued, regardless of whether the money had been received. The VAT was paid to Customs and Excise even though the trader may not have received the VAT from the purchaser of the goods or services. That system caused particular problems if the debt was defaulted upon. Until the Budget, the trader could get the VAT back only if the debtor became formally insolvent. That meant going into bankruptcy or liquidation. If a debtor simply disappeared without going into formal liquidation, the debt could not be recovered from the debtor or from Customs and Excise.
      The Government have introduced a welcome change in clause 11. We welcomed it when we debated the issue on 15 May. The Government are now proposing that if a trader has made provision for bad debt on VAT and the debt is not repaid after two years, the funds can be reclaimed from Customs and Excise. That is a step in the right direction.
      On 15 May, we set out in detail why we felt that the two-year period was too long. If a formal bankruptcy occurred within nine to 12 months of the VAT being paid, the new rules would be less attractive to a trader than the old rules. We proposed two alternative and complementary mechanisms to sort out that problem. We proposed
      796
      that the new and the previous systems should run in parallel, enabling a trader to receive relief on bad VAT debts by either of the two systems. The Government were not prepared to accept that.
      11.45 pm
      We also proposed a measure that would have reduced the waiting period for relief on bad debts from two years, which is the proposal in the Bill, to one year. That proposal was strongly supported by many small traders. On 15 May, the Economic Secretary, speaking from the Front Bench with all the authority of the Government, appeared to give our proposal a significant welcome. He said:
      "Our judgment was that two years is an appropriate period of time to elapse before a company decides that a debt cannot be recovered."
      The hon. Gentleman went on:
      "I am aware of the strength of feeling expressed in the debate and by the many organisations that have made representations to the Treasury. For those reasons, I have concluded that there may be scope for further improvement i n the scheme. We shall be examining that possibility between now and Report stage."—[Official Report, 15 May 1990; Vol. 172, c. 814.]
      That statement clearly showed that the Government were sympathetic to our proposal for a reduction, yet there is no Government amendment before us to give flesh to that commitment.
      As a result, we have tabled this amendment, which would change the period from two years to 15 months. We are being more generous to Customs and Excise than we were in our original proposal. We believe that a 15–month period would be sensible and practical and would give better relief to businesses, especially small businesses, than the Government propose. It would be entirely within the spirit of the statements by the Economic Secretary on 15 May.
      I hate to chide the Economic Secretary for a failure to live up to an indication that he gave in Committee, but we wish that the Government had been true to their word and had tabled an amendment such as amendment No. 38. I commend the amendment to the House.
      Mr. Beith: I support the case advanced by the hon. Member for Islington, South and Finsbury (Mr. Smith) for a more generous recognition of the problems of business in dealing with bad debts. I, too, formed the impression that the Government had taken seriously the many representations about their proposed time scale. They seemed to recognise that this matter required another look, and I am disappointed that the look has not turned into an appropriate change in the Bill.
      The hon. Member made clear at an earlier stage in the Bill what a serious problem this presented to the firm that he described as "Ryder associates"—or some such expression—if it had paid over a substantial sum in VAT to Customs and Excise at a time when an even more substantial sum remained outstanding from a company which had not paid it. He described how serious that would be, especially with present high interest rates, if the debt were spread over two years. I had hoped that the Government would recognise that this is a serious problem, and I look forward to the Minister having something to say on the subject tonight.
      Mr. Ryder: In debate on what was then clause 10, in Committee of the whole House, I said that we would consider whether anything could be done to improve the

      797
      Government's proposals on bad debt relief. The hon. Member for Islington, South and Finsbury (Mr. Smith) and the hon. Member for Berwick-upon-Tweed (Mr. Beith) were right to make their observations. I did so because of the view that some hon. Members expressed that our proposals did not go far enough.
      Our proposals were a huge improvement for businesses, as is evidenced by the cost of £150 million a year that will result from the change. The decision was one of the most generous and well-received in my right hon. Friend's Budget. Any further change would be equally expensive.
      Amendment No. 38, tabled by the hon. Member for Islington, South and Finsbury, seeks to reduce the waiting period from two years to 15 months. In the past two months, we have given careful consideration to whether we could justify a further change, but we have come to the conclusion that we could not. Amendment No. 38 would cost about £120 million in this financial year. That is a large price to pay for the marginal improvement that it would make to the scheme. The only way that we could afford to make such a change would be to defer the start date of the scheme to 1 January 1990 instead of 1 April 1989, as announced by my right hon. Friend in his Budget.
      Mr. Chris Smith: The Economic Secretary has estimated the cost of the change that we are proposing at £120 million. How can debts that are bad after 15 months, but are recovered within the subsequent nine months—that is, debts that are not bad at the end of two years—possibly amount to £120 million?
      Mr. Ryder: Those figures were calculated by Customs and Excise. We gave a figure of £150 million as the estimated cost of the proposal that we announced at the time of the Budget. The figure of £120 million estimated for this financial year is a significant sum, especially when it is judged alongside the other measures that have been introduced in the Budget, and beside some measures suggested to us in amendments during the course of the Bill. It is a large price to pay for what I would describe as a marginal improvement.
      If we were to accept the amendment, as I have described, it would ensure that the first claim was not made until 1 April 1991, as we had orginally planned. That would mean disappointing those who expected to be able to obtain relief in due course on debts that they incurred in the period between 1 April and 31 December 1989. That would also be too big a price for the majority of traders to have to bear to ease the position for a small minority. For that reason, and for the other reason that I gave earlier, we decided not to reduce the 24-month period on this occasion.
      In view of the information that I have given the hon. Gentleman, I should be grateful if he saw fit to withdraw the amendment.
      Mr. Chris Smith: The Economic Secretary has said that he believes that the cost of such a change would be £120 million. I confess to considerable scepticism about how that figure was arrived at, but it is not for me to quarrel at this stage with the Treasury's figures. Perhaps it would be best to wait and see how the new system beds down—to retain a watching brief and possibly to return to this subject in a year's time.
      798
      I contest the view that our proposal represents purely a marginal improvement. That is not the view of business, which believes that it would be a great improvement.
      We reserve the right to return to this issue. In the meantime, I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.

    Clause 21

      CARE FOR CHILDREN
      Amendment proposed: No. 7, in page 11, line 20 leave out from '(1)' to end of line 25 and insert
      'Where a benefit consists in the provision for the employee of care for a child, section 154 does not apply to the benefit to the extent that it is provided in qualifying circumstances.
      (1A) For the purposes of subsection (1) above the benefit is provided in qualifying circumstances if—
      (a) the child falls within subsection (1B) below.'.— [Mr. Lightbown.]
      Madam Deputy Speaker: With this it will be convenient to consider also Government amendments Nos. 8 and 9.
      Mr. Boateng: We welcome the amendment, but we wish it was part of a cluster of amendments that would make the proposal more attractive and more in keeping with the needs of enterprises that are concerned to take up the option of providing these facilities for their workers. We are conscious of the fact that the most comprehensive survey available—of women who can use employer-provided creches—shows that fewer than 0.2 per cent. of them, or 198 of the 1.1 million people surveyed, could take advantage of provision of this sort.
      The amendments will at least provide for the category of person with parental responsibility for a child or with a child or stepchild whom he or she maintains and who is resident with the employee. That category of parent, at least, will be able to take advantage of the child care and of the associated tax relief.
      However, other categories are not so fortunate. In the hope that the Government will in due course produce measures to improve on this scheme, we draw to the attention of the House the circumstances of, for instance, Sainsbury, which is a progressive employer in the retail sector seeking to provide child care for its employees. It finds itself falling foul of the requirement that the employer and employee trying to benefit from this provision have to show that the employer is involved in the management of the relevant nurseries. Sainsbury and a number of other employers in the same position find that because of the way in which their business is conducted —Sainsbury has about 300 retail outlets—it is just not possible to provide the space at all their outlets in which to establish a creche or workplace nursery. Inevitably, such companies fall foul of this restrictive condition unless they are able so to organise their affairs—and, being primarily concerned with the provision of retail services, they are not —in such a way as also to free staff to take part in the management of day nurseries and creches. It simply is not practical.
      Therefore, while welcoming the amendment, we are disappointed that it is so limited in its scope and in the relief that it brings to those who seek to expand their provision in this sector. We draw attention to that, but we shall not seek to divide the House on it.
      12 midnight
      Mr. Beith: The amendments slightly modify the Government's proposals, but not in any of the ways that employers would seek to make them effective, such as some of those already listed. The prospect of large numbers of employers having to be part of the management of a day nursery so that one trading estate can have a day nursery on it is daunting. The Government have opened up the extraordinary prospect that many of the firms that wish to co-operate in opening day nurseries may have to create a cumbersome management structure simply to satisfy the Government's conditions.
      I am especially mystified about the precise impact of amendment No. 8. What is the intention behind paragraph (c)? As I understand it, (a) and (b) taken together mean that the child for whom the benefit is payable has to be one for whom the employee has parental responsibility and who is resident with the employee. However, there is an alternative condition in (c), which refers to a child whom the employee maintains at his expense. I am not sure that I understand what the Government are getting at, and it would be helpful if the Minister could tell us.
      Do the Government mean that a divorced or separated woman who does not have custody of her children and whose children are living with her former husband nevertheless can obtain the relief and have the children sent to the workplace nursery at her workplace? If that is the purpose, why? If the objective of the relief is to direct it towards those women who make use of workplace nurseries to enable themselves to go to work and to enter the labour market, it does not seem to make a great deal of sense, and is a variant on what is already a narrow provision.
      I should be grateful if the Government could explain precisely what they mean. Although I do not really expect them to provide us, again, with reasoning about why they have not made the whole provision a great deal wider, this aspect certainly puzzles me.
      Mr. Lilley: This is a technical triplet of amendments to ensure that the definition of "a child" in the original clauses is appropriate.
      Following publication of the Bill, it was put to us in representations that the definition in the Bill might in certain respects be too narrow and could preclude relief in certain unusual but entirely worthy circumstances. These include, for example, a relative looking after an orphaned child where there is no formal adoption or guardianship, a step parent who has not formally adopted a child, and prospective adoptive parents before final adoption. In these cases, if the child attended a workplace nursery, strictly no exemption would have arisen for the employee. We seek to put that right.
      Mr. Beith: I fully understand that that is the effect of paragraphs (a) and (b) and it is most welcome, but can the Minister please explain the purpose of paragraph (c)?
      Mr. Lilley: We are adding to "parental responsibility" a wider category to encompass any children resident with the employee and any child of the employee, including a stepchild, whom he or she maintains. I believe that that includes all the categories.
      Amendment agreed to.
      Amendments made: No. 8, in page 11, line 32 at end insert—
      '(1B) The child falls within this subsection if—
      800

      (a) he is a child for whom the employee has parental responsibility,

      (b) he is resident with the employee, or

      (c) he is a child of the employee and maintained at his expense.'.

      No. 9, in page 12 leave out lines 13 to 36 and insert—
      '(5)In subsection 1(B)(c) above the reference to a child of the employee includes a reference to a stepchild of his.'.—[Mr. Ryder.]
      Amendment proposed: No. 6, in page 12, line 46 at end insert—
      '(1A) In section 154(2) of the Taxes Act 1988 for the words "section 155" there shall be substituted the words "sections 155 and 155A".'.—[Mr. Ryder.]
      Mr. Boateng: We welcome the amendment. It follows a new course. It follows from amendment No. 40 which we tabled on the Floor of the House, when the matter last came before us. The Government accepted it in principle and we are glad to see that it has been worked through into the Bill.
      Amendment agreed to.

    Clause 25

      DONATIONS TO CHARITY BY INDIVIDUALS
      Amendment proposed: No. 10, in page 14, line I7 after 'payment', insert 'of a sum of money'.—[Mr. Ryder.]
      Madam Deputy SpeakerM: With this it will be convenient to take Government amendment No. 14.
      Mr. Nicholas Brown: We said in Committee that the word "payment" covered only a payment of money, yet as the Government have drafted the clause it could have a wider and, as it turned out in the course of the debate, unintended meaning. The amendments suggest that our worries were well founded. I can see that their purpose is to address our worries and to tidy up the Bill.
      Mr. Ryder: I am grateful to the hon. Gentleman for drawing our attention to the problem in Committee. As a result of his observations, we have made changes and I appreciate his help.
      Amendment agreed to.
      Amendment proposed: No. 11, in page 14, line 23, after 'it', insert
      "or, where the donor or a person connected with him does receive a benefit in consequence of making it, the relevant value in relation to the gift does not exceed two and a half per cent. of the amount of the gift and the amount to be taken into account for the purposes of this paragraph in relation to the gift does not exceed £250'.—[Mr. Ryder.]
      Madam Deputy Speaker: With this it will be convenient to take Government amendments Nos. 12, 13 and 15.
      Mr. Nicholas Brown: The amendments derive from a suggestion that the Opposition made on the Floor of the House about training and enterprise councils. In Committee, again with regard to gift aid, we said that blanket anti-avoidance clauses which ruled out tax relief whenever the donor received any benefit, however small, were too wide and that a de minimis restriction should be introduced. At the time the Government rejected the idea, but they offered to reconsider. The amendments are a welcome result of that reconsideration.
      Mr. Ryder: Again, I am grateful to the hon. Gentleman for the assistance that he has provided. As a result of that assistance we have tabled the amendments.
      Amendment agreed to.
      Amendment made: No. 12, in page 14, line 42, at end insert—
      '(3A) For the purposes of subsections (2)(e) above and (3B) below, the relevant value in relation to a gift is—

      (a) where there is one benefit received in consequence of making it which is received by the donor or a person connected with him, the value of that benefit;

      (b) where there is more than one benefit received in consequence of making it which is received by the donor or a person connected with him, the aggregate value of all the benefits received in consequence of making it which are received by the donor or a person connected with him.

      (3B) The amount to be taken into account for the purposes of subsection (2)(e) above in relation to a gift to a charity is an amount equal to the aggregate of—

      (a) the relevant value in relation to the gift, and

      (b) the relevant value in relation to each gift already made to the charity by the donor in the relevant year of assessment which is a qualifying donation for the purposes of this section.'.—[Mr. Ryder.]

      Mr. Nicholas Brown: I beg to move amendment No. 41, in page 15, line 11, leave out
      'shall be assessed and'
      and insert
      'in respect of so much of them as is equal to the payment and may be deducted in computing his total income the donor shall be'.
      If the Government are grateful for our two small amendments to the gift aid clauses so far, I hope that they will be even more grateful for this amendment. We tackled the matter at some length in Committee so I shall not go over the issues again.
      Amending the Bill along the lines that we suggest here could save Her Majesty's Government as much as £4 billion. We hold to the view that the Bill is unintentionally imperfectly drafted. We addressed that in Committee. We had a Division on the point. The Economic Secretary was somewhat hesitant to vote no. I hope that he has had time to reconsider and will accept this clarification of the intention of both the Opposition and the Government. Our aims are the same; we are arguing about the phraseology. I believe that we have it right in our amendment and that the Bill is still flawed.
      Mr. Ryder: It is a pleasure to advise my hon. Friends to accept the Opposition's amendment. Again, I appreciate the assistance that the hon. Gentleman has given us, particularly in Committee.
      Amendment agreed to.
      Amendment made: No. 13, in page 15, line 28, leave out 'subsection (2)' and insert 'subsections (2) and (3A)'.—[Mr. Ryder.]

    Clause 26

      COMPANY DONATIONS TO CHARITY
      Amendment made: No. 14, in page 15, line 46, at end insert—
      '(1A) In subsection (1) after the word "payment" there shall be inserted the words "of a sum of money".'.
      No. 15, in page 16, line 8, after 'it', insert
      'and either the relevant value in relation to the payment exceeds two and a half per cent. of the amount given after deducting tax under section 339(3) or the amount to be taken into account for the purposes of this paragraph in relation to the payment exceeds £250.
      (3BA) For the purposes of subsections (3B) above and (3BB) below, the relevant value in relation to a payment to a charity is—

      (a) where there is one benefit received in consequence of making it which is received by the company or a connected person, the value of that benefit;

      (b) where there is more than one benefit received in consequence of making it which is received by the company or a connected person, the aggregate value of all the benefits received in consequence of making it which are received by the company or a connected person.

      (3BB) The amount to be taken into account for the purposes of subsection (3B)(b) above in relation to a payment to a charity is an amount equal to the aggregate of—

      (a) the relevant value in relation to the payment, and

      (b) the relevant value in relation to each payment already made to the charity by the company in the accounting period in which the payment is made which is a qualifying donation within the meaning of this section.'.—[Mr. Ryder.]

      Clause 28
      Amendment proposed: No. 16, in page 18, line 18, leave out from 'shall' to end of line 19 and insert
      'not be regarded as income for any income tax purpose'.— [ Mr. Ryder.]
      Madam Deputy Speaker: With this it will be convenient to take Government amendments Nos. 19, 21 and 22.
      Mr. Nicholas Brown: These amendments were promised in Committee, when the parliamentary Labour party pointed out that the TESSA legislation as previously drafted probably meant that banks and building societies could not deduct the interest they paid on TESSAs, because such interest had to be disregarded
      "for all purposes of the income tax."
      We thought that that meant both as regards taxing it in the recipient's hands and allowing it as a deduction for the payers. The amendments alter that so that interest will be disregarded as income for the purposes of the Taxes Act 1988, which will allow it to be deducted for tax purposes by the payers.
      Amendment No. 19 alters the old save-as-you-earn legislation. Although there is an interesting and esoteric point to make in that respect, I will not make it because the hour is late.
      Sir William Clark: I am in a slight dilemma because the amendments concern savings. I really want to speak to schedule 5, in respect of Government amendment No. 29, but perhaps it will be for the convenience of the House if I make my points now.
      The Government have encouraged savings, and one of the worrying aspects of schedule 5 is the implications that the Inland Revenue will have the power to make random tests of bank and building society accounts. I hope that my hon. Friend the Minister will not quote MIRAS regulations at me, because they relate only to such interest in terms of loans, including relevant contractual deeds, and so on, and to persons holding such contracts or having the means of making such payments.
      As to the receipt of interest from banks or building societies, now that the composite rate is being abolished and there are separate assessments for a husband and wife, I cannot comprehend why it is necessary for the Inland Revenue to have the power to undertake random tests of bank or building society accounts. If the Revenue has a suspicion that someone is not—
      Mr. George Howarth: On a point of order, Madam Deputy Speaker. Would it not be appropriate for the right hon. Gentleman to declare one of his many and extensive interests?
      Madam Deputy Speaker: I am sure that if the right hon. Gentleman has an interest to declare, he will declare it.
      Sir William Clark: I do not understand the hon. Gentleman's point of order, because I have nothing to do with banks. I am a vice-president of the Building Societies Association, which is a non-commercial body, as are members of the hon. Gentleman's own party. My remarks refer to the right of the Inland Revenue to examine a person's account at random.
      If the Revenue suspects that an individual is not making a proper return of his or her income, it has the right to obtain through the commissioners of income tax authority to examine any account. It is rather churlish of the hon. Member for Knowsley, North (Mr. Howarth) to accuse me of not disclosing an interest when the position that I hold is purely honorary. If the hon. Gentleman received such an honour, I would congratulate him.
      I ask my hon. Friend the Minister to give a categorical assurance that if the Revenue wants to examine a bank or building society account, it must have justification for so doing—but not at random. Why should the Revenue investigate a joint bank account, for example, if there is no suspicion that the husband and wife concerned are guilty of tax evasion?
      I hope that my hon. Friend can assure me that under section 482 random sampling will not take place and that the Revenue's powers will remain as they are, which means that it can only investigate where there is just cause and a reasonable chance that tax is being evaded. If we are not given that assurance, we are on a slippery slope, as the Inland Revenue acquire more and more powers. We would then have a big-brother state, which I want to avoid.
      12.15 am
      Mr. Ryder: My right hon. Friend the Member for Croydon, South (Sir W. Clark) has sought my assurance that we shall not undertake fishing expeditions. There is no question of such expeditions taking place. The Revenue gave banking representatives that categorical assurance when they met on 3 July. I am more than happy to repeat and emphasise that undertaking.
      Sir William Clark: I wonder whether my hon. Friend can confirm that that means that random sampling is out?
      Mr. Ryder: My hon. Friend referred to section 482(11)(aa) which ensures that the
      "regulations may make provision for the inspection of books, documents and other records"
      The terms of that provision are almost precisely the same as those that appear in the MIRAS legislation to which my hon. Friend also referred.
      I understand that, in the consultations that have been taking place with the banking industry, it has emphasised that no responsibility can be placed on bank staff other than for the most minimal compliance. That means that the whole burden of compliance falls on the Revenue. It is therefore essential for audit purposes that Revenue officials have access to records and documents and are supplied with information that will enable them to identify account holders who receive interest without any tax deduction.
      804
      I assure my hon. Friend that there is no question of fishing expeditions. The Revenue gave banking representatives that categorical assurance when they met on 3 July, and I repeat it.
      Amendment agreed to.
      Amendment proposed: No. 17, in page 20, line 10, at end insert—
      '(2) The reference in section 326A to a deposit account shall be taken to include a reference to a share account with a building society, and accordingly that section, section 326B and subsection (1) above shall apply to such an account with the necessary modifications.".'.—[ Mr. Ryder.]
      Mr. Nicholas Brown: The amendment is not contentious. It ensures that building society accounts qualify as TESSAs provided that the rest of the criteria in section 326A are satisfied.
      The amendment is evidence of sloppy drafting. Had the legal flaw not been spotted in time, most building society TESSAs would not, strictly speaking, have qualified as such. The Government were therefore right to correct that flaw.
      Amendment agreed to.
      Amendment made: No. 18, in page 20, line 14, at end insert—
      '(3) In section 149B of the Capital Gains Tax Act 1979, for subsection (4) there shall be substituted—
      "(4) Any bonus to which section 326 (certified contractual savings schemes) or 326A (tax-exempt special savings accounts) of the Taxes Act 1988 applies shall be disregarded for all purposes of the enactments relating to capital gains tax.".'.—[Mr. Ryder.]

    Clause 29

      EXTENSION OF SAYE
      Amendments made: No. 19, in page 20, line 20, at end insert—
      '(aa) in that subsection, for the words "be disregarded" onwards there shall be substituted the words "not be regarded as income for any income tax purposes.";'.
      No. 20, in page 20, leave out lines 33 to 37.—[Mr. Ryder.]

    Clause 50

      FRIENDLY SOCIETIES: APPLICATION OF ENACTMENTS
      Amendment proposed: No. 23, in page 40, line 22, after 'section', insert
      'may make different provision for different cases and'.—[Mr. Ryder.]
      Mr. Nicholas Brown: We accept that the amendment concerns a minor drafting point.
      Amendment agreed to.

    Clause 51

      AUTHORISED UNIT TRUSTS
      Mr. John Watts: I beg to move amendment No. 2, in page 44, line 27, at end add—
      'Authorised unit trusts: unfranked income trusts
      468.—(1) This section applies where:—

      (a) as regards a distribution period ending after 31st December 1990 a dividend is treated by virtue of section 468(2) as paid to a unit holder (whether or not income is in fact paid to the unit holder), and

      (b) all or part (in this section the "appropriate portion") of the dividend is paid from sources other than franked investment income, and

      805

      (c) the dividend is treated as paid by the trustees of a unit trust scheme which is an authorised unit trust as respects the accounting period in which the distribution period falls, and

      (d) arrangements with the Board as provided in section 468I are in force in respect of such unit trust scheme.

      (2) Where this section applies, if the unit holder to whom the dividend is treated as paid is not resident in the United Kingdom for the whole of the year of assessment in which the dividend is treated as paid and is resident in a qualifying country, he shall be entitled, on the payment (or deemed payment) of the appropriate portion of the dividend, to payment by the trustees of such unit trust scheme of the tax credit (if any) to which an individual resident in the United Kingdom would have been entitled had he received such dividend, and no United Kingdom tax shall be payable in respect of such dividend or the amount of the tax credit so paid.
      (3) For the purposes of sub-section (2) above, a person shall be treated as not resident in the United Kingdom and resident in a qualifying country for a year of assessment if this is proved on a claim in that behalf made to the Board.
      (4) Where units arc held under a trust and the person who is the beneficiary in possession under the trust is the sole beneficiary in possession and can, by means either of ther evocation of the trust or the exercise of any power under the trust, call upon the trustees at any time to transfer the units to him absolutely free from the trust, that person shall, for the purposes of this section, be treated as the unit holder.
      (5) The trustees shall certify in writing to the investor the appropriate portion of the dividend together with the amount of the tax credit referable thereto and to which a recipient is entitled to a payment as provided in this section.
      (6) In this section "qualifying country" means any country which is at any time during such year of assessment a member state of the European Economic Community or any other country which is for the time being designated for the purposes of this section as a qualifying country by order made by the Board.

      Authorised unit trusts: payment by trustees
      4681

      (1) The trustees of an authorised unit trust may enter into arrangements with the Board in respect of unit holders who would, if such arrangements were in force, be entitled to payment of the associated tax credit under section 468H.

      (2) Under such arrangements where a dividend falling within section 468H is treated by virtue of section 468(2) as paid to unit holders in respect of whom the arrangements have been made:—

      (a) the trustees may pay to such unit holders the amount of the associated tax credit in respect of the appropriate portion of the dividend (the "additional amount"): and

      (b) all additional amounts so paid shall be set against advance corporation tax which the trustees are liable to pay for the return period in which the dividend was paid and shall discharge a corresponding amount of that liability.

      (3) The Board shall not make arrangements under this section unless they are satisfied that the payment of the additional amounts shall not ensure to the benefit of persons other than those entitled thereto.

      (4) The effective period of such arrangements shall begin with the date on which the arrangements are made, or such later or earlier date as may be specified in the arrangements, and shall end with the date on which either party receives notice in writing from the other terminating the arrangements, or such later date as may be specified in the notice.

      806

      (5) The trustees shall render the Board an account at such time, and containing such particulars relating to the dividend as the Board may require.'.

      The amendment has been suggested by the Unit Trust Association, and in case Opposition Front Bench spokesmen get excited, I have no pecuniary interest in any unit trust or any association for unit trusts, but I have an interest in the general welfare of the industry.
      The purpose of the amendment is to improve the competitive position of the unit trust industry in the developing European market. At present, people living in most European countries will receive less income from a unit trust based in the United Kingdom than they could derive from a local fund. That is certainly true of gross receipts and, in some cases, of net receipts as well. That is because United Kingdom trusts are unique in paying corporation tax on their income. As far as I am aware, no European fund suffers from an equivalent tax impost.
      Income funds are expected to be a centrepiece of the export ranges of the United Kingdom fund managers seeking to develop the market in Europe. They will be competitive only if they can at least match the income paid out by local funds. The amendment proposed by the Unit Trust Association allows United Kingdom unit trusts to pay out more income so that they can match the local funds. The additional pay-out is the same amount as United Kingdom taxpayers would receive as a tax credit. That removes the disadvantage that they suffer as a result of corporation tax.
      The amendment involves no tax cost to the United Kingdom revenue, since, in effect, it will apply only to income on marginal businesses that would not otherwise be flowing through the United Kingdom, and there may be some small increase in United Kingdom tax revenue because, if the fund managers are successful, they will be paying corporation tax on the profits that they earn.
      I raised this matter in Committee and I welcomed another concession that the Government had made to the unit trust industry. My hon. Friend the Financial Secretary agreed to look further at the proposals from the Unit Trust Association and, good as his word, as we would always expect of him, he wrote to me with his further thoughts. I thank him for that. He is certainly sympathetic to the desire of the unit trust industry to establish a bridgehead in Europe and to increase our invisible earnings through that mechanism.
      My hon. Friend raised a number of points in his letter. He said that United Kingdom unit trusts benefit from favourable withholding tax rates on overseas dividends compared with Luxembourg funds that had no treaty benefits. I am told that Luxembourg is not considered the threat. The major competition in this market for United Kingdom managed funds of non-United Kingdom equities—American or Japanese securities—is expected to come more from France and Germany, which have tax treaty networks comparable with those that we enjoy.
      My hon. Friend also objected that the proposed change is complicated and would be expensive to administer. The legislation involves only the new clause that has informed my amendment. Managers who are not involved in the export business do not need to change their procedures; others will merely need to identify overseas investors who qualify for a gross distribution, and include on the distribution voucher a note of the amount that represents a tax credit.
      Any extra burden would fall principally on fund managers who chose to operate under such a scheme. Clearly, they think that it would be worth while. They should be given the fiscal opportunity to develop what they perceive to be a major opportunity to increase our invisible earnings. Therefore, I ask my hon. Friend to look again at the matter. I ask him not necessarily to accept my amendment this evening, but at least to give me an undertaking that he will conduct further studies with his officials, perhaps with a view to making some change in next year's Finance Bill.
      Mr. Nicholas Brown: There are a range of difficulties in getting British financial products wholly compatible with the practice that pertains in other European countries. It is particularly difficult to make them compatible with the systems used by our EC partners in time for 1992. The hon. Member for Slough (Mr. Watts) seeks to address one of the issues involved. As I understand it, his amendment would stop the United Kingdom charging withholding tax, to the extent that the distribution was attributable to income that was taxable in the hands of the unit trust.
      A balance must be achieved in deciding whether the yield to the United Kingdom Exchequer from unit trusts—despite what the hon. Gentleman said, I think that there would be some reduction in yield—would be offset by the advantages that would accrue to the United Kingdom by making unit trusts more attractive to investors from the Common Market. The Government must achieve that balance when deciding whether to accept the amendment.
      It is difficult for the Opposition to make a judgment, because detailed advice from the Revenue is available to the Financial Secretary but not directly to us, although I am sure that he will explain to us in a few moments.
      I am neutral on the amendment. I commend the hon. Member for Slough for at least trying to address one of the several complex and difficult issues that will have to be addressed before 1992. Delay hurts this country. They are not easy matters to solve, but the hon. Gentleman is right to attempt to do so, and we do not want to thwart him in that.
      Mr. Lilley: My hon. Friend the Member for Slough (Mr. Watts) is right to say that we discussed and corresponded on the amendment, which he asked me to reconsider. I have done so, and I will explain why I did not table a similar amendment at this stage.
      The amendment is likely to affect only 5 per cent. of funds—95 per cent. of unit trusts are already in a beneficial position vis-a-vis their European counterparts—and only in some countries. In France and Holland, for example, the potential investor would be no better off than he is as a result of the change, because the foreign dividends would flow straight to foreign shareholders. If foreign tax authorities do not like dividends flowing straight to foreign shareholders, they may alter the tax treatment to offset it, and we would be back to where we started. There would always be some benefit for those promoting such funds, because there would be opportunities for tax evasion where money is paid gross rather than net, but we should not go out of our way to promote that.
      In the light of my hon. Friend's comments, I shall leave a message that my successor—I can freely impose burdens on my successor that I might not place on myself—should reconsider the amendment, without commitment, before the next Budget.
      Mr. Watts: I thank my right hon. Friend for that sympathetic response. I wish him well in his new responsibilities and beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.

    Clause 74

      DEBTS OF OVERSEAS GOVERNMENTS ETC.
      Mr. Peter Viggers: I beg to move amendment No. 42, in page 63, line 26, leave out
      'subject to subsection (3) below'
      and insert 'in certain circumstances".
      Madam Deputy Speaker: With this, it will he convenient to consider amendment No. 43, in page 63, line 40, at end insert—
      '(2A) Subject to subsection (3) below, the circumstances in which subsections (1) and (2) apply are where either—

      (a) the loss results from a transaction with a connected party, or

      (b) within a period of twelve months before and after the event giving rise to the loss the company enters into transactions in the same class of debt with the result that the total amount owed to the company by debtors of that class is no less at the end of that period than it was at the beginning;

      and for the purpose of this subsection parties are connected and debts are of the same class if they meet the conditions laid down in regulations.
      (2B) Regulations under subsection (2A) above shall be made by the Treasury but shall be subject to annulment by a resolution of the House of Commons.'.
      Mr. Viggers: There is an important point of principle at stake and the amounts involved are large.
      Clause 74 and the amendments deal with the treatment of sovereign debt and the rights of banks to write off bad debts against profits. I have always understood that it is an essential point of principle that taxation should be levied on income or profits, which should be properly assessed. It is the duty of directors and auditors to provide a true and fair view of a company's accounts so that taxation can be levied according to that true and fair view. According to those principles, it is critical that bad or irrecoverable debts are written down or written off and proper deductions allowed. Clause 74 breaches that principle. Sovereign debt write-offs are allowed only on a formula basis of 5 per cent a year of the original debt. Prudence may require a higher level of write-off: the directors and auditors may well decide that it is appropriate for larger deductions to be made from the company's accounts. The Bill as currently drafted, however, prevents tax relief in that year.
      12.30 am
      I am grateful to my right hon. Friend the Secretary of State for writing to me and spelling out the Government's view. I also listened to the arguments that were advanced in Committee. The Government have presented three arguments in favour of clause 74 in its original form. First, they seek to show that it will benefit everyone to introduce certainty and clarity. Secondly, they argue that, according to the Red Book, they will gain some £200 million in the current year as a result of their proposed change. I think that the second argument contradicts the first; while certainty and clarity may indeed be introduced, the banks will lose out to the tune of £200 million this year.

      809
      The third argument—it is to the credit of my right hon. Friend and his colleagues that they have not tried to make a great point of this—is that banks could engage in tax avoidance. My amendments take account of that possibility and provide for anti-avoidance, but only in cases in which banks have been responsible for avoidance by way of swaps with other banks or deals with connected persons.
      In my view, the arguments against the clause as drafted are strong. First, it sets a precedent. In many instances, directors and auditors will seek to put forward their own views on the valuation of assets: it is fundamental that they should be allowed to do so, and that tax should be levied according to their valuation. In the case of, for example, the valuation of properties, stock, goodwill—my right hon. Friend and I both know a good deal about that—and unexplored oil acreage, it is necessary for directors and auditors to form a true and fair view. If their commercial judgment is to be segregated from taxation, I believe that that is a point of principle that the Government will live to regret.
      The clause provides for the Treasury to produce regulations. Let me say in advance that I shall not seek to divide the House, but I hope that, when drafting the regulations, my right hon. Friend will take account of what I have said, and also of the cogent points made in Committee.
      Sir William Clark: I support my hon. Friend the Member for Gosport (Mr. Viggers). It is extraordinary that the Inland Revenue should take it on itself to decide whether a debt is good or bad: it has no experience whatever of the conditions of the person who owes the money, and no idea of the stability of the country involved —for most of the debts are overseas debts.
      Surely, for the Revenue arbitrarily to limit bad-debt provision to 5 per cent.—or whatever formula it may come up with—is entirely contrary to all our tax experience. In the case of any company's accounts, the computation is put in by the accountants; the accounts have been audited, and the auditor's certificate has dealt with the bad-debt provision. If the directors and the company's financial section cannot satisfy the auditor that the bad-debt provision is too much or too little, it is a reflection on the certificate. Although the auditor has passed accounts saying that, say, 100 units is bad-debt provision, the Inland Revenue, with no experience of the local circumstances —mainly overseas—of the debt, may then arbitrarily decide that, in the computation of profits for that tax year, the only amount allowed is a percentage of the sovereign debt.
      As my hon. Friend the Member for Gosport has pointed out, there can be argument about the value of oil rights or goodwill. In the case of sovereign debts the bank knows how much has been loaned. The assessment of the bad debt provision for that loan is determined not only by the bank's board of directors but by its representative, the bank manager abroad. Between them they have to satisfy the auditor, and if he is satisfied that the bad debt provision is valid and reasonable, I cannot see why the Inland Revenue, which has no experience of the circumstances of the loan, should take it upon itself arbitrarily to say that the provision shall be only a certain amount. That is a violation of what has happened in the past about bad debt provision.
      810
      We all congratulate my right hon. Friend on his promotion to Secretary of State for Trade and Industry. If he is convinced by the argument advanced by my hon. Friend the Member for Gosport, he should persuade his successor to take action to remove this anomaly.
      Mr. Nicholas Brown: It will be no comfort to the hon. Member for Gosport (Mr. Viggers) and the right hon. Member for Croydon, South (Sir W. Clark) and the hon. Member for Berwick-upon-Tweed (Mr. Beith) to learn that the arguments advanced by them were vigorously advanced at length by their hon. Friends in Committee. They were not warmly received by the Opposition or by the Government. I am as certain as one can be in such matters that the Secretary of State will not accept the amendments. It would be peculiar if he did because they are wrecking amendments. They are designed to emasculate new section 88C of clause 74 which deals with actual losses on the sale or write off of debts rather than the claiming of deductions for the provision which new section 88B covers.
      Currently, such losses may be claimed only at 5 per cent. per year where the debt confirmed is a less-developed country debt that has already been provided against unless the debt is sold to the debtor nation, in which case the whole loss may be claimed. Amendments Nos. 42 and 43 would mean that the 5 per cent. restriction applied only in two narrowly defined cases; otherwise the whole loss would be claimable. I am sure from what the hon. Member for Gosport and the right hon. Member for Croydon, South have said that their intention is to restrict clause 74 as narrowly as possible. That is not in the spirit of what Ministers said in support of the clause, and it is certainly not the view of the Opposition. I am sorry that I cannot offer the hon. Gentleman any greater comfort. The hon. Member for Gosport said he did not intend to push the amendment to a Division. However, if we are asked to vote on it, I shall request my hon. Friends to vote against the amendment.
      Mr. Lilley: I am tempted to urge my hon. Friend the Member for Gosport (Mr. Viggers) to push his amendment to a Division so that I may have the pleasure of joining the hon. Member for Newcastle upon Tyne, East (Mr. Brown) in the Lobby. I enjoy debating such matters with him, but we rarely vote on the same side. My hon. Friend the Member for Gosport and my right hon. Friend the Member for Croydon, South (Sir W. Clark) advanced important issues which we considered at great length in Committee. I congratulate them on the pithiness of their contributions which were in contrast to those made in Committee. They made their case effectively.
      My hon. Friend the Member for Gosport says that it is a matter of principle that tax should fall on profits properly assessed at the time that they are assessed. However, the tax system contains the well established precedent that tax may be phased differently from the way in which it appears in a company's accounts. Not least, capital allowances for tax purposes may differ from those taken in management and company accounts. I do not think that any great principle is involved on timing. We are altering only the time in which the banks pay their profits and not the measure of profits, except in the context of the point raised by my right hon. Friend the Member for Croydon, South (Sir W. Clark).

      811
      The essence of the matter is that sovereign debt is sui generis. It is different from the sort of debts that ordinary companies incur. A bad debt that is incurred by a company is normally fairly obvious because the debtor has ceased to exist, has disappeared, has been made bankrupt or has become insolvent. Countries rarely disappear and are rarely declared bankrupt.
      Mr. Nicholas Brown: Sometimes.
      Mr. Lilley: That may happen sometimes, but only rarely. I think that in one instance the debts were carried with it, but I must be careful about what I say.
      It is a matter of assessing whether a loan is likely to be repaid at the end of its life. I am sure that my hon. Friend the Member for Gosport, who wants profits and debts to be related to timing, is not suggesting that we wait until the end of the loan before we assess whether it is a bad debt and should be written off and given tax relief. Sometimes it is necessary to make an estimate beforehand. It has long been accepted that the Bank of England's matrix is an authoritative guide to the necessary provisions that will be acceptable for tax purposes under tax law. Quite commonly, banks have made provisions in excess of the bank's matrix, and there has been no suggestion that they are automatically eligible for tax. It is only the bank's matrix, which suggests the prudential level that is required, which has been taken as the amount to be written off for tax purposes. In this underlying legislation we are enshrining the matrix in law and removing uncertain elements. A range of parameters has been defined and we are taking mid point. We are removing one or two subjective criteria and leaving objective criteria, and providing certainty and objectivity without changing the principle. I hope that my hon. Friends will understand that I cannot recommend acceptance of the amendments.
      My hon. Friend the Member for Gosport said that an attempt has been made to cover tax avoidance. The attempt has not succeeded because debts sold out of the group by one company may well be replaced by debts bought from outside the group by another company in the same group, and that other company may be outside the United Kingdom. In practice, it will be impossible for us to police an international banking group to ensure that that does not happen. Consequently, the possibility of avoidance would be rife if the amendments were accepted. I urge the House to reject the amendments. I understand that it is unlikely that they will be divided upon.
      Amendment negatived.

    Clause 76

      TRAINING AND ENTERPRISE COUNCILS AND LOCAL ENTERPRISE COMPANIES
      Mr. Nicholas Brown: I beg to move amendment No. 39, in page 64, line 28, at end insert
      'save that this subsection shall not operate to prevent subsection (1) above from applying where the aggregate values of any benefits which any persons mentioned above receive or are entitled to receive does not exceed two and a half per cent. of the amount of the contribution.'.
      We discussed a similar issue to the one raised by the amendment during a debate on the Floor of the House on Tuesday 15 May, which ended with a Division. We have advanced similar arguments to the Government on gift aid, and they have reconsidered their position. When we discussed the matter on 15 May, the Financial Secretary
      812
      said that he accepted that the amendments had been moved in a helpful spirit and that he accepted the spirit behind them. Even though he had no disagreement with them in principle or in substance, the Government believed that the amendments would prove onerous, so they were rejected.
      We have returned to the point because the Government have had second thoughts about a similar issue, gift aid. If it is right to think again about the de minimis principle as it affects gifts aid, surely it is right to do so in respect of tax. I hope that the Government will have second thoughts about training and enterprise councils. The amendment is moved in a bipartisan spirit, and I hope that it will be accepted by the Government.
      12.45 am
      Mr. Ryder: As the hon. Member for Newcastle upon Tyne, East (Mr. Brown) said, the amendment relates to a point that we discussed in Committee: that the relief for business contributions to training and enterprise councils and local enterprise councils will not apply if the contributor receives a benefit in connection with the making of the contribution.
      The amendment is designed to provide that, if a company receives benefits connected with a particular contribution that do not exceed in aggregate value 2.5 per cent. of the amount of the contribution, they will not prevent the contribution from attracting relief. We have introduced a de minimis cut-off broadly of that kind in relation to the gift aid provisions to which the hon. Member for Newcastle upon Tyne, East referred, but with a ceiling of £250. The amendment, however, has no ceiling. We did not believe that it was necessary to complicate this much more specific and limited provision by providing a similar cut-off. It is much more likely that the de minims benefits will be received in connection with a donation to a charity rather than to a TEC—for example, free tickets to the opera in return for a donation to Covent Garden, or free attendance at charitable events.
      Perhaps the most likely legitimate benefit that a company is likely to receive in return for a contribution to a TEC is some measure of free training for its work force. My right hon. Friend gave the hon. Member for Derby, South (Mrs. Beckett) an assurance both in our previous debate and subsequently by letter that the Inland Revenue will ignore benefits of that kind in individual cases. However, I recognise that the Opposition are concerned about the benefits rules in clause 76. I believe that their concern is misplaced, but I am ready to give the hon. Gentleman a firm undertaking that, if there is any suggestion that in practice the rules are inhibiting businesses from contributing to TECs and LECs, as we all want them to do, we shall return to the point.
      Mr. Nicholas Brown: That is a very helpful assurance, which I welcome. Therefore, I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.

    Clause 89

      INCOME TAX RETURNS
      Amendment proposed: No. 24, in page 76, line 28, after 'statements', insert
      ', relating to information contained in the return,'.—[Mr. Lilley.]
      Mr. Nicholas Brown: The amendment accepts, at least to a degree, the point that we and a number of Conservative Members raised in Committee. The inspectors' powers to demand any kind of accounts and statements to accompany tax returns were, we felt, rather wide. The amendment helpfully addresses that concern.
      Amendment agreed to.
      Amendment proposed: No. 25, in page 76, line 40, at end insert—

      'Trustee's return
      8A.—(1) For the purpose of assessing a trustee of a settlement, and the settlors and beneficiaries, to income tax an inspector may by a notice given to the trustee require the trustee—

      (a) to make and deliver to the inspector within the time limited by the notice a return containing such information as may be required in pursuance of the notice, and

      (b) to deliver with the return such accounts and statements, relating to information contained in the return, as may be required in pursuance of the notice; and a notice may be given to any one trustee or separate notices may be given to each trustee or to such trustees as the inspector thinks fit.

      (2) Every return under this section shall include a declaration by the person making the return to the effect that the return is to the best of his knowledge correct and complete.
      (3) A notice under this section may require different information, accounts and statements for different periods or in relation to different descriptions of source of income.
      (4) Notices under this section may require different information, accounts and statements in relation to different descriptions of settlement.'.—[Mr. Lilley.]
      Mr. Deputy Speaker (Mr. Harold Walker): With this, it will be convenient to consider amendment No. 26.
      Mr. Nicholas Brown: Both amendments are relatively minor. They relate to trustees' powers concerning special trust tax returns. Both are unexceptionable. The Opposition accept them.
      Amendment agreed to.
      Amendment made: No. 26, in page 77, line 40, leave out subsection (2) and insert—
      '(2) In section 12 of that Act (information about chargeable gains)—

      (a) in subsection (1) for the words "Section 8" there shall be substituted the words "Sections 8 and 8A" and for the words "it applies" there shall be substituted the words "they apply";

      (b) in subsection (2) after the words "section 8" there shall be inserted the words "or section 8A";

      (c) in subsection (4) the words "of income of a partnership" shall be omitted.

      (2A) In section 93 of that Act (penalties) in subsection (1) for the words "9 of this Act (or either" there shall be substituted the words "8A or 9 of this Act (or any".
      (2B) In section 95 of that Act (penalties) in subsection (1)(a) for the words "9 of this Act (or either" there shall be substituted the words "8A or 9 of this Act (or any".'.—[Mr. Lilley.]

    Clause 90

      CORPORATION TAX RETURNS
      Amendment proposed: No. 27, in page 77, line 45, leave out from '(1)' to second 'section' in line 46.—[Mr. Ryder.]
      Mr. Deputy Speaker: With this it will be convenient to
      814
      consider Government amendment No. 28.
      Mr. Nicholas Brown: All the changes to the rules on tax returns for individuals or partnerships apply from April 1990. Those on corporate tax returns apply only from the date pay-and-file is introduced, which will probably be 1993. These amendments make one small part of those rules apply instead as from Royal Assent. We generally support the spirit of clause 90, so we do not find the matter contentious.
      Amendment agreed to.
      Amendment made: No. 28, in page 78, line 26, at end insert—
      '(8) Subsection (4) above shall apply with respect to any notice served on or after the day of which this Act is passed.
      (9) Subsections (2), (3) and (5) to (7) above shall apply with respect to any notice served after the day appointed for the purposes of section 82 of the Finance (No. 2) Act 1987.'.—[Mr. Ryder.]

    Clause 115

      AMOUNT OF LEVY
      Mr. Beith: I beg to move amendment No. 44, in page 93, line 9, leave out '50' and insert '25'.
      Mr. Deputy Speaker: With this it will be convenient to consider amendment No. 45, in clause 116, page 94, line 21, leave out 'three' and insert 'nine'.
      Mr. Beith: We come to the port levy. Somehow the Government always contrive that the port levy shall be debated at the latest possible hour of the night, preferably with as few as possible of their hon. Friends present so that they cannot be made fully aware that it is not only a levy on ports but is a privatisation tax. It is a tax designed to recoup all the proceeds from the privatisation of ports to the central Exchequer. That process will probably discourage further port privatisations more or less totally. It is accompanied by a statement made in Committee by the Chief Secretary to the effect that any port that devises alternative arrangements for privatisation and brings them in a private Bill which would direct the proceeds towards the local community so that the Government did not get their 50 per cent. levy would face retrospective legislation to ensure that a 50 per cent. levy was secured. It is the first time I can remember hearing a Minister promise to introduce retrospective legislation on a certain matter. The Government are so determined to achieve their privatisation levy on the ports.
      Part of the problem is that the tax is certain to be more than 50 per cent. in many cases. There are other responsibilities such as capital gains tax to be considered and the capital gains tax market values are applied to the 50 per cent. If a port were to decide, for example, to place its shares as a private business in the hands of local authorities, local businesses or its own employees, they would change hands at less than the rate that would prevail if they were on the open market without those conditions. However, the company would still be taxed as if it had made the disposals on a full market-value basis. That will mean that a responsible port authority, seeking to safeguard the future of the port in its area, could find itself taxed at 70, 80, 100 or even 110 per cent. on the proceeds of privatisation.

      815
      I must ask Conservative Members what is the point of the exercise if it is not to release the trapped resources of the ports and bring into the ports the new resources from shareholdings which come about as a result of privatisation. Why does the central Exchequer have to grab all that money?
      Faced with those features, I have proposed two amendments. One reduces the levy to 25 per cent. nominally and, therefore, to 50 per cent. in practice, and the other deals with the specific issue of employee share ownership plans and the Government's stringent limitations on the opportunity for ports to make shares available to employees through employee share ownership schemes. It is extraodinary that the Government have taken this step. I do not see why the central Exchequer rather than local ports and local communities should be dipping so heavily into the proceeds. Many port authorities will come to the conclusion that privatisation is not for them. I say that as someone who is not, in general, opposed to all privatisations. There are many circumstances in which it might be an appropriate step to take. However, it would be appropriate only if the port authority can ensure that it remains under local management, and that its resources will not simply be transferred to the Exchequer. Faced with the arrangements that the Government have devised, many trust ports will say that they are far better off as they are.
      The Government have permitted a 3 per cent. dispersal of shares to employee share ownership plans to attract tax relief—despite the endorsement by the former Financial Secretary, now Secretary of State for Trade and Industry, of the idea that 10 per cent. might be an appropriate ESOP holding in a company. In Committee of the whole House the right hon. Gentleman said:
      "10 per cent. strikes the right balance, representing as it does a stake large enough to ensure the employees a degree of involvement in the company's affairs, while not being so large as to make the new relief unattractive."—[Official Report, 16 May 1990; Vol. 172, c. 960.]
      If 10 per cent. is good for ESOPs in general, why is it not good for ESOPs in ports? Ten per cent. was turned down in a Division in Committee, so I have put a slightly more modest proposal before the House tonight and suggest that we accept 9 per cent. Surely that would be acceptable to the Government.
      The Government seem determined to restrict to the absolute minimum the opportunities that they will afford for ESOPs to get some tax relief from this port levy. I wonder whether Conservative Members who are interested in and have shown strong support for ESOPs, such as the right hon. Member for Croydon, South (Sir W. Clark), are happy with this arrangement. It is profoundly unsatisfactory.
      At no stage have the Government made a convincing case for the central Exchequer making such huge claims on these revenues. They sought at one stage to argue that the Government had invested in trust ports in the past, and therefore were entitled to get their money back. Any scheme that got the Government their money back would return only a tiny fraction of the amount of revenue about which the Government are talking. I, therefore, invite the Government and the House to lower the nominal rate of levy so that it is not so huge a deterrent on the placing of shares with the local community and to raise the limit under which employee share ownership schemes can gain tax relief from this huge impost.
      Mr. Lilley: The hon. Member for Berwick-upon-Tweed (Mr. Beith) suggests that this is a privatisation tax, but he seems to forget that normally when the Government sell a company they keep 100 per cent. of the revenue. The states owns—
      Mr. Beith rose—
      Mr. Lilley: I shall give way if the hon. Gentleman wishes to pursue this arcane distinction between the state and the Government.
      Mr. Beith: It is not an arcane distinction. It is beyond dispute that the state does not own the ports. They are trust ports. If the state owned them, they would not be the subject of private Bills, such as the Tees and Hartlepool Port Authority Bill and the Clyde Port Authority Bill, and the Minister knows that full well.
      Mr. Lilley: On the contrary, the courts have ruled that trusts of this kind are owned by the state, as distinct from the Government. When the Government sell a company, they keep 100 per cent. of the revenue. The hon. Gentleman may argue that this is not a privatisation, but he cannot argue that there is anything abnormal about keeping the proceeds of a sale. In this case, we felt that it was right to have less than 100 per cent. of the funds going to the Government in order to give some incentive for the trusts to go private and to let them use some of the funds for the development of the port operations. Fifty per cent. seemed a good compromise, being half way between zero and 100 per cent.
      Although we may be reasonably sure that this levy will not discourage future privatisations by trusts, the main reason for privatisation is that the forming of private company status will free the trusts from the inhibitions, which they previously suffered under their existing status, from developing their activities beyond those of the ports and making full use of the assets that they possess.
      The companies are free to give more than 3 per cent. of shares to their employees if they wish, but only 3 per cent. will escape levy. Any higher proportion would have to come out of company funds, which is not unreasonable. There is nothing in this which is comparable with the 10 per cent. limit for ESOPs. Three per cent. would be a higher proportion going to employees than in any previous issue for which I have records—I think that the highest figure has been 2.4 per cent. So the 3 per cent. figure is not artificially low and I urge the House to reject both the amendments.
      Mr. BeithThe Government have just demonstrated how lacking in radicalism they are. They are content with a 2.4 per cent. proportion going to ESOPs rather than opening the way to a much larger share, and yet again they have failed to make out a case for that. The pretence is being made that the Government own the ports. That is clearly not the case, as they have been invested in, supported and managed by the local communities. The fact that a court had to find some definition of their ownership other than the Government is ample demonstration that they are not in the hands of the Government. The Government have no right to lay claim to resources which ought to be left in the ports. Therefore, I ask the House to resist the Government by at least reducing the level of the tax to be imposed.
      Question put, That the amendment be made:—
      The House divided: Ayes 8, Noes 88.

      Division No. 295]

      [11.09 pm

      AYES

      Barnes, Harry (Derbyshire NE)

      Meale, Alan

      Beith, A. J.

      Michie, Mrs Ray (Arg'l & Bute)

      Campbell, Menzies (Fife NE)

      Nellist, Dave

      Carlile, Alex (Mont'g)

      Parry, Robert

      Cryer, Bob

      Pendry, Tom

      Dunnachie, Jimmy

      Primarolo, Dawn

      Godman, Dr Norman A.

      Skinner, Dennis

      Graham, Thomas

      Spearing, Nigel

      Home Robertson, John

      Steel, Rt Hon Sir David

      Howells, Geraint

      Taylor, Matthew (Truro)

      Hughes, Simon (Southwark)

      Wallace, James

      Kennedy, Charles

      Kirkwood, Archy

      Tellers for the Ayes:

      Lewis, Terry

      Mr. Richard Livsey and

      Martin, Michael J. (Springburn)

      Mr. Ronnie Fearn.

      NOES

      Alexander, Richard

      Fishburn, John Dudley

      Alison, Rt Hon Michael

      Fookes, Dame Janet

      Amess, David

      Forman, Nigel

      Amos, Alan

      Forsyth, Michael (Stirling)

      Arnold, Jacques (Gravesham)

      Forth, Eric

      Arnold, Sir Thomas

      Franks, Cecil

      Ashby, David

      Freeman, Roger

      Baker, Nicholas (Dorset N)

      French, Douglas

      Bellingham, Henry

      Garel-Jones, Tristan

      Bennett, Nicholas (Pembroke)

      Gill, Christopher

      Benyon, W.

      Goodlad, Alastair

      Bevan, David Gilroy

      Goodson-Wickes, Dr Charles

      Blackburn, Dr John G.

      Greenway, John (Ryedale)

      Blaker, Rt Hon Sir Peter

      Gregory, Conal

      Body, Sir Richard

      Griffiths, Peter (Portsmouth N)

      Boswell, Tim

      Hague, William

      Bowis, John

      Hamilton, Hon Archie (Epsom)

      Brazier, Julian

      Hamilton, Neil (Tatton)

      Brown, Michael (Brigg & CI't's)

      Hargreaves, Ken (Hyndburn)

      Burns, Simon

      Harris, David

      Butcher, John

      Hawkins, Christopher

      Carlisle, John, (Luton N)

      Hayward, Robert

      Carlisle, Kenneth (Lincoln)

      Heathcoat-Amory, David

      Carrington, Matthew

      Hind, Kenneth

      Carttiss, Michael

      Howard, Rt Hon Michael

      Chapman, Sydney

      Howarth, G. (Cannock & B'wd)

      Chope, Christopher

      Hughes, Robert G. (Harrow W)

      Clark, Dr Michael (Rochford)

      Hunter, Andrew

      Clark, Sir W. (Croydon S)

      Irvine, Michael

      Coombs, Anthony (Wyre F'rest)

      Jack, Michael

      Coombs, Simon (Swindon)

      Jackson, Robert

      Cran, James

      Janman, Tim

      Currie, Mrs Edwina

      Johnson Smith, Sir Geoffrey

      Davies, Q. (Stamf'd & Spald'g)

      Jopling, Rt Hon Michael

      Davis, David (Boothferry)

      King, Roger (B'ham N'thfield)

      Day, Stephen

      King, Rt Hon Tom (Bridgwater)

      Devlin, Tim

      Knapman, Roger

      Douglas-Hamilton, Lord James

      Knight, Greg (Derby North)

      Dover, Den

      Knight, Dame Jill (Edgbaston)

      Dunn, Bob

      Lawrence, Ivan

      Fallen, Michael

      Lennox-Boyd, Hon Mark

      Favell, Tony

      Lightbown, David

      Fenner, Dame Peggy

      Lilley, Peter

      790

      Lloyd, Sir Ian (Havant)

      Spicer, Michael (S Worcs)

      McLoughlin, Patrick

      Squire, Robin

      Maxwell-Hyslop, Robin

      Stanbrook, Ivor

      Miller, Sir Hal

      Stern, Michael

      Moate, Roger

      Stevens, Lewis

      Morrison, Sir Charles

      Stewart, Andy (Sherwood)

      Moss, Malcolm

      Stradling Thomas, Sir John

      Moynihan, Hon Colin

      Summerson, Hugo

      Neale, Gerrard

      Taylor, Ian (Esher)

      Neubert, Michael

      Taylor, John M (Solihull)

      Newton, Rt Hon Tony

      Taylor, Teddy (S'end E)

      Nicholls, Patrick

      Thompson, Patrick (Norwich N)

      Norris, Steve

      Thurnham, Peter

      Oppenheim, Phillip

      Twinn, Dr Ian

      Paice, James

      Viggers, Peter

      Pawsey, James

      Waldegrave, Rt Hon William

      Porter, David (Waveney)

      Walden, George

      Powell, William (Corby)

      Wardle, Charles (Bexhill)

      Raffan, Keith

      Watts, John

      Redwood, John

      Wheeler, Sir John

      Renton, Rt Hon Tim

      Widdecombe, Ann

      Roberts, Sir Wyn (Conwy)

      Wilkinson, John

      Rowe, Andrew

      Winterton, Mrs Ann

      Ryder, Richard

      Winterton, Nicholas

      Sackville, Hon Tom

      Wolfson, Mark

      Shaw, David (Dover)

      Wood, Timothy

      Shaw, Sir Michael (Scarb')

      Yeo, Tim

      Shephard, Mrs G. (Norfolk SW)

      Shepherd, Colin (Hereford)

      Tellers for the Noes:

      Skeet, Sir Trevor

      Mr. Irvine Patnick and

      Smith, Tim (Beaconsfield)

      Mr. Tony Durant.

      Speller, Tony

      Division No. 296]

      [1.00 am

      AYES

      Beith, A. J.

      Steel, Rt Hon Sir David

      Campbell, Menzies (Fife NE)

      Wallace, James

      Kennedy, Charles

      Kirkwood, Archy

      Tellers for the Ayes:

      Michie, Mrs Ray (Arg'l & Bute)

      Mr. Simon Hughes and

      Skinner, Dennis

      Mr. Matthew Taylor.

      NOES

      Alison, Rt Hon Michael

      Hind, Kenneth

      Amess, David

      Howarth, G. (Cannock & B'wd)

      Amos, Alan

      Hughes, Robert G. (Harrow W)

      Arnold, Jacques (Gravesham)

      Irvine, Michael

      Arnold, Sir Thomas

      Jack, Michael

      Ashby, David

      Janman, Tim

      Baker, Nicholas (Dorset N)

      Johnson Smith, Sir Geoffrey

      Bennett, Nicholas (Pembroke)

      King, Roger (B'ham N'thfield)

      Blackburn, Dr John G.

      Knapman, Roger

      Blaker, Rt Hon Sir Peter

      Knight, Greg (Derby North)

      Boswell, Tim

      Lennox-Boyd, Hon Mark

      Bowis, John

      Lightbown, David

      Burns, Simon

      Lilley, Peter

      Butcher, John

      Maxwell-Hyslop, Robin

      Carlisle, Kenneth (Lincoln)

      Moss, Malcolm

      Carrington, Matthew

      Neale, Gerrard

      Chapman, Sydney

      Neubert, Michael

      Chope, Christopher

      Nicholls, Patrick

      Clark, Sir W. (Croydon S)

      Norris, Steve

      Coombs, Anthony (Wyre F'rest)

      Paice, James

      Coombs, Simon (Swindon)

      Porter, David (Waveney)

      Cran, James

      Renton, Rt Hon Tim

      Currie, Mrs Edwina

      Rowe, Andrew

      Davies, Q. (Stamf'd & Spald'g)

      Ryder, Richard

      Davis, David (Boothferry)

      Shaw, David (Dover)

      Day, Stephen

      Shephard, Mrs G. (Norfolk SW)

      Dover, Den

      Shepherd, Colin (Hereford)

      Dunn, Bob

      Squire, Robin

      Durant, Tony

      Stern, Michael

      Fallon, Michael

      Stevens, Lewis

      Favell, Tony

      Summerson, Hugo

      Fenner, Dame Peggy

      Taylor, Ian (Esher)

      Fishburn, John Dudley

      Taylor, John M (Solihull)

      Forth, Eric

      Thompson, Patrick (Norwich N)

      Freeman, Roger

      Twinn, Dr Ian

      French, Douglas

      Viggers, Peter

      Garel-Jones, Tristan

      Waldegrave, Rt Hon William

      Gill, Christopher

      Wardle, Charles (Bexhill)

      Goodlad, Alastair

      Watts, John

      Greenway, John (Ryedale)

      Widdecombe, Ann

      Hamilton, Hon Archie (Epsom)

      Wood, Timothy

      Hamilton, Neil (Tatton)

      Yeo, Tim

      Hampson, Dr Keith

      Harris, David

      Tellers for the Noes:

      Hayward, Robert

      Mr. Irvine Patnick and

      Heathcoat-Amory, David

      Mr. Tom Sackville.

      Question accordingly negatived.

    Schedule 5

      BUILDING SOCIETIES AND DEPOSIT-TAKERS
      Amendment made: No. 21, in page 124, line 45 leave out from beginning to 'shall' in line 46 and insert 'Subsection (3) (a) above'.—[Mr. Ryder.]
      Amendment proposed: No. 29, in page 128, line 12, at end insert—

      'Transitional provision
      16.—(1) In its application to the year 1991–92, section 477A of the Taxes Act 1988 shall have effect with the following modifications.
      (2) Regulations under subsection (1) may also require any building society to account for and pay, on transitional sums, an amount representing income tax calculated in part at the
      818
      basic rate for the year 1990–91 and in part at the reduced rate determined for that year under section 483(1)(a) of the Taxes Act 1988.
      (3) In sub-paragraph (2) above the reference to transitional sums is to such sums paid or credited after 28th February 1991 and before 6th April 1991 as may be determined in accordance with the regulations.
      (4) In subsection (3)(a) for the words from "actual" to the end of the paragraph there shall be substituted the words "appropriate amount".
      (5) The following subsection shall be inserted after subsection (3)—
      "(3A) In subsection (3)(a) above the reference to the appropriate amount is to the actual amount paid or credited in the accounting period of any such dividends or interest together with—

      (a) in the case of dividends or interest paid or credited in the year 1990–91, any amount accounted for and paid by the society in respect thereof as representing income tax, and

      (b) in the case of dividends or interest paid or credited in the year 1991–92, any amount of income tax accounted for and paid by the society in respect thereof.".'.—[Mr. Ryder.]

      Mr. Nicholas Brown: Schedule 5 effectively abolishes the composite rate tax scheme and introduces the new scheme, involving deduction of basic rate income tax. It is likely that the old rules covered the transitional period straddling the changeover date of 6 April 1991. However, the Government seem to have had second thoughts on this point, and the amendments are designed to facilitate those second thoughts. It is an unexceptional point and is acceptable to the Opposition.
      Amendment agreed to.

    Schedule 6

      LIFE ASSURANCE: APPORTIONMENT OF INCOME ETC.
      Amendments made: No. 30, in page 129, line 18, after 'agency' insert 'outside the United Kingdom'.
      No. 31, in page 133, line 29, after 'if, insert '—

      (a) each of the'.

      No. 32, in page 133, line 31, leave out 'the reference' and insert—

      '(b) in subsection (5)—

      (i) a reference to overseas life assurance business were included after each of the references to pension business in paragraph (a)(ii), and

      (ii) each of the references in paragraph (b)'.— [Mr. Ryder.]

    Schedule 8

      INSURANCE COMPANIES: HOLDERS OF UNIT TRUSTS ETC.
      Mr. Deputy Speaker: We now come to amendment No. 40, to be moved formally. I call Mr. Nick Brown.
      Hon. Members: Aye.
      Mr. Nicholas Brown: I hear hon. Members shout, "Aye," I am happy to take that as the consensus view rather than launching into my half-hour oration.
      Nevertheless, I beg to move amendment No. 40, in page 147, line 18, at end add—
      '(4) Relief under this paragraph shall be calculated in such a manner as is just and reasonable notwithstanding anything in section 35 Capital Gains Tax Act 1979 (part disposals).'.

      819
      Clause 46 provides for an annual deemed disposal of holdings of unit trusts and relevant interests—I am sure that this is going to keep the attention of the whole House—in offshore funds held by an insurance company as part of its long-term business fund. There are transitional provisions in schedule 8(2) to provide relief for assets held on two back liabilities in respect of policies issued before 1 April 1990.
      These provisions were foreshadowed in the December 1989 Inland Revenue press release, which stated in respect of assets relating to pre-1 April 1990 policies:
      "These assets will not be chargeable under the new rules for so long as the corresponding liabilities are outstanding."
      There is a problem with the existing part disposal rule for capital gains tax calculations, which means that the value of the relief is eroded much more quickly than the liabilities run off. During discussions with the Inland Revenue, a solution to this problem was suggested, but the Financial Secretary stated in Committee that the legislation required to deal with that calculation in detail would be very complex and lengthy and that he was not persuaded that the introduction of such legislation would be appropriate.
      The Association of British Insurers suggested to us and, it appears, to other members of the Committee the simple amendment now before the House. It requires little space in the Bill. Effectively, it empowers the Inland Revenue to ignore the effect of section 35 of the Capital Gains Tax Act 1979, when applying the rule in schedule 8, if the Revenue accepts that it would be just and reasonable to do so. Everyone from the ABI who approached us seems to think that that would meet the point. We are persuaded that it would do so. I hope that the Government will reconsider and accept our modest, constructive amendment.
      Sir William Clark: From the outset I should state that I am a consultant to Commercial Union Assurance. I congratulate the hon. Member for Newcastle upon Tyne, East (Mr. Brown) on reading out the brief, of which I have a copy, with such panache. He put the point that was made by the ABI, as he rightly said.
      There is no question but that the Government are sympathetic to what the insurance industry seeks to do. The only thing that holds them back is the complexity of any legislation. I hope that my hon. Friend the Financial Secretary will give the House an assurance that the Government will reconsider. There appears to be an anomaly, and if it proves to be one that affects the insurance industry, I hope that remedial action will be taken.
      Mr. Lilley: Our problem is that dealing with the underlying problem would require complex further legislation. An amendment which simply refers to calculations proceeding in a just and reasonable manner does not provide the required level of certainty or the sound basis on which the law should be framed. Different companies may have different ideas of what is just and reasonable. That lack of precision could give rise to disputes that would have to be resolved before the appeal commissioners or in the courts.
      However, I recognise the industry's worries. While it is not possible to introduce detailed legislation in this year's Bill, I can say without commitment that we shall consider returning to the problem next year. By "we", I mean my hapless successor.
      Mr. Nicholas Brown: I am sure that it will not be a hapless successor.
      It is not often that the right hon. Member for Croydon, South (Sir W. Clark) and I have similar speeches to make and similar briefs to read in the House. That is a welcome event. I hope that it is the beginning of a new consensus between us. Nevertheless, I suspect that probably I have not incited sufficient rebellious spirit on the Conservative Benches—although I can see that I have made a start. I would waste the time of the House by putting the matter to the test of a Division. I know that the Financial Secretary's not hapless successor will want time to reconsider the points raised. He may even arrive at a different conclusion. To facilitate that, I beg to ask leave to withdraw the amendment.
      Amendment, by leave withdrawn.

    Schedule 18

      DEFINITION OF "LOCAL AUTHORITY"
      Mr. Nicholas Brown rose—
      Amendment made: No. 33, in page 180, line 9, leave out paragraph 3 and insert—
      '3. In section 149B of the Capital Gains Tax Act 1979 the following subsections shall be substituted for subsection (3)—
      "(3) A local authority, a local authority association and a health service body shall be exempt from capital gains tax.(3A) In subsection (3) above—

      (a) "local authority association" has the meaning given by section 519 of the Taxes Act 1988, and

      (b) "health service body" has the meaning given by section 519A of that Act.".'.—[Mr. Ryder.]

    Schedule 19

      REPEALS
      Amendments made: No. 34, in page 182, leave out lines 34 to 37.
      No. 35, in page 184, line 4, at end insert—

      '1990 c. 19.

      The Natinal Health

      Section 61(2).'.

      Service and

      Community Care Act

      1990.

      No. 36, in page 184, line 7, leave out from 'repeals' to 'section' in line 8 and insert
      'of section 52 of the Finance Act 1974 and'.
      No. 22, in page 184, line 19, leave out 'sections 476,' and insert
      'section 476 (apart from the repeal in subsection (4) of the words from the beginning to "affecting" and the words "and that paragraph") and sections'.—[Mr. Ryder.]
      Mr. Nicholas Brown: On a point of order, Mr. Deputy Speaker. You put Government amendment Nos. 33, 34 and 36 to the House, overlooking the fact that the Opposition Front Bench spokesman was rising to speak. It was difficult for you to overlook it—
      Mr. Deputy Speaker: Order. Those amendments have already been debated. They were disposed of earlier.
      Further consideration adjourned—[Mr. John M. Taylor.]
      Bill (as amended in Committee and in the Standing Committee), to be further considered this day.

      Care of Cathedrals
      1.19 am
      Mr. Michael Alison (Second Church Estates Commissioner, representing the Church Commissioners): I beg to move,
      That the Care of Cathedrals Measure, passed by the General Synod of the Church of England, be presented to Her Majesty for her Royal Assent in the form in which the said Measure was laid before Parliament.
      This Measure, and a second Measure still on its way to Parliament—the Care of Churches and Ecclesiastical Jurisdiction Measure—but to which the General Synod gave final approval last week, represent the fulfilment, essentially, of a commitment made by the Synod to the Government in July 1984. The terms of that commitment were that the Church of England would implement voluntarily the proposals of the Faculty Jurisdiction Commission contained in its report published likewise in July 1984, provided that all churches in use, including cathedrals, were allowed to remain exempt from listed building controls; and that the state aid scheme launched in 1977 for churches in use, but as yet not for cathedrals, should be made permanent.
      In October 1986, the then Parliamentary Under-Secretary of State for the Environment, Lord Skelmersdale, announced the Government's acceptance of those two conditions. As a result, from early 1987 onwards a drafting committee chaired by Dr. Eric Kemp, Bishop of Chichester, has been continuously engaged on the task of preparing the promised legislation of which this Measure is the first instalment.
      In deciding to give priority to the care of cathedrals, the Bishop of Chichester and his colleagues took account of the fact that cathedral buildings, despite their immense historical and architectural importance, are at present outside the scope both of the Church of England's own faculty jurisdiction and of the state's system of listed building control. It seemed only logical to plug that gap before improving and extending the faculty jurisdiction that already controls repairs and alterations to churches other than cathedrals.
      Before outlining the provisions of the Measure, I draw the attention of the House to clause 1 in particular. It lays down explicitly the important principle that the functions of care and conservation which the measure confers on certain bodies—whether new or existing bodies—must be exercised with
      "due regard to the fact that the cathedral church is the seat of the bishop and a centre of worship and mission."
      While to many people that may seem a statement of the obvious, there are still some conservationists who need to be reminded that even the most important of our ancient churches have rightly and necessarily been altered and adapted to reflect changes in patterns of worship as one century has succeeded another.
      A balance must always be struck between, on the one hand, the role of the cathedral as
      "a spiritual powerhouse for the whole diocese",
      as the Bishop of Chichester described it, and, on the other hand, the temporal needs of the building as a part of our nation's architectural, archaeological and artistic heritage. Members of the General Synod, and not least the deans and provosts among them, set great store by the inclusion of clause 1 in the Measure. It will ensure that those who administer it have clear guidance, to the effect that their
      822
      duty is to attempt to reconcile the potential tension between spiritual concerns and heritage concerns, and not to pursue the one objective to the exclusion of the other.
      I turn to the control mechanisms that the Measure will introduce. Whereas in the past the administrative body of a cathedral enjoyed sole authority in the last resort to alter the interior of the building or to dispose of or acquire moveable contents, it will in future be required to secure the approval of a local statutory committee for every proposed change of significance short of certain really major changes—about which, more anon. There is to be one such committee for each cathedral, known as its fabric advisory committee. As schedule 2, which provides for its membership, shows, it will not include the dean or provost or any residentiary canon of that cathedral as voting members. Rather it is intended that this committee should be an independent group with relevant expertise and a particular interest in the cathedral concerned.
      The authorisation of the more important changes, including the disposal by sale or otherwise of outstanding moveables, will be reserved for a new statutory body at the centre to be called the Cathedrals Fabric Commission. This body will replace the present Cathedrals Advisory Commission which is constituted, like the other non-statutory boards of the General Synod, under the synod's standing orders.
      In many respects the new commission will inherit and continue the useful advisory functions of the one it succeeds, but it will have in addition a statutory power of control which will enable it to prevent action by a cathedral's administrative body without the commission's consent. This "new-look" commission will also be able to resolve disagreements between an administrative body and the local fabric advisory committee. Great care has been taken to involve as wide a range of expertise as possible in the composition of this very important commission. That composition is set out in schedule 1 to the Measure.
      There is also a provision in the Measure allowing an appeal by an administrative body against a refusal by the Cathedrals Fabric Commission to give approval to any particular proposal. An appeal by an administrative body at that level of jurisdiction is to take the form of a request for a commission of review. This would be an ad hoc three-member body which can fairly be described as the long-stop feature of the system, unlikely to be needed except on rare occasions. One member, probably the chairman, would be the Dean of the Arches or another lawyer appointed by him, the second a dean, provost or residentiary canon of another cathedral appointed by the two archbishops, and the third a nominee of the Secretary of State for the Environment.
      For a fuller treatment of the origins and content of the Measure, I refer hon. Members to the customary appendix to the ecclesiastical committee's report, which contains the report of the General Synod's legislative committee. In particular, I should underline the fact that, as can be seen from paragraph 12 of the latter report, not one single contrary vote was recorded in the final approval vote on the Measure in November 1989.
      Like the Bishop of Chichester in another place, I should like to put on record, on behalf of the Measure's drafting committee, our warm gratitude to all the present and past Ministers responsible for heritage matters, and to all those officials in the Department of the Environment who have advised them, for their unstinting help in the preparation of this intrinsically sensitive area of church legislation.

      823
      Let me say a word in this context about enforcement. Earlier this year, after consultation with the present Minister, the draft Care of Churches Measure, the one following this Measure, and still en route to us, was amended in the General Synod to include the enforcement provisions now contained in clause 12 of that Measure which were also acceptable to the Department of the Environment. It was too late, however, at that stage to amend the present Measure, and, in any event, there were then as yet no agreed proposals for an enforcement procedure appropriate to the special needs of cathedrals.
      To sum up, the present position as to enforcement is that the General Synod is already committed to an adequate enforcement procedure for cathedrals, if necessary by legislation. But the acid test is that this Measure should work. All of us in the Church of England are determined that it should, but we are equally clear that if experience gained after a reasonable trial shows it is not working, further action must be taken. Meanwhile, plans are laid to introduce the rules required under the present Measure for the approval of the new synod in November of this year. Once those are in force, the stage will be set for the archbishops to bring the main provisions of the Measure into operation shortly after.
      The Measure is undoubtedly a landmark in the lengthy process in which the Bishop of Chichester, his Faculty Jurisdiction Commission of the early 1980s and latterly his drafting group appointed in 1987 have each played a vital part. May I add my personal thanks to them for their achievements. I hope that the House will now help to crown them by endorsing this Measure, which seeks to give greater protection to some of the finest historical buildings that we as a nation possess.
      1.29 am
      Ms. Joan Walley: The Opposition welcome the Measure that is before us at this very late hour. There is no doubt that our 42 mainland cathedrals of the Church of England form, in the words of English Heritage,
      "the largest coherent and artistically splendid group of listed buildings in England, as well as being of enormous archaeological importance. They are also the home of some of England's greatest works of art from the post Roman period onwards."
      I am sure that many hon. Members and others concerned about the subject will fully agree with the view expressed by English Heritage.
      We welcome the fact that for the first time occasionally controversial decisions that would affect the buildings and contents of our Church of England cathedrals will now become subject to a procedure that will give a measure of public involvement in, and even control over, those wonderful listed buildings.
      We also recognise the enormous amount of hard work that has gone into the formulation of the measure. It seems remarkable that we have ended up with a proposal that is, as we have just heard, so acceptable to so many people, given that the first draft suggested that the Measure would not see the light of day.
      We believe that the local fabric advisory committee and the central Cathedrals Fabric Commission will definitely be of great benefit to the church administrative organisations responsible for the conservation and maintenance of cathedrals. We have no doubt that their membership, so carefully chosen, and the individuals who
      824
      will be appointed to serve on them, will bring enormous expertise and specialist knowledge to our cathedrals. That is particularly important and something from which our cathedrals will greatly benefit.
      I am sure that such wide knowledge of everything—architecture, archaeology, art, church music, stained glass, and historic manuscripts—will be invaluable to cathedral authorities charged with the task of balancing the cathedral as a place of worship against the concept of the cathedral as a vital part of our national heritage. That balance reminds me of the one that must be kept between nature conservation and access to the countryside. Drawing and maintaining that balance is an important part of conservation.
      It is important to view the Measure alongside other developments that are relevant to our cathedrals, some of which the right hon. Member for Selby (Mr. Alison) touched on. Positive action to implement the Faculty Jurisdiction Commission's 1984 report has been much too slow in coming forward. Today's Measure brings the standard of controls over listed Anglican churches more closely into line with those for secular buildings. However, that is only one of several measures needed relating to cathedrals and their conservation.
      I understand from a debate in another place that proposals on the restriction of the ecclesiastical exemption of listed building control following the consultation paper last year are imminent. In the debate on 28 June in the other place, the Parliamentary Under-Secretary of State for the Environment, Lord Hesketh, stated:
      "Tonight is not the right occasion on which to go into the details of our thinking on this issue"—[Official Report, House of Lords, 28 June 1990; Vol. 520, c. 1797.]
      I wish that there was a Minister present who could tell us what progress has been made on that. I would welcome comments from the right hon. Member for Selby, if not from the Minister, on the issue so that we may have some indication of the Government's timetable and the Synod's timetable for the implementation of the Measure proposing reductions in the scope of ecclesiastical exemption. I should be interested to know whether that proposal, whatever stage it has reached, is on the interiors as well as the exteriors of buildings. I am sure that that is an important issue.
      I join English Heritage in calling for speedy implementation to reduce exemptions. I should like to take the opportunity to ask for assurances that there are proposals for comparable controls for non-Anglican churches, chapels and other places of worship. Although a Minister is not present, it is important to draw attention to the fact that the buildings of other religious denominations are an equally important part of our national heritage.
      The lack of enforcement provisions in the measure must be remedied at the earliest opportunity. I noted carefully the comments of the right hon. Member for Selby and of the Bishop of Chichester that enforcement provisions for both the Care of Cathedrals Measure and the Care of Churches Ecclesiastical Jurisdiction Measure were withdrawn at the request of the Government. We must not delay tonight's Measure, but I wish to emphasise that an adequate enforcement procedure, properly resourced, is the highest priority.
      There is growing concern that the architectural heritage embodied in our churches and cathedrals is not receiving adequate funding for its care and upkeep. Statutory controls for the care of cathedrals are welcome because

      825
      they bring more accountability to the standards and mechanisms for church controls. Government and the churches must closely define the matters in which the latter retain freedom of action for building adaptations and change of use, while releasing more state funding subject to the expansion of an educational and interpretive role by the churches. That is an important point to make.
      Nobody knows how much maintenance and repair work is needed to keep our cathedrals in good order. To keep them more than wind and watertight, and so that they can weather the years ahead, a full audit of outstanding repairs is long overdue, and we must bear in mind the need to take account of the effects of acid rain.
      Is it not time that the Government and the Synod, with the assistance of English Heritage, assessed the state of the fabric and condition of our cathdrals and their contents? Is not it time that we took account of the dual role played by our cathedrals? Virtually each of our cathedrals, as well as being a place of worship, has become a centre for tourism, but some more than others. We should recognise the contribution made by the Salisburys, Wellses, Chesters, Herefords and other better-known cathedrals—or perhaps those with the greatest treasures that people, particularly tourists, wish to see—and by tourism to local economies. That can be a great economic bonus to local areas as well as bringing extra worshippers to cathedrals.
      We must take account of the effects of wear and tear on the fabric of buildings and the financial implications of that. The comparison that comes to mind are the tiles in Central Lobby. I cannot help but notice that those tiles, knowing that they were manufactured in my constituency, are inevitably worn out by the hundreds and thousands of people who pass over them. We should provide the extra facilities that are both necessary and desirable for the constant stream of visitors to our cathedrals, bearing in mind the balance to which I referred earlier.
      We recognise that any increased expenditure on our priceless cathedrals must go hand in hand with priority treatment for the recruitment and training of skilled craftsmen and craftswomen. We cannot begin to deal with the fabric of our cathedral buildings without taking account of the need to ensure that we have properly trained and qualified people to do the job.
      Historic buildings, ancient monuments and our national heritage have all suffered from public spending cuts. We recognise—as did the Select Committee on the Environment in its final report of February 1987—the need to improve the protection given to monuments, buildings and sites of archaeological importance, which, of course, includes cathedrals. Meanwhile, this Measure, although small in relation to that need, will play a large part in safeguarding the cathedrals that are so vital to our national heritage. It has our full support, if not—dare I say it?—our blessing.
      1.40 am
      Mr. Colin Shepherd: I congratulate my right hon. Friend the Member for Selby (Mr. Alison) on the clear and detailed way in which he set out the Measure. It is extraordinarily nice to debate a Church of England Measure with which I can wholeheartedly agree: I seem to
      826
      have been short of those of late, and it is a great pleasure to speak on one that I have pressed for—albeit only in spirit; the Synod pressed for it in actuality.
      It does not seem nearly two years since I stood here in high dudgeon, demanding that the Measure be presented to prevent the unfortunate experience suffered by Hereford a while ago. The nub of the matter for me, and, I think for Hereford—apart from the broad aspects mentioned by the hon. Member for Stoke-on-Trent, North (Ms. Walley)—is the question of the disposal of articles of value and historical interest. I am delighted that that has been brought into line with the provisions for parish churches, which have existed for some time.
      The House will be aware of the trauma involving Mappa Mundi which was sprung on this place in November 1988, on the verge of the 700th anniversary of the drawing up of Mappa Mundi by a canon—admittedly from Lincoln. The artefact itself had hung, modestly undisturbed, in Hereford cathedral for 700 years less a month; it was unfortunate that it should find itself in the limelight as a result of the decision by the dean and chapter to use it to restore the cathedral's financial fortunes.
      All hon. Members were seized with a sense of outrage that such an artefact should be hawked around to potential buyers—and, indeed, should evaporate, in conditions of great secrecy, in the direction of a London firm of auctioneers. Altogether it was an unfortunate experience, and it is pleasing to know that it will probably not recur. I have great sympathy for the cause of the dean and chapter who sought to address through this valuable artefact the question of repair and maintenance and the funding of future maintenance and other matters pertaining to the cathedral.
      Hereford cathedral has tremendous problems. It is not lavishly endowed with past generosity, but lives from hand to mouth. It was understandable that the dean and chapter should have decided in extremis that the prize was worth the outrage. I am glad that outrage won and that the prize was put back on the shelf. The outcome was intriguing. I subscribe to the cock-up theory rather than to the conspiracy theory about the way in which activity was started. I think that it was felt that the row would last a few days and when the dust settled the artefact would be sold and a nice £4 million or £5 million would be gained which would be sufficient to deal with most of the problems and endow a fund for appropriate maintenance.
      As so often happens in cock-ups, things went wildly wrong. On the conspiracy side, there is no way in the world that we could have promoted the Mappa Mundi to the rank of a world renowned artefact, which it now is, if we had not gone through the curious exercise which took so long and which cost so much. The naughty side of me asks whether there was an intrigue which promoted the artefact. I have discarded that theory, but it is a nice little thought. However, it is now well known throughout the world that Hereford cathedral has the earliest known full map of the world.
      I am delighted to have the Mappa Mundi back in Hereford. It is on display now and I invite hon. Members to come and see it and get to know it. I have been enjoying it for 40 years and I thoroughly enjoy taking guests to see it, especially those from America because the Mappa Mundi has a space where America might be—because it had not been discovered when the map was drawn. That keeps everything in perspective.

      827
      Its display presents a challenge and I look forward to the display and exhibition which is being worked on. The new building will exhibit great architectural sensitivity and delicacy and, in conjuncton with the display in the chained library, should provide an attraction that will keep Hereford on the map, if I may use such a phrase. It will develop the important relationship between the cathedral and the community.
      We must take into account the matters mentioned by the hon. Member for Stoke-on-Trent, North so that cathedrals can withstand the wear and tear of visitors. The building will need to be designed so that people are taken from some parts of the cathedral into the specially prepared display area to enjoy the exhibit in all the magnificence that has been brought out by modern technology. That will discharge the function in clause 1 of the Measure, which is to recognise that the cathedral is the seat of the bishop and of worship. The legislative committee's report forms one of the documents in the debate. Paragraph 10 of part 1 on page 4 states:
      "Nevertheless, the General Synod is preparing to bring forward specific provisions early in the lifetime of the next Synod, addressed directly to the further protection of cathedrals."
      If my right hon. Friend the Member for Selby is fortunate enough to catch your eye towards the end of the debate, Mr. Deputy Speaker, I hope that he will explain what that means. Does it involve enforcement, as the hon. Member for Stoke-on-Trent, North has asked, or further dimensions of the cathedral protection requirements that are not covered by the Measure before us, comprehensive as it seems? I hope that the House will continue to give the Measure a fair wind.
      1.50 am
      Mr. Simon Hughes: Measures that are expected to be non-controversial that emanate from the Synod come on at about this time of night. It is a pity that we cannot give them slightly better billing. An earlier time was found when a previous Measure ran into difficulty in the middle of the night. It was thought safer to reintroduce it earlier in the day. I wish that we could have been given a better slot this evening, even though the troops were not to be called in to reverse the result of an earlier rebellion.
      I welcome the Measure and feel an affinity with it. I was a cathedral chorister for the first part of my life. I attended a secondary school in another cathedral city and then moved to a further cathedral city with my family on leaving school. I now represent not one but two cathedrals. It is not surprising that I have an especial interest in cathedrals. I am happy to take up the remarks of the hon. Member for Hereford (Mr. Shepherd) because, like him, I have shared the joys of the history and treasures of Hereford cathedral over many years. I have enjoyed them personally and with others before they became so well publicised. I have shared the outrage and concern that we should suddenly find that we had lost, or thought that we had, the greatest treasure that the cathedral had of a moveable sort.
      The Measure is directed at that issue and would prevent the future folly of the sale of such an important treasure as the Mappa Mundi. It would prevent the Mappa Mundi from suddenly being taken away and placed in a sale
      828
      without proper control by authority delegated through the different hierarchy that the Measure provides. That is only for the good.
      It was argued that the Mappa Mundi was a treasure of Hereford, and indeed it was. It was also a treasure of us all. It was part of our national heritage. It is important, as the hon. Member for Stoke-on-Trent, North (Ms. Walley) said, that our heritage is preserved for us all to enjoy, and at the most appropriate places.
      The Measure would set up a decent substitute system for dealing with planning issues that affect the English cathedrals. It has taken a long time to get to this place. The process has been under way for more than eight years, or for nearly a decade. I do not complain about detailed consideration and I do not seek to devalue the work of the Bishop of Chichester and his committee, and of many others, but the complaint has been made that Measures that affect the Church often progress extremely slowly from the realisation of the need for them until they are approved by Parliament. That does not do the Church or Parliament, for as long as this place has responsibility, much good.
      Mr. Colin Shepherd: In this instance, Parliament has not hung around for long. The relevant date is 30 April, and that was not so long ago.
      Mr. Hughes: I do not suggest that on this occasion Parliament caused the delay. The process, from its conception to its conclusion through Synod and Parliament collectively, will have taken about eight years. That is a very long time. Had we been quicker, we should have avoided some of the problems to which reference has been made in the debate. Therefore, I share the hope of the right hon. Member for Selby (Mr. Alison) that the remaining part of this jigsaw, enforcement control, will come to Parliament soon. It should not be delayed. It is part of a package deal—that planning provision should be made and that enforcement should be provided for in a different Measure. The state aid provision is part of the agreement that was set out by the Under-Secretary of State in 1986.
      It is accepted that the state must make provision for cathedral treasures. They are part of our heritage. That must be implemented soon. State aid is already provided for churches. Since the cathedral authorities desired to retain their autonomy, state aid has come later for them, but I hope that it will not be long before that part of the jigsaw is also in place. The cathedrals have to pay a price for that aid. They have to sacrifice their autonomy. However, it is a reasonable price. The structure that has been worked out is reasonable.
      I share the view that we must not be partisan. There are parts of our Christian heritage and of our wider religious heritage that are not part of the Church of England. I hope that the same generosity will be extended to those parts of our Christian and religious heritage that fall within the jurisdiction of other churches and faiths. There are free church chapels that need support.
      My hon. Friend the Member for Brecon and Radnor (Mr. Livsey) specifically asked me to mention the position of the cathedrals of the Church in Wales. I know them all well. There are only six. Four of them are in rural parts of Wales. Substantial sums of money need to be spent upon them. Their repair bills amount to about £2 million. They are located in areas where it is difficult to raise money.

      829
      They, like the cathedrals in England, do not qualify for grants from Cadw, the Welsh equivalent of English Heritage.
      I have read in the Measure that cathedrals of the Church in Wales can apply under section 11 for advice from the commission. That is to be welcomed. I do not know, however, whether it is envisaged that they will also be able to receive funds when the Measure for state aid for cathedrals comes into force. I should be grateful if the right hon. Member for Selby could answer that question.
      A linked question relates to section 11(2)(b). I see that provision is made for a second category of cathedral, to be the subject of an application for advice from the commission. It is said to be
      "a cathedral church other than a cathedral church of the Church of England or the Church in Wales."
      I presume that that means, for example, a Greek Orthodox cathedral or the cathedral of another denomination. I am glad about that. I hope that the commission will deal positively with any request and will not seek to make a substantial profit out of it.
      The Measure provides that expenses should be reimbursed. That is reasonable. It should also be reasonable that the commission should not seek to profit from the desire of cathedrals of other denominations to benefit from the commission's expertise.
      I welcome the provision in section 12 that there should be consultation before the appointment of a cathedral architect. In particular, I welcome the provision that the cathedrals shall have the duty to appoint an archaeological consultant. My cathedral in Southwark—a very old one—is in the middle of an area that is so rich in archaeological remains that we hardly dare disturb anything. If we do, we chance upon another major archaeological find. Such finds are welcome. We found the original Roman road from London to Dover during the last couple of weeks. We find Shakespearean theatres at the rate of about one a year. All that is welcome, and it is important that the cathedral has someone to give advice on archaeological heritage, particularly as the Government have not yet agreed to the designation of further areas of archaeological importance.
      It is good that clause 13 provides for the compilation and maintenance of an inventory of objects in cathedrals. That is a right and proper list that should be available. There should be two categories, particularly noting those of outstanding archaeological, architectral, artistic or historic interest. It is good that section 14 provides that records should be kept and reports made on a regular basis on the state of the fabric of our cathedrals.
      I apologise if the right hon. Member for Selby thinks that I should know the answer to this question, but there is the provision for opt-out from the structure by some of our cathedrals. That is for cathedrals that are also parish churches. I understand that and do not oppose it. I would be interested to know—it is important to put it on record—how many cathedrals might be part of that provision which would take them out of the jurisdiction to which the Measure applies—the heritage of our cathedrals. I hope that the right hon. Gentleman can give me a simple and factual answer.
      I hope that this unanimous recommendation of the Church—that is the unusual feature of the report from the Synod to us—will soon be in force and that we will have
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      taken a clear, if slow, step towards the better guardianship of some of the jewels of our English heritage. The Measure is most welcome.
      2.2 am
      Dr. John G. Blackburn: I must pay a warm and generous tribute to my right hon. Friend the Member for Selby (Mr. Alison) for the manner in which he introduced the Measure to the House. I have three reasons for wishing to participate in the debate. First, I have had the privilege, the challenge and the pleasure of serving for the past 11 years on the Ecclesiastical Committee of the House. Like the hon. Member for Southwark and Bermondsey (Mr. Hughes), I think that it is tremendous to see the fruits of our labour.
      Secondly, I am unique in that the constituency which I am honoured to serve is divided in diocesan terms between Lichfield and Worcester. In that connection it was tremendous to hear my hon. Friend the Member for Hereford (Mr. Shepherd) give a graphic account of the events leading to the safety and secure retention of the Mappa Mundi.
      The crypt of the cathedral church of Christ and St. Mary was built in 1092 and the tower was completed in 1374. It is because of the events of 1374 that we have this measure before us to ensure that we retain our inheritance, our heritage and, as has been said several times, our stewardship of the cathedrals. The cathedral church of St. Mary and St. Chad in Lichfield was finally completed in 1195. Both those cathedrals have suffered great decay in the fabric of the buildings. I am honoured to be part of a team raising £10 million for the restoration of Worcester cathedral. Recently, nearly £1 million was raised for the restoration of the cathedral church of St. Mary and St. Chad.
      Thirdly, tonight is a special night in the history of the cathedrals. We are doing something that should have been done centuries ago—securing the fabric of our cathedrals. I welcome the creation of a Cathedrals Fabric Commission for England. Section 11 refers to "advice", but it is good to read on. It is almost like a biblical story—the more one reads, the better it becomes. As the hon. Member for Southwark and Bermondsey delightfully outlined to the House, we find that clause 12 refers to "duty". That appeals to me because of the inventory that will be taken and because a cathedral architect will be appointed, under the Cathedrals Measure 1963. Hon. Members are united on the issue of the appointment of an archaeological consultant. I suspect that the consultant appointed at Southwark will work much harder than the Worcester consultant.
      The Houses of Bishops, Clergy and Laity passed this Measure in the General Synod without a vote against. Tonight of all nights we can rejoice at the acceptance of the Measure. We are fulfilling our stewardship as parliamentarians, our duties as Christians and our responsibilities as citizens by protecting the cathedrals and giving them the expertise of the fabric advisory committees.
      This action has been taken by the Church—dare I say it—to put its house in order and to safeguard its future. The Measure will be welcomed the length and breadth of Christendom, and I wish it Godspeed.
      2.7 am
      Mr. John Bowis: I am delighted to join the late night line-up discussing our great cathedrals. I have no history of choir singing in such great buildings. All I can offer is the fact that when I was first married, I lived within the precincts of one and was woken every Sunday by the mellow but thundering bell of the cathedral at Peterborough. On the basis of that little bit of history, I join this debate to welcome the comments of my right hon. Friend the Member for Selby (Mr. Alison). Like my hon. Friend the Member for Hereford (Mr. Shepherd), this is the first time I have had the pleasure of supporting a Measure from the Church of England. I do so warmly.
      This is a good, useful Measure. As my hon. Friend the Member for Dudley, West (Dr. Blackburn) said, we are contributing to the preservation of our heritage and to passing it on to the next generation. This is all part of Church and Parliament coming together to achieve that end, and that is a good idea.
      I shall not detain the House for long. I merely wish to ask my right hon. Friend one or two questions as much for my own clarification and education as anything.
      Within the precincts of Peterborough cathedral is a rather fine bishop's palace. I want to know the extent to which bishop's palaces are incorporated in the Measure. Such palaces are often within cathedral precincts, but not always. There may be occasions when palaces outside need to be incorporated in the Measure.
      Again for information, can my hon. Friend tell me whether we are considering cathedrals only, or does the Measure include some of the great abbey churches—such as Westminster just across the road—or are they subject to different legislation?
      The hon. Member for Southwark and Bermondsey (Mr. Hughes) mentioned cathedrals that are also parish churches. I know of one in Portsmouth. I suspect that very often they are more recent churches which do not have the same problems of antiquity that affect most cathedrals, but I should be grateful for a word or two on the reasons why cathedrals which are also parish churches are exempted from the Measure in such a way.
      Another cathedral that I know a little of—not so much a church as a chapel—is Christ Church of Oxford. I know that that is specifically exempted from the Measure. What is the reasoning behind that, and what protection is given to that building? Perhaps special statutes govern the buildings of the university of Oxford which cover it adequately, but we should be told in this debate.
      Will cathedrals that may be approved in future—either parish churches or new buildings—automatically come within the terms of the Measure?
      Clause 15 refers to any
      "building or monuments within the precinct".
      I know of many cathedrals where the wall of the precinct is one of the features that one would wish to protect and preserve. Will ancient walls surrounding cathedrals be incorporated?
      My hon. Friend the Member for Hereford has great experience of recent events in Hereford and has wisely gone into the question of the treasures of our cathedrals. I hope that the Measure will not deter cathedrals from lending treasures. It is important that they continue to lend them out on exhibition and that they tour the country, as it is good for people in the rest of the country and good for the cathedral to have such treasures more widely viewed.
      832
      To refer back to a question and answer that I had from my right hon. Friend the Member for Selby earlier today, I express the hope that the security of cathedrals is being taken into account in such Measures. We have had unfortunate experiences with damage caused by break-ins and of items being stolen. This is a chance for the Church to put its house in order—locked-up order if necessary— as regards its treasures and assets.
      In all our discussions, now and in future, we must bear in mind the fact that cathedrals are not static items of architecture. They have evolved over the centuries. I know of no great historic cathedral church which does not contain a multiplicity of ages of architecture and design. That is part of the great glory of our cathedrals.
      I hope that we shall do everything that we can to protect and preserve the ancient and the good in our cathedrals, but that we will not stifle good additional modern designs which can enhance their lives.
      I join all other hon. Members who have welcomed the Measure.
      2.14 am
      Miss Ann Widdecombe: Matthew chapter 6, verses 19 and 20.
      2.15 am
      Mr. Alison: With the leave of the House, I shall answer some of the questions that have been asked.
      The hon. Member for Stoke-on-Trent, North (Ms. Walley) asked why the Measure had been so long delayed. The 1984 report of the Faculty Jurisdiction Commission was conditionally endorsed by the General Synod in July 1984—the condition being that the Government would respond in certain respects. There was then a long lapse of two and a half years before the Government reached their conclusion that it was reasonable to accept the General Synod's outline proposals and conditions. This they did in October 1986.
      The first version of the Measure was then introduced into the General Synod in February 1988, but consideration was adjourned following criticism by, among others, deans and provosts. As there are quite a number of deans and provosts, that took a great deal of sorting out. So this Measure was not introduced to the General Synod until November 1988 and it was finally approved a year later. So although the wheels have ground slowly I hope that they have ground exceedingly small and effectively—although there has been an extensive delay.
      Under the final clause in the Measure, implementation is likely to be in March next year.
      The hon. Member for Stoke-on-Trent, North asked about the possibility of other churches being included. I cannot speak with authority about the position of other denominations since I represent the Church Commissioners for the Church of England, so I can speak only for the Church. I can refer only to clause 11, with which the hon. Lady will be familiar, which is about advice being provided on a purely voluntary basis for other churches. I am not competent to answer on the fate of the architectural merits of churches outside the Church of England.
      My hon. Friend the Member for Hereford (Mr. Shepherd) is almost as well known—at least in the west of England—as the Mappa Mundi for the doughty battle that he fought for that priceless treasure in Hereford

      833
      cathedral. He asked a question about paragraph 10 in the explanatory memorandum, which speaks of bringing forward further
      "specific provisions early in the lifetime of the next Synod, addressed directly to the further protection of cathedrals."
      That refers to further enforcement provisions. Originally the idea had been to introduce a special Measure separate from the church and cathedral Measures, which would incorporate enforcement provisions for both categories of church building. However, it was not found possible to produce a satisfactory formula for enforcement. It was therefore decided that the cathedrals Measure should be allowed to go ahead on its own, without enforcement, precisely to help with crises such as that surrounding the Mappa Mundi. Meanwhile, a formula has been found for the churches Measure, which will presently come before the House.
      I can assure the hon. Members for Stoke-on-Trent, North and for Southwark and Bermondsey (Mr. Hughes), as well as my hon. Friend the Member for Hereford, that the General Synod is committed to providing an adequate enforcement procedure and has begun work on it. The General Synod has already had one meeting with its legal advisers followed by a helpful interview with the relevant Minister.
      The General Synod—or its officials—have roughed out a scheme which was considered by the drafting committee at the end of June. I am confident that the authorities will be able to produce a short Measure for the newly elected General Synod, which comes into being at the end of the year, and that shortly after that, the appropriate enforcement provision for this Measure will come along as a sort of "after burner", so to speak, and will reinforce it and add what is necessary to it. The words in paragraph 10, to which my hon. Friend referred, relate specifically to that.
      Apart from his query about enforcement, with which I hope that I have just dealt, the hon. Member for Southwark and Bermondsey also referred to clause 11. I am afraid that all that can be said is that advice will be available both for the Church in Wales and to churches of other denominations if they desire it. Obviously, no attempts will be made to exploit the expertise of the Church of England at their expense; costs will simply be covered. There is no question of any money being available, because the Measure has nothing to do with money. Unlike parish churches, there is no money available for cathedrals although we hope that, in the future, Government money may be available for cathedrals. The extent to which it will then be made available to cathedrals of other denominations is a matter about which I am not competent to advise the House. At present, there is no money in the kitty to help cathedrals, either in the Church of England, or anywhere else. We hope that there will be in the future.
      The hon. Member for Southwark and Bermondsey was right in his surmise that other cathedrals are eligible in the narrow sense that I have suggested, such as Greek Orthodox cathedrals, but not in the sense of money being available for them.
      The hon. Gentleman also asked about the potential of so-called parish church cathedrals to "opt-out". There are eight such parish church cathedrals in the province of Canterbury and a further six in the province of York. I am
      834
      advised that none has any intention of seeking or applying for what the hon. Gentleman described as the "opting-out" facility.
      I congratulate my hon. Friend the Member for Dudley, West (Dr. Blackburn) on his speech. The House knows that my hon. Friend has not been very well. It is marvellous to see him back, looking in robust health. The fact that he has stayed up until nearly half-past two in the morning to add his blessing for and endorsement of this Measure is a credit to the Measure as well as to my hon. Friend. We are pleased that he is here with us.
      My hon. Friend the Member for Battersea (Mr. Bowis) asked one or two questions that I shall try to answer. I am afraid that palaces do not necessarily fall within the scope of the Measure. My hon. Friend put his finger on the point that it all depends on whether the palace is within the precincts. Not many palaces manage to tuck themselves into the precincts of any of our great cathedrals, but if there are any, they will fall within the ambit of the Measure because the precincts are the determining characteristic of the Measure.
      Mr. Bowis: The palace at Peterborough is definitely within the precincts.
      Mr. Alison: Unless I am given contrary advice by my advisers, I suspect that this is an uncertain area, but the fact of being within the precincts is likely prima facie to mean that the palace would have to be considered carefully, in that context.
      My hon. Friend also asked about the walls within the precinct. As he will see if he reads the small print, the technical answer is that the Measure requires the administrative authorities to draw up a full, comprehensive and careful delineation of the precincts and to map them fully so that there is a definitive indication of the freehold territory occupied. Any administrative body that has any sense will make quite certain that the outside of the walls represents the outer limit of the precinct—not the inside of the wall—so that the wall falls within the precinct.
      My hon. Friend asked about buildings such as Westminster abbey. Only buildings which are specifically cathedrals, as defined in the interpretation clause 20, come within the scope of the measure. From that my hon. Friend will see that the definition
      "any cathedral church in the provinces of Canterbury and York,"
      excludes places such as Westminster abbey, which are not cathedrals. They do not have a dean and chapter in the same sense. The cathedral church of Christ Church in Oxford, to which my hon. Friend referred, is included because it is what is technically known as "a royal peculiar". It has its own mysterious jurisdiction and arrangements. For that precise reason it is excluded.
      My hon. Friend referred to the possibility that certain notable parish churches come within the scope of the Measure. They already come within the scope of the Faculty Jurisdiction Measure. They have their own governing rules and regulations. Therefore, there is no need to include them in the scope of the Measure.
      I have answered most of the queries that have been raised by my hon. Friends and by Opposition Members during this short debate. Perhaps it would be appropriate to mention that the Care of Cathedrals Measure represents one could almost say the final swansong, if it is appropriate to link swans with cathedrals, of the recently knighted Sir Derek Pattinson, who was for many years and

      835
      will be until Wednesday the Secretary-General of the General Synod of the Church of England. As it happens, Sir Derek is not far removed from us now. We all wish him a happy retirement and congratulate him on the success of his efforts to bring the Measure before the House tonight.
      Question put and agreed to.
      Resolved,
      That the Care of Cathedrals Measure, passed by the General Synod of the Church of England, be presented to Her Majesty for her Royal Assent in the form in which the said Measure was laid before Parliament.

    EUROPEAN COMMUNITY DOCUMENTS

      MILK AND MILK PRODUCTS
      Motion made, and Question put forthwith pursuant to Standing Order No. 102(5) (Standing Committee on European Community documents),
      That this House takes note of European Community Documents Nos. 4799/90 and 5598/90, relating to health rules for the production and marketing of milk and milk products; and supports the Government's aim of ensuring that any Council Regulations resulting from these proposals provide an effective and efficient system of hygiene controls throughout the Community without placing unnecessary burdens on small businesses.—[Mr. Sackville.]
      Question agreed to.

      MEAT HEALTH STANDARDS
      Motion made, and Question put forthwith pursuant to Standing Order No. 102(5) (Standing Committee on European Community documents),
      That this House takes note of European Community Documents Nos. 4780/90, relating to health rules for poultrymeat, 4596/90, relating to health rules for fresh meat, 4781/90, relating to health rules for meat products, 4863/90, relating to health rules for minced meat and certain other meat preparations, and 4782/90, relating to the conditions for granting derogations from specific Community health rules on the production and marketing of products of animal origin; and supports the Government's aim of ensuring that any measures resulting from these proposals contribute to effective harmonisation and efficient hygiene controls throughout the Community.—[Mr. Sackville.]
      Question agreed to.

      CADMIUM
      Motion made, and Question put forthwith pursuant to Standing Order No. 102(5) (Standing Committee on European documents),
      That this House takes note of European Community Document No. 10270/89 and the Supplementary Explanatory Memorandum submitted by the Department of the Environment on 8th June 1990, relating to cadmium and its compounds; recognises that the measure is generally in line with the European Community's agreed action programme on cadmium; and supports the Government's intention to ensure that European Community action in this area continues to take full account of United Kingdom interests.—[Mr. Sackville.]
      Question agreed to.

      Sewage Pollution (Cornwall)
      Motion made, and Question proposed, That this House do now adjourn—[Mr. Sackville.]
      2.27 am
      Mr. Matthew Taylor: I recently conducted a tour of primary schools in my constituency. One of the matters that the young people always raise with me is their concern about the environment—about beaches, waterways, CFCs or any other environmental issue that one might care to mention. That is a remarkable tribute to their awareness and, I hope, a sign of the way in which things will move in the future. It is appropriate to mention those children at the beginning of this short debate.
      The other matter that is constantly raised on my visits is the workings of Parliament and the peculiarity of a place that debates subjects so late. When I ask them when they think that we finish, they suggest 5 or 6 o'clock in the afternoon. They go on to suggest 8 or 9 o'clock and are surprised when I say that it might not be until half-past 10. They are even more surprised when I suggest that debates continue even later than that into the early hours of the morning.
      It is a record for me to start an Adjournment debate at 2.30 am—I do not know about the Minister. I am grateful to him for staying on to take part in the debate at thus hour. When children in my constituency raise environmental issues I shall be able to tell them not only that we debate until the early hours but that I debated precisely the matters that they raised with me.
      I requested this Adjournment debate tonight because of my anxieties about the pollution around the coasts of Cornwall. Our county is known worldwide for the beauty of our scenery and the quality of our unique environment. All of that is under threat in several ways. Indeed, all too often the reality is already far from ideal. The water is far from wholesome or pure. Tonight I wish to raise one of the most pressing of those anxieties. It comes as a shock and a surprise to those who encounter it. I refer to the problem of raw, untreated sewage around the Cornwall coast.
      In terms of designated bathing beaches, the situation is not as bad as it was. In 1989, 12 out of 70 designated beaches failed EC bathing water standards, but, sad to say, that tells only a small part of the story. More revealing is the fact that surfers around Cornwall recently formed their own campaign for action, Surfers Against Sewage, backed by local doctors, because of their experience of ill-health arising from people spending long periods in polluted water.
      The raw sewage that surfers, among others, encounter is the consequence of a system that which is not of the 20th century and which is no longer able to cope even if it did once. The concern felt among surfers is reflected by widespread public anxiety. Throughout the summer months in particular, I receive numerous letters from residents of and visitors to Cornwall giving horrific accounts of sewage strewn across the beaches and in the water, and who unwittingly allowed their children to play in water that was indescribably polluted.
      The most immediate concern is to safeguard public health and to alleviate the anxiety that pollution causes, but in a county in which about 15 per cent. of the work force is in the tourist industry, pollution has the potential for making a catastrophic impact on the livelihoods of a large number of local people. I hope that the Minister will

      837
      respond mainly to the genuine environmental concerns of my constituents, though the issue also has economic implications.
      Over the past 10 to 15 years, pollution has grown worse, not least because of population increases that have outstripped the public health infrastructure, compounded by the effects of increased affluence. They include the widespread ownership of dishwashers and washing machines that add to discharges. Sewerage built for the last century is still expected to cope with the demands of the next, even though it already collapses all too often.
      The repercussions of pollution go wider than just the sea. Some towns desperate to provide new housing for young people, and to encourage the construction of factories and workshops that will provide jobs, are forbidden to allow such development because the sewerage system would be unable to cope. One example of that is to be found in the Falmouth-Penryn area, just down the road from my constituency. We are told that South West Water cannot afford to act, and it has imposed an embargo on any form of development, even though it is socially desirable for the community.
      We ought to be aiming at the best in terms of sewage treatment, not the minimum that we think we can get away with. There are three types of treatments to be considered. Fine screening, or primary treatment, removes the visual evidence of sewage by reducing its size, but has no effect on the material itself, the bacteria it contains, or the contamination of which it is capable. Too often, not even fine screening is available, so the visual evidence of pollution is plainly there to see. However, just screening out the visual impact of pollution is not enough. In some cases it can give the public a false sense of security, as they cannot see for themselves that a problem exists.
      Secondary treatment does not kill all bacteria such as hepatitis and salmonella. The most thorough method, tertiary treatment, is the only one to remove all contamination. The resulting sludge residue is inert in terms of harmful bacteria and, if recycled, it can be used on the land or as fuel.
      Primary treatment might represent a big step forward to many Cornish beaches, but is not the way ahead. With increased sewage being pumped into the sea, that treatment is not the answer in the 20th century and it is certainly not a building block for the 21st. It disguises the problem and does nothing to solve it.
      I hope that the Minister will elaborate upon what the Secretary of State meant when he said that all sewage should be treated in the future. Does he mean the secondary treatment, about which South West Water has recently talked, or tertiary treatment? Is he proposing a solution to the problem, or is he merely offering a step towards that long-term solution?
      I am concerned that current plans fall far short of a final solution to the problem. The biggest current project in Cornwall is the Gwithian outfall and it is a good example of how the proposals for dealing with the sewage are not adequate to deal with the mounting problem.
      The Secretary of State has required the provision of primary treatment that reduces the solids in the effluent to no more than 150 mg per litre. The treatment process—sedimentation tanks—would cause 60 per cent. of the sewage to be deposited and the remaining 40 per cent.
      838
      would still go out through the Gwithian outfall. That process might meet the Secretary of State's requirement, but it means that 10 per cent. of the original bacterial content would still be discharged into the sea. It represents an inadequate level of treatment.
      If the tides of the sea bring effluent on to the beaches—there are good reasons to think that that may happen—the risk of contaminated beaches remains. If Camborne, Redruth and Portreath are eventually connected to the system, 40 per cent. of the double total flow would bring the total amount of faecal solids discharged close to what the original scheme—that at Penwith, which offered no treatment—would have discharged. Therefore, we would be back to the situation that the Secretary of State now judges to be inadequate.
      All the reports by South West Water's consultants, John Taylor and Sons, on the 1986–87 work were, after some pressure, made available for the public. The original scheme for a single outfall on the north coast was based on the fact that Mounts bay is unsuitable for the discharge of raw sewage. When the St. Ives bay sewage action committee asked the director of engineering services for the newly privatised South West Water whether there had been a further study of the possibility of having separate works for the north and south coasts, given that raw sewage will not be discharged, he said that the consultants—now called Acer John Taylor—had reviewed the matter and still recommended the Gwithian scheme.
      When that committee asked for the latest reports, on the basis that it had seen the previous reports, it was told that that was no longer possible now that the water company is privatised because of commercial confidentiality. That was confirmed by the managing director of South West Water at a meeting on 28 June.
      I do not want to concentrate on Gwithian and the outfall proposed there, but we seem to be ending up with a system that the Secretary of State has, in effect, said is inadequate, despite a multi-million pound investment. That must raise concern about the general provision for tackling the sewage problem in the county. Surely it is deplorable that, as a result of privatisation, public access to information is reduced, which limits our capacity to comment upon such issues. That hardly demonstrates the responsiveness to the consumer in which privatisation was supposed to result.
      When sewerage schemes are proposed, I hope that it is accepted that they are matters of public interest and that the basis on which those schemes are introduced should be subject to public scrutiny. Such schemes should not be regarded as matters to be covered by commercial confidentiality. If schemes are regarded as such, something in the system has gone wrong.
      Just before the North sea conference, the Secretary of State said that, from 1998, no more untreated sewage or sewage sludge would be pumped into the sea. South West Water faces a massive task in Cornwall if it is to meet the Government's requirements. There are currently 58 raw sewage outfalls in Cornwall, 26 to sea, 32 to estuaries. As I go around my constituency, from Gorran Haven, Carlyon bay, Mevagissey, Truro, Perranporth and St. Agnes, the list of complaints about sewage pollution in the water is almost endless. If we are to tackle that problem and reduce it to the levels I mentioned earlier, it will take enormous sums of money.
      South West Water says that it has a £435 million investment programme over 10 years in bringing bathing

      839
      waters up to EC standards. The north coast of Cornwall, from Gwithian to Portreath, currently has 2 million gallons of raw sewage a day discharged on to the shoreline in an area popular with tourists. That means that beaches such as Portreath, Porthtowan and Chapel Porth are often filthy. I understand that a child recently stood on a syringe needle on Perranporth beach. Yet South West Water, through the Gwithian outfall, plans to add 20 million gallons more effluent per day. That must have continuing serious implications for health, fishing and tourism. There must be serious doubts about whether the South West Water programme comes anywhere near meeting the need to clear that up over a reasonable period.
      Groups such as the South West Environmental Protection Agency call for all children who swim in the sea to be vaccinated against hepatitis B and say that signs should go up on beaches warning people that the beaches are contaminated.
      If we apply the Department of the Environment edict that all significant discharges of sewage should receive treatment to Cornwall, we begin to see that there is an immensely expensive and practical task to be taken on. If, as I believe, "significant" is defined by the Department of the Environment as being a discharge of more than 1,500 cu m of sewage in 24 hours, official figures for Portreath outfall alone show that it discharges 4,000 cu m every 24 hours, and the North Cliffs outfall discharges 4,280 cu m. A cubic metre is equal to 220 gallons. Both those outfalls discharge sewage that is totally raw and not even screened. There are many similar examples around the coast. However, South West Water is apparently unable to improve either of them in the next decade, despite the significant levels of sewage discharge there, and promises, before privatisation, that action would be taken—promises which it appears to have partly reneged on.
      South West Water is now telling Kerrier district council that it will have to contribute, through the poll tax, to the provision of basic screening at the Portreath outfall. It seems remarkable that something that we were originally told, pre-privatisation, would be effected now apparently hinges on the poll tax payer being prepared to contribute towards the cost of a privatised company.
      About 1.5 million people live in the South West Water district, and at times up to 500,000 tourists supplement that number. It is unreasonable to expect local people to pay for the infrastructure to support a heavy influx of tourists. It illustrates that it is a problem for the nation and not just for individual local communities, particularly those in one of the poorest parts of England and an area of many beautiful small towns and villages.
      The problem with such small towns and villages is that a low density population with a huge coastline means that the cost per person of sorting out the sewage problem is greater than almost anywhere else. It is unrealistic to expect the individual consumer, through the water rate, to pay for that problem to be sorted out.
      The reason for the problem is that successive Governments, Conservative and Labour, failed to invest properly in the water industry and proper sewage systems before privatisation. I accept that it is an horrendous problem for the present Government or privatised companies to tackle, but Ministers should take the opportunity to crack it now, meet the environmental demands of the century as we approach the next, and be prepared to invest.
      840
      My firm view is that the appalling under-investment in our sewerage system over the years means that Government, not just private company, investment is needed now. Without that, the Secretary of State's statement or promise will seem just hollow rhetoric. The urgency of the problem requires an immediate response. The Government estimate that it will cost £1.5 billion to end the pumping of untreated sewage into the sea, but I fear that that is a gross underestimate. I suspect that that will be the cost of primary treatment, and I hope that the Minister will clarify that point. I understand that the cost of the full treatment that I advocate could be four or five times as much. Will the Government contribute anything to that, and what treatment is the Secretary of State promising for sewage outfalls?
      Moreover, why does there seem to be such a difference in the figures that are being published compared with those prior to privatisation? It seems that people were sold a false prospectus, even allowing for the fact that the EC is upgrading the requirements that it will place on the Government.
      To show how powerful that problem is, South West Water has been unable to provide me with a figure for the cost of introducing secondary or tertiary treatment for sewage outfalls in Cornwall. It says that the implications of the Secretary of State's announcement are still being assessed, but will the Minister clarify that? By how much, and when, does he foresee charges rising to tackle these problems? Massive investment is needed. For such a policy to be introduced on the back of water ratepayers, pensioners and others who are struggling to pay their bills is unacceptable and the Government must seek an alternative route.
      South West Water recently announced profits up from £38 million to £45 million for the 12 months to 31 March. Those profits are all very well for shareholders, but they achieve nothing for anyone in the south-west unless they are spent on cleaning up the beaches. In part, South West Water says that it will reinvest that money, but in part it will be shareholders' reward for buying shares. The hon. Member for Cornwall, North (Mr. Neale), who is a loyal member of the Government and who voted for water privatisation, reacted by saying that those profits needed to be spent on water improvement in the region.
      Proper treatment of sewage cannot be left any longer. The problem around Cornwall, for geographic and historic reasons, is exceptional and should be tackled. I fear that the cost of that will be high, but I hope that the Minister will elaborate on it. Given all the sources of finance available to the Government, they must make available the money to meet those costs.
      2.47 am
      The Parliamentary Under-Secretary of State for the Environment (Mr. David Heathcoat-Amory): This is the latest hour at which I have taken part in an Adjournment debate, but nevertheless I am pleased to do so because the hon. Member for Truro (Mr. Taylor) has chosen his subject well. It gives me an opportunity to put on record the Government's concern to improve the quality of our coastal waters and the treatment of our waste water generally.
      The hon. Member spoke mainly of Cornwall, the subject of his debate, but I shall spend one or two minutes on more general matters and remind the House of this

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      country's good record. A high percentage of our households—some 96 per cent.—are connected to sewage systems. This bears comparison with any country in Europe. A study in 1987 showed that 95 per cent. of river length in this country was of good or fair quality, compared with 75 per cent. in the European Community generally. No other member state bettered our position.
      I agree with the hon. Member that the problem lies with the discharges of untreated sewage into coastal waters. Successive Governments received environmental advice that that was, in many cases, the best environmental option. That advice was tendered by the Jeger report of 1959, and endorsed in 1984 by the Royal Commission on environmental pollution.
      It is commonly recognised that some environmental cost is associated with any type of sewage treatment and disposal. Not everyone wants sewage treatment works near where they live, and considerable planning problems are involved in the establishment of sewage treatment. Moreover, treatment results in sewage sludge, which must be disposed of—by spreading on land, by incineration or by landfilling. Each of those options produces its own environmental problems.
      The Government accept that it is now time to take a further big step forward, and to improve our standards of sewage disposal. My right hon. Friend the Secretary of State for the Environment announced on 5 March that in future all substantial discharges of sewage would be treated: most would receive secondary treatment, but primary treatment would be more appropriate for coastal discharges where there would be no adverse effect on the environment. I remind the hon. Gentleman that even secondary treatment does not remove all the bacteria and viruses in sewage.
      Since that announcement, we have moved quickly to implement the new policy, and the National Rivers Authority is now applying it to all new applications for sewage discharge consents. It will indeed be an expensive undertaking, and complex engineering and planning issues lie ahead; but we are consulting actively with the sewerage undertakers and the various regulatory bodies to put our ambitious programme in train.
      We estimate that the cost of improving our bathing waters and treating all coastal sewage discharges will be around £3 billion, and a fair share of that will be spent in Cornwall. I have a list of some 10 long sea outfalls that were planned for Cornwall by South West Water; the total expenditure amounts to nearly £50 million. All of them will now receive a form of treatment.
      Mr. Matthew Taylor: The nature of the county means an almost inevitable series of discharges. People are afraid that we shall receive only primary treatment—that there will be screening, but that nothing will really be done to treat the problem. The fear is that, because of the county's geography, we shall end up with a second-rate sewerage system.
      Mr. Heathcoat-Amory: There is no hard and fast rule relating to the distinction between primary and secondary treatment. Secondary treatment will be carried out where it is required for the environment, and the type of the receiving water will also be taken into account. The hon. Gentleman is wrong, however, to suggest that primary treatment is simply a screening exercise; it settles out and removes a high percentage of the solid matter which then forms sewage sludge and needs to be disposed of separately. The water fraction is then discharged into the sea by means of an outfall.
      Secondary treatment removes some of the bacteria and viruses, which remain behind in the sewage sludge. I repeat, however, that neither form of treatment renders the sewage sterile, unless a process of disinfection is undertaken; that has its own drawbacks for the environment, especially the marine life in the receiving water.
      I was stressing that South West Water has its share of this ambitious national investment programme. Over the next 10 years it expects to spend about £240 million on improvements to sewage treatment works. That is in addition to about £300 million on the sewerage network. I think that the hon. Gentleman would agree that over past decades Governments of all parties have paid too little attention to problems of the sort that he has presented to the House. The structure that we have set up separates the regulator from the operator and places the operator in the private sector with access to private capital. That structure and administrative system will give effect to the improvements that we know are necessary.
      Mr. Matthew Taylor: The Minister says that we are taking a big step in the context of what is required for sewerage outfall systems. He says that that involves considerable extra investment. Do the Government intend to contribute to that investment or will it be wholly funded by increases in charges to the consumer in areas such as that covered by South West Water?
      Mr. Heathcoat-Amory: The weakness in past systems was that such investment programmes relied on the Treasury for money. When the last Labour Government encountered financial problems, the first cut that they made was investment in sewage treatment. It is much better for private companies to raise money from charges to customers. The Government apply that system generally, and Cornwall will be no exception. The advantage of that system is that it establishes a clear link between the customer who wants higher water standards and payment for those standards. A further advantage is that companies are able to raise all the necessary finance on the capital markets. The limiting factor—
      The motion having been made after Ten o'clock, and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
      Adjourned at three minutes to Three o'clock.