Commons Sitting of 8 July 1992

Preamble
The House met at half-past Two o'clock
PRAYERS
[MADAM SPEAKER in the Chair]
Oral Answers to Questions
  TRADE AND INDUSTRY

    Exports
    Mr. Etherington: To ask the President of the Board of Trade what measures he proposes to boost British exports.
    The Minister for Trade (Mr. Richard Needham): The Government, through their overseas trade services organisation, provide a wide range of help, advice and financial support which is highly regarded by United Kingdom exporters. The plans announced by my right hon. Friend the Secretary of State last Friday for reshaping the Department of Trade and Industry will enable us to build even closer ties with exporters.
    Mr. Etherington: As we have lost so much of our manufacturing base since 1979, is it not about time that the Department of Trade and Industry seriously considered the long-term outlook and sought to expand the export potential of manufacturers in Britain? When will the President of the Board of Trade use some of the imagination and verve that he is purported to have to take action on exports? Or shall we continue to see developments such as in Sunderland, North, where the possibility of expanding shipbuilding and marine services is sterilised by the building of yuppie housing and by other so-called prestigious projects, such as a business school which will not create one extra job but looks rather good?
    Mr. Needham: The hon. Gentleman could assist in the promotion of jobs in exports in the north-east of England by welcoming and supporting companies that came to his area, such as Nissan, rather than, as a delegate of the National Union of Mineworkers, supporting the Trades Union Congress resolution that said that Japanese projects were alien organisations. Perhaps he should tell his constituents which are the alien organizations—Japanese projects or trade unions such as that which he supports.
    Mr. Madel: One way to boost exports would be for the Department of Trade and Industry to allow AWD (Bedford) Trucks to export civilian lorries to Libya. Given the unemployment difficulties in my constituency and the difficulty that that company is in, could my hon. Friend help me and the people of Dunstable and grant the company an export licence to export civilian lorries to Libya?
    Mr. Needham: I am grateful to my hon. Friend for raising the matter. As he knows, he is coming to see me tomorrow to discuss the issue. Obviously, I am as sympathetic as possible to any company that wishes to export. Nevertheless, Libya is a country to which United Nations sanctions apply and there are obvious complexities. I look forward, however, to discussing the matter tomorrow with my hon. Friend.
    Ms. Quin: Does the Minister recall that the President of the Board of Trade pleaded with the Conservative party conference three years ago not to dismiss the trade deficit as unimportant and fully to recognise its seriousness? As we have had a trade deficit for five years, when does the Minister expect the trade balance to be in surplus?
    Mr. Needham: The hon. Lady knows that we never give that forecast. When her party left office in 1979, the visible trade deficit was 4 per cent; it is now 4·7 per cent. Her hon. Friends operated an industrial strategy, which cost the Government £6 billion a year, to pick and back losers. Compared with that figure, the deficit that we have now is insignificant.

    North Sea Oil
    Dr. Michael Clark: To ask the President of the Board of Trade if he will make a statement on his policy for encouraging the extraction of marginal oil from North sea fields.
    The Minister for Energy (Mr. Tim Eggar): The Government are committed to maximising economic recovery of North sea oil and gas. The fiscal regime is designed to achieve this.
    Dr. Clark: Is my hon. Friend aware that many companies currently operating in the North sea find little incentive to extract the marginal oil from their fields? Will he therefore undertake to examine the obstacles in their way, including present and planned superfluous legislation, so that investment continues to flow to projects in the North sea rather than to the former Soviet Union, where investment may go if there are no profit and incentives in the North sea?
    Mr. Eggar: I completely agree with my hon. Friend that we need a sympathetic legislative and fiscal framework for the North sea, and it is part of my job to ensure that. I am sure that he would agree that we must ensure that safety considerations are paramount, that the expenditure incurred in connection with the Cullen report is taken through and that the necessary measures are improved and implemented by the oil companies.
    Mr. Malcolm Bruce: Does the Minister accept that the level of investment in the North sea is reaching a plateau, albeit at a high level of £5 billion, and that this is an appropriate time to consider the fiscal regime to ensure that there are adequate incentives for developing marginal fields, not merely to benefit the oil companies but to maximise the market for British-based service and supply companies?
    Mr. Eggar: The hon. Gentleman is right. Investment is at a high level and the chances are that it will level off. That is the nature of investment in the North sea—as the hon. Gentleman realises, even if other hon. Members do not. On his specific point, different oil companies have different

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    tax cases, depending on their problems and the nature of their fields. I have told a number of companies that we shall consider their cases if they put them to us.
    Mr. Duncan: In recognising the tremendous success story that has followed investment in the North sea, does my hon. Friend agree that the industry must bear down on its production costs if it is to maintain its competitive advantage? Will my hon. Friend work with the industry to achieve that aim?
    Mr. Eggar: I very much agree with my hon. Friend. If North sea production is to remain competitive, we must get control of capital costs, where the industry has been successful, and current operating costs, which need more attention, especially in view of the cost of operating in Aberdeen.
    Mr. Dalyell: Is it not deeply unsatisfactory that, under the new set-up, this is the only reachable energy question on the Order Paper? Where precisely in the fiscal regime is there any item of legislation that encourages companies to get that last drop of marginal oil?
    Mr. Eggar: I am happy to answer as many of the questions on the Order Paper as we reach, and I encourage the hon. Gentleman and others to ask their questions. On the hon. Gentleman's specific question about the fiscal regime, as he well knows, it is extremely complex. The way in which it operates depends on the fundamental tax regime of the oil company, the nature of the field, the length of time that the field has been operating and so on. The way forward is for each company to consider projects to establish whether they make sense in pre-tax terms, but not in post-tax terms. If that is the case, and if they have kept costs under control, they should make representations to us.
    Mr. Colvin: Is my hon. Friend aware that the cost of abandoning the 155 structures in the North sea, in whole or in part, may well exceed the cost of building them? What talks has he had with companies or oil organisations such as BRINDEX, which represents the British independent oil exploration companies, and the United Kingdom Offshore Operators Association about the fiscal regime, to encourage them to set aside the capital required to meet the cost of abandonment when that moment comes?
    Mr. Eggar: I recognise that that is a concern. For that reason, changes were introduced in the Finance Acts in the past two years. If there are specific additional worries, I should be willing to hear about them. Additional complications, which relate to prospective suggestions about how field structures should be abandoned and the environmental implications, also concern the industry and I am considering them.

    Engineering
    Mr. Roy Hughes: To ask the President of the Board of Trade when he next expects to meet representatives of the Engineering Employers Federation to discuss the effects of the recession on the engineering industry.
    The President of the Board of Trade and Secretary of State for Trade and Industry (Mr. Michael Heseltine): I met the Engineering Employers Federation last month. I have no plans for a further meeting.
    Mr. Hughes: Does the President appreciate that unemployment has increased for the 26th consecutive month—an increase of more than 1 million—and that a further 70,000 jobs, again in engineering, are expected to go soon? Overall, the prospects seem very grim, so why does the right hon. Gentleman not discuss with the engineering employers the Chancellor's so-called "green shoots", because many people believe that he has been using weedkiller instead of fertiliser?
    Mr. Heseltine: The most effective support that we can give to the engineering and all other industries is to maintain our current counter-inflationary stance, keep interest rates coming down and maintain the thrust to provide increased international competitiveness in this country. Nothing that we do will be influenced by the Opposition trying to get us to abandon the policies on which ultimate success depends.
    Mr. Nicholas Winterton: Does my right hon. Friend accept that many members of the Engineering Employers Federation believe that he must work hard on the Treasury to make it understand the needs of engineering and manufacturing? Does he further accept that many members of the federation would be prepared to accept a modest increase in corporation tax if the Treasury would introduce 100 per cent. capital allowances?
    Mr. Heseltine: My right hon. Friend the Chancellor of the Exchequer and I are at one on those matters and all others. On the basis of that happy partnership, we shall look forward to the recovery of the British economy.
    Mr. Olner: When will the rhetoric finish and engineering employees get the same action from the Government as Germany and all other European countries get to assist their industries? The recession has gone on for far too long. It will never be over without investment in industry.
    Mr. Heseltine: The hon. Gentleman takes a rather more pessimistic view of the Government's approach to the engineering industry than the employers themselves. I welcome the constructive response that they gave last Friday to the announcement that we would restore sectoral dialogue between the industry and my Department.
    Mr. Marlow: What rate of interest is appropriate at the current stage of the recessionary cycle? Does the Chancellor of the Exchequer agree with my right hon. Friend?
    Mr. Heseltine: The rate of interest is that which the markets will accept, and the markets will accept the rate that reflects the level of inflation in this country, which is still more than the levels in many competing economies. Nothing would be more counter-productive to the recovery, which all hon. Members want, than indicating that the Government were to abandon their counter-inflationary strategy.
    Mr. Gordon Brown: Given the President's stark admission on Monday that this is the most difficult recession since the war and given the figures that came out today showing a 92 per cent. increase in bankruptcies in engineering and elsewhere, foreshadowing a summer and autumn of further closures, redundancies and job losses, why is he failing to implement his well-publicised ideas for

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    export, regional and industrial policy reform? Why. at the same time, is he presiding over cuts in support for industry and jobs in those very areas? Has he changed his mind or has the Cabinet changed it for him?
    Mr. Heseltine: The real dilemma from which the hon. Gentleman suffers is that he is incapable of understanding what I have been saying all these years. In no conceivable way will I abandon my support for the recovery of the British economy based on a highly competitive improvement in performance, on which our competitiveness must depend.

    Deregulation Unit
    Mr. Quentin Davies: To ask the President of the Board of Trade what plans he has for the future of the deregulation unit in his Department.
    The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Neil Hamilton): Deregulation is one of the Government's most important initiatives—at local, national and European level. We aim to abolish unnecessary regulations—
    Mr. Skinner: Why does the Minister not light up his tie?
    Mr. Hamilton: Why does the hon. Gentleman not switch off?
    We aim to abolish unnecessary regulations and licences, to make them as clear and effective as possible where they remain necessary, and to ensure proper compliance cost assessments in the case of new proposals.
    The deregulation unit helps to co-ordinate the work of units in all Departments and we intend to continue with a vigorous programme of cutting red tape.
    Mr. Davies: Does my hon. Friend agree that it is much more difficult to get rid of restrictions and regulations than to dream up new ones and that, therefore, a continuous effort is required by Government to redress the balance? In that context, will my hon. Friend give some thought to asking the deregulation unit to produce an annual report of its performance as a spur to and measurement of achievement?
    Mr. Hamilton: I am grateful to my hon. Friend for his interest in the subject. We have an annual programme of reform in that sector. I report from time to time, usually by way of a parliamentary question, on the progress that has been made. I shall certainly give sympathetic consideration to my hon. Friend's request.
    Mr. Hain: Is the Minister's definition of deregulation taking on a new meaning? I ask that question as his Department decided to strip the Royal Mail prefix from the Post Office's parcel force business. It seems as though that move may be an initiative to privatise that section of the Post Office.
    Mr. Hamilton: I hope that you will agree, Madam Speaker, that that supplementary question was wholly irrelevant to the main question.
    Madam Speaker: Order. As the Minister is responsible for the deregulation unit, the question was probably appropriate. [HON. MEMBERS: "Answer."] Order. If that is the Minister's answer, so be it. The hon. Member for Neath (Mr. Hain) will probably table a substantive question in future.

    Free Enterprise
    Mr. Barry Field: To ask the President of the Board of Trade if he will set out the initiatives taken by his Department to encourage free enterprise in Poland, Romania and the former Soviet republics.
    Mr. Needham: My Department can best encourage free enterprise by promoting trade with, and investment in those countries and ensuring that they have markets for their exports. My Department also provides advice and encouragement to potential British exporters and investors in many ways in those countries.
    Mr. Field: My hon. Friend will be aware that an application for some of the funds made available by the Government to promote free enterprise in eastern Europe was refused on the ground that the installation and assets to be acquired were to be used for a military purpose. I believe that British taxpayers expect that swords will be turned into ploughshares. Will my hon. Friend ensure that, in future, the rules are more transparent so that business men do not waste time applying in such circumstances?
    Mr. Needham: I understand my hon. Friend's concern. The four sectors for which the know-how fund is available are energy, financial services, food distribution and small business creation. As my hon. Friend says, defence conversion is not one of them, and that information has been published. I assure my hon. Friend that the Government will do all that they can to raise awareness of sectors covered by the know-how fund when that is possible.
    Dr. Kim Howells: The Minister will know that, when it comes to creating a viable commercial market in eastern Europe, no commodity is in greater demand than a secure and safe supply of electricity. Many nuclear power stations in the Soviet Union play a vital role in producing electricity but are far from safe and far from reliable. Will the Minister therefore ensure that the huge accumulation of experience and expertise in this country is deployed in helping the operators of those nuclear power stations to make them safe so that we may avoid a catastrophic decline in electricity production and a disaster such as that which occurred at Chernobyl?
    Mr. Needham: I certainly accept what the hon. Gentleman says about our expertise and the need for something to be done. I assure him that the Government will do what they can to that effect.
    Mr. David Atkinson: Does my hon. Friend agree that those who run the former communist countries today are the same people who ran the state-controlled, centralised, bureaucratic communist economies that they once were? Does he agree that those people should be encouraged now to encourage those in exile in the west, who already understand the free enterprise system, to return home to their countries to apply the principles of which they have already had experience?
    Mr. Needham: Yes, Madam Speaker.

    Engineering
    Mr. Kilfoyle: To ask the President of the Board of Trade what the trade balance for the engineering sector was in 1979; and what it is at the current time.
    Mr. Needham: In 1979, there was an engineering trade surplus of £2 billion. In 1991, the last full year for which figures are available, there was a surplus of £500 million. However, in the first five months of this year there was a deficit of £1·6 billion.
    Mr. Kilfoyle: The President of the Board of Trade is a former Minister with responsibility for Merseyside and will be well awsare of the collapse of all forms of engineering on Merseyside—indeed, in the north-west— since 1979. That has resulted in large numbers of job losses and plant closures by companies such as Plessey, Lucas, Marconi and Cammell Laird. Does the Minister agree that the declared intention of Ford to transfer research and development engineering functions from the United Kingdom to Germany presages another downward twist for British engineering, and its future?
    Mr. Needham: Ford has plans to rationalise much of what it is doing in the United Kingdom. It increased its purchase of United Kingdom components to about £2·7 billion worth in the past year—that figure was £1·3 billion less five years earlier. A whole queue of companies is lining up to get involved in component production in the United Kingdom, with the arrival of the new Japanese inward investors and because of the improved quality and competitiveness of British component suppliers. I was near the hon. Gentleman's constituency on Monday opening a new Japanese factory which will produce a large number of automated components. What the hon. Gentleman says is just not true.
    Mr. John Marshall: Does my hon. Friend agree that Honda, Nissan and Toyota, apart from providing direct employment in the United Kingdom, will become major exporters of British cars to the Community?
    Mr. Needham: As my hon. Friend says, the effect will be that by the mid-1990s this country will be a net exporter of cars. That could hardly have happened under the previous regime and it would not have happened if the Opposition had had anything to do with it because, as they have said, they regard Japanese investors as alien organisations.
    Mr. Dobson: Will the Minister tell us what the reaction of the Department of Trade and Industry is to the fact that the privatised electricity industry has virtually abandoned its formerly substantial research and development commitment? What impact does he think that will have on our engineering imports? [Interruption.] In case Conservative Members are not aware of this fact, if we do not manufacture things here and we want to build power stations here, we will have to import the plant and equipment to do so.
    Mr. Needham: The hon. Gentleman may not have been fully awake when my right hon. Friend the Secretary of State was at the Dispatch Box. He may be aware, as the hon. Member for Dunfermline, East (Mr. Brown) is, that we are organising the Department in a sectoral fashion, so perhaps he should pose his question to the Minister responsible.
    Mr. Dunn: Is it not a fact that our engineering sector would do much better abroad if a number of Governments, such as that of the empire of Japan, took our goods on the same terms as we take theirs?
    Mr. Needham: I quite agree with my hon. Friend that it is important to have the same credit guarantee arrangements across the world. Through the Organisation for Economic Co-operation and Development, the British Government are striving to achieve that objective. We hear Opposition Members knocking British engineering's achievements a great deal—although most of them have never run a business in their lives—whereas the record of the engineering industry in this country is second to none.

    Trading Standards Officers
    Mr. Callaghan: To ask the President of the Board of Trade what estimate he has made of the shortfall in the number of trading standards officers.
    The Parliamentary Under-Secretary of State for Technology (Mr. Edward Leigh): There is a shortfall of about 300, 14 per cent. of the total.
    Mr. Callaghan: I hear what the Minister says. Does he agree that there is an inadequate number of inspectors? Is he aware that car-clocking fraud is costing the general public £200 million a year? Why does not he implement the recommendations of the Automobile Association and the Royal Automobile Club and introduce a national car mileage registration scheme to stop fraud?
    Mr. Leigh: Trading standards officers already have adequate powers to deal with these matters. The hon. Gentleman should remember the old adage about glass houses. His borough of Rochdale has fewer trading standards officers than the complement allows for: it has nine but should have 13—despite the fact that we have given Rochdale a massive increase in its block grant, from £19 million to £28 million, to cover trading standards officers. I suggest that the hon. Gentleman addresses his remarks to his borough council.
    Mrs. Peacock: My hon. Friend will be aware of the importance of trading standards officers in many different consumer sectors. Has he had any representations from them about the misleading advertising of Global Marketing Europe (UK) plc, a timeshare company?
    Mr. Leigh: My hon. Friend will know that we are concerned about timeshare practices. We approached the Commission before the last election. As a result, it is drawing up a directive now. We also fully supported the Timeshare Act 1992 introduced by my hon. Friend the Member for Basingstoke (Mr. Hunter), which instituted a cooling-off period for timeshare purchases. We are making progress, but we recognise that trading standards officers will have an important role to play.
    Mr. Nigel Griffiths: Is the Minister aware that his failure to implement the Borrie report has cost car buyers more than £1,000 million in fraud and that his inaction has led to a car clocking epidemic, with one in five second-hand cars being clocked and 400,000 people being swindled this year?
    Mr. Leigh: The hon. Gentleman spent the 17 months before the general election grossly overstating his case, and

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    he is plainly continuing in the same vein. He knows perfectly well that we shall address these matters in a general review of consumer affairs in the new informed markets Bill. The directive on unfair terms in consumer contracts was agreed only last week. Despite the fact that my noble Friend the Under-Secretary of State for Consumer Affairs and Small Firms is a former racing driver, she cannot move that quickly and introduce legislation within a week.
    Mr. Sproat: Does my hon. Friend have any plans to strengthen the powers of trading standards officers so as to prevent companies from setting up businesses, starting to trade, running up debts, not paying those debts, declaring themselves insolvent and then starting up again in the same businesses with almost the same names?
    Mr. Leigh: That is a matter for my hon. Friend the Under-Secretary of State for Corporate Affairs, who no doubt has heard what my hon. Friend has said.

    Trade Descriptions Acts
    Mr. Hutton: To ask the President of the Board of Trade what recent discussions he has had with the Institute of Trading Standards Administration about updating the Trade Descriptions Acts.
    Mr. Leigh: There have been no recent discussions, but the institute was fully involved in the 1990 review of the Act.
    Mr. Hutton: Is the Minister satisfied with the present range and scope of the Trade Descriptions Act 1968 or does he agree with me and with the trading standards officers that it needs to he extended to include false statements on services, particularly mis-descriptions, and bogus claims about professional qualifications?
    Mr. Leigh: I agree that the Act is old and needs updating. We want to make sure that it covers services as well as goods. There are a number of concerns about green claims, for example, so the hon. Gentleman is right. In our review of the Act, on which we have already consulted, we shall address those points. I hope that we shall be introducing the informed markets Bill fairly soon. That will deal with all these points and update the Trade Descriptions Act. The hon. Gentleman has made a fair point.
    Mr. Rupert Allason: While I welcome the action that the Government have taken on timeshare, there is still concern about the related practice of pyramid selling. Has my hon. Friend had any representations from trading standards officers or from members of the public who have entered into what amount to almost legalised pyramid selling organisations?
    Mr. Leigh: We have had representations on terms of selling and we keep these matters under review, but at present we have no plans to change the legislation on this.

    London
    Sir Michael Neubert: To ask the President of the Board of Trade what plans he has to improve the attraction of London as an international centre for trade.
    Mr. Neil Hamilton: London is already the location of many international businesses and remains one of the
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    world's leading financial centres. Our policies, including the recent establishment of a ministerial committee for London, will help to ensure that London maintains its position.
    Sir Michael Neubert: Is it not ironic that that segment of our capital city and principal trading centre which is closest to our new home market of continental Europe is the least developed? What contribution is my hon. Friend making towards ensuring the success of London docklands and the survival of that strategically vital project, the extension of the Jubilee line?
    Mr. Hamilton: As my hon. Friend will know, my right hon. Friend the President of the Board of Trade played an important part in getting the docklands project going— [Interruption.] It is a highly imaginative project, which in due course will lead to the regeneration of the whole of that east London corridor. Some 50,000 jobs have already been created in docklands this year, compared with a much smaller number 10 years ago. Although the recession has resulted in difficulties for docklands, the project will not collapse. In due course, other companies will come in to complete this huge project, which will be the best news for east London that it is possible to hear.
    Mr. Salmond: Will the Minister clarify the Government's attitude to London's bid for the Eurobank? Is he aware that press reports from the Lisbon summit suggested that the Prime Minister was engaged in a futile rearguard attempt to protect London's claim, while the Secretary of State for Scotland, on a boat in the River Forth, was simultaneously hinting that the Government were reasonably sympathetic to Edinburgh's claim? Are the Government backing London, Edinburgh or nowhere for the site of the Eurobank?
    Mr. Hamilton: I can assure the hon. Gentleman of one thing: if Scotland were independent, nothing would go to Edinburgh.
    Mr. John Greenway: Does my hon. Friend agree that London is one of the pre-eminent financial services industry centres in the world? Is he aware that the Lloyd's insurance market contributed £8·5 billion to invisible exports in the past five years and supports some 80,000 jobs? Does she agree that the Walker and Morse reports published last week will lead to a strengthening of London's position as a major insurance centre?
    Mr. Hamilton: I entirely agree with my hon. Friend that Lloyd's is an important flagship for the insurance sector of London as a great financial centre. It does not help when Members such as the hon. Member for Neath (Mr. Hain) make irresponsible and unwarranted claims on the basis of half-truths. Last week the hon. Gentleman denounced the Walker report as whitewash before it was even published; he then had to retract after he had read it. It would be better for us all if Labour Members would make supportive noises about an industry which employs large numbers of people and is a major earner of foreign exchange for this country.

    Exporters
    Ms. Eagle: To ask the President of the Board of Trade what measures he proposes to assist British exporters.
    Mr. Heppell: To ask the President of the Board of Trade if he will make a statement on the steps he is taking to back British exporters.
    Mr. Heseltine: The Government, through their overseas trade services organisation, provide a wide range of help, advice and financial support which is highly regarded by United Kingdom exporters. I announced last Friday my plans for reshaping the DTI, which will further enhance our understanding of exporters' needs and our ability to communicate with them.
    Ms. Eagle: I am grateful for that response. Is the right hon. Gentleman aware that the existence in Britain of Stone Manganese Marine—the last remaining maker of propellers with its own foundry—is being threatened by unfair foreign competition from Poland and Korea? Is he further aware that that company is the holder of three Queen's awards to industry and that 80 per cent. of its turnover is exported, which helps our export effort? What steps will he take to ensure that such high-quality, strategically important companies are not killed off by unfair foreign competition and Government negligence?
    Mr. Heseltine: I share the hon. Lady's concern that no British company should be threatened by unfair foreign competition. If she or the company concerned will let me have the details, she may be assured that they will be carefully examined.
    Mr. Heppell: Is the right hon. Gentleman aware of the table in the publication "European Economy" showing that the United Kingdom has the lowest average annual export growth between 1979 and 1990 of any country in the European Community? Does he believe, as I do, that part of the reason for that abysmal record under successive Conservative Governments is the cuts that they have made in export support services?
    Mr. Heseltine: The hon. Gentleman knows that our exports of manufactured goods are at an all-time high and have grown by 4 per cent. in the past 12 months. I very much hope that when Labour Members set out across the world on their holidays in a fortnight's time they will stop peddling a message of gloom about this country.
    Sir Michael Grylls: Is my right hon. Friend aware that, despite the very good export record of British firms, some 70 per cent. of companies still do not export? Most of them are small and medium-sized concerns. Will my right hon. Friend pay particular attention to that sector, which needs help and encouragement to penetrate new export markets and thus give assistance to Britain?
    Mr. Heseltine: I am very sympathetic to my hon. Friend's view and I hope in the near future to set out our plans to improve the service that we give to small and medium-sized companies. I should add that we export a higher proportion of our gross domestic product than virtually any other comparable nation.
    Mr. Jacques Arnold: Is my right hon. Friend aware of Proyecto Venezuela, which involves the imaginative packaging of opportunities for British firms to export a wide range of products and services to that country? Have we learnt lessons from that, and will there be many opportunities to operate similar products in other countries in the future?
    Mr. Heseltine: I am grateful to my hon. Friend for drawing my attention to the need to search world markets and explore every avenue to put together the most attractive package for companies exporting from Britain. I hope that we shall be able to build on our already formidable reputation.
    Mr. Morgan: The Government should be providing measures of substance, rather than the shadow that the President of the Board of Trade with his new title tends to provide. Does the right hon. Gentleman agree that if he really wants to get rid of the doom and gloom being cast over British industry he should insist that the electricity companies charge less to key British industries? The chlor-alkali industry, for example, has approached the right hon. Gentleman. That industry, which is very important in the north-west, has been crippled by a 40 per cent. rise in electricity prices. Steel, aluminium smelting and many other heavy strategic industries are also being crippled by rising profits in the recently privatised electricity industry. Is the right hon. Gentleman aware that those profits are accompanied by big losses in the industries that electricity serves?
    Mr. Heseltine: The hon. Gentleman has raised an important point. We have established a regulatory system to keep the position under constant review. It is important for us to do that, but it is also important to realise that if we are to have a flourishing manufacturing economy companies must be allowed to make profits commensurate with the need to invest as a consequence of their success. Every time a company makes profits, Labour Members immediately attack it, because they fail to understand that profitability leads to investment and growth.
    Mr. Page: Does my right hon. Friend agree that what is needed to help British industry is an evaluation of the efficiency and effectiveness of our foreign competitors, and that feeding that information through to British industry will enable it to become more competitive? What will the Department do to help British industry in that regard?
    Mr. Heseltine: That question goes to the heart of the announcement that I made last Friday. I believe that it is essential for Britain, as a trading economy, to search the world constantly to assess its standards of competitiveness and—even more important—to establish what those standards will be in the decade ahead. I have set up a special division in my Department to advise us in that process.

    Coal Privatisation
    Mr. Foulkes: To ask the President of the Board of Trade by what means he proposes to implement his pledge to protect the pensions and concessionary coal of retired miners and widows after privatisation of British Coal.
    Mr. Eggar: I have already made it clear that the pension and concessionary coal entitlements of the current and former employees will be safeguarded. The detailed implementation of those assurances will be announced as soon as possible.
    Mr. Foulkes: Surely the Minister relises that such vague assurances will not reassure miners and miners' widows in my constituency and throughout the country. Miners have sacrificed their health and in some cases their lives to the

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    industry, and their widows are entitled to pensions and concessionary coal. Will the Minister give an assurance that he will set up a pension trust to protect miners' pensions from the predatory purchasers who will want to take over the pits?
    Mr. Eggar: I give the hon. Gentleman and the pensioners a clear, unequivocal commitment that there will be no rip-off of the British Coal pension funds.
    Mrs. Currie: Is the Minister aware that it is highly likely that after the privatisation of British Coal the new company will entirely lose interest in such issues as the social clubs for retired miners and miners' welfare? There are some of these clubs in my constituency, in areas where there are now very few miners and no mines whatsoever. Will my hon. Friend take those issues into account and ensure that the facilities which exist can continue, preferably with some kind of support from what remains of British Coal, so that my constituents will not face a more difficult time in their leisure?
    Mr. Eggar: Certainly I will.
    Mr. Eric Clarke: Can the Minister give a guarantee that if there are any changes arising from privatisation the Government will not give those people an ultimatum and that failure to reply will not be taken as agreement, as has happened before in the case of British Coal? That would be intolerable because many people, due to eyesight and other difficulties, cannot fill in forms. Will the Minister give a guarantee that he will consult pensioners associations and others in those villages and communities before any changes are implemented?
    Mr. Eggar: The hon. Gentleman made a very fair point in Committee, and I will certainly bear in mind what he has said, but it would help if some Opposition Members did not go around raising unnecessary scares.

    Manufacturing Output
    Mr. Austin Mitchell: To ask the President of the Board of Trade what was the level of manufacturing output in 1974, 1979, 1985 and 1991 with 1974 as 100.
    The Minister for Industry (Mr. Tim Sainsbury): Ninety-seven in 1979, 92 in 1985, and 103 in 1991.
    Mr. Austin Mitchell: That is a fairly appalling record. I wonder whether the Minister knows of any country that has had a lower increase in manufacturing output, particularly in the past 13 years. How are we to recover? We have lost more than 500,000 manufacturing jobs since we joined the exchange rate mechanism. With the Government crippling manufacturing by high interest rates to keep the pound up, is this not a case of running the country on the basis of Maxwell economics—raiding the pension fund to support the share price?
    Mr. Sainsbury: The hon. Gentleman seems to be joining his Opposition colleagues who spend their time running down the achievements of British manufacturing industry. It might help if he would read the CBI report, "Competing with the World's Best", which says:
    "UK based manufacturers are well placed in some of the key growth markets of the future".
    Mr. Batiste: Is it not clear that British manufacturing output benefits greatly as a consequence of Britain's
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    having the lion's share of inward investment into the European Community from the United States, Japan and all other countries? Will my right hon. Friend dissociate himself from Opposition Members who take every opportunity to discourage inward investment from Japan and other countries?
    Mr. Sainsbury: I am happy to join my hon. Friend in dissociating myself from the remarks of Opposition Members, to which reference has already been made. The scale of inward investment in this country proves that we have created the sort of environment which encourages manufacturers and entrepreneurs. It is disheartening to industry that the Labour party would seek to reverse all the progress that we have made in trade union law, taxation and deregulation, and would do its best to discourage British manufacturing industry.

    Manufacturing Trade
    Mr. Mullin: To ask the President of the Board of Trade what estimate he has of the size of the manufacturing trade deficit for the current financial year.
    Mr. Needham: In the Financial Statement and Budget Report 1992–93, the manufacturing trade deficit for 1992 was forecast to be £5 billion.
    Mr. Mullin: How is that possible after 12 years of Conservative government?
    Mr. Needham: As I said earlier, the percentage deficit on visible trade, at 4·7 per cent., is ·7 per cent. higher than it was in 1979.
    Mr. Dickens: Faced with a world recession, British companies have had to take a close look at their management and work forces, as well as their overheads, other costs and production techniques. As a result of this, am I right in saying that our businesses and manufacturing industries are streamlined and efficient, and well ready to take off now that the world recession is starting to ease?
    Mr. Needham: My hon. Friend is absolutely right. In the past three years the volume of United Kingdom trade has increased, rather than decreased as it did year after year when Labour was in power.
    Mr. Skinner: As we have had a recession for about three years and as it is accepted that when consumer demand is much lower the balance of trade falls, is it not remarkable and dangerous to have to accept that our balance of trade deficit will probably be about £9 billion when we get the autumn statement? If that is correct and if there is an upturn in the economy, which I doubt, the danger is that the balance of payments deficit will soar well above £20 billion. Included in that deficit is £1 billion worth of coal coming into this country, when we ought to be exporting coal. We have 300 years of coal, so why is it not mined instead of the industry being run down?
    Mr. Needham: Industry is hardly being run down when our volume of exports is at an all-time high. As to the balance of payments deficit, as a percentage of gross domestic product it is not very different from that of many other industrial countries which are also in recession.
    Mrs. Angela Knight: Is my hon. Friend aware that the report published this week by the Institute of Directors shows that business volume is up and optimism is good?

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    Does he agree that that survey of people who are involved in business paints a far more realistic picture than that which the gloom merchants opposite like to portray?
    Mr. Needham: I agree. We have heard speaker after speaker on the Opposition Benches continue to run British exporting down instead of promoting it.
    Mr. Henderson: If everything is so rosy in Britain, can the Minister explain why the trade deficit as a proportion of gross domestic product is the highest of all the G7 countries?
    Mr. Needham: I did not for one moment say that everything was rosy in Britain, because we are part of a worldwide recession. What I did say, and what I continue to say, is that British exporting performance ranks alongside that of any other country in the world. So long as we promote and advertise that fact, we shall restore confidence instead of knocking it, as Opposition Members try to do.
    Mr. Ian Bruce: My hon. Friend will know that the telecommunications industry has benefited greatly from the deregulation and denationalisation of our industries. Industries throughout the world have benefited from Britain's freeing up. What is my hon. Friend doing to ensure that European and other countries free up their telecommunications industries so that we can sell our excellent products to them?
    Mr. Needham: My hon. Friend knows that one of the foremost objectives of our presidency is to ensure that in the Internal Market Council we obtain enforcement and compliance in opening up the markets of Europe, particularly the public sector markets, to the sort of competition which has benefited our consumers here and has benefited suppliers in the telecommunications industry in this country.

    Assisted Areas
    Mr. Harvey: To ask the President of the Board of Trade what recognition he will give in conducting his recently announced review of assisted areas boundaries, to the cases made by black spot areas within or overlapping travel-to-work areas.
    Mr. Sainsbury: The Government made it clear in the consultation document that the assisted area map will continue to be designated on the basis of travel-to-work areas. We will, however, take full account of the problems of any black spot areas within these travel-to-work areas or overlapping their boundaries.
    Mr. Harvey: Does the Minister accept that travel-to-work areas are a useful guide, but should not be a straitjacket for this process? Does he also accept that travel-to-work area boundaries are long overdue for review, in that separate communities can be thrown together artificially and bear no relationship to true patterns of travel to work? Is he aware that the town of Ilfracombe in my constituency is a long-term unemployment blackspot, with unemployment higher than Liverpool and, indeed, higher than all but two of the existing development areas? Can the Minister confirm that those problems will be recognised, either by making entire
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    travel-to-work areas which include blackspots into development areas, or by fragmenting the travel-to-work area map?
    Finally, will the Minister take this opportunity to comment on suggestions in The Guardian that the Government intend to use the review to featherbed marginal Conservative parliamentary constituencies at the expense of those held by Opposition parties?
    Madam Speaker: Order. I caution hon. Members that this is Question Time and they should not make such long speeches.
    Mr. Sainsbury: Thank you, Madam Speaker. The hon. Gentleman's last remark was unworthy of him. I am, of course, aware that travel-to-work areas are not a perfect measure, but they are an indication of the areas within which people move around to seek employment opportunities. The areas will be reviewed when the data from the most recent census become available, but that will not be until 1994 and I do not think that we should delay the review of the assisted area map until then.

    Replacement Parts
    Mr. David Atkinson: To ask the President of the Board of Trade what discussions he has had with the replacement parts industry concerning the European Commission's green paper on industrial design.
    Mr. Leigh: I have met representatives of the Association of British Insurers and of the Consumers Association to discuss the possible effects of the European Commission's green paper.
    Mr. Atkinson: Does my hon. Friend agree that the European Commission proposals, if implemented, would devastate many thousands of small businesses in this country involved in the manufacture of spare parts for motor cars and specialised body panels? Is that not a travesty of the principle of subsidiarity, and will it not lead to a monopoly for motor vehicle manufacturers, which can only increase prices and reduce choice? Will my hon. Friend totally oppose the proposals?
    Mr. Leigh: I confirm that I shall, indeed, totally oppose the measures, which are ill thought out, hasty and anti-competitive. Clearly it makes sense to have some sort of design harmonisation throughout the EC, but that should be done on a deregulatory basis. It makes no sense to insist on design harmonisation for spare parts, which could drive many small firms out of business. I confirm to my hon. Friend and to the House that we shall fight the proposals in the Council and before the Council.
    Mr. Flynn: Will the Minister confirm that our influence on industrial design will decline as a result of his Department's inactivity and failure to defend the INMOS jobs about to be exported to France and Italy, and will he tell me now whether the Department has been in touch with Michel Carpentier, the director general of DGXIII? Mr. Carpentier says that the Government have not been in touch with him, and that if they had, the jobs could have been saved. He described the move of those British jobs to Europe as stupid. I know that the Government have been in touch with one department of the Commission, but has the Minister been in touch with DGXIII and DGXVI?
    Mr. Leigh: The simple answer to that question is yes.

    Price Marking
    Mr. Alexander: To ask the President of the Board of Trade what representations he has received about the proposed new price marking order.
    Mr. Leigh: I have received representations from the British Retail Consortium and from trading standards officers.
    Mr. Alexander: Have those representations included the fact that people selling small high-priced items such as cosmetics and pharmaceuticals could be severely disadvantaged by the proposed order? Is my hon. Friend aware that if people have to be able to see items and their prices without assistance, that would be impossible for sellers who keep goods being the counter, or under the counter? Will my hon. Friend take that concern on board?
    Mr. Leigh: My hon. Friend is right to be worried about that. As with so much that comes from the Commission on such subjects, it is sensible in principle to insist that shopkeepers should display prices in shop windows and on goods displayed behind the counter, but things go wrong when the Commission tries to be far too prescriptive— laying down, for example, as does the lengthy document which I have here, that hair care products, bath products, lacquer shampoos and rinsing products should all have their prices displayed as decreed in the memorandum. That is a regulation too far. It is too prescriptive. In our negotiations with the Commission we must seek to extend it, and we shall do precisely that.

    End User Certificates
    Mr. Alton: To ask the President of the Board of Trade if he will review the arrangements made by his Department to check the authenticity of end user certificates.
    Mr. Needham: Export controls in the United Kingdom are strictly enforced. My Department and other Departments involved keep under constant review the measures necessary to ensure their continued enforcement.
    Mr. Alton: The Minister will have seen the disturbing allegations in The Independent concerning the illicit use of
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    equipment manufactured in the United Kingdom. Given the scale of the problems illustrated in the articles, will he assure the House that he will undertake an overhaul of the existing end user arrangements as they are clearly not working satisfactorily?
    Mr. Needham: I understand the hon. Gentleman's question, and his concern, but some 56,000 licence applications on military goods have been presented by the purchasers of those goods in the past five years. Those certificates form only a small part of the information on which the Department relies.
    I wrote in reply to the article in The Independent, asking about Mr. Kelsey's sources of information, but so far I have heard nothing.
    Mr. Churchill: Is my hon. Friend aware of recent reports in the Sunday Times suggesting that a major British defence contractor falsified documents to export items which would help a third world country to achieve nuclear weapon status? Should that not be cracked down on most firmly, and should not such firms be put on notice that they cannot expect Government defence contracts if they circumvent our laws in that underhand way?
    Mr. Needham: If our laws are so circumvented and information is supplied which is knowingly incorrect, it is a criminal offence.
    Mr. Campbell-Savours: Should not the principle of end user certification be extended to the export of food products for humanitarian purposes? Will the Minister confirm that under arrangements approved by the Foreign Office and the Department of Trade and Industry it is possible for British food producers to export food to Iraq —where the client is Saddam Hussein and his agencies —for consumption by the republican guard? Is that not the position now being implemented by the Department?
    Mr. Needham: The Department acts as the agency for issuing licences. Food which goes to Iraq must be accepted by the UN sanctions committee and must pass the humanitarian causes requirement before it is allowed. If the hon. Gentleman is aware of a particular case, I shall be only too happy to look into it.

"Health of the Nation"
3.31 pm
The Secretary of State for Health (Mrs. Virginia Bottomley): With permission, I should like to make a statement about better health.
I am publishing today a White Paper, "The Health of the Nation", copies of which have been placed in the Vote Office. Last June, my predecessor, my right hon. Friend the Chancellor of the Duchy of Lancaster, published a Green Paper on the same subject, since when we have consulted extensively.
We made it clear before and during the election that a White Paper on health would be one of the first priorities of the new Conservative Government. Today, we honour that pledge.
The Government are committed to improving the health of the nation. The White Paper is the latest, but not the last, step in our strategy. The response to the Green Paper was impressive. More than 2,100 individuals and organisations responded directly. There has been a wide and productive debate at specially organised conferences and workshops, in newspapers and journals, and on television and radio.
That response reflects the growing interest in health matters as a whole. Hon. Members will know that people have become more conscious about what they eat, how much exercise they take and how they can generally improve the quality of their lives by becoming healthier.
We wish to build on that healthy trend. No responsible Government can be a disinterested observer of an unhealthy nation. There is an enormous cost to the national health service and to our economy of avoidable illness. It includes working days lost and expensive treatment given. We should prevent illness wherever we can. Prevention is better than cure. We shall be able to target health resources where they are really needed.
We are spending record amounts on the national health service. We must use resources to improve health as well as health care. We are seeking to improve the quality of life, and of individuals' lives, in the most cost-effective way.
One central message has emerged from the consultation exercise on the Green Paper—the wide backing for the overall strategic approach that it proposed. There is support from among policy makers, practitioners and politicians of all parties. The World Health Organisation welcomed our strategy, describing it as a model that other countries might follow. I am particularly pleased to launch the White Paper just one week into the United Kingdom presidency of the EC.
At the heart of the White Paper is the setting of targets in key areas. We have selected five areas—coronary heart disease and stroke, cancers, mental illness, HIV-AIDS and sexual health and accidents.
In each of these key areas we have set challenging but achievable targets. In some areas they are tougher than those proposed in the Green Paper. Those targets include a 40 per cent. reduction in deaths from coronary heart disease and stroke by the year 2000; a 30 per cent. reduction in deaths from lung cancer for men by 2010; reducing the number of people who smoke from one third of the population to one fifth by the year 2000; and cutting childhood accidents by a third by the year 2005.
Our task was to choose areas of greatest concern: where there is the most serious avoidable loss of life or handicap,
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and where the work needs to be done and can be done. The Department's chief medical officers have been closely involved in the work. We have drawn on a wide range of medical and other expert opinion.
Other areas do not cease to be important. In some cases, well developed initiatives to improve health already exist. For example, I announced last week that we have now achieved our 90 per cent. national target for immunisation against childhood diseases. We are now working to a new target of 95 per cent. by 1995.
In other areas, more development and research will be needed before national targets can be set. What we are proposing are not short-term measures. The strategy will grow and develop. To provide the knowledge and methodology for this to happen, the research and development strategy launched by my Department in April 1991 will play a crucial role. The White Paper identifies other possible target areas for the future. This underlines the fact that it represents a beginning, not an end.
I hope that the House will recognise and welcome the strategy. Coronary heart disease and strokes are the biggest causes of premature death and disability in this country. We have made considerable progress, but there is scope for more. Cancers account for a quarter of all deaths. Many of them can be prevented. Mental illness affects millions of people, with a high cost to the nation. There is still too often a taboo associated with it. Accidents are the most common cause of death in people under 30. Often they can be avoided. AIDS is the most significant new threat to public health this century. In improving sexual health generally lies the greatest scope for preventing HIV infection and the spread of this terrible disease.
We need targets for three reasons: they give us something real at which to aim, they provide a common focus for action, and they allow us to measure progress. To be respected, however, targets have to be tough. To be credible, they have to be realistic. It would be folly to set a target so out of reach that we would never get there, or one which is simply an extrapolation of existing trends.
Our comprehensive approach is unique. We have identified the broad strategies and the practical machinery needed to achieve targets. Everyone is involved. The White Paper is more than just the work of the national health service, vital though that is. It takes in the activities of every Department in Whitehall. It is for private companies and voluntary bodies, for local authorities as much as health authorities, for employers and trade unions, for organisations of -every kind, and for individuals of every age.
Working together, forming healthy alliances, is one of the central messages of "The Health of the Nation". The White Paper demonstrates the Government's commit-ment, first, by addressing a range of health issues which go well beyond the responsibility of the Department of Health; secondly, by highlighting the central role of the Cabinet Committee set up by my right hon. Friend the Prime Minister to oversee the development and implementation of the strategy—no other country has set up a similar structure at such a high level to take forward a health strategy—and, thirdly, by setting out a range of actions to improve health, which only Government can take.
While recognising the role of others, the national health service must be at the centre of the strategy. The

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publication of the White Paper today marks a major new landmark in the development of the NHS. It is the next logical step in the process of health reform. It provides new opportunities to raise our sights beyond the provision of health care—important though that is—to health itself.
The national health service was founded to secure improvement in the physical and mental health of the people and the prevention, diagnosis and treatment of illness. That was enshrined in the National Health Service Act 1946. This strategy carries those principles forward in a programme of work which will take us well into the next century.
The health reforms have enabled health authorities to take a more strategic look at the health needs of their local populations. The priority areas that we have selected and the targets that we have set match local needs and concerns. The NHS management executive will require health authorities to build the target-setting approach into all levels of local activity. The strategy will be central to the work of the NHS.
The NHS must also lead by example; it must be a healthy employer. Its 1 million employees must themselves play a part, helping themselves, their families and friends, as well as the patients for whom they care, to improve their health. We shall engage all NHS staff in making their own workplace a healthy place both for themselves and for patients. The NHS chief executive is working with the Health Education Authority to launch a special initiative on this later in the summer.
By many reckonings, we are healthy. In 1991, for the fourth successive year, perinatal and infant mortality rates fell to their lowest ever recorded levels. Our immunisation rates are high. We were the first country in the European Community to establish national screening programmes for breast and cervical cancer. In the past decade, life expectancy has risen by three years for men and by two years for women.
We have been adding years to life; the health strategy is about adding life to those years. Ultimately, it also means adding even more years to life. No one doubts that there are areas in which we can grow healthier as a people. The White Paper has identified those key areas and it has proposed real action for improvement.
The ideas in this White Paper will take root and grow. We have the potential to take this country to the top of the health league. I commend the White Paper to the House.
Mr. Robin Cook: There will be a broad welcome for the stress that the Secretary of State has rightly placed on promoting better health rather than just curing ill health. I offer a personal welcome for the toughening up of a target for a reduction in coronary heart disease which has been increased from 30 per cent. to 40 per cent. The Secretary of State will recall that when I pointed out to her predecessor that the original target meant that there would be no increase in the rate of reduction, he described that point as "facile" and "a misunderstanding". I express my pleasure that the right hon. Lady shares my misunderstanding and has acted on it.
It would be unfair not to recognise that the right hon. Lady has responded to the criticism that the Government's proposals on mental health were only about the closure of institutions. I congratulate her on coming up with a welcome range of targets for positive improvement in the
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mental health of individuals. These are all the more welcome as mental health does not always achieve the attention that it deserves in our deliberations.
The White Paper provides a bold target for cutting teenage pregnancies. In view of the trailers in the Sunday newspapers, I express some surprise that the Secretary of State made no mention of the target in her statement. Is that because she knows that the White Paper contains no new initiative on sex education and not a new penny for family planning? Will the right hon. Lady accept that, in this and in other measures, the reaction of many people to the White Paper will be that it has got the right diagnosis, but has not come up with the right prescriptions?
The White Paper identifies smoking as the largest single cause of preventable disease—a point stressed by the Secretary of State. Why, then, do the Government still duck a commitment to banning tobacco advertising? Does the Secretary of State appreciate that the offer in the White Paper of a review of tobacco advertising will be greeted with disbelief? Was she not listening during the year of consultation on the Green Paper? Can she name one submission from anyone in health promotion which did not support a ban on tobacco advertising? Does she not understand that it will be widely believed that the Government's failure to act now on the issue has nothing to do with the need to collect further information through another review and everything to do with the 2,000 poster sites supplied to the Conservatives by Imperial Tobacco in the general election campaign?
The White Paper stresses the need for a healthier diet. Will the Government therefore bring back the nutritional standards for school meals which they scrapped as soon as they came into office? The White Paper calls for a cut in road accidents. Will the Government accept the case for random breath testing to crack down on drink driving? The White Paper stresses people's responsibility to keep a check on their health. Will the Government scrap the charges for eye tests which dramatically cut the number of people coming forward for that check? What does the Secretary of State intend to do to ensure an NHS dental check for everyone who wants it when dentists are leaving the NHS in droves?
The Secretary of State claimed that her White Paper was comprehensive. I think that that was the word that she used in her statement. How can a White Paper on health promotion be comprehensive when it does not once mention poverty? Does the Secretary of State recognise that by doubling the number of children in poverty the Government have increased the number of children brought up on a poor diet? Does she recognise the link between increased homelessness and increased respiratory disease? Does she recognise the increase in suicides as a result of the increase in unemployment among young men?
Does the Secretary of State recognise that everyone knows that those links are missing from the White Paper because they would require the Government to admit that by increasing inequality they have increased ill health'? A White Paper which does not propose a single measure to combat poverty, homelessness or unemployment is not a White Paper which offers better health to all.
Mrs. Bottomley: I thank the hon. Gentleman for welcoming me to my position, but move on swiftly to say that I do not know whether this will be his swansong.

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Having said that, I hope that by the time we finish today we shall have had a last opportunity to convince him on several matters and errors of debate in recent years.
The hon. Gentleman raised several points which were a vindication of the strategy. He raised issues which are the responsibility of my right hon. and learned Friend the Secretary of State for the Environment and my right hon. Friends the Secretaries of State for Education and for Social Security. That shows why it is so important to have a Cabinet Committee specifically to address the improvement of the health of the nation. I shall respond to the hon. Gentleman on matters for which I am responsible. He will understand that other matters are precisely those which need further debate.
The hon. Gentleman rightly said that the targets had been strengthened. Indeed, in his working group the chief medical officer identified the targets and sought targets which were not extrapolations—the point that the hon. Gentleman made on the last occasion—but were challenging yet achievable. We have strengthened the targets not only on coronary heart disease but on smoking among women and on mental illness. I thank the hon. Gentleman for recognising that we have included mental illness. We share the view that mental illness is the source of a great deal of disability and unhappiness and does not always get the focus that it requires.
The hon. Gentleman mentioned poverty. The Department of Social Security spends £1 billion a week —an extra £600 million—on arrangements for low-income families. When we have discussed aspects of deprivation in our health debates, the hon. Gentleman has sought time and again to make the point that GPs in inner-city areas should not be expected to deliver the high targets set for the rest of the country. We disagree with the hon. Gentleman. We believe that we should encourage all areas to do as well as the best. That is why this year we are driving forward improvements in perinatal mortality rates to ensure that the least advanced areas do as well as those which are striking ahead. Above all, when it came to the GP contract, our approach was not a lower target for inner-city areas. On the contrary, it was to provide for the first time deprivation payments for GPs in inner-city areas.
The hon. Gentleman also mentioned eye tests. As he will be aware, the number of tests has now reached the level that it was at when the charges were introduced. It is reasonable when allocating resources to expect those who can afford it to pay an average of 12p per week for their eye tests. As for dental checks, we have never had so much NHS dentistry at any stage of the national health service. There were 7 million more courses of adult treatment last year than in 1979.
The hon. Gentleman mentioned school meals. It is not our view that school meals should be controlled by central diktat, but we welcome the activities of local education authorities, which are working with nutritionists to produce healthy meals in their areas. One of the initiatives of the health strategy is healthy schools.
Smoking is an important area, and the hon. Gentleman will be aware that we have strengthened targets for smoking. We are unequivocal in our determination to achieve those targets. What the hon. Gentleman does not always say is that only one country in the European community has achieved a sharper reduction in tobacco
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smoking than this country, and that is the Netherlands. It is a curious fact that the majority of countries which support a ban on advertising also have nationalised tobacco industries.
When considering what influences people to take up smoking, the key factor is price. The hon. Gentleman may wish to reflect on the fact that under recent Conservative Governments the price of cigarettes has risen by 43 per cent. When Labour was in power, the price rose by a mere 1 per cent. That is the contrast. We recognise that advertising has a part to play, and that is why we have a stringent voluntary code. What is more, we have introduced the fiercest health warning labels on cigarettes of any EC country. The hon. Gentleman will be aware that the tobacco industry is busy taking the Government to court on the strength of that.
This strategy represents an important new landmark for the national health service. I hope that the hon. Gentleman will bring himself to a deathbed repentance and will admit that he was wrong about the GP contract and wrong about NHS health reforms, but that at least he is right to welcome in principle the "Health of the Nation" strategy.
Mr. Roger Sims: I welcome the publication of the White Paper and on behalf of my hon. Friends I congratulate my right hon. Friend on demonstrating that she is a Secretary of State for health and is not solely responsible for illness.
Can my right hon. Friend confirm that this year the Government will be spending nearly £36 billion on the treatment of illness and disease, a high proportion of which is avoidable? Does it not make sense, and is it not incumbent on us all and not just on politicians and medical people, to ensure by following the White Paper's proposals that we avoid illnesses and diseases which can be avoided?
My right hon. Friend mentioned a number of targets. Can she say a little more about the mechanisms proposed at Cabinet level and locally to progress how they are met?
Mrs. Bottomley: I thank my hon. Friend, who has for many years been a champion of the cause of health strategy. As he rightly says, the White Paper sets the agenda for the Department of Health to consider health as well as health care. The reforms enable us to take that strategic approach so that we can assess the health needs of local communities precisely and translate them into concrete actions. The White Paper sets the third leg of the health service—prevention—as well as treatment and rehabilitation.
The NHS will be setting, and seeking to secure, delivery of those targets—the chief executive through the priorities and planning guidance, the regions by setting targets with the districts, and the districts by implementing those targets in the contracts that they place. At the same time, the ministerial Committee will want to monitor the development of the strategy and to ensure that, if we need more stringent action in any area to meet the targets, that action is taken.
I assure my hon. Friend that we shall meet those targets, and we shall beat those targets.
Ms. Liz Lynne: Does the Minister accept that there is more to health promotion than giving up chips and taking up jogging? Does she recognise that all Government Departments must be involved? Will she now demonstrate her commitment to health promotion by

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persuading the Government to ban tobacco advertising? Otherwise, people will assume that the Government are willing to profit from a person's addiction rather than do all in their power to prevent it.
Mrs. Bottomley: Certainly, I hope that the Department will practise what it preaches and that the NHS will practise what we preach. That is the significance of our initiative in ensuring that the NHS is an example of a healthy employer. As the largest employer in the country, it should certainly be a healthy employer. Our Department has been affected by the ministrations of my hon. Friend the Member for Derbyshire, South (Mrs. Currie) when she was at the Department and we have already taken a number of practical steps.
I must repeat our absolute commitment to meeting the targets to reduce smoking. Days lost, unnecessary costs to the health service and personal misery all result from needless smoking. We are determined that, by price, education, stopping the £1 billion subsidy to the growing of tobacco, preventing the example of tobacco smoking, and continuing to review the role of advertising, we shall ensure that this country is in the lead in the reduction of smoking. However, it is hard for us to take lessons from countries whose records in the reduction of smoking leave much to be desired.
Several Hon Members rose—
Madam Speaker: Order. We have reached the point at which I must remind hon. Members to ask only one question. I also appeal to the Minister to answer briefly so that we can make progress.
Mr. Stephen Day: Does my right hon. Friend agree that the White Paper, which is to be welcomed, would not have been possible without the health reforms which preceded it? Is it not about time the Labour party accepted the great benefits that those health reforms and the British Medical Association have brought to the health service?
Mrs. Bottomley: Following your instructions, Madam Speaker, I will simply answer yes.
Mr. Frank Field: Does the Secretary of State remember the time when she worked for the Child Poverty Action Group, when she lobbied the then Government to set health targets for all groups of the population but particularly for low-income groups? Does she recall that the official response to her then was that it would have been incautious of the Government to set such targets as they might be held to them? I congratulate the Minister on being less spineless than her predecessor. Does she also recall that when she worked for the group there were many data on the link between low income and ill health which current data still support? As the Government's figures show that since 1979 there has been an inexorable rise in the number of people and families on low incomes, what steps does the Secretary of State intend to take to prevent the Chancellor of the Exchequer's strategy from undermining her objective that poor as well as rich families will achieve those targets?
Mrs. Bottomley: The strategy is for the whole Government and the whole nation. I have made it clear that we already spend £1 billion per week on social security payments. The priorities of social security payments have been reordered so that additional money goes to
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low-income families. The hon. Gentleman is well aware that the challenge for us all is to generate wealth so that we can provide welfare. That is so whether the money goes into social security payments or the national health service. As for the resources available in the health service, we are determined to do all that we possibly can to encourage those sectors which have not acheived as well as those which are striving ahead. That is why, when it comes to immunisation, screening and every other health indicator, we are making it our business to ensure that the resources and skills of the health service are directed to the areas which need them most.
Dame Elaine Kellett-Bowman: My right hon. Friend will be well aware that in Lancaster we have an outstandingly good health service, but we have one worrying problem? May I draw her attention to pages 69 onward of her White Paper in relation to skin cancer? Lancaster appears to have a higher incidence of all forms of skin cancer than similar districts. Will my right hon. Friend make inquiries to see whether we can get to the bottom of that problem and cure it?
Mrs. Bottomley: One of our new targets is to halt the spread of skin cancer by the year 2005. I have no doubt that representatives of the regional health authority will talk to those of my hon. Friend's excellent district health authority—to which my hon. Friend rightly paid tribute —to consider whether there are special factors such as a special health promotion campaign or other means to ensure that my hon. Friend's part of the country achieves the same targets as other districts.
Mr. Terry Davis: If the Government are serious about improving the nation's health, why will they not tackle the problem of ill health caused by bad housing and low incomes?
Mrs. Bottomley: The document contains a great deal about the importance of housing. My right hon. and learned Friend the Secretary of State for the Environment played an important part in the document's preparation. I believe that he has welcomed the initiative as there are many sectors in which environment and health walk hand in hand. The document talks of establishing an institute to help set targets and study the links more effectively. Opposition Members are circling without knowing much about the detail, but those who have been involved in the development of estate action and urban programmes and channelling resources to the Housing Corporation all know that the Government do not shirk their responsiblities to improve the nation's housing stock and recognise the associations.
Mrs. Edwina Currie: I thank my right hon. Friend the Secretary of State for her kind remarks about me and reciprocate by saying that with this excellent White Paper she runs the risk of being the best Secretary of State for Health that we have had in a long time. If she is serious about reducing the number of adult smokers in this country, will she follow up the point that she rightly made about the price of cigarettes and encourage our right hon. Friend the Chancellor of the Exchequer to ensure that the real price of cigarettes—the most important element—goes up in this country year by year? Will she also ensure that we push hard in the

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Community, using our presidency, to ensure that the £900 million worth of subsidies towards tobacco production in Europe come to an end?
Mrs. Bottomley: I am grateful—very grateful—to my hon. Friend, who once again gets straight to the heart of the matter. Nearly £1 billion is spent on subsidising tobacco growing. However, of equal importance is the fact that we want other nations in the European Community to increase the price of cigarettes in their countries—and will take the opportunity of our presidency to push for that. If we do not, cheaper cigarettes could come into this country and undermine the policy. The price of cigarettes has increased by 43 per cent. while the Government have been in power. The White Paper reinforces that commitment to maintain the real price of cigarettes, which contrasts only too clearly with the record of the Labour party when in office.
Mrs. Margaret Ewing: The Secretary of State will recognise that no one would oppose the broad principles which underpin her statement today, but does she realise that in conceding a clear link between poverty and ill health—whether that poverty manifests itself through bad housing, lack of employment opportunities or bad environmental conditions—she has said that she is prepared to argue the case for additional expenditure in those public sectors? In that context, in the interesting conversations which have taken place on public expenditure, has she argued that instead of commissioning a fourth Trident submarine the money should be used for housing, education and employment opportunities?
Mrs. Bottomley: While our party has been in power, life expectancy has risen by two years for women and by three years for men. Perinatal and infant mortality are the lowest ever. The Labour party should therefore keep its remarks in context. Our economic policies will improve prosperity at all income levels. The public have no confidence in the Labour party's economic policies or— dare I say it?—in its health policies.
This strategy is about improving the health of the nation. I shall discuss with all my colleagues how we can work together to improve the health of the nation.
Dr. Liam Fox: I congratulate the Secretary of State on the proposals and targets for the mentally ill. Far too many work days are lost through mental ill health, and there are far too many suicides which would not necessarily have taken place if we had looked after those people better. The targets will be warmly welcomed. Does my right hon. Friend believe that they are attainable, and does she see a chink of light in the fact that they have at least temporarily stopped the sneering of Labour Front-Bench spokesmen?
Mrs. Bottomley: The targets that we set for mental illness are primarily associated with suicides. Nine per cent. of the life years lost by people under the age of 65 are due to suicide. Our concern is that many who have taken their own lives have been in touch with health or welfare professionals during the time before taking the fatal step, so it is extremely important, with the development of our mental health services, that we have better safeguards and a more effective and comprehensive service.
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We have introduced a specific grant for mental illness. We are also working with nurses, doctors and other health professionals to ensure an effective and seamless service. I believe that we can meet these important targets.
Mrs. Audrey Wise: Does the Secretary of State accept that the Department could make a contribution to giving babies a healthy and happy start in life if she accepted the report on maternity services issued by the Select Committee on Health? It includes a plea to the Department of Social Security to stop discriminating against the youngest mothers in the benefit system as they and their babies are the most vulnerable. Will the right hon. Lady take action on that?
Mrs. Bottomley: We shall be replying to the Select Committee shortly. I congratulate the hon. Lady and the members of the Select Committee on that important report, which I believe has changed the focus of the debate on maternity services. Having a baby in this country is a safe process now, and infant and perinatal mortality rates are at their lowest ever.
Mr. Nicholas Winterton: May I congratulate my right hon. Friend on the initiative that she has announced today and particularly on the targets that she has set for mental illness and mental health? I also congratulate her on the praise that she indirectly gave to the Select Committee, whose recommendations I think brought about the reduction in perinatal and neonatal mortality.
Will my right hon. Friend accept that some of us may have priorities additional to the five that she has identified? One of the greatest concerns in the health service and the social services is about whether community care will be effective and fully implemented in 1 April 1993. We are, after all, dealing here with the most vulnerable groups in society.
Mrs. Bottomley: I thank my hon. Friend; I can give him that commitment. A great programme of work is under way—my hon. Friend the Minister for Health will give more details of it soon—to ensure effective implementation and co-operation between the agencies. My hon. Friend has always sounded a note of caution about the exit of patients from institutions. As has been recognised already, the target involves the health and social functioning of mentally ill people, not just bricks and mortar.
Mr. Max Madden: Will the Secretary of State explain whether she accepts that there is a direct link between poverty and poor health? Yes or no will do.
Mrs. Bottomley: I believe that there is an association between a number of social factors and health. This health strategy is about how we can maximise the health of the nation; that, too, involves taking into account a great number of factors.
The hon. Gentleman may be surprised to learn that an inverse correlation governs some diseases and these factors. Breast cancer, it so happens, is inversely related to income—so the hon. Gentleman's assertion is not universally applicable.
Mr. Winston Churchill: I congratulate my right hon. Friend on the initiative that she is taking. Is it not a deplorable fact that hundreds and thousands of

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illnesses and deaths are self-inflicted and are largely preventable? If the situation could be changed in the years ahead, her efforts will have gained her much credit.
Mrs. Bottomley: We wish to make cost-effective improvements to health and it is clear that, by altering the focus, we can achieve real improvements in health, above all, by engaging and involving individuals, groups and employers in taking practical steps to ensure that the people for whom they are responsible make informed choices.
Rev. Martin Smyth: I congratulate the Secretary of State on the White Paper, but why are we targeting male smokers when younger women smoke more than younger men? Prevention is better than cure. Is there anything in the White Paper to encourage a shake-up in the royal colleges and prepare surgeons and others to deal with the new challenges of that age and to give women a proper role in medical and surgical care? In particular, will the Medical Research Council be doing anything to develop an understanding of myalgic encephalomyelitis, which is causing a great deal of concern and problems to many?
Mrs. Bottomley: Perhaps I can reassure the hon. Gentleman. The target for the reduction of smoking in women has been strengthened since the Green Paper. We want to ensure that men and women receive the maximum possible health gain. I am grateful to the hon. Gentleman for his comment about the role of women in the delivery of heatlh care. The national health service was the first Government department to sign up to Opportunity 2000 and we are determined to maximise the role of women in delivering health care throughout the service. ME is one of the many issues about which we received representations for inclusion. More work has to be undertaken as to what is an achievable target and what is effective intervention to achieve that target.
Madam Speaker: Mr. Warren Hawksley. No, I am sorry, Mr. Roy Thomason.
Mr. Roy Thomason: Sometimes it is an advantage to be mistaken for others. My right hon. Friend has said that this excellent health strategy is from the Government as a whole and not just her Department. How will she extend it to the Government as a whole, operating through other Departments, and in particular to the Department of Education?
Mrs. Bottomley: The ministerial Committee which meets under the chairmanship of the Leader of the House will hold all Ministers to account to ensure that they achieve progress and meet targets. In many sectors, we have similar interests with the Department of Education, as my hon. Friend rightly said. We work frequently through the Health Education Authority on smoking, sexual education, drug addiction, healthy eating and the development of healthy schools.
Mrs. Alice Mahon: If the Minister is committed to prevention rather than cure, why does she not restore nutritional standards to the school meals service? Why does she not negotiate with her colleagues in other Departments to stop the persecution of local authorities? Why have her Government persistently brought in policies which have damaged the school meals service? Why does she not act on the Black report
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recommendation that youngsters should have access to a free school meal? That is the best way to prevent bad health in low-income families.
Mrs. Bottomley: We certainly support the education authorities' work locally to ensure that meals are healthy and appropriate. It is not our view that the right way to do that is by central diktat.
Sir Anthony Durant: Does my right hon. Friend realise that many doctors thought that the immunisation and cancer screening targets were not achievable—as did the Opposition, who poured scorn on them when they were first introduced?
Mrs. Bottomley: I am afraid that I must remind the hon. Member for Livingston (Mr. Cook) yet again of his words in earlier debates about the general practitioner targets. He said that they were "too heroic" and "not achievable". In fact, nine out of 10 general practitioners are meeting the targets for immunisation and cancer screening, and three out of four are meeting the higher levels. That is a real credit to the family doctors and a real success in the health and welfare of women and children.
Mrs. Gwyneth Dunwoody: I am not sure what this expensive, pretty and ultimately superficial document is meant to reflect, but may I ask the right hon. Lady how the patients in my constituency will be helped by the quite clear distortion in the provision of health care by general practitioner fund holders? Not only is the right hon. Lady aware of that, but so is the whole of the health authority, which now has to deal with the problem.
Mrs. Bottomley: I find that a sad statement. The fund holders have made remarkable progress in innovating, developing and taking forward improved health care for their patients. Professor Glennister's report, which I recommend to the hon. Lady, makes it clear that the progress being achieved by fund holders is progress for the benefit of all general practitioners. It raises primary health care standards for all patients.
Mr. Ian Taylor: Does my right hon. Friend accept that the very welcome targets can be effective only if there is a system under which we can analyse both the quality and the nature of the health care which needs to be delivered? Does that not go to the very heart of the Government's proposals for reforming the NHS? Do not the proposals answer the Opposition, who do not believe that we care enough about those who most require health care? Have we not provided, through deprivation payments and through splitting the contractor from the provider, the best way to deliver health care to those most in need?
Mrs. Bottomley: That is precisely the success of the health reforms. Health authorities have been freed to take a strategic view in assessing health needs, and they can now commission health care to meet those needs. They will be held to account for the targets that they have been set by the regions. For the first time, we have the mechanisms to deliver a health service which will truly achieve health gains rather than automatically deliver a health service.
Mr. Malcolm Wicks: To establish health targets, there must have been a great deal of departmental research and statistical estimating.

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Would you be able to estimate how many people will die by the year 2000 because of your inaction—[HON. MEMBERS: "Order."]
Madam Speaker: Order. Let us have a little tolerance with new Members.
Mr. Wicks: How many people will die because of the right hon. Lady's inaction in banning tobacco advertising? Is it because the Tory party is now the tobacco party?
Mrs. Bottomley: A great deal of research has gone into smoking and the factors behind it, and I hope that there will be more. It is difficult to explain, in the hon. Gentleman's terms, why we have had a sharper reduction in the number of people smoking than any country except the Netherlands—which, like us, takes the view that the right way to control tobacco advertising is by a voluntary agreement. Price is a most important factor. When the Opposition were in office, the price of cigarettes increased by less than 1 per cent. We have increased it by 43 per cent.
Mr. Peter Bottomley: May I draw attention to the progress being made in beating by one third the targets set by another Secretary of State for reducing the number of people killed and seriously injured on the roads? I remind my right hon. Friend that the view echoed then was that the only way to reduce drink driving was to institute random breath testing; similar views are expressed now about tobacco advertising. The Labour party was wrong about that. Should not Labour Members look at the figures rather than the slogans?
Mrs. Bottomley: I believe that the Labour party was wrong and my close hon. Friend is right. Along with his ministerial colleagues, he did an enormous amount to change people's understanding of the effects of drinking and driving. Fifteen per cent. of life years lost by those under 65 are lost as a result of accidents; that applies not least to lives lost on the roads.
Mr. Andrew Miller: I am sure that the Secretary of State will know of the work done by Dr. Harvey Brenner and others on the correlation between unemployment and ill health, and the subsequent work done in this country by, in particular, Dr. Beale in the Wiltshire, North constituency—which, of course, is represented by the Minister for Trade. What provision is made in the White Paper to deal with the special category of people involved? I note that it is not included in the list of special categories towards the end of the document.
Mrs. Bottomley: I can only make it clear again that this is a Government strategy to achieve improvements in health. We have set challenging targets: we shall meet those targets, and we shall use all the means at our disposal for that purpose.
Mr. Peter Thurnham: The hon. Member for Livingston (Mr. Cook) has just scorned my right hon. Friend's welcome targets for a reduction in the rate of pregnancies in those under 16. Does she agree that he should take an extended tour—a Cook's tour, indeed —to Holland, where the rate of pregnancies in under-16s is twice as low as ours?
Mrs. Bottomley: The subject referred to by the hon. Member for Livingston (Mr. Cook) and by my hon. Friend is of great concern. I did not deal with it properly earlier.
In recent years, there has been a vast expansion in the provision of family planning services by general practitioners. Two out of three women now go to their GPs for family planning advice. However, that development has not been accompanied by a proper review of the appropriate role of family planning clinics. This year, one of the priorities of the NHS has been to review the provision of family planning clinics, and to ensure that they offer choice and a service for young people where that is appropriate. In supporting that work, we shall certainly take advice from Holland about how this worrying problem can be tackled.
Mr. Eddie Loyden: Does the Secretary of State agree that the death rate as a result of accidents is intolerably high? Will she bear in mind that certain industries—notably the construction industry—involve a large number of such deaths and that little or nothing is being done to arrest that? Will she ensure that the matter is addressed as part of her strategy?
Mrs. Bottomley: I beg to differ with the hon. Gentleman. The accident record in this country compares favourably with that in other countries. The hon. Gentleman has made an important point, however. Along with the Health and Safety Executive, which has worked closely with us in implementing the strategy, we want to promote the initiate of healthy alliances, especially in the workplace.
Mr. Simon Coombes: If my right hon. Friend's targets are to be realised in future, millions of ordinary people will have to change their life styles dramatically. Does she recognise that the key to that is education, and that an increase in the resources available to the Health Education Authority and health education facilities throughout the country is a necessary prerequisite for the achievement of such targets?
Mrs. Bottomley: I thank my hon. Friend, who has been a great champion of the cause for many years. We work extremely closely with the Health Education Authority, which has been very much involved in our strategy.
The HEA's contribution is important, but so, too, is the role of other health professionals. Following the introduction of the new GP contract, a number of health promotion clinics have been set up. Using the work of GPs in spreading the necessary messages has been extremely effective. We must involve nurses, other health professionals and those in the wider area to ensure that people know and understand the sensible choices that they can make to improve their health.
Mr. Andrew Faulds: As usual, my question will be brief and pithy. If these stringent voluntary advertising agreements with the tobacco industry are so effective, why is that industry now targeting young women through women's magazines, with the result that the number of young women who smoke is rising? Would not the health and lives of thousands of young women be saved if these voluntary agreements were even more stringent?
Mrs. Bottomley: All these matters are subject to continual review. The targets that we have set will be met. There is a particular rise in the target for a reduction in smoking amongst women. We are especially concerned about smoking among pregnant women, and in that regard there will be further initiatives. With regard to relations with the tobacco industry, the hon. Gentleman will be aware that that industry is currently taking legal action against the Government because the packet labels that we have introduced are the most severe.
Mr. Geoffrey Dickens: While we welcome the White Paper, the last thing we want is to frighten the nation to death. Can my right hon. Friend confirm that it is perfectly possible to enjoy a good lunch and a glass of wine and still live to a ripe old age? Does she agree that stress and tension, as demonstrated by the Opposition, are just as likely to cause heart disease as over-eating?
Mrs. Bottomley: With reservations, I confirm my hon. Friend's comments. On Saturday I went to a 100th birthday party. The person who had just become 100 years old ate moderately, drank little, had always taken a good deal of exercise and smoked not at all. I think that that indicates that the advice that we are spreading through our document should be followed.
Mr. Bob Cryer: Does the Minister accept that her cosy, vapid comments will entirely lack credibility so long as she fails to tackle the real problem of advertising with regard to the cancer-producing substances of tobacco? Could she not start by banning secondary advertising at outside sporting events, mainly through BBC television? There is clear advertising of cigarettes through that medium. The right hon. Lady could then go on to tackle the advertising of booze—alcohol products which cause an enormous amount of ill health in the nation. Or are the Tory Government simply in the pocket of the tobacco manufacturers and the brewers?
Mrs. Bottomley: The Labour party seems to be fixated on one means which it alleges can deliver an end. We are determined to achieve that end. Our aim is that this country should not just be the European Community member with the second greatest fall in tobacco consumption but should build further on that record and do even better by the end of the century. We shall use whatever means can achieve that end. As I have said before, I believe that price is important, that subsidising the growing of tobacco is important, and that advertising is important. In the case of advertising, that is why we have the voluntary agreement, which is constantly subject to renegotiation. Further powers have been taken to tighten control of the sale of cigarettes to under-age children. I take the view that, with regard to smoking, the worst effect on young children is produced by the smoking of parents.
Mr. John Bowis: My right hon. Friend's strategy is very welcome. Can she confirm that built into it is flexibility which will allow for the changing needs in medical science, such as growing awareness of the problems of younger Alzheimer sufferers, and for use of the whole range of medical science, including homeopathic medicine?
Mrs. Bottomley: The strategy is a beginning, not an end. We shall build on the targets. I hope that we shall
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develop them and broaden them and that new key areas will be introduced. We are working very closely with the director of research and development in the national health service so as to develop better mechanisms to set and achieve targets. I shall certainly bear my hon. Friend's remarks in mind as we carry the strategy forward.
Mr. Jimmy Boyce: The Secretary of State has said today that she supports a voluntary code for the advertising of tobacco products. She also referred to the fact that the best way to curb tobacco smoking is an increase in price. Will she be kind enough to tell us what level of price increase she is prepared to support?
Mrs. Bottomley: I am not prepared to tolerate any increase in smoking. That is why we have introduced strict targets to reduce smoking even further. There has been a significant fall in this country which, as I have already explained, is greater than in any other country apart from the Netherlands, which happens to take our view on the banning of tobacco advertising. There is concern about particular groups. They are a source of concern to us, of course. We must make sure that we continue to take all possible steps that will effectively achieve that end.
Mr. Anthony Coombs: I warmly welcome this further step in the development of the Government's preventive health policy, which I understand has already been described by the World Health Organisation as a model for other countries. Does my right hon. Friend agree that if we are to increase the targets for reducing coronary heart disease, it is vital to inculcate, particularly in young people, habits of exercise to promote good health? To that extent, will my right hon. Friend liaise with her right hon. Friend the Secretary of State for Education to ensure that physical education in schools is given much higher priority than it is at present, when all too often only one hour per week is allocated to this very important activity?
Mrs. Bottomley: I shall certainly speak not only to the Secretary of State for Education but also to the Secretary of State for National Heritage. I can confirm what my hon. Friend said about the World Health Organisation. Its director general, Dr. Nakajima, said:
"The health of the nation has international value. I. am sure other countries will benefit greatly from the approach England has adopted."
Mr. David Winnick: Is the Secretary of State aware that the continued price increases since 1979 for prescription charges, dental treatment and eye testing undermine and erode the whole concept of the national health service? Bearing in mind that fact and the Secretary of State's refusal to take any action over cigarette advertising, less hypocrisy from her on these issues would be welcome.
Mrs. Bottomley: I urge the hon. Gentleman to look at the facts more closely. On prescriptions, when the Labour party was in power, one item in three carried a charge. Only one item in five now carries a charge. Furthermore, life expectancy has increased by three years for men and by two years for women. Perinatal and infant mortality have fallen dramatically. According to a great number of criteria, the nation is healthier now than ever before. Our health strategy is about carrying that forward further and faster.
Mr. Jeremy Corbyn: Is the Secretary of State aware that there is a disturbing increase in asthma and related problems among children, particularly those living in inner-city environments? Is she prepared to undertake a serious study of the link between asthma in young children in inner-city environments, the increase in pollution caused by traffic, and inadequate housing? Until now, in response to parliamentary questions from me, she has said that there is no central recording and correlation of these data.
Mrs. Bottomley: The director of research and development has made it clear that better research in the case of asthma is something that we very much want to take forward. There has been a growth in asthma among children. All the factors are not properly appreciated. More work needs to be done. However, I can give the hon. Gentleman a pretty clear undertaking that this will come forward as a key target area at a later date when we have more information.
Mr. Hugh Bayley: I have a simple question for the Secretary of State: to what extent has the Department costed these plans? Is she aware that the Northern region costed the meeting of a coronary heart disease target in the Green Paper as between £1·6 million and £2·4 million each year until the year 2000? There are many other regions, including those in Scotland and Wales. What will be the total cost of the proposals? Will there be new money, or does the Secretary of State intend to raid existing NHS budgets and force cuts in other areas? Can she guarantee that there will be new money to fund all the targets?
Mrs. Bottomley: The purpose of the health service is to deliver high quality services and to achieve health gain. By concentrating on prevention in these areas, we can achieve health gain cost-effectively. That is our whole strategy for health—the result of our work in reforming the national health service. We spend £100 million a day on the NHS —we have never before put more money into it—and as more money goes in, so priority will be given to the key areas, chosen because through them we can most effectively improve the health of the nation.
Mr. Bryan Davies: Would not a more appropriate title for the White Paper be, "The Health of Two Nations"? Has not a section of our population been so impoverished by the Government that they cannot afford the high quality diet recommended? Their children are not getting high quality food at school —and often come back to damp and inadequate homes, which reflects the local government cuts enforced by the Government.
Mrs. Bottomley: I do not have sympathy with those remarks. I have made it clear that, for example, one of the most important developments in the general practitioner contract was the introduction of deprivation payments for GPs working in inner cities. Throughout all the key areas that we are considering it is important to ensure that those areas which have not made the same progress as others catch up. That is where health resources are concentrated —the skill, effort and determination necessary to meet the targets and to ensure that we tackle variations wherever possible.
Several Hon. Members rose—
Madam Speaker: Order. We must now move on.

Points of Order
4.35 pm
Mr. Keith Vaz: As you are aware, Madam Speaker, this morning the Bank of England published its response to the report of the Select Committee on Treasury and Civil Service on banking supervision and the Bank of Credit and Commerce International, dated 4 March. When I sought to obtain a copy of the report from the Library, I was told that none was available. I realise that the Governor of the Bank of England is running around the City like a headless chicken, seeking to defuse the expected criticism in the Bingham report. However, when public bodies respond to a Select Committee report, is it right that they should tell the Press Association before telling hon. Members?
Have you, Madam Speaker, had any intimation from the Chancellor of the Exchequer as to whether he is in a position to make a statement on when the Bingham inquiry report is to be published? There are only five days left before the recess, and hundreds of thousands of people all over the world are waiting for the results of the inquiry.
Mr. Brian Sedgemore: Further to that point of order, Madam Speaker.
Madam Speaker: Please—Mr. Terence Higgins.
Mr. Terence L. Higgins: It is always inconvenient for the House when an hon. Member receives a written answer that does not appear in Hansard until the following day. For the convenience of the House, perhaps I should therefore mention that an hour or so ago I received a written reply to a question asking when there would be a response from the Bank of England to the report of the Treasury and Civil Service Select Committee. The answer said that the Treasury Minister understood that a response had now been made and a copy placed in the Library. I received a copy earlier today, and I believe that copies are now available in the Library. No doubt, when the Select Committee is reconstituted—I very much hope that it will be next week—it will wish to consider the Bank of England's response.
Although the response accepts some of the recommen-dations, it does not accept them all; nor, in my view, is it adequate. But—
Madam Speaker: Order. The right hon. Gentleman is getting rather carried away—points of order are for the Chair. His earlier remarks were extremely helpful.
Mr. Higgins: Then I shall say no more, Madam Speaker —other than that the response does not seem to cover the criticisms that have been made and that I therefore hope that there will he a further response at a later stage.
Mr. Sedgemore: Further to that point of order, Madam Speaker. I confirm what the right hon. Member for Worthing (Mr. Higgins) has said. The Library has provided me with a copy of the report.
My point of order concerns the actions of the Bank of England in relation to the procedures of the House. Today, the Bank of England has published its response to the fourth report of the Treasury and Civil Service Select Committee on banking supervision and BCCI. On page 12 of The Guardian today there is an article by Alex Brummer and John Willcock headed

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"BCCI prompts Bank to seek law change".
I have checked the article against the report. It could have been written only by journalists who had the report. At the very least, it is discourteous and deceitful of the Bank of England to give copies of the report to journalists before it is available to hon. Members. I am sure that you, Madam Speaker, know what has happened: before hon. Members get the Bingham report, the Governor has attempted a pre-emptive strike because he knows that his job is on the line. I believe that that is an abuse of the procedures of the House. I hope that you will deprecate the actions of the Governor of the Bank of England.
Several Hon. Members rose—
Madam Speaker: Order. May I deal, first, with the points of order that have been made? In answer to the hon. Member for Leicester, East (Mr. Vaz), I have had no indication that the Chancellor or another Treasury Minister wants to make a statement today. I strongly deprecate the action of the Bank of England, because it shows great discourtesy to the House. As the House knows, I have no influence on the Bank of England. but, as a matter of courtesy, I would expect the House to be informed of a response to a Select Committee report before any other outside body.
Mr. Andrew Welsh: On a point of order, Madam Speaker. It is reported that the Government have appointed consultants to review the future of water services in a Scotland with a view to privatisation. That would affect everybody in Scotland, yet local authorities and workers in the industry have not been consulted and a statement has not been made on the Floor of the House. There is no Scottish Select Committee and there will be no Scottish Question Time between now and the recess. How can we make the Government answerable without them yet again resorting to the medium of a planted written question to deal with important Scottish matters?
Madam Speaker: I understand the hon. Gentleman's frustration. It occurred to me that we have the debate on the summer Adjournment tomorrow and he might like to try his luck in that.
Mr. Terry Rooney: On a point of order, Madam Speaker. The European Court ruled this morning that the Shops Act 1950 does not breach European law. In the light of that, and to assist local authorities, is not it time that the Government introduced legislation—preferably along the lines of the private Member's Bill of my hon. Friend the Member for Ogmore (Mr. Powell)—so that this nonsense of law-breaking up and down the country can be brought to an end?
Madam Speaker: That was a good try, but it is not a matter for the Chair. It is a matter to put to the Government in business questions.
Mr. Paul Flynn: On a point of order, Madam Speaker. May I raise a matter with you in your capacity as the defender of rights and privileges of Back Benchers? We have no greater privilege than the right to put questions to the Government.
For the past six months, I have been raising with the Government a matter of the greatest importance to my constituency. I received five answers last Thursday and a letter last night giving me ambiguous replies. Today, I was told that the Government had been in touch with Directorate-General XIII. I have since telephoned Brussels, which has no trace of any contact with the Government on this important matter. Unless that contact was made today, the answer that I was given was not entirely true. I realise that you, Madam Speaker, are not responsible for these matters, but I ask you to use your great influence to ensure that answers to hon. Members are intelligent and truthful.
Madam Speaker: I am sure that answers to Members are truthful. I do not have the influence that the hon. Member gives me credit for. I understand his frustration, because he has raised the subject on a number of occasions on the Floor of the House. I shall look into it.

Transactions with Tax Havens (Sanctions)
4.44 pm
Mr. David Shaw: I beg to move,
That leave be given to bring in a Bill to provide sanctions against persons or organisations who engage in financial dealings with tax havens; to amend the Companies Acts in respect of audits carried out by accountants who maintain offices in tax havens and in respect of the duties of directors of public companies; to amend the Banking Acts in respect of transactions with banks situated in tax havens; to regulate the activities of advocates, barristers and solicitors with regard to transactions with tax havens; and for connected purposes.
Although I am a chartered accountant and I shall mention the accounting profession in my speech, I have no financial interest in tax havens.
The House will he aware that one important aspect of the Maxwell affair is the fact that Mr. Maxwell based his business empire in the tax haven of Liechtenstein. Financial transactions with Liechtenstein are rarely, if ever, for honest purposes. The same is true of many financial transactions with other tax havens.
Recently, we have seen a number of large frauds involving loss to our citizens as a result of transactions involving tax havens. Consequently, I wish to introduce a Bill that would make it unlawful to carry out most types of financial transactions with tax havens. My Bill would provide for sanctions against professional persons—bankers, accountants or lawyers—who provide advice or assistance with financial transactions involving tax havens.
My Bill would further provide that directors of public companies and of companies managing collective investment schemes such as pension funds and unit trusts shall not enter into transactions with tax havens either personally or through their companies. If my Bill had been law in this country, there would not have been the scandal of the Bank of Credit and Commerce International, in which many United Kingdom citizens lost hundreds of millions of pounds, the scandal of Polly Peck in which hundreds of millions of pounds are still unaccounted for, the scandal of Barlow Clowes or the scandal of Mr. Robert Maxwell stealing so many hundreds of millions of pounds from the pensioners who had worked for his companies.
One point that I should like to make clear to the House is that the problem that tax havens cause is not so much related to the low rates of tax that exist in them; if that were so, the United Kingdom might be regarded as a tax haven. The main problem caused by tax havens is that they allow transactions to take place in conditions of extreme secrecy. which can be used by fraudsters like Maxwell and the management of BCCI unlawfully to remove many hundreds of millions of pounds from our citizens.
The use of the words "tax havens" is less and less appropriate as they become more and more fraud havens. Indeed, in my draft Bill I have not sought to construct my definition of a tax haven in terms of it being a low-tax area, since that of itself is of little concern. Instead, I have constructed the definition on the fact that a tax haven or fraud haven is a place where money goes missing and where there are no legal arrangements in operation that enable United Kingdom citizens who have been defrauded to obtain information or help that would assist them in the recovery of the money that they have lost.
Many people will ask, "How serious is the problem of tax havens?" I should like to make it clear that the Government have certainly tried to tighten tax law to
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reduce avoidance and evasion. However, the effectiveness in practice of some of the changes is open to doubt, and in any event the changes in tax law have not dealt with the problem of business and personal fraud.
Although there are no published figures, it is likely that as much as £2 billion a year may be lost in avoided or evaded tax and business or personal fraud through the use of tax havens or fraud havens. One has only to look at the large firms of United Kingdom accountants that maintain associate offices in the tax havens to see how big the business has become.
Although my Bill is mainly concerned with preventing fraud, a tax haven would not be a tax haven if it were not for the reduction in taxation that could be achieved by a person controlling a business from there or creating tax-efficient transactions re-routed through the tax haven. Often, that person gains the benefit of living in or carrying on a business in the United Kingdom but avoids or evades paying tax here by controlling his or her business assets through an offshore trust.
That is just what Robert Maxwell did. He never claimed to own the Daily Mirror; he claimed only to be its publisher, with ownership controlled by a Liechtenstein trust. That convenient arrangement enabled Maxwell to avoid—some would say evade—about £100 million of capital and other taxes that should have been payable on the profits made by his investment in the Mirror Group.
The loss of tax revenues through tax havens is clearly a serious matter. We could probably reduce income tax by a further 1p in the pound if the Government tightened this area still further. Losses caused by tax havens are by no means limited to the loss of tax revenues. Commercial and personal fraud through tax havens is running at record levels.
In the past 10 years, there have been nine Department of Trade and Industry company investigations which have found extensive details of fraud involving Switzerland and Liechtenstein. Those DTI investigations also detailed the part that other tax havens have played in assisting frauds through the provision of a cloak of secrecy behind which crooks can operate. Consequently, the main purpose of the Bill is to reduce economic loss to the United Kingdom and our people and to discourage white collar crime.
Which are the tax haven countries? According to my definition of a tax haven, the main criterion is that it is a country that assists fraudsters in the taking of other people's money. It is not my intention to penalise a tax haven because it may have a lower rate of tax than the United Kingdom; my concern is that income and capital gains should not be diverted to a tax haven from the United Kingdom to enable a person who benefits from an association with the United Kingdom to evade or even avoid tax in the United Kingdom.
The Bill is directed at the tax havens that assist frauds to take place as well as tax evasion, drug dealing, money laundering and insider dealing. They are crimes that the United Kingdom Government regularly enact legislation to prevent, but all United Kingdom Governments—Labour and Conservative—have failed to tackle the problem adequately in terms of hitting the white collar criminal where it hurts, which is in his or her bank account. The Government must face the issue because the size of frauds involving tax havens is growing and the number of frauds may also be increasing.
Some areas that are regarded as tax havens, such as Jersey, Guernsey and the Isle of Man, could easily adapt

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their systems to avoid being classed as tax havens. All they have to do is accept that where a monetary loss takes place in the United Kingdom, they will co-operate in righting the wrong. Indeed, I believe that some degree of co-operation from those countries has been available in the past.
My main concerns are with Switzerland, Liechtenstein, the Netherlands Antilles and a number of United Kingdom dependent territories in the Caribbean such as the Cayman islands, the British Virgin islands and Panama. The latter countries and United Kingdom-dependent territories are the countries where many of the fraudulent transactions take place. Too many tax havens have traditional relationships with the United Kingdom. That is no excuse for allowing their economies to develop around fraud. Their people will become lazy and their economies will not develop properly. The Foreign Office has a duty to our citizens to review its policies towards those territories and to suggest policies which benefit this nation and its people.
Too many tax avoiders and evaders have been using such tax havens. Too many creative accountants or company directors have been using them; for example, Mr. Maxwell arranged a number of transactions of such a nature to manipulate the accounts of the Maxwell Communication Corporation. Large international drug dealers are known to use places such as Panama. Share manipulators, a new breed. were found to use tax havens in the Guinness affair, and Goldman Sachs did a large number of share transactions in Maxwell Communication Corporation shares from Liechtenstein trusts in very dubious circumstances.
Tax havens have been found to be used by insider dealers in the United States, and a significant one was caught recently. Sadly, no big insider dealers have been caught here. Those caught have tended to be the smaller ones, and one wonders whether that is because the investigations have gone to the door of the tax havens but, because of secrecy laws, have been unable to go any further.
The case for the Bill, or for measures with a similar effect to be introduced by the Government. is overwhelming. How will the Bill operate? In practice, United Kingdom accountants and accounting firms, lawyers and other professionals who have privileges enshrined in law would have sanctions brought against
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them if they continued to make transactions with tax havens. Accountants carrying out audits and law firms have significant privileges in law. If the privileges are to be sustained, such people and organisations must also have responsibilities to others. Tax havens and transactions with tax havens should be restricted, and sanctions should be used against those who carry out their work in tax havens.
United Kingdom public company directors also have many privileges. They should not own or carry out transactions in a tax haven—
Madam Deputy Speaker (Dame Janet Fookes): Order. May I invite the hon. Gentleman to wind up?
Mr. Shaw: Thank you, Madam Deputy Speaker. I shall conclude.
My Bill would work. I believe that the sanctions, which would be onerous, would be effective because they are necessary to restrict the fraud that has taken place in the companies that I mentioned. The Maxwell fraud and the misery that has been caused to many retired and elderly people make one realise that no measure can be too draconian if it prevents such an evil fraud. I believe that many banks in the City of London would welcome the Bill because it would assist them in preventing and tackling fraud within their own operations.
Question put and agreed to.
Bill ordered to be brought in by Mr. David Shaw, Mr. Richard Page, Mr. Stephen Day, Mr. Frank Field, Mr. Keith Vaz, Mr. Tony Banks and Mr. Simon Hughes.

TRANSACTIONS WITH TAX HAVENS (SANCTIONS)
Mr. David Shaw accordingly presented a Bill to provide sanctions against persons or organisations who engage in financial dealings with tax havens; to amend the Companies Acts in respect of audits carried out by accountants who maintain offices in tax havens and in respect of the duties of directors of public companies; to amend the Banking Acts in respect of transactions with banks situated in tax havens; to regulate the activities of advocates, barristers and solicitors with regard to transactions with tax havens; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 27 November and to be printed. [Bill 57.]
Orders of the Day
  Finance Bill
  Not amended in the Committee and as amended (in the Standing Committee), further considered.
New Clause 12

  HOME INCOME PLANS (INVESTMENT BOND SCHEMES)
  '.—(1) Where a person has sold since 6th April 1986, more than ten investment bond related home income plans to individuals, the provisions of this section shall apply to them.
  (2) A person falling within the provisions of this section shall be entitled to a reduction in their tax liability for 1992–93 of the amount specified in subsection (3) below if the condition of subsection (4) below is met.
  (3) The reduction in tax liability referred to in subsection (2) above shall be £1.
  (4) The condition referred to in subsection (2) above is that no more than 10 per cent of the investment bond related home income plans they have sold since 6th April 1986 have subsequently been terminated.
  (5) The Board is empowered by this subsection to issue regulations defining the term "investment bond related home income plans".'.
  Brought up, and read the First time.—[Mr. Boateng.]
  4.56 pm
  Mr. Paul Boateng: I beg to move, That the clause be read a Second time.
  The last time the issue of home income plans was raised on the Floor of the House was in March, during the debate on the Friendly Societies Bill. At that time, I registered my concern, that of my party and, indeed, that of hon. Members of all parties about the thousands of pensioner households which had been inveigled into making investments in wholly unsuitable home income plans. I also said that I had doubts about the effectiveness of the Government's response, which consisted of setting up a committee of regulators to examine problem cases.
  We make no apology for bringing the House's attention to the subject again, because we see no evidence—and our postbags reflect this —that the problems have been dealt with adequately. Indeed, there are currently a number of early-day motions which have attracted widespread support from hon. Members of all parties.
  The subject, which is of particular concern, has been raised during points of order and in the presentation of the Bill. It is of particular concern because of the warnings that have repeatedly been given, not least by my colleagues, that the Government's deregulation of the financial system has left the unsophisticated saver dangerously unprotected.
  The issue should concern all hon. Members. It follows directly on something that the Prime Minister said at the previous Tory party conference. Some Conservative Members will remember that they were there, clapping like agitated penguins at the Prime Minister's words. He said:
  "I want to give … every family the right to have and to hold their own private corner of life: their own home, their own savings, their own security for their future."
  They are fine words but they are, of course, belied by the number of home repossessions.
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  Home repossessions are especially tragic when they involve the victims of the home income plan scandal, victims who are in the main aged, in retirement and in the autumn of their lives. They find themselves on the verge of being flung out of their homes, and some are being flung out. A number of them have been driven to suicide as a result of their anxiety about the plans and the indebtedness into which they have fallen. Literally hundreds of people have written to me in the past nine months about their plight arising from the home income plans scandal. I know that hon. Members of all parties have received a similar postbag.
  I will read to the House some letters that give a sample of the agony and concern that these elderly people face. Mrs. Vera Hawkins of Bromley in Kent writes on behalf of her husband:
  "We are another elderly couple who are involved in the Home Investment Plan Scheme which went so distressingly wrong. My husband is 72 and I am 69.
  We are desperate because so far nobody has been prepared to stand up and be counted on our behalf.
  We understood that we were safely covered by FIMBRA the regulatory body. Can the Government tell us to what use or purpose these bodies exist? They are called 'Watchdogs.' Who are they watching? Not those devious firms who are their members! Not the clients who obviously so needed this! Did the number of clients increase their cash flow?"
  Mrs. Hawkins describes writing to the regulatory body and the unsatisfactory answer. She tells of the crippling burden of debt that she and her husband face. She also tells of the plight of other elderly people who have gathered together in support groups for victims. They are doing all they can, even in old age, to fight back.
  Mrs. Timperley writes from Northamptonshire. It is often the case that elderly women write because their husbands are too ashamed of the debts into which they have fallen to put pen to paper. Their distress is added to by the fact that they are of a generation for whom any indebtedness is a shame and a disgrace. They are often afraid to go to the local citizens advice bureau or to face their Members of Parliament at their surgeries.
  Mrs. Timperley writes:
  "I am 73 and my husband is 77. Three years ago we saw an advertisement in a magazine for the over-65s"—
  the sharks knew how to target their victims and where to go to attack the vulnerable and ill informed—
  "regarding these schemes. We were put in touch with the Portman Building Society and applied for a loan on our bungalow of £ 10.000 or less. The minimum was £20,000 so we borrowed that amount. After about one and a half years, we repaid £8,000 thinking it would bring the basic mortgage down to £12,000. We received a statement earier this month and to our dismay find that we owe nearly £22,000 and are paying interest on interest. This means that in a few years time we will he homeless and they will have the property for £12,000."
  Mrs. Timperley describes how she trusted the good faith of the building society and how, as a result of what she describes as sharp practice—an understatement—she is in her present plight. She asks whether something can be done
  "for all the elderly people who have been duped in this way and prevent it happening to others?"
  Those are just two letters from a postbag that runs into hundreds.
  The new clause is exploratory. We recognise that the procedural conventions of Finance Bills proscribe any amendment designed to increase revenue. They constrain us from our preferred course, which would be to levy a

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  substantial charge on financial advisers engaged in selling the schemes. Instead, we are obliged to offer a reward to any adviser who can demonstrate a 90 per cent. success rate. We do so in the confident expectation that no one will come forward because no one will be able to exhibit such success in relation to the ill-fated schemes. If anyone did so, he would receive the princely sum of £1, which shows how high in the public esteem those who sell such instruments are held.
  More importantly, the new clause provides an opportunity for the whole House, once again, to express its concern about the issue and to reassure the victims that they are not forgotten. It is also important to hear the views of the Economic Secretary, and we look forward to them.
  I do not want or need to describe the details of the schemes again, or to explain why they were so unsuitable for pensioner households. Most hon. Members already know that the schemes involved remortgaging a home to invest the proceeds in broker bonds, and that they relied on a scenario of ever-rising house and stock market prices. That scenario in relation to house prices was actively fed by some Conservative Members and by the Government of the day. The schemes were always highly risky speculations and were suitable only for those with large amounts of capital to spare. Clearly the regulators agreed, albeit belatedly, with that assessment, because they banned the further sale of such schemes two years ago.
  The Government have not been short of expressions of sympathy for those who are already trapped. The former Economic Secretary, John Maples, wrote to me on 12 March. He said that he could
  "well understand the distress which has been caused by the inappropriate home income schemes."
  The relevant regulatory bodies
  "have produced a straightforward system for handling, on a case-by-case basis, complaints which have arisen as a result of schemes which have gone wrong."
  He saw no need for the Government to press building societies to make any further undertaking.
  That reply was not good enough, because a number of problems have arisen from the scheme established by the Government for complaints about home income plans. The procedure is complex; the system for handling complaints is far from straightforward. We accept that the victims' position was eased by the creation of a single port of call for the registration of complaints, but that is by no means the end of the story. To put their case, victims are obliged to fill in a mass of documentation. Elderly people, who are more vulnerable and more likely to be confused than others, often find writing a letter a strain. Simply to present the case is not enough, because they then have to get it resolved.
  The method by which claims are subsequently processed is unwieldy and time-consuming. To put it bluntly, those elderly people do not have all that much time left. They have only a limited number of years left to them and they are entitled to some quiet and calm in those years. The speculators and sharks who sold them the schemes have denied them that calm.
  The committee established is composed of seven different bodies, yet the previous Economic Secretary described it as straightforward. The bodies include the Securities and Investments Board, the Financial Intermediaries, Managers and Brokers Regulatory Organisation, the Life Assurance and Unit Trust
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  Regulatory Organisation, the investors compensation scheme, the Building Societies Commission, the building societies ombudsman and the Law Society. Each body has distinct responsibilities, but crucially no one body is in overall control. That is where, all too often, the problem lies.
  There is a suspicion that, if it were possible for a case to be solved by the regulators acting alone, the regulators would do so without the intervention of the Securities and Investments Board committee. For example, one accepts that LAUTRO has on occasion been able to deal speedily with its problems. Conversely, if responsiblity is not easily assigned, matters can be spun out indefinitely as the various regulators pore over the details of the case to determine who is responsible when none of them is empowered to insist that a decision is made. That is a time-consuming process. The victims do not have time, and the process is grossly unsatisfactory.
  Secondly, the restitution offered to victims is inadequate. The victim cannot be certain of full restitution. Let us take a typical case of a pensioner who has been sold a home income plan by an independent financial adviser. The victim is not entitled to any recompense from the investors compensation scheme unless the financial adviser has been suspended from FIMBRA membership. Instead, the victims have to rely on FIMBRA's arbitration system, which is under-resourced and obliges the victim to forgo any other recourse against the FIMBRA member. Fears have been expressed about that in the House before, and I have no doubt that they will be expressed by my hon. Friend the Member for Manchester, Blackley (Mr. Eastham) in the speech to which we all look forward that he is to make in the Consolidated Fund debate early—at least I hope it will be early, for his sake—on Friday morning. So restitution is a problem.
  Another problem is that, once access to the ICS is obtained, the rules restrict the payout. Compensation is limited to investment losses. No account is taken of legal or other costs already incurred, let alone damages for stress and inconvenience. A ceiling of £48,000 is placed on total compensation. That is often below the loss that victims face. The victim's claim is assessed as of the date when the FIMBRA member was suspended. That is clearly not appropriate in the case of investment bond related home income plans, in which interest on the victim's mortgage will continue to build up. It is in the nature of such plans that the interest will roll up during the period of up to one year while the ICS is assessing the relevant claim.
  Furthermore, in order to claim funds from the ICS, the victim is required to assign to the ICS all rights to redress from third parties, even where he or she has received less than full restitution. In those circumstances, it is hardly any wonder that the victims and their solicitors have been wary of committing themselves to the procedures of the committee of regulators.
  5.15 pm
  Thirdly, the resources for tackling the issue are insufficient. The Government must acknowledge—we look for some sign of it this evening—that, even if victims are persuaded to come forward, the present system is simply not equipped to cope with the numbers involved. Age Concern has estimated that we are talking about more than 40,000 victims. The committee of regulators appears

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  to consist of ad hoc meetings of staff, whose principal responsibilities lie elsewhere. They are brought together from other duties for the purposes of the meetings.
  The problem is recognised by some of those involved. Almost all the problem cases involve building societies and to that extent are likely to require the attention of the building societies ombudsman. The ombudsman's annual report for 1991–92 published last month makes some reference to the matter. It says:
  "We might find ourselves with a large number of cases which are difficult for us, as well as the parties, to process."
  That issue needs to be addressed. Surely it would be possible for the Government to ensure that resources of staff and support are available to process the claims that are being made and are expected to be made.
  Another problem is non-co-operation from certain building societies. The committee of regulators relies on the co-operation of all the parties. That does not cause a problem where lines of responsibility are clear and established. As the SIB has other investment business, clearly there is not a problem where other parties are involved. Again, the principal problem lies with the building societies. As we have asked from the outset, who is to ensure that the building societies meet their obligation? The remit of the Building Societies Commission is "prudential supervision" of the societies.
  The Economic Secretary's predecessor, Mr. Maples, was at pains to emphasise that the commission had insisted on additional capital adequacy requirements to reflect the risky nature of home income plan business. I do not doubt for one moment that that decision was sensible, but that is of no comfort whatever to the victims. It is of no comfort to them to know that the building societies have survived the experience. It is not the building societies that face the loss of their homes or destitution in old age.
  The building societies ombudsman is responsible for complaints against societies, but even there a hitch has arisen. Leading counsel has told the ombudsman that the ombudsman has jurisdiction only where the complainant was a member of the society when the contract was signed. Typically, home income plan victims came to an arrangement with their financial advisers before the mortgage was formally arranged—that is the whole point —so the victims lie outside the ombudsman purview. Apparently, nothing can be done.
  So the absurd position has arisen whereby building societies can be held to account by the committee of regulators only if they volunteer to be held to account. That is absolute nonsense, because it gives those building societies which are not prepared to adopt an altruistic and moral approach a way out. If the building societies were concerned with morality and prudence, they should never have become entangled in home income schemes in the first place. It is a shame and disgrace to those who became entangled that they did so. That is a matter of real substance, and we must have a response from the Economic Secretary.
  Of the six societies initially identified for scrutiny by the SIB, three have not agreed to co-operate: the Bristol and West and the National Counties refused outright. That is disgraceful, and those responsible for their management have a great deal to answer for, not least when my postbag shows that there are a particularly large number of victims in the Avon area who have been lured into their schemes as a result of the reputation of a building society that seeks to trade on its probity. The West Bromwich building
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  society has still to make up its mind. There is no question about those three societies and the position that they take —that is the report of the building society ombudsman. It is time that the West Bromwich made up its mind, and agreed to take responsibility and to accept the jurisdiction of the committee of regulators.
  To their credit, the Cheltenham and Gloucester, Bradford and Bingley and Britannia building societies are co-operating. One would expect no less from societies of that reputation. The other three societies have some explaining to do. Let me make it clear that Opposition Members—doubtless many hon. Members on both sides of the House will take this view—will not hesitate to come to the House again and again to expose the failures of those building societies, as they have taken a grossly irresponsible course over the scandal, and have either refused to co-operate or have prevaricated in so doing.
  The question remains about the other societies involved in the disgraceful business. Apparently, the list contains well over 20 names. It is not clear whether they will withhold their co-operation and what will happen to the Government's committee of regulators if they do. We understand that the SIB has recently forwarded a few more names to the ombudsman. We should like the Minister to tell us what the response from those societies has been. It is absolutely vital that such issues are out in the open.
  It is vital that those building societies, which trade on their good name and reputation, should not be allowed to hide their response to Government action over the scandal behind a veil of official secrecy. If open government means anything, and if transparency in financial regulation is to have any meaning, we should know which societies are involved and what their response has been. Only when we know that can we judge the degree of responsibility, prudence and morality that guides their actions.
  We make no apology for focusing our attention, and that of the House, on the role of the building societies. We have all been the recipients of missives from building societies. Some have sent them with more regularity than others; nevertheless, they have all been actively lobbying on their own behalf and on that of their members. They were among the most active in lobbying for deregulation in the 1980s. They fought to lend ever higher multiples of earnings and proportions of market value. One only has to open the papers to see that they continue down that route, even with the housing market in its present state. They complied in the practice of equity release to extend their borrowing still further. Now that the experience has turned sour, they have been distinctly lukewarm about helping customers who have hit difficulties. It is not good enough. They cannot have it both ways. They cannot hold themselves up as responsible lenders, and organisations deserving of special treatment, by virtue of their reputation, history and tradition of mutuality, while turning their back on the aged and vulnerable. We are entitled to expect a better response from the building society movement.
  The Government also have some responsibility. Now is not the time to go into the inadequacies of the Government's mortgage rescue package. That has been discussed and I do not want, for one moment, to remove the focus of the debate from the plight of the elderly and the vulnerable who have been affected by the schemes, but it has to be said that the Government's rescue package simply has not bitten to assist those facing repossession.

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  However, it goes beyond that. Sir George Blunden, chairman of the Money Advice Trust and former deputy governor of the Bank of England, has criticised the building societies for failing to offer adequate help to the Government scheme. Home income plans, and the inadequacy of the building society's response to them, is simply an example—albeit the worst—of a generally lukewarm response to home repossessions. We intend to pursue the issue until we have had an adequate response from the Government and from the building society movement.
  Time and time again, we argued with the Minister's predecessor that it required the Government's active participation to bring matters to a satisfactory conclusion. That remains the case—more than ever before. Only the Government, with the power and authority that lie at the disposal of the Treasury, are in a position to bring pressure to bear on all the parties. Nothing that the Government have said or done suggests that they appreciate the scale or the urgency of the problem.
  Tonight we want to hear from the Minister how many cases have been solved through the existing apparatus. Is he satisfied with that number? Is he satisfied with the way in which the arrangements are working, and, if not, what will he do? What assurance can he give the House, and, more importantly, to the vulnerable, who face ruin and penury in their old age, that the Government will act? The penury they face is not a matter that the House could take lightly or would wish to. It is a matter of the gravest concern, and we expect a sufficient response—one that recognises that concern in a way that, to date, has been all too sadly lacking.
  Mr. Paul Tyler: As the hon. Member for Brent, South (Mr. Boateng) said, all of us have received letters from constituents on this issue. A letter from two of my constituents in North Cornwall says:
  "My wife and I are two of a large number of people throughout Britain who are now confronted with the dreadful possibility of losing our homes, and with it, the only asset of any substance to our name. Some poor wretches who have suffered were driven to suicide, and whereas I do not wish to appear over-melodramatic, it is important to convey to you the very seriousness of the matter. We are both pensioners, and as there was a need two or three years ago for us to increase our level of income, the scheme advertised in the national press seemed to be the ideal thing we were looking for, and we entered into it accordingly. As I hope you will appreciate, it does seem drastically wrong that people such as ourselves, who after a lifetime's hard work and having contributed to the 1939–45 war, should now be confronted with a threat of this kind through absolutely no fault of our own in the twilight of our lives."
  The letter concluded:
  "would you please do all in your power to keep this matter constantly in the minds of whoever in Government is responsible in such matters?"
  As the hon. Member for Brent, South said, someone in Government must be responsible for that situation and, therefore, responsible for finding the appropriate remedy.
  5.30 pm
  I do not wish, in a short speech, to refer in detail to the schemes. We all know them too well from experience passed on to us by elderly and vulnerable householders in our constituencies. However, three elements of each of the schemes have surely caused the difficulty, and Age Concern has accurately pinpointed them in the excellent briefing that it has given to many hon. Members: first, the independence evident in the advice given to customers;
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  secondly, the extent to which that information was biased about the merits of the schemes—bias that may have been caused by eligibility for commission; and thirdly, the extent to which people taking out such schemes were warned of the possible risks, either from a reduction in property values or from a reduction in the value of equity holding.
  It may be said that people should have known about all those three points, because, after all, similar schemes in the past have fallen foul in the same way. Age Concern's briefing makes it clear that nobody in Government or in the regulatory bodies at the time was adequately able to monitor what was being said or to add the "health warning" that should have been attached to those schemes.
  In the Adjournment debate on 11 March, the then Minister for Corporate Affairs said:
  "My hon. Friend said that he thought that some of these difficulties arise because we have a system of self-regulation. I cannot entirely agree. We do not have a system of self-regulation: we have a system of professional regulation under statute. There is practitioner involvement at board level, but the people doing the day-to-day regulation—those who have to go out and interrogate, investigate and bring suspicious circumstances to the public eye—are all full-time paid professionals who do this work and nothing else."
  If the system is not self-regulatory, some responsibility for what is described as "professional regulation under statute" must fall back on the Government. Later in that debate, the Minister said;
  "My hon. Friend the Member for Romsey and Waterside asked why such schemes were permitted in the first place. With the benefit of hindsight, that is a good question."—[Official Report 11 March 1992; Vol. 205, c. 953–954.]
  Although several paragraphs follow thereafter, on that occasion the Minister never answered the question which he described as good.
  Today, patience is wearing thin, for the reasons that the hon. Member for Brent, South described. Many of the people most hard-hit by those schemes are not— temperamentally, psychologically or because of their age —capable of putting up with the strains and stresses of what has occurred or of trying to find a way out of it. It is especially unfortunate that some of the building societies, with which many of those people had saved throughout their working lives, have now decided that they should try to sidestep their proper responsibility. Each month, week and day that passes, frustration and helplessness increase. Sadly, some of the victims must be disappearing from the list of complainants because they are simply no longer with us.
  There seems to be a real danger of legal nit-picking and prevarication that does no credit to the regulatory bodies or the Government who stand behind them. Moreover, the fact that we must constantly return to discussing those issues does no credit to the House. We welcome the opportunity offered by new clause 12 further to investigate the full implication of those schemes. It is time to examine again the responsibility that lies on the Government and their self-reglatory bodies to clear up the mess.
  Although the precise wording of the new clause may not be viable, we believe that Ministers must make a definitive statement this evening to show how they intend to help that vulnerable section of the community, strengthen the regulatory system and prevent a repetition of this matter in the future.
  The Economic Secretary to the Treasury (Mr. Anthony Nelson): The hon. Members for Brent, South (Mr.

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  Boateng) and for North Cornwall (Mr. Tyler) have raised an important issue and have once again brought before the House the plight of many thousands of people who have suffered serious financial loss and face great uncertainty through the purchase of home investment bonds and home income plans.
  I am the first to appreciate, listening to the letters that they have read out from constituents and other correspondents, the real financial difficulties that have been visited on people and the issues that must be addressed, not just by the Government but by those in the financial services, banking, credit and marketing industries. I hope that the subject of our debate will go well beyond the Chamber.
  I shall not accept the new clause, which the hon. Member for Brent, South was the first to admit was exploratory rather than substantive. However, if it does not embarrass him too much, I wish to congratulate him on the way in which he has pursued the matter, not just today but with my predecessor. To his personal credit, he has championed the cause of many people. Since assuming my responsibilities, I have taken an interest in his previous correspondence and meetings and have sought to ask, in the Treasury and elsewhere, many of the searching questions that he has rightly posed this afternoon. Although I may not be able to give him all the satisfaction that he requires, nor that required by those who have suffered loss or are fearful for the future, I hope that my remarks will provide some reassurance.
  May I make it clear that by no means all schemes that allow people to release equity tied up in their homes are bad. For example, under home reversion schemes the owner of a property can sell all or part of it to the scheme provider for an immediate cash sum and can continue to live there until he dies. That is a much more assured scheme and carries much less risk than the sort of schemes under consideration today. It has been, and no doubt will remain, of benefit to many of those who enter into it.
  The purchase life annuity scheme is the most common method used by elderly people to release the equity in their homes and, crucially, is the only sort of scheme to receive encouragement through the tax system. That does not apply to roll-up mortgages or the sort of schemes covered by the new clause. Under a purchase life annuity scheme, the home owner takes out a mortgage loan on the property and uses the cash to buy an annuity, which services the loan interest and leaves an income.
  Under the Income and Corporation Taxes Act 1988, relief of up to £30,000 is available on the loan used to buy the annuity. As long as people keep below that limit, they should enjoy a positive, if modest, income after meeting the interest due on the loan. As the interest is always covered, there should be no risk of the debt getting out of hand. It is estimated that about 2,000 such plans are taken out each year and, on that basis, there may be about 15,000 to 20,000 plans in existence.
  Under investment bond-based schemes—the sort of scheme to which the hon. Member for Brent, South referred—the owner takes out a mortgage on part of the value of his or her home and invests the proceeds in an investment bond. It appears that several thousand such schemes were sold. Although borrowers were advised that
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  the bonds would generate enough income to pay the interest and provide an income, the bonds were high risk and, in many cases, did not perform to their expectations.
  I understand and fully sympathise with the concern expressed by hon. Members at the plight of elderly home owners who have been sold unsuitable home income plans. As the hon. Members for Brent, South and North Cornwall are aware, action is being taken to deal with that problem. I shall expand on that matter, on which I was quite rightly subjected to incisive questioning by the hon. Member for Brent, South.
  The financial services regulators—the Financial Intermediaries, Managers and Brokers Regulatory Organisations and the Life Assurance and Unit Trust Regulatory Organisations—have amended their rules to prevent the further marketing of unsuitable and inappropriate schemes and have taken disciplinary action against the firms involved. In addition, action has been taken to help those in difficulty. Investors may be eligible for compensation from either the investment company or the investors compensation scheme, set up under the Financial Services Act 1986.
  Firms regulated by LAUTRO have already paid £5 million in compensation to more than 400 investors, who have been restored to the position that they were in before they became involved in the scheme. I understand that the great majority of investors who took out such schemes on the basis of advice from salesmen of LAUTRO members have been compensated, although 60 further cases are being considered by the insurance ombudsman, a recognised complaints authority for LAUTRO. As the hon. Member for Brent, South appreciates, and it is important for the House to understand, LAUTRO generally compensates in cases involving tied company agents. LAUTRO's member firms and LAUTRO itself return people to their former position so that they are fully recompensed.
  The position is different in relation to independent financial advisers under FIMBRA. They introduce, perhaps to an insurance company, not just the prospect of a buyer for an investment bond but a mortgage package that may be different from that which the company representative of a LAUTRO member would have offered. Unfortunately, it does not necessarily follow that people will be entitled to the same restitution and compensation as those covered by LAUTRO have received. Each case is subject to an examination of the package, the circumstances and the terms of the investment bond and mortgage proposed. The extent and admissibility of the application for compensation will depend on those factors.
  Four of the independent investment intermediaries involved in marketing schemes who were members of FIMBRA have been declared in default under the investors compensation scheme. More than 1,000 claims involving those firms have been received, and I understand that payments have begun. Many cases are complex and many involve the responsibility of a number of different parties such as the financial adviser, solicitor or lender.
  5.45 pm
  In March, the liaison group set up by the Securities and Investments Board announced a one-stop procedure for handling complaints. Under that procedure, investors who invested in such schemes on the recommendation of a FIMBRA member, are in difficulties as a result and have received no satisfaction may pursue all their complaints

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  through FIMBRA even if the complaint involves firms other than the FIMBRA member. That might include the insurance company whose investment bond was used or the solicitor who dealt with the mortgage documents.
  Some building societies have agreed to co-operate with the building societies ombudsman in using the one-stop procedure, and discussions are continuing with other building societies with a view to encouraging them to do likewise. I am sure that societies will have noted the strong words used today by the hon. Member for Brent, South. I hope that the societies involved will feel able to agree to co-operate with the building societies ombudsman.
  A number of building societies have been approached to join the one-stop procedure for complaints about the investment bond scheme, and three of the larger societies have agreed to participate. As the hon. Member for Brent, South knows, a number of other building societies have not. As I understand it, there is no legal sanction to force them to do so due to the limited remit of the ombudsman. However, I agree with the hon. Member for Brent, South and hope that those societies will feel able to co-operate.
  I understand that, in addition to those cases where there are claims under the investors compensation scheme, a further 60 complaints are being considered under the one-stop procedure. Meanwhile, the building societies involved have made it clear that they want to enable elderly borrowers to stay in their homes, resolve their worries and avoid hardship. During the debate, some building societies have come in for criticism. It is only fair to say that most building societies have made it clear that they want elderly borrowers to stay in their homes and there is no question of parting them from their homes, which is an important assurance.
  The consideration of complaints and compensation claims takes time. One of my concerns was to act as expeditiously as possible and encourage the responsible authorities to speed up their handling of applications for compensation and complaints, as uncertainty and worry are visited on people, many of whom are elderly and vulnerable. Therefore, I have raised the matter as often as I can.
  It is sometimes difficult and time-consuming to obtain all the necessary information about what has happened. The investors compensation scheme and the regulatory organisations are aware of the concern of all hon. Members, which I share, that the matter should be resolved as quickly as possible. I am assured that every effort is being made to help investors provide the necessary details as quickly as possible so that their cases can be dealt with without duplication or avoidable delay.
  The investors compensation scheme expects to make substantial progress in finalising claims in the next two months and hopes to have dealt by November with the bulk of claims so far received. I hope that cases being handled by the one-stop complaints procedure can be completed in a similar time scale.
  In response to the pertinent points raised by the hon. Members for Brent, South and for North Cornwall on new clause 12, I shall conclude with a short personal homily that will provide little comfort to those who have lost, or face the prospect of losing, under such schemes.
  The more I become aware of the marketing of schemes of this kind and the more I look at reports of what has gone wrong, the more I become aware of two aspects. One is that it is difficult, if not impossible, to devise a fail-safe system of investor and depositor protection. It does not
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  matter whether there is a statutory scheme or a self-regulatory scheme or a statutory-based system of practitioner self-regulation, which we have. It is extremely difficult—I dare say impossible—to provide against every possible loss and ensure that people will not be ripped off.
  We must do what we can, however, both in Parliament and in the City, to ensure that the risk for depositors and investors is limited as far as possible. At the same time, the investing and depositing public have a duty to remind themselves that they must not be encouraged by modern marketing schemes to abandon the basic common sense and prudential rules which have always been impressed on people.
  The five golden rules are: buyer beware, spread investments, seek good advice, read the small print, and do not confuse authorisation with a guarantee. Investors must always consider not just the attractions and benefits of an investment scheme but the down side of the scheme as well. It is right to be cautious and to use common sense. People should not be misled by the attractions and by the statistics advanced in favour of schemes and their attractions.
  There has been an increasing number of claims and of cases arising out of self-regulatory organisations standing behind firms, the Securities and Investments Board standing behind self-regulatory organisations and the Government standing behind the SIB. I do not think it practical, desirable or possible to have a guarantee or indemnity in all cases of misleading sales, faulty products or default on behalf of investment firms. Authorisation must not, therefore, be confused with a guarantee or an indemnity.
  I have said what I have said about spreading investment and reading the small print, but despite the problems that sometimes arise, people should still seek professional or independent or reputable advice, as the circumstances demand. Ignoring these basic rules of investment or of incurring liability involves risks.
  I have met constituents who lost large sums of money in Barlow Clowes. Like the hon. Member for Brent, South, I was impressed by how vulnerable many of them were. Not necessarily elderly, many of them were straightforward people who had, for instance, spent their lives in the armed forces and who, with a commutation retirement pension. had sunk all their money in one investment product offered by Barlow Clowes. It seems hardly credible that people who have held responsible jobs and saved securely throughout their lives should then abandon a basic tenet of safe investment: not putting all one's eggs in one basket. Yet people do that; and the elderly are even more vulnerable.
  This is why it is right that we have introduced financial services legislation and other measures designed to protect such people. It is why it is right continually to re-examine whether these mechanisms are working properly. It is why it is right—without indulging too much in homily—to remind people from time to time that neither the Government nor the taxpayer can safeguard or indemnify investors in all circumstances. People must use their own nous; the buyer must continue to beware.
  I hope that what I have said will encourage the hon. Member for Brent, South to believe that the Government take seriously the distress of those involved with home income bonds. We are encouraging expedition in dealing with claims for compensation and we will carefully watch

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  the responses of the building societies and regulatory organisations to these difficult problems. On that basis, I hope that the hon. Gentleman will withdraw the motion.
  Mr. Boateng: The care and thoughtfulness that have clearly gone into the Minister's response are welcome. We look forward to his continuing involvement as a Minister with responsibilities in this area. I am sure that I speak for all who have signed a variety of early-day motions on this matter when I express the hope that he will in due course agree to meet a group of us so that we can explore these issues further on behalf of those who have suffered from the marketing of these schemes.
  When we meet the Minister—it will be sooner rather than later—we will expect greater clarity about the number of cases that have been resolved under existing arrangements and a greater willingness, in the spirit of open government, to inform us which building societies are proving recalcitrant about arriving at voluntary arrangements. By the time of our meeting, we will also expect a marked degree of progress on both relevant fronts in respect of compensation.
  All hon. Members whose constituents have been affected by the tragedy that these schemes represent want to place on record our appreciation of the work of the victim support schemes set up as a result of the need to bring together the elderly and vulnerable people who have suffered as a result of the marketing of these plans. The schemes are designed to offer mutual support and to pool such resources as these people have to obtain proper advice and assistance. We should record our appreciation of those who organise and service these schemes. I think particularly of people like Mr. James Fielding of Essex, who has done so much to bring this matter to the attention of hon. Members. Many others have done the same.
  We wish these people well in their continuing work of supporting those who have suffered at the hands of the unscrupulous persons who have marketed the schemes—and of those who stand behind them and who seek, regrettably, to shirk their responsibilities.
  We will not tolerate it if building societies continue to avoid their responsibilities in this area. They will he exposed if they continue to be indifferent to the sufferings of the victims of the unscrupulous people who marketed the schemes, and they will be exposed to the full glare of publicity unless they are prepared to co-operate with the regulatory committee and arrive at a fair and reasonable settlement about outstanding claims.
  We shall return to this issue in the fullness of time, but in the meantime I beg to ask leave to withdraw the motion.
  Motion and clause, by leave, withdrawn.

New Clause 13

  TRAVEL BETWEEN WORK AND HOME
  '(1) In section 154 of the Income and Corporation Taxes Act 1988 (general charging provision) after subsection (3), there shall be inserted the following subsections:
  "(4) The benefits to which this section applies shall exclude any benefit consisting of an employer paying for an employee's journey between work and home where:

  (a) the employee is required, by reason of his employment, to work to a time between 9 p.m. and 6 a.m.; and

  (b) it would not be reasonable for the employer to expect the employee to use public transport at that time.

  (5) For the purposes of subsection (4) above, but without prejudice to the generality of that subsection, there is a presumption that it would not be reasonable for an employer to expect the employee to use public transport where:

  (a) public transport has ceased or being substantially curtailed; or

  (b) because of the low level of availability or reliability of public transport services at that time, a journey using public transport would be likely to take significantly longer than a journey between work and home at a time between 8 a.m. and 7 p.m.; or

  (c) there would be an increased risk to the personal safety of the employee should they travel by public transport at that time.".

  (2) In section 153 of the Income and Corporation Taxes Act 1988, after subsection (3), there shall be inserted the following subsection:
  "(4) The payments to which this section applies shall exclude any payments made by an employer if, had they been incurred by the employer directly, they would not have been taxable benefits to the employee by virtue of section 154(4) and (5)".
  (3) This section shall apply for the year 1992–93 and all subsequent years.'.—[Mr. Nicholas Brown.]
  Brought up, and read the First time.
  6 pm
  Mr. Nicholas Brown: I beg to move, That the clause be read a Second time.
  The new clause is aimed at addressing the circum-stances in which work-related travel expenses paid by the employer are deductible for income tax purposes, particularly where the employee has to work late. At the moment, journeys between work and home are tax-deductible in certain circumstances, which are set out in the Inland Revenue pamphlet IRI on extra-statutory concessions. The circumstances that the Inland Revenue says are satisfactory for the concessions are these:
  "Where … an employee is occasionally required to work late but those occasions are neither regular nor frequent; and by the time the employee can go home, either public transport between the employee's place of work and home has ceased or it would not be reasonable in the circumstances for the employer to expect the employee to use it".
  The definitions that are set alongside this are that
  "a requirement to work late means working until 9 pm or later" —
  that is reflected in our new clause—
  "late working would normally be regarded as frequent if it occurs on more than 60 occasions in a tax year; regular means a predictable pattern, for example if late night transport is provided every Friday."
  We are arguing that the extra-statutory concession should be made statutory, and our new clause would achieve that.
  Before going into the details of the topic, I should emphasise that we are not arguing that, in normal circumstances, travel to work should be allowable for a deduction from income tax. I know that the Financial Secretary will be tempted to attack a target as wide as he can make it, so it is important that we focus on the circumstances in which people have to go home late at night. We are not arguing for a wider concession. We are not discussing normal circumstances. We are discussing those who, because of the nature of their employment, have occasionally to take taxis home after 9 pm.
  This is an important matter to us, because it affects the safety of employees in this position who have to face the dangers of travelling home late at night and unaccom-panied, often when the running of whatever public transport is still working may not fit the whole of the work

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  to home travel pattern. I am sure that the House will readily accept that the people most likely to be affected by this are those who work in the licensed trade, such as bar staff, who have to work late into the night.
  This is an important matter, because of the number of people employed in this sector. The hotel and catering trade employs 1·1 million of our fellow citizens, many of whom would fall within the ambit of the new clause. Therefore, it is worthy of our consideration and attention, and I hope that it will command the full attention of the House and the Paymaster General, who I know is particularly responsible for some of these matters, at least when it comes to setting the duty on the products retailed to the public by the people whom we are discussing.
  I know that the Government hope to bring the wages councils to an end as soon as they can, but at the moment a wages council order sets a minimum wage for the licensed trade. In 1991, it stood at £2·74 an hour, but I understand that the Financial Secretary and his friends think that this is too much, and that the protection afforded to these low-paid workers should be removed.
  The full £2·74 an hour is less than half the average hourly pay of manual male workers, which is £5·76 an hour, and two thirds of the average for manual women workers, which is £4 an hour. In 1991, full-time male workers in the hotel and catering trade were paid on average £157·60 a week, and female workers were paid £119·90 a week. Of the 400 or so occupations covered in the new earnings survey, working in the hotel and catering trade was the lowest-paid occupation for men and the joint lowest-paid occupation for women, the other being hairdressing. That will come as a surprise to nobody who is familiar with these matters.
  We are discussing the tax treatment of a payment to a substantial number of people—1·1 million—who are among the lowest paid of our fellow citizens. A number of points logically follow from the fact that wages in the licensed trade sector are so abysmal. The first is that it is odd that the Inland Revenue is targeting them for special attention. There cannot he much money involved in the remuneration of the poorly paid. Secondly, it is far less likely, because of the rates of pay, that employees in the hotel and catering industry will have the personal transport that would allow them to travel to and from work. Therefore, it follows that the concession of getting a paid taxi home late at night for their safety is even more significant than might at first be thought.
  The third factor that follows from the deplorable rates of pay in this trade are that the earnings are so low that some employees will fall below the £8,500 threshold and therefore will not be eligible for taxation on benefits-in-kind. This is an important issue, and I know that if I do not refer to it, the Financial Secretary will do so. He is always reminding us that real take-home pay is important, and of the great Conservative achievement that it rose throughout the 1980s. However, the benefits-in-kind threshold has not risen with it, and the £8,500 limit was set in 1979–80. Had the limit been raised in line with prices, it would be two and a half times that level, or £21,500. The regulations ensure that liability to income tax on benefits in kind are biting at ever lower income levels, so it logically follows that, year after year, more and more people in the hotel and catering trade will be drawn into the Inland Revenue's net.
  When the benefits-in-kind threshold was first set, in an earlier age, I understand that the principle behind it was
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  that it would catch those who were well remunerated and were in a position to get a whole range of benefits in kind on top of a substantial income. It was rightly felt that it would be unfair if such benefits became an extended tax avoidance device. However, at the same time, it was clearly the view that it would be unfair to catch the much smaller scale benefits, if benefits they be, of those who were poorly remunerated. I am thinking in terms of the free coal to mineworkers, or the taxi home late at night for bar staff. However, such is the change in these matters that taxis home for bar staff are very much in danger of being caught.
  It might be argued that the threshold of £8,500 is still set sufficiently high to ensure that part-time bar staff are not caught. While I accept that there may be some force in that argument, it is only fair to point out that the threshold includes the value of the taxi home. If someone received £10 a night for a taxi, five times a week, the total cost could be well over 20 per cent. of his total remuneration. When the Inland Revenue examines the notional earnings of bar staff as opposed to their real earnings, it insists on the inclusion of a notional element for tips. Therefore, it is not simply a question of the wage rate; it includes what the Revenue believes the tips to be—and added to that will be the value of the taxi home at night, the benefit in kind. It is likely that many bar workers will cross the £8,500 threshold much more quickly than at first appears to be the case.
  Bar staff are not the only people liable to have their taxis home taxed as a benefit in kind, although they are the category most likely to suffer and to be treated unfairly in the way that the Revenue pursues these matters. Other people are driven home if they work late at night—for example, the Financial Secretary. We discussed these matters in the early hours of the morning, when we considered the Bill in Committee. I walked back to my flat, but I saw the hon. Gentleman being driven home in a Government car—[Interruption.] Perhaps I do the hon. Gentleman an injustice; it might have been an illusion due to the time of the morning. However, I am sure that he will concede that it is normal practice for Ministers to be driven home while their counterparts have to walk. I note that the Minister thinks that that is right, and no doubt if I were in his position I would take the same view. I am sure that Ministers are not taxed on their cars home as a benefit in kind, although there may be other considerations in the case of Ministers.
  If civil servants have to stay late at night to help us in our deliberations, they have taxis home. I have seen prominent civil servants leaving this place late at night in taxis, which I assume are paid for by their Departments. I do not want to discuss the tax arrangements of any individual, but it is highly unlikely that the Revenue taxes civil servants' taxis home as a benefit in kind.
  I understand that journalists who stay here late at night covering our debates could have their taxis home late at night or early in the morning taxed as a benefit in kind. Indeed, there are discussions between the Revenue and the journalists' unions about the tax treatment of the cost of their taxis home. It would be unfair to tax journalists in that way when they have to work here, or anywhere else, late at night, as though the taxi home was a benefit rather than something necessitated by the late hours they work.
  Although the group that is undoubtedly most affected, simply by the sheer number of people involved, is the workers in the hotel and catering industry, the issue goes

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  wider and embraces the journalists who cover our debates. It could embrace senior civil servants, but I suspect not. It might even embrace Ministers, although again I suspect not.
  6.15 pm
  I ask the House to consider whether that is a sensible use of the resources of the Inland Revenue. The effective policing of those arrangements, pub by pub, club by club, throughout the country would require vast resources. I suspect that, in practice, such arrangements cannot be effectively policed. If the Government insisted that they were, the benefit to the Exchequer would be dispropor-tionately small compared with the resources involved.
  Time and again, we have pressed the Government about tax avoidance, but we always keep a sense of perspective in our representations. I debated with the hon. Gentleman's predecessor the issues of dual residency and the use of offshore trusts as avoidance devices. Those are large issues that cost the taxpayer billions of pounds a year, but that is not what we are discussing today. Instead, we are discussing the cost of a taxi home and the tax take from that for people who are among the poorest of our fellow citizens.
  The avoidance issues are at the heart of the way that the Inland Revenue operates. The Government are absolutely obsessed with investigating what they believe to be the concealed earnings—the hidden perks—of the less well-off. Their priorities should be elsewhere. The Inland Revenue's 1990–91 annual report shows that £1·4 billion was raised from counter-evasion and counter-avoidance activities, so the Government's priorities should lie there. A further £2·5 billion was raised by the Revenue's technical review exercise—the reviewing of company accounts to check that the profits on which corporation tax is paid are as they should be. That sort of exercise should be the Government's priority, not picking on poorly paid bar staff.
  The relationship between the cost of compliance and the yield in increased tax is shown by the yield-cost ratio, which is the way that the Government and the Revenue measure these matters. The inquiry branch raised 24 times more than it cost. The ratio was 29:1 for the special office —which together with the inquiry branch form the main pillars of counter-evasion work. Should not the Government place emphasis on that sort of work rather than picking on the poor? The Revenue's activities included company investigations, with a yield of 9:1; accounts investigations, with a yield of 5·5:1; and non-accounts investigations, with an astonishing yield of 47:1.
  That sort of work should be the Government's priority if they are serious about clamping down on evasion and targeting resources efficiently. The Financial Secretary should be thinking about doing that rather than picking on the poorest people in society. Our new clause is a modest attempt to bring fairness back into the tax system— something that the Conservative party is reluctant to agree to in practice.
  The Financial Secretary to the Treasury (Mr. Stephen Dorrell): The new clause would exempt from income tax the provision of late-night transport by employers. The hon. Member for Newcastle upon Tyne, East (Mr. Brown)
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  was at pains to stress that it was not his purpose to argue against the general principle that provision of home-to-work transport should be taxed as a benefit; he accepts that the tax system is built on such principles, and he regards that as correct. He said that he wanted to enshrine in legislation the extra-statutory concession A66, which sets out the circumstances in which an employee is not taxed if his or her employer provides late-night transport.
  As the hon. Gentleman pointed out, the terms of the extra-statutory concession are quite narrow. They require a journey during unsocial hours to be neither "regular" nor "frequent". The hon. Gentleman wants to remove that test of regularity and frequency from the concession before it is written into the statute book. It is therefore not quite accurate to describe new clause 13 simply as a measure to "legislate" the concession; the hon. Gentleman's ambition is slightly wider.
  The new clause would write an important new loophole into income tax law. It would remove the test of regularity and frequency from the concession, allowing employers to provide their employees with tax-free transport if those employees were returning home between 9 pm and 6 am. That would be the most important test: night workers would be entitled to a concession allowing their transport between home and work to be paid for regularly by their employers without paying tax on that benefit.
  Such a concession strikes me as too wide to write into the tax system. The hon. Gentleman, understandably, stressed the implications for the hotel and catering sector, emphasising that many workers in that sector are relatively low paid. That is true, of course—although plenty of workers in that and other sectors are not low paid, but work unsocial hours. I am not sure why they should benefit from such a concession ahead of workers in other sectors who may be paid significantly less, but who are not provided with tax-free transport between home and work. I do not feel that the simple test of working hours is a sufficient basis on whch to exempt transport between home and work from income tax.
  I understand the case made by the hon. Gentleman and others about the potential risk to personal safety posed by travel undertaken late at night. That is one of the motives behind the well-established extra-statutory concession. The risk to personal safety is greatest when employees are working late at night on an irregular basis; the chances are that an employee working late on a regular basis will make arrangements to avoid threats to personal safety.
  Mr. John Townend: I do not entirely understand that argument. If it is dangerous for a young girl to travel home late one night, it will be equally dangerous for her to do so on two or three nights. I know that from experience. I am involved in the hotel industry and my daughter, aged 18, once had a low-paid job in central London. Her employers operated the rule that if employees worked until later than about I am, they should be sent home in taxis. I was grateful for that rule; I did not like to think of my 18-year-old daughter travelling home through central London at that hour.
  My daughter did not work late every night, but she worked late regularly, several nights a week. I do not understand my hon. Friend's argument that regular late-night travel is not so dangerous as irregular late-night travel.
  Mr. Dorrell: If that had been my argument, I would understand my hon. Friend's mystification. I was arguing not that such travel was any less dangerous if undertaken regularly, but that if it was undertaken regularly as part of the normal course of employment, it was reasonable to expect employer and employee to make arrangements to avoid the hazards associated with it. Employees are at greatest risk when they have made no such arrangements and do not know how they will get home. I feel that the taxing of those who find themselves having to work late on an irregular basis, with no arrangements for getting home safely, is most objectionable.
  Mr. Townend: If such arrangements are made because the employee must undertake late-night travel regularly, why should they be taxed as a benefit in kind? I do not understand the logic.
  Mr. Dorrell: I am coming to that. When an employee plans to work late as part of his employment, he knows that he will have to travel at times when there is not much public transport. He will have to find a way of getting home at such times. Surely it is reasonable for that to be reflected in the agreements reached with the employer in regard to remuneration and other terms and conditions of employment.
  Mr. Clive Betts: If an employee must regularly make arrangements for getting home late at night, he will probably decide to take a taxi, as will employees who work late on an irregular basis. The cost will be exactly the same in both cases. Why does the Financial Secretary suggest that those benefits—as he sees them—should be taxed differently?
  Mr. Dorrell: That is the point. If late-night travel is undertaken regularly, it is reasonable to expect employer and employee to agree terms which cover the extra cost. If it is undertaken irregularly, there will be no need for the terms of employment to cover the cost. When employees have to go home late in exceptional circumstances, that will be an exceptional cost associated with the employment. People who have to work late regularly should agree wages which cover the cost of late-night travel before taking on such employment because it is not exceptional but an obligation that is expected from the outset.
  The person who is in the worst position is the employee whose late-night travel is unexpected, and whose conditions of employment do not cover the extra cost. That is the key proposition on which the extra-statutory concession is based. The cost of regular late-night travel should be included in the wages agreement; if an employee is not satisfied with the conditions—including the requirement for late-night travel—it is open to him to argue with his employer. The employee is in the worst position when he or she is required irregularly and at short notice to take on that cost. In those circumstances, it would not be reasonable to ask the employee to pay tax. That is why extra-statutory concession A66 exempts the employee from tax.
  Mr. Townend: Does my hon. Friend not agree that acceptance of his view could result in sex discrimination? He is saying that the employee has to negotiate with the employer to secure extra salary to pay for a taxi. It might well not be unreasonable for a strong boy 6 ft tall and 18 years old to walk a mile or a mile and a half at half past
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  one in the morning, but in the case of a girl of 17 it would be extremely dangerous. My hon. Friend has not convinced me at all. Clearly he does not have much knowledge or experience of the hotel industry, as I have.
  6.30 pm
  Mr. Dorrell: I realise that my hon. Friend has a lifetime's experience in the hotel and catering industry, whereas I do not for one moment pretend that I have. However, I am not sure that I can accept the proposition that we should design the tax system in such a detailed way as to take account of my hon. Friend's point. We should have to provide for tax-free late-night travel for women but not for men—maybe even for small women and not for big women. We cannot make the tax system as precise as that.
  The proposition on which I base my argument is simply that in normal circumstances the cost of travel between home and work is expected, in general, to be met by employees out of their after-tax earnings. It seems to me that that should apply as much to people who work late and unsocial hours as to the rest of us. Only in the special circumstances of the requirement to work late at night on an irregular basis is a tax concession justified. On that basis I recommend that the new clause be not accepted.
  Mr. Nicholas Brown: I do not suppose that the same arguments would be advanced if we were discussing this matter in the context of Ministers rather than bar staff. It could hardly be argued that lady members of the Cabinet should be provided with cars to take them home late at night while gentleman members should be required to walk—whatever the Financial Secretary says about his willingness to walk rather than be driven home in the early hours of the morning. I am sure that the Financial Secretary will accept that it is not the intention of the parliamentary Labour party to create a new tax loophole. On the contrary, to my certain knowledge, in the debates on Finance Bills over the last five years the parliamentary Labour party has tried to close tax loopholes, so it would be odd if, even inadvertently, we were to create a new one.
  There is some strength in the Financial Secretary's argument that those whose occupations require them to work late should have their hours taken into account when the terms and conditions of employment are being settled. Where things are equally balanced, that is probably what happens in practice, and the disadvantages of working late are probably reflected in salary. It is fair for the Financial Secretary to observe that late-night working can be taken into account in the employer-employee arrangement without further provision through the tax system, but that argument applies only where employer and employee have something like equal bargaining strength. The Financial Secretary's argument is less strong in respect of those working in the hotel and catering industry, who by any definition are low paid. The Financial Secretary referred to those people as being relatively low paid. I repeat that of the 400 occupations included in the new earnings survey, hotel and catering work attracted the lowest pay in the manual work sector, and among women workers those in the hotel and catering industry were joint lowest with those in the hairdressing industry. Those people are not relatively low paid; they are absolutely low-paid.
  One of the reasons for that is that their bargaining position is not so strong as that of people in the industrial sectors, where claims can be asserted with more vigour.

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  The industry is noted for its transiency, and the low wages probably have some bearing on that. I suspect—though I cannot offer any evidence for this—that the average age is lower than in the work force as a whole. The industry is noted for seasonal employment and for the fact that it offers jobs to casual workers, some of them students trying to earn some money during the summer.
  It should be pretty obvious to the whole House that such people are not in a strong bargaining position. They are not able to say, "I won't take the job unless the wages council rate is topped up by an amount to cover the cost of getting home late at night." That is not a practical proposition, and the purpose of the new clause is to deal with the circumstances arising from the fact that it would not be practical for this matter to be taken into account in the employer-employee relationship. I suppose that it follows logically that we should have put an earnings ceiling on the concession. The Financial Secretary did not make that suggestion, but it follows logically from his arguments, too. It would have been legitimate for him to make such a proposal. The idea has some attractions, and if its absence from the new clause makes the provision imperfect, that will explain why I do not intend to press it to a vote.
  The Opposition's main concern is not the generality of the way in which this benefit is treated but how it bears down specifically on poorly paid workers, who may be substantially disadvantaged by the way in which it operates in practice. We are worried about precisely the circumstances that the hon. Member for Bridlington (Mr. Townend) described when he brought to the House his experience of these matters. It is frightening for a young lady of 17 or 18 to be required to get herself home at half past eleven at night when public transport has ceased altogether or is very infrequent and in any event may not get her from her actual place of work to the safety of her home. Safety is at the heart of our concern.
  We are not seeking to establish some great loophole of which the very wealthy can take advantage; we are seeking to ensure that a girl of 17 or 18 can get home in safety. At the very least, the tax system should not create a disincentive in that regard. The whole House will agree that we should do all that we can to assure the safety of vulnerable people.
  I emphasise again the importance of keeping a sense of proportion in these matters. Really efficient use of the Revenue's time is not achieved by the pursuit of some student bar worker in respect of the very limited concession—if concession it is—of a taxi ride home. It is a waste of the Revenue's time. The Revenue can make effective use of its time elsewhere—by pursuing corporate evasion, not by pursuing innocent and very poorly paid students. I am sure that the Financial Secretary has taken that point on board. I do not intend, therefore, to divide the House on the new clause.
  Mr. Robert Sheldon: I agree with my hon. Friend the Member for Newcastle upon Tyne, East (Mr. Brown) that the new clause should not be pressed to a vote. I apologise for not having been here for the whole debate—I was attending a meeting of the Public Accounts Committee—but I have been here long enough to get the flavour of it.
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  The Inland Revenue and the Treasury are frightened by anything that might lead to a loss of revenue. However, the way of earning a living, particularly during the last 10 years, has undergone fundamental changes. Large costs are involved nowadays in earning a living. People travel much further to work than they ever used to do. They have to wear far better clothes. They have meals in the canteen, or elsewhere. In the past, many people lived just along the road from their factory. They wore work clothes and they had butties for their meals. Many pounds are now spent each week on transport, clothes and food. None of that is allowable against income tax. Yet those items are an essential part of earning a living. That was not so in the past.
  I recognise the obvious problems involved here, but people can be discouraged from seeking employment because they know that they will be unable to claim some of those considerable expenses against tax. I was interested in the suggestion made by my hon. Friend the Member for Newcastle upon Tyne, East that a ceiling could possibly be placed on any concession. Another ceiling which might be placed on any concession is that the place of employment should be no more than a certain distance from a person's home.
  We all recognise that we must try to prevent loss of revenue of the kind envisaged, but at some stage in the future the cost of earning a living must be related to the income tax that a person pays. My hon. Friend was right to give the subject an airing.
  Mr. Nicholas Brown: I beg to ask leave to withdraw the motion.
  Motion and clause, by leave, withdrawn.
  Mr. Deputy Speaker (Mr. Geoffrey Lofthouse): We now turn to new clause 15.
  Mr. Nick Harvey: In the absence of the hon. Members for Leeds, North-West (Dr. Hampson) and for Bexleyheath (Mr. Townsend), in whose name the new clause stands, it would be regrettable if this valuable opportunity to give a boost to the—
  Mr. Deputy Speaker: Order. I am advised by the Clerk that only a Member whose name is attached to a new clause can move it, so I am afraid that the hon. Member is out of order.
  Mr. A. J. Beith: On a point of order, Mr. Deputy Speaker. Would it not have been a courtesy to the House if those hon. Members who placed the new clause on the Amendment Paper had not left us in the position of being unable to debate the new clause? I know that a number of hon. Members would have liked to take part in that debate.
  Mr. Deputy Speaker: That is not a matter for the Chair. It is a matter for the hon. Members for Leeds, North-West (Dr. Hampson) and for Bexleyheath (Mr. Townsend). I have no doubt. however, that the right hon. Gentleman's words will have been noted.
  Dr. Norman A. Godman: Further to that point of order, Mr. Deputy Speaker. I had hoped to take part in the debate on the new clause. It has important implications for many people in maritime communities in Scotland. Were you informed at any stage that those two Members would not be present this evening?
  Mr. Deputy Speaker: I personally had not been informed, and I am not aware that the previous occupant of this Chair was informed.
  Mr. Peter Bottomley: Further to that point of order, Mr. Deputy Speaker. It is possible that we have made faster progress than was expected. That may be the reason why my hon. Friends are not here. It sometimes happens.

Clause 12

  VEHICLES EXCISE DUTY: DISABLED PERSONS
  Dr. John Marek: I beg to move amendment No. 9, in page 8, line 32, leave out clause 12.
  Mr. Deputy Speaker: With this it will be convenient to consider the following amendments: No. 1, in page 9, line 6, at end insert—
  '(3) Subsection (1) shall not have effect with respect to any individual who was entitled, at 30th June 1992, to exemption from vehicle excise duty by virtue of section 7 of the Finance Act 1971 or section 7(2C) and (2D) of the Vehicles (Excise) Act 1971.'.
  No. 2, in page 9, line 6, at end insert—
  '(3) Subsection (1) shall not have effect with respect to any individual aged under five or over sixty-five years of age if. apart from this section, they would be entitled to exemption from vehicle excise duty by virtue of section 7 of the Finance Act 1971 or section 7(2C) and (2D) of the Vehicles (Excise) Act 1971.'.
  6.45 pm
  Dr. Marek: The Opposition certainly had no prior knowledge of the fact that new clause 15 was not going to be moved. I believe that some of my hon. Friends came here for the express purpose of debating it. However, as it has not been moved, we have to turn to the next set of amendments.
  I am grateful to you, Mr. Deputy Speaker, for grouping amendments Nos. 1 and 2 with amendment No. 9. In our view, it makes sense, since they all relate to clause 12 and to the withdrawal of a concession to a group of disabled people.
  Hon. Members receive a lot of mail from charities and societies that represent disabled people— and rightly so. In the Opposition's view, the needs of disabled people are not properly recognised. It is right that hon. Members should be informed of lacunae in the legislation and also of Government proposals to take away rights and privileges that disabled people have hitherto enjoyed. Clause 12 will lead to the Government taking away one such right from disabled people.
  I have received many letters recently from people who drive ambulances for leagues of friends and other charities. They pay value added tax on their petrol. They are wondering whether there is any way in which they could be exempted from paying VAT on petrol that is used to drive disabled people around the country. Without that service, disabled people would not be mobile. If the Paymaster General could say something about that, I should be grateful. However, that is not the import of the amendments. They principally concern vehicle excise duty and the fact that the Government seek to withdraw an exemption from a particular group of disabled people.
  Three groups of disabled people are exempted from the payment of road tax for a vehicle registered in their name. About 2,500 people qualify as a result of belonging to the
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  pre-1976 invalid carriage scheme. The answer to a recent parliamentary question of mine showed that, at 31 March 1992, 2,125 people qualified for exemption. The invalid carriage scheme was phased out in 1976, so a diminishing band of people qualify under that scheme.
  In addition, approximately 400,000 people qualify because they receive the higher rate of mobility component in the disability living allowance. Clause 12 does not seek to change the status of people who receive the higher rate of mobility component in the disability living allowance. They will continue to be exempted from paying road tax for a vehicle that is registered in their name. However, about 20,000 people under the age of five or over the age of 65, who are virtually unable to walk and who receive the higher or middle disability living allowance care component, need to be driven by another person. The Government seek to remove exemption from payment of road tax from that group of people.
  People are disabled for all sorts of reasons—either from birth or through accident. If people are disabled, they ought to receive special help so that they can be mobile. In previous years, the Government have recognised that. Those three groups of people were in a scheme which by and large was considered satisfactory, and people who wanted help with mobility could get it in various ways —not least of which was the exemption from vehicle excise duty.
  According to the parliamentary answer on 30 June, among the approximately 20,000 people in the third category who receive the exemption, there were more than 4,183 first-time successful applications during the period 1 April 1991 to 31 March 1992. The Government seek to stop that group of people gaining exemption from VED. It is likely that the figure of 4,183 represents a continuing level, so basically the Government are stopping an allowance for about 4,000 new disabled applicants every year.
  Although there are temporary provisions in the clause to ensure that everybody in the third category who receives the exemption will continue to do so, I believe that anyone not already exempted will he unable to obtain exemption once the Bill is enacted.
  There is an interesting political point here. The Government have slipped clause 12 quietly in, couched in parliamentary language so that it is difficult for anybody reading it to understand exactly what it is about. It has taken the House and the interested organisations representing disabled people largely by surprise. Nevertheless, I have had a reasonably heavy postbag on the subject, pointing out the problem, and I hope that some of my hon. Friends have too. It may be late in the day, but it is not too late, because now we can discuss the clause on Report.
  The Government want to exclude the third group of disabled passengers from road tax exemption, even though that may be the only form of assistance with mobility costs they receive. Children under five cannot get the mobility component of the disability living allowance, and people over 65 can receive it only if they qualified for it before their 66th birthday.
  Such severely disabled people are more likely to need a car because they experience difficulties in getting around, yet they are less likely to be able to afford to purchase and maintain one, because their incomes are generally low, and they are under pressure from other costs caused by their disabilities. I wonder whether the Government understand

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  the financial pressure that people suffer simply to make ends meet, as they get older and need extra heating and incur extra mobility costs—as I shall seek to demonstrate later.
  Children under five with cerebral palsy, for example, need great care and help if they are to be mobile at all, and substantial extra costs are incurred by parents, some of whom must purchase and maintain a car. It is perhaps easy for us in the House to say that, if parents with one or more children with cerebral palsy have a household income that is not high, they should use public transport, but in practice it is not that easy, and some parents have to purchase and maintain a car, which causes a lot of hardship.
  It is mean and niggling for the Government to withdraw the vehicle excise duty concession for parents who have to look after such children under the age of five. Those people are angry that the Government refuse to accept that they have extra mobility costs. Will the Paymaster General confirm that, or will he admit that those costs exist?
  Here is a clear example—a child under five with cerebral palsy. At the moment, his or her parents can obtain the exemption on the child's behalf so as to allow the child mobility. The Government propose to withdraw that exemption. I should imagine that, on hearing about that, everybody in this country would say that it was entirely wrong—and I hope that some Conservative Members will think so too, so that something can be done about it.
  The provision would affect not only children under five but people over 65 in that third category of about 20,000 disabled passengers. They have to be unable or virtually unable to walk, to receive the higher or middle DLA care component, and to he driven by another person. If such people do not apply, or do not demonstrate their eligibility, by their 66th birthday, they will not be able to get the exemption in future—or rather at present.
  However, some old people—including, I believe, people with cerebral palsy as they grow older—get arthritis, and that disease may not become evident, or may not become serious enough to satisfy the present regulations for securing exemption from VED, until people are well beyond their 66th birthday. People who develop arthritis in advanced years would not be able to gain exemption if the clause as it stands were enacted.
  I should be happy for exemptions under the disabled passengers scheme to be abolished, but only when the Government remove all discrimination on the grounds of age from the DLA mobility component. Amendment No. 2 seeks to do that, so that disabled people under five or over 65 would be able to claim exemption through receipt of the mobility component, like everybody else. While that age discrimination remains, the current method of exemption under the disabled passengers scheme will continue to be necessary.
  I feel strongly on this subject. The measure is a petty attack on what could be described as a small concession for disabled people—but a disabled person with limited means will look upon it not as a small attack but as something much bigger.
  The Government do not have to do as they propose. I should like them to accept our amendment No. 9, which
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  would remove clause 12 from the Bill—there would be no problem in doing that at this stage. They could ensure that the needs of the under-fives and over-65s are properly looked after and table a new clause to next year's Finance Bill. They should not object to leaving the situation as it is for another year. I am aware that a new DLA scheme will be introduced in September, but despite that there is no need for the Government to insist on clause 12 remaining in the Bill.
  If the Government cannot accept amendment No. 9, they should accept amendment No. 1 or 2, and I should prefer them to accept amendment No. 2. However, if they want to be obstinate and to drive the knife into this class of disabled people, I ask them to give the organisations that represent disabled people a chance to show the need for the exemption from vehicle excise duty. If they did so, I would withdraw some of my strictures.
  Clause 12 is a petty measure that sticks the knife into a group of people who desperately deserve our help. I hope that the Government will consider the clause with a social conscience and accept the amendments.
  7 pm
  Mr. Peter Mandelson: Hon. Members who served on the Committee or who have read our proceedings will know that clause 12 was the subject of long and occasionally sharp exchanges between myself and the Paymaster General, which were truncated only by the lateness of the hour. The right hon. Gentleman will agree that we now have a better opportunity to consider clause 12.
  In Committee, the Paymaster General was at great pains to assure Members that no one who is eligible for vehicle excise duty exemption would lose it. He said that the clause would increase, rather than decrease, the number of disabled people who are assisted and that, far from achieving savings—a term that he described as a legal term and not one to detain the Committee—the Government would offer disabled people more help.
  Closer examination shows that the Paymaster General was being less than forthcoming and complete in his description of clause 12. Its effect is to disqualify disabled people over 65 or under five from the exemption from vehicle excise duty which they have come to rely on. I should have thought that there would be cross-party agreement on that provision continuing, but, unfortunately, that is not the effect of clause 12, which the Paymaster General described as a tidying measure.
  It may be helpful to give the history of the exemption to understand better why it is becoming less than full and is being withdrawn from a small but severely disabled group of people. The original exemption scheme, to which clause 12 refers, was first introduced in section 7 of the Finance Act 1971, which exempted three categories of people from vehicle excise duty. The first category were disabled drivers of cars and invalid tricycles issued by the then Department of Health and Social Security. The second was disabled drivers eligible for a grant from the DHSS in respect of their own cars.
  The third—this is the crucial category—were
  "persons having a particular disability that so incapacitates them in the use of their limbs that they have to be driven and cared for by a full-time constant attendant."
  That last group was excluded from help under the DHSS vehicle service because they were too disabled to drive, but it was thought reasonable, appropriate and desirable for

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  them to receive exemption from vehicle excise duty on cars used for their use and benefit. The criterion for eligibility was deemed to be met if the person was in receipt of attendance allowance at the higher rate.
  Subsequently, the DHSS vehicle service began to be phased out, and mobility allowance was introduced. Disabled drivers in categories one and two and some disabled passengers in category three were exempted from vehicle excise duty by their receipt of the new mobility allowance.
  In many respects, the introduction of the mobility allowance represented a significant step forward in provision for and the extension of benefits to disabled people. Unlike the original DHSS vehicle service, the new mobility allowance equitably helped those who could drive in spite of their disability and those who were too disabled to drive. There was no discrimination—those who could drive and those who were too disabled to drive equitably received the same benefit.
  The equity was maintained when section 7 of the Finance Act 1971 was amended by the Finance Acts 1972 and 1974. Significantly, the amendments made in 1972 and 1974 meant that those in the original third category, who were too old to be eligible for the mobility allowance, were still entitled to receive the vehicle excise duty exemption.
  Even at that stage, when the 1971 Act was amended in the subsequent Acts of 1972 and 1974, there was no age bar or disqualification for those under the age of five or those who became disabled passengers after reaching the age of 65. However, it was in the transition from the simple mobility allowance to the higher rate mobility component of the disability living allowance that the Government effectively changed the rules and abolished the eligibility of that small but severely disabled group. The House will recall that the change was made in April this year, when the disability living allowance was introduced.
  Unlike the previous simple mobility allowance, the higher rate mobility component of the disability living allowance cannot be claimed by people over 65 or under five. The crucial change was made in the transition from the former simple mobility allowance to the new higher rate mobility component of the disability living allowance, which was introduced in the Government's new provisions in April this year.
  As the Paymaster General said in Committee, clause 12 tidies the Finance Act and brings it into line with the changes introduced when the disability living allowance became operative in April this year. As my hon. Friend the Member for Wrexham (Dr. Marek) said, its savage effect is to stop very severely disabled people, who after reaching the age of 65 find that they cannot walk or drive, enjoying vehicle excise duty exemption. In effect, as a result of the tidying and consequent to the changes in the transition to the introduction of the disability living allowance, the Government are saving a not insignificant sum of money at the expense of some very severely disabled people.
  In passing, without any great elaboration or explanation and at a late hour, when our consideration of these issues was drawing to a close, it was perhaps understandable that the Paymaster General did not speak in as much detail or with as much specificity as the Committee might have expected in view of the consequences and implications of the changes being proposed. Nevertheless, he said:
  "there is no longer machinery for setting entitlement"
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  for those who become 65 and become disabled passengers and who previously have been eligible for exemption,
  "because the machinery for the new allowance … cannot he used."—[Official Report, Standing Committee B, 18 June 1992; c. 151.]
  7.15 pm
  I hope that the Paymaster General will now give a proper explanation as, if necessary, we have the whole evening ahead of us to discuss this issue. I suggest that there is machinery for awarding the highest rate care component of the disability living allowance, which used to be called the higher rate attendance allowance. The existence and availability of the new highest rate care component of the DLA could be used to provide suitable criteria, as the care allowance did, to make exemption available to all, whether they are under five or over 65 when they become severely disabled and too disabled to drive their own cars.
  Why cannot the new care component be used to deem that the criterion of having to be driven and cared for by a full-time constant attendant is being met, just as it was if the person was in receipt of the previous attendance allowance at the higher rate? I contend that the two are comparable and that it is possible to transfer that eligibility, definition or qualification using the new higher rate care component in exactly the same way that the previous care allowance was used under the previous arrangements.
  If the available machinery were utilised, it would mean that those who became severely disabled after the age of 65 and who would previously and easily have qualified for exemption could continue to do so, thus obviating the need for clause 12.
  The Opposition strongly believe that vehicle excise duty exemption should remain available to disabled passengers —the original third category—who become disabled too late to be eligible for the mobility allowance or for the new higher rate mobility component of the disability living allowance. Eligibility for the higher rate care component would qualify for entitlement to the higher rate mobility component but for the fact that the people involved are over the age of 65.
  I strongly urge the Paymaster General to consider using that simple comparison and the transferred use of the care component—the former care allowance and the new higher rate care component. If he were to do so, it would obviate the need for clause 12. Acceptance of the amendment would enable the Government to withdraw clause 12.
  There is absolutely no reason for clause 12 to be included in the Bill. It tidies what does not need to be tidied, because there is machinery available to transfer and extend the exemption in the way that it has always operated. Clause 12 excludes those who are under five and have severe disabilities, and those who are not yet 65 may become disabled passengers after that age. They should not be excluded from such an important exception.
  I hope that, in understanding the full history of the measure and in accepting my argument for the comparability and transferability of the machinery that is available to the Government to use, the Paymaster General will accept the amendment so that clause 12 can be removed from the Bill. That will benefit a significant number of considerably disabled people in our community.
  Mr. John Hutton: Like my hon. Friend the Member for Wrexham (Dr. Marek), who so ably moved the amendment, I and many of my hon. Friends have strong and deeply held views on the subject. It is reasonable to say that clause 12 can be described only as the most lamentable feature of the Bill as it provides for the repeal of the disabled passengers' scheme. Those affected by clause 12 include severely disabled elderly people aged 65 and over and severely disabled children under the age of five who are already denied help under the disability living allowance with extra mobility costs. Although the Government have made it clear that clause 12 will protect entitlement for existing claimants—that must be good news—no new claims under the disabled passengers' scheme will be possible if clause 12 remains in the Bill.
  Age Concern, the Disability Alliance and many other organisations have expressed the view that the clause is an attack on severely disabled people. I share their concern and that of many of my hon. Friends that that is precisely the import of the clause. As my hon. Friend the Member for Hartlepool (Mr. Mandelson) made clear, we do not believe that we can regard the clause as a tidying-up device. It is no such thing. Clause 12 can best be described as a convenient fig leaf which conceals a wider and reprehensible attack on the rights of disabled people.
  We can legitimately regard clause 12 as discrimination against two of the most vulnerable and needy groups of disabled people. I and many of my hon. Friends share the concern of many organisations in the area that that will be the real effect of the clause. That is why I support the amendment and urge the Government to think again.
  Some 20,000 people currently qualify under the scheme that clause 12 seeks to abolish. In the past year, more than 4,000 people who come into those two groups of disabled people came under the cover of the scheme. Those are significant numbers. It is worth bearing in mind that the Government have never actively promoted or publicised the disabled passengers' scheme. I suspect that the figure of 4,000 can be regarded as the tip of the iceberg. There may be significantly more disabled people in the two crucial categories who may be entitled to vehicle excise duty exemption but who do not apply for that exemption. Clause 12 is likely to have severe long-term effects, especially as the overall population is ageing. The number of people reaching the age of 65 will increase, so the effect of clause 12 will be cumulative as the years pass.
  The Treasury stands to gain from clause 12, but it will do so at the expense of very disabled people. In the current climate, that says a lot about the Government's real objectives. It is fair to describe the clause as an act of indescribable meanness. Part of the Government's case, as my hon. Friend the Member for Hartlepool said, is that the necessary machinery to assess who qualifies under the disabled passengers' scheme is no longer in place. That follows changes introduced by the disability living allowance and by the process of self-assessment.
  Surely it would be easy for the relevant Department to devise a few self-assessment questions for the purpose which would allow the identification of need to be established and assessed at an early point. It is ludicrous to argue that the only response is to abolish the scheme altogether. That is not a credible or coherent approach for the Government to adopt.
  I urge the Government to think again about clause 12 and to do the decent thing for those deserving categories
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  of disabled people. They need our help, and it is inconceivable and cruel for the Government to maintain the fictitious argument that they have deployed throughout proceedings on the Bill.
  The Government have frequently expressed their commitment to improving the quality of life for older people and to enabling them to live as full and independent lives as possible. In that context, I strongly urge the Government to reconsider the proposal and to move towards ending discrimination against people who become disabled later in life. I urge the Government to think again, to go back to the drawing board and to come back to the House with more credible and reasonable policies which address fully the mobility needs of those with acute and severe disabilities.
  I have one comment about the interaction between the fiscal and tax system, and the social security system as a whole. I understand that part of the Government's case is that the benefits should be part of the social security system. I do not believe that the two groups of disabled people whom my hon. Friends have identified as losers from clause 12 will receive any equivalent extra benefit if the clause remains in the Bill.
  I seek an assurance from the Paymaster General that there will be no losers if clause 12 remains in the Bill. It would be contemptible for those two groups of disabled people to lose as a result of the clause. Concern about clause 12 is shared by hon. Members of all parties. I hope that the Paymaster General will confirm that there will be no losers and that he can categorically assure me and many of my constituents who are concerned about the proposals that none of them will lose a penny piece because of clause 12.
  Mr. Clive Betts: The proposals stem initially from the changes which brought in the disability living allowance. No Opposition Member has sought to undermine the main thrust or benefits of those proposals. What we have done is to highlight a problem whereby, under clause 12, only those who receive the higher rate mobility element within the DLA will get vehicle excise tax exemption.
  As my hon. Friend the Member for Hartlepool (Mr. Mandelson) rightly stressed, in Committee we did not have as thorough a discussion of the matter as we might have done. We tried to raise questions and to get some information about how many people would be affected by clause 12. We wanted to know how many people who had been in the category of being able to get vehicle tax exemption would not have that right in future. We have now been given information that about 20,000 people will be in that position. If the scheme were retained, with better publicity the number might grow, but currently it is about 20,000.
  We are dealing with the two categories of people who are the passenger element in the scheme—children under five and people over 65 whose lack of mobility came about after the age of 65. The number of people is not enormous compared with the total benefit arrangements that the Government make, but that does not mean that those people should be forgotten or treated any old how without any thought or care for their welfare.

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  7.30 pm
  As only 20,000 people are involved—although the number might be increased with proper publicity—the issue is relatively easy for the Government to deal with. No doubt the Paymaster General will tell us that transitional arrangements will be put in place to ensure that people who currently benefit from the exemption keep it. That is fine for the time being, but in the future people in exactly the same circumstances will no longer be exempt. Ultimately, the 20,000 people who were previously exempt from vehicle excise duty will have to pay it. As transitional arrangements will be made, the number of people who will lose next year and the year after is small. It must be possible for the Government to find a way to assist that small number of people.
  Responses from Treasury Ministers always cite costs as the reason why they cannot do things. As only 20,000 people are involved, the expenditure or income forgone by the Treasury must be about £2 million. As the transitional arrangements will deal with most of the 20,000 people immediately, the extra cost of continuing the exemption for people who would newly qualify must be minuscule in this and the next financial year. The cost may be minuscule, but the impact on many families will be considerable. For some families, £2 a week may not be much, but many families of disabled people are on low incomes and £2 a week is a lot to them.
  To take another comparison, under the parliamentary mileage allowance scheme, £2 might take one only three miles, but for some families £2 can be a lifeline. Hon. Members must see it in that context. I have spoken to Mencap about the proposal, and Mencap had a simple view, especially on how the proposal affects children under five. When someone has a child with learning difficulties under five, it is all very well to say, "You can put it under your arm and take it on the bus. There is no difficulty with that." Many such children have behavioural difficulties. They often create a disturbance and get upset by the experience of travelling on public transport. Private transport is crucial to the family of such a child. The spokesman for Mencap said:
  "Many of these families are under real pressure."
  The Government's proposal will simply add to the pressure on families who have real difficulties in any event.
  As my hon. Friend the Member for Hartlepool said, if the Government do not have the machinery available at present to continue the vehicle excise duty exemption, for heaven's sake let them create it. They should not take it out on the families. Eminently sensible proposals have been made and I hope that the Minister will respond to them. As my hon. Friend the Member for Barrow and Furness (Mr. Hutton) said, if the Government contend that the matter should be dealt with not through fiscal arrangements but through the benefit system, let the Government tell us what extra benefit will be paid to such families. Let them tell us that there will be no losers.
  I simply ask the Government to change their mind. The proposal in clause 12 is mean, miserly, despicable and hard hearted. It is the product of an uncaring and unfeeling Government. Our proposal will not destroy their plans for next year's public sector borrowing requirement. It will not undermine the Government's fiscal, economic or social policy in any respect. It is simply a relatively cheap, simple proposal to give a little help to a small number of families who need it. I hope that the Government will accept the amendment.
  The Paymaster General (Sir John Cope): I wish to deal first with some of the smaller points and go on to the main questions, which Opposition Members mostly addressed. The effect of amendment No. 1 would be to write into the law one way of delivering the undertaking which the Government have given, and which I am happy to repeat, that no one who currently benefits from the vehicle excise duty exemption will lose it as a result of clause 12.
  It is important for me to emphasise—several hon. Members asked me to do so—that there will be no losers at the point of change. However, as I explained in Committee, we seek to achieve that by means of the order which will introduce transitional provisions as well as fixing the date from which the clause takes effect. That is the best way of doing it. It is better than doing it by the means proposed in the amendment.
  There is a drafting problem with the amendment. Vehicle excise duty, and thus exemption from it, attaches to vehicles, not people. The position is not as described in the amendment. That is one reason why it would not be a good thing to accept the amendment. However, I accept the point behind the amendment. Indeed, we have said all along that there should be no losers at the point of change. Everyone who currently receives the exemption will continue to do so.
  There are other difficulties with the amendment. It fixes the date as 30 June and relates to eligibility rather than to whether or not someone receives the exemption. That could give rise to other complications, but I shall not dwell on them. I am anxious that people should appreciate that we take the point behind amendment No. 1. However, we intend to achieve the aim in a different way.
  The hon. Member for Wrexham (Dr. Marek) raised in passing value added tax on fuel used by leagues of friends and other organisations which often provide transport for the disabled. There is always a problem with proposals to extend zero-rating. It is the problem of the sixth directive —indeed, it was signed by the Labour Government— under which we agreed with our European partners not to extend zero rates. So we could not do precisely what the hon. Gentleman requested. However, it is relevant that vehicle excise duty exemption for passenger vehicles involved in transporting mentally and physically disabled passengers is not affected by clause 12.
  Since 1979, no VAT has been charged on the purchase price of cars leased to certain disabled people. A little later, in 1984, we also removed VAT on leasing payments. Subsequently, in 1989, we lifted the car tax on such cars. Various other changes have been made, but we could not pursue the precise change proposed by the hon. Member for Wrexham.
  Most of the comments made this afternoon have dealt with the main point behind clause 12. Amendments Nos. 2 and 9 have the effect of removing clause 12, but achieve it in slightly different ways.
  The hon. Member for Hartlepool (Mr. Mandelson) complained of the lateness of the hour, although I see from the record that it was only 10.17 pm when we finished debating the clause in Committee. As I am sure the Opposition Deputy Chief Whip, the hon. Member for Jarrow (Mr. Dixon), knows, we sat considerably later than that on several occasions, but I shall not make much of that.
  The hon. Member for Hartlepool again used the phrase "tidying up", which is not one that I would have used to describe the proposal. However, I was anxious to ensure

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  that the Committee considered the clause in the context of the wider reforms of help for the disabled and the introduction of the disability living allowance. It is clear from the debate that hon. Members have understood that the clause must be considered in that context.
  Several hon. Members have described the amount as petty, which it is, as it covers only vehicle excise duty. One hon. Member said that amounted to only £2 per week, but it is slightly more than that. I do not seek to hide behind that. As I told the Committee and as has been reflected in the debate, the introduction of the new allowance makes it difficult to provide the machinery to continue the allowance for the two groups of people to whom attention has been drawn.
  Under DLA and attendance allowance for the over-65s, we shall no longer be able to rely on a doctor's examination to provide the information needed to decide about walking ability for the purposes of exemption. That is the central difficulty and, with respect, I do not think that hon. Members have tackled it as they might have done. It is not a question of costs. One hon. Member said that they were minuscule; in terms of Government expenditure and the help that we give to the disabled, they are. I do not seek to dismiss the proposal on that account, but that is a fact.
  The hon. Member for Barrow and Furness (Mr. Hutton), among others, suggested that if the scheme had been publicised, the costs involved might have been larger. All mobility allowance recipients received a leaflet about vehicle excise duty exemption, and those awarded attendance allowance were told about it in the award notice. I have heard no suggestion, nor do I believe, that the scheme was not understood by those eligible for it. Therefore, the number of people in receipt does not understate the number that would have been in receipt if there had been more publicity.
  Even if hon. Members did not know it before they came to the House, once they have been here for a short while, they must realise that the interaction of the benefit system and the tax systems is extremely complex. It is difficult to ensure that people receive all the benefits for which they are eligible. That is a constant problem, which does not get easier when we extend allowances. On the contrary, it tends to become more complicated. We are all familiar with that, and would like to solve the problem, but it is inevitable.
  Several hon. Members mentioned the under-fives, one of the categories involved. We have extended entitlement to help with extra costs for children by making the new, lower rate of the care component and the higher rate available to all children, which in turn gives access to the disabled child premium in the income-related benefits. We more than doubled those in April 1990, and they are important for the under-fives, among others.
  As for the over-65s, the clause does not affect any people who benefit from the allowances. We are proud of our record on help for pensioners. It is not irrelevant to remark that expenditure on benefits for the elderly has risen by 33 per cent. in real terms since 1978–79. I hope that we can be acquitted of any general charge as regards the elderly, although it is true that the Government wish to do the best that we can for them, as would all right hon. and hon. Members.
  7.45 pm
  Mr. Mandelson: No one questions the Government's desire that those who receive benefits should continue to do so. My remarks were aimed principally at those who have yet to become 65 and to qualify for the category three group which I defined. The right hon. Gentleman needs to explain clearly his argument about the machinery before he concludes his remarks. Why cannot the machinery for awarding the highest rate of care component of the disability living allowance, introduced in April, be used to provide the benefit and exemption to those people who meet the criteria, who would previously have fitted in that category and would have been eligible for the exemption after they reached 65? Will he explain that clearly?
  Sir John Cope: The criteria provided for that component of DLA are not relevant to this benefit. In any case, the care component does not apply to those who become disabled after the age of 65. That is the nub of the difference that we are introducing in clause 12.
  The hon. Member for Wrexham, who opened the debate and sought to remove clause 12 from the Bill, acknowledged that the effect was relatively small and asked whether we would consult organisations about the matter and about the genuine difficulty in which we find ourselves, which gives rise to the clause. My right hon. and hon. Friends—especially those in the Department of Social Security who are mainly responsible for benefits —are continually in touch with the organisations that have been mentioned. I am sure that they will remain in touch about that matter, as they will about other matters concerning disability and benefits.
  Dr. Marek: The debate has been useful, and the gist of what the Government are doing has been conveyed to the House by Opposition Back Benchers. I am in a charitable mood this evening, because the Paymaster General answered the debate honestly. I have been in the House for a few years now and in my time on the Finance Bill I have seen and heard Paymasters General who have been decidedly shifty in their replies on clauses. That is not the case this time—[HON. MEMBERS: "Name them."] I must not succumb to my hon. Friends' entreaties on that matter. It would be unfair to refer to other Paymasters General, but I absolve the present Paymaster General of being shifty.
  Mr. Mandelson: I would be the last Member of this House to accuse the Paymaster General of being shifty or dishonest at any time. [Interruption.] He may have been when he was in the Whips Office, but that was long before I came to the House. Although he may have been honest, his answer to my question about machinery was less than complete. Originally, the criterion that a person had
  "to be driven and cared for by a full-time constant attendant"
  was deemed to be met if the person was in receipt of the attendance allowance at the higher rate. Why cannot the equivalent of that former attendance allowance at the higher rate—the higher component of the new disability living allowance—be used now? The Paymaster General has consistently refused to explain why that machinery cannot be used, and we should not let him off the hook.
  Dr. Marek: I agree with my hon. Friend. A gallery of rogue Conservative Whips is displayed in today's Evening Standard, and the Paymaster General's face does not appear among them. So I shall continue in my charitable

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  mood and appeal to the Paymaster General's sense of fair play. He said that his hon. Friends in the Department of Social Security were in continual touch, and that he was sure that they would continue to be in touch, with organisations representing disabled people about that matter.
  Sir John Cope: I had the impression that the hon. Gentleman might be bringing his remarks to a close, and I wished to respond to the intervention by the hon. Member for Hartlepool (Mr. Mandelson). I tried to explain—perhaps I was not clear enough—why we cannot use the machinery that he suggested. The care component is concerned with people's need for attention and supervision, not with whether people are incapacitated in the use of their limbs. That is why the criterion is not relevant in this matter.
  Mr. Mandelson rose—
  Dr. Marek: I shall give way in a moment but, in accordance with the rules of the House, I must make a comment first.
  I am grateful for the Paymaster General's explanation, and I shall give way to my hon. Friend.
  Mr. Mandelson: I hope that the Paymaster General will understand the spirit in which I am pursuing this matter. If the criterion of being
  "driven and cared for by a full-time constant attendant"
  was a perfectly adequate definition and basis for qualification then, why is that not the case now? Why has the criterion changed? The severity of people's disability and their need for exemption from vehicle excise duty have not changed. Nothing has changed apart from the Paymaster General's redefinition of the criterion for reasons that I do not understand.
  Dr. Marek: That is a pertinent question. I shall not press the Paymaster General to reply, but I shall give way to him in due course if he can do so.
  I agree that there is a much greater reliance on self-assessment in the new scheme for the operation of DLA. An obvious question to ask is why a doctor's note could not be demanded before exemption from the VED was allowed. It would be simple to construct a form in such a way that people would be allowed certain benefits on a self-assessment basis, but if they wanted VED exemption and were under five or over 65—if they belonged to the third group that receives those benefits at present—they would need a doctor's note. If that is the only problem, a bit of ingenuity could get round it.
  The Paymaster General replied to the debate in an honest manner. I take it that the sum of money is not at issue—as one of my hon. Friends said, it is only about £2million—and the Treasury does not seek to recover £2 million to make inroads into the £28 billion of public sector borrowing requirement that it must fund. I do not believe that the Government are hard-hearted and want to hit the disabled where it hurts, so they must be taking this step because their advisers and civil servants have told them that the difficulties in continuing the allowance for the disabled are insuperable and the best way is to get rid of it. Such advice cannot be accepted without thorough and searching scrutiny.
  I therefore rely on the Paymaster General's words and shall read them carefully in the Official Report tomorrow. He said that his hon. Friends will talk to the groups
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  representing disabled people, such as the Spastics Society and Mencap. If the various societies can convince them that there are ways to get round the problems, I hope and expect that the Government will put the matter right in a future Finance Bill.
  The Paymaster General said that the Conservative party is proud of its record on pensioners. I cannot let that remark pass, because it is not true and the myth should not be given credence. Old-age pensioners have received increases based on the retail prices index. The increases are not based on a proportion of average earnings.
  While the rest of the country has been growing richer because the world has been growing richer and GDP has been growing faster than the RPI—although slower than in many other states of the European Community— pensioners have not partaken of that increase. Even worse, besides increasing the burden of taxation—as a percentage of GDP it is much higher now, under Conservative rule, than it ever was under Labour rule—the Government are shifting the balance from direct to indirect taxation. By and large, pensioners do not pay income tax, but they all pay value added tax.
  Therefore, I challenge the Paymaster General's statement that pensioners have done well or that the Conservative party has a proud record on pensioners. Disabled people, especially those over 65, who need all the help that we can give them, would value a continuing exemption from vehicle excise duty if it could be arranged.
  I hope that the Government will continue to talk to organisations representing disabled people, because £2 million is a small sum. If they can find a way round the drafting difficulties to ensure that the allowance goes to those who properly qualify, I hope that they will do so in next year's Finance Bill.
  Amendment negatived.

Clause 15

  SPECIAL TREATMENT FOR PERSONS INVOLVED IN FARMING ETC.
  8 pm
  Mr. Michael Stern: I beg to move amendment No. 4, in page 11, line 26, leave out clause 15. I wish to make a procedural point, and I hope that you, Mr. Deputy Speaker, will allow me a couple of minutes to develop my argument.
  Clause 15 is the first example in the Bill of a regrettable practice that has grown up in recent years: adding to the Finance Bill in Committee clauses—often with schedules attached—that are frequently never discussed on the Floor of the House or mentioned in the Budget speech, and are neither urgent nor uncontroversial. In 1984, two clauses were added to the Finance Bill in Committee. In 1986, 11 clauses were added in Committee; in 1989, 16 clauses were added in Committee; in 1990, 30 clauses were added in Committee, and the numbers have remained in double figures ever since. Increasingly, as the Finance Bill emerges from the House, it bears less and less relation to the Budget speech that is supposed to introduce the fiscal measures or to the Finance Bill as it was first introduced to the House and made available to the public to study a matter of only two to three months previously.
  I accept that there are occasions when the Chancellor or the Chief Secretary in opening the debate on the Finance

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  Bill will tell the House that proposals are to be introduced, but the Bill's drafting is incomplete, so those proposals will be introduced into the Bill later. That is perfectly legitimate, because at least the public who follow our debates are aware that proposals such as those in the current Bill that relate to rents are to be introduced. Equally, as with new clause 1, which was introduced yesterday on Report, there are occasions when, in order to stop a gap in the Treasury's tax-gathering powers, it is necessary to introduce a clause urgently. However, it is worrying that much of the legislation introduced in such a way has not fallen into either of those categories.
  Over the years, a number of highly contentious matters have been introduced into the Bill in Committee. Section 49 of the Finance Act 1986 reversed the decision in the case of Collard's Mining and Industrial Holdings. Schedule 11 of the same Act introduced the controversial provisions on the taxation of foreign entertainers and sportsmen. Anti-avoidance provisions against charities were introduced in section 31 of the 1986 Act.
  Section 109 of the Finance Act 1988, introduced in the name of my right hon. Friend the Prime Minister when he was Chief Secretary to the Treasury, contained provisions on gains from settled property that are still controversial. Section 105 of the Finance Act 1989 restricted the availability of small companies' corporation tax rate.
  Such clauses, often introduced only after discussion in Committee, involved matters of great public interest. Section 73 of the Finance Act 1991 deals with relief of company trading losses. Sections 23 and 87 and schedule 4 of the Finance Act 1990 introduced various provisions relating to company cars. Sections 25 and 27 of the Finance Act 1990 introduced provisions on tax relief on charitable donations.
  Often clauses were introduced that seemed to have no great urgency, and could have been delayed until the next Finance Bill—for example, clauses 110 to 112 and virtually the whole of part IV of the 1991 Act, relating to non-contentious stamp duty changes. The same is true of section 76 of the same Act, relating to the treatment of annuities.
  One assumes that, following today's debate, the current Bill will proceed to be given Royal Assent after only cursory discussion in another place. Protection against clauses introduced into a Bill in Committee or on Report is that they are subject to further discussion in another place, but that is not true of the Finance Bill.
  Matters introduced into the current Bill in that way include changes in the rules relating to qualifying maintenance payments, foreign earnings, equity notes, double taxation on interest, films, farmers—the subject of the present clause—and the promised provisions on tax-free rent of furnished accommodation. Anyone who is vaguely interested in taxation legislation but who does not personally receive a weekly tax intelligence report or who does not subscribe to all Inland Revenue press releases will be unaware that such legislation has ever been contemplated, let alone that it is just a couple of days from becoming law.
  The procedure is made even worse because new clauses introduced in that way are discussed in Committee only when the entire Bill has been studied and there is extreme time pressure on the Committee's business. Committee
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  members, having spent many evenings, nights and often mornings on the Bill's original provisions, are anxious to complete their business and get back to normal life. Not surprisingly, many of the new clauses added in that way receive only cursory discussion in Committee and are never discussed on the Floor of the House.
  The hand of the Treasury on such clauses is weighted even more heavily, as it can supply Committee members with information that is not now, was never and never will be available to anyone else. Whenever a new clause is tabled to a Finance Bill, a few days later—possibly only 48 hours before the clause is discussed—Committee members will receive notes on it explaining its intentions line by line. Those notes are never published: they are secret to members of the Committee, and it is expected that those Members will destroy them once the Committee has deliberated on the relevant clause.
  Mr. Tyler: The hon. Gentleman suggests that the notes were secret. I have been a member of the Committee discussing the Finance Bill and I do not think that that is the case. It was perfectly possible for Committee members to discuss the matter with all interested parties. I have great sympathy with the case being made by the hon. Gentleman, but I hope that he will not overplay it.
  Mr. Stern: I must assure the hon. Gentleman that those notes are provided only for Committee members. While it is expected that at least the sense of them may be discussed outside the Committee, they never appear in print in the form in which they are handed to Committee members.
  Whatever the reasons for the procedure, I believe that it now goes too far—particularly when one considers the growth in the number of such clauses. In the tax sphere above all others—because of the lack of discussion in another place—legislation that is rushed through, without an effective opportunity for public comment, cannot be part of our system. At the very least, there is surely now a case for the publication of the notes on clauses. That would at least enable those interested in the subject being discussed in Committee to receive full information on what is being added to the Bill.
  I should like the Government to go further. I hope that, when it becomes necessary to introduce a new clause to the Bill, they will not simply introduce it in Committee, but will consider proceeding in the same way as they do with every other minor Government announcement: by way of a reply to a written question.
  Dr. Marek: I have some sympathy with the views of the hon. Member for Bristol, North-West (Mr. Stern), although some clauses have to be brought in quickly. There is no such thing as a fixed rule which can never be varied.
  The hon. Gentleman referred to the publication of notes on clauses. I do not find them very helpful; they tend to be rather perfunctory. If the hon. Gentleman reads them—I am sure he does—he will agree that they should be rather more informative and helpful, so that not only the experts affected but a reader with an average education and some knowledge of the subject can understand them. Some clauses are, after all, technically difficult. The Government should perhaps take action on this, whether or not they publish the notes on clauses.
  A great deal of financial legislation is not really a cause of party division. When the Government of the day introduce changes in tax rates, they are likely to be the

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  cause of political division. I suspect that our confronta-tional system will continue, but many clauses are not the subject of party political dispute. I always feel that it is a great pity that Her Majesty's loyal Opposition have to try to oppose everything. Equally, when Ministers introduce new clauses, they try to get them through without changing a single comma. Their briefs from civil servants instruct them to resist all attempts to amend such clauses, often listing 20 reasons why amendments should be rejected.
  Perhaps we could have a more collaborative Committee stage for some of these proposals—I wonder whether the hon. Gentleman would agree. I suspect that this is all part of a much wider subject: the reform of the procedures of the House, which is proceeding slowly in certain areas. I await the day when we can turn our attention to reforming the ways in which we scrutinise legislation which is not controversial.
  Certainly many of the clauses and schedules to which the hon. Member for Bristol, North-West referred were not controversial. Clause 15, for instance, is by and large uncontroversial—I could find nothing in it to oppose. On the other hand, the Opposition could certainly have commented on it constructively, and would have done so had we felt that the Government would be constructive in return. Our Committee system is not set up like that, unfortunately. It is a confrontational replica of the House of Commons Chamber. Committee Rooms are full of parallel Benches facing each other, making it difficult if not impossible to scrutinise these clauses in the way that I suggest.
  I hope that the hon. Gentleman will join me in suggesting wherever and whenever he can that we need to look at this whole matter and to find a better way of scrutinising legislation.
  Sir John Cope: My hon. Friend the Member for Bristol, North-West (Mr. Stern) will find a good deal of sympathy for his views. He has used this clause and this amendment as a vehicle to express his views on the management of legislation and on the insertion of new clauses in the Finance Bill.
  The clause was the subject of considerable consultation by my predecessor, now Secretary of State for Employment, when she was doing largely the same job as I do now before the general election. That consultation involved the Chancellor of the Exchequer and various outside interests connected with the matter.
  At the time of the Budget it was not thought helpful to proceed with the scheme outlined in the clause. Such was the view of many of the organisations consulted and it was a view accepted by my right hon. Friends in the Treasury. That is why the scheme did not appear in the Budget.
  8.15 pm
  When I arrived at the Treasury after the general election the scheme had moved down in the scale of priorities, so it was not included in the Bill as originally published. Consultations had nevertheless continued; we were still in discussion with outside interests, and it became apparent that it would be desirable to include the scheme, which is why we tabled the clause.
  As the hon. Member for Wrexham (Dr. Marek) said, the clause is not a matter of terrific controversy between
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  the parties. Indeed, it has been generally welcomed—by the National Farmers Union and other involved interests —as a helpful move.
  I do not apologise for having inserted the clause. I should have preferred to insert it in a proper manner when the Bill was first published, but events did not turn out that way. It was desirable to introduce the scheme this year rather than to leave it until next year's Finance Bill partly because of the arrival of the single market on 1 January 1993. The clause is not essential for the creation of a single market, but it is helpful to have the scheme to which it refers up and running—if we can—by 1 January.
  When we decided to include the clause we issued a news release which I hope will have helped to draw the attention of those outside to what we are proposing. Besides tabling the clause, we also did our best to ensure that those in the House who had taken an interest in these matters, in Committee and elsewhere, knew what we were doing and why.
  In Standing Committee we had what I hope was a useful discussion. Today we are holding another debate in which we could, if hon. Members chose, discuss the detail of the clause. There will also be further opportunities for debate on the clause. It is, after all, an enabling clause permitting the flat-rate farmer scheme to be introduced. Treasury orders subject to the affirmative procedure—and, I anticipate, Customs regulations subject to the negative procedure—will have to come before the House.
  I assure the House that we shall be exposing for comment later this year details of the scheme that we have in mind to enable the views of those interested in the clause and the scheme to be taken into account before we place the necessary secondary legislation before the House. We have thus gone to some trouble with the outside interests concerned in this clause.
  My hon. Friend the Member for Bristol, North-West made, quite fairly, a more general point about the number of clauses being inserted into this and other Finance Bills, drawing attention to some of them in particular. He said that notes on clauses were secret to members of the Committee. I have never regarded them as secret to members of the Committee, who are certainly at liberty to share their copies or to copy notes on clauses at any time. They frequently share them with those who advise them or with whom they are in touch about the different matters involved in Finance Bills. It is true that they are not published in the form in which they are sent to hon. Members and receive a fairly wide distribution. We could consider doing that, but I do not think that it would add a great deal to the knowledge of those outside. Similar information is usually available, sometimes through the written parliamentary question and frequently through press releases.
  Mr. Stern: My right hon. Friend is being most generous in his reply. However, I have frequently heard criticisms, particularly within the accountancy profession—of which, as my right hon. Friend is aware, I am a member—that notes on clauses are not published. Those who study tax law consider them to be of some value in understanding the purposes of clauses. Would my right hon. Friend consider, in addition to what he has been describing, placing a copy of the notes on clauses in the Library?
  Sir John Cope: Copies are available in the Vote Office. These can be taken away and given to people. That is

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  sometimes easier than having papers in the Library. If hon. Members wish us to do so, we can consider other ways to disseminate this information more widely.
  Dr. Marek: I do not know whether this will assist the hon. Member for Bristol, North-West (Mr. Stern), but if he thinks that people outside should see the notes on clauses, perhaps they should be put in the Sales Office where people can buy them. Does the Paymaster General know whether that happens?
  Sir John Cope: So far as I know, that is not the case, but I am speaking entirely off the cuff. If my hon. Friend would like to pursue that, he should take it up with the House authorities rather than with us. This goes much wider than the Finance Bill, although my hon. Friend the Member for Bristol, North-West made a special point about the Finance Bill in relation to the other place.
  Apart from the clause which is the subject of this amendment, other clauses have been inserted in the Bill, some of which I hope that my hon. Friend will agree are entirely helpful to the interests concerned, and many of which were introduced after considerable consultation with those interests.
  In Committee, I had a little to do with the four new clauses relevant to the taxation of companies producing films. Those are now clauses 41, 42, 43 and 68. Those clauses were the subject of considerable consultation with the industry concerned and were much discussed in advance. They were mentioned in principle in the Budget speech but, due to the complexity of the consultations which had to take place, they were not drafted in time to be included when the Bill was published initially. That is an example of the consultations preventing the system being followed in the conventional manner that my hon. Friend would wish.
  Clauses 57 and 58 and schedule 10, which set up the rent-a-room scheme, were introduced in Committee. They were the subject of considerable discussion outside and formed part of the manifesto on which my hon. Friend and I fought the election, as well as press releases, and so on.
  One could evolve a special case for all the new clauses which are inserted into the Bill but the fact that one can advance a special case for each and every new clause does not detract from the soundness of my hon. Friend's basic point—that there are too many in total even if each can be justified. My hon. Friend raises a good point about the difficulties, for those outside the House as well as for those inside, of dealing with Bills which change, through the introduction of new clauses, as they follow their stages through the House. I can only say that we shall try to avoid that where possible in the future.
  Mr. Stern: I am grateful to my right hon. Friend for that reply, and in particular for his comments about notes on clauses. I emphasise my assurance to him that anything that he can do to disseminate these wider will be welcomed, at least among those who study legislation in detail. We have had a useful debate and a mild warning shot has been fired across the bows of my right hon. Friend. In those circumstances, I beg to ask leave to withdraw the amendment.
  Amendment, by leave, withdrawn.

Clause 63

  REDUCED AND COMPOSITE RATE
  Mr. Beith: I beg to move amendment No. 8, in page 46, line 48, at end add—
  '(3) the foregoing provisions of this section shall have no effect in relation to proceedings commenced before 16th June 1992.'.
  We are talking about court proceedings taken by building societies which believe strongly that they have been required to pay tax that they were not due to pay and have been so required by means of successive pieces of retrospective legislation. They and I appeal to the principle so clearly set out in 1991 by the then Economic Secretary to the Treasury in Committee, when he said:
  "it would have been wrong to seek to change the law in the middle of a court case … the Committee would have been shocked, rightly, if the Government had sought to change the law in their favour between appeals. That would not have been right.—[Official Report, Standing Committee B, 6 June 1991; c. 212.]
  The amendment has been tabled by myself and the hon. Member for Eltham (Mr. Bottomley), who took the initiative in bringing the matter back to the House after it had been discussed in Committee so that we could look at it on Report. What lies behind it is a determination that those building societies that have this grievance should not be prevented from taking their case to court by successive retrospective Acts.
  All this goes back to the removal of the composite rate of taxation and the introduction of a system under which people pay the tax for which they are liable on their building society account. That was a sensible change and one for which we had argued. However, one consequence was that, in the changeover, a number of building societies whose accounting year was different from others believed that they had been double counted for the assessment of tax. There resulted from this a series of regulations and other legislative measures. In October 1990, the House of Lords found that the Income Tax (Building Societies) Regulations 1986 were invalid in so far as they purported to re-tax interest paid by building societies to their depositors during the tax year 1985–86. That was the transitional composite rate tax that was part of the changeover process.
  Woolwich building society took the Revenue to court and was repaid the transitional tax. Other building societies followed suit and demanded repayment. The Revenue said, "No, nothing doing, no money, we're not paying", so others also took the Revenue to court. Two building societies, the Leeds and the National and Provincial, issued writs against the Revenue claiming payment. A few days later—it is amazing how quickly the Revenue authorities operate in these circumstances—the Chancellor announced in his Budget statement a measure that became section 53 of the Finance Act 1991, and retrospectively validated the invalid regulations, except in the case of the Woolwich, which was allowed to keep the money that it had got in the first appeal.
  Hon. Members will remember the intense debate that we had on that measure in Committee and the many criticisms made by the hon. Member for Eltham and others of its retrospective character. Although we went into considerable detail on the background to this in Committee this year, it would not necessarily be helpful to go into quite such detail again. The key element for today's debate is that, when last year's Finance Bill was being

  401
  discussed in Committee, the Leeds building society pointed out that if the 1986 regulations were validated retrospectively, that would throw out the composite rate tax for one or more years because of the way in which the rules calculated it.
  The Revenue's regulations, in measuring the tax by reference to the period of a year, mean that if the period is more than a year the calculation is bound to be incorrect. It said that that would happen, and it did. That is why we have had to return to the matter in the Bill, and why it contains a retrospective clause, adding to the trail of retrospection.
  8.30 pm
  The Leeds obtained leave to bring judicial review proceedings and it has been joined by four other building societies—the National and Provincial, the Bradford and Bingley, the Scarborough and the Yorkshire. It is because of those proceedings that the Government have sought to block that avenue and to prevent the court from hearing the grievance and resolving the matter.
  The Minister made much in Committee of the fact that the ground had shifted and that the building societies inevitably are now arguing a different part of the argument from where they started. That is because of the way in which the Government have dealt with the matter at every stage. Every time the societies have tried to have a real argument before the right court and have their grievance dealt with properly, the Government have taken from them the power to pursue the matter in that way. However, in doing so, the Government inevitably get it wrong and produce invalid legislation—so the societies can pursue their argument in subsequent proceedings.
  All that the societies want or ever wanted is the right to have their original grievance heard and the right to the repayment of any tax that the courts find that they were overcharged— no more and no less. The societies have made depositions limiting their claims under the litigation so that they cannot involve anything more than the original grievance.
  The amendment would not extend beyond the cases already entered upon and therefore could not open up the possibility of other building societies finding new grievances or claims that they could bring before the courts. The amendment is designed to enable the building societies with the original grievance to pursue it, but to gain no more. In Committee, we offered a perfectly satisfactory way by which the Government could contain the matter to the original grievance. However, they argued that if the matter could be pursued, theoretically £15 billion of revenue could be at stake. The amendment that I moved in Committee was designed to ensure that that could not happen and this amendment is similarly so designed. When combined with the clear declaration by the building societies, the matter would be confined to the original grievance.
  It appears to us, to many outside the House and to many of the Inland Revenue's clients who are observing what is happening that in circumstances such as this the Revenue looks rather like a heavily armed, overcoated, trilby-hatted gangster, saying, "Nobody goes to court and gets the better of us—and certainly nobody goes to court, gets the better of us and lives to tell the tale." That is no stance for a revenue collection Department to take, least of all in relation to building societies.
  402
  The societies ask for no more than that their grievance be properly heard in a court of law and that their opportunity to pursue the matter in the courts not be removed by retrospective legislation. The amendment would meet that need. I hope that the Minister. even at this hour and even though he did not accept the case in Committee, will feel able to accept the amendment.
  Mr. Tim Smith: The right hon. Member for Berwick-upon-Tweed (Mr. Beith) said that the Inland Revenue was not adopting an appropriate attitude in immediately moving to change the result of a court case that was not resolved to its satisfaction. I can understand why any revenue department would want to do that. The question is whether it is right for Parliament to endorse that decision—and that is what we must decide tonight.
  As the right hon. Gentleman said, we considered the matter in considerable detail in Committee, so I do not want to rehearse its long history, even though I have been associated with it from the start. The position is now quite simple. Originally, there was considerable doubt about what Parliament intended. Whatever the Government may have said, in the debate on the Finance Bill in 1985, there was some doubt about what Parliament intended. However, whatever hon. Members may say, there can be no doubt about what Parliament intended when we debated the matter last year.
  Not one of the building societies could be in any possible doubt about that, because we had very long debates in Committee. John Maples, the then Economic Secretary, produced a great chart showing in graphic form how the income tax years matched the payment to be made of composite rate tax by the building societies. No one could be in any doubt about what was intended by Parliament and the Government last year. Whatever the building societies have said subsequently, they could quite clearly read what was intended in the Hansard of last year's debate.
  I did not agree with last year's decision, because I thought that there was sufficient doubt about what Parliament had intended in 1985 not to warrant the introduction of retrospective legislation. However, the position is now different. The Leeds has, as it is perfectly entitled to do, had another try. Three sets of regulations relating to the payment of composite rate tax could have been subject to doubt for a long time as the case wended its way through the High Court, the Court of Appeal and the House of Lords.
  The Government moved immediately to deal with that possibility, and I believe that they were justified in doing so, because there can be no doubt about what Parliament intended last year. There was originally some doubt about what was intended for the payment of composite rate tax in the transitional period. The Treasury's intention was to put the building societies on the same basis as the banks. They were paying interest quarterly, but the building societies were paying it annually. The dispute related to the transitional period. There was doubt about words that were uttered in this House and elsewhere about the Government's intentions, but no one who reads the Official Report of last year's proceedings can be in any doubt about what was intended.
  Although I appreciate that there is a case for giving special consideration to those who brought legal proceedings before the date in the amendment, I still do not think that the House would be wise to accept it.
  Mr. Peter Bottomley: My hon. Friend the Member for Beaconsfield (Mr. Smith) made a helpful speech, although I take a different view. I pay tribute to him, because he and Patrick Jenkin first raised the issue in 1985.
  I am prepared to accept that there was some ambiguity in the Government's intention in 1985. If they had clearly considered what their intention should have been, it would be that there should be no taxation for a period for which the tax liability had already been satisfied. Indeed, I do not think that the Government intended to impose taxation for a period for which the tax had already been collected —until part way through the year when, I suspect, the position changed from an excess of income to the Government saying, "It's getting a bit tight", and then to, "Where are the ambiguities, where are the opportunities?" I may be wrong, but it does not really matter. There was ambiguity: I concede that point to my hon. Friend the Member for Beaconsfield.
  I made a mistake last year. The affected building societies were willing, prepared and keen to write to every one of their members asking them to raise the matter with their Members of Parliament and with the Government. I advised them not to do so, because I thought that there were signs that the Government would recognise that it was politically impossible and unjust to try to draw a division between the Woolwich and the Leeds. I declare a non-interest, as my mortgage is with the Woolwich, not the Leeds. The Woolwich has got its money.
  I was wrong last year, and I am prepared to say so. I feel some guilt because I realise that I was wrong. If 1 million letters had been written to Members of Parliament, the Government would have reconsidered dropping the gate after the Woolwich had applied for a judicial review—not a tax appeal—and then the Leeds would have had its money. It is interesting that it took more than five months after the House of Lords announced its result for the Government to decide and declare that they would not let the Leeds have the money.
  I have since discovered that, even if there were a tax appeal, let alone a judicial review, the Inland Revenue does not have to pay back money that is unlawfully levied on, demanded or accepted from taxpayers. I look forward to receiving in the next few days a whole series—a first wave —of parliamentary answers to certain questions. However, I do not intend to bring that into the debate.
  I may have to apologise for the fact that, in an early-day motion, I described a certain calculation as a mathematical hoax which did not really demonstrate whether the composite rate was appropriate. If that accusation proves wrong, I will happily make a public apology to those concerned. I believe, however, that, given the exact calculation that is in the nature of composite rate tax, it is impossible to match the proceeds with the tax revenue that would have been there had taxpayers paid.
  Let me give the Government some encouraging news. I do not think that many European Court decisions have been made about United Kingdom taxation. The Leeds case is clearly unjust, because a division cannot be made between the Leeds and the Woolwich; that simply would not wash, no matter how many times retroactive primary legislation was sought. Once domestic remedies had been exhausted, any European action would abolish susidiarity and open the gates in a thoroughly undesirable way.
  If the amendment is not accepted and cannot be rephrased, it would be right for it to be replaced by primary legislation. The Government used such legislation
  404
  to try to clear up a possible ambiguity that could have operated in favour of the Revenue—or, at any rate, against the interests of the Leeds. I mention the Leeds again because it was that building society that first told the Government and the Revenue what the effect of the original regulations would be. There is some doubt about whether regulations 11 and 12 can be balanced; let me stick to regulation 3. Regulation 3 clearly imposes a massive extra disadvantage on the Leeds and other building societies.
  I may speak after the Minister if that is allowed; or I may wait, and try to introduce primary legislation. I suspect that the Government would be beaten if a million letters were written to Members of Parliament. It would be necessary to find only about 10 hon. Members who accepted the injustice of what had happened—I refer not to the interpretation of last year's law, but to what has happened over the past five or six years—to resolve the matter by means of primary legislation.
  As my hon. Friend the Member for Beaconsfield implied, what has happened in regard to the judicial review of composite rate tax is no surprise. Last year, I made an announcement on the Floor of the House. There was no need for the Government to act after the general election, and nine months or so after I had warned them that last year's legislation would not work.
  Let me make a suggestion to my hon. Friend. I am not trying to bring in all the hon. Members who advanced other ideas in Committee; but I suggest that, although it is acceptable for the Government to keep their £15,000 million minus £90 million, it is reasonable to allow the £90 million to be decided by the courts. The Government believe that they have an overwhelming case—so overwhelming that they are introducing primary legislation to ensure that they do not lose. If the matter is not put to the vote, we shall return to it again and again—not just in Europe, but here as well.
  Mr. Dorrell: I am acutely conscious that the whole story of the change in the basis of composite rate tax, as it affects banks and building societies, is not a particularly happy saga. I know that I am the latest in a run of Ministers who have had to deal with various aspects of that transition. I assure the House, and in particular my hon. Friend the Member for Eltham (Mr. Bottomley), that if I felt that there was a way of producing an agreed resolution of the problem—based either on the formal wording of the amendment or on what my hon. Friend and others have said in the weeks since I took responsibility for such matters—no one would be keener than I to find a compromise which was fair to all taxpayers and ensured that the will of Parliament was implemented as it concerns the transition from the old basis of collection to the basis which applied between 1985 and 1988. Indeed, no one has a stronger vested interest in that regard. I do not believe, however, that such a compromise is possible.
  8.45 pm
  The House must be clear about the issue that is addressed in clause 63—as it has now become, following the Committee stage. The right hon. Member for Berwick-upon-Tweed (Mr. Beith) offered a brief history of the evolution of that issue, and I do not dissent from the bare bones of what he said. The building societies' sense of grievance arose because they thought, and still think, that the imposition of the transitional tax during the "gap"

  405
  period in 1985–86 was unfair; they felt that it constituted what my hon. Friend the Member for Eltham described, in shorthand, as double taxation.
  Although that was not the issue which was decided in the Woolwich case, it did underlie that case. As a consequence, the House and the Standing Committee considering last year's Finance Bill addressed the issue head-on, and concluded after detailed debate—this is the important point—that the transitional arrangements provided in last year's legislation should he implemented in law.
  Mr. Peter Bottomley: May I clarify the issue for the sake of those who may occupy the Financial Secretary's seat if he is promoted before the next legislative stage? The courts did not decide the double or extra taxation for a period for which taxation liability had been satisfied because the first set of retroactive legislation had established that the matter was settled by Parliament and not by the courts' interpretation of the first part of the primary legislation and the regulations.
  Mr. Dorrell: I shall not seek to interpret the rulings of judges. I am clear about the basis on which I am advised that the Woolwich case was decided; I am equally clear —and I do not consider it a subject of dispute—that the issue on which the case turned was not the issue of double taxation. Even if it was, however, that issue was addressed head-on in last year's Finance Act, which confirmed provisions for the collection of tax during the transitional period. Parliament considered the grievance felt by building societies during consideration of last year's legislation; it examined the arguments in detail and rejected them. Parliament confirmed that it wanted composite rate tax for 1985–86 to be collected on the basis provided in last year's Act.
  Because the building societies accept that last year's Act provides a clear and proper basis for the imposition of tax during the transitional period, a case has been brought which seeks to challenge not the tax levied during the transitional period, but the mainstream collection of composite rate tax during the four-year period between 1985 and 1988. As more than one hon. Member has pointed out, the composite rate tax yield in that period amounted to £15 billion. Because the practical effect of the case currently in the courts is to undermine the legal basis on which £15 billion was collected, the Government introduced clause 52, which has now become clause 63. I agree entirely with my hon. Friend the Member for Beaconsfield (Mr. Smith). I make no apology for saying that we were right to introduce that clause to remove any doubt about whether that £15 billion was properly collected.
  As I said in the Standing Committee, I do not think that it is possible to consider the arguments put forward in Committee and on the Floor of the House last year about the imposition of tax during the transitional period and fail to conclude that it was understood in all parts of the House and by all parties outside that what was under discussion was the imposition of transitional tax in addition to the collection of composite rate tax during that four-year period. I put it to the House that it was understood last year that, once we had agreed the transitional tax, the only practical effect would be to net the transitional tax off the mainstream composite rate tax liability so that the taxpayer would pay no more than he
  406
  would have done if last year's provisions had never made it to the statute book. If it were otherwise, why on earth did the House spend hour after hour discussing last year's Act? It is patently absurd to suggest that we spent hours discussing tax legislation which would not make a penny piece of difference, either to the total amount of tax paid or to the conditions in which it is levied.
  Mr. Bottomley: Let me put my question in a different way. Why on earth should the Leeds have had a duplicate application for judicial review—it used the same firm of solicitors on exactly the same piece of law—when the Government came along and used a pair of scissors between the Woolwich and the Leeds? I do not blame the Government or the Inland Revenue; it is up to Parliament to decide what ought to be the law, and it is for the courts to interpret it. At Somerset house there is a taxpayers' charter which says that cases between taxpayers and the Revenue can be heard by an independent tribunal, but we are being told today that that cannot be done. The House understands the point about the £3,000 million. The amendment would allow the Government to keep the £15,000 million, minus up to £90 million which might be at risk if the Leeds and other building societies were to continue their cases. It seems to me that that is an unanswerable answer to my hon. Friend.
  Mr. Dorrell: My hon. Friend invites me to look at the difference in treatment between the Woolwich and the Leeds. Both societies have a year end of 30 September and are, broadly speaking, in comparable positions with regard to the transitional arrangements. It is not in dispute that, from its own perspective, the Leeds has not been treated so generously as the Woolwich. Clearly that is true, but the issue was faced head-on in last year's debate. This has not been landed on the House as a surprise; it was consciously considered during the passage of last year's Bill. As hon. Members know very well, the disparity between the two building societies is the result of the fact that the Woolwich won its court case on a different point. The judgment went in its favour and the Government, in accordance with well-established precedent, took the view that they could not legitimately take away what are loosely termed the fruits of victory.
  The effect of the court ruling was that the Woolwich was treated more generously than the Leeds, but that did not arise as an unintended consequence of last year's legislation, which was designed to confirm Parliament's intention.
  Mr. Bottomley indicated dissent.
  Mr. Dorrell: My hon. Friend shakes his head. Surely the intention is that taxes should be collected in accordance with the legislation. Nobody argues that last year's legislation is ambiguous. I do not need to enter into the argument, which was mentioned by my hon. Friend the Member for Beaconsfield and by my hon. Friend the Member for Eltham, about whether the earlier legislation was ambiguous. The House considered last year's legislation, knowing that it produced a disparity of treatment between the Leeds and the Woolwich and, weighing all the factors, concluded that it should be passed. Now we have a building society which, because it does not like the decision that Parliament reached last year, is bringing a legal action concentrating on a quite different point as a proxy for the argument that it lost.
  Mr. Bottomley: My hon. Friend is being very helpful, but I should like to offer a couple of thoughts. In the mid-1980s the Leeds did not want to pay the tax, and did its best to avoid paying. The Government came along and changed the law. Obviously Parliament is more important than the Leeds or the Woolwich and can try to get away with that sort of thing. What had clearly been accepted as being unlawful became lawful, and the Woolwich won the money in the House of Lords. Then the Government came back to divide the Woolwich from the Leeds. For the sake of this discussion, I shall leave the other societies aside.
  It was argued in Committee and on Report that it was open to the Leeds to come to an agreement with the Revenue so that the benefit of the Woolwich case would apply to it. Padmore was quoted. In my view, that was not a parallel. We all accept that in a tax appeal case one cannot necessarily expect to secure the benefit. However, I believe that in the case of judicial review there is not one precedent of the Revenue's asking for agreement that judicial review should apply to somebody else. In what circumstances and for what purpose does the benefit of a statement of the law in the House of Lords apply to the taxpayer? It is automatically assumed that it applies to the taxpayer. Therefore, the basis on which the House proceeded last year was pretty well flawed and certainly unjust.
  Mr. Dorrell: The House needs to understand the background to the decision that was reached last year. The courts did not rule that the transitional arrangements were unjust or that they constituted double taxation. I have deliberately skirted round the subject. To clarify the issue, to ensure that the House is clear about why we proceeded as we did last year, I remind hon. Members that the Woolwich ruling was handed down not on the ground that there had been double taxation and that, therefore, the transitional arrangements were ultra vires, but on the ground that the rate at which the transitional tax was collected had not been properly calculated. We were talking about a relatively small variant at the margin; we were not talking about an attack in the judge's ruling on the central provisions of the transitional arrangements. That is why it would have been wholly unjust to conclude that, because the Woolwich won its case on that technicality, it was right to throw away the whole basis of the transitional tax arrangements.
  That was the issue that Parliament had to address last year, and Parliament concluded that it would not be right to waive the transitional arrangements during that four-year gap. That is why the House concluded last year that, despite the undoubted disparity of treatment between the two building societies, it was right to confirm that the original intention was to levy transitional tax during the four-year period. This year, the Leeds and its co-litigants, having had that issue decided against them last year, are seeking to use the law courts to prolong what is essentially a political argument.
  The point that I feel most strongly about is that it is not a proper and legitimate use of the law courts to seek to pursue through the law courts a disagreement that the Leeds building society and its co-litigants have about a decision that Parliament reached last year. The judge has no status for providing a ruling.
  9 pm
  Mr. David Trimble: Nonsense.
  Mr. Dorrell: The hon. Gentleman says nonsense. The judge is perfectly entitled to rule that something is ultra vires, but if this House reaches a decision by proper and due process I do not believe that in a parliamentary democracy it is open to a judge to seek to reconsider a decision that has been properly reached by due process. The effect of the action that the litigants are now bringing has led to the Government tabling clause 63 in this year's Finance Bill in order to put the matter beyond doubt.
  Mr. Trimble: I apologise for intervening as I am not entirely familiar with the background, but surely the Leeds is entitled to go to law and to make an application for judicial review. At the very least, the proper course to take is to allow the Leeds to go to court for a decision.
  Mr. Dorrell: I do not dispute for one second the right of the Leeds building society to go to law. Everybody is entitled to access to the courts. I am seeking to ensure that the £15 billion of revenue—
  Mr. Trimble: What has that to do with it?
  Mr. Dorrell: I will tell the hon. Gentleman precisely what it has to do with it. The effect of the clause is to remove from the judge the opportunity to rule that £15 billion of revenue was improperly collected. It is avowedly retrospective—something about which the House is properly sensitive; it flows inevitably, however, from the consequences of the decision that the House reached last year.
  Mr. Matthew Carrington: I was not a member of the Committee which considered this year's Finance Bill, but I was on the Committee which considered last year's Finance Bill, and I remember that these matters were debated at considerable length and in considerable detail. The Government's position with regard to the Leeds building society was made very clear at that time. The Leeds can be under no misapprehension: it knew that this legislation was going to be passed this year to establish the position. For the Leeds to complain now that this has come as a surprise and that it was not expecting retrospective legislation is unreasonable in the face of the very long debates that we had last year.
  Mr. Dorrell: I agree entirely with my hon. Friend. He is an expert witness. He will remember better than I the arguments in Standing Committee and on the Floor of the House. The hon. Member for Newcastle upon Tyne, East (Mr. Brown) and the whole Opposition Front Bench team remember it in great detail. The effect of the decision that the House reached last year was to confirm the transitional tax arrangements during the transitional period.
  Both last year's legislation and this year's legislation are avowedly retrospective. The effect of the amendment would be to revisit the decision that the House made last year. I have not been convinced by the arguments that I have heard this evening, and have heard at length both in the Standing Committee and outside the House from those interested in the case, that we should revisit that decision. I believe that the House reached the right decision last year, and I invite it to confirm that decision today.
  Mr. Beith: Talk of revisiting last year's decision is a bit rich coming from the Government, who framed the

  409
  legislation in such a way that we were bound to revisit it. If they had got the arrangement right last year, there would be no debates this year, no basis for the judicial review and nothing for the Government to be frightened of.
  If the Minister is so confident of his case, why does he not let the court go ahead, and make arrangements to appear there on behalf of the Revenue, arguing with similar confidence that the litigants do not have a leg to stand on? That would be a more impressive way of handling the matter.
  The Minister is wrong to keep waving the figure of £15 billion at us. It is clear that the combined effect of our amendment and the depositions already made would restrict the sum involved to precisely that which was at issue in the first place.
  I am perplexed by the Minister's fundamental argument. He sought to persuade the House that we should not revisit last year's decision because the House had clearly decided last year, after a controversial debate, the basis on which the tax should be collected. The Minister said that the mechanism of allowing the judicial review to proceed was therefore not a satisfactory way to deal with what he acknowledged was a serious grievance. Without admitting the argument, he acknowledged that there was a reasonable matter for dispute here. At the beginning of his speech he said that if he could find a way to secure a compromise which would allow the grievance and the dispute to be considered and dealt with, he would have found one, but that he did not wish the House to revisit its decision on last year's Finance Bill.
  During his speech the Minister advanced no satisfactory reason why he could not find a compromise and devise a method of his own choosing to deal with the matter. He has not convinced those of us on both sides of the House who have shown concern about the issue that the societies should not be permitted to go to court. Even if we accepted his argument that it would be undesirable for the court proceedings to go ahead, and undesirable for the House this year to put into question the decision that it made last year, we should still ask why he did not seek methods of his own choosing to find out whether a voluntary arrangement could be made with the societies. He has dismissed all the proper legal routes and refused to make any compromise. In view of that, I cannot do other than ask the House to vote for the amendment.
  Question put, That the amendment be made:—
  The House divided: Ayes 127, Noes 258.

  Division No. 58]

  [9.07 pm

  AYES

  Ainger, Nick

  Campbell, Menzies (Fife NE)

  Ainsworth, Robert (Cov'try NE)

  Campbell-Savours, D. N.

  Banks, Tony (Newham NW)

  Cann, James

  Barnes, Harry

  Chisholm, Malcolm

  Battle, John

  Clapham, Michael

  Bayley, Hugh

  Clarke, Eric (Midlothian)

  Beggs, Roy

  Clarke, Tom (Monklands W)

  Beith, Rt Hon A. J.

  Coffey, Ms Ann

  Bell, Stuart

  Connarty, Michael

  Berry, Roger

  Cook, Frank (Stockton N)

  Betts, Clive

  Corbyn, Jeremy

  Bottomley, Peter (Eltham)

  Cousins, Jim

  Boyce, Jimmy

  Cryer, Bob

  Bruce, Malcolm (Gordon)

  Cunningham, Jim (Covy SE)

  Burden, Richard

  Dafis, Cynog

  Byers, Stephen

  Dalyell, Tam

  Callaghan, Jim

  Davidson, Ian

  Campbell, Ms Anne (C'bridge)

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

  410

  Denham, John

  Mahon, Alice

  Dixon, Don

  Marshall, David (Shettleston)

  Donohoe, Brian

  Maxton, John

  Etherington, William

  Meale, Alan

  Faulds, Andrew

  Michael, Alun

  Flynn, Paul

  Michie, Mrs Ray (Argyll Bute)

  Forsythe, Clifford (Antrim S)

  Milburn, Alan

  Foster, Donald (Bath)

  Miller, Andrew

  Foulkes, George

  Mitchell, Austin (Gt Grimsby)

  Fraser, John

  Morgan, Rhodri

  Gapes, Mike

  Morris, Estelle (B'ham Yardley)

  George, Bruce

  Mudie, George

  Godman, Dr Norman A.

  Mullin, Chris

  Godsiff, Roger

  O'Brien, Michael (N W'kshire)

  Golding, Mrs Llin

  Olner, William

  Graham, Thomas

  Pike, Peter L.

  Grant, Bernie (Tottenham)

  Pope, Greg

  Griffiths, Nigel (Edinburgh S)

  Primarolo, Dawn

  Gunnell, John

  Radice, Giles

  Hanson, David

  Robinson, Geoffrey (Co'try NW)

  Harvey, Nick

  Roche, Ms Barbara

  Heppell, John

  Rogers, Allan

  Hogg, Norman (Cumbernauld)

  Rooney, Terry

  Home Robertson, John

  Ross, William (E Londonderry)

  Hood, Jimmy

  Salmond, Alex

  Hughes, Kevin (Doncaster N)

  Sedgemore, Brian

  Hughes, Roy (Newport E)

  Shore, Rt Hon Peter

  Hughes, Simon (Southwark)

  Simpson, Alan

  Hutton, John

  Skinner, Dennis

  Illsley, Eric

  Smith, Llew (Blaenau Gwent)

  Jackson, Ms Helen (Shef'Id, H)

  Spearing, Nigel

  Jamieson, David

  Squire, Rachel (Dunfermline W)

  Janner, Greville

  Steel, Rt Hon Sir David

  Jones, Ieuan (Ynys Môn)

  Strang, Gavin

  Jones, Ms Lynne (B'ham S O)

  Taylor, Matthew (Truro)

  Jones, Nigel (Cheltenham)

  Tipping, Paddy

  Keen, Alan

  Turner, Dennis

  Kennedy, Charles (Ross, C&S)

  Welsh, Andrew

  Leighton, Ron

  Wicks, Malcolm

  Lewis, Terry

  Winnick, David

  Livingstone, Ken

  Wise, Audrey

  Llwyd, Elfyn

  Wray, Jimmy

  Loyden, Eddie

  Young, David (Bolton SE)

  Lynne, Ms Liz

  Macdonald, Calum

  Tellers for the Ayes:

  McFall, John

  Mr. Paul Tyler and

  McMaster, Gordon

  Mr. David Trimble.

  McNamara, Kevin

  NOES

  Adley, Robert

  Brandreth, Gyles

  Ainsworth, Peter (East Surrey)

  Brazier, Julian

  Aitken, Jonathan

  Bright, Graham

  Alexander, Richard

  Brown, M. (Brigg & Cl'thorpes)

  Alison, Rt Hon Michael (Selby)

  Browning, Mrs. Angela

  Allason, Rupert (Torbay)

  Budgen, Nicholas

  Amess, David

  Burns, Simon

  Ancram, Michael

  Burt, Alistair

  Arbuthnot, James

  Butcher, John

  Arnold, Jacques (Gravesham)

  Butler, Peter

  Ashby, David

  Butterfill, John

  Atkinson, David (Bour'mouth E)

  Carlisle, Kenneth (Lincoln)

  Atkinson, Peter (Hexham)

  Carrington, Matthew

  Baker, Nicholas (Dorset North)

  Channon, Rt Hon Paul

  Banks, Matthew (Southport)

  Chaplin, Mrs Judith

  Bates, Michael

  Clappison, James

  Batiste, Spencer

  Clark, Dr Michael (Rochford)

  Bellingham, Henry

  Clarke, Rt Hon Kenneth (Ruclif)

  Bendall, Vivian

  Clifton-Brown, Geoffrey

  Beresford, Sir Paul

  Colvin, Michael

  Biffen, Rt Hon John

  Congdon, David

  Blackburn, Dr John G.

  Coombs, Anthony (Wyre For'st)

  Body, Sir Richard

  Coombs, Simon (Swindon)

  Bonsor, Sir Nicholas

  Cope, Rt Hon Sir John

  Booth, Hartley

  Cormack, Patrick

  Boswell, Tim

  Couchman, James

  Bottomley, Rt Hon Virginia

  Cran, James

  Bowden, Andrew

  Currie, Mrs Edwina (S D'by'ire)

  Bowis, John

  Curry, David (Skipton & Ripon)

  Boyson, Rt Hon Sir Rhodes

  Davies, Quentin (Stamford)

  411

  Davis, David (Boothferry)

  Knox, David

  Day, Stephen

  Kynoch, George (Kincardine)

  Deva, Nirj Joseph

  Lait, Mrs Jacqui

  Devlin, Tim

  Lawrence, Sir Ivan

  Dicks, Terry

  Legg, Barry

  Dorrell, Stephen

  Lennox-Boyd, Mark

  Douglas-Hamilton, Lord James

  Lester, Jim (Broxtowe)

  Dover, Den

  Lidington, David

  Duncan, Alan

  Lightbown, David

  Dunn, Bob

  Lilley, Rt Hon Peter

  Durant, Sir Anthony

  Lloyd, Peter (Fareham)

  Dykes, Hugh

  Lord, Michael

  Eggar, Tim

  Luff, Peter

  Elletson, Harold

  MacGregor, Rt Hon John

  Emery, Sir Peter

  MacKay, Andrew

  Evans, David (Welwyn Hatfield)

  Maclean, David

  Evans, Jonathan (Brecon)

  McLoughlin, Patrick

  Evans, Nigel (Ribble Valley)

  McNair-Wilson, Sir Patrick

  Evans, Roger (Monmouth)

  Maitland, Lady Olga

  Evennett, David

  Malone, Gerald

  Faber, David

  Mans, Keith

  Fabricant, Michael

  Marlow, Tony

  Fenner, Dame Peggy

  Marshall, Sir Michael (Arundel)

  Field, Barry (Isle of Wight)

  Martin, David (Portsmouth S)

  Fishburn, John Dudley

  Mawhinney, Dr Brian

  Forsyth, Michael (Stirling)

  Merchant, Piers

  Forth, Eric

  Milligan, Stephen

  Fox, Dr Liam (Woodspring)

  Mills, Iain

  Freeman, Roger

  Mitchell, Andrew (Gedling)

  French, Douglas

  Mitchell, Sir David (Hants NW)

  Fry, Peter

  Moate, Roger

  Gallie, Phil

  Monro, Sir Hector

  Garnier, Edward

  Nelson, Anthony

  Gill, Christopher

  Neubert, Sir Michael

  Gillan, Ms Cheryl

  Newton, Rt Hon Tony

  Goodlad, Rt Hon Alastair

  Nicholls, Patrick

  Goodson-Wickes, Dr Charles

  Nicholson, David (Taunton)

  Gorman, Mrs Teresa

  Nicholson, Emma (Devon West)

  Gorst, John

  Norris, Steve

  Grant, Sir Anthony (Cambs SW)

  Onslow, Rt Hon Cranley

  Greenway, Harry (Ealing N)

  Ottaway, Richard

  Greenway, John (Ryedale)

  Page, Richard

  Griffiths, Peter (Portsmouth, N)

  Paice, James

  Hague, William

  Patnick, Irvine

  Hamilton, Rt Hon Archie

  Patten, Rt Hon John

  Hamilton, Neil (Tatton)

  Pattie, Rt Hon Sir Geoffrey

  Hampson, Dr Keith

  Pawsey, James

  Hanley, Jeremy

  Peacock, Mrs Elizabeth

  Hannam, Sir John

  Pickles, Eric

  Hargreaves, Andrew

  Porter, David (Waveney)

  Harris, David

  Powell, William (Corby)

  Haselhurst, Alan

  Redwood, John

  Hawkins, Nicholas

  Renton, Rt Hon Tim

  Hawksley, Warren

  Richards, Rod

  Heald, Oliver

  Riddick, Graham

  Heathcoat-Amory, David

  Rifkind, Rt Hon. Malcolm

  Hendry, Charles

  Roberts, Rt Hon Sir Wyn

  Heseltine, Rt Hon Michael

  Robertson, Raymond (Ab'd'n S)

  Hicks, Robert

  Robinson, Mark (Somerton)

  Higgins, Rt Hon Terence L.

  Roe, Mrs Marion (Broxbourne)

  Hill, James (Southampton Test)

  Ryder, Rt Hon Richard

  Hogg, Rt Hon Douglas (G'tham)

  Sainsbury, Rt Hon Tim

  Horam, John

  Scott, Rt Hon Nicholas

  Howarth, Alan (Strat'rd-on-A)

  Shaw, David (Dover)

  Howell, Rt Hon David (G'dford)

  Shepherd, Colin (Hereford)

  Hunt, Rt Hon David (Wirral W)

  Shepherd, Richard (Aldridge)

  Hunter, Andrew

  Skeet, Sir Trevor

  Jack, Michael

  Smith. Sir Dudley (Warwick)

  Jackson, Robert (Wantage)

  Smith. Tim (Beaconsfield)

  Jenkin, Bernard

  Soames. Nicholas

  Johnson Smith, Sir Geoffrey

  Spencer. Sir Derek

  Jones, Gwilym (Cardiff N)

  Spicer, Michael (S Worcs)

  Jones, Robert B. (W H'f'rdshire)

  Spink, Dr Robert

  Jopling, Rt Hon Michael

  Spring, Richard

  Kellett-Bowman, Dame Elaine

  Sproat, Iain

  Kilfedder, Sir James

  Stanley, Rt Hon Sir John

  Kirkhope, Timothy

  Steen, Anthony

  Knapman, Roger

  Stephen, Michael

  Knight, Mrs Angela (Erewash)

  Stern, Michael

  Knight, Greg (Derby N)

  Stewart, Allan

  412

  Streeter, Gary

  Waller, Gary

  Sumberg, David

  Ward, John

  Sweeney, Walter

  Wardle, Charles (Bexhill)

  Sykes, John

  Waterson, Nigel

  Taylor, Ian (Esher)

  Watts, John

  Taylor, John M. (Solihull)

  Wells, Bowen

  Taylor, Sir Teddy (Southend, E)

  Whitney, Ray

  Temple-Morris, Peter

  Whittingdale, John

  Thomason, Roy

  Widdecombe, Ann

  Thompson, Patrick (Norwich N)

  Wiggin, Jerry

  Thurnham, Peter

  Willetts, David

  Townsend, Cyril D. (Bexl'yh'th)

  Winterton, Mrs Ann (Congleton)

  Tracey, Richard

  Winterton, Nicholas (Macc'f'Id)

  Tredinnick, David

  Wolfson, Mark

  Trend, Michael

  Wood, Timothy

  Trotter, Neville

  Yeo, Tim

  Twinn, Dr Ian

  Young, Sir George (Acton)

  Vaughan, Sir Gerard

  Viggers, Peter

  Tellers for the Noes:

  Walden, George

  Mr. Sydney Chapman and

  Walker, Bill (N Tayside)

  Mr. Robert G. Hughes.

  Amendment accordingly negatived.

Clause 64

  LIFE ASSURANCE BUSINESS: I MINUS E BASIC
  Mr. Beith: I beg to move amendment No. 10, in page 48, line 1, leave out 'income or gains' and insert 'income, gains or expenses'.
  Mr. Deputy Speaker (Mr. Michael Morris): With this it will be convenient to take amendment No. 11, in page 48, line 7, leave out 'income or gains' and insert 'income, gains or expenses'.
  Mr. Beith: We last considered this issue at 4.35 am on 30 June. My comments were brief then because of the lateness of the hour, and I do not intend to speak at much greater length now.
  The amendment is intended to make the law clearer so that the clause says what we think the Government want to say and—[Interruption.]
  Mr. Deputy Speaker: Order. I should be grateful if hon. Members would depart in peace.
  Mr. Beith: Nunc dimittis.
  The Government seem to want to say what we think that they want to say but the clause does not say it. The amendment aims to ensure that the income minus expenditure basis is the accepted taxation position—that the net investment return on which a company is taxed is calculated by adding together a company's investment income and its capital gains from sales and subtracting expenses incurred in the same period. There is no quarrel over that.
  The problem is that while the clause refers to the "I minus E basis" in subsections (3) (a), (4) (a) and (5) (a), it does not spell out what the "I minus E basis" is. In subsections (4) (b) and (5) (b), it refers to
  "the calculation of the income or gains"
  and does not mention expenses.
  That fact has led to real concern in the life assurance industry that the clause may be interpreted by some tax inspectors as not allowing expenses to be deductible in the calculation of net investment returns. The tax inspectors might argue that Parliament deliberately did not include expenses in the clause mentioning the "I minus E basis" because Parliament does not mean that basis to allow for

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  expenses to be deductible. That is especially of concern because the area can be a notoriously difficult one in which to agree on what are expenses.
  We seek to clarify the position and to clarify what the Minister described in Committee as
  "the widely held and long-standing interpretation of the law". —[Official Report, Standing Committee B, 30 June 1992; c. 463.]
  I hope that the amendment will prove helpful.
  Mr. Dorrell: I can be a little more helpful to the right hon. Member for Berwick-upon-Tweed (Mr. Beith) on this amendment than I was on the previous one. There is no division of purpose on the subject. The clause as drafted is intended to have precisely the purpose that the amendment seeks to clarify. For various technical reasons with which I will not bore the right hon. Gentleman, the amendment does not have the effect that he intends.
  I want simply to make the position clear to the House. The deductibility of management expenses is not in doubt. The application of the provisions relating to management expenses is secured by the definition of the "I minus E basis" contained in clause 64(3)(a). The "I minus E basis" is described there simply as
  "the basis commonly so called (under which a company carrying on life assurance business is charged to tax … otherwise than under Case I of Schedule D)".
  In those circumstances, the normal provisions of the Taxes Act 1988 relating to expenses of management automatically apply. Nothing further in the clause is required to secure the full deductibility of the expenses of management. I hope that that clarifies the issue beyond peradventure.
  Mr. Beith: I am grateful for that clarification. Although it may not hold in a court of law, it will certainly hold —I hope—in all the offices of the Inland Revenue, where it can be printed and set up on the wall. On that basis, I am more than happy to beg to ask leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  9.22 pm
  Mr. Dorrell: I beg to move, That the Bill be now read the Third time.
  A Finance Bill is always a long march. In the early days of spring, the Chancellor rises in an atmosphere of enthusiasm and anticipation, and unveils to the House and to the world his proposals for the tax provision in the following year. About three weeks later, there is a dull thud as the impenetrable prose of the Finance Bill is made available to the world. There then follows a series of late nights and high temperatures as the summer wears on and as the detail of the Bill is torn apart. As my hon. Friend the Member for Bristol, North-West (Mr. Stern) said, there has been a regrettable tendency in recent years for Governments to add later thoughts to the Bill as it proceeds. Finally, in the dog days of summer, a rather depleted band of enthusiasts gathers to celebrate the Third Reading of the Bill which has been the subject of such enthusiasm and anticipation on Budget day. Whereas enthusiasm and anticipation are the characteristics of Budget day, relief and exhaustion are perhaps the characteristics of the atmosphere when we get to Third Reading.
  I suspect that such feelings are even more palpable than usual this year. Budget day on 10 March seems a long time
  414
  ago. It was on that day that my right hon. Friend the Chancellor of the Exchequer set out his prescriptions for taxes in the coming year. Six days later on 16 March, in the salubrious quarters of the Royal Institute of Chartered Surveyors, the shadow Treasury team gathered in panelled splendour to tell us what it thought should be on offer instead.
  The shadow Treasury team offered us 59 per cent. tax rates. It defined the rich as those earning more than £22,000 a year, on whom a new impost would he placed to pay for the Labour party's social programme. Three weeks later the people had a choice and the people chose the prospectus of my right hon. Friend the Chancellor of the Exchequer.
  Mr. Betts: Part of that prospectus was a £28 billion public sector borrowing requirement. Is that prediction still correct?
  Mr. Dorrell: We do not get into daily revisions of the expected PSBR. The current prediction is contained in the Red Book and, as the hon. Gentleman correctly remembers, it is £28 billion.
  In a rational world, the fact that the people chose the prospectus offered by my right hon. Friend the Chancellor of the Exchequer rather than that offered by the right hon. and learned Member for Monklands, East (Mr. Smith) should have been fatal for the prospects of not only the right hon. Member for Islwyn (Mr. Kinnock) but the right hon. and learned Member for Monklands, East. It is an engaging idiosyncrasy of the Labour party that it is apparently on the point of crowning king the man chiefly responsible for engineering its electoral defeat.
  Mr. Nicholas Brown: We have no intention whatever of electing the editor of The Sun leader of the Labour party.
  Mr. Dorrell: It is curious if one thinks about it that every opinion poll not only during the election campaign but before it showed that Labour's Achilles' heel was thought to be the economy. We all know how accurate opinion polls are, but the margins by which people reported that opinion mean that we must attach some credibility to them. Labour needed to keep off the economy as much as some of my hon. Friends thought that we needed to keep off the subject of my earlier ministerial responsibility. The economy was held to he Labour's Achilles' heel. Yet the same opinion polls regularly reported that the Labour leader strongest in public affections was the very same right hon. and learned Member for Monklands, East who was responsible for the policy which was held to be the party's Achilles' heel. It is an interesting conundrum which the Labour party is still trying to work through.
  Mr. Alex Salmond: An opinion poll last week showed 80 per cent. support for a referendum on the Maastricht treaty. Does the Minister hold that in high regard?
  Mr. Dorrell: I was simply quoting the evidence. I am not a supporter of the right hon. and learned Member for Monklands, East. Still less do I believe that opinion polls are decisive on any issue. I am certainly not in favour of a referendum. I have never understood why it should be thought that a referendum is a necessary defence for a

  415
  parliamentary democracy. The place where national decisions should be made in the United Kingdom is in this Parliament.
  That point is somewhat outside the scope of a Third Reading debate, so I shall not pursue it. I sketched in a little of the political background to the Bill. It might have been thought that, against the background of the electorate's decision which was clearly in favour of the prospectus of my right hon. Friend the Chancellor of the Exchequer, the passage of the Bill would he a trifle subdued.
  Mr. Mandelson: I am sorry that I was not present for the beginning of the Minister's speech. I was detained by a constituency matter. Before the hon. Gentleman leaves the political context of the Bill, would he care to set out in some detail the terms in which he spoke at the weekend when he described my party as a potent force that should not be underestimated and was likely to come back and win the next general election?
  Mr. Dorrell: I certainly said that the hon. Gentleman's party should not be underestimated, but I did not predict that it would come back to power at the next general election. I said that it was important for us to ensure that we had a sound economic base so that the Labour party would be defeated by a larger margin at the next election than it was at the last.
  As the electorate decided the main issue of this year's budget debate, and some of the key planks of my right hon. Friend's prospectus were passed in the short Finance Act just before the election, one might have thought that the passage of the Bill would be relatively quiet and sedate. After all, the chief interest of Opposition Members in the past few weeks has certainly not been the goings-on in Committee Room 10. There have been more absorbing activities elsewhere. However, this year's Standing Committee on the Finance Bill was fascinating.
  It quickly became clear to my right hon. and hon. Friends that we were being treated to a sort of officer training school cadet force from the Opposition. A group of people had been selected by the regimental sergeant major of the Labour party, the hon. Member for Jarrow (Mr. Dixon)—a tightly knit group of politically motivated men, who were being honed for fast-stream promotion. Clearly, they were close to the seat of power, with great prospects ahead of them, if they passed the test and satisfied the hon. Member for Jarrow.
  The hon. Member for Newcastle upon Tyne, East (Mr. Brown), who is deceptively charming and informal, was in charge of the troop. I noticed that he was watching his cadets, and I should tell him that they were watching him carefully. Whenever a furrow crossed his brow, they were nervous. They knew that he was close to the seat of power and had the ear of the incoming centre of power in the Labour party, so it was interesting to watch.
  The all-powerful Member for Newcastle upon Tyne, East charmingly referred to his hon. Friend the Member for Wrexham (Dr. Marek) as, "Mr. Precis." We shall always remember him in that light.
  Just to prove that even in the new model Labour party all is not Calvinistic virtue, the hon. Member for Brent,
  416
  South (Mr. Boateng) was chiefly interested in his travel prospects to Bordeaux, and that detained the Committee on more than one occasion during our deliberations.
  The hon. Member for Hartlepool (Mr. Mandelson) thought heretical thoughts about private landlords and the contribution that they can make to a future resolution of our housing difficulties. That was an interesting speech and it was especially interesting to watch the reactions of some of his hon. Friends as he developed his argument. On my side of the Committee there was some enthusiasm for his ideas, but there was rather less on his.
  I began to wonder on one of our longer nights whether there was any subject on which the hon. Member for Sheffield, Attercliffe (Mr. Betts) would not give us the benefit of his advice.
  Mr. Betts: No.
  Mr. Dorrell: I do not think that there was.
  Clearly, the Committee was made up of the stars of the future Labour party. I am not sure that that encourages me, but it was fascinating to have been a member of such a Committee.
  Forty hours later—a day and a half on Report—we laboured mightily to bring forth a Bill which contains some important substance and I hope that the House will give it a Third Reading with a resounding majority.
  My right hon. Friend the Paymaster General was responsible for some fundamental reforms on VAT and excise duty being written into the Bill, to provide the basis for the development of the single market within the European Community. He was responsible for some important provisions to improve the tax treatment of charities and of film production, and its encouragement in this country. The Bill will be remembered for those provisions.
  My hon. Friend the Economic Secretary took responsibility for the inheritance tax provisions, which were the subject of substantial debate in Committee. It was an interesting debate because it highlighted some of the differences between the two sides of the House. My hon. Friend rightly stressed the importance of ensuring that those who build successful businesses are not presented with an enormous inheritance tax bill as a result of and as a reward for their efforts, but are given the prospect of seeing their business continue to develop and to provide economic activity, jobs and benefit for the community at large in the medium and longer term.
  My hon. Friend the Economic Secretary dealt also with stamp duty, which is a slightly less comfortable—but none the less important—provision to ensure that when the Government introduce a time-limited tax incentive, the time limit will be observed and honoured. It is important that that happens.
  I handled some important changes on the treatment of the married couples' allowance to ensure that it is more fairly available—
  Mr. Chris Smith: It is about time, too.
  Mr. Dorrell: There is more rejoicing in heaven over a sinner reformed than over 10 virtuous men.
  Mr. Beith: Ninety-nine virtuous men.
  Mr. Dorrell: I understated the extent of joy in heaven.

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  Another interesting debate highlighted the difference between the two sides of the Committee over the business expansion scheme and its success in developing a venture capital industry and a vibrant small and medium-sized business sector.
  Mr. Smith: That is why the Government are closing it down.
  Mr. Dorrell: Indeed, we are now bringing it to an end because the scheme—whose avowed purpose is the building of a vibrant venture capital and small business sector— is well on the way to success.
  We also had an interesting debate about enterprise zones in which, once again, the Opposition's preference for central planning and hostility to economic success by private sector entrepreneurs was demonstrated. Their prejudices were even demonstrated in the speeches made by the officer cadet corps of the modern Labour party.
  Mr. Salmond: The Financial Secretary is describing all the jewels in the crown of the Finance Bill. Can he point to a measure that will lift the economy out of recession?
  Mr. Dorrell: The most important change that my right hon. Friend the Chancellor introduced in his Budget on 10 March, as the House and the electorate are well aware, was the lowest starting rate of income tax for a generation. If the hon. Gentleman wants to know how to create the recovery that we all want, let me say that it is inescapably by ensuring that powerful incentives are available to provide the basis for the efficient operation of a free enterprise economy. When left to its own devices, the free enterprise economy is the most powerful wealth creation machine that anyone has yet devised. We are determined to provide the context to allow that free enterprise economy to do its work. It will then deliver improving living standards and an improving standard of public services for everyone who lives in this country.
  I was about to mention an important, although relatively modest, change: the introduction of rent-a-room. It is a relatively late arrival in the Bill but was an important pledge in our election manifesto.
  We also discussed the inevitable provisions on anti-avoidance, without which no Finance Bill would be complete. They seem to be planned to come up at four o'clock in the morning, which reflects not the Standing Committee's interests but merely the Opposition's careful planning to ensure that explanations on the most complex bits of tax law are left until all sane people are asleep.
  There are important measures in the Bill. We should not forget the important contribution to the British statute book made by the hon. Member for Newcastle upon Tyne, East when I was able, early one morning, to accept his amendment to clause 56—demonstrating, as ever, that the Government are prepared to accept that not all wisdom occurs among Government Members in the House or in Committee.
  The Bill contains important provisions. It is the final confirmation of the prospectus that my right hon. Friend the Chancellor of the Exchequer set before the House and the country from the Dispatch Box on 10 March. I commend the Bill to the House.
  9.40 pm
  Mr. Nicholas Brown: I am surprised that Conservative Members regarded our debate on the Finance Bill in Committee as a long march, but if they did, they were cheerfully led—although I cannot say that they were cheerfully followed. Indeed, I suspect that their followers were becoming increasingly sullen as the debate and long march progressed. For the Opposition, discussing the Finance Bill in Committee was not a long march but an opportunity that we readily embraced.
  In moving Third Reading, the Financial Secretary wondered about the whereabouts of leading Opposition personalities. It might have been more instructive if he had wondered about the whereabouts of his predecessor, Francis Maude, or the former Economic Secretary, Mr. John Maples. For them, the general election did not have the happy outcome of which the Financial Secretary seemed so proud.
  The Financial Secretary spoke of opinion polling, and was good enough to refer to the popularity of the next leader of the Labour party, my right hon. and learned Friend the Member for Monklands, East (Mr. Smith). He could have explored that subject a little further, and compared and contrasted the popularity of Labour's chief economic spokesman with what the opinion polls—I accept that they are not totally accurate—have to say about the popularity of his chief, the Chancellor of the Exchequer. That chief is so popular that the Conservative party hid him away as the general election campaign drew towards a conclusion.
  This is an opportunity for us to reflect on what we have done and to review the main functions of the Finance Bill. Its major purpose is to set the chief rates of tax. Unusually, this year that was done for us before the election, so we dealt with the rest of the Bill in Committee. However, the Finance Bill has functions other than setting taxation rates. It reverses the decisions of courts that have gone against the Inland Revenue or the Customs and Excise. We have done a fair bit of that in the past few days. The Bill provides Members of Parliament with an opportunity to demand special tax concessions for one interest group or another about which they feel strongly for one reason or another.
  The Finance Bill provides Treasury officials with an opportunity to place on the statute book detailed regulations that they have probably long treasured in their hearts. They succeed in getting the regulations past Ministers and then rely on the Government's majority to get them past the Committee—a Committee that vigilantly scrutinises such matters. The Finance Bill enables the Inland Revenue to catch up in the continuing game of close the loophole—mentioned by the Financial Secretary —that it plays with the tax avoidance industry.
  It is not a devious strategy of the Labour party to ensure that such incredibly tortuous and complex issues are discussed in the early hours of the morning. We are not trying to make the Financial Secretary give a personal explanation—heaven forfend. The reason is that, when all hon. Members are committed to closing the loopholes, matters tend to be less controversial and can be taken at a time when our affairs attract less prominence. Those in the Inland Revenue involved in the game of close the loophole play with a handicap—Conservative Back Benchers, who invariably protest, question or demur when loopholes are closed.

  419
  The Bill also provides a vehicle for bringing in changes that belong more properly to other Ministries or even to separate legislation. I think not so much of this year's Bill as of the legislation relating to privatised ports of a couple of years ago. The Finance Bill can still be used in that way.
  Increasingly, Finance Bills deal with harmonisation issues arising out of our membership of the European Community. Such Bills are also an opportunity for us to trail the great issues of the day. On Report yesterday, the Labour party had a chance to air its views on inheritance tax avoidance, the housing market and the recession, and the internationally important third world debt crisis. The Liberal Democrats also had the chance to raise matters that they feel are important. They focused on the position of employees who take their employers' vans for the night. It is of course for each party to determine its own priorities, but we were all very much taken with the right hon. Member for Berwick-upon-Tweed (Mr. Beith), who told us about his teenage days courting in what one Conservative Member unkindly described as a passion wagon.
  As all who have served on a Finance Bill Committee will know, it is also a social occasion. After all, when else do civil servants get a chance to sleep with Ministers?
  Most importantly of all, the Finance Bill Committee and Report stages provide the only opportunity for elected Members to scrutinise details of the Government's primary legislation on these matters, and it is this last function that has been at the heart of the parliamentary Labour party's approach over the last five years. Inevitably, the Government take the view that this is all rather inconvenient; that it takes too much time; that the Government should be able to get their way on a fixed timetable after listening to a few Opposition speeches and a larger number of pleas for special treatment from very interested Conservative Back Benchers.
  I know that it will come as a shock to my hon. Friends to learn that there are Conservative Members who do not appreciate the speeches of my hon. Friend the Member for Wrexham (Dr. Marek) on value added tax. I am toying with an idea that will beat the Conservative party at its own game. The Conservatives have released a record of their former leader reading the Gettysburg address with an orchestrated background. Our party can do better. I propose a singularly British reply: the stirring speeches of my hon. Friend the Member for Wrexham on value added tax, with suitable musical accompaniment and an occasional—utterly authentic—moan of despair from the hon. Member for Beaconsfield (Mr. Smith). This should be released on a record—a long-playing record. I am confident that sales of this entertainment will exceed those of the American Gettysburg address.
  I appreciate that there is a case for reviewing the way in which we handle the necessary and detailed provisions of the Bill. I have no doubt that I or my successor will be discussing these matters with the Government in the context of the Chancellor's planned changes in how we handle tax and public spending debates. We hae always been advocates of reform, and we will take a constructive view of these matters, but we will not give up our right to detailed scrutiny at our own pace. We will not be bullied into an unrealistically short timetable. If the sittings are few, it is likely, as I am sure the Financial Secretary has
  420
  discovered by now, that they will last longer. It is possible to deal with these matters in a way that is satisfactory to all sides, and I look forward on my party's behalf to discussions about that before next year.
  Mr. Beith: Is the hon. Gentleman saying that the amount of time taken, particularly in all-night sittings of the Committee, is a direct consequence of the Government's failure to agree the number of sittings, the procedure that he would have preferred, or is it simply a return to the old style of conducting Committee procedure, which many of us thought that the Labour party had passed over?
  Mr. Brown: I was speaking generally, not specifically. The right hon. Gentleman is setting himself up as a "Newcastleologist", if such a thing exists, and putting forward the most peculiar interpretations of what are reasonably straightforward actions. I am making it clear to the House that we are happy to enter discussions on these matters, but we are not prepared to give up our right for a steady, thorough and forward-moving consideration of the Bill. If there is only a small number of sittings, it logically follows that we shall have to take more time within them. The hon. Gentleman should not read any more into that than what my words are intended to convey.
  I mentioned the role of the Finance Bill in reversing court cases that the Inland Revenue and the Customs and Excise have lost or are about to lose. It may seem to dispassionate observers that the Bill has been about little else. Clause 23, and schedule 6 allow the Government to reverse the Court of Appeal decision in the J. Sainsbury plc v. O'Connor case. Clause 63, as it is now, has been much discussed and I do not intend to discuss it again, but it is, as everyone will agree. a reversal of a court case and potential court cases.
  New clauses 7 and 8 reverse a special commissioners' decision in fiendishly complicated and rather unwieldy language, and the clause that we took on the Floor of the House yesterday on VAT reversed the High Court decision in the Commissioners of Customs and Excise v. L. Rowland and Co. (Retail) Ltd.
  The Labour party has tried to help the Government in these matters and offered pre-emptive strikes to prevent future Bills of this kind. We tried to amend schedule 13, which clearly does not do what the press release says it is supposed to do, and we tried to amend new clause 11 because there appear to be anomalies in legislation on life assurance and friendly societies. No doubt other Finance Committees will hear about these matters again. As our pre-emptive strikes have not been accepted, I can only assume that Ministers regard it as a treasured part of the Finance Bill that they are able to reverse the decisions of the courts.
  The Committee also discussed the relationship between the words of Ministers and the meaning of the Bill. The issue is at the core of the Pepper v. Hart court case, in which judgment has been made, although it has been reserved and is not expected until August. The issue before the courts was the status of comments made in Committee and on the Floor of the House relating to the underlying legislation. The case focused particularly on ministerial comments.
  It is suggested that these comments affect the way in which the law is interpreted by the judiciary. It is a point

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  of view that I know that the hon. Member for Beaconsfield holds dear. He suggested that we summon two journalists who hold the opposite view to the Bar of the Committee, convict and then hang them. I suspect that that is going a bit wide of the Committee's powers, but it shows how strongly the hon. Gentleman feels about the issue. However, if he feels that strongly, perhaps he would care to discuss it with the Economic Secretary, particularly in the context of the debate on inheritance tax.
  The debate on clause 59, as it was then, was controversial. I said:
  "Clause 59, through tax incentives, encourages entrepreneurs to hold on to assets rather than cash them. It encourages older people to keep their wealth in the form of business assets. Given all the extremities of old age, there may be other more appropriate forms for older people to hold their wealth. Those forms would be more suitable but for the bizarre financial privilege that the clause confers on a specific form of wealth holding."
  Oddly enough, there was support for that view from the hon. Members for Beaconsfield and for Crosby (Mr. Powell). I remind the Minister that he said:
  "The hon. Member for Newcastle upon Tyne, East said … that the provisions … encouraged the holding and concentration of wealth. I do not believe that they do. If anything, the clause will make the decision between giving away during lifetime and holding until death more neutral."
  I pointed out to him:
  "What the Minister is saying is obviously wrong, as Iwo of his hon. Friends have pointed out."
  He said:
  "The clause and schedule will make the position more neutral between lifetime gifts and retaining assets until death."
  He later said:
  "My hon. Friend the Member for Beaconsfield was worried that the provisions might encourage the retention of business until death. The provisions will make that less likely."—[Officio! Report. Standing Committee B, 30 June 1992; c. 404–14.]
  What the Minister appeared to have in mind was the inheritance tax incentive to give away money pre-death, provided that the giver survived for another seven years. What he did not take on board was the difference between paying capital gains tax on an asset and the base cost of that asset. If a business asset is gifted, it is possible to hold over the gain under section 165 of the Taxation of Chargeable Gains Act 1992. That would reduce the base cost by the amount of the gain—that is, the capital gain is not extinguished, just deferred. That compares with the position at death when assets bequeathed are received at their true value. That is reasonable, because inheritance tax is in principle due on that value.
  If the Minister's words are to be interpreted by the courts at some future stage, he will need to reconsider what he has said and at least provide a clarification. I ask him carefully to consider what he has said and to talk it over with his professional advisers. He may then decide whether, at some time in the not too distant future, he should at least put his words in a more acceptable context.
  In his opening remarks, the Financial Secretary referred to the speeches of Labour Members in Committee. He was right to do so, as even he, as an honourable opponent, spotted the quality of my hon. Friends whom the electorate so rightly sent here to serve their constituency interests. My hon. Friends went out of their way to try to help the Government through the pitfalls, such as the one that I have just described.
  As the Paymaster General was stumbling over clause 1(4)(b), which dealt with joint and several liability, my
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  hon. Friends the Members for Sheffield, Attercliffe (Mr. Betts) and for Ashfield (Mr. Hoon) were there to help him out of his difficulties. Indeed, my hon. Friend the Member for Ashfield was there again to help the right hon. Gentleman as he stumbled over the issue of duty paid. I thought that my hon. Friend provided the right hon. Gentleman with far more help than he received from Conservative Members. I would not want it to be thought that they played no part in our proceedings, but when they contributed to the debate, for example, the hon. Member for Bridlington (Mr. Townend) said:
  "A chap may hire a van and go to Bordeaux with his wife. As there are two of them"—
  that was astutely spotted—
  "they may buy 40 cases of wine, two cases of spirits and goodness knows how many cases of beer. They may bring a whole wagonload within the specified amount and then split it with their neighbour. That would be a private arrangement and I suggest that the provision will be impossible to police. Any law that cannot be enforced is bad law. That will filter through to the trade. I do not want the hon. Member for Brent, South to accuse me of being racist."
  I do not know why the hon. Member for Bridlington singled out my hon. Friend the Member for Brent, South (Mr. Boateng) as the person who would accuse him of racism; by the end of that speech, that view of him was widely shared.
  The hon. Gentleman went on to say:
  "but in the restaurant trade there are people from all parts of the world—Spaniards, Greeks, Italians, Pakistanis, Chinese and so on—many of whom do not have any respect for paying taxes."—[Official Report, Standing Committee B, 16 June 1992; c. 44–5.]
  I have sat through five Finance Bills, and I know that, if ever there was a bunch of people who resent paying taxes, it is members of the Conservative party. I shall take some convincing that that is peculiar to foreign people and unknown among our fellow citizens when a Conservative Member tells me so, and I certainly shall not be convinced on the evidence of Conservative speeches on five Finance Bills.
  The Opposition speeches, however, were a joy to listen to. I am only disappointed, Madam Speaker, that you now occupy too elevated a position to preside over proceedings in Committee: I know that that will he a great disappointment to you as well. My hon. Friend the Member for Darlington (Mr. Milburn) made a very well-informed speech about an important part of his constituency's industrial base, but before that he had already quizzed the Paymaster General on regulations and statutory instruments.
  My hon. Friend the Member for Hartlepool (Mr. Mandelson) made a good speech about the defence of good cause for those who fell foul of the VAT man, standing up for the rights and interests of the small business man—something that Opposition Members are often accused of never doing. Those points also worried my hon. Friends the Members for Leeds, East (Mr. Mudie), for Leeds, West (Mr. Battle) and for Hornsey and Wood Green (Mrs. Roche).
  My hon. Friend the Member for Darlington made an effective speech about the powers of Customs and Excise. My hon. Friend the Member for Barrow and Furness (Mr. Hutton) came in strongly, not on Trident submarines but on section 1 of the Customs and Excise Management Act 1979, which showed considerable attention to detail on the part of one so new to our proceedings and promised much for the future. Not to be outdone, my hon. Friend the

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  Member for Hornsey and Wood Green spoke about the Buchanan report and its effect on transport policy: that, too, showed a mastery of detail.
  When it came to dealing with bread-and-butter constituency issues, my hon. Friends the Members for Leeds, East, for Hornsey and Wood Green and for Barrow and Furness spoke on the clause relating to bingo duty with the enthusiasm of parliamentary veterans. The subject is of course important in constituencies where the club movement flourishes. My hon. Friends the Members for Hartlepool and for Attercliffe spoke of the importance of the vehicle excise duty clause and its impact on the disabled. My hon. Friend the Member for Leeds, West made an effective speech about charities, supported later in the debate on pensioners and the poor by my hon. Friends the Members for Darlington, for Leeds, West and for Hartlepool.
  My hon. Friend the Member for Newcastle-under-Lyme (Mrs. Golding) contributed to our debate on the married couples allowance. My hon. Friends the Members for Barrow and Furness, for Hornsey and Wood Green, for Hartlepool and for Darlington spoke about capital taxes, and we heard effective contributions from the hon. Member for Wolverhampton, North-East (Mr. Purchase) and others on the business expansion scheme, the enterprise zones and inheritance tax.
  I have made reference to the important contributions of the new Labour members of the Committee, but not in any partisan spirit. The Financial Secretary too referred to the excellent contributions from Labour Members, so it is only right that I should make what little reference can be made to the contributions from the Conservative side. The hon. Member for Slough (Mr. Watts) welcomed the clause that deals with club bingo, and declared his interest as an officer of the all-party clubs committee. The hon. Member for Esher (Mr. Taylor) also quite properly declared an interest as vice-chairman of the Association of Conservative Clubs and as president—I thought this a little more unlikely—of the East and West Molesey Conservative working men's club in Esher. I was slightly struck by the fact that there is a working men's club in Esher. As there is, it is wholly appropriate that the hon. Gentleman should be its president. In any case, he welcomed the clause on bingo.
  The hon. Member for Bridlington told us that he was a wine merchant, and he went on to express the fears of the industry, to which I have already referred. He told us that he was a small business man, and he expressed the fears of small business men when we were discussing the business expansion scheme and inheritance tax. The hon. Member for Beaconsfield told us that he was a distinguished contributor to Accountancy Age magazine, and he went on to demand that the Committee hang two other contributors. The hon. Member for Slough complained that the Unit Trust Association had not invited him to dinner.
  The hon. Member for Bournemouth, West (Mr. Butterfill) went one better and defended the lower-rate tax band as a work incentive for pensioners. That is probably the most feeble defence of that measure ever to have been advanced. However, the hon. Gentleman managed to go one better when he defended offshore unit trusts. He said that they were quite expensive to set up. There are many
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  things that could be said about offshore trusts, but use of the cost of setting one up must be the feeblest evidence ever offered in mitigation.
  The hon. Member for Stamford and Spalding (Mr. Davies), who is a continuing delight to the Labour members of the Committee, spoke up for capitalism, as he always does. When we discussed inheritance tax and other capital tax points, he told us that he was a director of Dewe Rogerson and a consultant to Morgan Grenfell. We were dealing with matters affecting those firms in relation to schedule 10. He spoke up for the interests of landowners. As we know, he is himself a landowner and a notorious sheep farmer. The hon. Member for Slough spoke up for one of his clients when we were dealing with the clause relating to BCCI and with schedule 11. He even moved an amendment which he hoped would affect the interests of his clients.
  These are the forces that have shaped the Bill: altruism from the Labour side; interest—in some cases, vested interest, albeit declared—from the Conservative side. What sort of Act are we bringing into being, and what effect will it have on the great issues that affect the running of the British economy? My hon. Friend the Member for Attercliffe referred to the Government's economic forecasting. Their forecast outturn of gross domestic product is again 1 per cent., and the Financial Secretary told us today that he stood by that prediction. But the most likely outturn is nothing of the sort; it will probably be about one quarter of that.
  The Government predict that investment will fall by 0·5 per cent. The likely outturn is a fall of 1·8 per cent. The Government forecast that our exports will grow over the year by 3·5 per cent. The likely outturn is now generally agreed to be about 2·4 per cent. The Government expect imports to grow by 1 per cent. Most forecasters expect them to grow by 6·9 per cent. The balance of payments deficit is forecast by the Government to be £6·5 billion. Most observers feel that a figure of £12 billion is closer to the truth.
  According to the Government, retail prices are expected to grow by 3·75 per cent., but most forecasters believe that the Government cannot, even in the current economic climate, get that figure below 4 per cent. According to the Government's latest hypothesis, unemployment stands at 2·4 million. The likely outcome is 2·7 million. These are the issues that really matter to the British economy. It is absolutely clear that the Bill that we shall carry into law will have no measurable impact upon them.
  10.11 pm
  Mr. Beith: The speech that we have just heard demonstrates the truth of the proposition that the speeches made in the Finance Bill Committee by the shadow Treasury team would, placed end to end, stretch to infinity and probably back again. It is alarming to realise that when they get themselves programmed for long speeches they sometimes lose the code whereby the programming can be taken out again.
  There was a classic occasion in Committee when the hon. Member for Newcastle upon Tyne, East (Mr. Brown) was not deprogrammed before he made an incidental speech on tobacco taxation, at a point when the strategy of long speeches had supposedly been abandoned. That most learned discourse, which I shall not fault for its

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  understanding of the law, seemed to incommode certain of the hon. Gentleman's hon. Friends. It was not the occasion for one of the hon. Gentleman's regular swingeing denunciations of the idea of a ban on tobacco advertising, but we did get a touch of that during the proceedings, just to set the context for today's discussions across the Floor of the House. Nevertheless, it was a notable speech.
  This is a Finance Bill of significant missed oppor-tunities, although it contains some good things. There is the rent-a-room scheme—straight from my party's 1987 election manifesto. There is inheritance tax relief and the transferability of the married couple's allowance, for which we have argued for a long time in successive Budgets. Those are useful provisions. There is a particularly unwelcome measure—clause 63, originally clause 52—which we have debated again today. I do not propose to go over the arguments again, but that measure in itself would be a strong enough reason for me to vote against the Bill.
  Much of the rest of the Bill is innocuous. The vast majority of its provisions are totally uncontroversial and are not contested by any party. However, there are many missed opportunities. No provision is made for child care. Interestingly, that is the issue that the Opposition Front Bench abandoned in their shadow budget. [HON. MEMBERS: "No."] The Minister referred to the shadow budget and the problems that it presented at the time of the election. The process of dismantling it has begun, but it has begun from the wrong end. It is odd that the Opposition should have removed one of the potentially more popular features of their shadow budget instead of the ones which proved extremely unpopular during the election campaign. However, they are not disposed to support any widening of tax relief for child care.
  There are no useful clauses in the Bill to deal with environmental issues, or to tackle poverty, or to help small businesses and the bureaucracy that they face, in the way in which small businesses could have been helped if significant changes had been made. If the clause on vans had been accepted, a lot of small business men would have had a lot less form filling to do and the tax position of a great many people who do not enjoy high incomes would have been eased by the scale charge that we proposed.
  This is about the most inconsequential set of Finance Bill proposals that I can remember among the many Finance Bills on which I have served. Yet they led to the lengthiest debates and the lengthiest sittings of any Finance Bill Committee on which I have served. That seems an extraordinary paradox. One has to go back to 1984 and 1985 to find sittings of that length, and then controversial measures were being introduced.
  There are various interpretations of the length of the Committee proceedings. One was hinted at by the hon. Member for Newcastle upon Tyne, East, but he backed away quickly when a possible truth seemed to emerge—that there had been some sort of breakdown and the necessary number of sittings had not been provided to meet the Opposition's requirements, so the remaining sittings had to be extended.
  Then there is the training school scenario, which I suggested when we discussed the matter in Committee. and which the Financial Secretary mentioned earlier. The idea was that the Committee was to be a demonstration to newer Labour Members of what lengthy Committee proceedings were all about, and a test of their ability to
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  carry them through. Indeed, we heard a sort of marks session just now, in which the hon. Member for Newcastle upon Tyne, East went through his list. He did not disclose the marks, but they were there in the tone of his voice, in his inflections and in the length of his descriptions. Those Labour Members all know where they stand, and whether they have passed or failed. Their cards have been marked, on the basis of those comments.
  That is no way to examine legislation of this kind. There was a hint of contrition when the hon. Member for Newcastle upon Tyne, East said that the Opposition were ready to consider whether there were better ways to organise proceedings on the Finance Bill on which, subject to agreement and discussion, reforms could be based. There must be a better way than taking proceedings through from 4.30 in the afternoon to 8 o'clock the following morning, and being forced to add sudden Wednesday sittings because not enough clauses have been considered. There must be a better way than the uneven manner in which clauses are considered according to the state of relations between the parties rather than according to the intrinsic merits of the argument on the clause, its complexity or the difficulty of explaining it. It is time we reformed those procedures and carried them out more sensibly.
  Attention to those matters would not solve the disagreements of policy, such as whether the Bill can meet the needs of a country in recession—we believe that it cannot—or whether it addresses issues such as poverty, which I mentioned. However, the sheer quality of legislation, and of the way in which it is considered, could be greatly improved if we organised our affairs on a basis which the outside world might understand. If any outsider had been around to listen to or observe half of what went on in the late hours of the night, that person would have been bemused and not a little derisive at the manner in which our proceedings were conducted.
  10.17 pm
  Mrs. Judith Chaplin: This is a good Bill, and I especially welcome it because of its measures to help businesses. Many businesses are in difficulties and many of the measures, together with those already passed as part of the Budget, will give substantial help, especially to small businesses.
  Small businesses have already gained by the freeze in the uniform business rate introduced earlier, whereby no business rate can increase by more than inflation. Many of the businesses in my constituency have been faced with large increases because of the revaluation, so they will welcome the freeze, as will firms throughout the country. That revaluation was based on what may turn out to be a peak year for property values, so the reduction is fair and may relate more closely to the average rate over the five years than to that peak rate.
  The Bill also helps small businesses through the changes in the VAT registration threshold, through the changes in the timing of payments and through the reductions in penalties, all of which are important for cash flows. I welcome them all.
  The most important measure in the Bill for businesses was the increase to 100 per cent. in the relief on business assets for the purposes of inheritance tax. Too often in this country tax arrangements are designed to deal with a few exceptional cases and no regard is paid to how they affect

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  the vast majority of taxpayers or their effect on the economy. Inheritance tax on business assets was just such a tax. Small companies were often destroyed or irreparably damaged because they did not have the liquid funds to pay the tax following the unexpected death of one of their major owners. I welcome the fact that that will stop, to the great benefit of small companies, which grow to form larger companies.
  I have already expressed my concern that the change could lead people to hold on to assets to avoid capital gains tax on the increase in their assets in the long term. It has been suggested that, therefore, changes in inheritance tax should not be made. I urge Ministers to consider capital gains tax—a complex and distorting tax that does tremendous damage to the economy—and I hope that in future that will be high on their list of priorities.
  Anything that reduces tax complexity is to be welcomed, as it allows the Inland Revenue and Customs and Excise to deal more effectively with those who, I am told, are now to be called "customers". That is a strange word to use because people have little choice in receiving this service.
  A better service for everyone is, however, to be welcomed. I was rather concerned, therefore, to read a report that the Inland Revenue decision to contract out some of its secretarial and support work was being criticised because it was said that it would lower the standards of confidentiality in taxpayers' affairs. I have been a temporary civil servant and rather resent the implication that temporary staff are less aware of confidentiality than permanent staff. I very much hope that Ministers will agree that contracting out will not make taxpayers' affairs less confidential. It will lead to an improvement in the service, which we should all welcome.
  10.21 pm
  Mr. Betts: I did not want to disappoint the Financial Secretary by failing, in our final deliberations on the Bill, to persuade him of the path of truth.
  I judge the Finance Bill by reflecting on what it offers my constituents and how it meets their needs. What will it do for them? Indeed, what have Finance Bills in the past 13 years done for them? I shall not go as far back as that because I can draw some themes from the Bill. What will it do for the problems of unemployment and housing? Having listened attentively to everything that Ministers have said, I conclude that the Bill does not address the needs of my constituents.
  Themes have been apparent in much of the legislation which are consistent with the Government's simplistic view of the private sector and its workings and benefits. Often, the Government have seemed ashamed to admit public subsidies. Some of the examples of management incompetence have been breathtaking. They have generally been followed by a shambolic withdrawal of proposals with little apology or embarrassment for the mess that the Government have created, leaving the real problems facing so many constituents untouched and unaddressed.
  There is a real problem with the growth and development of small businesses—a problem of survival through the recession at a time of high interest rates. Everyone accepted that small businesses are important to
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  our future economic development. Despite the Government's overall commitment to a simplistic view of the free market and a philosophy of trying to get British industry lean and competitive—in too many cases, it has become skeletal and redundant for many firms in my constituency—when they introduced the business expansion scheme in the early 1980s there was probably some recognition of the positive role that they could play in helping firms start and grow in the early stages which would ultimately be of great benefit to the firms and to the people whom they could employ. A not inconsiderable amount of public expenditure was involved. I understand that in the past four years about £1 billion of investment was generated through that source, but in the past few years the implementation of what could have been a good scheme has been shambolic and a waste of taxpayers' money.
  My constituents want jobs, but not many will get employment in collecting rare wines, not many will get employment in accumulating agricultural holdings, and not many will get employment in owning race horses. Yet money from the business expansion scheme has been spent on all those follies and ventures. The Government have steadily had to legislate for a scheme which they got wrong in the first place. A few people may have been employed in wine bars and restaurants, but those are not the type of businesses that we expected to expand when the scheme was set up, and they are certainly not the sort of businesses that we should now seek to support with public money.
  What happened? There have been reforms to try to close some of the loopholes. Following that, there were measures to develop—and now measures in the Bill to develop further—the scheme to encourage housing provision. I do not deny that housing provision is important. Certainly, my constituents would benefit from an increase in the number of houses being built for them to rent. That would be important, but our argument is clear: the business expansion scheme was the wrong way to stimulate housing provision. The release of capital receipts for local authorities to spend would have been the right way.
  I shall not repeat the lecture that I gave the Minister at 5 o'clock one morning about the failure of the Government's housing policy—[HON. MEMBERS: "Go on."] I could be tempted, but it might be a waste of time. After all, the Government's failures are there for all to see. They can be seen in the homeless young people on the streets of our cities. These are the 1990s, but a supposedly civilised and wealthy country is unable to care for people and put a roof over their heads. That is a failure of the Government's housing policy with which the business expansion scheme failed to deal, even though 90 per cent. of the expenditure under the scheme in the past two years has gone into housing and providing easy money for people with up to £40,000 to spend instead of dealing with the real issues facing small businesses.
  What does the Bill do? Ultimately, it withdraws the scheme to help small businesses and leaves them in the position they were in before the Government introduced the scheme in the early 1980s. In the middle of a recession, with a lack of venture capital, with small companies searching for support and under pressure from their banks, what do the Government do? They walk away. That is the truth of the situation. Many Conservative Members who are concerned about and understand small

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  businesses should start to worry about the lack of attention shown by the Government—their Government —to the needs of small businesses.
  What other schemes have there been? There have been enterprise zones, and we have had some interesting discussions about provisions in the Bill for such zones. In this instance, the Government have made no concessions in terms of their absolute belief in the free market. They believe that if they remove tax obligations, blame the bureaucracy of local councils and remove that too, everything will be all right. There will be a free-for-all and a thousand flowers will bloom. We can take them around enterprise zones—it is not flowers that are blooming but weeds growing out of the rubble that remains.
  A free-for-all? Well, there is some freedom from taxation for the businesses involved, but it is not a free-for-all because the taxpayer has paid. As I said in Committee, I believe that Sheffield was right to refuse an enterprise zone because, although we cannot get proper information from the Government about precisely how the money is being spent and what the effect of enterprise zones has been, it is fairly clear that they have not been an enormous success.
  Let us consider the money involved. For instance, £2·5 billion has been spent on Canary wharf. That is a disgrace. The Government are now scrambling around to justify their folly and the monument that they have built to Thatcherism. That compares with only £50 million over five years for the development corporation in Sheffield, where there are real problems to address and real opportunities, if only the Government were prepared to work with the local authority and private business.
  I was doing some sums on that £2·5 billion of expenditure. It is more money than the Government have allocated in rate support grant and revenue support grant to Sheffield city council over 13 years to provide for education, social services, environmental health, leisure, highways, refuse collection and all the other services that local authorities provide. It is an obscenity that cities such as Sheffield should be starved of resources when the Government are prepared to waste £2·5 billion on that folly of their own making at Canary wharf in order to justify their policies on enterprise zones.
  We understand, although the House has not been told formally, that it may not: be a matter of moving civil servants down the road and of a leasing arrangement but that the Government may be considering buying Canary wharf. That may be the only way out of their problems. They will have to buy Canary wharf and spend a further £1·5 billion on the Jubilee line.
  Few jobs have been created by the Canary wharf project, but lots of cash has been spent. The jobs that have been created have often been moved from nearby. The move from Marsham street is a classic example. Some jobs would have been created anyway. Many jobs are short-term, low-paid jobs which will not exist once the Government end the enterprise zone concessions. It is another shambolic mess of administration. The Government are not continuing enterprise zones because even the Government recognise that they have been a failure.
  All the constituencies in which enterprise zones have been created—indeed, all constituencies in urban areas —have the same problems. They are the problems of dereliction, problems which need proper development plan and partnership arrangements between local councils and
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  the private sector. Certainly Labour councils are willing to enter into those arrangements, and the private sector is mostly willing, but meaningful Government support is needed to make such arrangements work.
  The rent-a-room scheme is based on the idea that somehow the private sector will solve our housing problems, just as it would solve our industrial problems. Incredibly, in the Standing Committee we heard comments from Conservative Members to the effect that the Labour party was somehow to blame for the failures of the private rented sector. Perhaps they failed to notice that their party had been in Government for the past 13 years.
  I accepted many of the comments made by the hon. Member for Buckingham (Mr. Walden). He expressed reservations about the Government's housing policy. He spelled it out. Mortgage tax relief is a difficult issue, but the private rented sector in Britain will never prosper while the Government subsidise owner-occupation through mortgage tax relief. It is quite simple: the Government can fiddle around with schemes as much as they like, but they will not create a viable rented sector.
  Now the Government are introducing tax relief for the rent-a-room scheme. In Committee we pressed the Minister at some length about how much the scheme would cost. He was just about awake in that debate early in the morning. He said that it would cost £2 million to £3 million. I will not quibble about the amount of money because in a different debate today we argued that £2 million was not a lot of money. It amounts to a small attempt to tackle an enormous problem. The £2 million to £3 million tax relief will go not only on newly rented rooms but on rooms which are already rented out. The addition to the amount of housing space available for homeless people is minuscule.. Perhaps the Government will eventually admit that that scheme was a failure, too, but it is already a failure in that it is no solution to the real housing crisis affecting our major cities. It offers no hope to homeless young people, and does not provide better accommodation for people living in deplorable conditions in the private rented sector or for young people with children who are living in high-rise accommodation and want to move to low-rise properties.
  The Finance Bill follows the same track record—an over-reliance on the private sector and a failure to recognise the contribution that the public sector can make, balanced by hidden public subsidies, a lack of open government right the way through, and appalling managerial incompetence on behalf of the Government.
  The Finance Bill fails to tackle the real problems of urban areas—the problems of homelessness and the lack of sufficient housing. It fails to tackle the problems of the lack of industrial investment, and offers no coherent approach to small businesses struggling to grow or to survive in the middle of the longest recession since the war, which was also created by the Government's actions.
  In the midst of recession, the Finance Bill offers no solutions to unemployment, and no stimulus to economic activity, despite the fact that the Government should admit that their projections of gross domestic product as my hon. Friend said, ought to have changed since the Budget, because all the financial commentators have changed theirs.
  By all reasonable tests, the Finance Bill is a failure. The Government may have won the election, but they are not

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  winning the battle against the long-term economic decline of this country. They are not even fighting that battle and, ultimately, the electorate will find them out.
  10.36 pm
  Mr. Christopher Gill: I shall detain the House for only a few brief moments, and shall resist the temptation to take issue with the hon. Member for Sheffield, Attercliffe (Mr. Betts).
  First, on behalf of the House, I should express our gratitude to the members of the Committee for the time and wisdom that they brought to deliberations on the Finance Bill. I am sure that those of us who were not in Committee were well blessed to be in our beds when they were kept from them.
  On the Third Reading of Finance Bills in the past year or two it has been my habit to draw hon. Members' attention to some features of our tax regime. The six main taxes of the revenue—income tax, corporation tax, petroleum revenue tax, capital gains tax, inheritance tax and stamp duty—raised £80·4 billion in 1991–92. Against those six main taxes are 87 reliefs and allowances, totalling £88·63 billion. The reliefs and allowances come to £8 billion more than the six taxes levied. I want to impart to Treasury Ministers that there is enormous scope for a radical Chancellor to simplify our tax regime dramatically, while decimating the rates of tax.
  My hon. Friend the Member for Newbury (Mrs. Chaplin) rightly had some harsh things to say about capital gains tax. She might be interested to know that there are reliefs and allowances against capital gains tax worth £2·66 billion, even though the tax only raises £1·2 billion. The situation is even more interesting for inheritance tax, where the reliefs and allowances amount to more than £5 billion, whereas the tax raises only £1·3 billion.
  I am grateful to the House for bearing with me while I ride that hobby horse. I have said it before on the Third Reading of Finance Bills and I think that I am getting my message through. I think that I am correct in saying that there is one less relief and allowance this year than at the equivalent time last year. So my message is obviously getting through to the Treasury Bench.
  I welcome this well constructed and well targeted Bill, which I am sure the House will approve.
  10.39 pm
  Mr. Mandelson: I am stimulated to intervene at this late stage in the debate by the fine quality of the contributions made by my hon. Friends in this Third Reading debate.
  The limitations of the Bill clearly illustrate that the central criticism of the Government is not that, in the full range of their economic and fiscal policies, they look to individual firms and companies to provide the main engine of enterprise in our economy. That view is shared on both sides of the House. The main criticism of the Government is that they expect firms to undertake that task in isolation and are prepared to give so little support to enable companies to be more successful engines of growth and enterprise in our economy. Firms do not look to the Government to do everything for them—far from it—but they do not expect a responsible Government like ours to
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  do so little, especially when Governments of all colours in every other European country are doing so much more for their companies.
  No debate during the lengthy course of the Bill's proceedings has better illustrated the paucity of the Government's strategy for dealing with the country's problems than that on the housing crisis and the collapse of the Government's measures to deal with it. The lesson of that crisis goes to the heart of the Government's failing and reveals the tragic contrast between the promises that they made before the election on 9 April and the collapse in hope and confidence in their policies that has taken place since the election. Time has shown the housing measures announced by the Government in December last year to be ill thought through gimmicks, packaged and hyped to people who need not empty gestures but real help to alleviate their housing and personal finance crises.
  To take the mounting mortgage arrears crisis off newspaper front pages, the Government struck a rather crude bargain with mortgage lenders: in return for building societies devising a range of mortgage rescue packages and negotiating a variety of arrangements with housing associations, the Government agreed to pay the mortgage interest element of income support direct to lenders and conceded to building society demands for a freeze on stamp duty to kick-start the slumbering property market. In return for a mortgage rescue lifeboat, building societies persuaded the Government to throw in a stick of dynamite to break the logjam in the housing market. Unfortunately, the lifeboat has turned out to be a threadbare raft and the dynamite a disappointingly damp firework.
  In February, a Shelter report speculated that some 40,000 families might be saved as a result of the Government's package. That prediction was dismissed at the time, notably by Government spokesmen, as "miserably pessimistic". Instead, the predictions made by Shelter earlier this year have proved, lamentably and tragically—no one derives enjoyment or satisfaction from the failure of the Government's policies to deal with the housing crisis—to be not miserably pessimistic but wildly optimistic. One report, if it is to be believed, calculates that the Government's measures have saved no more than 12 homes and a handful of families.
  Across the country, the package has been a sad failure. In my constituency of Hartlepool, there was a 24 per cent. increase in repossession orders last year. Already, in the first quarter of 1992, 102 mortgage possession actions have been entered in the county court of Cleveland. Some 66 suspended orders have been agreed, and a further 15 have been made by the courts.
  In rehearsing those figures, I do not need to point out that they represent considerable human misery and tragedy for the families involved. They have suffered considerably during the past two years in the course of the second recession that was manufactured in Downing street and brought about as a failure of the Government's economic policies. It has been a financial blight on their lives, and they have had to find any penny they could lay their hands on.
  Mr. Alan Duncan: In his speech so far, the hon. Gentleman has mentioned the word "crisis" about 13 times. Everything that he has said seems to have smacked of the late Prince of Wales saying nothing more than "something should be done." Will the hon.

  433
  Gentleman advise the Houe of specific measures that he believes should be included in the Finance Bill? Otherwise, his reputation as an exciting operator might take a sudden plunge.
  Mr. Mandelson: After their party has spent 13 years in government, we can expect Conservative Members to tell us a little more about what should be done to solve this country's crisis in housing and the economy.
  The pattern is now prevalent, not only in my constituency but many others like it, not only in the northern region, but across the country, not only in the west midlands and Yorkshire, but in London and the south-east. Many orders have been placed against families in my constituency, threatening the repossession of their homes, taking away their pride in that asset—the castle in which they have invested their savings and from which they have taken so much satisfaction.
  If those orders are enforced by county courts in my constituency and others like it, at least one family a week will face the repossession of their home. In many constituencies, more than one family will face the loss of their home. That is not only a tragedy: it is a scandal. I am sure that the hon. Member for Rutland and Melton (Mr. Duncan) accepts that it represents a serious crisis in the personal affairs and finances of those families who were so tragically affected.
  Those families are trapped in mortgage misery that is not of their making. Thousands of them are marooned in the housing market. Some of them have to watch the value of their houses fall below the size of their mortgage. Others are simply trapped in their homes, unable to find a prospective buyer who will pay a reasonable price for their home to enable them to move—in many cases, to follow their families or to take up the jobs that they have been lucky enough to obtain in other parts of the country.
  The main plank in the Government's policies, the chief weapon in their armoury, has miserably failed so far to prevent the continuing collapse of the housing market this year. I refer to the stamp duty holiday. Transactions were down 23 per cent. in the first five months of the year. Understandably, the fear is that the Government's refusal to extend the relief will kill off any struggling signs of life in the housing market, and there are precious few of those.
  Home owners, mortgage lenders and house builders, like everyone else in the economy, have been tragically misled by the Government, ever keen to answer with an empty promise any criticism made of them as their policies fail once more to deliver the goods.
  This country is crying out for relief from the recession. All hon. Members will know from their surgery experience how constituents come to them begging for relief, to be spared the continued misery that the recession is causing them and their families. It is tragic that this Finance Bill will do nothing to bring relief to the countless people across the country whom we represent here.
  We can only hope that the recent warning issued by the Financial Secretary will come true. Many of us were interested in his speech, delivered at the Conservative party's weekend school in a location not a million miles from Nottingham. That speech, never made during proceedings on the Bill, probably said more about the inner feelings and true fears of Conservative Members than any speech made on this Bill.
  The Financial Secretary issued a warning to his own party to the effect that the Labour party may have been
  434
  defeated and may be a slumbering giant but it still contains the strength, the potency and the skill to return and fight and win the next general election. The hon. Gentleman's right hon. and hon. Friends would do well to heed his warnings.
  It is the failure of the Government's economic policies —this Bill has done nothing to ameliorate that failure— compounded by the missed opportunities represented by this Bill which will further boost the already considerable strength of the Labour party and enable it to come—I have every confidence in this—to the aid of the country before all hope is lost, at the next election.
  10.54 pm
  Mr. Nicholas Brown: The Financial Secretary, that happy warrior, reaches his journey's end. Before we vote on Third Reading, I have two things to say to those of my hon. Friends who served with me on the Committee. The first and obvious thing is thank you. The second, and perhaps less obvious, is that there are worse things to be called, even in this place, than "officer cadets".
  For me, this is the end of five years of serving on Finance Bill Committees, so I also take this opportunity to say thank you to my Front-Bench colleagues, the hon. Members for Islington, South and Finsbury (Mr. Smith), for Brent, South (Mr. Boateng), for Wrexham (Dr. Marek) and for Newcastle-under-Lyme (Mrs. Golding). A better bunch of colleagues and comrades a Member of Parliament could not wish for.
  As the Bill reaches its journey's end, the country will know that its contents are not the fault of the Opposition. I urge my hon. Friends to vote against it.
  10.55 pm
  Mr. Dorrell: Journey's end indeed! The Bill completes the legislation founded on the Budget that my right hon. Friend the Chancellor of the Exchequer introduced on 10 March. It was based on the lowest starting rate of income tax for a generation, and on the commitment to extend that low rate of income tax right through the payers of standard rate tax and to see that commitment carried out as soon as may be. It was based on the commitment to ensure that the top rate of income tax was not allowed to rise above 40 per cent.
  The House will remember that, six days after that Budget was presented, the Labour party presented an alternative Budget that promised a 59 per cent. top rate of tax and defined riches as beginning on an income of £22,000 a year. Three weeks later, the country made its choice. It is now for the House to give effect to that choice and to carry the Bill into law.
  Question put, That the Bill be now read the Third time—:
  The House divided: Ayes 303, Noes 250.

  Division No. 59]

  [10.57 pm

  AYES

  Adley, Robert

  Ashby, David

  Ainsworth, Peter (East Surrey)

  Aspinwall, Jack

  Aitken, Jonathan

  Atkinson, David (Bour'mouth E)

  Alexander, Richard

  Atkinson, Peter (Hexham)

  Alison, Rt Hon Michael (Selby)

  Baker, Rt Hon K. (Mole Valley)

  Allason, Rupert (Torbay)

  Baker, Nicholas (Dorset North)

  Amess, David

  Baldry, Tony

  Ancram, Michael

  Banks, Matthew (Southport)

  Arbuthnot, James

  Banks, Robert (Harrogate)

  Arnold, Jacques (Gravesham)

  Bates, Michael

  Arnold, Sir Thomas (Hazel Grv)

  Batiste, Spencer

  435

  Beggs, Roy

  Forth, Eric

  Bellingham, Henry

  Fox, Dr Liam (Woodspring)

  Bendall, Vivian

  Fox, Sir Marcus (Shipley)

  Beresford, Sir Paul

  Freeman, Roger

  Biffen, Rt Hon John

  French, Douglas

  Blackburn, Dr John G.

  Fry, Peter

  Body, Sir Richard

  Gale, Roger

  Bonsor, Sir Nicholas

  Gallie, Phil

  Booth, Hartley

  Gardiner, Sir George

  Bottomley, Peter (Eltham)

  Gamier, Edward

  Bottomley, Rt Hon Virginia

  Gill, Christopher

  Bowden, Andrew

  Gillan, Ms Cheryl

  Bowis, John

  Goodlad, Rt Hon Alastair

  Boyson, Rt Hon Sir Rhodes

  Goodson-Wickes, Dr Charles

  Brandreth, Gyles

  Gorman, Mrs Teresa

  Brazier, Julian

  Gorst, John

  Bright, Graham

  Grant, Sir Anthony (Cambs SW)

  Brooke, Rt Hon Peter

  Greenway, Harry (Ealing N)

  Brown, M. (Brigg & Cl'thorpes)

  Greenway, John (Ryedale)

  Browning, Mrs. Angela

  Griffiths, Peter (Portsmouth, N)

  Bruce, Ian (S Dorset)

  Grylls, Sir Michael

  Budgen, Nicholas

  Gummer, Rt Hon John Selwyn

  Burns, Simon

  Hague, William

  Burt, Alistair

  Hamilton, Rt Hon Archie

  Butcher, John

  Hampson, Dr Keith

  Butler, Peter

  Hanley, Jeremy

  Butterfill, John

  Hannam, Sir John

  Carlisle, John (Luton North)

  Hargreaves, Andrew

  Carlisle, Kenneth (Lincoln)

  Harris, David

  Carrington, Matthew

  Haselhurst, Alan

  Carttiss, Michael

  Hawkins, Nicholas

  Channon, Rt Hon Paul

  Hawksley, Warren

  Chaplin, Mrs Judith

  Hayes, Jerry

  Chapman, Sydney

  Heald, Oliver

  Churchill, Mr

  Heathcoat-Amory, David

  Clappison, James

  Hendry, Charles

  Clark, Dr Michael (Rochford)

  Heseltine, Rt Hon Michael

  Clarke, Rt Hon Kenneth (Ruclif)

  Hicks, Robert

  Clifton-Brown, Geoffrey

  Higgins, Rt Hon Terence L.

  Colvin, Michael

  Hill, James (Southampton Test)

  Congdon, David

  Hogg, Rt Hon Douglas (G'tham)

  Coombs, Anthony (Wyre For'st)

  Horam, John

  Coombs, Simon (Swindon)

  Hordern, Sir Peter

  Cope, Rt Hon Sir John

  Howarth, Alan (Strat'rd-on-A)

  Cormack, Patrick

  Howell, Rt Hon David (G'dford)

  Couchman, James

  Hunt, Rt Hon David (Wirral W)

  Cran, James

  Hunt, Sir John (Ravensbourne)

  Currie, Mrs Edwina (S D'by'ire)

  Hunter, Andrew

  Curry, David (Skipton & Ripon)

  Jack, Michael

  Davies, Quentin (Stamford)

  Jackson, Robert (Wantage)

  Davis, David (Boothferry)

  Johnson Smith, Sir Geoffrey

  Day, Stephen

  Jones, Gwilym (Cardiff N)

  Deva, Nirj Joseph

  Jones, Robert B. (W H'f'rdshire)

  Devlin, Tim

  Jopling, Rt Hon Michael

  Dickens, Geoffrey

  Kilfedder, Sir James

  Dicks, Terry

  King, Rt Hon Tom

  Dorrell, Stephen

  Kirkhope, Timothy

  Douglas-Hamilton, Lord James

  Knapman, Roger

  Dover, Den

  Knight, Mrs Angela (Erewash)

  Duncan, Alan

  Knight, Greg (Derby N)

  Duncan-Smith, Iain

  Knight, Dame Jill (Bir'm E'st'n)

  Dunn, Bob

  Knox, David

  Durant, Sir Anthony

  Kynoch, George (Kincardine)

  Dykes, Hugh

  Lait, Mrs Jacqui

  Eggar, Tim

  Lawrence, Sir Ivan

  Elletson, Harold

  Legg, Barry

  Emery, Sir Peter

  Leigh, Edward

  Evans, David (Welwyn Hatfield)

  Lennox-Boyd, Mark

  Evans, Jonathan (Brecon)

  Lester, Jim (Broxtowe)

  Evans, Nigel (Ribble Valley)

  Lidington, David

  Evans, Roger (Monmouth)

  Lightbown, David

  Evennett, David

  Lilley, Rt Hon Peter

  Faber, David

  Lloyd, Peter (Fareham)

  Fabricant, Michael

  Lord, Michael

  Fenner, Dame Peggy

  Luff, Peter

  Field, Barry (Isle of Wight)

  Lyell, Rt Hon Sir Nicholas

  Fishburn, John Dudley

  MacGregor, Rt Hon John

  Forman, Nigel

  MacKay, Andrew

  Forsyth, Michael (Stirling)

  Maclean, David

  Forsythe, Clifford (Antrim S)

  McLoughlin, Patrick

  436

  McNair-Wilson, Sir Patrick

  Smith, Tim (Beaconsfield)

  Madel, David

  Soames, Nicholas

  Maitland, Lady Olga

  Spencer, Sir Derek

  Malone, Gerald

  Spicer, Sir James (W Dorset)

  Mans, Keith

  Spicer, Michael (S Worcs)

  Marlow, Tony

  Spink, Dr Robert

  Marshall, John (Hendon S)

  Spring, Richard

  Marshall, Sir Michael (Arundel)

  Sproat, Iain

  Martin, David (Portsmouth S)

  Squire, Robin (Hornchurch)

  Mates, Michael

  Stanley, Rt Hon Sir John

  Mawhinney, Dr Brian

  Steen, Anthony

  Mayhew, Rt Hon Sir Patrick

  Stephen, Michael

  Merchant, Piers

  Stern, Michael

  Milligan, Stephen

  Stewart, Allan

  Mills, Iain

  Streeter, Gary

  Mitchell, Andrew (Gedling)

  Sumberg, David

  Mitchell, Sir David (Hants NW)

  Sweeney, Walter

  Moate, Roger

  Sykes, John

  Monro, Sir Hector

  Tapsell, Sir Peter

  Moss, Malcolm

  Taylor, Ian (Esher)

  Needham, Richard

  Taylor, John M. (Solihull)

  Nelson, Anthony

  Taylor, Sir Teddy (Southend, E)

  Neubert, Sir Michael

  Temple-Morris, Peter

  Newton, Rt Hon Tony

  Thomason, Roy

  Nicholls, Patrick

  Thompson, Patrick (Norwich N)

  Nicholson, David (Taunton)

  Thornton, Sir Malcolm

  Nicholson, Emma (Devon West)

  Thurnham, Peter

  Norris, Steve

  Townend, John (Bridlington)

  Onslow, Rt Hon Cranley

  Townsend, Cyril D. (Bexl'yh'th)

  Oppenheim, Phillip

  Tracey, Richard

  Ottaway, Richard

  Tredinnick, David

  Page, Richard

  Trend, Michael

  Paice, James

  Trotter, Neville

  Patnick, Irvine

  Twinn, Dr Ian

  Patten, Rt Hon John

  Vaughan, Sir Gerard

  Pattie, Rt Hon Sir Geoffrey

  Viggers, Peter

  Peacock, Mrs Elizabeth

  Waldegrave. Rt Hon William

  Pickles, Eric

  Walden, George

  Porter, Barry (Wirral S)

  Walker, Bill (N Tayside)

  Porter, David (Waveney)

  Waller, Gary

  Portillo, Rt Hon Michael

  Ward, John

  Powell, William (Corby)

  Wardle, Charles (Bexhill)

  Rathbone, Tim

  Waterson, Nigel

  Redwood, John

  Watts, John

  Renton, Rt Hon Tim

  Wells, Bowen

  Richards, Rod

  Wheeler, Sir John

  Riddick, Graham

  Whitney, Ray

  Rifkind, Rt Hon. Malcolm

  Whittingdale, John

  Robathan, Andrew

  Widdecombe, Ann

  Roberts, Rt Hon Sir Wyn

  Wiggin, Jerry

  Robertson, Raymond (Ab'd'n S)

  Wilkinson, John

  Robinson, Mark (Somerton)

  Willetts, David

  Roe, Mrs Marion (Broxbourne)

  Winterton, Mrs Ann (Congleton)

  Ross, William (E Londonderry)

  Winterton, Nicholas (Macc'f'ld)

  Rowe, Andrew (Mid Kent)

  Wolfson, Mark

  Ryder, Rt Hon Richard

  Wood, Timothy

  Sainsbury, Rt Hon Tim

  Yeo, Tim

  Shaw, David (Dover)

  Young, Sir George (Acton)

  Shepherd, Colin (Hereford)

  Shepherd, Richard (Aldridge)

  Tellers for the Ayes:

  Sims, Roger

  Mr. Robert G. Hughes and

  Skeet, Sir Trevor

  Mr. Timothy Boswell.

  Smith, Sir Dudley (Warwick)

  NOES

  Abbott, Ms Diane

  Benn, Rt Hon Tony

  Adams, Mrs Irene

  Benton, Joe

  Ainger, Nick

  Bermingham, Gerald

  Allen, Graham

  Berry, Dr. Roger

  Anderson, Donald (Swansea E)

  Betts, Clive

  Armstrong, Hilary

  Blair, Tony

  Ashton, Joe

  Boateng, Paul

  Austin-Walker, John

  Boyce, Jimmy

  Banks, Tony (Newham NW)

  Boyes, Roland

  Barnes, Harry

  Bradley, Keith

  Battle, John

  Bray, Dr Jeremy

  Bayley, Hugh

  Brown, Gordon (Dunfermline E)

  Beckett, Margaret

  Brown, N. (N'c'tle upon Tyne E)

  Beith, Rt Hon A. J.

  Bruce, Malcolm (Gordon)

  Bell, Stuart

  Burden, Richard

  437

  Byers, Stephen

  Gerrard, Neil

  Caborn, Richard

  Gilbert, Rt Hon Dr John

  Callaghan, Jim

  Godman, Dr Norman A.

  Campbell, Mrs Anne (C'bridge)

  Godsiff, Roger

  Campbell, Menzies (Fife NE)

  Golding, Mrs Llin

  Campbell, Ronald (Blyth V)

  Gordon, Mildred

  Campbell-Savours, D. N.

  Graham, Thomas

  Cann, Jamie

  Grant, Bernie (Tottenham)

  Chisholm, Malcolm

  Griffiths, Nigel (Edinburgh S)

  Clapham, Michael

  Griffiths, Win (Bridgend)

  Clark, Dr David (South Shields)

  Grocott, Bruce

  Clarke, Eric (Midlothian)

  Gunnell, John

  Clarke, Tom (Monklands W)

  Hain, Peter

  Clelland, David

  Hall, Mike

  Clwyd, Mrs Ann

  Hanson, David

  Coffey, Ann

  Hardy, Peter

  Cohen, Harry

  Harman, Ms Harriet

  Connarty, Michael

  Harvey, Nick

  Cook, Frank (Stockton N)

  Henderson, Doug

  Cook, Robin (Livingston)

  Heppell, John

  Corbett, Robin

  Hill, Keith (Streatham)

  Corbyn, Jeremy

  Hinchliffe, David

  Cousins, Jim

  Hoey, Kate

  Cryer, Bob

  Hogg, Norman (Cumbernauld)

  Cummings, John

  Home Robertson, John

  Cunningham, Dr John (C'p'I'nd)

  Hood, Jimmy

  Dafis, Cynog

  Hoon, Geoffrey

  Dalyell, Tarn

  Howarth, George (Knowsley N)

  Darling, Alistair

  Howells, Dr. Kim (Pontypridd)

  Davidson, Ian

  Hoyle, Doug

  Davies, Bryan (Oldham C'tral)

  Hughes, Kevin (Doncaster N)

  Davies, Ron (Caerphilly)

  Hughes, Robert (Aberdeen N)

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

  Hughes, Roy (Newport E)

  Denham, John

  Hughes, Simon (Southwark)

  Dewar, Donald

  Hutton, John

  Dixon, Don

  Ingram, Adam

  Dobson, Frank

  Jackson, Glenda (H'stead)

  Donohoe, Brian H.

  Jackson, Helen (Shef'Id, H)

  Dowd, Jim

  Jamieson, David

  Dunnachie, Jimmy

  Janner, Greville

  Dunwoody, Mrs Gwyneth

  Jones, Barry (Alyn and D' side)

  Eagle, Ms Angela

  Jones, leuan Wyn (Ynys Môn)

  Eastham, Ken

  Jones, Lynne (B'ham S O)

  Enright, Derek

  Jones, Martyn (Clwyd, SW)

  Etherington, Bill

  Jones, Nigel (Cheltenham)

  Evans, John (St Helens N)

  Jowell, Tessa

  Fatchett, Derek

  Kaufman, Rt Hon Gerald

  Faulds, Andrew

  Keen, Alan

  Field, Frank (Birkenhead)

  Kennedy, Charles (Ross, C & S)

  Fisher, Mark

  Kennedy, Jane (L'p'I Br'g'n)

  Flynn, Paul

  Khabra, Piara S.

  Foster, Derek (B'p Auckland)

  Kilfoyle, Peter

  Foulkes, George

  Kinnock, Rt Hon Neil (Islwyn)

  Fraser, John

  Leighton, Ron

  Fyfe, Maria

  Lestor, Joan (Eccles)

  Gapes, Mike

  Lewis, Terry

  Garrett, John

  Litherland, Robert

  George, Bruce

  Lloyd, Tony (Stretford)

  438

  Llwyd, Elfyn

  Robertson, George (Hamilton)

  Loyden, Eddie

  Robinson, Geoffrey (Co'try NW)

  Lynne, Ms Liz

  Roche, Ms Barbara

  McAllion, John

  Rogers, Allan

  MacDonald, Calum

  Rooker, Jeff

  McFall, John

  Rooney, Terry

  McKelvey, William

  Ross, Ernie (Dundee W)

  McLeish, Henry

  Rowlands, Ted

  McMaster, Gordon

  Ruddock, Joan

  McNamara, Kevin

  Salmond, Alex

  McWilliam, John

  Sedgemore, Brian

  Madden, Max

  Sheerman, Barry

  Mahon, Alice

  Sheldon, Rt Hon Robert

  Mandelson, Peter

  Shore, Rt Hon Peter

  Marek, Dr John

  Short, Clare

  Marshall, David (Shettleston)

  Simpson, Alan

  Marshall, Jim (Leicester, S)

  Skinner, Dennis

  Martlew, Eric

  Smith, Andrew (Oxford E)

  Maxton, John

  Smith, C. (Isl'ton S & F'sbury)

  Meacher, Michael

  Smith, Rt Hon John (M'kl'ds E)

  Meale, Alan

  Smith, Llew (Blaenau Gwent)

  Michael, Alun

  Soley, Clive

  Michie, Bill (Sheffield Heeley)

  Spearing, Nigel

  Milburn, Alan

  Spellar, John

  Miller, Andrew

  Squire, Rachel (Dunfermline W)

  Mitchell, Austin (Gf Grimsby)

  Steel, Rt Hon Sir David

  Morgan, Rhodri

  Steinberg, Gerry

  Morley, Elliot

  Stevenson, George

  Morris, Rt Hon A. (Wy'nshawe)

  Strang, Gavin

  Morris, Estelle (B'ham Yardley)

  Straw, Jack

  Morris, Rt Hon J. (Aberavon)

  Taylor, Mrs Ann (Dewsbury)

  Mowlam, Marjorie

  Taylor, Matthew (Truro)

  Mudie, George

  Thompson, Jack (Wansbeck)

  Mullin, Chris

  Tipping, Paddy

  Oakes, Rt Hon Gordon

  Turner, Dennis

  O'Brien, Michael (N W'kshire)

  Tyler, Paul

  O'Brien, William (Normanton)

  Vaz, Keith

  Olner, William

  Walker, Rt Hon Sir Harold

  Orme, Rt Hon Stanley

  Wardell, Gareth (Gower)

  Pendry, Tom

  Wareing, Robert N

  Pickthall, Colin

  Welsh, Andrew

  Pike, Peter L.

  Wicks, Malcolm

  Pope, Greg

  Williams, Rt Hon Alan (Sw'n W)

  Powell, Ray (Ogmore)

  Williams, Alan W (Carmarthen)

  Prentice, Ms Bridget (Lew'm E)

  Wilson, Brian

  Prentice, Gordon (Pendle)

  Winnick, David

  Prescott, John

  Wise, Audrey

  Primarolo, Dawn

  Worthington, Tony

  Purchase, Ken

  Wray, Jimmy

  Quin, Ms Joyce

  Young, David (Bolton SE)

  Radice, Giles

  Randall, Stuart

  Tellers for the Noes:

  Raynsford, Nick

  Mr. Eric Martlew and

  Reid, Dr John

  Mr. Thomas McAvoy.

  Question accordingly agreed to.
  Bill read the Third time, and passed.

  House of Commons Members Fund
  11.15 pm
  Mr. Alfred Morris: I beg to move,
  That, in pursuance of the provisions of section 3 of the House of Commons Members' Fund Act 1948 and of section 2 of the House of Commons Members' Fund and Parliamentary Pensions Act 1981, the maximum annual amounts of the periodical payments which may be made out of the House of Commons Members' Fund under the House of Commons Members' Fund Act 1939, as amended, and the annual rate of any payments made under section I of the said Act of 1981 shall be varied as from 1st April 1992, as follows:

  (a) for paragraph 1 of Schedule 1 to the said Act of 1939, as amended there shall he substituted the following paragraph:

  '1. The annual amount of any periodical payment made to any person by virtue of his past membership of the House of Commons shall not exceed £3,370 or such sum as, in the opinion of the trustees, will bring his income up to £6,197 per annum; whichever is the less:

  Provided that if, having regard to length of service and need, the trustees think fit, they may make a larger payment not exceeding £6,487 or such sum as, in their opinion, will bring his income up to £9,314 per annum, whichever is the less':

  (b) for paragraph 2 of that Schedule there shall be substituted the following paragraph:

  '2. The annual amount of any periodical payment to any person by virtue of her being a widow of a past Member of the House of Commons shall not exceed £2,106 or such sum as, in the opinion of the trustees, will bring her income up to £4,933 per annum, whichever is the less:

  Provided that if, having regard to her husband's length of service or to her need, the trustees think fit, they may make a larger payment not exceeding £4,055 or such sum as, in the opinion of the trustees, will bring her income up to £6,882 per annum, whichever is the less':

  (c) in paragraph 2A of that Schedule for the words 'the annual amount of any periodical payment' to the end of the paragraph, there shall be substituted the words:

  'the annual amount of any periodical payment made to any such widower shall not exceed £2,106 or such sum as, in the opinion of the trustees, will bring his income up to £4,933 per annum, whichever is the less:

  Provided that if, having regard to his wife's length of service or to his need, the trustees think fit, they may make a larger payment not exceeding £4,055 or such sum as, in the opinion of the trustees, will bring his income up to £6,882 per annum, whichever is the less':

  (d) in section 2(1) of the said Act of 1981, for the words from the beginning to the end of paragraph (b) there shall be substituted the words:

  'the annual rate of any payments made under section I shall be—

  (a) £1,962 if the payments are made to a past Member: and

  (b) £1,227 if the payments are made to the widow or widower of a past Member'.

  Mr. Morris: These motions stand on the Order Paper in my name and in the names of right hon. and hon. Members on both sides of the Chamber who share with me the responsibility, as managing trustees, of administering the House of Commons Members Fund. There are three motions to consider.
  The purpose of the first motion is to enable the managing trustees to make higher awards to the widows
  440
  and widowers of former Members now receiving help from the Members' Fund. Widows and widowers of former Members with entitlements under the parliamentary contributory pension fund receive a five eighths pension, and the managing trustees now propose the same provision for those helped by the Members' Fund. The effects of our proposal are set out in detail on today's Order Paper and can be briefly summarised.
  Paragraphs (a) and (b) of the first motion deal with the provision of grants to widows and widowers of ex-Members under the House of Commons Members' Fund Act 1939. We propose to increase the basic annual grant for the period 1 April 1991 to 31 March 1992 to £2,023, subject to an income limit, including the grant, of £4,738. similarly, in the case of widows and widowers of ex-Members who had longer service and are assessed as being in need, the grant may be increased to a maximum of £3,894, subject to an income limit of £6,609 per annum.
  Para (c) refers to the "as of right" payments to widows and widowers provided for by the House of Commons Members' Fund and Parliamentary Pensions Act 1981. In these cases, benefit derives from 10 years' service by a former Member before October 1964. For the period 1 April 1991 to 31 March 1992, it is proposed to increase to £1,178 the "as of right" payment to the widow or widower of a former Member with that length of pre-1964 service in the House.
  The second motion provides for an increase in the present levels of all grants and payments which may be made under the Members' Fund legislation, taking into account the increase to five eighths in payments to widows and widowers. These were last revised by approval of the motions I brought to the House in April 1991, and we propose now to increase them with effect from April 1992 by approximately 4·1 per cent., in line with increases already approved for public service and state retirement pensions which took effect from the same date.
  Among those who will benefit from the second motion are mostly very elderly former Members who left the House no later than September 1964, or their surviving spouses, who, unlike present Members, do not qualify for a pension in respect of parliamentary service as of right.
  Many of this fast-dwindling number are now into their eighties and nineties, and their problems are compounded by advancing years. The modest extra financial help which the motion seeks to provide will, I know, be gratefully received by the beneficiaries, as evidenced by letters of fulsome appreciation received by the managing trustees and secretariat of the fund during the past year. I am very glad to be joined by the hon. Member for Horsham (Sir P. Hordern) who is a long-serving trustee of the House of Commons Members' Fund and who has given distinguished service to former Members and their dependants on boths sides of the House.
  I make no apology for asking right hon. and hon. Members once again to help us in tracing any former Members, or dependants of deceased former Members, who may be in need of help from the fund. I appeal to Members, when they return to their constituencies, to find out, if they can, the whereabouts of its former Members. Constituency party or association elders have long memories and the cause is well worth a word with them. Over the last two years, the managing trustees and secretariat of the fund have continued their own searches and have been able to assist former Members and

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  dependants in need of our assistance, but additional help from Members in identifying possible beneficiaries is always most welcome.
  Again, the provisions for which we seek approval in the second motion can be briefly summarised. Paragraph (a) deals with the provisions for grants to ex-Members. Here it is proposed to increase the basic annual grant to £3,370, subject to an income limit, including the grant, of £6,197. In the case of ex-Members with longer service, and in need, the grant may be increased to a maximum of £6,487, subject to an income limit of £9,314.
  Paragraphs (b) and (c) deal with the provision of grants to widows and widowers of ex-Members. It is proposed to increase the basic annual grant to £2,106 subject to an income limit, including the grant, of £4,933. Similarly, in the case of widows and widowers of ex-Members who had longer service and are in need, the grant may be increased to a maximum of £4,055, subject to an income limit of £6,882 per annum.
  Mr. Bowen Wells: Will the right hon. Gentleman explain to the House how he reaches those curious figures? They are very precise, and result in strange numbers, especially the ends of the numbers. Why do we not work to the nearest hundred pounds, say, instead of having peculiar sums such as £97 here, £66 there and £55 there? That seems foolish to me. It may be all right to calculate a day, but it does not seem like sensible administration.
  Mr. Morris: Rounding up rather than rounding down, which is what I hope the hon. Gentleman is suggesting, is possible and, I believe, desirable. As managing trustees of the House of Commons Members' Fund, however, we have to work on the public sector increase arising from inflation. We are acting on the figure of 4·1 per cent. and, as others do, we have to keep to the precise effects of that movement in benefits for widows and dependants in the public sector.
  I suppose that the hon. Gentleman's point is one of general importance rather than one of particular relevance to our problem. We have to follow decisions made by other people. In this case, the governing figure is 4·1 per cent.
  Paragraph (d) refers to the as-of-right payments from the Members' fund to ex-Members who had 10 years service before October 1964, and to widows and widowers of such Members, provided for by the House of Commons Members' Fund and Parliamentary Pensions Act 1981. We propose to increase the annual payments to £1,962 for ex-Members and £1,227 for widows and widowers.
  Mr. John Hutton: Will my right hon. Friend tell the House the present annual rate of payments from the fund, before the proposed increases take effect?
  Mr. Morris: The present annual rate of payments from the fund is rather more than £265,000 in advance of the application of the increases which I propose under the motions.
  The third motion relates to section 4 of the House of Commons Members' Fund Act 1948, as amended by section 7 of the Ministerial and Other Pensions and Salaries Act 1991, which now authorises the trustees of the Members' Fund to make
  "such periodical or other payments as they think fit"
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  to ex-Members, or their widows or widowers, or to children of ex-Members,
  "having regard to the circumstances of the person or persons in respect of whom the payments are to be made."
  Section 4 of the 1948 Act, together with section 1 of the 1957 House of Commons Members' Fund Act, as amended, provides that, in any year, for the purpose of making such payments, the House of Commons may by resolution direct that the whole or any part of the amount contributed by Members from their salaries be appropriated, together with the whole or any part of the Treasury's contribution which is now increased to £215,000 a year.
  In my speech to the House in March last year, I recalled the then Lord President's agreement to set aside an extra £100,000 to meet the costs of additional discretionary awards under section 4. I am pleased to see his successor in his place tonight, and to say that what was promised is now reflected in the additional Treasury contribution.
  Mr. Ray Powell: We are concerned about the grant from the Government. Could not they increase the fund for the widows of ex-Members by far more than my right hon. Friend is suggesting? I am not criticising him or his attitude to the fund, which benefits Members on all sides, but the Government should give more, especially as they now contribute less than they did some years ago. How does the investment performance of the fund compare with funds outside the House? I am concerned about a fund that was managed by somebody who controlled the Mirror Group. We all know what happened to that, and when an investigation is carried out, perhaps a further investigation should be carried out by a Select Committee into the pension fund for Members.
  Mr. Morris: My hon. Friend made two important points. The grant in aid from the Treasury is now £215,000 —an increase on what we received previously. I have proposed, by the motions, an increase in widows' pensions from 50 per cent.—from half—to five eighths. That would not have been possible but for the increase in the grant in aid from the Treasury to £215,000.
  Hon. Members on both sides contribute to the Members' Fund. It is not widely enough appreciated outside the House that the fund is largely sustained by contributions made by right hon. and hon. Members. They help in giving money via the Fees Office. They help former Members of advancing years and the widows and dependants of deceased former Members. The Treasury contribution is, however, an important one and it would not have been possible to increase to five eighths the payments to widows of pre-1964 Members but for that increase.
  My hon. Friend the Member for Ogmore (Mr. Powell) referred to income from investments. Our gross income from investments in the last year has been more than £94,000. I cannot say off the cuff how that compares with the investment income of other funds. There are not many funds like the House of Commons Members' Fund. It is a highly unusual and, I suggest, an important fund.
  Sir Peter Hordern: By statute, the public trustee ensures that the House of Commons pension fund investments are properly held in safe custody. In addition, the trustees of the parliamentary pension fund have taken the opinion of independent experts on the investment performance of our fund. I believe that its performance has been somewhat above average in recent times.
  Mr. Morris: My fellow trustee is eminently right to say that we do monitor the results of our investments. We try to compare our performance. All the information we have indicates that we do very well in comparative terms.
  I hope that my hon. Friend the Member for Ogmore will be assured on the two points he has raised—first of all, about the grant in aid from the Treasury and secondly, the gross income from investments—that we are appreciative, as managing trustees, of the interest of hon. Members who follow in great detail our work, as my hon. Friend always does. I am grateful to him.
  The extra sum from the Treasury has enabled the trustees to finance some 140 new discretionary awards to widows and widowers of former Members. In addition, there are at present a further nine beneficiaries who receive payments under section 4 and the moneys to be appropriated are needed both to continue these payments and to fund further cases as they arise.
  Finally, and as before, I pay very warm tribute to those who help us with the detailed work of administering the fund from the Fees Office. In particular, I want to thank Jim Dobson, the former accountant, who retired last year after long and devoted service to Members, past and present, and their dependants. Tony Lewis, who has succeeded Jim Dobson, is from the same mould and I extend also to him our very warm appreciation. He and Michael Fletcher and all their colleagues in the Fees Office go far beyond the calls of duty in the service that they give and merit not only the gratitude of the managing trustees but that of this House as a whole.
  I commend the motions to the House.
  Mr. Deputy Speaker (Mr. Geoffrey Lofthouse): With the leave of the House, I shall put the three motions together.
  Question put and agreed to.
  Resolved.
  That, in pursuance of the provisions of section 3 of the House of Commons Members' Fund Act 1948 and of section 2 of the House of Commons Members' Fund and Parliamentary Pensions Act 1981, the maximum annual amounts of the periodical payments which may be made out of the House of Commons Members' Fund under the House of Commons Members' Fund Act 1939, as amended, and the annual rate of any payments made under section 1 of the said Act of 1981 shall be varied as from 1st April 1992, as follows:

  (a) for paragraph 1 of Schedule I to the said Act of 1939, as amended, there shall he substituted the following paragraph:

  '1. The annual amount of any periodical payment made to any person by virtue of his past membership of the House of Commons shall not exceed £3,370 or such sum as, in the opinion of the trustees, will bring his income up to £6,197 per annum; whichever is the less:

  Provided that if, having regard to length of service and need, the trustees think fit, they may make a larger payment not exceeding £6,487 or such sum as, in their opinion, will bring his income up to £9,314 per annum, whichever is the less':

  (b) for paragraph 2 of that Schedule there shall be substituted the following paragraph:

  '2. The annual amount of any periodical payment to any person by virtue of her being a widow of a past Member of the House of Commons shall not exceed £2,106 or such sum as, in the opinion of the trustees, will bring her income up to £4,933 per annum, whichever is the less:

  Provided that if, having regard to her husband's length of service or to her need, the trustees think fit, they may make a larger

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  payment not exceeding £4,055 or such sum as, in the opinion of the trustees, will bring her income up to £6,882 per annum, whichever is the less':

  (c) in paragraph 2A of that Schedule for the words 'the annual amount of any periodical payment' to the end of the paragraph, there shall be substituted the words:

  'the annual amount of any periodical payment made to any such widower shall not exceed £2,106 or such sum as, in the opinion of the trustees, will bring his income up to £4,933 per annum, whichever is the less:

  Provided that if, having regard to his wife's length of service or to his need, the trustees think fit, they may make a larger payment not exceeding £4,055 or such sum as, in the opinion of the trustees, will bring his income up to £6,882 per annum, whichever is the less':

  (d) in section 2(1) of the said Act of 1981, for the words from the beginning to the end of paragraph (b) there shall be substituted the words:

  'the annual rate of any payments made under section 1 shall be—

  (a) £1,962 if the payments are made to a past Member; and

  (b) £1,227 if the payments are made to the widow or widower of a past Member'.

  Resolved,
  That the whole or any part of the sums deducted or set aside in the current year from the salaries of Members of Parliament under section 1 of the House of Commons Members' Fund Act 1939, and the whole or any part of the contribution determined by the Treasury for the current year under section 1 of the House of Commons Members' Fund Act 1957, as amended by the House of Commons Members' Fund and Parliamentary Pensions Act 1981, be appropriated for the purposes of section 4 of the House of Commons Members' Fund Act 1948, as amended by section 12 of the Parliamentary Pensions etc. Act 1984, and section 7 of the Ministerial and other Pensions and Salaries Act 1991.—[Mr. Alfred Morriss]
  Resolved,
  That, in pursuance of the provisions of section 3 of the House of Commons Members' Fund Act 1948 and of section 2 of the House of Commons Members' Fund and Parliamentary Pensions Act 1981, the maximum annual amounts of the periodical payments which may be made out of the House of Commons Members' Fund under the House of Commons Members' Fund Act 1939, as amended, and the annual rate of any payments made under section 1 of the said Act of 1981 shall he varied from 1st April 1991 to 31st March 1992 as follows:
  (a) for paragraph 2 of Schedule I to the said Act of 1939, as amended, there shall be substituted the following paragraph:
  '2. The annual amount of any periodical payment to any person by virtue of her being a widow of a past Member of the House of Commons shall not exceed £2,023 or such sum as, in the opinion of the trustees, will bring her income up to £4,738 per annum, whichever is the less:
  Provided that if, having regard to her husband's length of service or to her need, the trustees think fit, they may make a larger payment not exceeding £3,894 or such sum as, in the opinion of the trustees, will bring her income up to £6,609 per annum, whichever is the less';
  (b) in paragraph 2A of that Schedule for the words 'the annual amount of any periodical payment' to the end of the paragraph, there shall be substituted the words:
  'the annual amount of any periodical payment made to any such widower shall not exceed £2,023 or such sum as, in the opinion of the trustees, will bring his income up to £4,738 per annum, whichever is the less:
  Provided that if, having regard to his wife's length of service or to his need, the trustees

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  think fit, they may make a larger payment not exceeding £3,894 or such sum as, in the opinion of the trustees, will bring his income up to £6,609 per annum, whichever is the less';
  (c) in section 2(1)(b) of the said Act of 1981, there shall be substituted the words:
  (b) £1,178 if the payments are made to the widow or widower of a past Member'.—[Mr. Alfred Morris.]

  PETITION
  11.32 pm

  Dogs (Nailsea)
  Dr. Liam Fox: I beg to ask leave to present a petition to the House. The town of Nailsea in the west country has asked me to present this petition of more than 1,000 citizens. It is a very pretty town, but a minority of irresponsible dog owners are providing an environmental hazard to health and an eyesore. Action is needed to educate dog owners and provide adequate facilities for the disposal of dog excrement. The petition states:
  Wherefore your petitioners pray that your honourable House will ensure that district councils, in this case, Woodspring district council, will fulfil its duty as laid out by statute, improving dog fouling facilities in Nailsea and that the House will give due consideration to further legislation to reduce the aforementioned hazards.
  To lie upon the Table.

  Asbestos Pollution (Armley)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Kirkhope.]
  11.33 pm
  Mr. John Battle: As the Minister will be aware, I raised the issue of lethal asbestos pollution in Armley in my constituency in the House on 25 November 1988. At that time, I urged the Government to set up a public inquiry into increasingly concentrated cases of people suffering and dying from the deadly asbestos-related cancer, mesothelioma. These were people who had no known previous history of contact with asbestos, other than to have lived in the immediate neighbourhood of J. W. Roberts' asbestos factory in Canal road.
  I was advised by the then Minister of Employment that people who were suffering, or who had relatives who had died, had to use the usual legal procedure of claiming against the company. Since then, lawyers acting on behalf of mesothelioma victims have been trying to get Turner and Newall plc of Trafford Park, Manchester—the owners of J. W. Roberts, which closed in 1958—into court to challenge the company with asbestos pollution in the neighbourhood, causing injury and death. Basically, it is an attempt legally to prove negligence in the face of foreseeable likelihood that harm would occur as a result of causing or permitting asbestos dust to permeate the atmosphere in or around the factory premises in Canal road, Armley, between 1925 and 1958.
  In his reply, the then Minister—the hon. Member for Teignbridge (Mr. Nicholls)—said that the main requirement of the 1931 regulations
  "was that … dust should be controlled by the use of exhaust ventilation equipment".
  That means blowing dust out into the neighbouring streets on the assumption that it could be dispersed at what were then described as safe levels. Many local people witnessed that the company allowed dust to escape from the factory into the streets in the vicinity.
  The legal test is whether the company knew that the dust could cause serious or possibly fatal injury to those living in the 840 houses nearby who work in the local workplaces or who attend the Armley clock school.
  There are now well over 30 recorded neighbourhood mesothelioma cases on which lawyers are working, but it takes time to develop a test case. Already, some of my constituents with mesothelioma—one at least was claiming for a deceased wife—have died. They were waiting for the completion of the legal procedures recommended by the employment Minister to whom I have referred. In some cases legal aid has had to be transferred to other relatives. We have seen examples of the legal delays that are likely to occur. I am haunted daily by the fact that most victims and their relatives will die before their cases get to court.
  On 25 November 1988 the then employment Minister said:
  "We do not know exactly what was being done at the factory. Nor do we have any data about actual asbestos exposure for either employees or members of the public nearby. At the time no one would have thought it worth collecting … records from so long ago are not kept."
  The Minister was wrong. I have reason to believe that the company and other sources, medical and environmental,
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  did have that sort of data, and still do. The difficulty lies in seeking it out—discovering it—and, especially, forcing the company to disclose all that it knew and knows.
  There have already been national television, radio and press investigations into the Armley asbestos tragedy. So far as I know, however, Turner and Newall plc has undertaken no inquiries into what has happened or is still happening. A responsible company would surely be coming forward to assist and, in view of the worst fears of the community, even to offer to carry out testing in the area.
  In reality, there is emerging an intractable legal Catch 22 problem as a result of the document discovery provisions under the terms of section 34 of the Supreme Court Act 1981, rule 7a. Documents tend to be shifted around from one subsidiary to another within the parent group. Lawyers are expected to specify exactly what records they want without knowing what the company holds. Even if they manage to specify particular records, such as reports on the escape of dust from the factory and tested measurements of asbestos levels within the factory or in the surrounding area—even details of the factory's structure and its ventilation system—those documents are either outwith the rules of discovery or the reply comes back that the records no longer exist.
  It is surprising that American lawyers who are challenging the same company—Turner and Newall—can insist on visiting its document depository at St. Mary's Parsonage, Manchester. They emerge with photocopies of documents, which are seen in the public domain in the United States. Yet to obtain the same documents and to use them in the United Kingdom is ruled out of order.
  Airborne dust measurements that are reported to have been carried out at the factory could provide crucial evidence in this devastating story. I said on 25 November:
  "It appears from the evidence of such an intense mesothelioma cluster that the factory had, and is still having, a lethal impact on the people in its neighbourhood."—[Official Report, 25 November 1988; Vol 142, c. 408–13.]
  In the same month, Leeds city council began a survey of a small proportion of the 836 houses in the neighbourhood. It tested 36 homes for asbestos pollution over a period of six months. On the basis of the results, a warning letter was sent to all residents between March 1989 and April 1992 alerting them to the possibility of asbestos pollution in their homes.
  In November last the council decided to undertake a more thorough survey of 300 dwellings in the area. The detailed results of that survey are currently being processed and the full report on the findings is due to be published soon. Preliminary reports already suggest that asbestos dust is present in many of the houses, in roofing, cellars and window sashes. Already it seems reasonable to assume that all 836 houses need to be specially cleaned of asbestos pollution.
  There is a means of cleaning the houses of asbestos which is properly licensed under the Asbestos (Licensing) Regulations 1983. But—here is the nub—it will cost £7,500 per property. That would make a total of £6 million. The properties are back-to-back, terraced homes, of which 556 are owner-occupied, 169 are council-owned, 22 belong to housing associations and 95 are privately rented.
  The local authority has to accept the cost of cleaning out its properties, but under the current arrangements it can offer only means-tested improvement grant aid to the private owners. Only 20 per cent. of the residents will

  449
  qualify for the full means-tested grant. The majority will have to make some contribution and some will receive no grant.
  Most of the families living in the Armley Lodge area simply cannot afford to pay for the decontamination work. Already their homes have lost their value. Their homes are unsellable and blighted. They live in personal fear of deadly asbestos pollution. The victims of the pollution should not even be asked to pay.
  When the city council publishes the results of its survey of the extent of the pollution, it should also be in a position to publish a full programme of work to tackle the problem, to ensure that homes are safe and free of asbestos dust in the future, reassure local residents and lift the blight which currently afflicts the whole area. That requires that full and detailed financial backing for such a programme be committed.
  The glimmer of good news is that there is a system which could get rid of the asbestos. To reassure residents, tests by electron microscope could be carried out after the clean-up work. But I hope that we all agree that none of the residents should have to bear the costs of decontamination. They are the innocent victims. They have already suffered, they are still suffering, and they have worried enough.
  Home owners should not be expected to take on Turner and Newall plc. Nor should the Armley Asbestos Campaign, which represents all the local residents, regardless of tenure, be expected to appeal to law. They do not have any resources to do that. If we are to adhere to the make-the-polluter-pay principle, the money should not be squeezed out of the falling public housing budget of the city of Leeds. Nor should the poll tax payers of Leeds be expected to pay a levy for clearing up pollution caused by a private company.
  Leeds city council is currently investigating the legal liability of Turner and Newall, pursuing the polluter-should-pay principle. Turner and Newall will be made aware of the results of the survey and the likely cost, and asked to contribute. But in the event of protracted legal action, people in the Armley Lodge area cannot he expected to hold on and wait for years of legal wrangling and court procedures, living in personal fear for themselves and their families, and trapped in houses which they cannot sell or leave.
  Mr. Derek Enright: Will my hon. Friend accept the thanks of some 60 people in South Kirkby who worked at that factory, originally during the war as part of the war effort, and who have suffered from this terrible disease since? Will he acknowledge that for them to sue the company in the economic circumstances in which they find themselves is impossible? They are very grateful for the assistance given to them in their campaign by my hon. Friend the Member for Leeds, West (Mr. Battle).
  Mr. Battle: I am grateful to my hon. Friend. The campaign will continue until a satisfactory solution has been found for everyone who has been blighted by the tragedy.
  In the circumstances, I must suggest to the Minister the precedents that could assist positively. First, if land is contaminated, a 100 per cent. derelict land grant is available, across the board, from the Department of the
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  Environment. Is it not possible to classify contaminated homes in the same way and to give them the same treatment?
  Secondly, I urge the Minister to consider using the Bellwin scheme emergency funds, set up in 1983, to replace ad hoc arrangements for giving assistance to local authorities faced with serious disasters. Under that scheme, grants are paid to local authorities to help with additional expenditure caused by an emergency or disaster involving destruction of, or danger to, life or property. The grant covers immediate emergency works needed to safeguard life or property, or to prevent suffering or serious inconvenience.
  What circumstances could people face which are more of an emergency than asbestos pollution? It is a danger to life, now and in the future. Their property has been totally blighted, and inconvenience and suffering has been endured by a community.
  The Bellwin scheme can be activated, at the Minister's discretion, in respect of storm and flood damage, as set out in the letter from the Department of the Environment to local authorities on 6 February 1990. The scheme was called on to deal with flooding in the Severn valley and in Maidenhead in 1990. If the River Aire in Leeds had flooded more than 800 houses in Armley, they would have been covered by that scheme. Yet we face a far more deadly threat than two feet of water and a filthy layer of mud. Residents of Armley have faced the dangers of asbestos pollution for a generation and are still facing them.
  When the risk of asbestos is so well known, and it is possible to decontaminate and to check homes to make them safe, it would be major negligence if remedial action were not supported immediately.
  11.47 pm
  The Minister for Housing and Planning (Sir George Young): I am grateful to the hon. Member for Leeds, West (Mr. Battle) for raising the important issue of asbestos pollution in Armley and securing the debate. I note that his concern about environmental and health matters is shared by his hon. Friends the Members for Hemsworth (Mr. Enright), for Wakefield (Mr. Hinchliffe) and for Leeds, Central (Mr. Fatchett), as well as by my hon. Friend the Member for Leeds, North-East (Mr. Kirkhope).
  The hon. Member for Leeds, West spoke movingly about the human issues flowing from that tragedy, and I am full of sympathy for the matters that he has raised. I am familiar with the issues because I read the Adjournment debate that he initiated in November 1988 and he has pursued the matter assiduously ever since. I am aware that the dispute has been long and extremely complicated, and I hope to identify some possible options to deal with the problem. My interest, as a housing Minister, is in physical solutions to help to make the homes safe. The hon. Gentleman raised many other legal issues, on which I fear that I can shed no light.
  I want to be realistic about what we can do. Central Government have no powers to intervene directly, or to set up a short-term rescue fund, however attractive that might seem. From the evidence available, the problem appears to be local and it is therefore proper for the local authority to tackle it, using its powers. I fully recognise the lead taken

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  by Leeds city council in arranging surveys of properties in the area, and in advising householders on how they can best reduce possible risks to their health.
  It is important to emphasise that the conditions that applied at the time of the operation of the Roberts factory do not exist now. The Government have prohibited the two most hazardous types of asbestos—blue and brown —and the most hazardous uses. There are now strict controls over all work activities involving asbestos, including demolition, removal and disposal of materials containing asbestos.
  Emissions from scheduled asbestos works are currently subject to air pollution control by Her Majesty's inspectorate of pollution—HMIP—and workplace controls are enforced by Health and Safety Executive inspectors. Controls have been extended by part I of the Environmental Protection Act 1990. The Act requires operators of "prescribed processes"—including asbestos works—to obtain written authorisation containing conditions under which processes must operate, including controls on emissions to the air. Those authorisations must be placed on a public register.
  Under the new system of integrated pollution control, HMIP is concerned with not only air pollution but releases to land and water. The Government have led the field in raising and maintaining health and safety standards and over the years have introduced a comprehensive package of legislation with the overall aim of reducing risks to health from exposure to asbestos to an absolute minimum.
  In situations where asbestos remains a health hazard, local authorities may be able to give house renovation grants towards the cost of remedial works. The grant system thus offers a potential source of help for owner-occupiers, private tenants and landlords for asbestos removal.
  Under the grant system local authorities can give mandatory grants for works to make properties fit for human habitation. That may cover asbestos removal where the presence of asbestos causes a dwelling to fail the fitness standard as a result of serious disrepair, structural instability or poor ventilation. It is for the local authority to decide whether particular works qualify for grant aid, but it is conceivable that where presence of asbestos is a hazard to health it could make a property unfit.
  In addition, local authorities have, powers to give discretionary grants for asbestos removal where works are required to put a dwelling into reasonable repair, or in conjunction with other works. Again, an authority must decide whether a particular remedial scheme satisfies grant requirements.
  As the hon. Gentleman said, all renovation grants are subject to a means test. However, I do not agree with him that grants should not be means tested when dealing with health hazards. The means test ensures that available resources are targeted on those least able to afford to carry out works. Removing the means test for works dealing with health hazards would fundamentally undermine that principle. As the fitness standard is primarily about protecting occupiers against health hazards, it would mean paying non-means-tested grants for all or most works to make properties fit. The result would be that full grants would be given to many people who could well afford to carry out remedial works from their own resources. That
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  would not be a justifiable use of public funds. The present system allows grants of up to 100 per cent. to be paid to those applicants who are in greatest need.
  I recognise that means tests may need some adjustment to give more help to those who can least afford the cost of renovation work. I have been examining the operation of the test as part of the recent review of the house renovation grant system to see what changes may be desirable, but we have no plans to change the principle of means testing grants. I hope to be able to announce the outcome of the review very shortly.
  Local authorities are allocated resources for private sector renovation grant expenditure as part of their annual housing investment programme—HIP—allocation. Leeds received an allowance of £5 million for its grant expenditure in 1992–93, as part of a total HIP settlement of £27·4 million. As the authority knows, that allowance is not a limit and it is free to exceed it if it wishes to claim the 75 per cent. Exchequer subsidy expenditure. It also has power to borrow temporarily to pay for grants and claim subsidy in the following year. The funding arrangements for renovation grants thus give Leeds City council considerable flexibility to meet possible demand for grants for works relating to asbestos removal.
  In the last financial year, Leeds underspent its allowance for renovation grant expenditure by more than £2 million. It is, of course, for the local authority to determine its own priorities for expenditure within the resources available. However, I hope that the authority will give priority to using its grant resources to the full, including possible expenditure on asbestos work, in the current year.
  For 1992–93 we have also set aside £30 million as supplementary credit approvals for mandatory renovation grants. These will be issued to local authorities facing heavy pressure from mandatory renovation grants. Leeds will have an opportunity to bid for a share of those resources when bids are invited later this month, if demand for mandatory grants—including grants for asbestos removal works—causes the authority to exceed its grant allowance. Any application from Leeds would, of course, receive careful consideration.
  The local authority's HIP strategy and proposals for next year and future years offer the best means of providing extra resources to tackle the asbestos problem in Armley through the grant system. The problem could be highlighted in the authority's annual HIP strategy statement with a quantified assessment of the needs and resources required to alleviate it. That would allow works to be carried out according to a cost-effective and realistic programme over an appropriate time scale.
  Placing a bid for additional resources within the context of the authority's HIP strategy has other advantages. It would allow proper account to be taken of it in the assessment of needs and particularly in the exercise of Ministers' discretion over grant resources. Progress in tackling the problem could also be properly monitored and reviewed within a broader housing context.
  In addition to the grant system, it is possible that the statutory nuisance provisions, under section 82 of the Environmental Protection Act 1990, may be of help to some individual householders whose homes are affected by asbestos dust. Under those powers, a householder affected by a statutory nuisance can bring proceedings against the owner to carry out works to abate the nuisance. That would allow a tenant to take action against a landlord to

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  carry out remedial works. Where an individual owner-occupier is unable to obtain a grant to carry out asbestos remedial works to his property, there are other possibilities for raising money to pay for it. The Department plans to issue a revised booklet on sources of finance for home repairs and maintenance in the next few months.
  The hon. Gentleman mentioned the Bellwin scheme —a good one to mention as it has Leeds connections. I have considered it and, sadly, I do not think that it offers any joy. An important component of the Bellwin scheme is that the assistance offered is for immediate action such as might follow a storm. Immediate action is taken to mean within two months of an incident. The money is to be used to refund local authorities that have to take immediate action within about two months of the incident. Under the terms set out in section 155 of the Housing Act 1988, it would be difficult to define as "immediate.' any action to be taken in the case under consideration.
  The hon. Gentleman expressed concern about the disclosure of information by companies to those preparing
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  legal battles about liability for deaths linked to asbestos. There is provision in British law for that, but it is a fairly detailed and complex area of law for which my Department does not have responsibility. However, if the hon. Gentleman would like to put his concerns direct to my right hon. Friend the Lord Chancellor, I am sure that my right hon. Friend would be happy to pursue them.
  I have focused my remarks on that aspect of the problem that my Department has some ability to address. I have tried to outline ways in which owner-occupiers and tenants can obtain access to resources that will enable them to carry out the necessary work for their homes and put the problem behind them. To the extent that Ministers have discretion to try to help Leeds, I can say that we shall give special attention to the case that Leeds makes in its annual HIP bid to see whether we can make fast progress in bringing this sad problem to a conclusion.
  Question put and agreed to.
  Adjourned accordingly at two minutes to Twelve o'clock.