Commons Sitting of 12 November 1992

Preamble
The House met at half-past Two o'clock
PRAYERS
[MADAM SPEAKER in the Chair]
PRAYERS

  ROYAL ASSENT
  Madam Speaker: I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Acts:

  Boundaries Commissions Act 1992

  Maintenance Orders (Reciprocal Enforcement) Act 1992

  London Regional Transport (Penalty Fares) Act 1992

  Price's Patent Candle Company Ltd. Act 1992

  Greater Manchester (Light Rapid Transit System) (No. 4) Act 1992

  PRIVATE BUSINESS
    BRITISH RAILWAYS (No. 4) BILL (By Order)
      BRITISH WATERWAYS BILL [Lords] (By Order)
        CROSSRAIL BILL (By Order)
          EAST COAST MAIN LINE (SAFETY) BILL (By Order)
            GREATER MANCHESTER (LIGHT RAPID TRANSIT SYSTEM) BILL [Lords] (By Order)

              WOODGRANGE PARK CEMETERY BILL [Lords] (By Order)
              Orders for Second Reading read.
              To be read a Second time on Thursday 19 November.

Oral Answers to Questions
  NATIONAL FINANCE

    Subcontractors (Payments)
    Mr. Flynn: To ask the Chancellor of the Exchequer what new proposals he has to assist the prompt repayment of debts to subcontractors from contractors employed by Government Departments.
    The Chief Secretary to the Treasury (Mr. Michael Portillo): All contractors to a Government Department are required to commit themselves by contract to their subcontractors to pay promptly, ordinarily within 30 days.
    Mr. Flynn: Does the Chief Secretary realise that many prime contractors do not consider paying their debts until writs have been issued and that that adds greatly to the climate of fear that is paralysing much of British industry?
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    Will he assure us that the 30-day limit will be rigidly applied? At the moment, there are many exemptions. Will the Chief Secretary consider introducing the right to claim interest on all debts that are not paid within 30 days?
    Mr. Portillo: The hon. Gentleman has pursued that matter assiduously with me in correspondence and parliamentary questions. It is a requirement that there should be a commitment within the contract to pay within 30 days. That has been with us since April and the Government take it very seriously. I should be happy to take up on the hon. Gentleman's behalf any case that has arisen. It is possible, as he said, for a company to pursue the matter through the courts. It is also possible for the Government to take account of poor performance when awarding future contracts. Those are the best remedies, rather than imposing interest payments, but the hon. Gentleman may wish to pursue a particular case with me.
    Mr. James Hill: Is my right hon. Friend aware that that system is not working, particularly in the private sector? If a subcontractor objects to the main contractor about non-payment within 30 days, he will probably never be given another contract. It is impossible to legislate for such an event. This must be part of the moral factor of a contract that the Government should emphasise in both the public sector and the private sector.
    Mr. Portillo: I agree with my hon. Friend that it is easier to see this as part of a culture than as a matter where legislation would be effective, although I do not rule that out entirely for all time. The Government have made efforts to improve the small claims court procedure, which requires large companies to report on their performance in their report and accounts. As I said to the hon. Member for Newport, West (Mr. Flynn), we have taken steps with our own contractors regarding the way in which they deal with subcontractors.
    Mr Beggs: Does the right hon. Gentleman accept that it is desirable that subcontractors are protected? A serious problem, which must be addressed, is that after a main contractor has taken over a contract, the subcontractor having been approved by a Government Department, the main contractor could go into liquidation, with no protection for the subcontractor. Will the right hon. Gentleman undertake to look into that problem and endeavour to protect subcontractors?
    Mr. Portillo: The hon. Gentleman raises an interesting and difficult problem. I am not sure to what extent Government protection can be extended in these cases. It might help me, however, if the hon. Gentleman were to refer to me the case that he has in mind and we could see whether any general lessons could be drawn from it.

    Inflation
    Mr. Evennett: To ask the Chancellor of the Exchequer what is the latest estimate of the rate of producer price inflation.
    Mr. Carrington: To ask the Chancellor of the Exchequer what is his latest assessment of the prospect for inflation.
    The Chancellor of the Exchequer (Mr. Norman Lamont): Producer price inflation for manufacturing, excluding food, drink and tobacco, is estimated to have

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    been 2·5 per cent. in October—the lowest rate of increase since May 1969. I shall outline my latest assessment of the prospects for inflation when I present my autumn statement later today.
    Mr. Evennett: I am grateful to my right hon. Friend for that information. Does he agree that low inflation gives British industry a great opportunity? Furthermore, will he urge British business men to build on the Government's achievement of low inflation by going out into world markets and selling more British goods?
    Mr. Lamont: My hon. Friend is absolutely right. Low inflation is the most important aspect of competitiveness. As long as other countries have low inflation, we cannot afford to have high inflation. That is why it is good news for our exporters to Europe that our level of inflation has been below the European Community average. I hope that our exporters will take the maximum advantage of that.
    Mr. Carrington: The news about inflation is extremely good. Does my right hon. Friend agree, however, that the dangers of an increase in inflation are ever present in the economy, particularly given the decrease in the value of the pound? Will he reassure the House that his determination to continue to fight inflation is undiminished?
    Mr. Lamont: My hon. Friend is right to emphasise that excessive depreciation of the pound would endanger our inflationary objectives. That is why I have consistently made it clear that I am not prepared to take risks with inflation or the exchange rate. Having said that, the depreciation that we have experienced and the fact that our inflation is lower than the European average mean that our exporters have a considerable opportunity.
    Mr. Beith: As the Chancellor often pointed out that the exchange rate mechanism partly helped us to achieve low inflation, is there a level below which he would not wish the pound to sink because of inflation dangers? If he will not tell us what that level is, how are markets to believe that he will pay more attention to the level, which may be in his mind, than to all the pressures from behind him?
    Mr. Lamont: As I have repeatedly made clear, we do not have a formal or informal exchange rate target. But I have made it crystal clear that we believe in a strong exchange rate. The right hon. Gentleman asks why people should believe that we care about inflation or that we will do what is necessary. The one thing that cannot be denied is that in the past couple of years we have fought a tough battle, stuck with difficult policies and succeeded in getting inflation down from nearly 11 per cent. to under 4 per cent.
    Mr. Skinner: Has not the Chancellor of the Exchequer got a cheek telling the House that he is capable of bringing down inflation, or anything else, after the misery of the past few weeks? Is this not the Chancellor of the Exchequer who borrowed £7·25 billion not to bolster social services but to throw money at the stock exchange, and the same Chancellor who condemns the Labour party for borrowing money to provide services despite throwing £10 billion down the black hole at his City friends?
    Mr. Lamont: The hon. Gentleman is quite wrong—I do not know whether intentionally or otherwise—if he is implying that money spent on supporting the pound might have been available for public expenditure. As he knows,
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    we exchange one currency for another by using reserves or by borrowing. The cost to the public sector depends on what happens to the trend of the exchange rate. Much of the reserves that were deployed to support the pound were acquired at a lower level than that at which they were sold and we made a profit.
    Mr. David Martin: Will my right hon. Friend confirm that the battle against inflation remains the central aspect of the Government's economic policy and that, in the long term, policies based on debauching the currency will lead only to economic ruin, as we saw for so many years under Labour Governments—when we last had them?
    Mr. Lamont: I hope that I have made it clear that we have not gone through the past couple of years—the sacrifices, effort and difficult policies that have been pursued—to throw it all away. As various of my hon. Friends have said, a low rate of inflation is vital for our competitiveness and the future of jobs and therefore important to the country as a whole.
    Mr. Gordon Brown: Given all that the Chancellor says about the prospects for inflation, will he explain why, in the months after devaluation, input prices for manufacturers rose by 2·5 per cent. in only four weeks? In answer to a question on inflation several months ago, the right hon. Gentleman said that unemployment was a price worth paying. Will he now apologise to the million people who have lost their jobs since he made that statement? Can he now tell us when unemployment will come down?
    Mr. Lamont: The most important thing for unemployment is, first, that we get recovery and, secondly, that we have low inflation. Those are the most important factors that will affect unemployment.
    I am certain of one thing about input inflation: those figures in that one month do not reflect the depreciation of the pound. The hon. Gentleman may have noticed that producer output inflation, minus food, drink and tobacco, was the lowest since May 1969. The trend of producer prices is a good guide to future inflation and is extremely encouraging.
    Mr. Burns: Does my right hon. Friend agree that low inflation figures are one of the factors that are crucial for restoring consumer confidence? Will he deplore the practice of certain business organisations, political and economic pundits and Opposition Members who constantly talk down every good statistic that is published, thereby undermining any increase in confidence?
    Mr. Lamont: I agree with my hon. Friend. Indeed, I have made the same point from time to time. My hon. Friend is also right to say that low inflation is vital for consumer confidence.

    Devaluation
    Mr. Betts: To ask the Chancellor of the Exchequer what estimate he has made of the future effect on United Kingdom inflation of the devaluation since he suspended the United Kingdom's membership of the exchange rate mechanism.
    The Paymaster General (Sir John Cope): As my right hon. Friend said just now, he will be publishing a revised forecast of prospects for inflation in the autumn statement in the usual way.
    Mr. Betts: Given the Chancellor's previous statements of confidence about the level of inflation—a confidence which is not shared by many private sector analysts, including the London Business School—why do the Government wish to rejoin the ERM? Do they intend to rejoin the ERM before or after the Danish referendum?
    Sir John Cope: As the hon. Gentleman knows, we pay tribute to the ERM, for the way in which it has helped us to get inflation down. That is part of the reason why we will re-enter the ERM when times are right.
    Mr. Butterfill: Will my right hon. Friend confirm that the recent easing of monetary policy is by no means inconsistent with a policy of keeping inflation low, provided that we maintain controls over public expenditure, particularly revenue expenditure?
    Sir John Cope: Indeed, and we shall hear more about that later today. My right hon. Friend the Chancellor has reaffirmed that he is not prepared to take risks with inflation.
    Mr. Darling: Notwithstanding what the Chancellor said about the 2 per cent. rise in input prices last month, does the Minister not accept that, although there is spare capacity in the United Kingdom economy, our economic base is so weak that, unless remedial action is taken, there will be a substantial risk that inflation will rise beyond the upper estimate of 4 per cent. which the Chancellor gave? Can we take it from the Minister's comments about the ERM and his tribute to it that the Government regard a managed exchange as being dead?
    Sir John Cope: On the contrary, I said that we would rejoin the ERM when times were right. As we have made clear before, that is what we shall do. There are still strong deflationary pressures in the pipeline.

    Civil Service Relocation
    Mr. Ian Bruce: To ask the Chancellor of the Exchequer what payback period his Department demands for civil servant relocation projects; and what plans he has to bring these into line with those pertaining in private industry.
    The Financial Secretary to the Treasury (Mr. Stephen Dorrell): In common with private industry, we require relocation proposals to offer good value for money.
    Mr. Bruce: I am disappointed that my hon. Friend does not appear to know that the answer that I received from the Ministry of Defence about a week ago was that there was a 25-year pay-back period on relocation whereas private industry has a three-year pay-back.
    My hon. Friend will see an announcement at 4 o'clock which will add to the relocation out of my constituency. A total of 2,300 jobs will be moving. The Treasury has approved some of these moves, at a cost of £60,000 per move. Will the Minister give an assurance that he will look at the matter with renewed vigour?
    Mr. Dorrell: Of course, I understand the considerable impact that the proposals will have on my hon. Friend's constituency. He will know that the proposals are being announced, subject to discussion with the trade unions. Of course, we shall take those discussions seriously.
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    It is not correct to imply that there is a firm rule or a piece of algebra that exempts decision makers from the necessity to make a judgment. We do not define a piece of algebra. We ask people to apply a wide range of tests so that when proposals to relocate staff from one part of the country to another are put into effect, they can insist that good value for money is delivered to the taxpayer, taking all taxpayers into account.

    Housing Market
    Mr. Duncan: To ask the Chancellor of the Exchequer what steps he has taken to assist the housing market; and if he will make a statement.
    The Economic Secretary to the Treasury (Mr. Anthony Nelson): A package of measures was implemented to reduce the number of repossessions. I also announced recently two measures—top-up loans and security substitution—to help borrowers with negative equity. The fall in mortgage interest rates should bring relief and help stimulate a revival of confidence in the housing market.
    Mr. Duncan: I am grateful for that answer because the problem of negative equity is simply that, more often than not, people cannot move house even if they have a willing buyer. As it does not worsen the risk position of the lender in any way if a borrower moves into a similar house, will my hon. Friend put as much pressure as possible on lending institutions to allow people to move within the new guidelines? That would inject much-needed activity into that sector of the housing market.
    Mr. Nelson: I agree with my hon. Friend. I acknowledge that negative equity can be a problem for some borowers. [Interruption.] For some borrowers, yes; for others, it is not a problem. The Bank of England recently estimated that up to 1 million people may find themselves with negative equity. I hope that the two measures that I have announced will help tens of thousands of negative equity borrowers. However, it will require the assistance of the building societies and their schemes. I hope that they will heed my hon. Friend's words.
    Dr. Lynne Jones: Will the Minister consider making capital financing available, through either the borrowing allocation or the use of capital receipts, so that local authorities and housing associations can help people trapped by negative equity to buy houses that are empty, under do-it-yourself or other shared ownership schemes?
    Mr. Nelson: Even under existing spending plans, it is anticipated that by the middle of the 1990s housing associations will spend about £2 billion a year; so a considerable commitment has already been made. I ask the hon. Lady to await the statement that my right hon. Friend the Chancellor of the Exchequer will make later.
    Mr. Watts: Is my hon. Friend satisfied that mortgage lenders are as quick to pass on reductions in base rates as they are to pass on increases in base rates?
    Mr. Nelson: I hear what my hon. Friend says, as will the building societies. Of course, the building societies also consider the competitive interest rates offered by other savings products. I, too, am mindful of that when influencing the rate of national savings products. I hope that the building societies will heed what my hon. Friend

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    says if there are any further reductions in interest rates. Their alacrity in passing on reductions to borrowers will be welcome.
    Ms. Harman: Given that the Government's policies have left 60,000 families homeless, 400,000 construction workers on the dole and 1·5 million families in houses that are worth less than their mortgage, does the Minister recognise the failure of the Government's policies? Does he recognise that the housing market will not pick up until the economy recovers? It is because the Government have no policies for recovery of the economy that the housing market continues to look gloomy.
    Mr. Nelson: I acknowledge that the housing market has gone through a difficult period, as has the construction industry. However, to listen to the hon. Lady, one would think that there was no good news on the scene at all. Indeed, the good news is welcome. For example, there was strong growth in housing transactions in the third quarter of this year and a significant drop in the number of repossessions in the first half of this year. The affordability of homes for first-time buyers is extremely good. We do not want to fuel house price inflation and have the sort of housing boom that put housing beyond the reach of ordinary people and first-time buyers.
    Mr. William Powell: Is my hon. Friend aware that a significant part of the problems in the housing sector has arisen as a result of negative equity in home income plans? Is he aware that all right hon. and hon. Members have constituents who have been adversely affected by the lending institutions' refusal to come to terms with some of the ruthless consequences of the sale of such plans? One of my constituents committed suicide because of it. Will my hon. Friend take a more active stance than hitherto in trying to bring the building societies and others to realise that they must solve the problems?
    Mr. Nelson: I share the sentiments expressed by my hon. Friend, and I know that they are shared by hon. Members on both sides of the House. The Government, too, have been concerned by the marketing of some of the home income plans—I replied in a debate on the issue in the House recently. The problem has been largely resolved for the future, but many people have still lost out in the meantime. That is why I welcome the fact that the Financial Intermediaries, Managers and Brokers Regulatory Organisation has set up a one-stop shop to try to resolve some of the problems. Again, that will require the assistance of the building societies and other lenders, which I hope will be forthcoming.

    Balance of Payments
    Mr. Hall: To ask the Chancellor of the Exchequer what measures he is taking to reduce the United Kingdom's balance of payments deficit.
    Mr. Portillo: The recent reductions in interest rates, our low inflation and the competitive level of sterling offer significant opportunities to exporters and to firms competing against imports in domestic markets. The key to long-term success remains United Kingdom producers' ability to keep costs down and quality high.
    Mr. Hall: Is the Minister aware that PowerGen has decided to import 6 million tonnes of coal from Colombia
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    and China through the Liverpool docks? That will serve only to increase our balance of trade deficit. It will result in the closure of Parkside colliery, the only remining pit in the Lancashire coalfield, and it has threatened the jobs at the Point of Ayr colliery. Will the Minister join me in condemning the politics of the madhouse, which we see here this afternoon?
    Mr. Portillo: If coal is imported, clearly the balance of payments suffers to that extent—but that is not by any means the end of the story. If British industry is obliged to take electricity and other fuel supplies at prices higher than those paid by our competitors, that is bad for both imports and exports. The hon. Gentleman will know that my right hon. Friend the President of the Board of Trade is considering a broad range of issues in relation to the coal industry. The hon. Gentleman should not be allowed to get away with such a simplistic statement about the economics as they affect this country.
    Mr. David Shaw: Will my right hon. Friend confirm that the balance of payments deficit is relatively small compared with our gross national product and that it is well financed by the massive increase in overseas earnings from interest and dividends from successful British companies and investment overseas?
    Mr. Portillo: The balance of payments is indeed financeable, but I should not like to say that it is small—clearly, it is a matter of concern to the Government, and that is why we pursue policies to enable our economy to grow and our manufacturers to do well in export markets. My hon. Friend made a good point about inward investment. As a result of Nissan's investment in this country, that company now exports half what it produces in Sunderland, and the United Kingdom is set to become a net exporter of television sets.
    Mr. Andrew Smith: Is it not a measure of the Government's utter industrial failure that our balance of payments deficit is now running at £1 billion a month? When will the Government start backing British exporters, as other countries back theirs? What action will the Minister take to cut the export guarantee insurance premiums which so undermine the efforts of British exporters?
    Mr. Portillo: There has been a substantial increase in the cover provided by the Export Credits Guarantee Department for our exporters. Last year, that cover provided for £2 billion worth of British exports. We have been fighting hard in the European Community to reduce trade barriers, and I believe that the single market is worth £400 million in savings to British business. We have successively cut the rate of corporation tax on businesses, which has given them a tremendous competitive advantage. My right hon. Friend the Prime Minister has led the fight to keep alive the general agreement on tariffs and trade negotiations, because that is the most important development possible for British exporters. All those measures have been substantial commitments to British business.
    What is more, we have created a climate in Britain that has enabled us to attract half the investment into Europe from Japan and the United States. All that improves our export opportunities.

    Public Sector Debt
    Mr. Shersby: To ask the Chancellor of the Exchequer what are the latest figures for net public sector debt as a proportion of gross domestic product; and what the equivalent figure was 10 years ago.
    Sir John Cope: At the end of March 1992, net public sector debt amounted to 28½ per cent. of GDP, compared with 47 per cent. at the end of March 1982.
    Mr. Shersby: Is my right hon. Friend aware that his answer to what I can only describe as the Uxbridge question is most satisfactory and that my constituents will regard it as a record of prudent financial management by the Government, in sharp contrast to that of the last Labour Government? How does the position of the United Kingdom compare with that of our Community partners?
    Sir John Cope: Yes, my hon. Friend is quite right. It is a great tribute to Conservative government over the years that we have such a strong position in that respect. Only Luxembourg in the Community has a better ratio of Government debt to GDP.
    Mr. Nicholas Brown: How much of the change is due to debt repayment and how much to inflation? What contribution has privatisation of public assets made to the change—privatisation which has been carried out, as the hon. Member for Uxbridge (Mr. Shersby) could tell the Paymaster General, at a substantial loss to the public purse?
    Sir John Cope: A whole series of factors have gone into it, not least tight control on Government spending over many years. Debt repayment has been very significant and places us in a much stronger position now.

    Public Expenditure (Index Linking)
    Mr. Barry Field: To ask the Chancellor of the Exchequer how many items of public expenditure are index linked.
    Mr. Portillo: Certain social security benefits, public service pensions and some debt interest are linked to increases in prices either by statute or ministerial pledges.
    Mr. Field: Does not indexation amount to institutionalising inflation, something the private sector can never afford and which the British taxpayer should not be asked to underwrite? With the retired population exceeding the working population for the first time in the nation's history by the year 2005, is not indexation the economics of the mad house?
    Mr. Portillo: My hon. Friend makes an extremely good case for low inflation because inflation causes indexation to be a burden. I believe that people who have contributed all their lives to social security benefits are entitled to see those benefits rise in line with inflation. It is the Government's duty to ensure that inflation is kept to the minimum. My hon. Friend raises a most pressing problem for all economies in the west. As time passes and the retired population becomes larger, so the burden falling on the working population becomes very large indeed. That is one reason why the Government have been so keen to help people make provision for themselves beyond and outside the state sector with personal and occupational pensions.
    Mr. Sheldon: On a day when even Sam Brittan accepts the need to learn from John Maynard Keynes, does the Chief Secretary to the Treasury agree with him? Will the right hon. Gentleman do something to promote sensible public investment?
    Mr. Portillo: I do not think that I have seen the article to which the right hon. Gentleman has referred. However, we have made it perfectly clear throughout the public spending round that we believe that we should do all we can to protect capital spending. However, the extent to which we can do that depends on the extent to which we can find savings in current spending. Given the present levels of borrowing and spending, I believe that it would be irresponsible to propose, as the Labour party proposes, that we should borrow more.
    Mr. Oppenheim: Are not we fortunate that spending on health in Britain has not been strictly index linked since 1979 bearing in mind that under this Government spending on the health service has increased far faster than inflation? In contrast, were not we unfortunate in the late 1970s that health spending was not index linked, bearing in mind that Labour slashed the hospital building programme and on one occasion cut nurses' pay in real terms?
    Mr. Portillo: Yes. The instinct of the Labour party when it concerns itself with controlling public spending is to cut capital projects wherever it can. It always takes the short-term, short-sighted view. That is not the view which we would want to take. My hon. Friend is absolutely right to say that spending on the health service has increased far faster than inflation. But the case is much stronger. Because of our efficiency gains and the reforms that we have made to the health service, the output which we get from that money is even greater than the amount would suggest.
    Mr. Salmond: Some public expenditure items are linked to inflation and some to population. Now that the right, hon. Gentleman has routed the Scottish Secretary of State on the Barnett formula, is not it convenient for him to judge these things on population since it means that the more he depopulates Scotland the less he has to spend on it? If expenditure on Scotland is to be judged by population why is not expenditure on the London docklands judged similarly?
    Mr. Portillo: The hon. Gentleman's last question is completely beside the point. He will find this afternoon that a very fair settlement has been made for Scotland. My right hon. Friend the Secretary of State for Scotland will be able to announce proudly the outcome of the public spending review. He has protected Scottish interests in a difficult round and he will have every reason to come away with considerable pleasure.

    Debt-income Ratio
    Mr. Duncan-Smith: To ask the Chancellor of the Exchequer how many G7 countries have achieved a fall in their debt-income ratio since 1980.
    Mr. Nelson: Only the United Kingdom of the G7 countries has reduced its ratio of general Government debt to GDP since 1980. The ratio has fallen by over 19 per cent. to 35·4 per cent.
    Mr. Duncan-Smith: Does my hon. Friend agree that these are significant figures? The simple fact that we are the only G7 country to have reduced the ratio, coupled with the earlier answer that, bar one, we are the lowest in the EC, makes a mockery of what the merchants of doom in the Opposition say when they make their comparisons with international figures. Does my hon. Friend agree that we should welcome these figures and trumpet them, which of course the Opposition will not do?
    Mr. Nelson: My hon. Friend is absolutely right. Our public sector debt of £195 billion is relatively low compared with other G7 countries. We are in that strong position partly because of the repayment of significant amounts of public debt in the late 1980s and also because of the significant growth that has taken place under the Conservative Government.
    Mr. Tony Banks: Do not the figures that the Minister has just announced to the House make a clear case for massive public sector investment by the Government?
    Mr. Nelson: That is typical of the hon. Gentleman. His party has always been the party of big spenders at somebody else's expense. His party has no qualms about handing on an inheritance of increased debt to the next generation and it has no worries about the impact of extra borrowing on interest rates and inflation.
    Mr. John Townend: Does my hon. Friend agree that to reduce national debt as a proportion of GDP to the level of 1991 means that we will have to bear down heavily on public expenditure not just this year but for the foreseeable future?
    Mr. Nelson: Again, my hon. Friend is absolutely right to make strictures about the need to restrain public expenditure. Unless growth is to increase dramatically, we will need to restrain the extent to which the public sector borrowing requirement is allowed to rise. That has implications for fiscal policy as well.

    Government Deficits
    Mr. Soley: To ask the Chancellor of the Exchequer by what date he estimates the United Kingdom will have met the convergence criteria on Government deficits as laid out in article 104c of the treaty of Rome, proposed under the Maastricht treaty.
    Mr. Dorrell: The Government have a long-standing commitment to avoid what the Maastricht treaty describes as "excessive budget deficits".
    Mr. Soley: Given that the Government could already meet the criteria of article 104c, can the Minister tell us why they have deferred signing it? Is it for the political reason that if they sign it the European Commission could fine Britain? If so, does not that indicate that the Government have no serious intention towards the long-term convergence of the economies of Europe?
    Mr. Dorrell: The hon. Gentleman has misunderstood completely the relevant provisions of the treaty. There is no provision there for the Commission to fine any member state for transgressing a single rule. The treaty provision requires the Commission to present a report to the Council in the event of a member state finding itself in a position
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    where the Commission believes that it is running an excessive budget deficit. It is nowhere near as automatic as the hon. Gentleman's question implies.
    Mr. Paice: Is it not abundantly clear that many countries that signed that treaty do not expect to reach those convergence criteria? Whereas this country decided not to support the move to the single currency until we know what the situation is, many other countries such as Italy will have to renegotiate because they will not be able to fulfil their obligations.
    Mr. Dorrell: My hon. Friend is right to point out that, from the beginning of the negotiations, our position has been that we cannot reasonably commit ourselves to joining a single currency years in advance, when we are unaware of the circumstances in which that currency will come into effect. My hon. Friend is also right to suggest that other member states, and the people within them, are coming to realise the wisdom of that position.
    Mr. Cryer: Does not article 104c imply an enormous handing over of economic power to the EEC? Would not Mr. Martin Bangemann be among those Commissioners who would initiate proceedings if the Government acceded to the full section of the treaty, which could result in the Council of Ministers taking a decision to fine the United Kingdom if we failed to raise taxes or to cut public expenditure? Also, is it not true that the United Kingdom Government would not be allowed to vote in such proceedings if we were subject to them?
    Mr. Dorrell: The hon. Gentleman is advertising the importance of my right hon. Friend the Prime Minister's achievements in allowing us to make a decision to join, or not to join, a single European currency when we are able to take into account all the circumstances in which that currency will come into effect. Those circumstances are not yet clear.

    Retail Sales
    Sir Fergus Montgomery: To ask the Chancellor of the Exchequer what is his assessment of the latest trend in retail sales.
    Sir John Cope: Retail sales volume has risen by a half of 1 per cent. in each of the past two quarters.
    Sir Fergus Montgomery: Does my right hon. Friend agree that the figure gives some encouragement? Is it not a sign that the cuts in interest rates are working through? Does he agree that the prophets of doom and gloom, who thrive on bad news and who rubbish the economy at every turn, do great harm to this country?
    Sir John Cope: My hon. Friend is right. It does no good to talk down this country in the way that some people do.
    Mr. Bryan Davies: Can retail sales be expected to improve while the purchasing power of people is so low, with more than 3 million people unemployed, and while the incomes of large numbers of other poor people are deliberately kept low by the Government?
    Sir John Cope: That is exactly the point. Retail sales have risen and that reflects the fact that people have had some money in their pockets and have been prepared to spend it.
    Mr. Nigel Evans: Does my right hon. Friend agree that the interest rate cuts since the 1990s, down from a peak of 15 per cent., have helped to generate retail sales and have meant lower mortgage rates—some of the lowest since the 1960s—and that, although those interest rate cuts have been welcome, another cut, sooner rather than later, would be most welcome?
    Sir John Cope: I hear what my hon. Friend say. He is obviously right about the effect on retail sales.

    Interest Rates
    Mr. Cohen: To ask the Chancellor of the Exchequer what criteria he takes into account in setting the level of interest rates.
    Mr. Dorrell: The level of interest rates is set so as to meet the Government's objectives for low inflation and sustained economic growth.
    Mr. Cohen: Although lower interest rates are most welcome, is there not an underlying concern that the main criteria for setting the rate is the Chancellor's whim? Does not experience in the United States show that lower rates will not succeed unless they are matched by sustained investment?
    Mr. Dorrell: The hon. Gentleman must be one of a relatively small group of people if he believes that there was not a case for reducing interest rates in recent months. We have set the interest rate at the level that we believe holds the balance between our inescapable obligation to hold down the rate of inflation, to safeguard long-term economic prospects, and our desire to create room for growth in the months ahead. Our success in reducing inflation in the past two years has allowed us to plan for growth.
    Mr. Alexander: Will my hon. Friend remind the House that the inflation rate was 15 per cent. only two years ago? Will he tell the House about the great amount of money that must have gone into the economy as a result of people being able to spend more because they no longer have to pay so much in interest rates? Will he also remind the House, however, that if we reduce interest rates too far, that will work its way through to the value of the pound, the cost of imports and, eventually, the inflation rate and the cost to people of buying things?
    Mr. Dorrell: My hon. Friend is precisely right to identify that risk in the second part of his question.
    On the first part of my hon. Friend's question, the reduction in base rates since their peak has reduced the cost base of British industry by £9 billion and has reduced the cost to a typical family with a £30,000 mortgage by £110 a month. It is precisely because we recognise the value of those reductions that we are so determined not to jeopardise the success that we have achieved in bringing inflation down and creating the opportunity for stable growth.

  PRIME MINISTER

    Engagements
    Mr. Garrett: To ask the Prime Minister if he will list his official engagements for Thursday 12 November.
    The Prime Minister (Mr. John Major): This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.
    Mr. Garrett: Today's unemployment figures confirm that Britain is in the longest recession since the 1930s and is still heading for the deepest recession since the 1930s. How would the Prime Minister describe his stewardship of the economy, when to most people it has been incompetent and callous?
    The Prime Minister: I think that the hon. Gentleman has been in the House long enough to know the difficulties that are faced not only here but elsewhere across Europe and beyond Europe. What the hon. Gentleman characteristically forgot to mention is that, this morning, notwithstanding the fact that every single figure in the unemployment increase is a personal tragedy, that increase is smaller than the average monthly increase has been for some considerable time. I hope that that will prove to be a welcome trend. My right hon. Friend the Chancellor of the Exchequer will set out some measures later on today of which I think the hon. Gentleman may approve.
    Mr. Devlin: To ask the Prime Minister if he will list his official engagements for Thursday 12 November.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Devlin: Is my right hon. Friend aware that, since his recent chat with Mr. Delors, it was reported in yesterday's American press that the French Government are hinting that a compromise on GATT may now be only just around the corner? I do not know what my right hon. Friend said to Mr. Delors when he popped into Downing street recently, but, for the sake of all those manufacturing industries in the north of England, will he keep on saying it please?
    The Prime Minister: I shall certainly keep pressing the case for an early conclusion to the GATT round. I certainly welcome the assurance that the President of the Commission gave me last Friday about an early resumption of talks with the United States. I am delighted that that has subsequently been endorsed by the full Commission and equally pleased that Mr. MacSharry will be rejoining the talks. We will certainly continue to press for a very early conclusion. I believe that the Commission hopes to regroup on 20 November. It would be very agreeable if it were able to report a success with the United States so that the matter could then go to Geneva for final settlement.
    Mr. John Smith: Will the Prime Minister tell us when he first knew that the Government guidelines on the export of arms-related machinery to Iraq were being breached?
    The Prime Minister: Let me try, for the sake of the right hon. and learned Gentleman and a number of other hon.

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    Members of the House, to disentangle the true issues from some of the misunderstandings and wilder allegations of recent days.
    Let me make the first and fundamental point that the issues raised by the Matrix Churchill case have been referred to an independent judicial tribunal. All the papers that the inquiry seeks will be available to it. All Ministers and officials who are asked to give evidence to that inquiry will be required to do so and the inquiry will be free to publish whatever material it wishes.
    The second point relevant to the whole House, I think, is that every relevant aspect of the conduct of all Ministers will be open to scrutiny by the inquiry and I thoroughly welcome that. I will, if I may, clear a third point and that is that Ministers, in claiming public interest immunity, were doing what they were obliged to do by law. They signed such documents only as advised by counsel and the Attorney-General. It follows that they were not concealing information from the court. On the contrary, they were making available the relevant documents to the court. It was then for the judge to decide which of the documents should be protected by public interest immunity and which should not. I hope that that will clarify matters.
    Mr. John Smith: Instead of answering a clear and direct question, the Prime Minister has issued a prepared statement. I remind him that this question goes right to the heart of the credibility of his Government. I ask him it again. When did he first know that the guidelines on arms-related exports to Iraq were being breached; what date, please?
    The Prime Minister: It is not clear at all that they were breached. The first allegations that they might have been breached were made by The Sunday Times in late 1990. Following that article, I, together with the Cabinet Secretary, had a meeting with Mr. Alan Clark. At that meeting he told me that it was totally false to suggest that he was advising the companies concerned on how to prepare licence applications in such a way as to conceal military use. Mr. Clark took the same position in the written witness statement which he provided to the court. It was not until his testimony in the case, therefore, that I had any reason to believe that what he had told me and what was in the written witness statement might not correspond with his oral evidence.
    Mr. John Smith: Does the Prime Minister understand that if he thinks that the guidelines were not breached, he must be about the only person in this country who has arrived at that conclusion? Will the Prime Minister tell us whether, when he gave replies, in particular a reply to the right hon. Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel) on the Liberal Benches on a previous occasion about exports to Iran being conducted in the light of the guidelines, that was the whole truth as he knew it at that time?
    The Prime Minister: Every parliamentary answer that I have given or letter that I have dispatched has been based on the position as I understood it to be. I am utterly confident that that will be clear in Lord Justice Scott's inquiry.
    Mr. Duncan-Smith: Does my right hon. Friend agree with me that it is quite appalling for right hon. and hon.
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    Gentlemen to go on the media and accuse my right hon. Friends of dishonourable conduct before—[Interruption.]—
    Madam Speaker: Order. The hon. Gentleman will resume his seat unless he questions correctly. The Prime Minister has responsibility only for Government activities. Will the hon. Gentleman frame his question correctly or not?
    Mr. Duncan-Smith: Yes, indeed, Madam Speaker. Does my right hon. Friend agree with me that all that he has said so far this week indicates that there will be a complete inquiry and that all will be revealed, honourable conduct included?
    The Prime Minister: The House has that complete assurance. Indeed, if I had wished there not to be a complete inquiry and hon. Members to be open to questions, I might have followed the proposal of the right hon. and learned Member for Monklands, East (Mr. Smith) and had an inquiry under the Tribunals of Inquiry (Evidence) Act 1921, which would have made the matter sub judice in the House.
    Mr. Ashdown: Is it not the case that the Prime Minister and the Government knew as early as July—that is, six months before the Prime Minister's letter to me—that the machine tools being exported to Iraq by Matrix Churchill and other companies were beyond peradventure being used to make munitions for the Iraqi army?
    The Prime Minister: I have replied to the right hon. Gentleman's letter and the many media appearances that he has made. As he will see when he receives my letter, his second letter shows that he has completely misunderstood the position. [Interruption.] The right hon. Gentleman asked a question; he might have the courtesy to listen to the answer. The right hon. Gentleman referred to my letter of 6 December and wrongly claimed that I misled him by concealing knowledge of the Matrix Churchill case when I explained the Government's policy on export licences for Iraq. That is not the case. If the right hon. Gentleman reads my letter, he will see that I refer in the second paragraph to an investigation by Her Majesty's Customs and Excise which was into Matrix Churchill. I made it clear that I could not comment in case I prejudiced any proceedings. That is the rational explanation for which the right hon. Gentleman asked. He failed to understand my correspondence.
    Mr. Anthony Coombs: Is my right hon. Friend aware that the latest figures, for October, for manufactured car exports show an increase of no less than 37 per cent. on last year? Is he also aware that the Textile Alliance anticipates that the exports of the textile industry from the United Kingdom, at £4·8 billion, will be a record for this year? Does he agree that a newly competitive exchange rate will give British exporters the opportunity to improve even on that excellent performance?
    The Prime Minister: Yes. That is certainly the case, and there is no doubt that car production rose very dramatically in September, and the figures for October, which were released today, suggest that production is holding up. I have no doubt that our present competitive exchange rate will improve that position.
    Mr. Cryer: To ask the Prime Minister if he will list his official engagements for Thursday 12 November.
    The Prime Minister: I refer the hon. Gentleman to the reply I gave some moments ago.
    Mr. Cryer: Instead of passing the buck continually to a vague and unsatisfactory inquiry, will the Prime Minister clean out the cesspit of the present Government by sacking all those Ministers who conspired to pervert the course of justice in the Matrix Churchill case in order to cover up a Government policy of encouraging the sale to Iraq of machinery which they knew was to be used for the manufacture of munitions and nuclear weapons? Or would that involve sacking himself?
    The Prime Minister: The hon. Gentleman is one of the foremost conspiracy theorists in the House and an acknowledged expert at muckraking. But not even he can call an independent judicial inquiry anything other than an impartial, clear-cut and independent inquiry. That is what we have ordered and that is what we shall have.
    Mr. Tredinnick: Does my right hon. Friend agree that it is a great scandal that some local authorities are obstructing schools that want to become grant-maintained? Will he join me in welcoming the statement by the Secretary of State for Education that the law will be changed to make that obstruction impossible? Does he agree that most of that obstruction has come from Labour-controlled local authorities?
    The Prime Minister: I think that that is a matter of fact and not conjecture. I very much welcome the action taken by my right hon. Friend in the Education Bill to ensure that parents have a proper choice. It is intolerable that some local education authorities should deliberately scare parents by claiming, entirely falsely, that by voting for grant-maintained status, they will damage their children's education. It is equally unacceptable that LEAs, as teachers' employers, should put pressure on staff to resist the ballots of parents.
    Mrs. Mahon: To ask the Prime Minister if he will list his official engagements for Thursday 12 November.
    The Prime Minister: I refer the hon. Lady to the reply that I gave some moments ago.
    Mrs. Mahon: Does the Prime Minister intend to retain the nurses' pay review body? If so, does he agree that, if that body is to have any relevance to the pay that nurses actually receive, the Government must accept its recommendations and fund them?
    The Prime Minister: The hon. Lady will be able to hear my right hon. Friend's statement very shortly.
    Mrs. Peacock: Is my right hon. Friend aware that a private sector proposal to work the Markham Main colliery has been with British Coal for almost three weeks without any acknowledgement? Does he agree that that may suggest that British Coal does not want competition?
    The Prime Minister: I shall pass my hon. Friend's remarks to the President of the Board of Trade. I have no knowledge of that particular proposal, but I have no doubt that it will be brought to British Coal's notice very speedily.
    Mr. Don Foster: To ask the Prime Minister if he will list his official engagements for Thursday 12 November.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Foster: Does the Prime Minister agree with those Conservative councillors in Bath who this week supported a motion expressing dismay at the deterioration of the national health service in Bath? Or does he support the comments of the Secretary of State who, on a recent visit, said of the closure of wards at the district hospital, of the loss of beds for the elderly mentally infirm and of the increased waiting lists for elective surgery that she thought they were "mere teething problems"?
    The Prime Minister: I think that the hon. Gentleman is just a little selective. He makes no mention of the fact that health service expenditure is up by more than 50 per cent. in real terms since 1979 or that, for every pound spent in 1979, nearly £4·50 will be spent this year. Neither did he mention the fact that the national health service will spend nearly £2,500 a year for every family of four in this country. No other Government would have provided those resources.
    Mr. Ottaway: Is my right hon. Friend aware that Sunday trading at Tesco superstore in Purley has resulted in an increased turnover, more jobs and a surplus of staff who want to work on a Sunday, and it is very popular with my constituents? Will he introduce legislation that clarifies that area of the law before an unacceptable compromise is introduced to the House in January?
    The Prime Minister: As my hon. Friend knows, we have a manifesto commitment to bring forward proposals for reform once the European Court of Justice has settled the compatibility of the current law with the free trade provisions of the treaty of Rome. We expect that judgment in the Court in November and my right hon. and learned Friend the Home Secretary will then make an announcement to the House about legislation.
    Madam Speaker: Time's up. We now have a statement by the Chancellor of the Exchequer.

Autumn Statement
3.30 pm
The Chancellor of the Exchequer (Mr. Norman Lamont): With permission, Madam Speaker, I should like to make my autumn statement.
As usual, the main public expenditure figures and the full text of the Industry Act forecast will be available from the Vote Office as soon as I sit down. The printed autumn statement will be published next Wednesday, after which there will be a full debate in this House.
Following the announcement that I made in my Budget, next year the autumn statement will be brought together with our proposals for taxation in one annual Budget statement. This is, in my opinion, a long overdue reform. For one final year, however, I shall bow to tradition and leave my Budget proposals until the spring. But this autumn statement will also be the first occasion on which the Treasury's economic forecast will be presented alongside others. Two weeks ago, I announced my intention to establish a new panel of independent forecasters. That will be in operation for next year's Budget; but in the meantime, the forecast that I am publishing today will include some details of how the Government's own economic forecast compares with the view that other organisations have taken. I am sure this change is sensible and will be welcomed, in the House and outside.
This year's autumn statement has been drawn up against a background of continuing recession at home and renewed weakness abroad. Despite exceptionally low interest rates, confidence in the United States remains depressed. Industrial production has fallen sharply in Japan, and the countries of continental Europe face the prospect of continuing high interest rates and a marked slowdown in Germany.
It is not surprising, therefore, that here in Britain, the recovery which nearly all forecasters expected at the time of the Budget has still not become established.
There has been an encouraging increase in retail sales, but the housing market remains depressed and confidence has taken a severe blow from the turmoil in the foreign exchange markets that led to sterling's suspension from the exchange rate mechanism.
Against that difficult background, a strategy that brings renewed confidence and a return to growth is more essential than ever, but the Government have no intention of engineering a short-lived boom that would lead swiftly to higher inflation and higher interest rates. Our objective is sustainable, long-term growth and our strategy to achieve that is based on three clear principles.
First, with the pound floating, a completely new framework is required for monetary policy. Interest rates are now set according to British monetary conditions—to meet the target that I have established for inflation. Underlying inflation will be kept within the range of 1 to 4 per cent., and our aim is to get it down to the lower half of that range by the end of this Parliament. Low inflation is the key to sustainable growth and a lasting reduction in unemployment.
I have set out clearly the indicators that will guide our assessment of how far we are on track to meet our inflation objectives. The exchange rate, asset prices and the growth of narrow money are all taken into account. Today, I can
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announce the monitoring range that I intend to use for the broad measure of money, M4. For the second half of this financial year, that range will be 4 to 8 per cent.
Madam Speaker, as I have explained to the House before, in the past few months of our ERM membership, monetary policy was tighter than was actually needed to deliver our inflation objective. It is crucial that monetary policy should not be so lax that the private sector faces higher inflation, but nor should it be so tight that money demand is inadequate.
Outside the ERM, I have been able to rebalance policy by cutting two percentage points off interest rates. That, in itself, will provide a significant boost to the economy, without re-igniting inflation. Despite the fall in the exchange rate, I expect underlying inflation to be below 4 per cent. by the end of next year. In common with most economic forecasters, I expect gross domestic product to rise next year, by about 1 per cent., following a fall of a similar magnitude in 1992.
My second principle is that there must be an appropriate balance between fiscal and monetary policy. Above all, public spending must be kept under firm control. The Government therefore put in place last July a clear medium-term strategy for the control of public spending, designed to ensure that public expenditure declines as a share of GDP over time. The new system is based on a top-down approach. Clear and affordable limits are set for the total level of public spending, and the Government can then settle their priorities through a process of collective discussion—involving first a new Cabinet Committee, and then the full Cabinet itself.
The third key principle of the Government's strategy is that the best way to increase the long-run growth rate in the economy is to make markets work better, so we will be pressing ahead with our policies on privatisation, deregulation, cutting out waste, and keeping the tax burden on companies and individuals as low as we can. We must also fight for the interests of British business in world markets, and provide them with the best environment in which they can compete and succeed. In the short term, that means securing a successful outcome to the GATT round.
Low inflation, tight control of public spending, open markets, competition, and a vigorous supply side policy—those are the principles of the Government's strategy, and they provide the right framework for economic growth. I do not believe that Governments can spend their way out of recession. It is individuals and companies in the private sector that are the engine of economic growth.
But that does not mean that, once the right economic framework is in place, the Government's task is complete. The Government too are investing for the future, in the nation's infrastructure and the development of human capital. As I said in my Mansion house speech, the Government have also been looking at specific policies to ease the path to recovery. I shall be announcing later in my statement a series of measures to rebuild confidence, to help industry and strengthen the economy.
Taking account of those measures, I expect the public sector borrowing requirement in the current year to rise to about £37 billion. Of course, that is high, but borrowing is bound to rise in a recession; and it would be damaging to seek to prevent it from doing so at this moment. As the economy recovers, it is absolutely vital that borrowing is

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brought back towards balance. We have made an excellent start today with a tight overall settlement for public spending.
Much of the recent increase in the PSBR reflects the rapid growth in expenditure on social security benefits, and that has also damaged the financial position of the national insurance fund. In normal circumstances, it would have been necessary to raise national insurance contributions, to reduce that shortfall; but, given the current weakness of the economy, I do not believe that this would have been appropriate.
Accordingly, while the upper and lower earnings limits and the thresholds of the bands for the employers' contribution will be indexed as usual, the rates for national insurance contributions will remain unchanged. I have agreed with my right hon. Friend the Secretary of State for Social Security that the fund should receive a Treasury grant to make up the shortfall.
Let me now turn to the Government's public spending plans. In this survey, the priority was clear. It was vital to put the needs of the economy first. Therefore, within a tight overall settlement, we have sought, wherever possible, to protect programmes, especially capital programmes, that will promote recovery and Britain's longer-term prospects.
At current levels of borrowing, the amount we have to pay in debt interest is rising rapidly, diverting billions of pounds a year away from spending on services. Against that background, the Cabinet decided in July to set a remit for the public spending round which would keep expenditure under firm control. That remit had two elements. For next year, we set ourselves the objective of sticking to existing cash plans. For the three survey years as a whole, our aim was to hold the growth of the new control total down to 1·5 per cent. or less, to keep the overall rate of growth in public spending to a rate below that of the economy as a whole.
Although our target for next year of £244·5 billion allowed a real increase of 4·5 per cent., the pressures for more spending have been intense, and we have had to consider carefully whether the original targets were achievable. However, I can now announce to the House that we have indeed achieved our target. The planning total for next year will be £244·5 billion. As a result of certain definitional changes, I should warn the House that the number which actually appears in the printed document will be slightly different. It will, in fact, be some £2 billion lower.
I can also announce that the new totals for 1994–95 and 1995–96 are fully consistent with the remit agreed in July. Despite the pressures that have emerged since the summer, the real growth in the new control total over the next three years will average just under 1·5 per cent. a year, half the rate of growth over the last three years.
I am sure that my right hon. and learned Friends will welcome the meeting of the remit; and let me at once pay tribute to my right hon. Friend the Chief Secretary for his skill, perseverance and hard work in making his achievement possible.
To meet our objectives, we have had to look very carefully at every single programme, and particularly at current spending. The biggest single budget is, of course, social security. Indexing social security benefits in the coming year would cost £2·5 billion. If we are to protect capital spending, it is to areas of current spending such as social security that we must look first. I can tell the House
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that, despite the many claims on the available resources, the Government have been able to meet in full their commitment to index pensions and other benefits.
The other major claim on current public spending is public sector pay. The earnings of public sector staff have risen on average by 20 per cent. over the last two years, compared with just 13 per cent. in the private sector; but, if the gains in competitiveness from the recent fall in the exchange rate are not to be lost, it is vital that all employees keep tight control over their pay bills. The public sector cannot be sheltered from the difficulties faced by the private sector, where pay awards are now the lowest in a generation. I have therefore decided that, in the coming year, pay settlements in the public sector should be restricted to a maximum of 1·5 per cent. This, of course, is consistent with a lower growth in total pay bills. The aim must be to keep the growth in pay bills in each area of the public sector as low as possible.
The restriction will apply to the whole of the public sector and related bodies without exception, regardless of whether pay is negotiated, recommended by review bodies or subject to formula calculations. It will apply to all offers made from today, although formal offers already made will be honoured. The Government will in due course bring forward a resolution on Members' pay, consistent with this policy, but I can tell the House that Ministers will receive no increase at all.
Given the overall objective of restraining the growth in public spending, this survey has involved some difficult decisions. If some items are to be increased, it inevitably means that others must be cut back. Our tough decisions about public sector pay will lead to savings for other programmes and services of some £1·5 billion a year. As I say, that will permit higher levels of service to the public, and higher capital programmes as a result. None the less, in some programmes we have made reductions in the base lines which were set out last year; but, in many of those cases, expenditure still remains on a rising trend. What is more, the progress that we have made on inflation will help to ensure that reductions in base lines are consistent with continuing improvements in public services.
Even so, individual programmes have faced searching scrutiny, and hard choices have had to be made. Over the next few years, defence expenditure will continue to fall in real terms. The benefits of the "Options for Change" review will be secured, and some further savings, consistent with the policies which underlie it, will be made. The legal aid budget is a demand-led programme that has been putting immense pressure on public finances. The Lord Chancellor is announcing changes to restrict its growth, and they are fully reflected in the survey.
At a time when tight control over public spending is needed at the national level, it is clear that the same discipline should be applied at the local level. Central Government support for local authority revenue expenditure in England will therefore rise by 3·7 per cent. next year, and the total standard spending by 3·1 per cent. In addition, there will be a special grant of £539 million in England, to help local authorities to meet their new responsibilities for community care.
This settlement should be fully adequate to meet local authorities' requirements. The proposals assume that local authorities implement in full our policy of pay restraint. Provided that they do this, the savings made will enable them to ensure proper provision of services without exerting upward pressure on the council tax. The

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Government will not hesitate to use their capping powers as necessary. My right hon. and learned Friend the Secretary of State for the Environment will be making a full announcement later this month. Full details of the new plans for local authorities in Scotland and Wales, and for other programmes, are being made available separately.
The population-related formulae which largely determine changes to expenditure provision more generally in Scotland, Wales and Northern Ireland have been updated. Expenditure plans for the territories will be announced by their respective Secretaries of State at a later date.
At the time of the general election, the Government made it clear that education and health would be among their key priorities for the longer term. Rising spending in these areas is fully justified, not just in terms of immediate needs, but as a contribution to the country's human capital.
The education programme is therefore planned to rise to a level £1·5 billion higher in 1995·96 than the equivalent spending this year. There will be some important changes over this period. The proportion of children staying on at school beyond 16 is expected to go on rising. The Government are providing for a higher proportion of school leavers to take up YT places. We shall finance a sharp increase in the number of students attending further education or sixth form colleges—25 per cent. up over the survey period.
At the same time, we have earmarked enough finance to maintain the present record level of participation of young people in higher education. All this is an important investment in our young people which will improve the quality of the country's human capital and benefit the economy in the longer term.
There will also be increases in the level of real resources provided to the national health service in each of the next three years. Spending in the NHS will rise by nearly 3 per cent. in real terms next year, compared with this year's plans. That means an increase of over £1·9 billion.
This is a very tight settlement overall. At the beginning of the spending round, there was widespread speculation that the Government would take the easy way out, by letting current spending rise and cutting capital spending instead. But what we have done is to take the tough but necessary decisions to put the needs of the British economy first.
Restraint on current spending has made it feasible to provide more protection to capital, and we have done so across a whole range of programmes. Next year there will be a significant increase in the volume of road building. We have maintained the national roads programme at a time when construction prices have fallen. Our new plans will ensure that in real terms, compared with 1979, we will have a doubling next year of the combined capital spending of British Rail and London Transport. Next year health capital spending in England alone will be at the record level of nearly £2·1 billion. The new plans should more than deliver our election commitment to provide through the Housing Corporation 153,000 homes over three years.
One major project for which we have expressly reserved provision is the Jubilee line extension. Subject to satisfactory completion of negotiations, the line will be able to go ahead. This will create many thousands of jobs and give an important boost to the construction industry.
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The Government have taken seriously their pledge to do what they can for capital spending, but there is yet more that can be done.
I said in my Mansion house speech that I was examining ways to increase the scope for private financing of capital projects. Obviously, the interests of the taxpayer have to be protected, but I also want to ensure that sensible investment decisions are taken whenever the opportunity arises. I am now able to announce three significant developments.
In the past, the Government have been prepared to give the go-ahead to private projects only after comparing them with a similar project in the public sector. This has applied, whether or not there was any prospect of the project ever being carried out in the public sector. I have decided to scrap this rule. In future, any privately financed project which can be operated profitably will be allowed to proceed. This should be widely welcomed, particularly by the construction industry.
Secondly, the Government have too often in the past treated proposed projects as either wholly private or wholly public. In future, the Government will actively encourage joint ventures with the private sector, where these involve a sensible transfer of risk to the private sector. We may be prepared to consider such an approach, when the time arises, for projects such as the east-west crossrail, the central Scotland fastlink, the Birmingham western orbital road and perhaps also the channel tunnel rail link.
Thirdly, we will allow greater use of leasing where it offers good value for money. As long as it can be shown that the risk stays with the private sector, public organisations will be able to enter into operating lease agreements, with only the lease payments counting as expenditure and without their capital budgets being cut.
In addition, British Rail will be allowed to lease some £150 million of new rolling stock in the next three years. The new leases will be undertaken with a view to developing the leasing market for rolling stock, which will facilitate privatisation.
In addition, my right hon. Friend the Secretary of State for Transport will publish a Green Paper early next year on the scope for motorway charging. If, in the light of consultation, the Government decides to proceed with charges for inter-urban roads, this would create significant new opportunities for private finance. As a possible transitional step, private contractors might be invited to design, build and operate roads, for which they would receive payments from Government relating to the use of their roads. Money contributed by the private sector under these arrangements will not contribute towards public spending: it will represent additional resources in the area concerned.
Those changes are only the beginning. I have asked my hon. Friend the Financial Secretary to carry forward and develop our policy in this area, encouraging the private sector to bring forward proposals and to help us identify any obstacles which frustrate its success.
Many of the measures that I have announced so far today will take time to have their full effect. I therefore propose to introduce a supplementary package of time-limited fiscal measures. These will be aimed at sectors of the economy which have been hardest hit by the recession, helping to rebuild confidence and so foster recovery.

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Housing and construction have faced particular difficulties in the past two years, but home buyers now have some of the lowest mortgage rates since 1978. The Government have responded in a number of other ways, most recently with measures to help those with negative equity who wish to move. Today, I propose to go further.
The overhang of empty properties in the owner-occupied sector is holding back activity in the housing market. I therefore propose to make available an extra £750 million to he used before the end of this financial year to buy up some of these properties. I hope that the Housing Corporation will be able to achieve a substantial contribution on top of this from private sector lenders. Scotland, Wales and Northern Ireland will introduce parallel measures.
This measure, even without additional contributions from the private sector, should reduce the overhang of empty properties that has been holding the market back by more than 20,000 over the next few months, so providing a stimulus to activity. It will also increase the available stock of subsidised housing by a similar amount and make a real contribution towards housing families in need.
Many hon. Members are aware of the representations by many local authorities to persuade the Government to relax the rules on local authority capital receipts. Many local authorities have accumulated a stock of these receipts, rather than use them to pay off debt, as the Government advised. That remains the Government's view, and I do not intend to reward those who have ignored it.
I propose, however, to allow a time-limited relaxation of the rules governing local authorities' use of their future capital receipts. The existing rules allow them to spend only 25 per cent. of housing receipts and 50 per cent. of other receipts. With certain exceptions, local authorities will now be entitled to spend all the capital receipts that they realise between tomorrow and the end of December 1993.
This measure is expected to stimulate extra capital spending by local authorities of over £1·75 billion in the next three and a half years. The Government hope that local authorities will make early and effective use of the additional spending power before the end of this financial year across the range of local authority capital programmes, including housing, education, schools and roads. Any receipts which are not spent this year or next will provide an on-going stimulus to house-building and construction in 1994–95 and 1995–96, as well. The availability of the extra receipts will be taken into account in distributing credit approvals between local authorities. In that way, virtually all local authorities should receive some benefit. There will be separate measures for Scotland, Wales and Northern Ireland.
The reduction in the exchange rate has offered immense opportunities to exporters, but our exporters of project equipment and other supplies which require medium or long-term finance rely heavily on the guarantees provided by the Export Credits Guarantee Department.
I now intend to make available a further £700 million of ECGD cover and to ease some of the constraints on cover for individual countries. That will enable our exporters to compete more effectively in the increasingly difficult situation that they now face. I am sure that the measure will be widely welcomed by the engineering and capital equipment industry.
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I have also considered the position on capital allowances. It remains my view that the reform of business tax by Lord Lawson in his 1984 Budget was the right one. Low tax rates and a broad tax base provide the best framework for the medium term. However, in the present circumstances, I am prepared to allow some changes which should help to bring forward private sector investment.
Accordingly, for a limited period of 12 months, I propose to raise from 25 to 40 per cent. the allowances available in the first year for investment in plant and machinery, excluding cars. I also propose to introduce an initial allowance of 20 per cent. for spending on new industrial and agricultural buildings for which contracts are placed before 31 October 1993 and which are brought into use before the end of 1994. That will help the construction industry. I propose to legislate for those changes, with retrospective effect to 1 November, in the next Finance Bill.
I have one final measure to announce. The motor industry lies at the heart of British manufacturing. In recent years it has seen a renaissance, with large increases in inward investment. However, the recession has brought a more difficult climate. I have considered what might best be done to help. Of course, any action in this area will have to be paid for in my next Budget by higher motoring taxes after 1992–93.
I have decided nevertheless to continue with the tax reform begun in my last Budget and to abolish car tax altogether from midnight tonight. That will mean a saving of about £400 on a typical family car. This measure will require a simple Bill, which I shall bring forward shortly. It will provide a direct boost to the motor industry and will, of course, benefit business more widely. I am sure that it will be warmly welcomed.
The measures that I have announced today should provide an immediate boost to confidence and welcome relief for some of the most hard pressed sectors of the economy. Taken together, they will add some £4 billion to borrowing over the next three years, but with no increase to the PSBR over the medium term. These measures come on top of the Government's new spending plans for the next three years and the proposals that I have announced to liberalise the rules on private finance.
Finally, there is the significant relaxation in monetary policy since Britain left the ERM just two months ago. Britain already has the lowest interest rates in the European Community; and the pound is trading at a level that gives British industry a sharp competitive edge in foreign markets.
That relaxation of policy has been possible because of the dramatic progress that we have made in getting inflation down; and it is precisely because our inflationary prospects remain excellent that today I can go further.
Alongside the tight public expenditure plans that I have announced, I believe that it is appropriate now to make a further reduction in interest rates. The Governor and I have agreed that the Bank will tomorrow set the minimum lending rate at 7 per cent. That reduction is, in my judgment, fully consistent with the Government's inflationary objectives.
Today's reduction takes British interest rates down to their lowest level for nearly 15 years; it means that our interest rates have been cut by fully eight percentage points over the last two years; it takes a further £1 billion off

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industry's costs on top of the £9 billion fall in interest payments that we have already seen; and it will provide further help to all those with mortgages.
British business now has the opportunity that it has been looking for—to bring the country out of recession; to increase sales, expand production and invest for the future. Industry can now seize the new opportunities, safe in the knowledge that the Government are playing their full part.
We have a new monetary framework that will deliver low inflation over the medium term. We have a new system for controlling public spending that will deliver annual spending increases which the country can afford. We have new spending plans, which protect the poorest in society and offer hope, help and opportunity by switching resources to programmes that support the long-term prosperity of the country.
We have the lowest interest rates in the European Community, and we have a carefully targeted set of measures designed to lift confidence and get the country back to work. This is a clear and comprehensive strategy. It is a strategy for growth. I commend it to the House.
Mr. Gordon Brown: Will the Chancellor first tell the House and his Back Benchers and then tell the country what he did not tell us in his statement—that, as a result of the publication of his documents today, unemployment will continue to rise; the balance of payments will continue to worsen; as a result of the underfunding of the health service, waiting lists and queues will grow; low-paid workers such as nurses and home helps will face even greater poverty; overseas aid budgets will be cut; and, despite the welcome interest rate cut today, for which the Chancellor has long been pressed by the Opposition, business bankruptcies will unfortunately continue to grow?
The Chancellor's detailed figures, which he did not share with the House, confirm that Britain is bottom of the league in the European Community for growth, investment, output and employment. Yesterday the Governor of the Bank of England admitted Britain's image as a second-rate economy. The truth is that, having been driven by events to signal a change of policy against his will, the Chancellor has not only failed to admit the scale of the mistakes of the past but has failed to measure up to the extent of the problem which the country faces. He has failed to give us an economic and industrial strategy for the future.
With regard to the credibility of the Chancellor's forecast this afternoon—[Interruption.] Conservative members will have to listen, because it is the Opposition who are speaking for the country, and about the need for change. Will the Chancellor confirm that national output, which last year he told us would rise by 2 per cent., has fallen by 1 per cent.? He promised us that consumer spending would rise by 2·5 per cent., but it has not recovered at all. Will he confirm that, according to the Government data in the report, investment, which he said would rise by 1·25 per cent., has fallen by 2 per cent.? Will he further confirm that manufacturing output, which he said would rise by 3·25 per cent., has fallen by 1 per cent., that exports, which he said would rise by 6 per cent., have risen by less than half as much, and that unemployment,
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which he told us last November would be at 2·4 million, has risen to almost 2·9 million—half a million more men and women than he predicted—as a result of his mistakes?
What credibility does the right hon. Gentleman have when virtually his entire economic forecast of last year has been proved wrong? Can he give us one good reason why we should believe anything that he says this afternoon, when not only his forecast but his economic policy has collapsed? Were not the Conservative Members who cheered and waved their Order Papers at the Chancellor this afternoon part of the group who cheered and waved their Order Papers at him a year ago, when he promised that we would stay in the exchange rate mechanism, that he would not devalue, that the exchange rate was at the centre of his anti-inflation policy, and that he would reduce unemployment—and when he promised a recovery which he has failed to deliver?
The Chancellor is being dragged by public opinion into accepting some of the measures which we proposed, and which he used to call fake remedies. Only a few weeks ago, his colleagues ridiculed export credit help as being unnecessary in a free market. In April, he himself described investment incentives as phoney measures, which would not be used, and his Housing Minister said only a few weeks ago that the release of capital receipts was fools' gold.
Will the Chancellor not accept, however, that, although he has been driven part of the way by the pressure upon him, through lack of conviction he has failed to adopt the full recovery programme necessary to bring the economy out of slump? He has failed to accept the employment measures and the industrial strategy that Britain needs—the essential direct construction measures which would lie at the heart of any recovery programme.
Is it not true that not one penny of the £5 billion in capital receipts which local authorities have amassed will be released as a result of the Chancellor's proposals? He is allowing local authorities to spend in a year when there will be very few council house sales. Is it not the case that, apart from the Jubilee line, which he has reannounced for the umpteenth time today, he has not announced one capital investment project in London or in the rest of England, or in the nation of Scotland, Wales and Northern Ireland?
Is not the proof of all this the figures which have emerged from the autumn statement details? The combined total of all the Chancellor's proposals for the private and public sectors leads him to predict that investment will grow by only 0·25 per cent. in 1993, and that growth in the economy will be only 1 per cent. The result of that is inevitable—thousands more face unemployment.
When unemployment has today risen for the 30th month running; when male unemployment is worse than at any time since the 1930s; when, inevitably, unemployment will rise for a 31st, 32nd and 33rd month and more under the Chancellor's proposals, will he agree that, by his failure today to direct action against unemployment by taking up the new employment programme that we proposed, which would create jobs and rebuild Britain, he has failed to understand that, while unemployment continues to rise, and the fear of unemployment continues to rise, the confidence necessary to get the economy moving will not return?
In that context, is it not a disgrace that, when we face the single market, the industry budget of the President of

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the Board of Trade is to be cut by 32 per cent. by 1994–95 and that the training and employment budget of the Department of Employment is, according to the figures that we have seen, to be cut by £200 million? Is not the great recovery programme being launched on the basis that the training budget between 1987 and 1995—the whole Department of Employment budget—is being cut by the Government by £2,000 million?
What possible help can cuts in Department of Employment and DTI budgets be to reduce unemployment or ensure recovery? Is it not a tragedy that, while a few of the richest in the world made millions as a result of speculation, millions of the poorest in the world face starvation as a result of further cuts in the overseas aid budget—£75 million by 1995?
Will the Chancellor explain why he is setting an inflexible ceiling on public sector pay, breaking all agreements with review bodies, tearing up quite specific promises and making home helps, nurses and other low-paid workers the scapegoats for his economic failures? Will the Chancellor explain specifically why that is being done when the Prime Minister said:
"heavy central control, uniform, rigid and monolithic pay structures will mean difficulties over recruitment and retention of particular skills, mean staffing problems and put the public services at a very severe disadvantage"?
Given that the Chancellor has also announced new road taxes from next year, does that include road pricing? When there are 1 million children in school classrooms built before the first world war; when two thirds of hospital wards are hangovers from the days of charity hospitals; when roads need repair and when the rail infrastructure needs not a pilot scheme, but proper and sustained—[Interruption.]
Madam Speaker: Order. I ask the House to settle down. Our fellow citizens are watching the debate on television. If the House were to realise the number of letters that I receive each day from people outside this place about the poor behaviour here, I am sure that there would be order on both sides of the House.
Mr. Brown: When there are nearly 1 million people on health service waiting lists—and people outside this place will be interested to hear what the Government are doing—why will health service spending not keep up with the needs of demography and technology? Why is the transport budget being cut by £270 million in one year? Why is local authority expenditure down £0·5 billion in a year? Why are the Government assuming that rents in local authorities will rise by 9 per cent. in a year?
How can the Government justify breaking yet more election promises that all public spending programmes in detail would be upheld? Those breaches of promises can only add to unemployment, prolong the recession, damage long-term efficiency and hit hardest the poorest and weakest in our community.
Is it not the case, in looking at the autumn statement as a whole, that having abandoned the unemployed, having abandoned the low-paid with the abolition of wages councils, having hit the sick and disabled by underfunding the health service, having made nurses and home helps pay the price for the Government's mistakes over public spending, and having promised a recovery that they have singularly failed to deliver after all the promises before and after the election, there is now no one left for the Government to betray? The election having been fought
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on the issue of trust, is it not the case that the country will never trust these men, these Ministers or the Conservative party again? Is it not also the case that the fresh start which the country needs is a fresh programme of measures under fresh leadership?
Mr. Lamont: I appreciate that it is very difficult to respond to statements quickly, but that was a pretty feeble showing by the hon. Gentleman. The programme contains a reduction in interest rates, a boost to private sector investment through increased capital allowances, £1·8 billion of capital receipts available to help the construction industry, and a boost to the motor industry by the abolition of motor tax. How he can say that that will add to unemployment I cannot understand. The only explanation for the hon. Gentleman's view is that he believes, wrongly, that employment comes from Government spending. It does not: it comes from the private sector. That is the mistake that the Opposition always make.
The hon. Gentleman again, I am afraid, was wrong in many of the points that he made about the individual programmes. For example, on aid there are cash increases in the next few years, not cash cuts. On health, the programme shows that spending is rising each year. We shall be able to finance increased throughput, increased treatment of patients and an increase in activities of 2·5 per cent. a year. What the hon. Gentleman looks at are the actual money numbers, but the health service is very much an employer of labour. The fact that we are putting a limit on public sector pay means that services can be improved with less money. That is the point. The hon. Gentleman thinks that the only way to improve services is with money rather than with efficiency and with having a limit on wages.
The hon. Gentleman referred to the budget for the Department of Employment. Again, contrary to what he says, there will next year be a real increase in that budget. The training and enterprise councils' budget will remain virtually intact. [HON. MEMBERS: "No."] It will be 99 per cent., to be precise.
The hon. Gentleman talked about the performance of the British economy, referring to how disappointing the outturn had been and how forecasts had been wrong. As always, he talked about the British economy as though no other country had any problems with growth. He seems to be unaware that in five out of the past six months Germany has seen unemployment rise, and that in six out of the past seven months it has seen industrial production fall. The hon. Gentleman seems to be unaware that in Japan industrial production over the past year has fallen by over 4 per cent., that in Germany it has fallen by over 3 per cent., that in Italy it has fallen by over 3 per cent., and that in Canada it has fallen by over 2 per cent. That is the difficult climate in which we are competing. That is the difficult world background to the autumn statement. That is why we have given a special boost to help exporters and to help industry at this time.
The hon. Gentleman referred to forecasts and made much of the fact that recovery had not appeared. May I remind him that it was not just the Government and the Treasury who were forecasting recovery? At one time, even he and his hon. Friends were saying that there would be a recovery. His right hon. Friend the Member for Islwyn (Mr. Kinnock), the former Leader of the Opposition, accused me last autumn of creating a pre-election boom

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and said that the recovery had been managed in order to create conditions for an election. Indeed, an official fund-raising letter from the Labour party at the time explained:
"Interest rates are dropping just in time to create a pre-election boom."
The hon. Gentleman talks about consistency. Let us remember the consistency of his party's policies. What did the Opposition propose at the election?—the biggest increase in taxes on incomes since the war. I remind the House that after the election the Leader of the Opposition stood by his party's policies and said:
"I strongly defend these proposals."
A few days ago, the shadow Chancellor said:
"Further tax increases at this time would be a mistake." Who are the opposition to talk about consistency? Who are they to talk about forecasts? Everything that they have said has turned out wrong.
Mr. Terence L. Higgins: I congratulate the Chancellor on an extremely imaginative package, and welcome his acceptance of the idea suggested by the Select Committee on Treasury and Civil Service that a number of the measures ought to be time-limited to avoid a resurgence of inflation later. Will he make it clear to the foreign exchange markets that, given the degree of deflation in the economy, the amount of stimulus that he proposes is sensible and is likely to reinforce his view on the exchange rate, and that the package is likely to restore confidence and to be welcomed by the country?
Mr. Lamont: I am grateful to my right hon. Friend. When he was Chairman of the Treasury and Civil Service Select Committee, he often emphasised the need for and the appropriateness of time-limited measures. That is a part of the package that we have put forward today. The measures that we have announced are prudent. As I have explained, they do not add to medium-term borrowing and have only a short-term cost.
I agree with what my right hon. Friend said about exchange rates. I have consistently made it clear that I believe in a strong exchange rate, and that remains my position.
Mr. A. J. Beith: Will the Chancellor confirm that he is maintaining capital spending levels and not providing a large boost? Although the abolition of car tax and the capital allowances will significantly help some sections of industry, when set against the loss of spending power for the lowest-paid people in the public sector, the total effect is unlikely to give anything like the boost that he needs. How can it make sense to ask local authorities to sell land if they want to engage in capital expenditure when the market is at rock bottom?
Instead of a pay freeze for Ministers, would it not have made sense to put them on performance-related pay, so that, if these measures do not work, they will not get paid at all?
Mr. Lamont: The key requirement must be to control borrowing. I had hoped that I had spelt out clearly and frankly to the House the need to control public borrowing. That has to be done by one means or another. I am surprised that the right hon. Gentleman seems to think that that can be evaded. It cannot be avoided—we have to
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face up to it—and there must be restrictions either on current or on capital spending. This year we have decided to restrict current spending to protect industry, especially the construction industry.
I remind the hon. Gentleman that I have also cut interest rates today, on top of the 2 percentage points reduction in interest rates in the past six weeks. There has also been considerable depreciation in the exchange rates. That is a considerable loosening of monetary policy, which confirms the outlook for British industry.
On the hon. Gentleman's final point about the prospects for sales, our estimate of £1 billion is based on a cautious assumption compared with the past, and with what local authorities have been able to sell.
Sir Peter Tapsell: May I congratulate my right hon. Friend the Chancellor on announcing a strategy for growth which will be widely welcomed and which deserves support? Although a public sector borrowing requirement of £37 billion is high, should we not bear in mind the fact that in 1931, when the country last found itself in a similar economic predicament for somewhat similar reasons, the PSBR was 7·5 per cent. of GDP, which is a significantly higher figure than the 6 per cent. I take to be the percentage of GDP represented by £37 billion. In 1931, that justified a reduction in interest rates to 3 per cent. which makes his announcement of a cut in interest rates to 7 per cent. fully sustainable and a step which can be pursued downwards as time passes.
Mr. Lamont: I am grateful to my hon. Friend for his remarks and I am glad that he welcomes the reduction in interest rates. However, I must make the cautionary point that the PSBR, at some 6 per cent. of GDP, is, on a medium-term basis, far too high. When I look at what is happening in other countries, I am sure that it is in the best interests of everyone that it is brought down. [Interruption.] Hon. Members may disagree and people may argue about economic management, but, at the end of the day, the fundamental problem that remains is that debt must be paid for and interest must be paid. If we have too high a level of debt interest, it squeezes out other items of public spending.
I am grateful to my hon. Friend for his support for and approval of the reduction in interest rates, but I think that we should address the problem of the PSBR, and I will do that.
Mr. Giles Radice: What assumptions about the level of unemployment for the coming year has the Chancellor given to the Government Actuary?
Mr. Lamont: 2·8 million.
Mr. John Townend: I congratulate my right hon. Friend on his courage and determination in tackling the problem of the growing budget deficit. His colleagues on the Conservative Benches believe that his package will increase confidence, stimulate investment, encourage exports, help the housing market and boost the motor industry. We now have a coherent economic policy for recovery, which we strongly support. Does he agree that it is now time for British business to take advantage of the lowest interest rates in Europe, low inflation, a competitive pound and incentives for investment and go out and sell?
Mr. Lamont: I am grateful to my hon. Friend. The measures that I have announced on capital allowances are designed to promote private sector investment.
The motor industry very much wanted to be rid of the car tax. It is one of the most important manufacturing industries and, in recent years, its decline has begun to be reversed. With the receipt of foreign investment, its prospects are excellent. It is right and appropriate to encourage that industry in such a difficult time.
The measures that we have announced on credits will help exports, so my hon. Friend is right to say that the depreciation of the pound gives our exporters a considerable opportunity. It is vital that business does not allow its own costs to get out of control, that it remains competitive, and that it takes advantage of the new opportunities that now exist.
Mr. Robert Sheldon: I welcome the capital allowances concession that the Chancellor of the Exchequer has given. I would have preferred it to be more, but I am pleased that it is on plant and machinery. Up to four years ago, however, the Government believed that manufacturing industry presented no problem. In the past four years, they accepted that it was a problem, but they did nothing about it. Now, very late in the day, they are doing something and making some concession. Meanwhile, the industrial base of this country has shrunk alarmingly. We have lost 30 per cent. of our industrial base under the Government.
The measures announced are inadequate given that it is now assumed that the growth rate will be 1 per cent. next year instead of 3 per cent., as forecast at the time of the Budget, and there is a crisis in the manufacturing industry. Although the right hon. Gentleman has done something, he has not done enough.
Mr. Lamont: It is something that the right hon. Gentleman is able to give even a modified welcome to the measures, and I am grateful to him for that. He is quite wrong to say that we have not thought manufacturing to be important. It is, but we have to look at the economy as a whole, and manufacturing is a part of it—perhaps the most important part. We have always believed that it is important.
The right hon. Gentleman referred to the modest growth forecast that we have made, and it is somewhat lower than most forecasters are projecting, but I believe that, in recent weeks, the prospects in the world have got considerably worse. It is therefore right that we should look to ways to help British industry to take advantage of the new situation. The right hon. Gentleman says that 1 per cent. is not enough. Of course it is not enough, but we cannot just conjure more growth out of the air. I do not know what the right hon. Gentleman would say about Germany, where the projection is that the economy will grow by 1 per cent. next year and by 0·5 per cent. the year after. This is a very rough world.
Sir Michael Grylls: Is my right hon. Friend aware that there will be a warm welcome for his decision to encourage capital projects and to give the green light to them? It can truly be said that the Government are rolling out the cement mixers, and many people will think that that is quite right at this time.
I want to ask the Chancellor about a particular problem with regard to investment. Although his investment incentives will be welcomed, there is a problem for small
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and medium-sized firms, which are encountering difficulties in getting the right support from the banks because the banks themselves have got into trouble in recent years. Will he look at this problem, because, if firms do not have support for their productive investment, it will be difficult for them to take advantage of the situation as the country comes out of recession?
Mr. Lamont: What I have announced on capital allowances applies right across the economy; it applies to all purchases of plant and machinery, not only manufacturing. It is not just of help to the construction industry; it is of help to engineering, and metal-based industries in particular.
My hon. Friend mentioned banks. I very much hope that the reduction in interest rates today and the 2 per cent. by which I have reduced interest rates since 16 September will be passed on by the banks. Last year I had cause to discuss with the banks whether small businesses were getting the benefit of interest rate reductions, and the banks assured me that they were. Recently, I have been concerned to discover that some banks are operating a floor for interest rates beyond which they will not reduce them. I hope that they will consider this position very carefully.
Mr. Frank Field: Recently, the Chancellor said that every Government action would be evaluated as to its effect on increasing employment. In pursuance of the question asked by my hon. Friend the Member for Durham, North (Mr. Radice), may I ask, first, how many more people will be in work one year hence? Secondly, when he said that pensions and other benefits would be fully indexed, the House assumed that he meant that all other benefits would be indexed. Was the House right in assuming that?
Mr. Lamont: The answer to the second question is yes. When the hon. Gentleman asks me how many people will be in work, or out of work, in a year's time, he knows that not only can I not but we never do make a forecast for unemployment. However, as a result of the measures that we have taken today, the outlook for growth and jobs is definitely better.
Mr. George Walden: Is my right hon. Friend aware that his statement deserves to generate confidence not only on the Benches behind him, which is useful, but also in the country? Does he agree with me that the main reason that this country is in a bigger hole than many other countries is our debt overhang, which is due overwhelmingly to housing debt? Therefore, while I understand the pressures that have driven him to throw another £750 million at housing, will he avoid giving the impression to the country that we can reflate our economy by reflating our housing and building some spurious prosperity on houses—which cannot, incidentally, be exported?
Mr. Lamont: My hon. Friend makes an extremely telling point, and a very correct analysis, which he has made on earlier occasions. He will understand that the £750 million for the purchase of empties is not to reflate the housing market; it is to take the overhang of properties off the market. I agree with my hon. Friend's analysis.
I believe that the main thing that has been holding back recovery in this country, as in the Scandinavian countries, some of which have had recessions just as long as we have

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—indeed, Sweden is in the third year of recession—and as in north America, is the overhang of debt, which does not exist in continental Europe to the same extent. The measures that we have taken will help, but I agree with my hon. Friend that the position of housing is absolutely crucial. We would be making a great mistake if we simply tried to have a great house price boom again.
Mr. William Ross: Is the Chancellor aware that the Unionist party is happy that he has reasserted his view today that the public sector borrowing rquirement must be kept under firm control? But I confess that seeing the PSBR for the current year rising from £28 billion to £37 billion between March and November could not, by any stretch of the imagination, be described as keeping it under firm control, especially when the right hon. Gentleman also said in his statement today that he expected it to rise next year. Can he say what it will be in cash terms in 1993–94?
Will the right hon. Gentleman also, when looking at the sums that should go to housing, ensure that a large proportion of those sums is directed to housing associations, which seem to make better use of the moneys than can be said of some public bodies that receive them?
Will the Chancellor look carefully at the situation of the north of Ireland block grant? In the past, certain sectors have lost money because of the need to pay compensation to those who suffered from terrorist violence. As that has simply meant hardship for those who suffered from terrorist violence in one form or another, may I ask him to consider the possibility of financing all such extra compensation sums from the contingency fund, which should, of course, be used for the defence of the realm? If compensating those who suffer from terrorist violence is not part of the defence of the realm, what on earth is?
Mr. Lamont: My right hon. and learned Friend the Secretary of State for Northern Ireland will have noted the hon. Gentleman's points. I am indeed aware of the controversy and argument, but the hon. Gentleman will forgive me if I do not get drawn into that today.
The hon. Member talked about the PSBR and outturn and asked why it was not kept under control. He should realise that the main reason for the increase in the PSBR is falling tax revenues. It is not expenditure. It is largely in the ratio of 6:1 of falling tax revenues. The hon. Gentleman put his finger on it when he said that it is difficult to predict the outturn for the PSBR. For that reason, he will perhaps understand why I do not accept his invitation to predict it for next year, though I shall be doing that at the time of the Budget.
Mr. Nicholas Budgen: If interest rates of 7 per cent. on 13 November are appropriate, how could interest rates of 10 per cent. have been appropriate on 13 September? Should we not all be profoundly grateful for black Wednesday, and would not the best thing that my right hon. Friend could say to increase confidence be that we shall never ever return to the ERM?
Mr. Lamont: I do not agree with my hon. Friend's analysis. He will be aware that we have options open to us as to how far and at what speed we wish to defeat inflation. I have made it clear—I have done so before and I repeat
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it—that I believe that in recent months, which does not mean in the whole of the last two years but recently, as a result of the direction in which German interest rates were going, our policy was not wholly appropriate for this country.
Mr. Budgen: The Chancellor did not say so at the time.
Mr. Lamont: But I made it clear very quickly indeed. My hon. Friend should recognise that the fact that we might have over-achieved on inflation in the short term was not something that would have brought other than advantage and gain for this country. We cannot, as some of my hon. Friends sometimes seem to think, opt out of the battle against inflation. It remains extremely important indeed.
Mr. John Garrett: Does the Chancellor agree that this modest boost to the economy is being paid for by an absolute cut in the standard of living and quality of life of many hundreds of thousands of public sector workers, many of whom receive the lowest pay in this country?
Mr. Lamont: Public sector wages in the last two years have done better on average than those in the private sector. Many public sector workers also have greater security of employment than is the case in the private sector—[Interruption.]—not in all cases, but in some. I believe that, given the choice, it is right for the Government, rather than to cut services, programmes, the provision of health and the provision of education, to economise just for one year on our current spending. Is that really so unreasonable?
Mrs. Marion Roe: I add my congratulations to the Chancellor on his statement this afternoon. At a time when he has, rightly, been concerned first to help the economy, his statement is also good news for the health service. Does he agree that his announcement shows the Government's continuing priority for the health service, as has been demonstrated since 1979? Does he further agree that the large NHS programme will be good not only for patients but for the construction industry and for jobs?
Mr. Lamont: I am grateful to my hon. Friend for her comments. The capital programme in the NHS will be at record levels next year. My hon. Friend is also right to refer to the number of patients who will be treated and about the level of activity. There will be an increase next year in activity of about 2·5per cent. and an increase in expenditure overall in real terms of about 3 per cent., demonstrating clearly the Government's continuing commitment to the NHS. That is amply demonstrated by the fact that total expenditure since 1979 has gone up by the astonishing figure of 65 per cent. in real terms.
Mrs. Alice Mahon: How will a 2 per cent., cut in the wages of hundreds of thousands of public sector workers, including nurses, whom the Chancellor has betrayed by these cuts, help the economy to recover? I assure him that services are affected when morale is low. Is he not aware that, when nurses cannot pay their bills, that is reflected in how they do their work? Is he further aware that by hitting the public sector in this way he is particularly hitting women, who are in the low-paid sector, more than anybody else? He is making low-paid workers pay for the incompetence of the present miserable Tory Government.
Mr. Lamont: I tried to explain to the House why, in my view—I believe that the whole country recognises this—some economies must be made. Expenditure and borrowing must be cut back. We have a choice of acting on capital spending, on programmes or on the salaries and wages of those employed by Government. To say that they will have an increase of from nil to 1·5 per cent. for a 12-month period, given what is at stake, does not seem an unreasonable policy or an unreasonable request for the Government to make.
Mr. Nicholas Winterton: I am happy to tell my right hon. Friend that I am pleasantly surprised by his autumn statement—[Interruption.]—and I shall have no difficulty in voting for it. He knows that my devotion to the manufacturing sector is total. For the first time for some years, he, as Chancellor, has injected confidence into both manufacturing and construction in Britain. His reduction in interest rates, his reintroduction of capital allowances, his relaxation on spending of capital receipts and his abolition of the special car tax will be very welcome indeed.
May I take it that this will be the first of many pronouncements by my right hon. Friend, whose credibility has been restored by his statement this afternoon, and that he and the Government finally recognise that manufacturing industry is the only real source of non-inflationary economic growth?
Mr. Lamont: I am tempted to say that I am pleasantly surprised by my hon. Friend's remarks—[Interruption.]—and particularly by his comments about voting. I have always believed that manufacturing was important, contrary to what my hon. Friend seems to think I thought. As I say, I have always regarded it as an important part of the economy, and it is obviously the key part in relation to international trade.
But we also have services and financial services. We have a diverse economy. I believe that the measures I have taken today will help construction, the engineering sector and manufacturing in general. I am pleased that my hon. Friend is pleased.
Mr. Alex Salmond: When the Chancellor described Scotland, Wales and Northern Ireland as territories in his statement, was that an official Government description or a Treasury forecast of the fate that will befall our country if we allow Tory economic policy to continue to depopulate it?
Will the right hon. Gentleman confirm that the adjustment to the Barnett formula means that the Scottish Office will have £60 million less next year than it otherwise would have had? If that spending squeeze is combined with the investment project concentration in the south-east of England, is not the Chancellor's announcement more a dash for votes in the Tory heartlands than a strategy for growth? If the Chancellor had not lost £2,000 million in a single afternoon, what would he have spent it on today?
Mr. Lamont: The answer to the hon. Gentleman's question is, no, Scotland will gain more than it would have done. The change that has been made in the formula as it applies to Scotland merely brings the formula in line with the population, as determined at the time of the census. That means that, since we have been making reductions in
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the survey, the reductions that apply to Scotland have been less than they might otherwise have been, so perhaps the hon. Gentleman should not be quite so dismayed.
I am sure that the hon. Gentleman will welcome the fact, and make it widely known in Scotland, that there will be a £70 million package of construction-related work over the rest of the present financial year; that Scottish Homes will benefit from new investment resources amounting to some £70 million over the next three years; and Scottish business rates will be reduced next year by £68 million. Taken together, those three measures represent a £340 million boost for Scotland over the next three years. Go and tell everybody in Scotland about it.
Mrs. Angela Browning: I congratulate my right hon. Friend. Does he agree that the package that he has announced today will be extremely helpful to the small business sector? As he will be aware, in the south-west, and particularly in my constituency of Tiverton, we have only small businesses; we do not have large companies. They will welcome the reduction in interest rates, help with exports and, particularly, the increase in the first year's capital allowances, along with other measures that he has announced. Does he also agree that, in the 1980s, the small business sector created 1 million new jobs and we shall look to that sector again in the future for the creation of wealth and new employment opportunities? The statement will be greatly welcomed in Devon.
Mr. Lamont: My hon. Friend is absolutely right. Small businesses are the backbone of this country's economy. One of the great achievements of the 1980s was that so many small businesses were created. I note that, even today, despite the recession and insolvencies, VAT registrations for 1991 were slightly up on the previous year's. Anything that can be done to encourage small businesses is obviously welcome. Some of the measures, such as capital allowances, might be thought to apply only to large businesses, but my hon. Friend is right to remind us that capital allowances also benefit small businesses, which will also benefit from the reduction in interest rates.
Mr. John Gunnell: The Chancellor has announced that £1·9 billion will go to the health service. I note from the papers that he has distributed that £300 million that comes from so-called efficiency gains. What sum also comes from income generation by the NHS? Is any of the so-called new money for the health service a transfer from Department of Social Security funding?
Mr. Lamont: The money for care in the community will involve some new money as well. There will be £140 million for care in the community. The hon. Gentleman points out that we are assuming some efficiency gains in determining our budget. Why on earth not? Surely one should assume that, as we always have in the past and always do everywhere in the public sector. What we are assuming on income generation and efficiency gains is not out of line with what has been achieved in the past. That is why the settlement for the health service is realistic and will enable the health service to go on improving provision.
Mr. John Butterfill: Does my right lion. Friend accept that, at a time when many in the private sector have been suffering short-time working, cuts in pay, and even redundancy and unemployment, he got the balance absolutely right when he suggested that we

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should have restraint in public sector pay, accompanied and balanced by the fact that those who rely on the state for their income benefits are protected? That will give great pleasure to my constituents, so many of whom are pensioners. Will he share my hope that, when we vote on the question of restraint of the pay of Members of Parliament, we shall be supported by Opposition Members?
Mr. Lamont: I am grateful to my hon. Friend. He is absolutely right to say that we should restrict public sector pay to preserve services. The Government will be recommending a zero increase in the pay of Members of Parliament, and I hope that we shall get the support of Opposition Members.
Mr. Tony Banks: How will the £750 million to be used by housing associations for the purchase of properties be distributed throughout the country? Why has the Chancellor of the Exchequer specifically ruled out the spending of the £5·1 billion accumulated capital receipts?
Mr. Lamont: I explained the latter point in my statement, when I said that we had in the past encouraged local authorities to pay off debt. The hon. Gentleman should remember that the disagreement between myself and Opposition Members on that issue has always been based on the simple fact that letting local authorities spend their receipts adds to public spending. We must hear that in mind. I decided that a relaxation was in order, but it must be limited. I decided to do it in this way for the reasons that I gave. The distribution of the £750 million will be the subject of an announcement by my right hon. Friend the Secretary of State for the Environment, who is consulting the Housing Corporation about it.
Mrs. Judith Chaplin: I welcome my right hon. Friend's decision to abolish car tax. Does he agree that that will help not only British car manufacturers but all businesses which must spend money on cars?
Mr. Lamont: My hon. Friend is right—it will help all purchasers of cars. They were very much helped in the Budget by the first step that I took when I halved car tax. My hon. Friend may remember that I also increased the capital allowances. Specific limited capital allowances apply to the purchase of motor cars by businesses, and I increased those by a considerable amount in the Budget. So three distinct and, I hope, important measures have helped the car industry, both in my Budget and in this autumn statement. The car industry was pressing for that, so I am sure that it will be widely welcomed. In tax terms, it also makes sense.
Ms. Joyce Quin: Will the Chancellor give us his balance of payments forecasts for this year and next year? In the calculation of next year's balance of payments forecast, has he made any allowance for the Government's proposed pit closure programme?
Mr. Lamont: When the hon. Lady looks at the published documents in the Table Office, she will see the provision in the programme of the Department of Trade and Industry. I hope that it does not sound too Irish—[Interruption.] I must be careful because I have a difficult paradox to tell the House. Provision has been made both
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on the basis of a certain number of pits being closed and of pits being kept open. We have allocated a substantial amount of money in the second year of the DTI's programme, as the hon. Lady will see. The projection is that the current account deficit next year will be some £15 billion, but I expect that the depreciation will gradually have a favourable effect on the current account. I know that the hon. Lady follows these matters closely and understands them. One would expect to get the adverse effects before the beneficial effects.
Sir Anthony Grant: Has my right hon. Friend ever heard such a moaning, miserable, Jeremiah-like, negative performance as that which we heard from the hon. Member for Dunfermline, East (Mr. Brown)?
I appreciate the warning of my hon. Friend the Member for Buckingham (Mr. Walden) against a housing boom and housing debt, but is my right hon. Friend the Chancellor aware that in his statement he recognised that the higher priority now is for economic growth to restore confidence in the construction industry and housing market? What he has said today will go a long way to help that hard-pressed sector. I welcome the reductions in interest rates that he has announced, but will he bear in mind the fact that the essential ingredient for a thriving economy in the long term is a low interest rate policy?
Mr. Lamont: Of course, what my hon. Friend says is right, but he must bear it in mind that interest rates are not just part of industry's costs, but a tool of economic management. They control the growth of money in the economy and are, above all, the key weapon in the fight against inflation. Without low inflation, businesses—big and small—will be destroyed.
I am grateful that my hon. Friend supports what I have managed to do today. I believe that the housing and construction industries have faced serious problems, and although I have been able to reduce interest rates—in some ways the single most important factor for housing and construction—I thought that it was right to take additional measures.
I entirely agree with what my hon. Friend said about the hon. Member for Dunfermline, East (Mr. Brown).
Mr. Peter Mandelson: The right hon. Gentleman gave the go-ahead for the Jubilee line in London, which may well bring a boost in morale to those living in the south. Will he itemise the specific, named capital projects for which he will give the go-ahead in the north to give a similar lift in hope to my constituents and people living in surrounding constituencies?
Mr. Lamont: There will be twice as many road starts next year as this year. That will benefit construction and the road building industry all over the country. In my statement I listed a number of projects—
Mr. Mandelson: In the north?
Mr. Lamont: Several of those projects were not in the south—[Interruption.] I am afraid that I will not identify where the projects are constituency by constituency, let alone town by town or village by village. What I will say is that the whole country will benefit. I do not make decisions on the basis of log rolling, which the hon. Member for Hartlepool (Mr. Mandelson) seems to think is the only appropriate way of making them.
Sir Michael Neubert: Does my right hon. Friend understand that any small disappointment that may have been felt because he was unable to announce an unequivocal go-ahead for the Jubilee line extension today is more than offset by the widespread approval throughout our great capital city of his decision to reserve the money for it? Will he and his ministerial colleagues accept the thanks and congratulations of Londoners on the fact that they have remained faithful to that major infrastructure project? Will my right hon. Friend warn the bankers that if they balk at coming up with their contribution they will not be forgiven?
Mr. Lamont: I am more than usually grateful to my hon. Friend for his contribution. We shall keep faith and hope that the bankers will also—that is important. The Jubilee line is a major project that will provide thousands of jobs in the construction and engineering industries, and will be of great benefit, not just in London, but to firms up and down the country.
Mr. Dennis Skinner: Is the Chancellor aware that when he talks about a public sector borrowing requirement of £37 billion—probably rising to £50 billion the following year—one of its biggest component parts is the £30 billion that is paid to keep 3 million to 4 million people unemployed? If the right hon. Gentleman tackled that problem, he would be halfway to solving all his Budget problems.
In the twilight of his Chancellorship, the right hon. Gentleman has today introduced a spiteful mini-Budget that attacks the lowest-paid, taxes nurses and others in the public sector, and hammers women—who are mainly low-paid workers. He should have clawed back the £29 billion that went to the richest 1 per cent. of the population under previous Tory Budgets. If he had taken back that money from the richest 1 per cent., he could have ensured that the national health service, pensioners, the low-paid, and the education and housing sectors benefited. Instead, he has lined the pockets of his City friends, and wants the workers to pay the tab.
Mr. Lamont: Unlike the hon. Gentleman, I do not believe that one can simply spend one's way out of recession. The hon. Gentleman said that we did not need to have a PSBR problem but that all that was necessary was a series of employment-creating measures. He said that
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that would eliminate the PSBR problem and the recession. That is nonsense. If that were the solution and the right approach, there would be no public deficit problems and no recession in any country in the world. That is not the way to approach the problem.
Mr. Bob Dunn: I welcome my right hon. Friend's reference to the preservation of the national roads programme and the ultimate creation of money for the Jubilee line. I also welcome his commitment to involve private sector capital in transport projects across the country. Will he bear it in mind that there is a successful precedent for such a policy in the construction of the Dartford bridge, which was built by free enterprise using private money, has been completed and is now running on time?
Mr. Lamont: My hon. Friend makes a good point, but I am afraid that our regime for private finance has been extraordinarily complex and arcane. I know that many people have felt that it was designed more to frustrate private financing of infrastructure than to encourage it. It was something of a minor miracle that the Dartford bridge got the go-ahead as a private sector project. We want to encourage more Dartford bridges which is why we have now finally made what I think will turn out to be decisive and clear changes in the rules to facilitate more construction in the longer term.
Mrs. Jane Kennedy: I welcome the increases in line with prices in the invalidity benefit, but how does the Chancellor intend to raise the £240 million that he mentioned in his statement by tightening up on invalidity benefit? Does he intend to tax the benefit in future, or does he intend to interfere with doctors' judgments?
Mr. Lamont: My right hon. Friend the Secretary of State for Social Security is to make a statement immediately after this statement which will cover the hon. Lady's point.
Mr. Win Griffiths: On a point of order, Madam Speaker.
Madam Speaker: Order. As the hon. Gentleman is aware, points of order are taken after statements and the business statement.

Social Security
5.7 pm
The Secretary of State for Social Security (Mr. Peter Lilley): With permission, I wish to make a statement on social security following directly from my right hon. Friend's autumn statement.
As my right hon. Friend the Chancellor has announced, spending on social security in each of the next three years will be £79·8 billion, £82·9 billion and £87 billion.
That is a gauge of the Government's commitment to the needy, the sick, the elderly and to families. Despite the intense pressure on the social security budget we will maintain support for those hit by the recession, we will focus additional support on the most needy. and we will keep our pledges to families and to the elderly.
I can today announce that all major benefits will be increased fully in line with inflation. Subject to parliamentary approval, benefit rates will therefore go up by 3·6 per cent. next April.
The basic retirement pension for a single person will increase by £1·95 a week to £56·10, and for a couple it will rise by £3·10 to £89·90. Unemployment benefit will increase by £1·55 for a single person and by £2·50 for a couple, and I propose to make no other changes to that benefit.
Child benefit will be £10 for the first child and £8·10 for each subsequent child. In addition to uprating all benefits, we will keep our promises to focus increased support on those in greatest need. Last month, the Government boosted the income support rates for pensioners, by £2 for a single pensioner and by £3 for a couple. From next April there will be a increase in the real value of income support. Thereafter, no one on income support will be required to contribute a minimum of 20 per cent of the local government taxation charge, as people have up to now, but the increase in basic income support levels introduced to match that liability will be maintained. That is worth on average £1·40 a week for a single person under 25, £1·60 for a single person over 25 and £2·80 for a couple.
That means that the disposable income of an unemployed couple on income support will actually increase by an average of £5·20 a week next April, and the disposable income of an average 80-year-old couple on income support will be £9·35 more than it was last April, taking their income support over £100 a week for the first time. The uprating itself will cost £2·5 billion next year and the real increase in disposable income for those on the income-related benefits is worth a further £1 billion.
It has been possible to meet these commitments in full only as a result of a searching scrutiny for savings in all my Department's programmes. My first priority has been to find savings that do not involve curtailing entitlement to benefit. I have therefore subjected my Department's running costs to rigorous examination, while maintaining my Department's full commitment to the citizens charter and enhancing capital spending, which will rise by £159 million over the next three years, bringing total capital expenditure to more than £1 billion in that period.
A major component of running costs is the payment of benefits by order book or giro. That is markedly more costly than payment through the banking system. I therefore propose to encourage more customers to accept payment of benefits directly into their bank or building society accounts. In addition, my Department will be
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working closely with the Post Office to improve efficiency and reduce theft and fraud involving order books and giros. This, along with fraud elsewhere in the system, can involve very substantial sums of money. I have already announced my determination to tackle fraud and abuse of benefits. Those who defraud the system have nothing in common with the vast majority of honest and genuine claimants, and every pound lost through fraud means less for those in real need.
I therefore plan to step up the fight against fraud. I am increasing our investment in fraud work by £10 million a year. This, aided by better use of our existing resources and new techniques, will have an expected return of £100 million a year. I am today laying the regulations withdrawing income support from those—be they new age travellers or others—who are not even actively seeking work. I will consult the local authority associations on a new initiative to encourage local authorities to stop fraudulent claims for housing and council tax benefits. By taking those measures, I hope that the total of fraud identified and stopped will increase to nearly £1 billion each year.
It is also necessary to look carefully at how well benefit spending is focused on those whom Parliament intended to help. There has been a significant increase in the numbers on invalidity benefit and in spending on it. There are now more than twice as many people drawing this benefit as in 1979, at a cost nearly two and a half times as great. By 1996 invalidity benefit will cost well over £7 billion a year. Against that background, I intend to tighten up the administrative and medical procedures for controlling this benefit. That will ensure that medical examinations are better targeted and that more effective action will be taken when people fail to attend for their examination or are found to be capable of work. Those changes are expected to reduce spending by £240 million over the survey period. A major research study into invalidity benefit was launched last year. Some results have been received, and others will be received during 1993. I shall consider those results carefully as they become available.
I have also looked at two aspects of war disablement pensions. Officers receive more compensation for a given disability than other ranks. There is no reason why they should. I therefore intend to abolish rank differentials for disablement pensions, by moving everyone up to the rate for officers. That will benefit nearly 200,000 war disablement pensioners who will gain by up to £5 a week.
This will be made possible by the second change, which is to bring the rules for noise-induced hearing loss more into line with the industrial injuries scheme. As under that scheme, awards will no longer be made to those whose noise-induced hearing loss is assessed at less than 20 per cent. disablement. But I can assure the House that no existing war pensioner will suffer a reduction in the cash that he or she is currently receiving. These proposals will now be discussed with the Central Advisory Committee on War Pensions.
I also intend to introduce two minor savings measures. I propose to increase the top rate non-dependant deduction in housing benefit and income support, but to freeze the three lower rates. I propose also to freeze the higher rate of statutory sick pay, as most employees who benefit from it are covered by occupational sick pay schemes. These enable me to make a number of modest, but worthwhile, improvements. I plan to increase by £10 per week all but one of the income support limits for those

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with preserved rights in residential care and nursing homes. I plan to extend the severe disability premium to those sharing a household with a blind person. I am increasing the amount that carers may earn without affecting their benefit. I am giving £1 million to help hospices and more money to help severely disabled drivers.
We are also introducing improvements in the benefit arrangements for orphans. I believe that those measures will he widely welcomed.
I now turn to the social fund. By using loans, we can help far more people with a given amount of money than if it were given as grants. Improved repayments of these loans enabled me last week to announce an extra £8 million for the social fund discretionary budget for the current year. Together with a further injection of cash, that means that I now expect next year's budget to be up 12 per cent., at £340 million. That is a 50 per cent. increase in two years.
In accordance with my statutory duty, I have carried out a review of national insurance contributions. The national insurance fund is obviously affected by the state of the economy. However, the Government do not propose to make changes to national insurance contributions for next year other than normal adjustments for inflation. That reflects our determination to minimise the burdens on employers and employees. Instead, we intend to seek powers to keep the national insurance fund in balance by drawing as necessary on a new, limited, Treasury grant. That grant will give us useful flexibility in managing the fund during a downturn in the economic cycle. I intend to introduce a Bill shortly to make provision for the grant. The Bill will also provide for the new age-related addition for personal pensions. Personal pensions have proved outstandingly popular. This addition will remove a potential distortion. It fulfils our manifesto commitment and it will ensure the continued success of personal pensions.
Fuller details of the uprating, national insurance and other measures have been given in two written replies to my hon. Friends the Members for Hertfordshire, West (Mr. Jones) and for Tiverton (Mr. Browning). Those replies are available with the autumn statement briefing in the Vote Office and will be published in the Official Report.
My right hon. Friend the Chancellor has set out a tough and realistic programme for public expenditure as a whole. Within that total I have sought to make savings, particularly by bearing down on operating costs and fraud. I have sought to curb programmes that might otherwise pre-empt the resources needed to sustain recovery in the longer term. As a result, we have been able to protect benefits for those hit by the chill wind of world recession, to channel increased support to the most needy and to keep the pledges that we made in April. I commend our plans to the House.
Mr. Donald Dewar: Let me begin by welcoming the general uprating of benefits by 3·6 per cent. It is not so much a cause for satisfaction as a cause for relief when measured against the rumours that were allowed to run.
Let me also register my personal relief that the Secretary of State has not acted in the spirit of his speech to the Tory party conference, in which there was so much
1020
talk of subsidised scroungers and the something-for-nothing society. To say that the preservation of the status quo is presented to look like progress is, I think, to make a fair comment on the Government's record.
Notwithstanding the Secretary of State's complacency, will he recognise that, for many, life on benefit is anything but easy? Last year, income support was uprated by 7 per cent.; this year, the uprating is 3·6 per cent. Does the Secretary of State accept that, whatever the technical reasons for the change in the Rossi index, many will feel a cold wind blowing in the new year? Retrospective indexing is, of course, a comforting method when inflation is falling, but now, with the emergence of a very different picture, does the Secretary of State recognise that he is leaving pensioners' living standards vulnerable to rising inflation in the coming year?
The underlying rate of inflation in the year to September was 4 per cent. Is that not a better estimate of pensioners' costs, given that most of them do not have mortgages? Does the right hon. Gentleman accept that bonfires will not be lit following the news that a married person's pension is to rise from £86·70 to £89·90?
I hope that the Secretary of State has noted and studied the Rowntreee report, by Professor Jonathan Bradshaw, which was published earlier this week. The report underlined the difficulty of making ends meet at current income support levels. Does the right hon. Gentleman accept that there is little room for comfort when—according to the report's findings—a couple with two children under 11, living in a council house, need an extra £36 per week to fund an austere low-cost budget? There are no signs that this Minister and this Government have any visible or active commitment to tackling the problems of poverty.
I note that the Secretary of State intends to cut £240 million from invalidity benefit expenditure over the survey period. A few minutes ago, one of my hon. Friends asked the Chancellor a question that I shall now ask the Secretary of State. Is he, in effect, challenging the professional judgment of general practitioners, and does that imply that there will be new instructions on certification by doctors? If so, will the right hon. Gentleman give details? If not, exactly what kind of changes is he contemplating?
Will the Secretary of State now come clean about the hidden agenda in connection with invalidity benefit? Are there plans for legislation to reduce average payments of the benefit, and to bring it into tax? Would that not mean that an additional 70,000 people whose only income is invalidity benefit would have to pay tax?
Mr. Nigel Evans: That is a scare story.
Mr. Dewar: I shall be delighted if the Secretary of State tells us that it is a story without foundation, and rules it out. I shall wait with interest to see whether he does so.
I note that the Secretary of State is laying regulations to withdraw income support when it is held that a claimant is not actively seeking work. Those changes will not only affect new age travellers, as Ministers often imply; they will affect all applicants for unemployment benefit. Will the Secretary of State tell me what advice on the matter, and on that specific proposal, was given by the Social Security Advisory Committee?
I welcome the changes in war disablement pensions to put other ranks on a footing with officers, which

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constitutes a rare appearance of the classless society in the Government's work. Does the Secretary of State accept, however, that there will be some disquiet at the news that the changes are to be funded at the expense of those claiming for hearing loss as a result of service?
There will also be a welcome for the changes affecting income support levels for residential care and nursing homes. The Secretary of State should note, however, that we shall want to look closely at the increase in the top-rate non-dependant deduction in housing benefit. Is that not a disincentive for children to stay with their families, at a time when homelessness is growing—and is certainly one of the most common causes of benefit overpayment and, on occasion, of fraudulent claims?
I welcome the extension of the severe disability premium to those who share a household with a blind person; but will the Secretary of State give a categorical assurance that that is not the end of the story? It would be very sad if it were to be the final concession, and if all other carers living with the person cared for were to be permanently excluded from the premium. As one of my hon. Friends suggested earlier, should not the criterion be disability rather than loneliness?
May I ask the Secretary of State to look again at the social fund? I recognise his reluctance to retreat, but the social fund is arbitrary in operation and often unjust in outcome. Will the right hon. Gentleman recognise the need to review the cash-limited nature of the fund?
The significant figures in today's statement are the projected spending totals for the next three years, which are to rise to a formidable £87 billion in 1995–96. Will the Secretary of State acknowledge that, under current policies, expenditure on benefits will continue to rise for the worst of reasons—the rise in unemployment? Given that every 100,000 added to the unemployment total costs the right hon. Gentleman's Department £330 million this year, what room will there be for any real improvement in living standards for the people on benefit who are included in those totals?
The long-term outlook remains depressing. There is a price to be paid for the Government's mistakes. The Secretary of State pays out almost £1 in every £3 spent by Government. The tragedy is that it will not bring comfort and dignity to those at risk while this failed Administration use it to fund the cruel waste of the dole queues.
Mr. Lilley: Let me take an opportunity that I missed on a previous occasion, and welcome the hon. Member for Glasgow, Garscadden (Mr. Dewar) to his post, to which —as the whole House will agree—he will bring a high level of intelligence, integrity and diligence. I am particularly delighted to see my former pair sitting opposite me.
The hon. Gentleman gave my statement a rather grudging welcome, although it was a little more forthcoming than the response of the hon. Member for Dunfermline, East (Mr. Brown) to that of my right hon. Friend the Chancellor. The hon. Member for Dunfermline, East is made happy only by bad news, and it seems that the hon. Member for Garscadden and his colleagues are made rather gloomy by good news.
The hon. Gentleman's principal criticism of the Government's actions seems to be our failure to fulfil the "rumours" that he himself fostered and encouraged on
1022
every possible occasion. He also suggested, rather surprisingly, that my statement was out of tune with a speech that I had made to the Conservative party conference. I assure him that it was in no way out of tune with that speech. Then, I emphasised the importance of an attack on fraud, and made it clear that there was every difference in the world between the vast majority of claimants—who are honest and genuine people—and those who commit fraud. It is the Labour party that does not distinguish between the two.
Let me remind the hon. Gentleman of a paper that was submitted to the Labour party's national executive committee by his hon. Friend the Member for Sheffield, Brightside (Mr. Blunkett). According to that paper, one of the disadvantages from which the Labour party suffered was the fact that it had linked itself with freeloaders. [Interruption.] I shall be happy to give chapter and verse later, if anyone cares to question that point.
The hon. Member for Garscadden said that income support had risen by only 3·6 per cent. I spelt out in some detail the implications of the extra £1 billion of resources that would be provided on top of that, allowing income support beneficiaries a rise in disposable income significantly larger than the original figure. That will mean a real improvement in standards of living, especially among the poorest pensioners.
The hon. Gentleman suggested that we move to a system of uprating based on prospective rather than retrospective inflation. I should have thought that, at a time of falling inflation, that would disadvantage most people, returning us to the days of a Labour Government who made precisely such a change and, in the process, cut the real value of pensions by 6 per cent.
The hon. Gentleman said that the Rowntree report spelt out an "austere low-cost budget"—a budget that allows the poorest only a video recorder, a camera and a television set; the report adds that they will not be able to afford a second television set for the children. According to the report, a modest budget requires an income of nearly £21,000 a year. As I recall, that is close to the income level at which the Labour party considered that a person was so rich that he should suffer a tax increase.
As for invalidity benefit, that is not a cut in entitlement. By tightening up our procedures and making better use of our medical resources, we hope to be able to save that amount over the period. For example, we shall cut out some of the procedures that require us to go twice to our own medical officers for the same piece of information. Medical officers will therefore be able to examine more cases and exercise tighter judgment. The opportunity has always been there to take the opinion both of general practitioners and of our medical officers. It is not unknown in the medical world to take a second opinion.
The taxation of invalidity benefit is a matter for my right hon. Friend the Chancellor of the Exchequer, as are all taxation matters. The hon. Gentleman knows that the literature that recipients of this benefit receive contains a statement that it has been our long-standing intention to bring that benefit into tax, but only when the difficulties in doing so can be overcome.
The hon. Gentleman referred to the effect of the regulation laid today on those who are actively seeking work and said that it would apply to all people. It will apply only to those without children. A number of other

1023
categories are excluded, including—following the advice of the advisory committee—pregnant women. They, too, will be excluded from the operation of this rule.
The hon. Gentleman described the social fund as arbitrary and unjust. I believe that it is a far better system and less arbitrary and less unjust than the single payment system that preceded it. It will not be possible to operate it without a cash limit. Were we to operate solely on the basis of grants, the amount of cash that we have would mean that the operation of the cash limit would be far more stringent than that which we operate at present.
The hon. Gentleman referred to the very large total expenditure on social security. That is a gauge of our commitment to the neediest and to those who are most affected by severe economic circumstances. The hon. Gentleman is right to say that the best help they can have is the recovery of the economy. I believe that the Chancellor's statement earlier today offers the best promise of achieving that recovery. I believe, too, that his statement will be welcomed as much by the beneficiaries of my Departments as by every hon. Member.
Mr. Patrick Nicholls: Does my right hon. Friend accept that the action that he has announced against new age travellers will he particularly welcomed on this side of the House? Does he also agree that the vast majority of people who honestly draw benefits find it peculiarly insulting when they see the nation's resources being squandered on an indolent, anarchic rabble?
Mr. Lilley: My hon. Friend makes an extremely good point. In the estimates that I have made of savings through tackling fraud, I have made no allowance for any deterrent effect that the announcements will have. I believe, however, that an example effect was created when people could see that perhaps only a small number of people were getting away with living on benefit. That must have tempted others to do likewise. Now that they know that we are bearing down on that practice, they will not be so tempted. That must be beneficial to the country as a whole.
Mr. Archy Kirkwood: May I, like the hon. Member for Glasgow, Garscadden (Mr. Dewar), extend a grudging welcome to the statement? It is with some relief that we see that the Secretary of State has managed fully to index benefits. I acknowledge and welcome that fact. However, it drives a coach and horses through the contributory principle of the national insurance fund if the Secretary of State needs a Treasury grant to balance the books. It takes us all the way back to the old Treasury supplement days.
In his conference speech, the Secretary of State said that he intended to crack down on fraud. That is right and proper. However, can he give the House an assurance that the new techniques will not result in menace and intimidation? Many claimants are genuinely ignorant about the system and find it difficult to make claims.
As for the social fund, can the Secretary of State tell me how much of the announced money that he has adverted to this afternoon is real, new money and how much of it is due to the faster repayment of loans? The only effective way of measuring the size of the social fund budget is to measure it as an amount versus the number of income support claimants.
Can the Secretary of State also say a word about payments directed into bank accounts? He knows that many claimants do not have bank accounts. Very many
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post offices in rural areas and other areas will find it difficult to remain financially viable if the Secretary of State is too draconian about introducing that change too fast.
Mr. Lilley: I am grateful to the hon. Gentleman for his self-confessedly grudging welcome. He believes that it is a small matter fully to uprate the benefits throughout the system. Many other countries throughout Europe are finding it difficult or impossible to do so. I know that the hon. Gentleman wants us to follow Europe in every respect. Does he wish us to follow in that respect also? The hon. Gentleman said that the ability to top up the national insurance fund from taxation was unwelcome. I presume, therefore, that he wants us to put up contributions. We think that that would not be right at present.
I can assure the hon. Gentleman that there is no question of menace and intimidation in the pursuit of fraud. I agree that it would be entirely wrong to go down that route. None the less, it is right to use all the techniques and information that we have available, through the computerisation of the benefits system, to achieve that end.
As for the social fund, I can assure the hon. Gentleman that the increase in the budget in recent years and in next year's budget is in excess of the increase for people on income support. Therefore the amount of help available to people in that category is, effectively, increasing, even though the amount of new cash is quite small, but the recycling of cash through the repayment of loans earlier than was originally thought possible enables a 12 per cent. increase to be made in the coming year.
Mr. James Couchman: I wholeheartedly congratulate my right hon. Friend on having uprated all benefits in line with inflation and on not imposing an additional burden on industry through increasing national insurance contributions. It must have been a strong temptation, which my right hon. Friend was very wise to put on one side at this time. The very many people who are on low incomes find it grossly offensive that people who earn money through the black economy make no contribution, either through taxes or insurance. My right hon. Friend's attack on fraud will be particularly welcomed by those low-income families who pay their tax and national insurance honestly.
Mr. Lilley: I am grateful to my hon. Friend for his congratulations. It has obviously been difficult for the Chancellor to achieve such a good settlement. I am delighted that he has been able to do so and that we have been able fully to uprate without increasing national insurance contributions. My hon. Friend is correct about fraud. No one resents fraud more than the genuine claimant of unemployment benefit when he sees someone else, who he knows has a job, fraudulently claiming unemployment benefit. That is intolerable and unsatisfactory. We shall do our best to root it out.
Mr. Win Griffiths: The Benefits Agency office in my constituency deals with the largest number of disability benefit claimants in the country. The Secretary of State's reference to tightening up the procedures implies that it will become more difficult for people to claim disability benefit. Many of my constituents will be shocked by that remark. One of my constituents heard only a fortnight ago, two years after making her application for

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disability benefit, that it had been approved. Thousands upon thousands of people throughout the country have been waiting for months and months—in this case for two years—to hear whether their application has been approved. Can the Secretary of State assure us that these measures will not lead to a reduction in the number of people who receive disability benefit?
Mr. Lilley: I can assure the hon. Gentleman, and I hope that he will reassure his constituents, that there is no question of harassing the vast majority of people who are entitled to this benefit and who will continue to receive it. We are proud of the fact that we helped twice as many people with this benefit as the Labour party and that we spend two and a half times as much upon it. However, we want to ensure that it goes where Parliament intended it to go. We have legal powers to check the medical basis upon which it is given. Anyone who fulfils those criteria has absolutely nothing to worry about, but it is right and proper that where referrals are made and there is a question about entitlement, we should investigate more of them than we do at present. I shall look into the two-year delay to which the hon. Member referred. He may have been referring to the disability living allowance, which is newer and with which there have been problems, but we have drafted in 800 extra people to get on top of them.
Mr. Lyles Brandreth: Can my right hon. Friend confirm that his caring and balanced statement means that there will be no curtailment in the duration of unemployment benefits and no reduction in its real value? If so, will he use the opportunity to condemn the scaremongers on the Opposition Benches who have been having a heyday spreading rumours and, consequently, dismay? They must have had a disappointing afternoon, because they have a vested interest in bad news.
Mr. Lilley: My hon. Friend makes a valid point. I can confirm that there will be no reduction in the duration of entitlement to unemployment benefit. Rumours to that effect, fostered by Opposition Members, have proved ill-founded, as so many have in the past. Opposition Members' obvious delight in getting hold of any rumours or suggestions was matched only by the misery and disappointment on their faces when they realised that they were untrue.
Mr. Terry Rooney: Will the Secretary of State confirm that it is a condition of entitlement to benefit that an unemployed person must not only be available for work but actively seeking it? Will he therefore elucidate on the changes for which he said he is legislating today?
Mr. Lilley: Yes, I am happy to do so. Under existing rules, someone who is not actively seeking work is not entitled to the full rate of income support. It has been possible to secure the hardship rate, which is 40 per cent. lower, without actively seeking work. That entitlement has been removed from most categories where it clearly should not apply. A number of cases have been allowed to continue, where appropriate, partly on the advice of the advisory committee.
Mr. Charles Hendry: I welcome the comments that my right hon. Friend made about trying to
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make savings in his departmental budget by encouraging more people to have their benefit paid directly into their bank account. Will he confirm that that is possible only because of his Department's multi-billion pound investment in new technology, which shows that the Government are committed not only to maintaining the level of benefit but to improving the way in which it is delivered?
Mr. Lilley: That is absolutely correct. On the issue of encouraging people to have their benefit paid directly into their bank accounts, which was mentioned by the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood), I should point out that only those who have bank accounts and can be persuaded to use the facility will do so. There can be no question of claimants in rural areas who use the Post Office or whose bank is a long distance away switching from the Post Office. There is therefore no threat to rural sub-post offices.
Mr. Nigel Evans: I congratulate my right hon. Friend on his announcement, and especially on inflation-proofing benefits, contrary to the scare stories, which did not help people who are on benefit. I particularly welcome the announcement about the savings that have been achieved by targeting fraud—£1 billion is not an inconsiderable sum of money—which have been reinvested to the benefit of people in need. May we have an assurance that the campaign against fraud will continue and that any future savings will be reinvested in the social security programme?
Mr. Lilley: Had I not been able to offer the Treasury the assurance that we would make efforts to stop and get back the £1 billion that otherwise would be lost through fraud, we would have £1 billion less to pay in benefit. It would not have been possible, therefore, fully to uprate benefits. That is why some Labour Members who deride the attack on fraud and identify it with an attack on poverty are 180 deg wrong. The hon. Member for Brightside, who cast doubt on my reference to his quotes, has conveniently left, but in his paper to the national executive of the Labour party, he said fear of Labour arises when
"it tolerates the intolerable—anti-social behaviour, freeloaders and the like from whatever level of society."
He is right; the rest of the party should listen to him.
Mrs. Margaret Ewing: The Secretary of State has stated that he wants to introduce administrative ideas to control invalidity benefit. Does he see control as being more important than the award of invalidity benefit, and when he talks about difficulties in taxation with this aspect of social security benefit, is he advocating taxation or opposing it?
Mr. Lilley: There is no conflict between controlling a benefit and awarding it. We want to award benefit to those who are entitled to it and ensure that it is not indiscriminately available to those who are not. It would be wrong and contrary to the intentions of Parliament to award benefit to those who are not entitled to it, so we propose to check more cases that are referred to us for checking, to make better use of information and to have better relations and transfer of information with GPs, who often are not experts in social security law but who, in effect, have to comment on it. As a result, we shall better handle a very important benefit for many people and the money will go to the right people.
Mrs. Ewing: And taxation?
Mr. Lilley: I have made my position clear to the hon. Member for Garscadden: taxation is a matter for my right hon. Friend the Chancellor. We have a long-standing commitment to bring untaxed benefits, including this, into taxation, but that has not yet proved possible because of the difficulties surrounding it.
Mr. Frank Field: Has not the Secretary of State scored a first in persuading his Cabinet colleagues of the extent of social security abuse, which is so widely believed at Tory party conferences? I congratulate him on so exciting his colleagues that he managed successfully to steer through his total social security budget. Does he accept that, although he has been successful, Secretaries of State responsible for the public sector have allowed the lowest paid workers to suffer real cuts in living standards? Some of those workers earn about the same as or less than they could claim in benefit. Is there not something unsatisfactory about the public expenditure review when the living standards of the poor are dependent on the political skills of the masters around the Cabinet table?
Mr. Lilley: I am very grateful for the hon. Member's friendly remarks—perhaps "friendly" is the wrong word because he supports us only when we are right and a real friend would support us when we were wrong. We are right today and we have done the right thing. I am glad that he recognises that. He carries a lot of weight as Chairman of the Select Committee on Social Security and we always listen carefully to what he has to say. Inevitably, everyone who is dependent on public spending must keenly await the outcome of a public spending round. We always try to protect the poorest and most needy. I have made clear and explicit statements that that is our objective, including in my speech to the Conservative party conference. Others chose to listen to rumours rather than to my clear and open words.
Mr. David Willetts: I congratulate my right hon. Friend on his conspicuous success in securing a full uprating of social security benefits. I congratulate him particularly on securing what is in effect an increase in the real value of income support. Is not that evidence of our ability to target help effectively on the poorest members of society? Our low inflation ensures that the real value of benefits is maintained properly during the year and that old and unemployed people do not suffer a 20 per cent. or 25 per cent. reduction in the real value of their benefits, as they did under the previous Labour Government.
Mr. Lilley: I am grateful to my hon. Friend for his thanks. It is true that we have increased the real value of benefits to the most needy. That is the best way of targeting. The Labour party is now committed to considering the means testing of all universal benefits. That is another way of targeting. We shall see how popular means testing proves to be.
My hon. Friend is right that inflation is the real thing that hits the poor. It destroys their savings. In the course of the year inflation can undermine purchasing power. If inflation is 20 per cent., on average purchasing power throughout the year is 10 per cent. less than it was at the start. That was the position under the Labour Government when we had an inflation rate of 20 per cent. That would be the position again if we were to give way to the Labour party's profligate and foolish policies.
Mr. Clifford Forsythe: I welcome the uprating and the other improvements that have been announced, especially as they relate to war pensions. Can the Minister reassure the House that, as a result of tightening up the invalidity benefit and other procedures, no one who is entitled to a benefit will be disadvantaged in any way? Will he take into account the many proposals that have been made to make the social fund more effective and fair, which it is not at present?
Mr. Lilley: I can give the hon. Gentleman an unequivocal assurance on invalidity benefits. Our intention is not to reduce the entitlements; it is simply to ensure that the benefit goes to those who are entitled.
I will consider carefully the several reports that have been made on the social fund. I am not persuaded by any of the reports that we should move away from the underlying principles on which the fund is based. The underlying principles are that the fund must have a discretionary element to deal with the aspects of benefits which are not covered by the present complex system of rules, that it must include a loan element and that it must be cash-limited.
Mr. Bernard Jenkin: I add my congratulations to my right hon. Friend on the full uprating of all social security benefits. Does he agree that it is a bit rich for the hon. Member for Glasgow, Garscadden (Mr. Dewar) to spread fresh rumours about the erosion of the value of pensions in the future when the only Government ever to massage the real value of pensions downwards was a Labour Government? [Interruption.]
Mr. Lilley: From the squealing on the Opposition Front Bench, it is clear that my hon. Friend's bullet hit its target.
Mr. Paul Flynn: While no one would defend claims by anyone who is not entitled to a benefit, does the Secretary of State note that in the valleys of south Wales there are a larger number of claims than usual for invalidity benefit? That is not because people cheat or doctors lie but because the area has a high incidence of silicosis, pneumoconiosis and bronchitis among people working in quarrying and mining.
If the Secretary of State wants to tighten up on scroungers, as he told the Conservative party conference in Brighton, should not he look to the royal travellers—the minor members of the royal family—who take substantial sums of public money to which they are not entitled? Should we re-examine the possibility of taxing the Queen?
Mr. Lilley: The hon. Gentleman spoilt a good point with a bad one at the end. He is right about the ill health and disability that is often experienced by miners. We have every intention of keeping invalidity benefit fully open to them.
The hon. Gentleman may have referred to remarks on the television. The views were those of the programme, not of any Minister. We did not participate in that programme, which made suggestions about miners in south Wales. I have not seen the programme but I know that there are problems in mining communities. We want the benefit to be available to miners.
Mr. David Nicholson: Is my right hon. Friend aware that the congratulations which are rightly

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due to him, as the hon. Member for Birkenhead (Mr. Field) pointed out, for piloting his budget through the Cabinet, should perhaps be shared with his predecessors, notably the Leader of the House, for the difficult decisions that they took in targeting the benefits programme? Does he agree that we should also congratulate the electorate on resisting the siren voices in the Labour party, which wanted to make extravagant promises that it could not possibly have afforded if it had come to government?
Is my right hon. Friend aware that his efforts to eliminate social security fraud will be welcome among Conservative Members, particularly those who represent parts of the country which were invaded this summer by new age travellers? I fear that, if the weather had been better this summer, we would have suffered rather more substantial and lengthy invasions by those travellers. As part of the programme of investigating fraud, will he examine the rents charged in constituencies such as mine for accommodation which is designed primarily for people on social security benefits? Certain local authorities feel that rents should be examined.
Mr. Lilley: I agree with my hon. Friend that it is impossible to overstate the amount that we owe to my predecessor both when he was Secretary of State for Social Security and now in his strategic location. I have only one thing against him: he weeded out many nonsenses which would otherwise have been available for me to weed out and for which I could claim credit.
My hon. Friend is right about new age travellers and others. We have nothing against the travelling mode of life as long as people obey the law, contribute to society and do not become leeches on it. Of course, I shall look into the matter of rents with local authorities.
Mrs. Audrey Wise: The Secretary of State referred to a major research project into invalidity benefits and said that he was examining the results of it. Will he publish those results? Does the research include examining the fate of the many people who are deemed capable of light work, which is unspecified and usually unobtainable?
Mr. Lilley: Some results of the research are already coming through and more results will come through in the next few months and in 1993. I will certainly consider publishing them. It is my predisposition to publish, and that is the normal practice.
Obviously, the existing rules on light work will not be changed by what we have announced today.
Mr. Harold Elletson: Does my right hon. Friend remember a motion that was passed at this year's Labour party conference which called for increases in—
Madam Speaker: Order. May I give a little guidance to the hon. Member? We are asking questions on a statement that has been made by the Secretary of State. The hon. Member must ask a question about the statement.
Mr. Elletson: In the light of the announcement today of increases in income support and support for pensioners and other categories of people, does my right hon. Friend remember a motion that was passed at this year's Labour party conference which called for increases in pensions?
1030
Can he confirm that the hon. Member for Glasgow, Garscadden (Mr. Dewar) admitted that such increases could cost the taxpayer up to 25 per cent.—
Madam Speaker: Order. I try to help hon. Members who have not been here very long, but I am afraid that I cannot accept that question. We must now move on.
Mr. Jeremy Corbyn: Will the Secretary of State take this opportunity to confirm that the breaking of the link between the state old-age pension and earnings in 1980 and the substitution of a link with the retail prices index has cost pensioners about £15 per week, if not more? Do the Government intend to recompense pensioners for the money that has been stolen from them in the past 13 years and restore fully the link that existed under the last Labour Government?
Mr. Lilley: The simple fact is that the living standards of pensioners have increased five times as rapidly under this Government as they did under the last Labour Government. I believe that most pensioners are glad that we have pursued our policies, not those of the Labour party. The Labour party often makes reckless pledges and commitments and then breaks them. My hon. Friend the Member for Blackpool, North referred to a pledge that was passed at the Labour party conference. The deputy leader of the Labour party says that the Labour conference makes Labour policy. At the Labour conference the hon. Member for Garscadden said that such a pledge would cost about £25 billion, and added that he saw it as a commitment by the conference, and supported it as an aspiration. It is an aspiration which it would be impossible for any Labour Government to fulfil—certainly not while doing all that was announced in my statement as well.
Mr. Michael Stephen: Does my right hon. Friend accept that his statement will he warmly welcomed in the country? In the depths of a world economic recession it is a fine achievement. Does my right hon. Friend also accept that there is no monopoly of compassion among Opposition Members, and that in supporting his statement Conservative Members are every bit as committed to giving the elderly and sick and the disadvantaged the best help that we can. The difference between us and them is that we know that there is no crock of gold at the end of the rainbow out of which all demands on the public purse can be met.
Does my right hon. Friend recall that the Labour Government could not even muster the resources to pay pensioners their £10 Christmas bonus?
Mr. Lilley: My hon. Friend makes a good point. Any pretence that the Labour party ever made to be the friend of the needy was blown apart by the miserable looks on Labour Members' faces when the Chancellor of the Exchequer announced, and I repeated, that all benefits would be uprated in full. I hope that those miserable faces will be seen on the nation's television screens. Never have I seen gloomier faces on the Opposition Benches.
Mrs. Maria Fyfe: I would suggest that our faces wore expressions of doubt, disbelief and mistrust rather than of gloom. When we talk about scaremongering, the Secretary of State must know that his colleagues in the Ministry of Agriculture, Fisheries and Food produced a study whose findings appalled the

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nation, with its ideas on how much it was reasonable to expect a person to live on per week, and the kind of diet that would result. Will he now tell us that he rejects those findings, and would expect people to have a better standard of living?
The Secretary of State mentioned that people's money should not be paid by giros or by order book. I hope that he realises that many people cannot have bank accounts —banks will not accept large one-off payments because the bank managers do not expect such people to be able to sustain bank accounts, so they are turned away. Will the Secretary of State tackle that problem?
Mr. Lilley: We believe that income support is sufficient, and in effect, as I explained, this year we have increased the real purchasing power of those who receive it by removing the requirement to pay 20 per cent. of the council tax. Thus we leave people free to spend that money as they choose, on different necessities of life.
I propose to encourage people to receive benefits by automated credit transfer into their bank accounts, but clearly people without bank accounts will not be able to do so. I should he happy to discuss the matter with the banks if, as the hon. Lady suggests, there is evidence that they refuse my customers bank accounts. I would tell them that they should not refuse, because social security payments are reliable, social security is good money, and if people wish to receive their benefits in that way that is better than benefits being paid by more expensive means.
Dr. Robert Spink: Will my right hon. Friend spell out for us—in simple language that even the hon. Member for Islington, North (Mr. Corbyn) can understand—the Government's continued commitment to basic state pensions and child benefits, which has been demonstrated by his statement?
Does my right hon. Friend agree that the only party which threatens universal benefits with means testing is the Labour party, which proposes a commission on social justice? Such a commission would produce not social justice but the opposite—[Interruption.]—and would threaten the basic pension and child benefit—[HON. MEMBERS: "Speech."]
Mr. Corbyn rose—
Mr. Lilley: My hon. Friend has made his point in an admirably clear, concise fashion, which I think brought a measure of understanding to the hon. Member for Islington, North, who obviously wished to show his support. What my hon. Friend said is absolutely correct.
Mr. Bob Cryer: Does the Secretary of State accept that we oppose fraud, whether in city boardrooms, in Lloyd's of London, in insurance companies or of welfare benefits? However, does he accept that his explanation of welfare fraud omitted the fact that in order to obtain the figures his Department multiplies by 32 all fraudulently claimed money recovered, which somewhat exaggerates the total?
Does the right hon. Gentleman also agree that the House would not be happy to entrust a tax on fraud to such a scaremongering Minister as himself? At the Tory party conference the right hon. Gentleman said that there were girls who got pregnant in order to cheat on housing queues, and councillors who cheated by obtaining benefits and attendance allowances at the same time. Neither his Department nor the Department of the Environment has
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any statistics for either of those categories. The Secretary of State has no figures whatever to prove his false, malicious, scaremongering smear. He should withdraw it now and apologise to the House.
Mr. Lilley: I unreservedly agree with the first part of what the hon. Gentleman said: we too oppose fraud in all aspects of life, whether in the benefits system, in commerce or in taxation—indeed, I believe that the whole House opposes it. On the hon. Gentleman's second point, to be accused of scaremongering by him is an accolade indeed.
Mr. Iain Duncan-Smith: I congratulate my right hon. Friend on his excellent statement. I understand that behind that statement lies a recent success, on which my right hon. Friend may like to comment. He won a recent court case on national insurance contributions and saved £500 million, which has enabled him to uprate pensions. Will he also tell us whether that was the first time that we have won such a case?
Mr. Lilley: My hon. Friend is right. We won a case in the European Court of Justice, which preserved revenues of £500 million a year which we would not otherwise have had, or which we would have had to obtain elsewhere, so we would have found it that much more difficult to meet the uprating bill. My hon. Friend is correct to say that that was the first such case that the Government have ever won in the European Court of Justice in our 20 years of membership. However, my Department has won two more cases since then, so clearly we are on a winning streak.
Mr. Malcolm Wicks: If we are to have a public sector pay freeze, which will include the wages of poor families with children, at a time when social security benefits are being uprated, what will the effect of the one be on the other? If there is to be more poverty in real terms, what are the implications for social security entitlement, and therefore for public expenditure projections? There must be a connection.
Similarly, what implications will abolishing the wages councils have for projections of social security expenditure?
Mr. Lilley: The interrelationship between my statement and the tight control of public sector pay is clear. It is because we have exercised tight control of public sector pay, and because of the other rigorous measures that the Chancellor of the Exchequer has adopted, that the Chancellor has been able to secure the position of the less well-off, the most needy, and to increase resources for those in greatest need—and also to generate more resources, which will increase the number of jobs in the future.
We believe that in the long run the abolition of wages councils will increase the number of jobs, and so diminish the burden of expenditure on my Department. It is possible that some of those jobs may be low-paid, so that those who do them will be helped by family credit. That is what family credit is there for.
Mr. Peter L. Pike: What adjustments does the Secretary of State intend to make to housing benefit to ensure that those on benefit who pay rent do not receive money from the Government with one hand and have to pay it straight back with the other in increased rent?
Mr. Lilley: To the extent that rents increase, people on low incomes are protected through the operation of housing benefit—that is what it is there for.
Mr. Keith Bradley: May I press the point made by my hon. Friend the Member for Croydon, North-West (Mr. Wicks)? The announcement that public sector pay will be kept down at 1·5 per cent. means that many low-paid workers will receive a very small increase in their wages. Has the Department estimated the number of people who will then be eligible to claim other means-tested benefits, particularly family credit, housing benefit and council tax benefit because those people will fall into that category and become eligible for means-tested benefit?
Mr. Lilley: The hon. Gentleman should not dismiss the point that I made in response to the hon. Member for Croydon, North-West (Mr. Wicks). If those in work take only moderate increases, we can help those who are out of work and help generate the jobs to bring them back into work. The net effect of the changes that we have announced will be beneficial in terms of my budget and in terms of the well-being of the population as a whole.

Business of the House
6.10 pm
The Lord President of the Council and Leader of the House of Commons (Mr. Tony Newton): Slightly later than usual, I should like to make a statement about the business for next week:
MONDAY 16 NOVEMBER—Opposition day (5th allotted day). Until about seven o'clock there will be a debate described as "Housing—Homelessness and the Mortgage Crisis" followed by a debate on Bosnia. Both debates arise on motions in the name of the Liberal Democrats.
TUESDAY I7 NOVEMBER—Second Reading of the Trade Union Reform and Employment Rights Bill.
Ways and Means resolution relating to car tax (abolition).
WEDNESDAY I8 NOVEMBER AND THURSDAY I9 NOVEMBER—There will be a debate on a motion to approve the Chancellor of the Exchequer's autumn statement.
FRIDAY 20 NOVEMBER—Private Members' motions.
MONDAY 23 NOVEMBER—Opposition day (6th allotted day). There will be a debate on an Opposition motion, subject for debate to be announced.
It may also he helpful for the House to know that European Standing Committees will meet on Wednesday 18 November at 10.30 am.
Dr. Norman A. Godman: Not again.
Mr. Newton: Evidently with the reluctant participation of at least one hon. Member. They will meet to consider European Community documents as follows:
[Wednesday 18 November
Standing Committee A
Relevant European Community Documents

(a) 10229/91 Common Fisheries Policy

(b) 5337/92 Fisheries: Discards

(c) 9135/92 Common Fisheries Policy: Mid-Term Review Proposals

(d) 9019/92 Common Fisheries Policy: Control System

Relevant Reports of the European Legislation Committee

(a) HC 24-ix (1991–92) HC 79-i (1992–93)

(b) HC 79-i (1992–93)

(c) HC 79-vii (1992–93)

(d) HC 79-vii (1992–93)

Standing Committee B
Relevant European Community Document
6818/92 Aid for former East German Ship Yards.
Relevant Report of the European Legislation Committee HC 79-iv (1992–93)]
Mrs. Margaret Beckett: I thank the Leader of the House for the statement. There may be a certain amount of cynicism in some parts of the House about the fact that the Liberal Democrats' saving the Government's bacon is followed so closely by the award of an Opposition day.

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I press the Leader of the House for a debate in Government time on the supply of plant and machinery to Iraq. Before the Leader of the House reminds us that there is to be an inquiry, may I say that the matter is not sub judice. Therefore, there is nothing to prevent the House from having a debate. We have a duty to scrutinise the role and behaviour of Ministers in relation to the House and statements made here.
As the timetable for completion of the European Communities (Amendment) Bill seems to be under continual review, when does the Leader of the House now expect to resume the Committee stage? I thank the right hon. Gentleman for next week's debate on the autumn statement, but will he bear in mind that, after the Select Committee report, the House will want an opportunity to take a more detailed look at the public expenditure programme?
Will the Leader of the House bear in mind the strong view on the Opposition Benches that it is quite unacceptable that the autumn statement and the social security uprating statement should be made on the same day in future, particularly on a Thursday, as that is bound to reduce the opportunity normally available to the House for questioning on those different subjects? Finally, may I utter the two words, "Members' interests"?
Mr. Newton: Taking the last point first, I assure the hon. Lady, as I have assured the hon. Member for Workington (Mr. Campbell-Savours) on whose behalf she no doubt raises the point in his absence, that I have that matter very much in mind. However, I cannot add to what I have said over the past week or two.
Returning to the main thrust of the hon. Lady's questions, although I note without surprise what she described at the outset of her remarks as cynicism, it will be well within the knowledge of those on the Liberal Democrats Bench that they have been pressing for a Supply day opportunity for some time—as, indeed, the hon. Lady probably has. My statement gives an Opposition day to the Liberal Democrats and to the official Opposition. It does nothing more than reflect my normal wish to be as helpful as I can in responding to the pressures on me.
With regard to the debate on the Matrix Churchill business for which the hon. Lady was pressing, I cannot promise that. The proper course is for the independent inquiry to do its work. However, I have already said that there is an Opposition day and no doubt the hon. Lady may wish to bear that in mind when considering what she wants to do.
I cannot give the hon. Lady a precise date at the moment for embarking on the Committee stage of the European Communities (Amendment) Bill. However, I assure her that she will not have to wait too much longer. In respect of the hon. Lady's desire for a further debate on the autumn statement, I have said that next week's debate is expected to take place on a motion to approve the autumn statement. That would take over from the debate that more normally takes place in January. However, if the hon. Lady wishes to press, through the usual channels, for further opportunities to debate economic or public expenditure matters, between now and the Budget, consideration can clearly be given to that in the normal way.
I was a little surprised by the hon. Lady's remarks about the autumn statement and the social security
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statement coming on the same day. In many ways, there has been an artificiality in previous years in having the social security statement picked out some weeks in advance of the overall outcome of public expenditure. Although I do not say that that sets an immutable precedent, it makes a certain amount of logical sense. It is now more than two and three quarter hours since the first of the statements was embarked upon and there has been a full opportunity to question my right hon. Friends the Chancellor of the Exchequer and the Secretary of State for Social Security.
Mr. Patrick Cormack: Will my right hon. Friend make a statement next week on the way in which the House will examine the issue of the ordination of women? My right hon. Friend will be aware that that matter will have to come before the House after the Ecclesiastical Committee of both Houses has considered it. Is he aware that there is deep feeling on both sides of the House about the issue and that we will expect a full day's debate at least when it comes before the House?
Mr. Newton: I take careful note of that point. I am well aware that, following yesterday's decision, the House will expect a substantial opportunity to debate the matter should it come before us. I shall bear what my hon. Friend said in mind.
Mr. Simon Hughes: Grateful though we are for the debate space on Monday, I wish to press the Leader of the House on the Committee timetable and remaining stages timetable on the Maastrich Bill. Will he dispel the various confusions in Government circles about the timetable from now on? Are we going to start the Committee stage, as we are told, the week after next? When will Third Reading be taken?
Mr. Newton: As I told the hon. Member for Derby, South (Mrs. Beckett), I cannot give a specific date, but I certainly anticipate embarking on the Committee stage of the European Communities (Amendment) Bill very shortly after we have disposed of the business that I announced today, which takes us up to Monday week. However, I shall not attempt to give a specific date this afternoon. As for subsequent stages of the Bill, the position has been made entirely clear by my right hon. Friend the Prime Minister and I have nothing to add to that.
Mr. Graham Riddick: Would my right hon. Friend care to tell me when I shall be able to express my dismay at a rather feeble decision by the Rugby Union authorities to kow-tow to the African National Congress and decide not to play the national anthem at Twickenham on Saturday? Will my right hon. Friend join me in urging the fans at Twickenham to initiate the singing of the national anthem on Saturday to continue the long-held tradition which has been enjoyed there for such a long time?
Mr. Newton: Many will share my hon. Friend's concern. I understand that, following the press report earlier in the week, further discussions are taking place today and a decision is expected later. So far as I am aware, it has not been made yet. It is not, of course, a matter for the Government, being a matter for private bodies, but I hope that a solution will be found that will enable the tradition to be maintained.
Dr. Godman: May I say in passing that I am very interested to hear that European Standing Committee B is meeting next week.
My question concerns the need for a statement next week by the Secretary of State for Social Security about a decision by the chief adjudication officer to appeal against a commissioner's decision to restore invalidity benefit to a lady in Liverpool. The Government's refusal to restore payment of that benefit by way of the commissioner's decision, which is based upon an EC directive dating from as far back as 1979, has important implications for many thousands of women, some of whom are quite frail in health.
I appeal to the Leader of the House, who has knowledge of these matters, to arrange for a statement concerning the timing of the appeal to the English Court of Appeal. If that appeal is lost, I should like to know whether the Government would then appeal to the House of Lords. I have today written to Mrs. Papandreou urging her to take action at the European Court of Justice against the Government by way of article 169.
Mr. Newton: The hon. Gentleman was kind enough to suggest that I had a certain knowledge of social security matters, which I suppose inescapably is the case after three years as Secretary of State, but it does not extend—
Mrs. Beckett: That does not necessarily follow.
Mr. Newton: That is a really cynical remark.
Dr. Godman: What does the Leader of the House mean?
Mr. Newton: I was referring to the hon. Member for Derby, South (Mrs. Beckett). The hon. Gentleman probably did not hear her sedentary and cynical intervention.
As for the hon. Gentleman, I must tell him that whatever knowledge I have did not extend to the details of the case that he raised. However, I know enough about such matters to know that I would be unwise to comment off the cuff. I shall draw his remarks to the attention of the Secretary of State.
Mr. Robert Banks: Is my right hon. Friend aware that it is some time since we have had a debate in Government time on tourism? Will he give recognition to the fact that tourism is Britain's largest industry, both in terms of revenue gains for the country and because of the number of people employed in it? Will he therefore urgently see if he can find time for a debate on tourism?
Mr. Newton: That is the second time in a couple of weeks that the point has been raised. Although I cannot give any promises, I shall bear my hon. Friend's request in mind. Meanwhile, noting the town that he represents in Parliament, I hope that it did reasonably well out of the CBI conference.
Mr. Ken Eastham: I wish to raise with the Leader of the House the desperate plight of between 20,000 and 25,000 unfortunate old-age pensioners who, as a result of deregulation of the money markets in the mid-1980s, were encouraged by investment companies under the umbrella of the FIM BRA logo—that of the Financial Intermediaries, Managers and Brokers Association—to take up home investment schemes and who have seriously impoverished themselves. Some families are almost on the point of suicide. Will the Leader
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of the House arrange for a Treasury Minister to make a statement to the House next week, with a view to introducing strict regulations to protect those unfortunate people?
Mr. Newton: I do not have to undertake to bring Treasury Ministers to the House next week, because they will be here in profusion on Wednesday and Thursday. It will be for you, Madam Speaker, to judge whether reference to such a matter would be in order in that debate. As I said last week, it would seem that, with reasonable ingenuity, it might be possible to get the point in.
Mr. Roy Thomason: Will my right hon. Friend give time for a debate on nepotism in local government and recent accusations which have been made, in particular against Monklands district council in Scotland?
Mr. Newton: I do not think that I can promise an immediate or early debate on that matter, but my hon. Friend has made his point by raising it in the House.
Mr. Nick Raynsford: I draw the Minister's attention to early-day motion 647, which calls for the introduction of a boarder premium for homeless families.
[That this House is deeply concerned at the growing number of homeless families living in temporary accommodation, without access to independent cooking facilities, who are suffering from severe dietary and health problems; notes that these families have no resources to meet the additional costs of buying take-away food and having to east out in cafes, and that in the majority of cases children are not getting an adequate diet; congratulates the House of Lords for supporting Lord Henderson's motion to implement a boarder premium on 6th July; and urgently calls upon Her Majesty's Government to amend the 1987 income support regulations accordingly, thereby providing an extra £10 per week to each member of a homeless family living in these intolerable circumstances.]
That motion has now been signed by 176 hon. Members. Will the right hon. Gentleman, as a former Secretary of State for Social Security, agree that it was a serious disappointment that there was no mention in the statement by the present Secretary of State of the need for the introduction of that premium to cope with the acute problems of deprivation and malnutrition among such families? Will he urge the Secretary of State to reconsider the matter and to make a statement to the House at the earliest opportunity?
Mr. Newton: Again, given that social security was very much part of the autumn statement, albeit the subject of a separate statement, I should have thought that the hon. Gentleman might find an opportunity to raise that matter in the two-day debate next week. However, I do not wish to raise his hopes for a sudden change in policy. I draw his attention to the fact that quite significant increases in social security benefits for families of all kinds were announced by my right hon. Friend only a few moments ago.
Rev. Martin Smyth: Will the Leader of the House convey to the Secretary of State for Northern Ireland the warm response of the people of Northern Ireland to his positive statements yesterday concerning the democratic deficit that they have suffered, particularly in local government? Will he encourage the Secretary of State

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to make provision for the restoration of accountable democracy in local government in Northern Ireland, if not next week, at least before the forthcoming local government elections?
Mr. Newton: I am grateful, and I am sure that my right hon. and learned Friend the Secretary of State for Northern Ireland will also be grateful, for the hon. Gentleman's comments and, indeed, for the comments of many from the political scene in Northern Ireland during the exchanges yesterday. I shall draw my right hon. and learned Friend's attention to the hon. Gentleman's point.
Mr. Harry Barnes: I, too, am concerned about yesterday's statement by the Secretary of State for Northern Ireland. I asked a question about economic and social affairs in the Province. The right hon. and learned Gentleman claimed that those matters were taken seriously in the talks and were a serious concern of the Government. Yet when I look at the material supplied with the autumn statement, I find that from 1988–89 to the estimates for 1995–96 there is a decline year by year in the percentage that is to be spent by the Northern Ireland Office. That does not seem to tie in with the notion that there is concern for economic and social regeneration. We should therefore have a debate on the matter.
Mr. Newton: Following the autumn statement, we are having a two-day debate next Wednesday and Thursday. It is clear, as I think I can say even without consulting you, Madam Speaker, that the point made by the hon. Gentleman would be in order in that debate.
Mr. John Gunnell: Is the Leader of the House aware that there are 180 refugees stranded on the Austro-Slovenian border? They have been there since 9 am yesterday. My understanding is that they are going to different destinations in the United Kingdom and that the coach that is coming to Leeds carries people who have connections in Yorkshire. I further understand that those people are stranded because of the changes in arrangements for entry which were made recently in the House. When the original arrangements were made, their papers were in order, but they are now no longer so.
Is that entirely the responsibility of the Home Office or, given where those people are, is it the responsibility of the Foreign Secretary? Will the Leader of the House ensure that action is taken rapidly to get those people moving? Will he also ensure that a statement is made to the House next week?
Mr. Newton: I can certainly undertake to draw the hon. Gentleman's remarks to the attention both of my right hon. and learned Friend the Home Secretary and my right hon. Friend the Foreign Secretary, although I understand that the organisation that has been involved in the matter was informed on several occasions before the people started their journey that visas would be required for the passengers.
Mr. John Hutton: I draw the attention of the Leader of the House to early-day motion 778 concerning the future of Britain's shipbuilding industry.
[That this House notes with deep concern the continuing loss of jobs in Britain's shipbuilding industry, with recent redundancies at Swan Hunters and VSEL; recognises that in shipbuilding communities there is a collection of unique and
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precious engineering skills vital to the success of British manufacturing industry; and therefore calls upon the Government to take immediate action to promote the industry and thus secure the jobs of many thousands of people by pursuing policies which will allow warship yards to bid competitively for merchant orders through the intervention fund scheme, by bringing forward the order of new vessels such as LPH, and by actively supporting diversification initiatives.]
I remind the right hon. Gentleman that in recent years there have been thousands of redundancies in our shipbuilding communities and more than 6,500 in my constituency. Government policies are ruining jobs in shipbuilding industries and we need an urgent debate in Government time to discuss the future of that once-mighty industry.
Mr. Newton: The hon. Gentleman will be aware that when I was Secretary of State for Trade and Industry I had a considerable connection with shipbuilding matters, so I am obviously aware of the problems. I am also aware of the important amount that has been done, with considerable success, in many shipbuilding areas, not least in Sunderland, where the Nissan factory is virtually m sight of the former shipyards and has brought new and diversified employment.
Mrs. Margaret Ewing: Given my questions during past weeks, it will come as no surprise to the Leader of the House that I welcome the meeting of European Standing Committe A next Wednesday. Does he realise the exact extent of the legislation that he has remitted to that Committee? The documents that I have here are only 50 per cent. of the material that affects common fisheries policy. I could question Ministers for two and a half hours on those documents alone.
Is it possible for the Committee meeting to be extended to ensure that we can question Ministers in detail? Will the right hon. Gentleman guarantee the presence of a Scottish Office Minister at the meeting because of the closure of the haddock fisheries, which are important to the Scottish fishing industry? Does the right hon. Gentleman accept also that that meeting is not a substitute for a full-scale debate on the Floor of the House?
Mr. Newton: I take the hon. Lady's latter point. She has strenuously pressed that matter during the past few weeks. She will be well aware that normally there is a debate on fisheries towards the end of the year. Although I cannot give a time for that debate, I note her implicit request.
On the Standing Committee, I shall consider the matters that the hon. Lady raised. I cannot say more than that today. Given that there is to be a Fisheries Council discussion on 23 November, it is important to have a discussion in the Standing Committee beforehand, and that was the best way to do it.
Mr. Peter Mandelson: Have Ministers studied early-day motion 775, entitled "Rights of Social Security Claimants", tabled by myself and my hon. Friends, which requests the Government to withdraw the measure restricting the rights of claimants to have errors corrected?
[That this House believes that if an error is made in determining a person's benefit the claimant should have a statutory right to have such an official error corrected; therefore regrets that the Government has laid the statutory

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instrument entitled, The Social Security (Miscellaneous Provisions) Amendment (No. 2) Regulations 1992 (S.I., 1992, No. 2595) as it will diminish the rights of existing and future claimants to such retrospective entitlement; believes that this attempt to remove Regulation 49 of the 1987 Claims and Payments Regulations is a further attempt to erode the rights of the poorest in the community and reduce social security expenditure by undermining the rights of benefit claimants; and urges the Government to withdraw S.I., No. 2595.]
Will the right hon. Gentleman take note of the strength of opinion in the House on that matter and arrange for an early debate?
Mr. Newton: I shall draw the hon. Gentleman's comment to the attention of my right hon. Friend the Secretary of State for Social Security rather than promise a debate. I understand that the repeal of regulation 49 will not deny rights to people who have not received their entitlement to income support or family income supplement because of official error.
Mr. Dennis Skinner: Does the Leader of the House think that it is about time that we had another debate on the mining industry, because the first debate was allocated on an Opposition Supply day? The Government ought to allocate a day's debate to that subject because 10 pits are being allowed to go to rack and ruin and 7,000 miners are being turned away when they go to work. It is costing the Chancellor of the Exchequer or British Coal £1·4 billion to send miners home instead of letting them go down the pit. Those 10 pits are being gradually closed, even though the Government gave a commitment that all 31 would remain open. Surely we should have a debate on that issue in Government time.
Mr. Newton: The hon. Gentleman is well aware of the review that is being conducted. The appropriate time to consider further debate in Government time would be when we have the results of that review.
Mr. Win Griffiths: The Leader of the House will no doubt have heard the Chancellor of the Exchequer say during his autumn statement that the Secretary of State for Wales would make a statement on expenditure in Wales. I noticed in one of the tables that central Government support for local government will increase by £140 million in England and by £20 million in Scotland, but that it will decrease by £80 million, or 3·3 per cent. in Wales. Can the right hon. Gentleman tell the House how soon the Secretary of State for Wales will come to the House to face questions on a serious issue for Welsh Members?
Mr. Newton: The straightforward answer to the hon. Gentleman's question is that I cannot tell him anything beyond the fact that my right hon. Friend the Secretary of State for Wales is due to answer questions next Monday.
Mr. Jeremy Corbyn: The right hon. Gentleman has held his office for some time now—more than six months—so when does he propose to make a statement on access for disabled people and visitors to this building and to refreshment and toilet facilities and on allowing members of the public to see the building without being accompanied by a Member at all times? I am sure
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that he agrees that it is nonsense that the House has legislated for facilities for disabled people in cinemas and public buildings, but that there is no real access to this place, apart from the humiliation of people in wheelchairs being taken down the back stairs route via goods lifts. It is high time that the right hon. Gentleman did what none of his predecessors have done and achieved a real change in this building.
Mr. Skinner: I asked about that last week.
Mr. Newton: The hon. Member for Bolsover (Mr. Skinner) is right. He raised those matters with me last week and I undertook to assist and to do whatever I could. In the not-too-distant past, the House agreed revised arrangements for its governance, delegating substantial responsibilities to fully fledged Select Committees, including the Accommodation and Works Committee, chaired by a respected member of the Opposition Front Bench. In the first instance, I must draw to the attention of that Committee the issues being raised in the Chamber.
Mr. Paul Flynn: Will the Leader of the House reconsider the reply that he gave to my hon. Friend the Member for Derby, South (Mrs. Beckett) about the need for a Commons debate on the Matrix Churchill affair? Some of the issues are separate from the Scott inquiry. There are matters with which the House needs to deal and we have received answers from Ministers and from the Prime Minister about which there are serious questions. We need to debate a serious issue—either the Prime Minister knew about the arms exports, in which case he is being dishonest, or he did not know about them, in which case he is being incompetent.
Mr. Newton: My right hon. Friend the Prime Minister dealt at some length with those matters at Question Time today. I am afraid that I am not in a position to add to what I told the hon. Member for Derby, South in response to her request from the Opposition Front Bench. The appropriate course is to ensure that the independent inquiry conducted by the judge is carried out as quickly and as fully as possible.
Mr. Andrew Mackinlay rose—
Madam Speaker: Order. I shall call the hon. Gentleman, but he came into the Chamber when the Lord President of the Council was on his feet answering the first question. It is a matter of courtesy and procedure that if Members are going to question statements, they should be in the House to hear them, irrespective of what they are.
Mr. Mackinlay: I fully accept that ticking off, Madam Speaker, and your advice and guidance.
At the remembrance service on Sunday, it occurred to me that it would be timely for the House to debate the plight of many war veterans and their dependants—widows and orphans. Many of them are increasingly infirm and are in the late evening of life. Many hon. Members on both sides of the House have strong connections with the Royal British Legion, the Royal Naval Association and the Royal Air Forces Association and they would welcome the opportunity to discuss the increasing plight of many elderly and infirm ex-service men and women and their dependants. It is time for the House to put aside a half-day to debate those issues and especially

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early-day motion 735, which draws our attention to the inadequate compensation awarded to Japanese prisoners of war after the second world war.
[That this House joins with the nation in remembering on Sunday 8th November all those who made the ultimate sacrifice for our freedom; calls upon Her Majesty's Government to remember those Japanese prisoners-of-war alive today, still imprisoned physically and mentally by the callous and inhumane actions of Japanese Imperial Forces during the Second World War; records that this continuing sacrifice was deemed in 1951 and still remains worth only £76·50 in final and complete settlement; reminds Her Majesty's Government that this issue is not closed until survivors receive full and adequate compensation commensurate with the sacrifice, claims which hitherto remain challenged only by the absence of natural justice.]
Many hon. Members would like to press the Government to consider whether that matter should again be raised with the Japanese Government.
Mr. Newton: I am glad to find that I have something else in common with the hon. Gentleman, other than the fact that we both represent parts of the same county, through our connection with the Royal British Legion and the Royal Naval Association. I repaired to the Royal Naval Association branch in Braintree after the remembrance service on Sunday afternoon, where I met many of my friends. No doubt the hon. Gentleman did the same.
My right hon. Friend the Secretary of State for Social Security made an announcement that will help more than 200,000 war disablement pensioners, who will gain up to £5 a week. Not more than two years ago, when I was Secretary of State for Social Security, I made an announcement that was hugely beneficial to a large number of war widows.

Points of Order
6.40 pm
Mr. Win Griffiths: On a point of order, Madam Speaker. During questions on the autumn statement, the Chancellor was asked by one of my hon. Friends whether invalidity benefit would be taxed in future. In answer, the right hon. Gentleman referred to the statement to be made later by his right hon. Friend the Secretary of State for Social Security. When the Secretary of State was asked that same question, however, by one of my hon. Friends, he said that that was a matter for the Chancellor.
I wonder whether you would check the record, Madam Speaker, to see whether the Chancellor said, as I believe, that it was a matter for his right hon. Friend the Secretary of State for Social Security. If so, would you call the Chancellor back to the House tomorrow to answer that question?
Madam Speaker: The hon. Member knows that I have no authority to require Ministers to come to the Dispatch Box. Perhaps this matter can be made clear in the debate next week.
Mr. Jeremy Corbyn: On a point of order, Madam Speaker. When my hon. Friend the Member for Thurrock (Mr. Mackinlay) raised the extremely important and delicate matter of the memory of those who were rightfully or wrongly killed, the Government Whip and the Under-Secretary of State for Health, the hon. Member for Suffolk, South (Mr. Yeo), seemed to find it all very amusing and kept on trying to interrupt my hon. Friend as he asked that serious question. May I ask them, through you, Madam Speaker, to disport themselves in a better manner when my hon. Friend speaks?
Madam Speaker: That is not a point of order for me. I think that I made my position clear to start with when I said that I expect hon. Members, however serious their contribution, to be in the Chamber at the beginning of a statement.

STATUTORY INSTRUMENTS, &c
Madam Speaker: With permission, I shall put together the motions relating to statutory instruments.
Motion made, and Question put forthwith pursuant to Standing Order No. 101(3) (Standing Committees on Statutory Instruments, &c.).

INCOME TAX
That the draft Double Taxation Relief (Taxes on Income) (Guyana) Order 1992 be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Double Taxation Relief (Taxes on Income) (Falkland Islands) Order 1992 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Patnick.]
Question agreed to.

Adoption Law Review
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Patnick.]
6.42 pm
The Parliamentary Under-Secretary of State for Health (Mr. Tim Yeo): The debate this evening provides the House with an opportunity to consider the recent report to Ministers by the interdepartmental working group, set up in 1989 to carry out a review of adoption law. The report was published in full on 19 October and was made available to hon. Members in the usual way. I welcome the opportunity to bring to the attention of the House some of the more important and innovative proposals contained in the report.
The House should be aware that there is no commitment by the Government at this stage to proceed with any of the recommendations contained in the report. We wish to encourage further debate on the proposals. That is why we are anxious for the report to reach as wide an audience as possible—not only from within the public and voluntary sectors but from individuals affected by adoption or who have had experience of the adoption process. But today's debate, is not just an opportunity for consideration of the report's proposals. I hope, within the limits of order, that it will also give the House an opportunity to discuss all aspects of adoption which may be affected by the proposals.
It is 20 years since the Houghton committee produced the last report on adoption law and practice. The recommendations of that committee were the main principles underlying the Adoption Act 1976 and included the restriction of power to arrange adoptions to local authorities and approved adoption societies; placing local authorities under a duty to provide a comprehensive adoption service, and giving adult adopted people the right to obtain a copy of their original entry in the register of births.
The intervening years have seen many developments in the social structure of our society, particularly in relation to the family and the care and protection of children. Since 1976, adoption practice has developed in response to the new obligations placed upon agencies and courts in recognition of those social trends. Changes in professional and public concepts of the needs of children, birth families and adoptive families have brought about developments in social work theory and practice. There has been growing recognition of the desirability of involving birth parents in the adoption process; and of the need felt by some adopted people to learn about their origins and make contact with members of birth families.
There has continued to be a steady fall in the number of babies needing adoptive families, and therefore an increasing emphasis on placing older children, children in care and children with special needs. In 1974, the total number of children placed for adoption in England and Wales was 22,502, of which more than 5,000 were under the age of one year. In 1990, the total fell to under a third of that figure—6,533—of which only 969 were under one year of age. Many voluntary adoption societies are developing specialised family-finding services, especially for children with special needs. Inter-agency working arrangements and partnerships between agencies have been developed. There has also been a growth in the number and range of other voluntary organisations and
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self-help groups to meet the needs of people involved in adoption, especially in connection with post-adoption services.
Since 1979, several legislative measures have been introduced to improve child care and the reform of family law. The Children Act 1989—"the charter for children" —is the most recent and notable example. The review of adoption law is a logical consequence of the Children Act and is also part of the Lord Chancellor's review of family law.
In July 1989, my right hon. Friend the Secretary of State for Health, with the Lord Chancellor, Home Secretary and other Ministers established the interdepartmental working group comprising officials from the health Department's, the Home Office, the Lord Chancellor's Department, the Office of Population Censuses and Surveys and a law commissioner. The group was supported by a joint team from the Department of Health and the Law Commission. I should like to pay a warm tribute to the work of that group.
The group's work followed on the Royal Assent to the Children Act in November 1989, and the review has been conducted in a similar way to the review which led to that legislation. Four consultation papers were issued—"The Nature and Effect of Adoption" in September 1990; "Agreement and Freeing" in September 1991; "The Adoption Process" in November 1991; and "Intercountry Adoption" in January 1992. In addition, three background papers on international perspectives, research relating to adoption and inter-country adoption were also issued as part of the consultation material. More than 200 organisations and individuals responded to those papers. Members of the group also met representatives of organisations involved in the various aspects of adoption. The results of those wide-ranging discussions are contained in the review.
The review looks at all aspects of adoption law and practice including, most importantly, an examination of the nature and effect of adoption; agreement to adoption; a review of court procedures; alternatives to adoption orders available under the Children Act 1989; improving the adoption service; and inter-country adoption.
Adoption continues to provide an important service for children. In the provision of this service, the needs of the child come first and the welfare of the child must be the paramount consideration. This principle has been rigorously maintained by the working group throughout its work on the review—and quite rightly. The purpose of adoption is to provide children with families, not families with children. There is no room for dogma when dealing with an issue as complex and important as this. What is needed is common sense, compassion and a sound legal framework.
The report contains a total of 45 main recommendations, some confirming present practice, some amending and extending it, and I draw the attention of hon. Members to a few of them. The first is the need for local authorities to have a duty to establish and give due weight to the wishes and feelings of the child, his or her parents and any other person whom the agency considers relevant.
Secondly, children of 12 years and over should have automatic party status in court hearings. Children under 12 years may be given party status by the court if appropriate, and a guardian ad litem should be appointed in every case.

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Thirdly, freeing for adoption should be abolished so that the court can consider the advantage to the child of a particular adoption. A placement order would be granted by the court before placement commenced and parental agreement to a particular placement would normally be obtained. The grounds for dispensing with parental agreement will be limited where the parent cannot be found or is incapable of giving agreement; or to a single test that will require that the court be satisfied that the advantage to the child of a new family significantly outweighs any other options that may be available, so justifying the overriding of the parents' wishes.
Fourthly, the report recognises that, in the case of step-parent adoptions, it should not be necessary for the birth parent involved to become an adoptive parent, and that there should be provision for such an order to be undone if the marriage ends.
There are also recommendations to extend the remit of the adoption contact register, allowing birth parents and other relatives to indicate a preference not be contacted. There should also be the facility to allow bona fide tracing agencies to locate interested parties seeking a link.
Openness in adoption is another feature of the report, although not, of course, a new concept. It can take many forms and should be seen generally as a move away from the closed and secretive process which has characterised adoption until recently. Openness may take the form of exchanges of information between adoptive families and birth families or contact between adopted children and members of their birth family—brothers and sisters or grandparents—not necessarily involving birth parents. Whether openness is appropriate in any individual case or what form it should take will, of course, depend on the needs of the child.
One point that I wish to stress to allay any unfounded fears is that it is certainly not envisaged that contact should be imposed on adoptive families. The arrangements must be handled in every case with sensitivity and skill. They require agreement by all parties well before an adoption order is made. Nobody involved in adoption, whether as part of the birth family or of the adoptive family, should feel threatened by the risk of unwelcome or unauthorised contact.
The report makes a number of important recommendations about inter-country adoption.
The origins of inter-country adoption date back to the post-war years, but its nature has changed. Originally, it was mainly a humanitarian initiative in response to catastrophe, designed to meet the needs of children displaced and suffering through war. More recently, inter-country adoption has developed more as a service for childless couples, although, of course, humanitarian instincts are still prevalent.
Its growing popularity stems in part from the decline in domestic adoption in many western countries in the past two decades as the number of babies available for adoption has decreased. In the United Kingdom this has been due in large measure to the greater availability of birth control, changed attitudes towards single mothers, and the more sympathetic social conditions which enable unmarried mothers to take responsibility themselves for the care of their children.
Communications have also played a part. Not many years ago the plight of children in countries overseas would have been largely unknown. Today, heart-rending pictures of deprived children are beamed straight into our
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living rooms from all around the world. As the world shrinks, we identify more with the difficulties of people in other countries and, with fewer babies available for adoption at home, prospective adopters naturally look further afield for children. This trend is likely to continue.
There are different and often strongly held views of inter-country adoption. For many childless people and for those who wish to add to their family, inter-country adoption seems to achieve two objectives: fulfilling their wish for a child, and meeting the need of deprived children elsewhere for a home. For others, inter-country adoption appears to be a form of humanitarian aid, rescuing children from abandonment and poverty.
There are people, however, who have serious reservations about inter-country adoption on grounds of principle, or practice, or both. There are practical concerns over the supervision of adoption arrangements in some countries and about children's ability to adapt to life in a very different culture. Underlying these reservations is a basic question: is it right that many arrangements for inter-country adoption should operate primarily as services to provide couples with children rather than to provide children with families—which, as I said earlier, is the purpose of adoption?
In some countries, despite great efforts to introduce safeguards and regulation, an unofficial traffic continues alongside the official services. Even where legislation in sending countries specifically requires that foreigners should not be allowed to adopt except where they have been found suitable by the authorities in their own country, the requirements are not always observed.
We should not underestimate the risks that official arrangements can mean for children. For a child to be taken to a foreign country only then to be rejected is very undesirable indeed. Similarly, it is unacceptable for parents who have been turned down by the authorities in their home country to try to beat the system by adopting from overseas. These risks are not a reason for preventing inter-country adoption altogether, but they underline the need for great care in its regulation and management at both the national and the international level.
When the report was published last month, there was some interest in the recommendation that bringing children into the United Kingdom without proper authority should be made a criminal offence. I can assure the House that this action would not be considered until any new legislation was in place and running smoothly.
National initiatives must fit into a wider international effort if we are to guarantee the well-being of children involved in inter-country adoption. Two important international instruments contain provisions about inter-country adoption. These are the 1986 United Nations declaration on social and legal principles relating to the protection and welfare of children, with special reference to foster placement and adoption nationally and internationally, and the 1989 United Nations convention on the rights of the child.
The declaration and the convention together spell out a number of key principles in relation to inter-country adoption. They are proving increasingly influential in shaping the development of Government policies and legislative reform in sending and receiving countries.
Perhaps the most encouraging development in inter-country adoption in recent years is the proposed international convention on inter-country adoption. It is being developed by a special commission set up in 1990 by

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the Hague conference on private international law and will meet again in May next year to discuss the draft convention. It aims to establish safeguards so that inter-country adoptions take place only when they are in the best interests of the child. It also aims to establish a system of co-operation among contracting states to ensure that these safeguards are respected.
In the United Kingdom we strongly endorse these aims. It is only through international co-operation, on the level of both policy and planning and on the case-by-case level, that inter-country adoption can truly meet the needs of individual children. I am glad to say that in the United Kingdom we already have in place the infrastructure of central authorities and authorised agencies which the proposed convention envisages for the proper regulation and strong central supervision of inter-country adoption.
Additionally, in recognition of the increasing interest in overseas adoption, the Department of Health awarded a grant to the Bridge child care consultancy earlier this year allowing it to host the overseas adoption helpline project. The helpline is intended to be an independent source of advice and information for families seeking to adopt from abroad as well as for professionals in the field. The helpline began operations on 11 May and its progress will be reviewed in the new year. The recommendations in the report reflect those international initiatives, and I commend them.
I will mention some aspects of adoption practice which are not covered directly by individual recommendations in the review but which are fundamental to any consideration of the whole subject. I recognise that one of the main reasons why some would-be adoptive parents attempt inter-country adoption outside the existing legal framework is their anger and frustration at what they see as the obstructive attitude of some local authorities.
I do not condone such attempts by prospective parents to short-circuit the system, but local authorities must understand that public confidence in the fairness of their policies is destroyed if adherence to fashionable or politically correct notions appears to influence their decisions more than consideration of the interests of the individual child.
Three aspects of adoption practice give rise to particular controversies. They are age, race and the position of single people. On the subject of age, the report does not include recommendations on an upper age limit for prospective adopters. Nor does present adoption law specify such a limit. In looking at an individual child with individual needs, the aim must always be the best possible environment for that child. In particular cases, that could mean older parents. Rigid and inflexible age limits have no place in modern adoption practice and should not be imposed by any local authorities.
Agencies generally follow the practice of placing babies with couples who are not much older than the age at which most people start a family. Because there are more people wishing to adopt healthy babies than there are babies needing families, there is an abundant choice of prospective parents, but we must not discount the real value which more mature parents can bring to parenting in terms of security, experience and general understanding.
I come to what has become known as the "same race placement" policy. The Government have no such policy,
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nor is one suggested in the review, because the starting point in arranging for family placement of a child from a minority ethnic group is that all issues concerning the child's needs and welfare must be considered.
Issues of race and culture are important but form only part of a wide range of considerations in determining the most suitable placement for a child. A guiding principle is that, all other things being equal, in many cases a placement with a family of similar ethnic origin is likely to meet a child's needs. There will be exceptions to that general approach, and guiding principles are valuable only insofar as they are applied with proper consideration for the circumstances of the individual child. The Department's guidance specifically points out that there may be circumstances in which placement with a family of different ethnic origin is the right and best choice for a particular child.
The third area of practice on which I wish to comment is adoption by single people. It is beyond question, in my view, that the interests of the vast majority of children will best be served by having a mother and a father. I therefore expect that in every case of a child seeking adoptive parents the authorities should make the most strenuous possible efforts to place that child with a married couple. However, there may be occasions where no suitable couple is available to adopt a child. When that occurs, I would not wish to use either the law or guidance to prohibit adoption by a single person. Indeed, adoption by a single person may for some children be their only route out of an institutional environment into a family home.
In choosing adoptive parents, adoption agencies must always remember that their duty is to serve and safeguard the best interests of the individual child. "Equal rights" and "gay rights" policies have no place whatsoever in adoption work. No one has a right to adopt a child. It is the duty of adoption agencies and the courts to provide the best adoptive parents for each child.
The Government have not yet decided whether to follow the review's line that the law should be silent on those issues. It may be that the principles of good practice should be enshrined either in primary or secondary legislation, and I shall be interested in the views of hon. Members on that point.
The review comprises a comprehensive and far-reaching view of the way forward for adoption in a fast-changing society. I hope that it will stimulate extensive debate, and I am pleased to commend it to the House.
7.4 pm
Mr. David Hinchliffe: It is a privilege to make my maiden speech at the Dispatch Box on an issue of such fundamental importance as adoption. As the Minister will be aware, I had the honour to be closely involved with the Children Act 1989.
The review of adoption law is very much the unfinished business of the 1989 Act. It is a pleasure to see in her place my predecessor on the Opposition Front Bench who was responsible for matters concerning children, my hon. Friend the Member for Eccles (Miss Lestor), who served, as I did, in Standing Committee when that important measure was being discussed.
The Opposition welcome the publication of the report, and my hon. Friends and I look forward positively to contributing to the wide-ranging debate that is bound to take place on some of the often difficult and at times

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contentious issues to which the Minister referred. While we have reservations and concerns about a number of points —I shall refer to some of them—we believe that the overall direction of the report is to be generally welcomed.
I have always regretted that on most occasions social work practice comes under scrutiny in the House because of apparent failures. Indeed, the most recent deliberations in the Chamber concerning social work arose following the publication of reports on matters relating to the Orkneys and Fife. The usual tirade of abuse of social workers followed, and even The Observer carried an article suggesting that it might be no bad thing if social workers were "disbanded as a profession."
As some hon. Members may be aware, I must declare a degree of subjectivity on such matters because, in common with the Secretary of State—although we have precious little else in common—I spent many years in social work before entering Parliament.
There are few areas where the skills and successes of social work practice are more evident than in this country's adoption provisions. Sadly, but rightly, successful adoptions—they are the vast majority—do not make newspaper headlines or feature in our constituency postbags, but they are a quiet and conclusive demonstration of the fact that social workers have considerably more successes than their much publicised failures.
Having undertaken guardian ad litem work and the challenging task of vetting applicants for adoption, I can express a personal appreciation of the efforts of the inderdepartmental working group. Having many years later served as a local councillor on an adoption panel, I pay tribute to the fact that the group has clearly tried to get to grips with the way in which what might be termed the adoption environment has markedly changed in recent times.
Our adoption law must be reviewed to take account of a whole range of developments, some arising directly from the Children Act 1989. The fact that the welfare principle underpinning the Act is proposed for application to adoption legislation is to be welcomed. It is also entirely consistent to place positive emphasis on the child's needs in proceedings rather than concentrating on underlining parental failings, as has often been the case in the past.
The application of the welfare principle beyond just childhood into adult life reinforces the importance and possible implications of decisions that are taken during a child's or young person's early years. The 1989 Act introduced a whole range of important new options available to the child, the family and other interested parties, the social services and the courts. It is right that consideration should be given to the possible relevance of those when a court is considering an application for a placement or adoption order. The availability of the widest possible range of alternatives enables the court to have the opportunity to consider the most appropriate response to the needs of a child or young person.
I stress "young person" because, as the review makes clear, we are now more than ever concerned with the consideration of possible adoption arrangements for an older child or young person. It is in a situation such as that that those concerned with making the best possible arrangements for the child often face the most difficult decisions in determining whether links with the natural family should be totally severed.
I was recently involved with a constituency case in which a child's grandmother, probably the most stable
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influence in the birth family, faced total loss of contact with the child, having given love and care for the first eight years of the child's life. Such situations are not infrequent and are particularly traumatic for all concerned, the child in particular. The wider range of possible options arising as a result of the 1989 Act, picked up by the interdepartmental working group, offers some hope for the better resolution of similar situations, and we welcome that fact. The proposals for a new order to be available to step-parents is, similarly, an important recognition of the realities of our times.
On the review's proposals for agreement to an adoption order, although it rightly presumes that the child's wishes and feelings should be taken into account at all times, the proposal that a child of 12 years of age or more should be able to prevent the granting of an adoption order by withholding his or her agreement raises important questions.
The Opposition have no objection to what is proposed but are concerned about whether a specific age can realistically be prescribed in that way. It might be suggested that, with some children, 12 is too young an age for such a decision or indeed for party status. I personally feel that 10 may have been more appropriate, giving some consistency with the age at which criminal law suggests a minor has achieved some maturity. But I concede that different children have different levels of maturity and we need to question whether it is necessary to put forward a specific age when it will inevitably be somewhat arbitrary.
We do, however, welcome the proposals for clarifying provisions for parental agreements and simplifying grounds for dispensing with parental consent. Frankly, our past practices in that respect, both in adoption and the assumption of parental rights, have left a good deal to be desired and the simplifications suggested are a positive step. Just as the Children Act 1989 reinforced not just the rights of the child but also those of the natural family, it is right that in any changes to adoption law the voice of the birth family is strengthened, especially in contested cases.
I am aware of the fact that it has been suggested that if the report's recommendations on consultation with birth parents and pre-placement hearings are introduced, the number of contested cases is likely to fall significantly. Bearing in mind the fact that, especially with the abolition of freeing, agencies would have to find placements that are, in most instances, consistent with the wishes of the child and birth family, the reduction in contested cases should be a logical outcome.
We wish to support in particular the proposal that any new legal provisions should underline a child's right to know that he or she is adopted. Since the 1975 Act, significant numbers of those who have in the past been adopted have taken advantage of their right to learn about their origins once they reach the age of 18. But it must be said that many of them have struggled to get what is theirs by right and perhaps the review group could have given more thought to how we may in future reduce some of the difficulties they so often face.
Some time ago, I was contacted by a 51-year-old man, whom I have known personally and well for some 25 years. He came to me as his Member of Parliament over the difficulties that he was having in tracing his natural family. Although he was always reticent about discussing his past, I had no idea that he had been abandoned by his mother as a baby and subsequently adopted by a family who subjected him to both physical and sexual abuse.

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My role became one that should not have been necessary—of lobbying various local authorities and Government Departments to get them to take seriously that man's desire and right to know of his background. Clearly, many of those bodies felt that they had more important priorities than assisting him with his inquiries. He tells his own story in a letter which he sent me recently setting out how he first tried to trace his natural mother 25 years ago but was refused assistance by various charities, which felt that it was ridiculous for someone of his age to be worrying about the facts of his birth or natural mother.
He goes on to say:
"I got on with my life until more recently. A number of television programmes 3 or 4 years ago showed that it was possible for adoptees and mothers to find each other. I started again.
I advertised extensively for my mother in newspapers and ITV Oracle, etc, without response. A very kind lady helped me considerably by researching through natural birth registers of which there were microfilm copies at her local library in Lancashire. I discovered North Yorkshire Social Services had lost my adoption file. Harrogate Magistrates Court where I was adopted had also, but found it accidentally when they moved. I got access to their file after permission was granted by the OPECS and saw the childcare report and mother's notes already referred to.
With your help and also pressure from Wakefield adoption office, it was finally possible to discover from the DHSS that my mother was dead but nothing more. I visited London, got her death certificate from St. Catherine's House and a copy of her probate to trace a relative.
It was only when I visited Harrogate Magistrates Court that I made the first discovery that I had a brother. On the way home, I nearly broke down, and even now, I try not to think too hard about him. He died a few years before mother, aged 46 and unmarried. I never knew about him, that I had a peer, an older brother with whom I could have shared some life and happiness, and it is now too late".
If that man had received the proper help to which he was entitled, it might not have been too late. He concludes his letter by saying:
"We get virtually no official help, just as we did not when taken as children into whatever situation. Official records are largely denied to us, particularly the DHSS. It is a struggle of some magnitude in trying to get birth information and follow up contact with natural parents and relatives.
And it does seem strange to me that adoption and illegitimacy does still bear some stigma. Discussion with friends is extremely difficult, no matter how well they like me. And they cannot understand the desire for knowledge of my natural family. And I am now expected to remain silent as the `facts' are known at last".
Having traced my family history back to the 1700s, I fully understand the desire to find one's roots and I am sure other hon. Members also appreciate that point. Our task is to ensure that the various official agencies also appreciate that point and have some understanding of the need to give proper priority to dealing sensitively and carefully with the kind of inquiries that my constituent has understandably had cause to make.
It is perhaps appropriate at this stage to refer to the review group's proposals on inter-country adoptions. I know that their deliberations were at least partly prompted by the situation in Romania. Through my wife's involvement in a charity providing children's homes in Romania, I visited that country just over a year ago. I saw some very moving scenes that will remain with me all my life. I met a number of people who spoke to me in detail of the concern, at that stage within Romania, about the removal of children from institutional care, supposedly for
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foreign adoption, where the children were known in certain instances to have ended up in western European countries and America involved in organised prostitution.
I am certain that the vast majority of individuals from this country who have attempted to adopt Romanian children have done so for the best of reasons. I have met people with an understandable humanitarian concern, to which the Minister referred, to offer such children the opportunity of better material circumstances, love and care.
I have talked to people who feel that the Secretary of State's initial response to that issue was insensitive and wrong. Despite her treatment of me during Department of Health questions earlier this week, I must make it clear that I think that her response to the initial attempts to adopt Romanian children was broadly correct. Similarly, the working party proposals on inter-country adoption are also broadly in the right direction.
When I went to Romania I learned some important lessons on that issue. Perhaps the main one was that, far from many of those children being orphaned and unwanted, vast numbers of them had families who wanted them but were prevented from caring for them by a basic lack of resources to feed, clothe and house them. Although I do not doubt that adoption arrangements can be made within or outside that country to the benefit of some of those children, I sincerely believe that, if we are to offer humanitarian assistance, the most effective means is not by moving the children to other countries and other cultures but by enabling their own families to have the wherewithal to raise them properly in their own homes, in their own communities, in their own country and culture.
Certain lessons might also be applied in Britain. Having had the experience of receiving into care a total number of children that must have reached three figures, and having seen a significant proportion of that group subsequently adopted, similar issues of poverty and bad housing are not infrequently linked here with the eventual use of adoption procedures.
It is a simple fact that the majority of children entering care in Britain come from the very poorest sections of the community and are more likely to have had parents who were unemployed and to have endured homelessness or bad housing. Some of those children are ultimately adopted. I know from personal experience that the birth parents in such circumstances often become resigned to the fact that their children would be better fed, clothed and housed if adopted.
Just as it is wrong for Romanian children to lose their families in such circumstances, it is also wrong that we witness the same process, albeit to a much lesser extent, in Britain today. It is highly appropriate that discussion of such issues should follow on directly from the Chancellor's autumn statement, which is another significant reminder of the processes whereby the Conservative Government have consistently, year by year, plunged more and more children and families into homelessness, poverty and desperation.
There was a political consensus on the Children Act 1989, and there may be a political consensus on many of the provisions contained in the adoption review. However, there is no consensus on many of the related issues. For example, there is no consensus on the gross inequality in treatment of people who suffer from infertility. It is wrong that, in some districts of Britain, people are denied treatments that are available to others elsewhere. Many of

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the people who are denied treatment regard the adoption process as their only option. There is no consensus on the reasons for family breakdown and receptions into care. The Opposition answer is not simply one of adjusting child care legislation. We know that there is much more to do —we must tackle poverty and low pay, mass unemployment, homelessness and bad housing. The review deals with the consequences, not the causes.
We concede, in a way that the Government never do, that the implementation of such proposals will place significant new demands on local authorities and adoption agencies. We recognise that such changes and improvements require proper resources. We also appreciate that the development of new skills requires the provision of appropriate training. Let us be in no doubt that any move towards many of the proposed changes contained in the report will add significantly to the workload of all the agencies involved.
We are grateful for the opportunity to debate the overall direction of the report. It is also helpful to learn something of the Government's thinking on the matter and, particularly, to gain some clarification of the Minister's personal position. On 29 October, Social Work Today magazine stated:
"the Minister's obvious lack of interest in adoption law reform—apart of course from his conviction that you need to be heterosexual and married (a view not apparently shared by the Review's authors)—is all the more unfortunate because of the care and courage that has gone into the Review".
The Opposition welcome the report's publication. We feel that there should be the widest possible consultation and debate on its proposals, with an extension of the limited consultation period beyond the end of the December. We commend those involved in the review group for their efforts and hope that the Government will, in due course, grasp the nettle and bring forward legislative proposals for the important reforms that are so clearly needed.
7.24 pm
Mr. Peter Thurnham: I welcome the opportunity to speak in the debate held on a busy day, after a welcome autumn statement which contained many provisions for social security and carers.
As my hon. Friend the Minister said, many of the children adopted today are children with special needs. It is most important that there should be ample provision to help parents whose adopted handicapped children may make considerable demands on them. I was pleased to note that the autumn statement contained additional provision for those in receipt of invalid care allowance so that there will be a larger earnings disregard. That means that the parents will be able to take on other jobs as well as their caring duties in the home.
I am pleased to follow the hon. Member for Wakefield (Mr. Hinchliffe) and congratulate him on his excellent maiden speech from the Dispatch Box. He is well known in the House for his interest in personal social services. I was glad to hear him welcome this important Government report. I have only just had an opportunity to read most of the report and would still like to study it in more detail. It is a comprehensive report on the subject, and a welcome study of many aspects of inter-country adoption.
My own interest in adoption arose in 1983 when my wife and I initially fostered, and then adopted, a handicapped child. I know that the arrangements need
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streamlining. My hon. Friend the Minister mentioned the need to streamline them, but much more needs to be done. Local authorities are not the most efficient organisations and it can take some time for would-be adoptive couples to receive the necessary home studies and approvals.
My wife and I had to attend a considerable number of interviews and answer questions. When it was realised that my job as a Conservative Member of Parliament was in a marginal seat, I was termed as someone with an insecure occupation—a factor that can create potential difficulties. When it was discovered that our children got into bed with us on a Sunday morning, that almost finished our hopes. I know that social workers do not have an easy job, but I press on my hon. Friend the need to streamline the arrangements—a matter that forms the basis of my speech.
I agree with what my hon. Friend said about the need for children to be adopted, generally, by a normal family. I also agree with him that in some cases a single parent can make an outstanding adoptive parent. If my hon. Friend has the opportunity to visit my constituency, I hope that he can meet an excellent lady called Annie Gibson. She is a widow, but that did not prevent her from adopting an extremely handicapped child, Trevor, from the Elizabeth Ashmore home for handicapped children in Bolton. She lost her husband, a haemophiliac, when he became infected with AIDS through a blood transfusion and died. Annie wanted to have a caring role in life and decided to adopt Trevor. As a single parent, she had to go through all the hoops and await a number of committee meetings before she was accepted.
The local authority committee structure is not one of the best ways to make decisions. When my wife and I were finally approved as adoptive parents, our phone did not stop ringing. We were being asked to adopt almost every handicapped child in the district—for up to about 100 miles away—who was looking for a home. Committees tend to wait for someone to make a decision, and when that finally happens, want to climb on the bandwagon.
Annie Gibson is an outstanding example of how a single parent can provide the most loving care for a child who is seriously multiply and physically handicapped. If we study that case we reach certain conclusions. If a single parent can be an ideal adoptive parent—as Annie is—who she or he is living with is secondary. We need not pursue further the rare examples of gay or lesbian couples, but should consider each case in the light of its circumstances to see whether the requirements of the individual child are fully met by the proposed adoption arrangements. We should not be too dogmatic about the circumstances of the entire household into which the child is to be placed. The child's circumstances must come first—that is also true when a single parent is involved.
One of my first contacts with inter-country adoption was in Hong Kong. I do not know whether my hon. Friend the Minister has visited Hong Kong recently or is to go there, but if he does I strongly recommend that he visits the Home of Loving Faithfulness. It is a remarkable institution that exists to care for severely handicapped Chinese children and find homes for them. The Chinese culture does not tend to favour the adoption of children, let alone handicapped children. The Home of Loving Faithfulness in Hong Kong has found parents all over the world for severely handicapped Chinese children. It is a classic example of how inter-country adoption can be used to find a loving home for children with no prospect of finding a home in their immediate environment.

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The United Nations declaration is absolutely right to state that we should first try to keep children with their own families and, if that is not possible, to find adoptive homes in their own countries. If that cannot be done, one should look further abroad. I am concerned that the tone of part of the report is too parochial, mainly because it is written by officials who have a duty to look after British children. Those who wrote the document had no duty to look after Romanian children or those from anywhere else in the world and were bound to consider their own requirements. That is one of the problems encountered with local authorities. Although my hon. Friend thinks that local authorities should be able to carry out the job, they can be extremely parochial and consider that the only children who should be adopted are those on their own register, and parents who want to adopt other children have something wrong with them.
I ask my hon. Friend to adopt a broader perspective. Perhaps politicians have a better understanding of the motives of people who want to adopt, and perhaps the public can help officials to understand their wider duty. I am sure that my hon. Friend will do that well; I know that his predecessor did it extremely well.
This issue is all about love, a word that does not appear in the document, which is full of rules and regulations. For instance, paragraph 47.1 states:
"People who wish to offer a child a home and who are assessed as suitable to adopt a child from overseas should be enabled to do so."
That offers no encouragement to anyone to do so. The document continues:
"We consider that the way forward lies in the development of a system which allows intercountry adoption to take place".
The spirit of the report seems to be one of tolerance, not one of recognition of a worldwide problem which could be solved by finding homes for children who would not otherwise have a satisfactory future.
I was interested to hear that the hon. Member for Wakefield visited Romania last year. I was there earlier this year and I visited a home for irrecuperable children. I also visited an institution to which those children were sent when they reached the age of 16. The orphanage that I visited was called Ionaseni. I also went to see an adult psychiatric institution to which children are sent. It is called Podriga, and it is a frightful place. One would not keep animals in the conditions imposed on those people. It was supposed to be a hospital, but there was no doctor. My daughter Sophie, who worked in Romania, saw patients dead in their beds at Podriga, where there was no running water, where the toilets were all blocked and absolute chaos reigned. It is terrible to think of children being abandoned to that sort of future.
We are talking about relatively small numbers of children being adopted. If children from other countries can be adopted by people in this country, subject to proper safeguards, that will offer an example to Romanian people and to people in other countries of what they too could be doing. We should see inter-country adoption as just part of the solution—a way of offering an example to others of what should be done, and how it should be done. It should certainly not be regarded as an overall solution—that would never be right. Equally, it would be a great mistake to close down this option.
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I do not know what is going on in Romania. I am not aware of any children having been adopted since the Romanian adoption committee was set up. The last letter that I received from the Department of Health suggested that five cases were under consideration. Perhaps some of them have come through now, but it is tragic that the committee has effectively stopped all further adoptions from Romania.
I am not sure whether the Minister has seen the letter that I wrote to the Home Secretary asking him to reconsider the case of the Luffs. This tragic case concerns two Romanian children, Marcel and Florina, who have been waiting to be adopted for two years. I cannot imagine how we can claim that this country's arrangements serve the interests of those children. The whole episode is a terrible blunder. The doctor at the Department of Health who signed the certificate was under the impression that someone else would adopt the children if he signed a certificate saying that it would not be suitable if the Luffs adopted them. If my hon. Friend can rescue these two children from being strangled by British red tape, he will have done mankind a great service. I hope that it is not too late for him to reconsider that difficult case.
An overseas adoption helpline has been set up to advise people interested in inter-country adoption. I had asked for such a facility for some time, and I am pleased at the progress that has been made, but I am not sure what is happening at the helpline now. I do not think that it has had any public launch—I have seen nothing about it, nor have I had an opportunity to visit it. I do not know whether any other hon. Member has had a chance to see the helpline in action, but it certainly seems to be hiding its light under a bushel.
We need a specialist inter-country adoption agency. Not all local authorities have the skills or time to be able to attend to the needs of those who are adopting from abroad. We need more than a helpline; we need a full-blown inter-country adoption agency. I do not know whether it could be developed from one of our voluntary agencies, but I ask my hon. Friend to help bring it about. We do not have such an agency so far. Perhaps voluntary agencies are too tied up with the local authorities with which they have to work closely to be able to do the job.
One aspect of the report that I do not fully understand concerns whether there will be appeals. A complaints procedure is mentioned in part of the report. If local authorities are to have a virtual monopoly, and if they then create problems, there must be good arrangements for appeals by would-be adopters if they find that they are not receiving the help from their local authorities that they should.
Couples have contacted me to say that they might have to move home so as to live in the area of an authority that will give them more help. The campaign for inter-country adoption, of which I am a founding member, wrote to the Minister's predecessor in March, following the consultation paper. The letter, sent on 12 March, gives examples of the sorts of difficulties that occur with some local authorities. Authorities such as Mid Glamorgan, Islington, Hampshire and Ealing did not approve of inter-country adoption and were generally obstructive to people living in their areas who wanted to adopt. This is just not good enough. If the Government's policy is to leave the matter to local authorities, they must be obliged to deal with it properly.

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A more positive solution would be to allow would-be adopters to use an alternative channel. If they are blocked by their local authority then they should be able to go through such a channel, and that in turn would stimulate the local authority to give them better service in the first place and, instead of being obstructive, to advise them to use the alternative channel—
Mr. Hinchliffe: Does the hon. Gentleman accept that some of the local authorities to which he has referred are not dogmatically opposed to inter-country adoption but are so overstretched, in terms of resources and staff, that they find it impossible to meet their statutory duties to the children even of this country? I suspect that many of the responses of local authorities stem from the fact that they feel that it is beyond them to undertake the work expected of them—to evaluate applications for inter-country adoption.
Mr. Thurnham: To some extent, that is true. Local authorities are all under pressure. They have to implement the Children Act 1989. They have a shortage of skills in the first place, and all their time, money and skills are involved in their own responsibilities. They have no responsibility for children in Romania, Bulgaria, Thailand or Sri Lanka, so they are bound to have difficulties giving priority to would-be adoptive couples. Yet such couples are entitled to such priority, given that the public at large believe that such adoption is commendable and humanitarian.
So there is a conflict, and that is why we need an alternative channel to enable would-be adoptive couples who do not get the service to which they are entitled to go about the problem in a different way. Unless such people get help from their Member of Parliament, they can be left in queues and then be faced with these ridiculous restrictions—they are too old if they are over 35, or they may smoke, or have a dog, and hence not be allowed to adopt. Without the alternative channel that I propose, people will not be able to adopt children whose futures will otherwise be at best precarious and in the long term utterly bleak.
I should be grateful if my hon. Friend would tell us a little more about how the helpline is supposed to work. Will it have a public launch? Will it advertise its services? It is not clear how active it is at present. I know that some money has been provided, and that is welcome, but it is important that the overseas adoption helpline work closely with others who are active in the field and build a constructive relationship with them.
The campaign group feels that the report does not give nearly enough help and encouragement to would-be adopters. I agree: would-be adopters should be regarded not as a nuisance, but as people who can help to bring about more adoptions generally. One of the tragedies of an excessively parochial attitude is the way in which it chokes off the idea of adoption as a whole. Some 5,000 severely handicapped children are currently in institutional care in the United Kingdom and I believe that they would be looked after much better if they enjoyed the loving care of a family.
People need to be encouraged to provide that loving care. Perhaps they can be encouraged by the example of an acquaintance who has been to Romania and adopted a handicapped child from that country: that may provide the stimulus for them to adopt a British handicapped child. Similarly, people living abroad may have
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connections with this country, and, on a visit, may find out about handicapped British children who would benefit from adoption. Perhaps they will take those children back to Canada, Australia or wherever they live. Inter-country adoption can be a two-way thing; it should not be seen simply as a service for childless couples in Britain.
I recommend a book called "The Story of Michael", by Deborah Fowler. It describes how a couple—not a childless couple—adopted a child from Romania. Inter-country adoption should be seen first and foremost as an act of love between the child and his adopted family. I believe that the public would support my hon. Friend the Minister if he ensured that that was made possible, arid that, where local authorities could not provide the necessary service, others could.
I was disturbed to hear talk of criminal sanctions. Obviously, a couple who arrive at an airport with a child will present the authorities with a dilemma; but surely, rather than talking of criminal sanctions, we should recommend an improvement in the current arrangements. We need at least one specialist inter-country adoption agency, and I hope that my hon. Friend will encourage the establishment of such an agency.
I thank my hon. Friend for providing an opportunity for us to debate the report, and I hope that we shall have further opportunities to discuss the whole subject further.
7.42 pm
Miss Joan Lestor: I congratulate my hon. Friend the Member for Wakefield (Mr. Hinchliffe) on the balanced way in which he presented his arguments. I also congratulate the Minister on his presentation of the report, and the working committee on its work: it has touched on almost every aspect of adoption and fostering that is currently being discussed.
When the Minister said that he thought it far better for children to be adopted by married couples, I thought that I was going to fall out with him; however, he enabled me not to have a guilty conscience by adding that, in certain circumstances, single people could make successful parents. Despite all that has happened over the past 20 years, I feel that I was a reasonably successful single parent —certainly no less successful than many married parents.. regardless of whether their children are adopted.
I warmly support what the Minister has said throughout our discussion of the issue. On one occasion I wrote to him, pointing out that we were talking about trying to give children suitable families rather than the other way around. I believe that much of the discussion of, in particular, inter-country adoption has assumed the reverse.
When—many years ago—I first became interested in adoption, the subject was shrouded in secrecy. In many families an adopted child became a secret that was not discussed very much, because those who could not produce their own children were stigmatised to a certain extent. People went to enormous lengths to hide the fact that they had adopted a child, and—as we have heard—it was a long time before adopted children's right to know their background and origins was made public.
I remember being involved in discussions which, even then, I thought rather strange, about the matching of babies to their adoptive parents. A fair-haired child would be sought for a fair-haired parent, so that no one would know that the child was adopted. I also remember arguing

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about class background. Nowadays we all talk about the classless society, but things were different then. In those days, it was always the father who was the college professor and the mother who was the parlourmaid. The person with whom I was arguing suggested that a fairly intelligent family should be sought for a child with such a father—which, of course, assumes that the child would take on the characteristics of its father. Personally, I am sceptical about the whole question of heredity. I asked, "What about social mobility? After all, the builder of today can be the college professor of tomorrow; things are changing." That was not thought very relevant.
Given the history of adoption in this country, it is small wonder that many adopted children grew up unaware of their background, which later came as a terrible shock to them. Perhaps even worse, others grew up with a private shame about their origins, feeling that they had been put up for adoption only because they had not been wanted or were unworthy in some way. We have moved a long way since then; we are now embarked on a fresh review of adoption law, which—as the Minister and others have pointed out—is very timely.
The last 20 years have seen substantial—indeed, dramatic—social change, in this country and throughout the world. That change has shown itself in a variety of ways. There has been a rise in the number of one-parent families; increasing economic and social pressures, leading to family breakdowns; an increasing emphasis on the placement of older children, children with special needs and children who have been in long-term care; and growing involvement with children from other countries. The report also takes on board the question of divorce, remarriage and step-children, and I welcome that too. I consider it important for the House, in changing adoption and fostering law, to keep up to date with the rapid changes that have taken place, even in my time in the House.
The report has a go at almost every aspect of the subject that we have discussed; and those aspects will continue to be discussed. Like my hon. Friend the Member for Wakefield, I wish that there were a longer consultation period, because getting together people and organisations takes time.
We would all agree that any review of adoption law must be firmly anchored in a commitment to making children's rights a reality, not just an empty slogan. If their rights and interests are paramount, we must provide legislative structures to observe that. Children's rights have been enshrined in a United Nations convention-the right to a decent standard of living, the right to a family, the right to an identity, the right to education, the right to protection from violence and exploitation, and other rights. Today, we are really asking how well current adoption practice matches that modest checklist, and how we can make the system more responsive, more accessible and in children's best interests.
As the hon. Member for Bolton, North-East (Mr. Thurnham) well knows, I have never been a strong supporter of inter-country adoption. I have always felt that it should be a last resort, except in the case of children whose families are already here. When I represented Slough, I dealt with families who were trying to adopt children from their countries of origin and finding it
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extremely difficult to do so. By and large, however, I believe that it is wrong to encourage a country to export its children.
As others have said, we should be helping countries to tackle the problems of poverty and ignorance about contraception which force parents to part with their children. Had I ever become an Aid Minister, I should have wanted many more aid projects to be directed to the welfare of children, and the rescue of children who are abandoned and have little hope of a future of any kind—not just in Romania but in Ethiopia, in Mozambique, throughout the African continent and throughout Latin America.
The hon. Member for Bolton, North-East said that he felt that the Minister had grudgingly accepted inter-country adoption. I agree with the Minister about that. It is a complex process that is open to tremendous abuse. I have been appalled by how easily many people have acquired children from other parts of the world. It is not, in my view, a question of culture. I do not believe that children who are two or three months old, or even a little older, have a particular culture. One acquires the culture of wherever it is that one lives. The committee's report states that this is a child protection argument. I am glad that the Government have said that adoption procedures that involve children from other countries must be as rigorous as those that are applied here.
To those children from abroad who have come to this country, I say that I wish them well. Many of them will triumph and blossom in an atmosphere that it would be impossible to find in their country of origin. If the international community ensured that resources, aid and help were given to the families of those children, this would not happen. The fact is that 98 per cent. of Romanian "orphans" have parents. Disgraceful pressures were put on many people to hand over their children. They were given no alternative.
Many hon. Members know of the work of the Migrant Children's Trust. From the 1930s until the 1960s, children were shipped out from this country to Canada and Australia. Many of them have now asked the Migrant Children's Trust to trace their families. In many cases it has been found that those children had parents or relatives and that they were not eligible for adoption. However, they were sent abroad because it was felt that that would be better for them. A book entitled "Children of the Empire" deals with that issue.
When the question of inter-country adoption was raised I was reminded of that book. I think in particular of a woman who put her child in care in the 1940s or 1950s because she had to go into hospital for an operation. She was very poor. There was no family support. When she left hospital she found that her child had been shipped out of this country. She knew nothing of its whereabouts until many years later. The reunion of some of these people, who are now in late middle age, makes me think that at that time we did not do enough to find out what alternatives were available.
That applies equally to children from other countries that families here seek to adopt. We cannot allow children to be adopted on the basis that those people, having been rejected as possible adopters of children in this country, are good enough for children from abroad because they are second-hand children, or words to that effect. A report was published this week on what is taking place in the Philippines, where there is sexual exploitation of children

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and the buying and selling of children. Unless there are strict laws regarding international adoption, we shall be left wide open to international trafficking in children. Therefore, I welcome what has been said about the application of rigorous procedures for the adoption of children from abroad.
Reference has been made to the age of adoptive parents. As a result of fertility tests, people can be approaching the age of 40 before they are finally told that they cannot have children, or that it is too late for a woman to have a child because of the fear of complications. In many of those instances, they do not qualify to adopt children because they are over the age limit. That is wrong. Older parents have a great deal to offer children. If a survey were made of the successful upbringing of children—though the older I grow and the more I know about children, the fewer the theories I have about their upbringing—I think that we should find that the age of those bringing up children makes no great difference to the success rate.
When families break up nowadays, the grandparents are often fairly young. It is important, therefore, not to rule out by statute the opportunity for grandparents to adopt their grandchildren when family life breaks down. Every case has to be considered on its merits, but age is just one factor in the application of the adoption rules. There ought not to be a cut-off point, resulting in people over a certain age not even being considered suitable to adopt children. They can successfully bring up older children, in particular. One reads that in future women of 60 will be able to have children, so we have to look at the question in a different way.
As for the racial question, which is dealt with in the report, when children from different ethnic backgrounds are placed with families it is important to consider matching, but matching is only one factor. When children are successfully fostered by people of a different ethnic background, it can do great damage if they are then moved from those families, on that one argument alone. When I have taken up this issue I have been told by local authorities that that was not the only reason for the move; there were all sorts of other reasons.
I agree about matching, for all sorts of fairly obvious reasons. However, a loving home is even more important, so long as we do not lose sight of the question of ethnic identity and so long as contacts are made with people of the same ethnic origin as the child. It is far better for a child to be in such a home than to have to linger in a children's home waiting for the right placement, or to be moved from foster home to foster home.
Short-term placements are sometimes made. We understand why, but they become long-term placements. Two or three years later, application is made to adopt a child but it is turned down on the ground that it is a short-term placement. Children are resilient, but they need stability and to be able to identify with the people with whom they live. What the report says about that is very important.
Reference has been made to single parents. Relatives of a single parent may want to adopt a child after a family tragedy. Apart from those people, there are others who are unmarried who would make ideal parents. We cannot just rule out one category of people and say that in no circumstances can they adopt children.
Open adoption is a controversial question and will continue to be controversial. There is a great deal to be
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said for an adopted child keeping in contact with its birth family. Many children have remained in care or have been moved from foster home to foster home because the birth parent found it too difficult to let go. The local authority may believe that eventually it will be possible to reunite the child with the family, but in many cases family circumstances do not improve and reunion is impossible. If a child is not provided with stability, many of the social inadequacies—I emphasise social inadequacies because I do not believe in inherited inadequacies—will be passed on to the child. Insecurity breeds insecurity.
If we can meet the needs of older children in particular for identity and stability and yet allow a relationship with the birth parent to continue, we shall be able to free certain children for adoption and give them an environment in which they can flourish without them feeling that they have deserted their own parents. That is often what older children feel, or they feel that they are being forced to make a choice.
Reference is made in the report to the age of 12. I think that it could be lowered. If a child were told, "Yes, you can be adopted by these people who love you and with whom you live, but you can see your own mother or your own father," I think that the child would consent, but not if told that it must be a clean break and that there could be no contact with the parents. We must consider different types of adoption and guardianship.
I welcome the report. As I said at the beginning of my speech, it deals with most of the aspects of fostering and adoption that are under discussion. Children should be consulted as early as possible on how they see their future. That is impossible with very young children, but it is possible with older children.
Every hon. Member has said that we are talking about giving a child an identity and a future. That identity, future and security must always rest on what is in the child's best interests and not on what a family or person might want because they have been deprived of a child. Nobody has the right to a child. It is important that the Government rightly said where they stand on inter-country adoption. We must not allow the feeling to grow that children from other countries, who may be suffering enormously, are second-class and can therefore have adoptive parents whom our society may have said are not suitable. We cannot allow that to happen. I should like us to allocate more resources to ensuring that children stay in their own country rather than having their future exported.
8 pm
Mr. John Gunnell: I could say that I have a lifetime's experience of the issue because I was born into a family that had experienced adoption and therefore have an adoptive sibling. I followed that by becoming an adoptive parent, and more recently I have been a member of an adoption panel. In a sense, I have some practical experience and, through my experience, an ability to compare what the law permitted in the 1930s with what it required in the 1960s and how it operated in the 1990s.
I welcome the document because, like other hon. Members, I believe that it tackles all the issues. It will strengthen and tighten legislation and therefore will improve practice. I hope that the consultation period will not be too rigid because, like my hon. Friend the Member for Wakefield (Mr. Hinchliffe), I believe that it is

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important to get a response from all the agencies involved in the issue. After the consultation period, I hope that it will not be long before the Government legislate.
The basic principle of the document—the centrality of the welfare of the child—is important and correct. The document must attempt to apply the same principle across the board. It is important to follow the same principles for inter-country adoptions as we follow here. It is right to view with scepticism what have often seemed a little like DIY adoptions, because we must ensure that the welfare of the child is paramount and that those who adopt are people who, in any circumstances, would be accepted as adoptive parents.
The document rightly considers the law as it applies to all the parties concerned. It is an improvement to make provision for a social worker to act with the natural parents. I am sure that that will be welcomed in contested adoptions, but it must be said that it will be quite a costly proposal. It is estimated that between 50 and 80 families a year in Leeds would seek that additional social work input, which will be costly to the authority.
It is important to consider the views of relatives, primarily grandparents and siblings, and children. It is difficult to define an age rigidly, but I should prefer the principle that the views of children are taken into account to the extent that they are able to participate because it recognises the different development of children at a given physical age and that we should seek the views of children. It should be part of children's rights, where they can understand, that they should take part in a decision affecting their parentage.
One of my sadder duties as chair of social services in Leeds was to take part in what might be described as the opposite of that process, because until the implementation of the Children Act 1989 the termination of access between parents and children was decided by a panel of elected members. Over a two-year period, I saw many parents because it was my job to talk to them and convey the views of the panel. The only time that children were consulted was when I specifically asked to meet them, and that was not possible often. The evidence of children's views will have to be made very clear.
The document deals with the child's right to know and sets guidelines for the life story that social workers will have prepared. At all stages in their development, children should have as much knowledge of their background as it is possible for them to understand. It is a good recommendation that local authorities should have a duty to contact the child when he or she reaches 16 and ensure that the information has been passed on. That important duty will have to be handled sensitively. Again, sometimes it will be quite a costly operation, and we must consider how far back authorities can go, because the further back they go the higher the cost to local authorities.
I note that paragraph 23 talks of more flexibility in the membership of adoption panels and the difficulties that panels sometimes encounter in making a quorum. I certainly experienced that. As chair of social services with other duties, I often created a bit of a problem. We should be more flexible, but we should seek not additional members but that every panel member has an alternate member. An adoption panel must offer some continuity and, if possible, training. It is important that the
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documents that are placed before it are treated with the utmost confidentiality. Therefore, in changing the rigidity of the present arrangements, alternate members must be available to maintain continuity and confidentiality.
I appreciated the comments of the hon. Member for Bolton, North-East (Mr. Thurnham) and of my hon. Friend the Member for Eccles (Miss Lestor) about the need to achieve flexibility in adoption by single parents. In practice, the adoption panel that I was part of mainly placed or matched children with couples who were married. However, it sometimes placed children with single parents after it had examined all the evidence and was sure that it was the best placement for the child. We witnessed some placements to gay or lesbian couples. One would not have a policy of seeking such adoptions. However, in some circumstances, with particular children and in view of the relationships that they have developed with others, it is logical to say that such a placement is best for them. Therefore, although we set down what may be perhaps the normal pattern of adoption, we must always be prepared to be flexible.
The matter of race applies to inter-country adoptions. As other hon. Members have said, we must be careful about breaking a child from its cultural background and inheritance. If we cross such boundaries, we must take into account the age and circumstances of the child. Clearly, in many adoption cases the child was originally a foster placement. Frequently, a foster placement develops into the sort of bonding that leads to it being the logical permanent placement for a child. That may occur across the difference in ethnic backgrounds. In some cases the relationships and the bonding that exist become more important than the cultural difference.
Some anxiety has been expressed about the new court arrangements and court time. The adoption panel of which I was a member was worried about the length of time that it sometimes took between a placement being made and an adoption taking place. We must beware of increasing the number of court appearances which each adoption involves. We do not want to make the process longer than is necessary. Also, the length of the process adds to the costs. Obviously, additional court appearances increase the amount of social work time required, and extend the work and role of the guardian ad litem. The changes must be properly funded so we must examine the costs.
Adoption law is an important matter. I hope that the changes recommended in the report will be introduced in legislation. However, if social services departments are to undertake the additional work involved, we must make an accurate assessment of the costs which will be incurred. We must ensure that the authorities have sufficient funds to do the job.
I welcome the report. It offers the promise of security and happiness for more children. That is something to which we are all committed.
8.12 pm
Ms. Ann Coffey: It gives me much pleasure to be involved in this debate tonight because, before I was elected in April, I worked in the adoption service. I am glad to be part of the initial consultation process rather than in the position that I was in last year. The consultation process was so short that the document came to us for consultation two days before it was due back at the Department of Health. As other hon. Members have

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done, I urge the Government to extend the consultation process; otherwise the consultation document may end up on the director's desk without percolating down to those who are involved in practice and nothing meaningful will come back from the consultation material which is sent out.
Adoption has certainly changed over the years. From experience, I should say that most local authorities now place children between the ages of two and eight, sometimes singly and sometimes with brothers and sisters. Sometimes the children have additional special handicaps, and sometimes the children are of a different race from the adoptive parents. The majority of children who are placed for adoption are between two and eight.
Children placed by local authorities are a difficult group because, unfortunately, they may be damaged at an early age and that damage is sometimes irrevocable. Perhaps the Minister will reflect on the fact that, sadly, despite our enormous technological and scientific advances, we still do not have in Britain the skills to help small, damaged children overcome initial emotional distress. It would be helpful to put resources into finding a way to help them. Adoptive families who have taken on the care of those children find that they face difficult years ahead, often without help. We do not have the knowledge or skills to help the child and the family. As everyone who has been involved in adoption work knows, love is not enough. Love gives a base, but sometimes something additional and specialised is needed.
The extension of the welfare principle enshrined in the Children Act 1989 is welcome. I also welcome the notion of parental responsibility. It is clear that the use of the phrase "parental rights" has not helped. Parents do not have rights; they simply have responsibility. I have difficulty in understanding why the welfare principle should apply to almost all cases except the determination of an adoption order. If the welfare principle is paramount, it should be paramount in all cases. I cannot see any reason why there should be an exception.
The change in step-parent adoptions is welcome. Obviously, it was nonsense that the process of adoption made an adoptive parent of a natural parent because both had to lodge applications to enable the step-parent to adopt.
I also welcome the notion of a child's agreement. I agree with other hon. Members that an arbitrary age is not helpful, but the recommendation will give the message that, even if the age limit is complied with, we should listen to children. Sadly, children in care have simply not been listened to. They have been subjected to what other people think is good for them. People often take a dogmatic view. To encourage people to talk to children is a progressive step.
The abolition of the freeing for adoption order is welcome. I agree with the Minister that that provision was perhaps used in a way that was not helpful and was not intended. The idea of settling an adoption by means of a placement order is helpful in contested cases, but I have a problem with the notion of a placement order being made before every placement. I ask the Minister to consider how that will work with the role of adoption panels.
The adoption service looks for special parents when it seeks to place children between the ages of two and eight. Having identified those parents, it is often difficult to proceed without a meeting or some introductory period which serves as a time for judging whether that placement
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should proceed. I am concerned that having an adoption order made in all circumstances would not help in making a proper assessment or using an introductory period as an assessment time. I suspect that most social workers would never introduce a child to adoptive parents before a placement order had been made, so a chance to assess what the child is like with the adoptive parents, and how the adoptive parents feel about the child, may be lost.
Often this is a matter of chemistry. Things may look excellent on paper, but when people meet and spend time with each other, for some reason the relationship may not work on that level. I ask the Minister to consider more carefully what current practice is, before insisting on a placement order before the placement of every child. In some circumstances that would not be helpful.
I also ask the Minister to take the fostering legislation into consideration. Most children—indeed, all children, especially those of the ages I have mentioned—are first placed with foster parents, under fostering legislation. There is a danger that, if we make one route too hard, children will remain in foster care—and that will not reduce the delays or achieve the original intention of the Act. Will the Minister consider that aspect carefully?
As the Minister knows, I have corresponded with him before about being careful to ensure that there are no loopholes or easy ways out in what we put on to the statute book. Unfortunately, human nature being what it is, people will use those if they can. I especially remember writing to the hon. Gentleman about unregistered children's homes. Clearly, the intention of the Children Act 1989 was that homes with more than four children would register—indeed, that was a legal obligation.
However, it was assumed that homes with fewer than four children would be covered by fostering legislation. That turned out to be an incredible assumption. In fact, there was no legal obligation for homes to fall into either category, so there are now several small private children's homes covered by neither the fostering legislation nor the private homes legislation. In other words, local authorities placed children in totally unregulated homes, because the possibility to do so existed.
I urge the Minister, when he examines placement orders and the whole process of placement, to consider other legislation, too. It is important that children whose best interests would be served by adoption should end up being adopted rather than continuing to be fostered by default because the adoption process has become too difficult.
I am a little concerned about non-agency placements. Foster parents and other carers and non-relatives can apply for an adoption order, but so far as I can see, such people cannot apply to adopt a child without the local authority's consent. Without that consent, there is no way in which their application to adopt can surface—and there have sometimes been disagreements between foster parents and agency social workers about what is in a child's welfare interests. If a social worker decides not to recommend the application, there is nowhere for foster parents to appeal against the decision, because the whole process is contained within the agency.
Will the Minister consider setting up a process whereby foster parents can appeal—possibly to an independent body—against agency decisions not to support an adoption application? I have known of foster parents who had a good case and placements that would have met a

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child's welfare needs, yet because of a certain social worker's attitude, the application could not proceed. It is unfortunate, to say the least, when that happens.
One part of the report deals with marital status. I was taken aback by the illogicality of paragraph 26.10, on applications from unmarried couples. It is permissible for one half of such a partnership to apply and for the social worker making the assessment to take into account how the other partner, who cannot apply, is likely to look after a child and that person's possible parenting ability. But the report gives a reason for not permitting joint applications from unmarried couples and I must quote it, because I find it difficult to understand. It states:
"unmarried parents do not have the same legal obligations to one another as a married couple have."
That is true, but married couples have those legal obligations only so long as they wish to have them. When a couple who were once married wish to dissolve those obligations, they no longer have them. The report says that, for that reason:
"the caring parent may therefore be less financially secure than if they were married."
When a relationship breaks down, whether unmarried people are separating or married people are divorcing, the financial security and the arrangements made afterwards depend on their individual financial circumstances. The fact that a couple have been married does not give them any advantage over an unmarried couple, so the generalisation in the report is wrong. It cannot possibly be a reason for not accepting applications from unmarried people.
The report continues:
"one of the special features of adoption is that it transfers a child from one family to another and gives the child a legal relationship with all members of the new family, including grandparents, aunts and uncles. However great the commitment of unmarried adoptive parents to a child might be, it is open to question how far their wider families would be willing to accept that child as part of their family."
That is absolute nonsense, because in any assessment the social worker will examine the wider support networks—that is part of the assessment. One does not presume that the networks are non-existent and that the wider family will not accept the child, simply because the couple are not married. One considers that possibility during the assessment process. If the recommendation is to be pursued, someone somewhere will have to come up with a better reason than the one in paragraph 26.10, because it is terrible nonsense.
We talk of providing a "service" for adoption and discuss services for birth parents, adoptive parents, prospective adopters and childless people. In this context, the word "service" means social workers taking time to talk to people—the service which is provided is time. If you want that service to be provided, you will have to back it up with payment for the service and for the time, otherwise those services will not be provided, either by local authorities themselves or by their giving grants to voluntary agencies to provide services on their behalf. When resources are limited, people prioritise, and services for which there is less statutory responsibility fall off the end. Local authorities have been doing that for years.
When you provide, as I am sure you will, a brochure saying that local authorities will provide those services, all that will happen is that you will raise expectations—
Madam Deputy Speaker (Dame Janet Fookes): Order. Before the hon. Lady continues, I remind her of the rules governing the use of the word "you". I had hoped that she was using that word in an impersonal sense, but it is now clear that she is directing some of her remarks to the Minister instead of to me.
Ms. Coffey: I apologise, Madam Deputy Speaker. I got slightly carried away.
The Minister is considering allowing local authorities to charge for adoption services. I caution him to examine that proposal very carefully. I am concerned that if there is a charging policy, only those who could pay for that service would use it and that might become discriminatory.
It is difficult to be a good parent even if one has a supportive family, adequate income, friends, leisure activities and help. Some children—although not all—enter local authority care because little support is provided for mothers who are struggling with young children. Such situations lead to breakdown. In some circumstances, such families could have been kept together if there had been support in the community. Although that is the intention of the Children Act 1989, such provision is beyond the responsibility of the social services. We must consider all aspects of the services provided by local authorities.
8.31 pm
Mr. Kevin Hughes: I congratulate my hon. Friend the Member for Wakefield (Mr. Hinchliffe) on his maiden speech at the Dispatch Box.
We all agree that the interests and welfare of children should always be at the centre of adoption proposals and legislation. The review document recognises that an openness in adoption which allows for an exchange of information between doctors and birth families, and in some cases face-to-face contact, helps children to develop a more real and complete sense of who they are. It also enables older children to make the move into new families without the pain of losing links with relatives.
Open adoption will also help many adopted adults who spend years trying to trace information about their pasts. The amount and type of contact must be matched to the age and circumstances of each child and will inevitably change over the years as the child and the circumstances change and develop.
Any new legislation introduced as a result of the review must allow for a range of options in contact arrangements so that individual plans can be made for each child. Contact is a continuum, and any arrangements for contact must allow for the maximum flexibility.
The document recommends that no placement should be made without a formal hearing, during which a placement order will be made. Most of the children who are placed for adoption these days are older children and many of them have spent years in the care system. Many of them have come from very troubled and difficult backgrounds. Although introductions may have taken place, it is difficult for children or adults to make an informed choice in such a situation.
The document recommends that a guardian is appointed once the request for a placement order is lodged. It also recommends that during a very short period—for example, six days—the guardian will have to approach all interested parties to discover whether anyone

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objects to the child being placed for adoption. If an objection is lodged, a full court hearing will have to be held, and that would take several months.
Given that current experience shows that attachments between children and adults begin at the point of introduction, one wonders how a three-year-old child will understand what is happening or how a troubled seven or nine-year-old will cope with the uncertainty while waiting for a court hearing.
In those circumstances, is it envisaged that contact between the children and prospective adoption family will continue? Or is everything going to be put on ice? In such circumstances, it is likely that agencies, aware of possible repercussions. and insecurities for children, will prefer to use the fostering family placements legislation and put children in a foster placement. That could lead to a drift and avoid permanence—something that the review sets out to avoid.
The review suggests that a guardian ad litem be appointed for every adoption case and that the strict timetables introduced in the Children Act 1989 are used throughout the adoption process. That would create an enormous amount of extra work for guardians ad litem, and one wonders how existing guardians would be able to undertake extra work.
Moreover, the review also states that agencies should have a duty to give birth parents the opportunity to have their own social worker so that they can participate in the decisions about a child's future. In effect, that means that, where adoption is being considered for a child, three different social workers could be involved—the child's social worker, the birth parents' social worker and the guardian ad litem.
Such a recommendation obviously ensures the highest possible practice, but one wonders how a local authority could possibly manage to resource that recommendation in the current economic climate. The document clearly identifies current delays in adoption practice and recommends strict timetabling in future to avoid that. However, it is conceivable that the extra work involved will mean that adoption will be delayed because agencies simply will not have the resources to meet any new requirements. As a result, children may well still be drifting around in care.
The document also recommends that the responsibility for inspection and approval of voluntary adoption societies should revert to local authorities. That responsibility is currently held by the social services inspectorate and inspections are carried out every three years. The recommendation will lead to difficulties for many local authorities.
We must recognise that a large proportion of adoption work is carried out by voluntary societies such as Barnardo's, the Children's Society, the Church of England and many others. Much of the expertise in adoption lies with those voluntary societies. I wonder how local authorities will be able to inspect those organisations effectively.
The arms-length inspection units were set up to inspect residential homes for the elderly. They also have some responsibilities under the Children Act 1989. We must recognise that adoption work is highly complex and specialised. I believe that such expertise is currently not available in most of the inspection units, and it may well have to be brought in from elsewhere. The document
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suggests that the voluntary agencies should pay for that service. I wonder how on earth they could possibly afford that, given the current economic climate.
Concern about children who come into Britain has been growing for some time. For some children, their only chance of a happy family life is through inter-country adoption. However, those children need and deserve the same kind of protection that we take for granted in domestic adoptions. The proposals represent a real step forward in introducing safeguards. They will not prevent inter-country adoptions when that is best for the child, but they will go a long way towards preventing abuses such as trafficking in children.
We look forward to the proposals being translated into legislation, but only after full consultation with all concerned.
8.39 pm
Mr. Hinchliffe: I wish to take up some points from the debate and reinforce comments made on both sides of the House. We have had a useful debate. There is broad consensus on what is proposed in the review, albeit some reservations have been expressed.
Although there was only one contribution from the Government Back Benches, it was by the hon. Member for Bolton, North-East (Mr. Thurnham), who has a particular interest in the issue. I read with interest the comments that he was reported in The Sunday Telegraph on 25 October as having made:
"Mr. Thurnham does not support calls from the far right that children should be placed only in two-parent families and that homosexuals should be rejected. 'Every case should be considered on its individual merits. I know of many cases where single people do a wonderful job,' he said."
I reinforce that comment. Although I disagree with the emphasis in parts of his speech tonight, it was thoughtful, useful and helpful. I think that we would all concur with his central point that the main issue is what is best for the individual child.
My hon. Friend the Member for Eccles (Miss Lestor) has had to leave the Chamber, but I am glad that she was able to make a contribution. I affirm her success as a single parent, having met her children and her grandchildren. She described from her personal knowledge the marked changes in society which have led to the need for the review and for changes in adoption legislation. My hon. Friend reinforced the point that children's rights and interests must underpin the adoption proposals.
One crucial point made by my hon. Friend on inter-country adoptions was that British children have been exported for adoption. When the Australian rugby league team were here for the world cup final recently, I met a woman who had come with the team. She had found out that her father had been exported to Australia, without the knowledge of his family, and had been adopted in questionable circumstances. That happened within the lifetime of hon. Members present for the debate.
My hon. Friend also stressed the need for balance in same-race adoptions. Again, no doubt most hon. Members would agree with what she said.
I was pleased to hear the contribution of my hon. Friend the Member for Morley and Leeds, South (Mr. Gunnell), who has a unique background, both in personal terms and because of his political involvement as a past chair of Leeds social services department. He made the important point that the same principles should apply to

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inter-country adoptions as apply to adoptions within this country. I support that; no doubt Conservative Members would subscribe to that, too.
My hon. Friend also raised the issue, covered by several other hon. Members, of proper resources being necessary for local authorities to operate provisions affecting children. Many hon. Members with experience of working in local government or as councillors can vouch for how hard pressed many local authorities have been over many years and certaintly recently.
My hon. Friend the Member for Stockport (Ms. Coffey) gave us the benefit of her recent professional knowledge. It is gratifying for me to welcome her as a former social worker to the House. I felt somewhat lonely having only the Secretary of State to talk to as a former social worker, and I did not often get great comfort from her. I am glad that my hon. Friend is here to support me and to contribute to these debates from her practical experience.
My hon. Friend referred to the need to encourage people to listen to children. In the past we have often disregarded the voice of children. When I worked for Leeds social services department, I can recall the first time that the actual child in care was involved. That was as recently as the mid-1970s. That is a disgrace.
I look forward to the Minister's response to a specific issue raised by my hon. Friend—the gap in the Children Act 1989 in regard to unregistered private children's homes. The Minister has corresponded with my hon. Friend on that. I am concerned about the issue which she has uncovered. No doubt the Minister will be willing to respond to it.
My hon. Friend also made a telling point about the need for appeal mechanisms. Sometimes social workers make wrong decisions. A social worker may be prejudiced about an adoptive applicant, so it is right that appeal mechanisms should he introduced in future adoption legislation.
My hon. Friend the Member for Doncaster, North (Mr. Hughes), another former chair of social services who speaks with experience of balancing demands and statutory obligations against the matching resources, made an important point which has underpinned several contributions. He wanted to know how the Government would square the recommendations with resourcing the extra social work time that will be needed to carry out many of the provisions.
We have had an interesting debate with several important points being made. I hope that the Government will realise how much interest there is in this subject and that the Minister will take note of the pleas of several hon. Members to extend the consultation period so that there can be proper debate and public discussion of the many important recommendations in the report.
8.46 pm
Mr. Yeo: With the leave of the House, Madam Deputy Speaker, I should like to reply to the debate. As the hon. Member for Wakefield (Mr. Hinchliffe) has said, it has been a useful debate, characterised by the fact that all hon. Members who spoke did so either with a long-standing interest in the subject or with direct experience of it.
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May I begin by welcoming the hon. Gentleman to his Front-Bench duties? He brings considerable knowledge and experience of the issues. I do not suppose that we shall always enjoy the same harmony as this evening. He was somewhat ungracious in his reference to my right hon. Friend the Secretary of State.
Mr. Hinchliffe: I was paying her a compliment.
Mr. Yeo: The compliment was heavily disguised. The attitude of the Government Benches towards social workers has undoubtedly been influenced in a most favourable manner by my right hon. Friend's demeanour, bearing, and, if I am allowed to say so on the day after the Church of England decided to approve the ordination of women, even her appearance; she has influenced many of my hon. Friends to take a more sympathetic attitude towards social workers.
The hon. Gentleman referred earlier to the high success rate of adoptions in this country. Above all, that is a tribute to the care with which the whole process is undertaken. We must be careful not to do anything which diminishes that success rate in future.
I noted the hon. Gentleman's point about the suitability of the age of 12, which was also mentioned by the Member for Morley and Leeds, South (Mr. Gunnell). Inevitably it is an arbitrary figure which we may want to reconsider in the light of the response to the review. The court has the power to make any child, however young, a party to the proceedings.
The hon. Member for Wakefield referred in his opening speech to the sad case of an adopted person who experienced difficulty in tracing his birth family. Such experience must influence our consideration of issues about openness and contact.
The only time when the hon. Gentleman dragged in politics was when he tried to imply that poverty and deprivation were factors which might lead parents to decide that they wanted their child to be adopted.
Mr. Hinchliffe: That is true.
Mr. Yeo: If it is true, as the hon. Gentleman says from a sedentary position, the dramatic fall in the numbers of children needing adoption since 1979—a fall of more than 40 per cent. over the last 13 years—is yet another indicator of the massive rise in living standards enjoyed by every section of the community.
Mr. Hinchliffe: To balance the figures that the hon. Gentleman just quoted, he ought to consider alternative means to deal with children requiring substitute care other than adoption. The figures are not as bland and simple as he quoted.
Mr. Yeo: As the hon. Member knows, the number of children in residential care has fallen dramatically during the same period.
The hon. Member for Wakefield commented on the consultation period and was supported by his hon. Friend the Member for Stockport (Ms. Coffey). I do not have a passionate view on that subject. If the timetable were extended, it would obviously have an effect on the timing of future legislation. The more protracted the period of consultation, the later will be the chance for legislation, but we shall take account of the views expressed. The consultation process is helped by the fact that much of the work of the review was published as the process unfolded.

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The hon. Member for Wakefield quoted an article in Social Work Today. I make no apology for reiterating my conviction that in the majority of cases a married couple is the best answer for the child. I cannot stress how strongly I feel that every local authority should make the most strenuous efforts to seek married couples. No one has any right to adopt.
My hon. Friend the Member for Bolton, North-East (Mr. Thurnham) cited a useful example of the sort of single parent who can make a valid contribution as an adoptive parent. That was a helpful example. He also said that he had been assessed as having an insecure job. I am so glad that in 1987 and 1992 his job was demonstrated to have a high degree of security. If he continues to contribute to the House so thoughtfully and constructively, he has one of the most secure jobs of anyone who took part in the debate. I have noted his concern about the tone of the report's references to inter-country adoptions.
My hon. Friend mentioned Romania, and I have been disappointed that, since we signed the agreement with the Romanian committee for adoption in March—it became operative on 5 May—not one child has been adopted by a United Kingdom parent under the agreement. When the agreement comes up for review in January next year, we must consider carefully whether it is in our interests to continue with it.
My hon. Friend the Member for Bolton, North-East may like to know that I have decided to ask our ambassador in Bucharest to take up with the Romanian Government our concerns about the lack of results from the agreement, and to press them to take whatever measures may be needed to make that agreement work more effectively. I shall also write to some of the other countries involved—more than 20 have signed similar agreements with Romania—to find out their experiences and whether they have encountered similar difficulties.
Mr. Harry Barnes: May I give an example of a successful adoption from Romania? Bev and Ruth Smith, in my constituency, adopted Emese Gabor and at the time of her adoption she was the only child that I had heard of being adopted from a Romanian mental institution. The couple adopt many mentally disabled children and have all the facilities and abilities to deal with them. When they saw the terrible conditions which existed in Romania, they insisted on the adoption. It turned out that Emese is not mentally disabled, although she was in one of those terrible institutions. On carefully monitored occasions, such adoptions are very much worth while.
Mr. Veo: I am grateful to the hon. Gentleman for that contribution.
My hon. Friend the Member for Bolton, North-East mentioned one case and he will understand that I do not want to comment on it in public, although I shall consider what has happened and what the Home Office is doing about it. I suggest that he pays a visit to the helpline that he referred to. We should be glad if he did so. As he knows, the committee on inter-country adoptions has nominated a representative to serve on the project board which will review the operation of the helpline in the new year.
Several hon. Members mentioned resourcing of local authorities. Personal social services have been resourced
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generously—resources are up by two thirds in real terms since 1979. Charging is permitted, so no local authority should be deterred by a lack of resources from undertaking work in connection with possible inter-country adoptions.
An inter-country adoption agency could well have a place, but it would be better if it emerged from the domestic adoption service. The specialised knowledge of economic and social circumstances on an international scale may well be outside the scope of a local authority and an independent agency could fill that need. Of course, the basic principles and the standard of domestic adoptions, including the home study process, would need to be maintained.
The hon. Member for Eccles (Miss Lestor) made an outstanding contribution to the debate. She has been in touch with me about her interest in the subject and she has great experience of it. I welcome her endorsement of much that I said in my opening speech. She described powerfully the experiences of children taken from this country many years ago, and that underlines the fact that we should be careful to avoid allowing apparently up-to-date and fashionable ideas or modern thinking to outweigh basic common-sense principles when we consider adoption. Her remarks about age were important. I share her view that most of us enter parenthood with limited knowledge of what we are in for and that we have to learn as we go along. She was particularly right in her view of the race issue. There are appalling instances of children being removed from foster parents merely on the ground that they are of a different race from the child.
The hon. Member for Eccles made an interesting remark about the possibility that great openness and contact might lead to more adoptions. Under the Children Act 1989, grandparents may apply for a residence order which gives some stability and parental responsibility without the drawback of confusing the relationships of being a grandparent and a parent.
The hon. Member for Morley and Leeds, South made an important point about the need to avoid an unnecessary extension of the court time required.
The hon. Member for Stockport has been in correspondence with me about the position of small, unregistered children's homes and I shall respond to her about that as it falls slightly outside the terms of the debate. She referred to the fact that three out of five children adopted are between the ages of one and nine. That percentage has changed surprisingly little during the past 15 years. I note her concern about the procedure for the court to grant a placement order before placement commences, and we shall reflect on that. I do not share her view that unmarried couples should be considered equally suitable adoptive parents as married couples. Couples who have decided to get married have demonstrated a commitment to a relationship which is of a different order from that of two people who happen to live together.
The debate has been most helpful, and we shall take note of all the views expressed inside and outside the House. I hope that other people will follow the discussions and will support them by sending in their views.
Mr. Timothy Kirkhope: I beg to ask leave to withdraw the motion.
Motion, by leave withdrawn.

PETITION

  Pit Closures
  8.57 pm
  Mr. Alan Meale: It gives me great pleasure to present a petition on behalf of more than 136,000 people from Mansfield, Nottinghamshire and elsewhere. The petition calls upon the Prime Minister to intervene personally to stop the recent pit closure programme announced by the Government.
  I should like to pay tribute to the Chad News Group, the Mansfield Observer, the Sutton Coldfield Observer and Worksop Guardian whose editors and staff have organised, launched and managed this petition. The petition from people of the area expresses their fears about the consequences of pit closures on their community, which could lead, if unchecked, to the loss of up to 100,000 jobs in the coalfield communities of Britain and up to 32,000 jobs in the areas served by those newspapers.
  This fine and honourable petition of honest opinion from my area I give unto the House's keeping and it reads:
  To the Honourable the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled. This humble petition of people of Mansfield, north Nottinghamshire and elsewhere, sheweth that 136,000 people of the said area are deeply concerned about the recently announced pit closure programme and have called upon the Prime Minister to intervene personally to stop these closures.
  Wherefore your Petitioners pray that your Honourable House listens to this call upon the Prime Minister to intervene personally to stop such measures which would lead to the annihilation of the coal industry.
  And your Petitioners, as in duty bound, will ever pray etc.
  That petition is signed by Mr. Jeremy Plews of 21 Newgate lane, Mansfield, Nottinghamshire.
  To lie upon the Table

  Mr. Allan Nicklin
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Kirkhope.]
  8.59 pm
  Mr. Patrick Cormack: I am extremely grateful to Madam Speaker for choosing this subject for the Adjournment debate.
  I rise to raise the case of my constituent, Mr. Allan Nicklin, with a mixture of regret, frustration and anger: regret because what I say might conceivably strain relations between two friendly nations—this country and Saudi Arabia; frustration because, after 18 months of almost ceaseless work on behalf of my constituent, I have had to take the step of having an Adjournment debate on the subject; but most of all anger that Allan Nicklin has been treated so abominably merely because he had the misfortune to work for a company that turned out to be of dubious repute.
  Allan Nicklin, who is a Wolverhampton boy, educated at the grammar school, went into insurance after he left school. He qualified in the profession and has spent 30 years in various managerial positions. About half that time has been spent in the middle east, an area of the world to which he is passionately attached. Prior to the last job that he held in Saudi Arabia, he had done two tours in that country, to which he is also very attached.
  In 1988, Allan Nicklin was appointed general manager of Western Agencies, an insurance company based in the United States, with responsibility for three offices in the kingdom of Saudi Arabia. To him this was a job of challenge and promise, and he and his family relished the opportunity. They were in a part of the world that they all liked, in a country to which they had become attached. He felt that he would be able to do a good job in his chosen profession.
  Unfortunately, it did not work out quite that way. It soon became clear to Allan Nicklin that the company was not quite what he thought. There was slow payment of repair accounts for Saudi companies and towards the end of 1989 claims were being pressed. Throughout that time Mr. Nicklin made strenuous efforts to ensure that everything was done properly. By March 1990, however, he was advised that he had better not apply for an exit visa because he would not have a chance to leave the kingdom if he did. By July of that year, he was in prison, held responsible for the alleged debts of the company of which he was an employee. His wife made constant intercessions on his behalf. She took his food to gaol and she presented herself at office after office and worked tirelessly to ensure that her husband was released. She sought to ensure that it was recognised that he was not in any way responsible, so that he would be allowed to try to sort things out.
  At the end of November 1990, he was released from prison, but the case dragged on. At that stage, Mr. Nicklin looked upon this as a commercial and personal matter. Although the British authorities were aware in general terms of what was going on, Mr. Nicklin did not seek their active involvement or their help. He felt that it was a matter which he must sort out with the company for which he worked, and that was what he tried to do.
  By July 1991 he was told by the Saudi civil rights department that if he did not personally pay up he would go to gaol. It was at that stage, the middle of last year, that he asked for as much help as possible from the British

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  consul and sought, through his wife, my help and intervention as his local Member of Parliament. He did not wish his predicament to become public knowledge or property. He was conscious of the fact that Britain and Saudi Arabia enjoyed close and cordial relations. He had spent much of his working life seeking to strengthen in his own way those close and cordial relations. If we look back to midsummer last year, we had just gone through the Gulf war, in which those close and cordial relations had been demonstrated in a particular way.
  Alas, all Mr. Nicklin's hopes and aspirations seemed to count for very little. On 6 November last year, the threat that had been uttered in July was carried out and he found himself in gaol. This was no mere arrest and detention. He was imprisoned in a cell 10 m by 5 m. There were 24 other people in that cell at all times, and 28 for some days. He was in the company of murderers and other criminals of evil repute. He was not allowed to wash. He was not allowed exercise. His wife, when she visited him, was subjected to body searches and had to sit in a dusty courtyard with crowds of other women, waiting to see her husband.
  Allan Nicklin was detained in those conditions until 21 January this year, in spite of the best efforts of the ambassador and the consul, my hon. Friend the Member for Morecambe and Lunesdale (Mr. Lennox-Boyd) and myself. And still Mr. Nicklin did not wish his predicament, his troubles, to be made public. Obviously, I was in constant touch with his wife, and the House can imagine her distress and anguish when she returned to this country before Christmas last year.
  Soon after his release, the Saudi authorities admitted that Mr. Nicklin was indeed not personally liable for any debts; that there was no suggestion that at any time had he been guilty of any impropriety at all. This is not a British subject suspected of a criminal act. This case is not to be equated with the cases of drugs traffickers and those other cases about which one reads from time to time in which British subjects, sadly, contravene local laws, behave in a criminal manner and then, of course, must take the consequences. Here was a man who had sought to do nothing but follow his profession properly, and honourably discharge his business responsibilities, but all this to no avail.
  Although it is not done to name officials, I will name one official here—the private secretary of my hon. Friend the Member for Morecambe and Lunesdale, Mr. Charles Moore, who has been exemplary in the way he has sought to help and has handled this case and kept in constant touch with me. But in spite of all our efforts, in July of this year, what happened? I got a call from Mr. Moore one Friday to say that I could expect Mr. Nicklin to be flying in within two or three days. That was just as we were about to rise for the summer recess. My last conversation in July with the Minister gave hope that I would be able to greet Mr. Nicklin at Heathrow or at his home in the constituency conveying the good wishes of everyone concerned.
  In the event, nothing happened. Papers had been passed from one office to another and from one Department to another. Since those days in July, much effort has continued to be put in. My hon. Friend who will answer this debate has been constantly helpful in the matter. The Foreign Secretary has raised the issue with his opposite number, the Secretary of State for Defence has raised it at
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  high level and with his opposite number and the Prime Minister, with whom I have been in correspondence, has expressed concern and frustration.
  Indeed, as a result of a letter from the Prime Minister in which he said he saw no reason why I should not make the matter public, I talked to Mr. Nicklin and we decided that, at long last, the issue had to come into the open. It is a tribute to Mr. Nicklin and his wife that for all those long, dark, difficult months, they put the interests of this country and its relations with another country before their personal comfort and convenience.
  As I say, despite the totally genuine expressions of concern by the Minister who has had day-to-day charge of the case, by the Foreign Secretary, by the Secretary of State for Defence and by the Prime Minister, Mr. Nicklin remains without a passport and without permission to leave.
  This has been a cat-and-mouse game. Mr. Nicklin is being treated virtually as a hostage, and the situation is unacceptable. It is utterly unacceptable to Mr. Nicklin and his family and to their Member of Parliament. I hope that the Minister will demonstrate when he replies that it is equally unacceptable to Her Majesty's Government.
  This is a country with which, we all agree, we wish to have close relations, yet a British subject is being treated by that country in the way that I have described. It was out of sheer desperation that we decided—I spoke to Mr. Nicklin on the telephone from Saudi Arabia and I had numerous conversations with his wife, who comes regularly to see me and visits my office in the constituency virtually every day—that we could not allow the matter to go on without people knowing about it.
  Mr. Nicklin has not left Saudi Arabia for three and a half years. He has not been allowed to leave for two and a half years. He has not seen his daughter for two years, and during that time she celebrated her 21st birthday and graduated. He has missed all of the sort of family occasions that he should have had the right to attend.
  His son had to leave his independent school because the fees could no longer be paid. I managed to persuade the headmaster and governors to let him take his GCSEs, but then he had to leave. Mr. Nicklin has not seen his son for almost two years. The last time he saw his wife was when she visited him about a year ago in the intolerable conditions in prison to which I referred.
  Friends have helped to sustain Mr. Nicklin, and his wife has been marvellous in her support. But the strain on the family has been intolerable. Mr. Nicklin has no job and is without money. He has not been paid for over two years. It is clear from recent telegrams that the company for which he was working has almost certainly been guilty of criminal acts, but that is not his fault. In the United States, certain people are having to answer questions, but I will not digress and go into that now. Mr. Nicklin's reputation is such that other companies have been wanting to offer him employment. He has been unable to attend interviews, still less to contemplate taking up a job, because he has no passport and does not have permission to leave. He is entirely dependent on friends to feed and look after him.
  Although I do not want to over-emphasise my role as his Member of Parliament, had it not been for my intervention with all the statutory authorities who supply electricity, gas and so on, his family would have been in dire straits. I pay tribute to those to whom mortgage payments are owed, to British Telecom, British Gas and

  1081
  the local council for being extremely understanding and anxious to help. The position is desperate and that man remains in detention.
  We have moved a long way since 1850 and the days of Don Pacifico when Palmerston sent in the gunboats and later spent four hours addressing this honourable House to justify his conduct, making the greatest speech of his life. I do not necessarily invite my hon. Friend the Minister to emulate that but I stress that the position is unacceptable. I know that he and his colleagues in the Foreign Office have done all that they possibly could but it is terrible when, in spite of the constant entreaties of a friendly power, a nation refuses to allow a man against whom no charges are preferred or contemplated to return to his home and family.
  I tabled a question a few weeks ago asking my right hon. Friend the Foreign Secretary to summon the ambassador. My right hon. Friend replied that the ambassador was trying to be helpful and that he did not feel that that was the right moment to summon him. I do not criticise the Saudi ambassador in this country and am sure that he has tried to be helpful. However, all those good intentions and genuine efforts have not produced Mr. Nicklin at Heathrow airport and have not allowed him to rejoin his family.
  The last thing that I wish to do is jeopardise relations between Britain and any friendly country. Nevertheless, will my hon. Friend tell my right hon. Friend the Foreign Secretary in stark, unequivocal terms that such treatment of a British subject is utterly unacceptable and that the Saudi ambassador must be told that in no uncertain terms? Mr. Nicklin must be allowed to have his passport, return to his country and be reunited with his wife, son and daughter well before Christmas so that they can have a family time together. The family can then begin to unravel the manifold problems, financial and otherwise, that have encompassed and enmeshed them in the past two and a half years, particularly the past difficult year since he was imprisoned in those atrocious conditions in November 1991.
  I hope that my hon. Friend, to whom I am grateful for the time that he has given to this case, will be able to give me a reassuringly robust answer tonight. I appeal through the House and beyond the House to the Government to say to his Majesty the King of Saudi Arabia that, if he cherishes his relationship with Great Britain and truly believes what he said on his state visit to this country and during the Gulf war—I have no reason to doubt it—he should show that he repudiates the prevarication of his officials and that he will allow Mr. Nicklin to come back quickly.
  9.19 pm
  The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Mark Lennox-Boyd): I fully understand why my hon. Friend the Member for Staffordshire, South (Mr. Cormack) has brought this important matter to the attention of the House. I shall be speaking to my right hon. Friend the Foreign Secretary about the subject following tonight's debate. A copy of the text of the debate will be sent to our mission in Riyadh for
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  transmission to the appropriate authorities, and a copy will be made available to the Saudi Arabian ambassador in London.
  As my hon. Friend the Member for Staffordshire, South said, the story starts on 12 August 1990, when our consulate in Jedda was informed of Mr. Nicklin's arrest for debts incurred by Western Agencies Ltd., often known as WAL (Jedda)—the company for which he was general manager. As a result of representations made by our embassy in Riyadh, Mr. Nicklin was released for the first time from prison on 26 November 1990, two years ago to this month. But he was not free to leave Saudi Arabia then or now.
  Mr. Nicklin was initially given three months to settle the debts, and that period was extended to one year. He was unable to raise the money to pay the debts and, on 6 November 1991 he was rearrested. He was released into the custody of his sponsor, Prince Mishaal, on 21 January this year.
  Some 22 representations have been made to the Saudi Arabian authorities about the case by Ministers, consulate officials, myself and others during the past 12 months. Although, after Mr. Nicklin's arrest in January of this year, he was subsequently cleared of liability for all debts, he has not been allowed to leave Saudi Arabia. His case is now before the Council of Ministers, and we hope for an early and favourable decision that will enable him to return to his family in Britain.
  Under Saudi Arabian law, the senior representative of a company is liable for its debts and, until the debts are paid, he may be imprisoned. We have taken the view that Mr. Nicklin was an employee, not an executive, of WAL (Jedda), which was a subsidiary of the parent company based in Cyprus. WAL, a Cyprus-based company owned by two British nationals, Mr. Clive Lewis and Mr. Vincent Deacon, began operating in Jedda under the sponsorship of Prince Mishaal bin Saud bin Abdul Aziz on 27 March 1984. Mr. Nicklin arrived in Jedda in May 1988 to take up an appointment as general manager of WAL (Jedda). On I I August 1990, he was arrested and imprisoned for the local company's failure to pay claims to SASCO and Abbar company, both Saudi Arabian companies.
  During 1988 and 1989, numerous claims were made on WAL (Jedda) by both Saudi nationals and companies in respect of material damage, by fire and other events, which the company was unable to make good because the United States underwriters defaulted. The claims, amounting to about ·600,000, were underwritten by the United States companies Wilmington Marine and General Insurance company and American Marine and General Insurance company. Mr. Nicklin holds that all correspondence and dealings with the American insurers were conducted by WAL (Cyprus). One of the two major shareholders of WAL (Cyprus) admitted in a letter, dated 26 September 1990, that he and the other shareholder, as directors of the Saudi firm, were responsible for the debts of WAL (Jedda) and that Mr. Nicklin should not be held liable.
  In December 1991, during an official visit to Washington, I asked an official at the United States State Department to look into the status of the two United States insurance companies. After the State Department confirmed that neither company was under federal investigation, our missions in Houston and Atlanta tried to contact them direct.
  We learned that American Marine and General, which may now be in liquidation, maintained that, since it had

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  never received any premium on policies written by WAL (Jedda) and had never indeed written or authorised these policies, it did not consider itself liable for policies issued in its name. Mr. Nicklin disputes this, maintaining that premiums on policies issued up until the end of 1988, the period in question, were fully paid. Furthermore, he claims that virtually all policies issued by WAL in Saudi Arabia were signed by persons other than himself. Wilmington Marine and General, which was owned by a company now in liquidation, claimed that it was in the process of repaying its debt to WAL (Cyprus) by instalments, and that most of the money had already been repaid. The directors of WAL (Cyprus) claim that they have not received any payments.
  I want to put all the facts on record, as I am sure that they will be considered by others at a later date.
  In January 1992, the then Secretary of State for Defence, my right hon. Friend the Member for Bridgwater (Mr. King), raised Mr. Nicklin's case with Prince Ahmed, the Saudi Vice-Minister of Interior. As a result, Mr. Nicklin was released into his sponsor's custody and the documentation was transferred from Jedda to Riyadh. Our embassy in Riyadh submitted a dossier on the case to the Interior Minister on 23 March.
  In the meantime, our high commission in Nicosia had had a number of contacts with the two directors of WAL (Cyprus), the parent company, to try to bring home to them the seriousness of the position of their employee, Mr. Nicklin. Mr. Nicklin says that he has not received any financial assistance from them since mid-1991, although it has been made clear to them that both he and his wife, in the United Kingdom, are now destitute.
  We have repeatedly raised Mr. Nicklin's case at a high level with the Saudis, and our embassy in Riyadh has been active in trying to secure his release. Since my right hon. Friend the Member for Bridgwater raised the case in January 1992 with the Saudi Vice-Minister of Interior, a senior FCO official saw the chargé d'affaires of the Saudi embassy in London on 26 March. On 13 May, our ambassador in Saudi Arabia called on the Interior Ministry to express concern that the case had been transferred to the Ministry of Commerce. I raised the matter with the Saudi ambassador on 15 May, and the Foreign Secretary subsequently raised the case with the Saudi Minister of State, Mr. Masoud.
  On 19 May, our ambassador in Riyadh called on the Saudi Minister of Commerce, who said that the case was complex and would require careful scrutiny. He added that Mr. Lewis's 1984 contract with Prince Mishaal to sell insurance had not received Ministry of Commerce endorsement. Our ambassador reiterated our view that, as an employee of the company, Mr. Nicklin could not be held liable for its debts.
  Subsequently, we learned that the Ministry of Commerce had informed the Ministry of Interior that it considered that Mr. Nicklin should not be responsible for any debts; the United States underwriters should be responsible for the larger debt of about £500,000: the smaller debts, made up, for example, of repairs to vehicles insured, should be the responsibility of Prince Mishaal. The embassy was informed that the Minister of Interior would write to Prince Mishaal asking him to take on these liabilities. Our ambassador wrote to Prince Saud on 7 July to brief him on developments in the case.
  On 15 July, our consul in Riyadh accompanied Mr. Nicklin to a meeting with his sponsor, Prince Mishaal. The
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  prince said that he had not yet received any communication from the Ministry of the Interior. However, as he had no claim against Mr. Nicklin personally, he said that he would not stand in the way of his leaving Saudi Arabia. On 22 July, the prince's manager in Jedda told our embassy that the prince had been informed of Prince Nail's wish to have the debt issue resolved. Although he intended to dispute his own liability for the debts, Prince Mishaal instructed his office manager to request an exit re-entry visa in Mr. Nicklin's passport to enable him to travel as soon as possible.
  However, the immigration authorities in Jedda remained unprepared to remove Mr. Nicklin's name from their list of people forbidden to leave the kingdom. They said that they needed specific instructions from the Ministry of the Interior to remove his name from the list. On 28 July, a senior FCO official raised the problem with the Saudi ambassador, who said that he would see what he could do.
  Repeated representations by our embassy in Riyadh and consulate-general in Jedda have not yet overcome this new obstacle. Our consul-general in Riyadh and Mr. Nicklin called on the deputy Minister of Commerce on 8 September, and were again told that the Ministry considered that Mr. Nicklin should not be held liable for any debts, which should be the responsibility of the underwriters and his sponsor.
  My right hon. and learned Friend the Secretary of State for Defence raised the case when he met His Royal Highness Prince Naif bin Abdul Aziz, the Minister of the Interior, during his recent visit to Saudi Arabia, on 20 September. The Minister told my right hon. and learned Friend that he agreed that Mr. Nicklin should not be held liable for the debts, and hoped that he would be allowed to leave Saudi Arabia very soon; however, he wished to have a final look at the papers.
  Since then, the Interior Ministry has asked the Ministry of Commerce for further confirmation and clarification of its decision that Mr. Nicklin was not to be held liable for any debts. The Ministry of Commerce has, I understand, replied in the affirmative. As my hon. Friend knows, I spoke to the Saudi ambassador on 22 October, and followed that up with a letter enclosing a chronology showing how and when the Nicklin case had been discussed by British and Saudi Ministers and officials over the past six months.
  On 1 November, our ambassador in Riyadh was told by senior officials in the Interior Ministry that, as Mr. Nicklin's debts were not personal, the way should very soon be clear to authorising his release. We have now been informed that Mr. Nicklin's case has been referred to the Council of Ministers for final approval. Our ambassador spoke about the issue to the Foreign Minister on 8 November. We cannot, of course, tell exactly when that final approval will be given; but we have been given to understand that we are really at the last hurdle, and that Mr. Nicklin could well be free to return home very shortly.
  I know that this further delay will increase the distress to Mr. and Mrs. Nicklin, but I assure them, my hon. Friend and the House that we shall continue to do everything possible to secure Mr. Nicklin's unhindered departure from Saudi Arabia as soon as possible.
  Question put and agreed to.
  Adjourned accordingly at twenty-seven minutes to Ten o' clock.