HC Deb 19 April 1994 vol 241 cc822-57

The following subsection shall be inserted after section 6(1) of the Income and Corporation Taxes Act 1988

"(1A) Where—

  1. (a) a company has been formed for the purpose of the construction, design and operation of roads, rail or other transportation projects, the provision of training or child care, or such other purposes as the Treasury may by regulation deem appropriate, and
  2. (b) not less than 10 per cent. of the issued share capital of that company is owned by the Government or other public sector body at the end of an accounting period, and
  3. (c) not less than 30 per cent. of the issued share capital of that company is owned by private
bodies at the end of the same accounting period. then the liability of that company to corporate tax under this section for each accounting period shall be reduced by £100.".'.—[Mr. Darling.]

Brought up, and read the First time.

Mr. Alistair Darling (Edinburgh, Central)

I beg to move, That the clause be read a Second time.

Madam Deputy Speaker

With this it will be convenient to take new clause 18—Joint Ventures for Infrastructure Investment between Public and Private Sectors (No.2)

'The following section shall be inserted after section 6(1) of the Income and Corporation Taxes Act 1988


  1. (a) a company has been formed for the purpose of the design, construction and operation of roads, rail or other transportation projects, the provision of training or child care, or such other purposes as the Treasury may by regulation deem appropriate, and
  2. (b) at the end of the period of concesssion the assets and activities of the company are to pass to the public sector,
then the liability of that company to corporation tax under this section for each accounting period shall be reduced by £100.".'.

Mr. Darling

The new clauses are technical in nature but they allow us to debate an important matter that is crucial to the future of the United Kingdom and the world economy. Both concern the need for more initiatives involving public and private sector capital.

The need to invest in Britain's infrastructure is obvious to most people, if not to the Government. At the last election, the Labour party was anxious to ensure that the public sector had private sector money available to it. My hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott), the shadow employment spokesman, spent much of the general election campaign emphasising the fact that we believed that it was necessary for British Rail to attract private sector money. At that time, he was roundly criticised by the Government, who suggested that such a solution to the problem was not acceptable and should be rejected. Yet immediately following the general election the Government adopted exactly the same policy, showing that yet again they followed Labour party policy in this area of industrial development.

The bankrupt nature of the Government's approach during the past 15 years is best illustrated by what has happened with the channel tunnel link between London and the Kent coast. This summer, trains will travel through France at 185 mph. They will then travel through the tunnel at 85 mph. Then, and for the next 10 years, they will limp through Kent—a 75-mile bottleneck—at just 47 mph. The decision to build the channel tunnel was taken in 1986 and work began in December 1987. Yet Britain will probably not have a fast link between London and the Kent coast until 2004. Until we have that fast link there will not be the through link to many parts of England and to Scotland, all of which should benefit from the opening of the channel tunnel. I believe that that has happened because of the Government dogma which prevailed throughout the 1980s, and which we still see today, which says that only private sector money is appropriate for large infrastructure projects of this kind.

We know that parts of the London underground system are more than 120 years old. Anyone who travels on any part of the London underground system—which, as a general rule, Ministers do not—will know that it is in desperate need of overhaul. Even when the Government recognise that action is necessary, there is delay. The Northern line is an example of that, to which I shall return shortly.

The Heathrow express line, now a public-private sector partnership initiative, was planned 10 years ago. We have one of the world's major airports, if not the world's major airport; yet there is no efficient public transport link between it and London city centre. The Piccadilly line, which currently links the two, is an appalling service. I can bear personal testament to that, and it is no way to link a modern airport with a city centre. Yet after years of delay and argument the Heathrow express line will not be ready until 1997—and even when it is completed it will dump passengers at Paddington station with no direct link anywhere else.

The crossrail project, which will link east and west London, has still to complete its parliamentary passage and we do not know when, if ever, the line will be completed.

Leaving aside the argument whether the London docklands development was a good scheme, we had the absurd situation where it was completed but there was no infrastructure to enable people to get in or out of it. Until recently, the London river bus—another casualty of the recession—was by far the best way to docklands and other parts of London because the road and rail links were not efficient.

We also know that one in six sewerage pipes in Britain is more than 100 years old.

Alongside all those projects which desperately need investment we have between 3 million and 4 million people who are unemployed and condemned to a second class existence. They are people who want to work. There is work to be done and there are people ready to do it. What we need to find—and what the Government should find—is a solution which brings the work that is needed to those who want to work. The kind of initiative highlighted by new clauses 13 and 18 would provide one possible solution. I emphasise that it is one solution because there are other possibilities.

Clearly, projects totally financed by the public purse and those totally financed by the private purse are ways of tackling these problems, but I wish to concentrate on the solution that would be enabled by the new clauses—matching the need to invest with the available private sector finance if such finance is available. That is one reason why we published a consultative document entitled "Financing Infrastructure Investment" in February this year. We subsequently held a conference which was heavily over-subscribed and attended by industrialists and financiers, confirming our belief that the private sector wants to contribute and that the biggest single barrier to progress is Government dogma, on the one hand, and simple paralysis on the part of the Government on the other.

8.45 pm

I do not believe that there should be any ideological difficulty over the funding of such projects. For far too long, political ideology has been dominated, certainly on the Government side, by the issue of public financing. Throughout the 1980s, the Government held that the only spending worth undertaking was that undertaken by the private sector. If the private sector could not or would not do it, it was not worth doing. That is as daft as saying that the only way to finance public works is through the public sector.

Partnerships between the public and private sectors are essential. They are used in many different parts of the world. Local authorities throughout Britain have been pioneering such developments. The Government should now embrace the concept in order to tackle the woeful lack of investment in public infrastructure. The negative, polarised attitude has to change. We need to bring about the structural changes which are needed if partnerships are to develop. Public money should be used in a way which maximises the benefit to the community, which includes public infrastructure. If public funds are applied and they in turn attract public funding, aggregate spending is increased, bringing both direct and indirect benefits.

Our concept of public-private partnership is ambitious and expensive—[Interruption.] That was a mere slip of the tongue. Those who have been observing the debate so far will have noticed that our amendments are far from expensive, as the Financial Secretary has already seen. Our partnerships are ambitious and expansive. We see the scope for new partnerships not just in the provision of rail and infrastructure, but in inner-city and regional developments, training, housing and child care, as we discussed at some length in the previous debate.

As a first step, the Government should draw up a list of their priority projects. That is what seems to me to separate the Labour and Conservative parties. The Conservative party has never yet drawn up a list of those projects that it considers to be major priorities. It is for the Government to determine their infrastructure priorities and then to invite the private sector to participate—not the other way round. That simply has not happened. No doubt the Financial Secretary will tell us why.

That is also the view of the private sector. It is not just the Labour party which is saying that the public sector should do this. The Royal Bank of Scotland has said: The public sector takes an active role in identifying and promoting priority projects. John Laing—no particular friend of the Labour party—has said that it is essential for the Government to ensure that projects are drawn up so that the private sector pursues projects at the top of the Government's shopping list. That has not happened so far and it should happen as a matter of urgency. Instead, in the past 15 years we have had a Government ideology which has maintained that only the private sector knows best. That view has been rejected by the private sector itself. Yet every Conservative Member in the House today has been a bag carrier of that failed Tory dogma in the past.

Last September, the Chancellor decided that a new initiative was required. Having announced that because he was born in the midlands he had an eye to industrial strategy, he produced a list of 78 projects that he claimed demonstrated the Government's commitment to public-private sector projects. They ranged from the channel tunnel link at one extreme to the car park behind Eastbourne hospital at the other. When he addressed the Confederation of British Industry last November, he said in his typical style: You could say it is about privatising the process of capital investment in our key public services. As usual, he missed the point. The Government must determine priorities.

With other projects, the risks are too great to be borne by the private sector alone. Where such projects are to be encouraged, it must be the Government's responsibility to take a lead and to share the risk appropriately. Many projects, such as the west coast railway, have a strategic importance but are not necessarily seen by the private sector as an attractive commercial proposition, or at least not in their entirety. In that instance, no private firm would contemplate the line's wholesale upgrading; but in partnership with the public sector, certain parts of the project might be attractive to a private firm and it might be willing to help fund them.

Mr. Beith

I agree with the hon. Gentleman, but surely his earlier slip of the tongue was right. Some projects are expensive, but they are justified and cost-effective. The crunch is whether the Government are prepared either to put up the money or to underwrite the risk of some of the projects that he described. We shall not get away with £100 concessions to companies, as the hon. Gentleman's amendment proposes. It will require some commitment of public money to achieve the hon. Gentleman's objectives.

Mr. Darling

The right hon. Gentleman makes a fair point. Of course the sums at stake are substantial, particularly in respect of the channel tunnel link and the upgrading of the west coast main line. Ultimately, the public will fund those projects with the public purse through taxation, to service the loan. If they are funded jointly by the private and public sectors, the money will come partly from taxation and partly from fees, pricing or some other means of paying for them.

Earlier, before I was diverted by the Financial Secretary, I made the point that if public money is applied in that way and brings in private money, the aggregate investment is increased. I wholeheartedly accept the right hon. Gentleman's proposition that if the British economy is ever to get out of the rut that it is in, infrastructure investment in key projects will be needed. The Singapore Government, for example, are building both a physical highway and a telecommunications superhighway through the spine of that country. That is one example of a country prepared to embark on a major investment led by the public sector but subject to a substantial private sector commitment. That will bring economic spin-off developments which will provide employment for people who will then contribute taxes and national insurance or whatever is the appropriate system in that country.

I fully accept that such developments do not short-circuit the fact that if the public sector is involved it creates a public sector borrowing requirement commitment. We are debating ways of introducing private and public sector money to allow investment in infrastructure projects which have been neglected for many years.

Precisely that argument led me to emphasise the need for a channel tunnel link. It is not a narrow matter of a link between London and the Kent coast. The entire railway infrastructure to allow British companies to export to the rest of the European Union depends on a link between all parts of Britain, the tunnel and mainland Europe. That will not be possible in the absence of a fast link between London and the Kent coast, which is unlikely to exist for another 10 years

The west coast main line was one of the most modern railways when the Government came to power in 1979, but it is now desperately in need of investment and its managers warn that it is at risk of catastrophic failure. All that the Government have done is to put obstacles in the way. Instead of the private sector or the Government dealing with one operator—British Rail—the network is run by more than 20 operators, all with their own goals and priorities. We know the difficulties that that has caused. Strathclyde passenger transport executive, which operates a major commuter network in the west of Scotland which is vital to communications there, is finding it difficult to maintain its commitment with ScotRail, which operates the Scottish rail network, because of uncertainty about the effects of privatisation. It is tragic when an integrated transport system is put at peril because of Government dogma.

Earlier I mentioned the Northern line of the London underground—a classic case of the inflexibility of Government rules. Their policy has repeatedly delayed the investment that anyone who uses that line knows is desperately needed. The manufacturers of the new trains are happy to enter into an agreement to lease and to maintain them, which is important, because problems will inevitably arise with new rolling stock and they will have to be overcome. The Government want the manufacturers to go one step further and share the revenue risk. The people who build the trains freely admit that they do not have operational expertise. They cannot control the revenue, as they have no control over fare structure or marketing.

I do not argue that leasing and maintenance is the solution that we would go for in every case—there may be occasions when revenue risk is entirely appropriate—but the Government must devise some mechanism which offers the flexibility required. If the Government want a project badly enough, they should accept a greater degree of risk—perhaps ultimately by undertaking the entire project themselves, but perhaps something less than that. If the Government do not give a project particularly high priority, they would be right to ask the private sector to take a far greater share of the risk. At present, we have an extremely inflexible system, the result of which is that hundreds of thousands of Northern line users will be inconvenienced for a long time to come. That does not seem to make any sense. Does the Minister wish to intervene?

Mr. Dorrell

I am grateful to the hon. Lady—[Laughter.] I beg the hon. Gentleman's pardon. He alleged that there is a blockage because the Government require the operators to take a risk on revenues, but that is not the position. The Government published in the Official Journal the terms of a competition to determine which supplier would make the best offer in terms of replacing Northern line rolling stock. Is the hon. Gentleman arguing that that step is otiose?

Mr. Darling

Earlier the Financial Secretary was confused about the age of his son. Now he appears confused about my sex. I wonder if he is also confused about Government policy on the public and private sectors.

I have no objection to competitions or to tendering. The Government have said that they want the operators of the trains to accept a revenue risk, but I entirely see the operators' point of view: they do not know about the business of running trains. If they have an interest in only one particular line and not in others, it is difficult to see how they can reasonably be expected to take such a risk unless they are given some say in the fare structure and in marketing, so as to protect the risk that they are running.

Clearly, the Government must be flexible about any strategy for attracting public-private sector initiatives. If a bridge is to be built across a river, the Government may adopt a view different from the one that they would take if it was just a case of providing rolling stock for one section of one line. The Government must be open about these matters and must be prepared to show flexibility.

I would never argue that the Government should not press the private sector to make as much of a contribution to the risks as it possibly can. I know that those behind the Jubilee line extension wanted the Government to take the lion's share of the risks. I accept that the Government were right in that case to stick to their guns and ensure that the private sector took its fair share of the risk. No one should be dogmatic about these issues; it is just a case of what is right for the circumstances.

Mr. Dorrell

I entirely agree with the hon. Gentleman about the need for flexibility—it is an important point. He was arguing earlier that an unnecessary delay was being built into the Northern line acquisition by the Government's stance. The delay, if it be delay, is caused by the Government's insistence that potential suppliers enter into a competition. I want to establish whether the hon. Gentleman accepts that competition should be the next stage. If he does, he cannot argue that there is a delay.

9 pm

Mr. Darling

There is a delay by definition-because the Government have decided to hold a competition. I am glad to see that that is common ground. This is not just my complaint: many Members representing London constituencies, together with the Evening Standard and numerous members of the public, all know about the misery of using the Northern line every day—and they consider that the Government have caused the delay.

To say that the Government must be prepared to show flexibility is not to say that the private sector should not be pressed as hard as possible when it is right that it should assume a far greater risk. In certain other projects, such as the Northern line, it is important that the Government strike a realistic balance.

Mr. Brian Wilson (Cunninghame, North)

Does my hon. Friend agree that, whatever the Minister says, there has been an inordinate delay in getting to the point of holding the competition? The reason for that has been the Treasury's obsession with the idea that risk must take the form of operating risk—as well as maintenance risk, to which the operators are prepared to agree. Does my hon. Friend further agree that if the Minister is saying categorically that the Treasury is no longer insisting on operating risk as an element of the contract, that will be good news for everyone?

Mr. Darling

I do not believe that the Minister was saying that—indeed, he seems to be shaking his head. I think that we can take it that the Government are indeed insisting that operating risk should be part of the package.

Mr. Dorrell

It is one of the issues that will determine the result of the competition.

Mr. Darling

My hon. Friend the Member for Cunninghame, North (Mr. Wilson) makes his own point, and now the Minister appears to accept it. There has been an inordinate delay, but this is only one of many projects in which there has been delay, caused partly by the fact that the Government are not clear in their collective mind about what their approach should be.

There seems to be some confusion about where the Government stand. I appreciate that they have travelled a long philosophical road. Five years ago, under the previous regime, such talk would not have been allowed. At that time, the idea of a public-private sector partnership was not to be tolerated: the private sector knew best—that was all there was to it. We have had this list of 78 projects, of which 43 are mere proposals and, as such, cannot be relied on as part of a comprehensive Government strategy.

We should recall that these projects were announced by the Chancellor on a wet night in Glasgow last September. Perhaps they have the same status as the Chancellor says the Tory promises of tax reductions had when it came to the last Budget—it is just that one list was delivered on a wet night in Glasgow and the other in Dudley. They cannot be relied on. Two of the projects are, in any event, for car parks—highly desirable, no doubt, but scarcely the stuff of economic regeneration. They cannot be said to be priorities, but perhaps we shall hear more about them this evening.

The Government will say that it is unfair of me to blame them for everything that has gone wrong, and that the private sector has also made mistakes in the past. Others would argue that this business ought to be left to the private sector and that the public sector has no role to play. I recognise that there have been failures on the part of the private sector to invest in areas which fall within its own domain. These matters are perhaps outwith the scope of this debate, but the Government can take a lead. They set the tone and the economic framework. For example, they determine the takeover policy which has led to companies being forced to pay out heavy dividends to fight off takeovers—dividends which could have been deployed for investment. The Government should have a view on corporate governance, which can have a heavy influence on the culture of investment.

Institutional investors also have a lot to answer for. Those who saw last night's BBC "Panorama" programme must have despaired on hearing reports that banks, pension funds and other institutions are again investing heavily in property, despite two spectacular collapses in the past 20 years. It is not just a private matter: money invested in property is, by definition, not available for other investment, and property collapses which leave banks badly burnt are paid for by the public through increasing bank charges. It is high time the whole culture of investment in this country and the behaviour of some people in the City was questioned—not just by members of the public, but by the Government. Perhaps the Financial Secretary, who has hinted in a series of speeches that he is concerned about such matters, will say something about them today.

We need projects which can be implemented quickly, as well as projects which can enhance long-term efficiency and competitiveness. Projects should provide an acceptable rate of return, taking account of employment effects as well as straight cash terms. The Government have encouraged a culture in which high dividend payouts have taken priority over research and capital investment, which has seriously damaged our competitiveness. For that reason, it is for the Government now to show a lead in promoting public-private sector initiatives that will begin to redress some of the balance. We understand that only now, after 15 years, are the Government examining companies' behaviour with regard to dividends; only now has the Financial Secretary started to take an interest in the matter from the Government's point of view.

What about privatisation? No doubt we shall be hearing something about that. On average, about 20 per cent. of after-tax profits are paid out in dividends, but nearly 45 per cent. of the after-tax profits of the privatised utilities—water, electricity and gas—have been paid out in dividends. That is more than twice the figure for other companies. Yet we are asked to believe that privatisation leads to the best investment decisions. We know that that is not the case. We cannot leave such important matters, particularly matters of infrastructure, to private sector judgment alone. There are areas in which the private sector can operate best, but in many others there is a public interest—a public interest that has been neglected over the past 15 years. So far, we have seen no evidence that the Government are prepared to tackle seriously and reverse the problems that have occurred in the 15 years during which they have been in power.

There are other problems to be addressed. There is, for instance, the question of risk. As I have said, a flexible approach is needed. Risk does not come only in cash terms; there is the question of the Government's acceptance of planning and legislative risks, for instance. There is also the question of the public sector borrowing requirement, as I pointed out in response to an intervention from the right hon. Member for Berwick-upon-Tweed (Mr. Beith). The PSBR will not go away, but I believe that we need more transparency. The Government should separate their accounts to show their trading activities and investment borrowing as opposed to the borrowing that they undertake to maintain their core activities. We should bear in mind Sir Leo Pliatzky's observation that the PSBR is merely what the Treasury says it is. A far wider debate is needed about the definition of the PSBR. We accept that it will not go away, but people should be able to see what the Government are borrowing for.

The cost of borrowing itself must also be considered. The rate of return demanded by the Government has been unreasonably high in some cases—higher even than that in the private sector. That has stopped much rail investment, for example. Then there is the question of the status of public bodies such as the Post Office which find it very difficult to operate in the market because the Government will not let them do so—although many believe that the Post Office could compete very adequately if it were freed of the plundering by the Treasury each and every year.

It is significant that many local authorities—particularly Labour authorities, I am glad to say—have been at the forefront of imaginative development in metro schemes and various public sector developments. That should be encouraged. The whole issue of the public-private sector initiative must be part of an overall strategy for manufacturing investment and economic development. Yet we hear nothing from the Government. Such developments are happening all over the world—in the far east, in Europe and in the United States—yet in this country we have seen very little. We see merely continuing decay and decline.

The Government say that there is no alternative to their policies—just as they said that there was no alternative in the last 15 years which saw Britain's gradual decline in economic performance. I accept that there are problems, but these problems are there to be tackled and not used as an excuse for doing nothing. The Government need to broker agreements where agreements need to be reached. There is a willing private sector, there are people who want work and there is work that needs to be done. Britain should not be condemned to a second-class economic existence because of the triumph of Government dogma over common sense.

Mr. Beith

During the period of grim recession that we have just experienced the Government, along with the private sector, could have productively engaged in promoting infrastructure investment. In doing so, they would have allowed contracts to be placed at a time when the private sector was in a particularly weak position and when excellent prices could have been obtained. That would have created employment, thereby increasing the return from tax revenue and decreasing expenditure on social security benefits. At the end of the day, there would have been assets that we need desperately an improved transport system and improvements in housing and other aspects of public investment.

The fact that this has not occurred will count very heavily against us. If there is an economic recovery, there will come a point when it will be difficult for the Government to promote more investment and activity in this area because the private sector may be quite active elsewhere and engaging in such investment could generate more inflation. But the gaps will still be there. The deficiencies in the transport system will remain. They will produce bottlenecks which will create further problems, such as inflation, in particular, because of scarce capacity. People will have difficulty getting to work—a problem which is particularly evident in London where the transport system is not equal to the task of getting people to work. Business faces huge losses because of that inefficiency.

There will be problems not just in London, but in other parts of the country as well. The Government have missed a great opportunity and, in so doing, have made it a great deal more difficult for us to succeed and to be competitive in the future.

The opportunity has been missed partly for the reasons of dogma which have been mentioned already in the course of the debate. But let us get one thing clear: there is no free lunch; the kind of investment that we are talking about will cost the public sector some money. Partnership with the private sector can reduce the total amount of public sector commitment as well as bring other advantages. Private sector project management and private sector operation of activities can, in many cases, bring benefits and qualities which are sometimes absent from the public sector.

But the public purse will have to provide certain elements, or the projects would have gone ahead long ago. As a speculative investment, the private sector would have built railways and done other work for which there was a prospect of a reasonable return—particularly if economic conditions had been better managed than they have been in the past few years. But we are talking about areas where the risk is too great, where the return is too uncertain, or where, by the very nature of the scheme, there is not the means of securing the return which the private sector requires.

So we need a contribution by the public sector in the form of money up front or in the bearing of risk. Either way, the Treasury believes that it should appear on the public sector borrowing requirement. I was pleased to hear the hon. Member for Edinburgh (Mr. Darling) accept that as a fact of life; it is no use pretending otherwise The logical conclusion is to say, "Right, we may well be justified in adding to the public sector borrowing requirement in that way because by doing so we improve public investment, we improve our competitiveness for the future and we ensure that, in some respect, we can lower future public borrowing because we have an efficient and competitive economy".

It is extraordinary that, as a result of our not having a public sector balance sheet, we have this curious ideological argument. Just like any company, we should make a regular assessment of our community assets. The lack of a public sector balance sheet puts all the emphasis on revenue accounting. A public sector balance sheet would show where our assets were declining and where we were not renewing them and would set in context the debate about the PSBR.

9.15 pm

As I said, we must recognise that there has to be a contribution from the public sector to get some of these projects under way. The hon. Member for Edinburgh, Central said that the new clause was technical, and indeed it is—to any eligible company, it would mean only £100 relief from corporation tax. The Labour party's care not to make any public spending pledges could scarcely be clearer. I take it that the new clause was a device to secure a debate, but there is an important point underlying it.

Labour and Government Front Benchers are trying to escape the reality. The Government are trying to pretend that a great many public and private sector co-operative ventures are about to appear. The fact that they have not done so year after year, despite successive changes of policy by Chancellors, supposedly to make it easier, makes it clear that the Government are not facing reality. As for the Labour party, it refuses to admit that such projects cost money and that we shall have to fork out some public money to get them under way. I should expect the Labour party to argue that not only do they cost money but that it is money well spent and a reasonable expenditure. I agree with all that the hon. Member for Edinburgh, Central said about the desirability of the projects in question and their long-term cost-effectiveness.

The Government should come clean and admit that their efforts thus far to achieve public-private sector partnership have been woefully unsuccessful. If that were not so, there would not, in almost every Budget and in almost every autumn statement, have been another Government commitment to make new changes to move the culture so that the projects were easier to mount. Every year, we have questioned Ministers and civil servants in Committee about what they were going to do next and what other changes they were going to make, but we get nowhere because the Government will not face the fact that there has to be a significant contribution in the form of funds up front or guarantees to enable some of the projects to go ahead. For their part, the Opposition need to recognise that the projects involve justified commitment of public resources because they will make our economy much more efficient in the future.

There is so much agreement on the general desirability of some of these projects and such wide acceptance of the principle of partnership between the public and private sectors that it is extraordinary that we should still have to argue about it and that we should be making so little progress. I therefore call on the Government to make it clear that the projects that we are debating are necessary and important and will justify a commitment of public resources.

Public sector borrowing is not all bad. Public sector borrowing that is designed to create assets for the future can be fully justified if we can show a return on it in the future. In their understandable attempt to cope with the borrowing that has resulted from recession and from what I would describe as the mismanagement of recent years, the Government should not throw out the baby with the bath water. They must not convince their supporters, let alone the public in general, that it is always wrong for the public sector to borrow. It is not wrong if we are creating assets that will make our economy more efficient in the future.

There is a long list of such projects and there is considerable private sector interest in getting involved in them, but we cannot escape the need for a degree of public sector commitment if they are to go ahead. So far, the Government's attempts to promote public and private sector co-operation have not been equal to the task. The Ryrie rules, which originally covered this matter, have been relaxed at least three times in my recollection without any noticeable effect on projects coming to fruition. Successive Chancellors have said what they were going to do, but still too little has been done. Let us proceed—these projects are needed and they will make our economy more successful in the future.

Mr. Nicholas Winterton (Macclesfield)

I rise to speak because I have been fascinated by the contributions to the debate so far. I have immense sympathy with the views expressed by the Opposition Front-Bench spokesman and by the right hon. Member for Berwick-upon-Tweed (Mr. Beith)—except for his reference to what he called the Government's "mismanagement" over the past 15 years. I suspect that in a quiet moment, and perhaps only privately to me and not on the Floor of the House, the right hon. Gentleman would confess that what has happened over the past 15 years would probably have happened whatever Government had been in power. [HON. MEMBERS: "No."]

I say to the right hon. Gentleman and to the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) that they have only to look back at what has happened in the past 50 years, since the war. Because of the damp hand of the Treasury, which is the real problem, Governments have not made the investment either in public infrastructure or in private industry which the country required. As the right hon. Member for Ashton-under-Lyne knows only too well, such investment has been made in the countries that are our major competitors—in Japan, Germany and even France.

We should look just across the channel at the huge infrastructure that has been put into the channel tunnel project. We should consider the huge investment that the French, including their Government, have made on the other side of the tunnel at Calais and Sangatte, and in the rail infrastructure right the way through to Paris and elsewhere. I believe that this country should follow that example.

It is a pity that debates of this nature are not held more frequently, and on occasions other than debates on amendments or new clauses when the Finance Bill is on Report. If the House debated more seriously and legislated less frequently we should get a better answer at the end of the day. I am sure that the right hon. Members for Berwick-upon-Tweed and for Ashton-under-Lyne share my view that if all-party committees of the House considered proposed legislation—not least on joint ventures between the public and private sectors for infrastructure investment—the legislation that ultimately came before the House would have considerable cross-party support, and we should be able to counter the damp hand of the Treasury, which seems to bring to a halt in one way or another investment in both the public and the private sectors.

There is no doubt that the Government will never be able to find purely from public resources the means to fund, finance and resource the infrastructure projects. As the hon. Member for Edinburgh, Central (Mr. Darling), who led for the Opposition, and the right hon. Member for Berwick-upon-Tweed both said, we need those infrastructure projects because they are an investment for the future which will provide medium and long-term returns for the country.

We shall never be in a position to compete, especially in manufacturing, unless we have the infrastructure in the United Kingdom that will provide the best way for British industry to connect with the continent. Is it not crazy that the tunnel is about to open, yet British Rail does not have the infrastructure to enable the north-west—and, indeed, the north-east, but I am especially concerned with the north-west, because it is my region—to link up with the tunnel? That would enable us to channel immense investment and immense amounts of goods and manufacturing production towards the continent.

I hope that the Minister who responds to the debate will say that proposals such as those of the official Opposition and the Liberal Democrat party will not fall on deaf ears. I hope that he will realise that there are Conservative Members who are sick and tired of the Government's finding excuses not to advance resources for vital infrastructure projects. If they do not provide the actual resources for those projects, they should provide guarantees which would make it attractive and possible for the private sector to come forward with its expertise and its funds to make those projects possible.

The Government are currently toying with the idea of privatising the Post Office. What they do not say very often is that the Post Office in Britain is the most profitable, effective and efficient post office in the world. All that the Post Office needs is to be released from the restrictions under which it is operating at the present time. We will have to let the Post Office loose from those restrictions, or the Dutch or the Germans, for instance, will come into the country and cream off the corporate business of our Post Office to the detriment of the Post Office, to the detriment of employment in the country and to the detriment of the country as a whole. With the relaxation of restrictions on our Post Office, I believe that it will be able not only to continue to provide a universal service to all parts of the country, but will be able to make technological advances in Britain and look abroad for additional business. It requires action from Government and action from the Treasury.

The Government are concerned about public expenditure, but, as the hon. Member for Edinburgh, Central said, we must separate the types of public expenditure. For instance, we must separate the core activities of government, to use the phrase of the hon. Member for Edinburgh, Central, from that expenditure which would be an investment in the future, which could include investment in some of the public infrastructure projects to which the hon. Member for Edinburgh, Central and the right hon. Member for Berwick-upon-Tweed referred. It is stupid for the Government to pile up huge, additional expenditure for themselves by way of social security and other benefits when, by some modest investment, we could get people back to work, thereby reducing unemployment and reducing the pressure on the social security benefit budget.

I say that to my hon. Friend the Financial Secretary because I know that he has a very successful business background. I am sad because he has so far failed to manage to persuade the Treasury mandarins to do things that he would practise as a private business man. It is to my mind crazy that the present Government, who are supposed to represent business and private enterprise, so clearly fail to do just that through their policies. How would it be wrong for the Government to create the right environment in which those major projects could go ahead, either by providing a guarantee or by providing some climate in which it would be worth the private sector taking the risk and making the investment?

My hon. Friend knows, as do Labour Members, that in the House I have sought to speak for manufacturing industry for all the 23 years that I have represented my constituency. Just over a year ago, we formed the all-party manufacturing and construction industries alliance, which has had a little influence, not only in the House, but, dare I say it, on organisations outside the House such as the CBI. Sadly, from time to time, the CBI does not positively enough encourage the Government to take the right decision in the area of joint ventures by the public and private sector. That is the way in which to proceed.

I share some of the views that I think will be expressed by Opposition Members. I do not think that privatisation in itself is the solution to all the problems of the country. We are able to have highly efficient public organisations. I think that I was one of only two Conservatives who voted against water privatisation. I do not regret that decision and I believe that I have been proved right. What is the point of exchanging a public monopoly for a private monopoly, especially when it trebles the salaries of top executives and screws industry and the private house owner when everyone is going through a deep recession, because it is able to do so from its position of monopoly?

9.30 pm

I am not in favour of privatising the Post Office, but I am in favour of putting in, as we have, the best management and releasing it from the Treasury shackles within which it now operates. I hope that my hon. Friend the Financial Secretary will confess that the Post Office is making a substantial contribution to the Government's budget each and every year. Indeed, that contribution will increase this year over last year. Yet the Post Office is unable to compete in the free market.

I accept that there are not many Conservative Members in their places. I am ashamed that so many of my right hon. and hon. Friends are not present because this is a critical debate about our country's future.

The involvement of the private sector with the public sector in major construction projects could do much for the advantage of industry and for employment. It could do a great deal also to reduce the huge social security and benefit budget, which has caused many of the problems that the Government are now facing. If only—dare I say this where the Government and the Treasury are concerned—it were realised that we should take a gamble. The Government and the Treasury should, with the expert advice that is available to them, be able to identify many infrastructure projects upon which public money should be spent, and spent now. With the provision of guarantees we could make even more private money available to fund infrastructure projects.

I ask my hon. Friend the Financial Secretary why the north Birmingham relief motorway has not already been constructed. It is vital. The hon. Member for Liverpool, Broadgreen (Mrs. Kennedy) knows the M6 well as she uses it to travel down from her constituency to London. I know it, too, because I use it when I travel down to London from Macclesfield. It is crazy that the relief road, which could have been partially funded by the private sector, has not been constructed and put into operation, thereby reducing the tremendous road and other problems that are faced on the M6.

Ridiculous excuses have been trotted out by the Department of Transport and Treasury Ministers. I am sick and tired of them. We want action from the Government. I say to my hon. Friend the Financial Secretary, and through him to some of the highly paid and well-pensioned mandarins who sit in the Treasury, that it is about time they got out of London and started to use some of our infrastructure so that they come to realise how inadequate it is.

It would not cause a run on the pound if we were to invest in solid, sensible and well-assessed infrastructure projects involving both the public and private sectors. The Government would get cross-party support. Indeed, there would be support in the City. The trouble is that the City pays itself too much money and does not realise what is happening at the grass roots.

As the hon. Member for Edinburgh, South said from the Opposition Front Bench, too much money is being invested again in property. Why is it that people are investing in property? The answer is that in the past it has provided a much better return than investment in other sectors. But it has not created any real jobs in the long term. As a result, manufacturing industry has not been able to provide a return by way of dividends to its shareholders and has suffered a reduction in its investment.

We must invest in jobs. What is the most competent area of our economic activity in which we shall get that process going? The answer is the construction industry. What does the construction industry do? It carries out vital infrastructure projects. If we were to give the construction industry a fillip, it would undertake more work, provide more jobs in the United Kingdom and provide itself with a good base for undertaking the fantastic projects that are available to construction companies throughout the world. We have a fine history of carrying out some of the most successful infrastructure and civil engineering projects overseas.

Sadly, I shall be voting with the Government—[Interruption.] To be fair, the failings of new clause 13 have already been pointed out admirably by the right hon. Member for Berwick-upon-Tweed. I am sure that the hon. Member for Edinburgh, Central realises that the new clause was tabled to achieve a debate on Report of the Finance Bill. It has enabled me—I thank the hon. Gentleman for this—to say to my party in the House and publicly what I often say privately: let us get on with it, Minister. There is a hell of a lot to be gained. You can take a lead here. You have a business background, unlike many of your colleagues in the Treasury.

Madam Deputy Speaker

Order. The hon. Gentleman has forgotten that he should be addressing the Chair.

Mr. Winterton

Madam Deputy Speaker, I could never forget that. We have seldom had a more colourful Deputy Speaker. You are always in my eye, especially today because of the bright colours that you are wearing. [Interruption.] Madam Speaker, will I have to repeat the compliments that I have passed to Madam Deputy Speaker, who is just vacating the Chair?

My final comments are directed at my hon. Friend the Financial Secretary. I ask him whether the Treasury can give much more serious consideration to the sort of concept that is highlighted in new clause 13. I pray that he will understand the sincerity with which I have spoken. I come from a business background. There are many Tory Members who would like to see a better understanding by the Treasury of the important role that such infrastructure projects can play. They understand that the Government cannot do it on their own and it is vital to involve the private sector. That is what is behind the new clauses. I hope that my hon. Friend will do more than simply respond to them; I hope that he will give a commitment that the Government will take them seriously.

Mr. Hoon

We have heard three different speeches in the debate representing three different political parties. It is fair to say that, apart from slight differences in detail, there has been no difference in substance between any of the speeches. Perhaps it will be left to the Financial Secretary to inject a note of controversy in our debate on the new clauses.

That is typical of the problems that the country faces when the majority of public opinion is united in calling for new public investment but, sadly, is unable to persuade Ministers of the necessity for it. Indeed, the new clauses were designed to open up debate as to how we can best promote partnership in the provision of investment finance from the public and private sectors working together, as the new clauses emphasise, to improve the infrastructure in our society.

There is little doubt—the hon. Member for Macclesfield (Mr. Winterton) put the point forcefully, and perhaps even more radically than some Labour Members would do on occasions—about the chronic need for new capital investment in our infrastructure if we are to compete effectively with other advanced economies in Europe and, indeed, throughout the world.

Sadly, one comment that is made by people returning from visits abroad is how disappointed they are in the state of our public buildings—they seem to be run down and tired, and in need of new investment and new developments. People are also disappointed in how poor many of our public services have become in comparison with our immediate continental neighbours, and how low is the quality of our public environment. The vast majority of the population recognise that we need urgently new investment to restore our public facilities. However, to bring that about we need a Government who are prepared to take the lead. The present Government—although apparently committed in principle to the idea of attracting new private investment to public projects—appear incapable of getting involved, again for ideological reasons.

Management consultants Ernst and Young put it in this way in a pamphlet called "Project Finance in the 1990s": One of the chief deterrents to the private sector is Government's 'hands off' policy with regard to privately financed projects". The pamphlet continued: Government should act as the primary promoter of projects rather than as the arbitrator between different consortium bids.

The limited role which the Government have set for themselves goes a long way to explaining why their own private finance initiative has enjoyed such modest success—if success is the right word to use in that context. Some 96 projects were apparently identified, only 12 of which are under construction. Eleven have been completed, but each of those was started long before the initiative was announced. A further 43 apparently are no more than paper proposals which have not reached any stage of activity.

Mr. Dorrell

The hon. Gentleman has argued that the Government should set out clearly the projects which are available to be developed on a joint basis. I agree, and he has quoted from the list which was published by the Chancellor in September. Some of those projects have been completed, some are under construction and some are precisely what he is asking for—projects which the Government want delivered and where we are looking for private sector partners.

The hon. Gentleman cannot have it both ways. Either the list is suspect because some of the things on it have not been done yet, or he wants a list of projects for which the private sector can bid. I agree with the latter proposition: some of the projects have been included in the list about which he is talking.

Mr. Hoon

I intended my points to be taken together, and not chopped quite so logically as the Financial Secretary sought to do.

Many more than 96 projects around the country could be identified by a Government who were prepared to lead the way. That is precisely the criticism which was made by Ernst and Young, and that firm is hardly likely to be advancing propositions such as those made by the hon. Member for Macclesfield or by the Opposition.

It is said that many more projects would be possible than the 96 that have so far been identified. I hope that the Financial Secretary will address his remarks to that and explain why more has not been done by the Government. We must identify projects because, without them, we will not be able to compete effectively.

I want to consider one area—my hon. Friends will want to look at other areas—in which I believe that we must bring together public and private finance to take advantage of the technological advances which are available to us. We have talked a lot lately in this country and in the United States about information super-highways. My hon. Friend the Member for Edinburgh, Central (Mr. Darling) touched on that.

We know about the possibility of the technology which is available to establish networks which would allow information to be exchanged around this country, Europe and the rest of the world. Eventually, those networks will be based on systems of comprehensive fibre-optic cabling, not only throughout this country but in a way which will enable us to transfer information instantly around the world.

It is recognised that fibre-optic cabling will be used to improve our information exchange systems, and projects for our main trunk routes are to be cabled fibre-optically. As for taking the benefits of that technology along every street, we are engaged in cabling our streets with some of the oldest technology available in the field.

We are not even contemplating the way in which the technology will reach every home. If we are to take full advantage of the interactivity which will be available from the new technology for work and education, we must look at ways in which the full benefits of the technology which is well established can reach every house, every workplace and every public institution. Consider the benefits that that would bring to our society. Every place of work, every home, every public institution and every educational facility could have access to such sophisticated computer links. Working from home would become an entirely practical proposition, not only for the self-employed in particular types of job but for many employees who currently travel to and from work every day at roughly the same time in the morning and in the evening. Eventually it would be possible to extend the use of such facilities to the generality of employees. That would ease congestion on our roads, reduce the stress on public transport and eliminate the cost to businesses of providing expensive office accommodation in prime sites in big cities.

9.45 pm

Similar arguments can be applied to educational provision. People could enjoy educational courses at home at a time of their choosing, but with access to teaching on line that would allow them to ask questions. At present remote teaching does not always provide for that. Many people have concentrated on the benefits to entertainment of such a system. It could provide every home with access to the latest films, television and music. Indeed, the provision of that entertainment is seen by many as the key to providing the capital investment that will be required for the network.

For the moment, the along-the-street cabling that we are considering as a society is based on comparatively limited and rather old-fashioned technology. We need a financial structure that will allow us to take advantage of the latest in technology. In a sense, that problem is typical of the difficulties faced by Government in keeping pace with technological changes and harnessing those changes for the benefit of their citizens. Given the parlous state of Government finances, indeed the state that any new Government will inherit, no Government is likely to commit itself to the massive public expenditure involved in fibre-optic cabling every home, public building and workplace.

Moreover, despite the attractions of supplying paid-for entertainment and services down such fibre-optic cables, no private company will be in a position to take the enormous long-term risk involved in providing the large-scale fibre-optic linking, even if it was allowed to provide and charge for the comprehensive range of services.

The constraints placed on British Telecom are a good illustration of the difficulties under which private companies have to operate. Privatised by a Conservative Government who trumpeted the virtues of free market forces, the company is nevertheless prevented by law from competing with cable companies in the provision of entertainment down the line, even though the same cable companies provide telephone services in direct competition with British Telecom.

Moreover, in developing and using the technology, companies such as British Telecom are forced to do so subject to the constraints imposed on them by our existing relatively limited telephone network based, as I have said, on relatively old technology. Surely it ought to be possible to imagine a project agreed jointly between the public and private sectors in which the Government would lead the way in the provision of fibre-optic cabling subject to a significant private sector involvement in the provision of services paid for perhaps by long-term leases on the use of the basic equipment. The price of those leases would assume a significant return on the capital injected by the Government.

Mr. Dorrell

The hon. Gentleman makes an important point. He argues that the cabling that is currently being done by the private sector is an obsolete technology and that it would be a better business decision for those companies to invest in a different technology that allowed all the benefits that he describes. He will recognise that that is essentially a business decision. Why does the hon. Gentleman think that I—my hon. Friend the Member for Macclesfield (Mr. Winterton) kindly referred to my expertise in business from the textile industry, perhaps not the obvious background to make a judgment—or indeed anyone else in Whitehall, am better placed to make the type of judgment that he describes than the companies currently putting their shareholders' shirts on investing in the technology that the hon. Gentleman describes as obsolete?

Mr. Hoon

With the greatest respect, the Financial Secretary has demonstrated the Government's limited horizons on such projects. He has shown that he is considering the matter in the terms in which the Government established the system.

The Government are saying that small-scale cable companies will have a monopoly to provide such facilities, free from competition from British Telecom—free market forces only go so far where Government philosophy is concerned. Small companies cannot compete to provide the investment that will be necessary to bring fibre-optic cabling to our doors. That is what I was saying when the Financial Secretary interrupted me.

The Government are big enough to lead the way, and with private finance it could be done. Small-scale private operators are constrained to use older technology to provide cable systems and essentially that is what we have. Market forces mean that small companies can cable a relatively limited area using limited technology. That is the result when the Government opt out of their responsibility for leading the way.

That is not the reaction in other countries, where Governments recognise that they have a responsibility to establish those projects and create the conditions in which the private sector can participate. If the Financial Secretary considers the problem in that detail, he may reach some different conclusions.

I see no reason why the Government cannot take the lead. Providing leadership for a project and finding ways in which the private sector might become involved would be a perfectly proper role for the Government to play. I can imagine equally ingenious ways in which the private sector could pay for access to such computer networks.

The Government's scheme for computerising the Inland Revenue seems to have dragged on for an inordinate time. I understand the difficulties involved. The system will leave many people who are claiming state benefits still subject to the existing haphazard and rather abitrary system which, sadly, tends to dehumanise those involved on both sides of the exchange.

One only has to compare the scene in a typical social services department office, where a queue of claimants are trying to establish their rights and dealing with hard-pressed and often overworked officers, with that in a typical high street retail store where someone is paying with a charge card. The store has the technology to show that the card has been used on a certain number of occasions, subject to a credit limit. The card can facilitate shopping in all manner of ways.

It can also facilitate borrowing, with no social stigma involved. When people claim social security, they are subject to significant social stigma, notwithstanding the fact that they are exercising their legal right to funds to which they are clearly entitled. People who borrow money can do so in a socially acceptable way, but people who are exercising their rights to benefits are treated as second-class citizens.

Computerisation of the benefits process could make a significant difference, especially if private sector companies were involved in designing software packages. Such packages could, for example, show the best package available and how claimants could maximise their entitlement.

The Government need to use only a little imagination to envisage the possible revolution in the use of technology. I have given only one illustration of the way in which they could promote contact between the public sector and private finance. They might then recognise that such an exchange would have benefits for society.

I hope that the new clauses will force the Government to think more clearly about the ways in which private sector finance can be involved in large-scale capital projects which require their leadership. I hope that we can thus encourage the Government to think more carefully about the link between their initiatives and private sector finance and to take a lead in that respect.

Mr. Peter Snape (West Bromwich, East)

I have listened with interest to the debate. My hon. Friend the Member for Ashfield (Mr. Hoon) will forgive me if I do not follow him down the road that he has taken.

The hon. Member for Macclesfield (Mr. Winterton) referred to his 23-year career in this place. He will probably be aware that I spent some time, in a minor capacity, doing my best, 23 years ago, to prevent him getting here. Indeed, one of the narrowest escapes of my political life was not being selected as his opponent in the subsequent general election. He has mellowed considerably in the 23 years that he has been here. [Interruption.] Those Conservative Members who scoff should have seen him in those days.

Few of us would argue with the very relevant arguments that the hon. Member for Macclesfield made, especially about what he called the "damp hand" of the Treasury—what many of us would term the "dead hand" of the Treasury—which always seems to fall across any infrastructure project. Of course the circumstances—the economic situation—are never right for the expenditure of public moneys on major infrastructure projects.

Had the Ryrie rules been in Germany, the rubble of world war two would still disfigure most German cities. The German Government are a little more intelligent in their approach to public transport and infrastructure projects generally, and much more intelligent than successive Governments have been in the United Kingdom. I shall refer specifically to a project dear to my own heart in the west midlands, a light rail project—the midland metro.

My hon. Friend the Member for Edinburgh, Central (Mr. Darling) referred to some of the work that was done before the last election by the Labour party transport team in considering ways in which private sector capital could be attracted to some infrastructure projects. That initiative, led by my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott), was widely rubbished by some Conservative Members—not by the hon. Member for Macclesfield, I am glad to say, but especially by one of the many Transport Secretaries who occupied, for a fleeting few moments, it seemed, that post in the previous Conservative Government.

It is perhaps a poignant commentary on present-day politics that one of those Transport Secretaries, now Lord Parkinson, finds himself leading a consortium that is anxious to bid and to involve private sector money in work of the type that has been mentioned in the debate. He will have one great advantage that some of his colleagues might not possess—he will be able to refute all the arguments that he used to make against such projects when he was Secretary of State for Transport.

It appears that the lessons have not been learnt by the present Administration, and especially by the Treasury. One would have thought that the midland metro was the type of project that would appeal 100 per cent. to the Conservative party. The private sector is accepting a great deal of the risk. I will make comparisons later between the risk that has been accepted by the private sector in the midland metro and in other light rail schemes—in Manchester and Sheffield, for example.

When one considers projects such as the channel tunnel rail link, the west coast main line, the Heathrow express and the Northern line of the London underground, one is scarcely filled with optimism about the likely detail of the response of the Financial Secretary to the Treasury.

It seems to many of us that the Government's only idea about private sector involvement is to cloud and confuse the issue with a series of supposed competitions between supposedly interested companies at such length that interest in the matter dies away and the decision-making processes are postponed year after year. Line 1 of the midland metro, which runs through your constituency, Madam Speaker, as it does through mine, has had the toughest appraisal ever given to any transport project by the Department of Transport. It is the No. 1 transport priority for the west midlands, supported by all seven metropolitan councils, two of which, at least for another couple of weeks, are in the hands of the Conservative party.

I think that all Members of Parliament from the west midlands, Labour and Conservative, have supported that project, as have the chambers of commerce and industry, business groups such as Birmingham City 2000, and many others. Yet the net cost to the public purse of line 1 is just over £100 million. Government approval is needed right now to spend that, and Government grants of around £50 million are needed towards the total cost.

I listened with interest to my hon. Friend the Member for Edinburgh, Central. We in the Labour party are being a little timid at the moment about how we propose any public sector involvement in projects such as this. We shall never satisfy the Conservative party about our fiscal abilities, and it is pretty pointless trying to do so. But if we have a public debate about how much public money goes into projects such as the midland metro, our arguments will stand the test when set against the lack of progress in such projects by the Conservative party.

Despite the fact that the awful negative campaigning in which the present-day Conservative party indulges the whole time will enable it to go round accusing us of all sorts of fiscal sins, it is well worth while that a project such as the midland metro, and some of the others that I have already mentioned in which public and private sector finance is involved, should go ahead.

I referred to the other light rail projects for which the Government have given the go-ahead—the Manchester metrolink and the Sheffield supertram. Neither has been subject to the same fiscal appraisal as the midland metro. None of the private sector people involved in those projects has given the sort of guarantees that the John Laing/Ansaldo joint venture companies have given to the financial initiatives involved in the midland metro. Yet they have been given the go-ahead.

The Manchester metrolink has been up and running for some years, and the Sheffield supertram started a few weeks ago. We all know that the Treasury has the weird view that somehow public sector projects are less worthy than, for example, road building.

Mr. Dorrell

indicated dissent.

Mr. Snape

The Financial Secretary shakes his head, but he should listen to the speeches of some of his colleagues in the Department of Transport. They talk of massive rates of return on road building projects, but they refer to the midland metro as an expensive project.

The Prime Minister came to the west midlands a couple of weeks ago. Between infuriating the city of Birmingham with some of his more inflammatory comments, he talked about the specific project. Unfortunately, he gave us no great hope that we would get the go-ahead before the next financial year. But what more can the city of Birmingham, the west midlands, the constituency authorities and Members of Parliament do collectively to convince the Treasury of the worthwhile nature of the project?

If we cannot get the Prime Minister to give the go-ahead two or three weeks before local elections when the Conservative party chairman has promised to win the city of Birmingham—that is another promise that looks as though it is being junked the nearer we get to the day of the election—what can we do to convince the Financial Secretary of the necessity for the project in order to prevent the west midlands conurbation from seizing up altogether?

The Financial Secretary might consult his fellow Ministers in the Department of Transport, and they might say that there already exists some public transport along the Wolverhampton/West Bromwich/Birmingham corridor. It is true that there is an existing heavy rail line along part of that corridor, but since the closure of the former Great Western Railway line in 1972, constituencies such as ours, Madam Speaker, have been poorly served by public transport. The congestion along that corridor grew worse throughout the 1980s and 1990s. The alternative to the A41 Holyhead road are the M5 and M6 motorways. No hon. Member who uses that alternative—particularly those of my hon. Friends who advocate the swift completion of the Birmingham northern relief road—is under any illusion about the congestion it produces.

10 pm

I am at a loss to know how best we can convince the Financial Secretary of the worth of that project, particularly after the rigorous selection process to which it was subject. I hope that the Minister will say that the Government not only pledge their continued support and commitment to the project but will give it the go-ahead sooner rather than later. Unless that is done, all the talk from the Treasury Benches about commitment to public and private sector projects is so much hot air. That project is a priority for the west midlands.

We heard a great deal tonight about the Financial Secretary's business expertise, although we discovered subsequently that it was gained in the textile industry rather than in the people-moving industry. The hon. Gentleman is none the worse for that. It makes a pleasant and refreshing change for a Treasury Minister to have any sort of business experience. If the Financial Secretary is to live up to the blandishments heaped on him by the hon. Member for Macclesfield, he will put us out of our misery and give the go-ahead for the midland metro.

Mrs. Jane Kennedy (Liverpool, Broadgreen)

The new clauses do not pretend to offer a panacea for the overall problems of investment, but suggest changes to the Income and Corporation Taxes Act 1988, to allow joint funding of projects of the sort mentioned tonight to be placed on the agenda. They are not at present, because the fiscal regime does not encourage it.

The hon. Member for Macclesfield (Mr. Winterton) mentioned our shared sorrow at regularly having to use the M6 motorway. Another consequence for me of entering Parliament to represent a Liverpool constituency is that I must closely study changes in employment patterns in my own constituency and the constituencies of my hon. Friends, as well as throughout the world.

A recent study of Pacific rim countries revealed that they are investing heavily in labour-intensive manufacturing industries to compete with this country in attracting capital investment and custom. We no longer have to compete in the world market for capital—that is freely available.

We can beat other countries on the skills of our work forces. When we on these Benches talk about the need to invest in skills, we are not trotting out tired old phrases but advocating real investment, to give Britain a competitive edge in the world.

We can also beat our competitors in the developing world through our infrastructure. Tonight's debate has concentrated on large-scale projects of the kind that Pacific rim countries are taking seriously. They are investing a great deal of public and private money in developing their road and rail systems, to enable them to compete with us even at that level.

Unless we recognise that our competitors are achieving the same levels of skill and investment that we achieved in the past but are failing to achieve now, we shall fall behind. It will not matter that we are a member of the European Union. That issue needs to be taken seriously by the Government and, so far, they have not done so. My hon. Friends and the hon. Member for Macclesfield have made that point forcefully.

I want to talk briefly about one small area in which the public and private sectors could invest together. I also want to challenge some of the arguments advanced by the Financial Secretary during the previous debate.

Last week, I had the honour of opening the Rocking Horse day nursery in my constituency. It provides 40 places, largely for the children of the employees of Alder Hey children's hospital. It represents a public sector investment by an NHS trust. A beautiful building, it has been built right next door to Ronald McDonald house, so named because McDonald's food chain invested £1 million in a charitable project to provide accommodation for families visiting their children while they are in hospital.

Why did not the public and private sectors together consider investing in the nursery itself? Could not McDonald's or Burger King have been persuaded on to the site to invest alongside the health authority so that 80, not 40, places could have been provided?

The Financial Secretary has said that there is no problem with child care, because the need for it is being met by child minders. I know from personal experience that child minders offer an invaluable service. Not only do they provide a flexible service for working mums and dads; they also offer an easy way for women to return to the labour market, so they serve two purposes. But I challenge the Minister's assumption—that just, because child minders represent the growth area in child care provision, they are what most people would choose. That is not necessarily true.

The Financial Secretary said that he himself had chosen to use a child minder instead of a nursery. I made the opposite choice: having used a child minder, I opted for a private day nursery. But many people in my constituency do not have that choice. They have to use child minders because there are no nursery places.

There should be a fiscal regime that encourages the public and private sectors to consider ways in which money can be invested in this sort of project. Perhaps one sector could provide the capital and the other pay for the running costs of a nursery. Perhaps one or other could pay for certain staff—there are a range of ways in which, given the will, joint funding arrangements can be made.

We are losing because the private sector is discouraged from considering these options by our current tax regime.

Mrs. Teresa Gorman (Billericay)

Does the hon. Lady agree that, if we could persuade the Treasury to allow the cost of child care provision to be offset against earnings—tax relief on the cost of child care, in other words—that would be enormously helpful to women? It would also encourage the growth of new jobs—a whole new type of occupation for people who are out of work at the moment.

Mrs. Kennedy

We certainly need to consider every conceivable suggestion that might encourage child care provision to meet the growing needs of working mums and dads. The hon. Lady's option is one that should be considered—and would be, if we were developing the strategy whose details the Financial Secretary requested earlier.

Mr. Beith

May I remind the hon. Lady that that option was considered a little earlier this evening, when the House voted on new clause 6? As far as I can recall, neither she nor the hon. Member for Billericay (Mrs. Gorman) spoke about or voted for the new clause, which would have achieved precisely what they have asked for.

Mrs. Kennedy

I did not vote for the new clause because I do not agree with the idea of tax vouchers—but they should certainly be debated. It was the right hon. Gentleman's right to table the new clause, and mine not to vote for it: and I did not.

Ms Abbott

Is not nursery provision an excellent candidate for private/public sector partnership? It is easy enough for the Financial Secretary to say that child minders are meeting the need, and there are many excellent child minders about; but in inner-city areas such as my own—Hackney—and, for instance, Liverpool, child minders are struggling to look after children in inadequate living conditions and with insufficient training and support. Tomorrow morning, many a woman will take her child to a child minder with a heavy heart: she would be much happier if she had the option of taking her child to a high-quality nursery.

Mrs. Kennedy

My hon. Friend is absolutely right. Although the child minders whom I have used throughout my working life have, after months and years of acquaintance, become close personal friends whose help I have always appreciated, I am aware that some of my friends have not had the same experience. Child minders are not the answer to most people's problems, as the Financial Secretary suggested.

10.15 pm

Finally, let me say a word about the cost of nursery education. The Rocking Horse day nursery, which provides a marvellous service for the staff of Alder Hey hospital, charges £15 per whole day. In small projects like that, public/private sector partnerships would allow the public sector to provide more subsidies to help with child care costs.

I hope that the Financial Secretary will consider all the issues that I have mentioned. I feel that he replied too quickly to points made earlier, and I trust that he will deal with the serious matter raised by the new clause.

Mr. Keith Hill (Streatham)

All the speeches that we have heard—not least the impassioned contribution of the hon. Member for Macclesfield (Mr. Winterton)—have suggested that joint private and public sector projects could provide a useful way of supplementing infrastructure development, and that there is growing interest in the subject, as well as growing consensus between the parties.

As some Opposition Members have already pointed out, the concept has long been expounded by my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott), whose proposals for leaseback arrangements for certain railway projects on the French model were included in Labour's manifesto at the time of the last general election.

It goes without saying that my hon. Friend's eminently sensible proposals were consistently rejected, derided, condemned and shrugged off by a succession of transport and finance Ministers. They must now find themselves rather shamefacedly having to eat their words, following the Chancellor's welcome and important commitment to the private finance initiative in his Budget statement of 30 November 1993, in which he announced a number of new projects under the initiative, confirmed the establishment of a new working group chaired by Sir Alastair Morton and concluded that the Government had injected a new momentum into the private finance initiative."—[Official Report, 30 November 1993; Vol. 233, c. 933.] I am bound to say, however—given that the Conservative Benches have been singularly barren throughout most of our proceedings—that that momentum has not exactly set the Conservative party in Parliament alight.

Hard on the heels of the Budget statement, Labour published its own report on the issue, entitled "Financing Infrastructure Investment" and subtitled "Promoting a Partnership Between Public and Private Finance". That detailed consultation document set out a number of areas in which public and private initiatives could be undertaken through the creation of public interest companies, new relationships between Government and public trading bodies, the possibility of regional development banks' mobilising private finance into small and medium-sized firms and—critically—a review of the current distinction between operating and finance leases, a subject to which I wish to return.

The report makes clear Labour's commitment to private and public initiatives across a range of policy areas and beyond transport infrastructure alone. It says that Labour's concept of public-private partnership is "ambitious and expansive"—as my hon. Friend the Member for Edinburgh, Central (Mr. Darling) precisely enunciated.

We on this side of the House know, and the country knows, where Labour stands on this issue, which is the subject of new clause 13. Notwithstanding the Chancellor's fine words in his Budget statement, are we entirely sure where the Government stand on this issue? Has it finally been resolved in the Chancellor's favour inside the Treasury?

In his Budget statement, the Chancellor said that making a success of the private finance initiative would require "a complete change of culture within Government". Certainly the Treasury's grudging response to the recent London Underground Northern line offer by ABB Transport seems to suggest that this cultural change still has a long way to go.

It is rather tempting to believe that the Treasury was wrong-footed on this issue precisely because it was a private rather than a Government initiative. But despite the very clear benefits of the deal—a totally new fleet of trains on London's misery line for the first time since world war two; a 20-year operating lease financed by the private sector; the total value of the scheme amounting to in excess of £700 million, which could certainly not be funded in present circumstances by London Underground; and most of the new fleet in place by 1997—the Treasury dragged its feet for three or four months before it announced that it consented to the commencement of the tender process.

One is also tempted to think that its consent was influenced more by the political pressures generated by the highly effective campaign of the Evening Standard, as well as the imminence of the London local elections, than necessarily by a change of heart—a new conviction—on the part of the Treasury.

Nevertheless, the contract has now gone out to tender. I think that most of us who were involved in the campaign accept that making the announcement through the Official Journal was inevitable, and probably the correct procedure. But if the deal goes ahead, whichever company wins it, it will doubtless reflect the main features of the ABB offer.

So far, so good. Members of Parliament on both sides of the House, and all Londoners, were delighted with the progress achieved in the Secretary of State's announcement of 29 March. Notwithstanding the Secretary of State's announcement, some nagging doubts are emerging about the fine print in the Government's response.

These nagging doubts raise the question: was this merely a tactical concession on the part of the Treasury to avoid a short-term political embarrassment, or, at the heart of the Treasury, does there remain a fundamental resistance to this kind of scheme which jeopardises the whole approach to public and private finance initiatives—the subject of the present debate?

The Treasury has laid down two tests which such initiatives must pass: the value for money test and the risk transfer test. The essential element of the value for money test is whether it is apparently cheaper to fund within public sector borrowing requirement rules or through a private finance initiative.

Under the test, if it is apparently cheaper in total value for money terms to purchase through the public sector route, the private finance proposal is deemed to have failed. I emphasise that, under the test, a proposal is deemed to have failed, irrespective of whether Government moneys can ever have been made available for the project. That is clearly ludicrous.

Following the 1993 Budget, London Underground deferred indefinitely its Northern line modernisation scheme, and further cuts in public support may be in the offing. If it is left to public sector financing, there is no prospect in the foreseeable future of the investment like that offered by ABB, and possibly other sources, being made available to London Underground.

There is no acceptable alternative to the scheme. The refurbishment project, which we understand has been touted in the Treasury as an alternative, has few benefits and perpetuates many of the disadvantages already experienced by Londoners travelling on the misery line. A failure to acquire new Northern line trains through the private finance initiative would be an absolute loss to the London travelling public. I hope that the Financial Secretary will offer a firm assurance that there is no question of this absurd and irrelevant yardstick being applied in the final assessment of the bids under the tendering process.

The second test applied by the Treasury to the private finance proposals that we are debating is the risk transfer test. The essential measure is whether most liability for asset ownership over the life of a project transfers to the private sector. The questions are how much risk, and what kind of risk? This is perhaps where we find the source of the main anxieties about the Treasury's approach.

The Secretary of State for Transport's announcement of 29 March, the contractual details of which have now appeared in the Official Journal, set out two aspects of risk-taking by potential bidders. First, the private sector would be required to finance the cost of trains and to provide a complete maintenance and support system. Secondly, any deal would have to transfer a substantial degree of risk to the private sector in order to meet the Government's criteria under the private finance initiative".

The first requirement seems entirely reasonable in any such joint private-public venture. It seems reasonable that a manufacturer in this case—or any manufacturer, for that matter—should undertake responsibility for meeting the risk of performance of the rolling stock that he is producing as well as for possible cost overruns and delays. Indeed, such an undertaking, together with a maintenance deal, was already on offer from ABB Transport.

What seems by contrast quite unreasonable is the fact that the manufacturing company should assume responsibility for the many variables on which revenue returns are dependent and which lie entirely outside its control. For the Government, that means the level of public subsidy for transport services, and for London Underground management, it means factors such as staff costs, fare levels and even marketing.

However, that apportionment of risk now seems to lie at the nub of the argument and may be the obstacle that the Treasury is laying in the path of this new and exciting private financing initiative. The fact is that it is a matter of subjective decision-making. No fixed scale of risk transfer is laid down on projects of more than £10 million.

London Underground has estimated the percentage risk transferred with the ABB Transport project at 70 per cent., and it is satisfied that the project is merit worthy with a 6:1 benefit-to-cost ratio. Is it really the case, as some commentators suspect, that the Treasury wants to transfer the totality of risk to the private sector? Surely—this point has been made by many other hon. Members—the heart of the public-private sector joint project concept lies in the sharing of risk.

It is eminently acceptable that the public sector should bear a part of the risk because the gains from a decent public transport system, or decent public services in general, cannot be captured in higher fares and higher charges—higher charges if one wishes to impose them. Decent transport and decent public services are a public good and private and public deals should reflect that fact. If it is not recognised, such deals will not happen because there is nothing in it for the private sector. That may, of course, be precisely what the Treasury is looking for.

We are entirely clear that we are talking about risk sharing and sweeping away the cobwebs of obsolete thinking. However, we need answers from the Financial Secretary. Is the requirement for revenue risk in the Northern line project an absolute stipulation or, as the Secretary of State for Transport implied in evidence to the Select Committee on Transport, a general requirement that would be of interest, but would not be a make-or-break criterion for going ahead with the project? We need to know the status of that requirement. Much depends on the Financial Secretary's response.

10.30 pm

If the Government do not sort out the issue, if they intend entirely to privatise risk in such projects, that will sink the chances of the entire private finance initiative. That would be bad news for the Government, but—it is rather more important—it would be bad news for London Underground passengers and passengers elsewhere in the country, who would have to wait another two or three years until the next general election, after which a start will made on the modernisation of Britain's transport infrastructure, with a Labour Government genuinely committed to a partnership between public and private finance.

Mr. Dorrell

Anyone listening to the debate, if he had no reason to know better, could be forgiven for thinking that during the past 15 years the country had been run by a Government motivated solely by the aim of keeping the private sector out of the delivery of public services. From the speeches that we have heard it would have been reasonable to draw the conclusion that the idea that the private sector has a role to play in the delivery of public services was a new idea launched by the Opposition.

That is the exact opposite of the truth. For 15 years the Government have been involving the private sector in the delivery of services that in 1979 were regarded as the exclusive preserve of the state. British Telecom, water, electricity and gas are parts of the infrastructure now vested in the private sector, free from the public sector constraints that Opposition Members profess to find objectionable.

If the Labour party is serious about wanting to involve the private sector in the delivery of public services, surely to goodness that is a Damascene conversion on a truly biblical scale. It involves eating the words that have been spoken from the Opposition Benches for the past 15 years.

Mr. Wilson

Will the Minister give way?

Mr. Dorrell

No, I will not.

The use of the private sector in the delivery of public services goes to the core of what the Government have sought to do for 15 years. That is why over that period, in addition to the privatisation programme, we have used the private sector to deliver the Dartford crossing and to build the second Severn bridge, and to engage in the largest civil engineering project of our age—the channel tunnel. It is absurd for the Opposition to talk about their interest in the private sector as the deliverer of public services. In the 1992 autumn statement—

Mr. Wilson


Mr. Darrell

No, I shall not give way.

In the 1992 autumn statement, my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont) made it clear that he wanted the private finance initiative to be used to extend further the role of the private sector in the delivery of public services. The Opposition's argument this evening has been that the results of that initiative have been sparse. That is hard to square with the facts.

Since the 1992 autumn statement, private sector operators have been able to compete for the building of two new prisons. We have made it clear that we are extending to the private sector the opportunity to replace the Scottish air traffic control system. There has been a substantial investment in a myriad small projects in the national health service, involving private capital and management. The private sector has invested in student accommodation, as part of the expansion of our university system.

It has been involved in the future planning of the road system, through the development of road charging and the opportunity for shadow tolling, which was foreshadowed in a statement made by the Secretary of State for Transport only last week.

The principle of the Government's position is absolutely clear. The private sector has made it clear that it wants to be involved, and believes that it can contribute to the better delivery of public services. We, on behalf of the public sector, want to see its expertise and its resources recruited to the better delivery of public services. Changes on that subject are not required on this side of the House. It is on the Opposition Benches where the truly difficult questions remain to be faced. The hon. Gentleman—

Mr. Wilson

On a point of order, Mr. Deputy Speaker. Will you confirm that it is within the rules of a debate for a competent and confident Minister to give way during that debate, rather than simply to read from a prepared—

Mr. Deputy Speaker (Mr. Michael Morris)

Order. The hon. Gentleman has been in the House long enough not to need that sort of ruling.

Mr. Dorrell

The best that the Labour party has been able to do to substantiate its proposition that private finance is an issue that it may call its own has been to quote the speeches of the hon. Member for Kingston upon Hull, East (Mr. Prescott) on leasing to British Rail before the last election. Frankly, the hon. Member for Kingston upon Hull, East is condemned from his own mouth. He described his own idea as one concerned with accountancy not socialism. That is precisely the problem for the Labour party on the subject.

The problem has been grasped by the hon. Member for Hackney, North and Stoke Newington (Ms Abbott). She wrote to The Independent soon after the document about which the hon. Member for Edinburgh, Central (Mr. Darling) waxed so lyrical, drawing attention to the difficulties of the document published by Labour Front-Bench spokesmen. It is interesting to quote to the House the writings of the hon. Lady. She argued that: private sector involvement in public sector investment has all kinds of problems that neither Gordon Brown nor The Independent seem to appreciate. It is a more expensive way of raising money and the private sector invariably wants to take all of the profit and none of the risk. She went on: the involvement of private sector personnel and practices in the public sector seems to bring with it a risk of sleaze and corruption. In the hon. Lady's eyes, the private sector is identified directly, apparently, with sleaze and corruption.

The key point came in the next sentence of the hon. Lady's writings. She said: Above all there is a danger that the private sector will by degrees affect the priorities and the policies of a Labour Government in relation to public expenditure. She is, of course, exactly right. That is what involving the private sector means. It means bringing in not only capital, but management and accepting that people other than the Government have a perspective on improving the delivery of public services.

For 15 years, the Government have been opening the public sector to private sector skills and disciplines. During the whole of that time, Labour has resisted the process and identified public service with public provision. At last, we have seen the first signs that the dinosaur may be blinking. Labour has finally noticed that, while Government reforms have been giving customers better quality service and taxpayers better value for money, Labour policy has been stranded in a cul-de-sac. Fifteen years after the Government stamped on its tail, apparently the message has finally reached the dinosaur's brain. For that, there is much mercy, but little celebration.

Mr. Darling

The Financial Secretary's reply must surprise many people who thought that he was the coming man of the moment for the Conservative party. Instead of dealing with the arguments advanced, not only by Labour Members but by two of his hon. Friends, he has engaged in a rant which, frankly, does not do the subject any justice at all. We are entitled to ask where the Government stand on the question of public-private sector partnerships. The Financial Secretary seemed to be attacking its very principle, yet the Government say that they are in favour of developing further partnerships.

All that we have seen from the Government is a list—cobbled together, I suspect, 24 hours before the Chancellor gave a speech in Glasgow in September—of projects. Many of those will never see the light of day, but are simply glints in the planners' eyes. Others have been completed.

However, there was no evidence that the Government have any idea of a clear strategy on how to approach the problem. It is a piecemeal approach. The Government say that they are building two new prisons, and that they are building a Scottish air traffic control centre. I remember when the Chancellor announced that Scottish scheme, because it took many people in the air traffic control industry in Scotland completely by surprise. They had never heard of the project before. Yet the Government were saying that it was one of the centrepieces of the then autumn statement.

We have known for a long time that the Government have no strategy for economic investment. It is now abundantly clear, however, from what the Financial Secretary has said that they do not even have a strategy for promoting public-private partnerships.

The Financial Secretary complains about what my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) said before the last general election. He still condemns what my hon. Friend said. Yet the Government, having condemned what Labour candidates said during the election, went on to adopt the very same policy only a few months later.

It is not surprising that people do not have confidence in what the Government say. It is clear from what the Financial Secretary says that the Government do not know what they are doing from one moment to the next. They say that they are in favour of public-private sector partnerships, and the next day they say that they are not.

The Financial Secretary made no attempt to deal with the arguments advanced by the hon. Member for Macclesfield (Mr. Winterton), who made an excellent speech; I would not disagree with one word of it. I might suggest to him, however, that he should be complaining about the dead hand of Treasury Ministers, not that of the Treasury. It is Ministers who decide, and it is Ministers who should be held to account for the bankruptcy of policy in this area.

Many of my hon. Friends have said that it must make sense to invest in the infrastructure that the United Kingdom desperately needs if it is to compete with the rest of the world. My hon. Friend the Member for Ashfield (Mr. Hoon) referred to the Government's appalling policy and lack of foresight in respect of telecommunications super highways. My hon. Friend the Member for West Bromwich, East (Mr. Snape) talked about desperately needed infrastructure, including a specific metro scheme. In the area which I represent in part, Lothian regional council's metro scheme has been sidelined by Government policy.

As for timidity, I make no apology for the Opposition not being timid about the Government's policy. We believe that public-private initiatives are one way in which our country can begin to regenerate and rebuild its infrastructure, which has been neglected for the past 15 years.

If we are serious about maintaining and sustaining a high level of employment, surely rebuilding our infrastructure will enable people to go back to work to undertake that task. That must be a project that is well worth supporting. Yet what do we get from the Government? The answer is absolutely nothing. They heap scorn on anyone who comes up with any new ideas. They are hidebound by the dogma that has caused so much decline and misery for the past 15 years.

The Financial Secretary has made several speeches and written several articles. He has let it be known among the press that he is a new thinker, and that he is prepared to consider proposals that hitherto the right-wing members of his party were not prepared to contemplate. He has even hinted that there is something to be said for a consensus between the parties on economic matters where that makes sense. We have heard nothing about that tonight.

The Financial Secretary is supposed to be examining British industry's policies and problems on and with dividend payouts. We have heard nothing about that. He says that we should rely on the Government's privatisation proposals. He did not respond to our complaint that the dividend payments of the privatised utilities are double that of most other companies. That is money that should be available—we were told that it would be available—for rebuilding the privatised utilities' infrastructures. The Financial Secretary said nothing about that.

It is not surprising that, when the Labour party published "Financing Infrastructure Investment" earlier in the year, it was welcomed both inside and outside the House. It is not surprising also that, when the party held a conference to discuss the matter, it was heavily over-subscribed.

People said to us repeatedly, "Is it not surprising that the Government have no idea how to conduct an economic policy?" The Government live from day to day and minute to minute. They have nothing to say to those who believe that Britain must compete with the rest of Europe and, indeed, the whole world. To do that we must rebuild our infrastructure, which has been neglected because of the free market dogma that has dogged the political system for the past 15 years.

If the Financial Secretary is supposed to be the man of the future, it is not surprising that more and more people are coming to the conclusion that the Conservative party is the party of the past, and that it will be thrown out of office at the next election.

Question put, That the clause be read a Second time:—

The House divided: Ayes 260, Noes 297.

Division No. 215] [10.44 pm
Abbott, Ms Diane Clarke, Tom (Monklands W)
Adams, Mrs Irene Clelland, David
Ainger, Nick Clwyd, Mrs Ann
Ainsworth, Robert (Cov'try NE) Coffey, Ann
Allen, Graham Cohen, Harry
Anderson, Donald (Swansea E) Connarty, Michael
Anderson, Ms Janet (Ros'dale) Cook, Frank (Stockton N)
Ashton, Joe Cook, Robin (Livingston)
Austin-Walker, John Corbett, Robin
Banks, Tony (Newham NW) Corbyn, Jeremy
Barnes, Harry Corston, Ms Jean
Barron, Kevin Cousins, Jim
Battle, John Cox, Tom
Bayley, Hugh Cummings, John
Beckett, Rt Hon Margaret Cunliffe, Lawrence
Beith, Rt Hon A. J. Cunningham, Jim (Covy SE)
Bell, Stuart Cunningham, Rt Hon Dr John
Benn, Rt Hon Tony Dafis, Cynog
Bennett, Andrew F. Dalyell, Tam
Benton, Joe Darling, Alistair
Bermingham, Gerald Davidson, Ian
Berry, Roger Davies, Bryan (Oldham C'tral)
Blair, Tony Davies, Ron (Caerphilly)
Blunkett, David Davis, Terry (B'ham, H'dge H'l)
Boateng, Paul Denham, John
Boyes, Roland Dewar, Donald
Bradley, Keith Dixon, Don
Bray, Dr Jeremy Dobson, Frank
Brown, Gordon (Dunfermline E) Donohoe, Brian H.
Brown, N. (N'c'tle upon Tyne E) Dowd, Jim
Burden, Richard Dunnachie, Jimmy
Byers, Stephen Dunwoody, Mrs Gwyneth
Caborn, Richard Eagle, Ms Angela
Callaghan, Jim Eastham, Ken
Campbell, Mrs Anne (C'bridge) Enright, Derek
Campbell, Menzies (Fife NE) Etherington, Bill
Campbell-Savours, D. N. Evans, John (St Helens N)
Cann, Jamie Ewing, Mrs Margaret
Carlile, Alexander (Montgomry) Faulds, Andrew
Chisholm, Malcolm Field, Frank (Birkenhead)
Clapham, Michael Fisher, Mark
Clarke, Eric (Midlothian) Flynn, Paul
Foster, Rt Hon Derek Marek, Dr John
Foster, Don (Bath) Marshall, Jim (Leicester, S)
Foulkes, George Martin, Michael J. (Springburn)
Fraser, John Martlew, Eric
Fyfe, Maria Maxton, John
Galloway, George Meacher, Michael
Garrett, John Meale, Alan
George, Bruce Michael, Alun
Gerrard, Neil Michie, Bill (Sheffield Heeley)
Gilbert, Rt Hon Dr John Michie, Mrs Ray (Argyll Bute)
Godman, Dr Norman A. Milburn, Alan
Golding, Mrs Llin Miller, Andrew
Gordon, Mildred Mitchell, Austin (Gt Grimsby)
Graham, Thomas Moonie, Dr Lewis
Griffiths, Nigel (Edinburgh S) Morgan, Rhodri
Griffiths, Win (Bridgend) Morley, Elliot
Grocott, Bruce Morris, Estelle (B'ham Yardley)
Gunnell, John Morris, Rt Hon J. (Aberavon)
Hain, Peter Mowlam, Marjorie
Hall, Mike Mudie, George
Hardy, Peter Mullin, Chris
Harman, Ms Harriet Murphy, Paul
Harvey, Nick O'Brien, Michael (N W'kshire)
Hattersley, Rt Hon Roy O'Brien, William (Normanton)
Henderson, Doug O'Hara, Edward
Heppell, John Olner, William
Hill, Keith (Streatham) O'Neill, Martin
Hinchliffe, David Orme, Rt Hon Stanley
Hoey, Kate Parry, Robert
Hogg, Norman (Cumbernauld) Patchett, Terry
Home Robertson, John Pendry, Tom
Hood, Jimmy Pickthall, Colin
Hoon, Geoffrey Pike, Peter L.
Howarth, George (Knowsley N) Pope, Greg
Howells, Dr. Kim (Pontypridd) Powell, Ray (Ogmore)
Hoyle, Doug Prentice, Ms Bridget (Lew'm E)
Hughes, Kevin (Doncaster N) Prentice, Gordon (Pendle)
Hughes, Robert (Aberdeen N) Prescott, John
Hughes, Roy (Newport E) Primarolo, Dawn
Hutton, John Purchase, Ken
Illsley, Eric Quin, Ms Joyce
Ingram, Adam Radice, Giles
Jackson, Glenda (H'stead) Randall, Stuart
Jackson, Helen (Shef'ld, H) Raynsford, Nick
Jamieson, David Redmond, Martin
Janner, Greville Reid, Dr John
Johnston, Sir Russell Rendel, David
Jones, Barry (Alyn and D'side) Robertson, George (Hamilton)
Jones, Ieuan Wyn (Ynys Môn) Robinson, Geoffrey (Co'try NW)
Jones, Lynne (B'ham S O) Roche, Mrs. Barbara
Jones, Martyn (Clwyd, SW) Rogers, Allan
Kaufman, Rt Hon Gerald Rooker, Jeff
Keen, Alan Ross, Ernie (Dundee W)
Kennedy, Charles (Ross,C&S) Rowlands, Ted
Kennedy, Jane (Lpool Brdgn) Ruddock, Joan
Khabra, Piara S. Sedgemore, Brian
Kinnock, Rt Hon Neil (Islwyn) Sheerman, Barry
Kirkwood, Archy Sheldon, Rt Hon Robert
Lestor, Joan (Eccles) Short, Clare
Lewis, Terry Simpson, Alan
Litherland, Robert Skinner, Dennis
Livingstone, Ken Smith, Andrew (Oxford E)
Lloyd, Tony (Stretford) Smith, C. (Isl'ton S & F'sbury)
Llwyd, Elfyn Smith, Rt Hon John (M'kl'ds E)
Loyden, Eddie Smith, Llew (Blaenau Gwent)
Lynne, Ms Liz Snape, Peter
McAllion, John Soley, Clive
McAvoy, Thomas Spearing, Nigel
McCartney, Ian Spellar, John
Macdonald, Calum Squire, Rachel (Dunfermline W)
McFall, John Steinberg, Gerry
McKelvey, William Stevenson, George
Mackinlay, Andrew Stott, Roger
McLeish, Henry Strang, Dr. Gavin
McMaster, Gordon Taylor, Mrs Ann (Dewsbury)
McNamara, Kevin Taylor, Matthew (Truro)
Madden, Max Thompson, Jack (Wansbeck)
Maddock, Mrs Diana Turner, Dennis
Mahon, Alice Tyler, Paul
Mandelson, Peter Vaz, Keith
Walker, Rt Hon Sir Harold Wilson, Brian
Wallace, James Winnick, David
Walley, Joan Wise, Audrey
Wardell, Gareth (Gower) Worthington, Tony
Watson, Mike Wright, Dr Tony
Welsh, Andrew Young, David (Bolton SE)
Wicks, Malcolm
Wigley, Dafydd Tellers for the Ayes:
Williams, Rt Hon Alan (Sw'n W) Mr. Peter Kilfoyle and
Williams, Alan W (Carmarthen) Mr. Jon Owen Jones.
Ainsworth, Peter (East Surrey) Dicks, Terry
Aitken, Jonathan Dorrell, Stephen
Alexander, Richard Douglas-Hamilton, Lord James
Alison, Rt Hon Michael (Selby) Dover, Den
Allason, Rupert (Torbay) Duncan, Alan
Amess, David Duncan-Smith, Iain
Arbuthnot, James Dunn, Bob
Arnold, Jacques (Gravesham) Durant, Sir Anthony
Arnold, Sir Thomas (Hazel Grv) Dykes, Hugh
Ashby, David Elletson, Harold
Atkins, Robert Emery, Rt Hon Sir Peter
Atkinson, David (Bour'mouth E) Evans, David (Welwyn Hatfield)
Atkinson, Peter (Hexham) Evans, Jonathan (Brecon)
Baker, Nicholas (Dorset North) Evans, Nigel (Ribble Valley)
Baldry, Tony Evans, Roger (Monmouth)
Banks, Matthew (Southport) Evennett, David
Banks, Robert (Harrogate) Faber, David
Bates, Michael Fabricant, Michael
Batiste, Spencer Fairbairn, Sir Nicholas
Bellingham, Henry Fenner, Dame Peggy
Bendall, Vivian Field, Barry (Isle of Wight)
Beresford, Sir Paul Fishburn, Dudley
Biffen, Rt Hon John Forman, Nigel
Blackburn, Dr John G. Forsyth, Michael (Stirling)
Body, Sir Richard Forth, Eric
Bonsor, Sir Nicholas Fowler, Rt Hon Sir Norman
Booth, Hartley Fox, Dr Liam (Woodspring)
Boswell, Tim Fox, Sir Marcus (Shipley)
Bottomley, Peter (Eltham) Freeman, Rt Hon Roger
Bottomley, Rt Hon Virginia French, Douglas
Bowden, Andrew Fry, Sir Peter
Bowis, John Gale, Roger
Boyson, Rt Hon Sir Rhodes Gallie, Phil
Brandreth, Gyles Gardiner, Sir George
Brazier, Julian Garel-Jones, Rt Hon Tristan
Bright, Graham Garnier, Edward
Brooke, Rt Hon Peter Gill, Christopher
Brown, M. (Brigg & Cl'thorpes) Gillan, Cheryl
Browning, Mrs. Angela Goodlad, Rt Hon Alastair
Bruce, Ian (S Dorset) Goodson-Wickes, Dr Charles
Budgen, Nicholas Gorman, Mrs Teresa
Burns, Simon Gorst, John
Burt, Alistair Grant, Sir A. (Cambs SW)
Butler, Peter Greenway, Harry (Ealing N)
Carlisle, John (Luton North) Greenway, John (Ryedale)
Carlisle, Kenneth (Lincoln) Griffiths, Peter (Portsmouth, N)
Carrington, Matthew Grylls, Sir Michael
Carttiss, Michael Gummer, Rt Hon John Selwyn
Cash, William Hague, William
Clappison, James Hamilton, Rt Hon Sir Archie
Clark, Dr Michael (Rochford) Hamilton, Neil (Tatton)
Clifton-Brown, Geoffrey Hampson, Dr Keith
Coe, Sebastian Hanley, Jeremy
Colvin, Michael Hannam, Sir John
Congdon, David Hargreaves, Andrew
Conway, Derek Haselhurst, Alan
Coombs, Anthony (Wyre For'st) Hawkins, Nick
Coombs, Simon (Swindon) Hawksley, Warren
Cope, Rt Hon Sir John Hayes, Jerry
Couchman, James Heald, Oliver
Currie, Mrs Edwina (S D'by'ire) Heathcoat-Amory, David
Curry, David (Skipton & Ripon) Hendry, Charles
Davies, Quentin (Stamford) Hicks, Robert
Davis, David (Boothferry) Higgins, Rt Hon Sir Terence L.
Day, Stephen Hill, James (Southampton Test)
Deva, Nirj Joseph Hogg, Rt Hon Douglas (G'tham)
Devlin, Tim Horam, John
Dickens, Geoffrey Hordern, Rt Hon Sir Peter
Howard, Rt Hon Michael Rathbone, Tim
Howarth, Alan (Strat'rd-on-A) Redwood, Rt Hon John
Howell, Sir Ralph (N Norfolk) Richards, Rod
Hughes Robert G. (Harrow W) Rifkind, Rt Hon. Malcolm
Hunt, Rt Hon David (Wirral W) Robathan, Andrew
Hunt, Sir John (Ravensbourne) Roberts, Rt Hon Sir Wyn
Hunter, Andrew Robertson, Raymond (Ab'd'n S)
Hurd, Rt Hon Douglas Robinson, Mark (Somerton)
Jack, Michael Roe, Mrs Marion (Broxbourne)
Jackson, Robert (Wantage) Ross, William (E Londonderry)
Jenkin, Bernard Rowe, Andrew (Mid Kent)
Jessel, Toby Rumbold, Rt Hon Dame Angela
Johnson Smith, Sir Geoffrey Ryder, Rt Hon Richard
Jones, Gwilym (Cardiff N) Sackville, Tom
Jones, Robert B. (W Hertfdshr) Sainsbury, Rt Hon Tim
Key, Robert Scott, Rt Hon Nicholas
Kilfedder, Sir James Shaw, David (Dover)
King, Rt Hon Tom Shaw, Sir Giles (Pudsey)
Kirkhope, Timothy Shephard, Rt Hon Gillian
Knapman, Roger Shersby, Michael
Knight, Mrs Angela (Erewash) Sims, Roger
Knight, Greg (Derby N) Skeet, Sir Trevor
Knight, Dame Jill (Bir'm E'st'n) Smith, Sir Dudley (Warwick)
Kynoch, George (Kincardine) Smyth, Rev Martin (Belfast S)
Lait, Mrs Jacqui Soames, Nicholas
Lang, Rt Hon Ian Speed, Sir Keith
Lawrence, Sir Ivan Spencer, Sir Derek
Legg, Barry Spicer, Sir James (W Dorset)
Leigh, Edward Spicer, Michael (S Worcs)
Lennox-Boyd, Mark Spink, Dr Robert
Lester, Jim (Broxtowe) Spring, Richard
Lidington, David Sproat, Iain
Lord, Michael Squire, Robin (Hornchurch)
Luff, Peter Steen, Anthony
Lyell, Rt Hon Sir Nicholas Stephen, Michael
MacGregor, Rt Hon John Stern, Michael
MacKay, Andrew Stewart, Allan
Maclean, David Streeter, Gary
McLoughlin, Patrick Sweeney, Walter
McNair-Wilson, Sir Patrick Sykes, John
Madel, Sir David Tapsell, Sir Peter
Maitland, Lady Olga Taylor, Ian (Esher)
Malone, Gerald Taylor, John M. (Solihull)
Mans, Keith Taylor, Sir Teddy (Southend, E)
Marland, Paul Temple-Morris, Peter
Marlow, Tony Thomason, Roy
Marshall, John (Hendon S) Thompson, Sir Donald (C'er V)
Marshall, Sir Michael (Arundel) Thompson, Patrick (Norwich N)
Martin, David (Portsmouth S) Thornton, Sir Malcolm
Mates, Michael Thurnham, Peter
Mawhinney, Rt Hon Dr Brian Townend, John (Bridlington)
Mellor, Rt Hon David Townsend, Cyril D. (Bexl'yh'th)
Merchant, Piers Tracey, Richard
Mills, Iain Tredinnick, David
Mitchell, Andrew (Gedling) Trend, Michael
Mitchell, Sir David (Hants NW) Trotter, Neville
Moate, Sir Roger Twinn, Dr Ian
Monro, Sir Hector Vaughan, Sir Gerard
Moss, Malcolm Viggers, Peter
Needham, Richard Waldegrave, Rt Hon William
Nelson, Anthony Walden, George
Neubert, Sir Michael Walker, Bill (N Tayside)
Newton, Rt Hon Tony Waller, Gary
Nicholls, Patrick Ward, John
Nicholson, David (Taunton) Wardle, Charles (Bexhill)
Nicholson, Emma (Devon West) Waterson, Nigel
Norris, Steve Watts, John
Onslow, Rt Hon Sir Cranley Wells, Bowen
Oppenheim, Phillip Wheeler, Rt Hon Sir John
Ottaway, Richard Whitney, Ray
Page, Richard Whittingdale, John
Paice, James Widdecombe, Ann
Patnick, Irvine Wiggin, Sir Jerry
Pawsey, James Wilkinson, John
Peacock, Mrs Elizabeth Willetts, David
Pickles, Eric Wilshire, David
Porter, Barry (Wirral S) Winterton, Mrs Ann (Congleton)
Porter, David (Waveney) Winterton, Nicholas (Macc'f'ld)
Portillo, Rt Hon Michael Wolfson, Mark
Wood, Timothy Tellers for the Noes:
Yeo, Tim Mr. David Lightbown and
Young, Rt Hon Sir George Mr. Sydney Chapman.

Question accordingly negatived.

It being after Eleven o' clock, further consideration of the Bill stood adjourned, pursuant to Order [1 February] and Resolution [this day].

Bill, not amended (in the Committee) and as amended (in the Standing Committee), to be further considered tomorrow.

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