Commons Sitting of 12 January 1994

Preamble
The House met at half-past Two o'clock
PRAYERS
[MADAM SPEAKER in the Chair]
PRAYERS
  PRIVATE BUSINESS
    LONDON UNDERGROUND (GREEN PARK) BILL
    Queen's Consent, on behalf of the Crown, signified. Read the Third time, and passed.
Oral Answers to Questions
  TRADE AND INDUSTRY

    Business Links
    Mr. Moss: To ask the President of the Board of Trade how many business links he will be opening in the next six months; and if he will make a statement.
    The President of the Board of Trade and Secretary of State for Trade and Industry (Mr. Michael Heseltine): My Department is promoting the development of a national network of business links to provide a one-stop shop for support services for business. Three business links are now open, in Birmingham, Leicester and Congleton. By the middle of 1994, 30 will be open. My objective is to create a national network of around 200 outlets within the next two to three years.
    Mr. Moss: Does my right hon. Friend accept that the business community considers his business links scheme as one of the most important initiatives to come out of his Department to promote manufacturing output and import substitution and to create new jobs? Will he assure the House that every effort will be made to speed the implementation of the one-stop shops to cover the whole country? Will he also encourage independent agencies, such as the Greater Peterborough training and enterprise council, which covers my constituency, which are setting up their own initiatives as a first step to achieving business link status?
    Mr. Heseltine: I am grateful for the kind remarks of my hon. Friend. We will do all that we can to persuade the various agencies that are coming together to form the one-stop shops to move as quickly as is reasonable. There is one important caveat: we are determined to preserve the quality of the new services that are available and we would not wish to sacrifice quality for the number of units open.
    Mr. Nigel Griffiths: In July 1992, the President of the Board of Trade announced his plan to set up one-stop shops. He then told the House in December 1992 about
    "a major new strategy to establish one-stop shops"
    and said that it was "critical that the 15"—one-stop shops—
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    "are seen as pace setters".—[Official Report, 3 December 1992; Vol. 215, c. 414–17.]
    He boasted that he would
    "revolutionise the delivery of support services for business."—[Official Report, 15 April 1993; Vol. 222, c. 715.]
    On 17 February, he told the hon. Member for Aylesbury (Mr. Lidington) that he had had 57 bids to run those shops. On 17 March, he told the hon. Member for Langbaurgh (Mr. Bates) that he had a shortlist of 20 and on 15 April, he told the hon. Member for Dover (Mr. Shaw) that there would be 23 one-stop shops while on 19 May, he told the hon. Member for Taunton (Mr. Nicholson) that about 50 would be created. After all that, why has he opened only three in 16 months? Why have London and other parts of the country been neglected? Why has the right hon. Gentleman achieved so little despite four press releases, seven written parliamentary answers and a boastful statement in the House? Why is he even less effective than his party leader?
    Mr. Heseltine: I am sorry to disappoint the hon. Gentleman, but I have not opened any one-stop shop. That is a matter for local initiative by local people. That is where the decision and the initiatives come from and that is the pace at which we can move.

    Industrial Production
    Mr. Merchant: To ask the President of the Board of Trade what assessment he has made of the outlook for industrial production in 1994 in (a) the United Kingdom and (b) France.
    The Minister for Trade (Mr. Richard Needham): The OECD expects both industrial production and overall output to rise by more in the United Kingdom than in France this year.
    Mr. Merchant: Does my hon. Friend agree that what he has just said illustrates the powerful benefits that flow from successful policies of low inflation, low interest rates, low taxation and falling unemployment? Does he agree that a comparison of British and French achievement over the past decade further illustrates the success of this Government's economic and industrial strategy?
    Mr. Needham: As my hon. Friend says, the United Kingdom currently has faster growth, lower inflation and lower unemployment than does France. United Kingdom manufacturing output has grown faster than that of France between 1979 and today. It appears that when France has a socialist Government it falls behind; when we have a socialist Government we fall behind France.
    Dr. Marek: Nevertheless, does the Minister agree that if we compare the annual average rates of increase of industrial production between 1985 and the third quarter of 1993, the United Kingdom shows a rate of 0·7 per cent. whereas France shows a rate of 1·4 per cent? Is not the Minister doing a disservice to the country by bandying around selective statistics that can mean one thing or another? It would be far better if he provided us with a genuine set of statistics showing the trend, which, if we do not start in a dip or at a peak, indisputably show that France does better than we do in the long run.
    Mr. Needham: The hon. Gentleman did not listen to what I said. I took the years from 1979 to 1993 and I did not even add the point that, as we are now out of recession

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    and France is still in it, the gaps are likely to increase further. If manufacturing production in 1985 is taken as 100, between 1979 and 1993 Britain's manufacturing output grew faster than that of France.
    Instead of knocking the achievements of our industry, the hon. Gentleman should realise that we are competing successfully against one of our great and major competitors.
    Mr. Batiste: Is not another key difference between us and France the fact that over the past 10 years we have encouraged inward investment in high-quality manufactur-ing while the French have been relatively resistant to such investment? What assessment has my hon. Friend made of the impact of that investment on British manufacturing?
    Mr. Needham: We have indeed attracted 40 per cent. of the European investment made by Japan and a similar percentage from the United States. The fact is that that inward investment—as Opposition Members now realise, although they did not before—has brought immense benefits to this country, in terms of improving our quality, productivity and competiveness. Under this Government, as my hon. Friend the Member for Beckenham, (Mr. Merchant) said, with low inflation and low interest rates this country is the best possible place in Europe for foreign investment.

    Aerospace Industry
    Mr. Hanson: To ask the President of the Board of Trade what assessment his Department has made of the future prospects for the British aerospace industry; and if he will make a statement.
    The Minister for Industry (Mr. Tim Sainsbury): Prospects for long-term growth in the aerospace industry remain good.
    Mr. Hanson: In the light of the projected job losses in the defence industries which will impact heavily on the aerospace industry, will the Minister today give a firm commitment to implement the unanimous recommendations of the Select Committee on Trade and Industry, particularly those relating to defence diversification?
    Mr. Sainsbury: As the hon. Gentleman knows, orders from the Ministry of Defence are a matter for my right hon. and learned Friend the Secretary of State. He will also know that, as a result of the peace dividend, which we all welcome, the number of such orders is likely to be significantly lower than it was in the 1980s. We discuss that matter with the industry and do what we can to help it overcome it. It is, however, a problem not just for the industry in the United Kingdom but for industries throughout the world. As the hon. Gentleman will be aware, the United States aerospace industry looks likely to be cut by about a third as a result of the drop in orders.
    Sir Thomas Arnold: What steps is my right hon. Friend taking to maintain good trading relations with China? Is not that a major export market for aerospace?
    Mr. Sainsbury: My hon. Friend is right to identify China and the whole Asian and Pacific rim area as a major source of opportunity for aerospace exports—not just of complete aircraft but of aero engines and equipment. My hon. Friend the Minister for Trade and the whole Government are giving a great deal of attention to that area.
    Mr. Fatchett: In The Observer last Sunday, the President of the Board of Trade claimed that there was now a partnership between the DTI and leading British companies. Against that background, can the Minister explain why every leading British aerospace company that gave evidence to the Trade and Industry Select Committee complained about the lack of support from his Ministry? Why is it that leading British aerospace companies, in contrast to their counterparts in France, Germany and America, cannot rely upon the Government for long-term help and for a strategic view of the industry's future? Is not it the case that the Government and the Ministry simply have no view of the long-term importance of Britain's aerospace industry?
    Mr. Sainsbury: Perhaps the hon. Gentleman would like to study a little more carefully than he has the evidence that was given to the Select Committee and, if he is able, to develop a slightly closer dialogue with the aerospace industry. If he does, he will find that the situation is very different from that which he describes. I assure the hon. Gentleman and the House that the Government will continue to support this important industry in the way that we have done consistently and effectively since 1979, with a programme of support amounting to more than £1·5 billion.
    Mr. Nicholas Winterton: My right hon. Friend will be aware of the immense importance of the regional jet division of British Aerospace based at Woodford in the north-west. It is especially important to my constituency and to that of my hon. Friend the Member for Hazel Grove (Sir T. Arnold), as well as to Cheadle and Tatton. What is the Minister's understanding of the current position in the negotiations between British Aerospace and the Taiwan Aircraft Corporation? In the spirit of partnership that is so vital to industry nowadays, what assistance are the Government giving to ensure that the negotiations are ultimately successful?
    Mr. Sainsbury: I recognise the importance of that aerospace plant to my hon. Friend's constituency and those of my other hon. Friends. As he will be aware, we have kept in the closest possible touch with the company and have provided it with a great deal of assistance in the course of the negotiations. I understand that the companies have so far been unable to conclude a deal. However, talks on possible collaboration are continuing and I understand that AVRO, which is the name that British Aerospace has given to the venture, is considering other options. A welcome development is that the general fortunes of this business are improving.
    Mr. Beggs: Will the Minister join me in welcoming today's announcement by the newly appointed Minister with responsibility for the economy in Northern Ireland that unemployment in the Province has fallen below 100,000? Regrettably, that is still 13·3 per cent. of the work force. Does the Minister share my concern that 400 redundancies have been announced at Shorts, the most efficient and effective unit in the Bombardier group? Will he assure me that he will support Shorts as it seeks to obtain new orders overseas which will enable it to reinstate those who have been made redundant and create new employment opportunities?
    Mr. Sainsbury: I join the hon. Gentleman in welcoming the reduction in unemployment in Northern

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    Ireland, but I recognise, as he does, that it is still far higher than we would like it to be. Indeed, I welcome the reduction in unemployment throughout the United Kingdom. Shorts is a remarkably successful company whose productivity has been transformed and it is using the considerable skills of its work force to great effect in the aerospace industry. I join the hon. Gentleman in regretting the recently announced job losses and, of course, my Department will continue to give as much help as it can to Shorts to enable it to obtain orders not only in this country, but throughout the world.

    Cars
    Mr. David Atkinson: To ask the President of the Board of Trade when the European single market will be opened up for cars.
    The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Neil Hamilton): The single market is complete in all essential respects, so goods manufactured in the Common Market have the right to circulate freely anywhere within it. Good progress has been made in removing obstacles to free trade in cars and car parts, but we shall continue to press the Commission to bring forward other necessary measures and to enforce existing measures to ensure that the theoretical principle of free movement is a practical reality.
    Mr. Atkinson: Is my hon. Friend aware of the growing concern of British motor manufacturers that, in response to the recommendations made to his Department nearly three years ago by the Monopolies and Mergers Commission, he is shortly to announce an end to restraints on the import of Japanese manufactured cars in advance of 1999, which was agreed by the Community? Will he confirm that Britain does not intend to opt out of the EC consensus on this issue?
    Mr. Hamilton: I can say to my hon. Friend that that matter is under review and we will closely consult the interests that are most affected. I know of no evidence to show that either the Commission or the Japanese Ministry of International Trade and Industry is moving in the direction that he asserts.
    Mr. Roy Hughes: Does the Minister appreciate that a successful domestic car industry is to some extent dependent on an efficient steel industry? What are the Government doing about the unfair subsidies that are being paid to the steel industries in Germany, Italy and Spain? If that trend continues, it could lead to further redundancies in our steel industry.
    Mr. Hamilton: I am glad that the hon. Gentleman recognises that, unlike in the 1970s, the United Kingdom now has a successful car industry. It is because of so many years of taking difficult decisions in the long-term interests of the steel industry that it is in the shape that it is in today. I agree that it would be intolerable if steel workers in this country were to be put out of work as a result of unfair state aids elsewhere in the Community. My right hon. Friend the Minister for Industry has been most vigorous in his activities in the Industry Council to ensure that close scrutiny is applied to all applications for state aids in other parts of the European Community to ensure that British steel workers are not disadvantaged as a result of unfair subsidy regimes.
    Mr. Ian Bruce: Will my hon. Friend confirm that the British car industry, particularly Japanese owners of various British car manufacturers, are doing far better within the United Kingdom than they are doing at home in Japan? Why does he feel that the British car industry is doing so much better than our European, American and Japanese partners?
    Mr. Hamilton: As I am sure that my hon. Friend is aware, British industry, particularly the car industry, has addressed what in the 1960s and 1970s were long-term strategic problems. Today in particular, because the labour relations record of the motor car industry is second to none, we produce products of top-quality design which represent good value for money and which therefore regularly make increased inroads in overseas markets.
    Mr. Tony Banks: May I inform the Minister that, during the recess, I had a very pleasant holiday in Florida where, in order to save money, I shared a bed—with my wife. I would have saved a greater amount of money if I had bought a Ford car in America and imported it into this country. Why can the Japanese sell cars in the United States similar to models sold here, but charge people in the United States 50 per cent. less than people here have to pay? Why do our motor manufacturers rip off the British people? Is it because the motor manufacturers are far too powerful for the Government to address?
    Mr. Hamilton: I am most impressed by the vigour of the hon. Gentleman's paean of praise for the capitalist economy of what I am sure he once regarded as the great Satan of the United States. I hope that he enjoyed his visit to Disneyworld. As a member of a Mickey Mouse party, I am sure that he would have felt quite at home.

    Manufacturing
    Mr. Eric Clarke: To ask the President of the Board of Trade what plans he has to meet the Engineering Employers Federation to discuss proposals to increase the level of capital investment in manufacturing industry; and if he will make a statement.
    Mr. Heseltine: My Department has regular contact with the Engineering Employers Federation about many issues, including investment. The best incentive to increased investment is low inflation, low interest rates and a growing economy.
    Mr. Clarke: The President should be aware that the engineering employers asked the Chancellor to provide capital allowances to improve investment in manufacturing. The Chancellor did not listen to the employers. Did the right hon. Gentleman take up the case on behalf of the engineering employers in the Budget?
    Mr. Heseltine: The hon. Gentleman will know that my right hon. and learned Friend the Chancellor and I have wide discussions on all matters that are of concern to the manufacturing and service industries. I agree with my right hon. and learned Friend that the single most important thing that he can do to help the manufacturing economy is to preserve the climate in which inflation and interest rates are low and productivity is rising. In that, my right hon. and learned Friend is doing an exemplary job.
    Mr. Butcher: Does my right hon. Friend agree that one of the differences between industrial manufacturing

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    managers in the United States and those in the United Kingdom is the comparative reluctance of British managers in big manufacturing companies to leave and help start-ups and buy-outs in the small and medium-sized firm sector? There is a capital shortage in the small and medium-sized engineering sector. Will the reforms in the Budget, successor to the business expansion scheme, allow British manufacturing company managers to leave and take an interest as directors in those companies in which they are now being encouraged to invest?
    Mr. Heseltine: My hon. Friend will know that the new scheme that my right hon. and learned Friend announced made it clear that it would be possible, under the new successor arrangements for the BES, for investors to be directors and to draw an income from the company in which they were investing. Before we make too easy a judgment about the shortage of capital in small companies, it is important to realise that throughout the 1980s that sector increased to the extent that there are now 1 million more small companies than there were in 1979. The world recession slightly stilled the pace at which the expansion was taking place. There is no ground for believing that Britain will not see a resurgence in the growth of small businesses as we come out of that recession.
    Mr. Wigley: Does the President of the Board of Trade accept responsibility for intervening to maintain manufac-turing industry investment where that is threatened? Would he regard as appropriate an intervention in the circumstances of the announced closure today of BP at Baglan, with the loss of 600 jobs? If so, is that a responsibility of his Department or of the Welsh Office?
    Mr. Heseltine: No, I would not regard it as appropriate to intervene. I have looked at the details of the announcement by British Petroleum and, as the hon. Gentleman will know, it is closing older capacity because its new investment is coming on stream. As far as I know, there will be no adverse effect on the British balance of payments.
    Mr. Garnier: Will my right hon. Friend point the EEF towards Harborough, where he will find, both in the district of Harborough and in the borough of Oadby and Wigston, profitable engineering and small engineering businesses which have made over the years, and continue to make, capital investment in their own businesses and, as a result, are not only successfully improving their customer base in this country but are looking to find new markets both here and abroad?
    Mr. Heseltine: I am grateful to my hon. Friend for raising that point. By common experience—my hon. Friend the Minister for Trade constantly reminds of this —there is now a whole range of excellent small and medium-sized engineering companies not just operating as part of the supplier chain to the inward investment but pioneering export markets in an encouraging way.
    Mr. Robin Cook: Why will not the President admit that the Government have an abject record on industrial investment? Does he not know that the current level of industrial investment is well below that of 1979, by 10 per cent. in absolute figures and by 40 per cent. as a proportion of GDP? If he is confident that the figures will get better, would he like to predict in what year under the Conservatives manufacturing investment will get back to
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    the level that it was when they entered office—or does he privately suspect that long before they can do that an increasingly impatient electorate will have thrown them out of office?
    Mr. Heseltine: The hon. Gentleman knows that the manufacturing sectors of most advanced economies have been declining for many years. It is important to ensure that we create a climate in which the wealth-creating process is encouraged. He will be delighted to know that manufacturing investment is 23 per cent. up from where it was at the bottom of the recession in 1981. That is a remarkable recovery.

    Businesses
    Mr. Waterson: To ask the President of the Board of Trade what representations he has received from the Association of British Chambers of Commerce regarding the effect of the Budget on businesses.
    Mr. Sainsbury: The Budget has been well received by business, including the Association of British Chambers of Commerce.
    Mr. Waterson: I am grateful for that answer. Has my right hon. Friend received special welcomes for the provision in the Budget aimed at helping small businesses, including such matters as the proposal to lift the often onerous audit requirements? May I inform him that that measure, among others, has been warmly welcomed by members of the Eastbourne chamber of commerce?
    Mr. Sainsbury: I am delighted to hear the last part of my hon. Friend's comments. I can confirm that there has been a welcome for the item on audit requirements, particularly among small businesses. It was among a wide range of measures aimed at helping small businesses, all of which were welcomed by the president of the Association of British Chambers of Commerce, who said:
    "We like the help for small firms."
    We all like to hear that sort of response to the Budget.
    Mr. Clelland: In the Minister's discussions with the chambers of commerce, did they mention that millions of pounds of taxpayers' money is being spent on providing training for non-existent jobs? Did they advise him that it would be better for the Government to provide incentives and investment in product development, thereby increasing production and jobs and providing a demand for training?
    Mr. Sainsbury: Perhaps I may tell the hon. Gentleman a little more fully what the president said. He said:
    "All in all, it was an astute balancing act which responds to many of the concerns and needs of business".
    Mr. Anthony Coombs: Recognising the warm welcome that chambers of commerce gave the Budget, is my right hon. Friend aware of their pre-Budget submissions, which focused on the particular need for management education, especially in smaller and medium-sized firms? Will he confirm that that will be a principal priority of business links and the national vocational qualifications and their extensions to level 5?
    Mr. Sainsbury: My hon. Friend is right to identify training in education, including management training, as vital ingredients for the competitiveness of British industry, particularly smaller companies. I can confirm to him that among the Government and other support services

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    that will be funnelled through business links, high priority will be given to those services that help management training and assist smaller businesses in identifying their overall training needs.

    THORP
    Mr. Alan W. Williams: To ask the President of the Board of Trade if he will make a statement on the place of THORP in meeting Britain's future energy needs; and whether this will be tested at a public inquiry.
    The Minister for Energy (Mr. Tim Eggar): It is for the owners of spent fuel in the United Kingdom and overseas to make their own commercial decisions as to whether to use THORP as part of their nuclear energy production plans. My right hon. Friends have decided not to hold a public inquiry in respect of the Sellafield discharge authorisations.
    Mr. Williams: The Minister will know that two of the key arguments used in the initial public inquiry in 1976 to justify THORP involved future energy demand in Britain and the need for uranium and plutonium. As the fast breeder reactor programme has been cancelled, there is a glut of plutonium on the world market and the price of uranium is one sixth of what it was in the 1970s, will the Minister acknowledge that the energy arguments for THORP have collapsed completely? As circumstances world wide have changed so radically since the 1970s, is there not an overwhelming need for a public inquiry to re-examine those very arguments?
    Mr. Eggar: No. As my right hon. Friends have made clear, there is absolutely no need for a further public inquiry. Indeed, it is rather absurd to contemplate a further public inquiry 15 years after the initial public inquiry which, after all, was authorised by the right hon. Member for Chesterfield (Mr. Benn) and the funding was approved by the then Labour Government, and to reopen the 'whole question. The hon. Gentleman seems to forget that 3,000 jobs in west Cumbria and 2,000 jobs elsewhere in the United Kingdom depend on the plant and that BNFL estimates the commercial benefits of the plant at £4·5 billion over 10 years. Is he in favour of more prosperity in this country or against it?
    Mr. Page: As the United Kingdom is a signatory to the climate change convention to reduce the amount of carbon dioxide emissions, and as 34 per cent. of our carbon dioxide emissions come from power stations, is it not absolutely necessary that we should have a carbon dioxide-free nuclear industry in which THORP plays a vital part? Will my hon. Friend confirm that the Government have been more than scrupulous in allowing public inquiry and investigation into the viability and usefulness of THORP?
    Mr. Eggar: I completely agree with my hon. Friend. My right hon. Friends the Secretary of State for the Environment and the Minister of Agriculture, Fisheries and Food have issued a lengthy decision letter of some 75 pages. As I understand it, a judicial review of that decision is likely to take place, so it is difficult for me to go further than that. With regard to environmental benefits of nuclear power, that is one of the matters that we shall want to address during the conduct of the nuclear review.

    Land Mines
    Mr. Cohen: To ask the President of the Board of Trade if he will give further consideration to curtailing the export of land mines.
    Mr. Needham: We believe that our current licence controls are sufficient.
    Mr. Cohen: Is the Minister aware that it is estimated that there are 100 million uncleared mines in 56 countries around the world, many of which have British connections, that those mines kill thousands of people every week, and that the United Nations and the United States have said that trade in land mines is unacceptable and on a par with trade in chemical weapons? The Government could act immediately by issuing an Export of Goods (Control) Order which would ban not only the export of land mines but their design, so that British designed land mines would not be manufactured under licence in other countries. Why will the Government not act to stop the slaughter?
    Mr. Needham: The Government support the United Nations General Assembly resolution calling for a moratorium on the export of anti-personnel land mines which pose any threat to the civilian population. We have not produced or exported anti-personnel land mines in the category covered by the United Nations resolution for at least a decade.
    Mr. Skinner: Is the Minister sure?
    Mr. Needham: Absolutely sure. We have the capability to make land mines that are self-destructing and self-neutralising as part of a runway denial system, which we believe is a perfectly proper use of land mines in making equipment for defending our forces. If the hon. Member for Leyton (Mr. Cohen) thinks back to the Gulf war, he will realise that we have an obligation to ensure that our troops are properly protected and defended by the use of equipment which will stop the enemy using its runways. That is a capacity which we wish to maintain.
    Mr. Bellingham: A while back I asked the Minister about a report by Amnesty International which covered not just land mines but the export of torture and execution equipment and gave the example of a firm that exported gallows disguised as playground equipment. Does my hon. Friend agree that such exports are unacceptable, and will he update the House on the progress that he has made to stop them?
    Mr. Needham: I agree that any export of equipment that can be used for torture is unacceptable. We must ensure that such trade is stopped, and whenever it comes to our notice we insist that it is stopped. I assure my hon. Friend that we will take whatever action is necessary to ensure that the export of anything that could be used for torture ceases.

    Business Links
    Mr. Lidington: To ask the President of the Board of Trade if he will make a statement on the progress of the business links initiative.
    Mr. Neil Hamilton: I refer my hon. Friend to the brilliant answer given by my right hon. Friend the President of the Board of Trade a moment ago.
    Mr. Lidington: When my hon. Friend considers the next batch of business links bids to come before his Department, will he give careful and sympathetic attention to the bid from Thames Valley Enterprise which has set up business links in Aylesbury, Reading and Slough that will be of considerable benefit to people in Berkshire, Buckinghamshire and south Oxfordshire with the full backing of Buckinghamshire county council and the Thames Valley chamber of commerce and industry?
    Mr. Hamilton: A proposal from the Thames Valley partnership which covers my hon. Friend's constituency was accepted by the November assessment panel and those business links are due to open in May and June 1994 in Slough, Reading and Aylesbury. I commend my hon. Friend's support for the initiative.
    Mr. Flynn: Will the Minister also be aware of the danger of supporting any business enterprise that seeks to build on the popularity of the royal family? Will he bear in mind the failure of that enterprise and the loss of £7 million, including £200,000 of taxpayers' money? I hope that, with his fellow Ministers, he will take steps to ensure that that money is returned to the public purse.
    Mr. Hamilton: I do not know whether it was clear to my hon. Friends what the hon. Gentleman was rambling on about, but it was not clear to me.

    Post Office
    Mr. Pickthall: To ask the President of the Board of Trade what is the external financing limit for the Post Office in the next two financial years.
    The Parliamentary Under-Secretary of State for Technology (Mr. Patrick McLoughlin): The external financing limits for the Post Office for 1994–95 and 1995–96 are, respectively, minus £226 million and minus £213 million.
    Mr. Pickthall: Does the Minister agree that, in essence, that is an extra tax on the Post Office and thus on post office users? How does he justify to those post office users the fact that that gleaning of money from the Post Office will increase by more than 150 per cent. in the next three years? Does he agree with the Post Office Users National Council that that will mean lower capital investment, job losses, poorer quality services in parts of the Post Office and, most importantly, that it might prevent the Post Office from cashing in on its commercial success and becoming a world beater in its area?
    Mr. McLoughlin: I can think of no part of that question with which I agree. The hon. Gentleman talks about capital investment. Between 1976 and 1979, capital investment was some £89 million, compared with £900 million over the next three years. Under the last five years of a Labour Government, postal charges increased 122 per cent.—compared with 31 per cent. over the last five years of this Government.
    Mr. Jenkin: Will my hon. Friend confirm that BT contributes substantially more to the Exchequer as a result of being privatised and able to develop its services? Could not the same principles be applied to the Post Office, or at least to part of it?
    Mr. McLoughlin: I am grateful for my hon. Friend's views. The Government are conducting a wide-ranging review of the Post Office and will bear in mind my hon. Friend's representations.
    Mr. Robin Cook: Is the Minister aware that that wide-ranging review has been going on for 18 months while the Government dither over what to do with the Post Office? Does he have any idea of the damage done by that prolonged delay? Has he seen the statement by the chairman of the Post Office that that delay has already caused a sense of crisis and may cause a spiral of decline? Why does the Minister not admit today—and thus end the uncertainty—that the Government cannot find a way of privatising the Post Office which would not place at risk thousands of Post Office branches, and that the best way of keeping the Post Office successful is to retain it in the public sector where it can provide a public service?
    Mr. McLoughlin: The hon. Gentleman must be patient. No doubt he will attack whatever conclusions we reach as a result of the review. As to post office closures, 19,000 of the country's 20,000 post offices are already private businesses.
    Mr. Clifton-Brown: My hon. Friend will be aware that electronic mail is a fast-growing business world wide. What discussions has he had with the Post Office to ensure that it develops a share of that business?
    Mr. McLoughlin: A number of matters are continually being discussed with the Post Office. One aspect being taken into account in the review is the way in which the Post Office may want to compete in other markets and the best way for it to do so.
    Mr. Malcolm Bruce: Does the Minister accept that it is Government humbug to impose strict external financing limits on public bodies and then to argue that because they are so restricted those bodies must be privatised? Is not the reality that the Post Office is and will continue to be an essential public service which requires a monopoly to enable it to deliver mail to every household in the land? It needs relaxed external financing limits, to enable it to compete internationally, rather than more Government restrictions.
    Mr. McLoughlin: I will not take any lessons in humbug from the hon. Gentleman. No doubt he would have made the same argument in respect of BT and all the other privatisations that this Government took forward. They have been most successful, bringing expansion and better markets, leading to benefits for the consumer.

    Coal Industry
    Mr. Skinner: To ask the President of the Board of Trade how many coal mines were in production in June 1979, June 1992 and 31 December 1993.
    Mr. Eggar: I have been informed by British Coal that there were 223 producing coal mines at the end of the financial year 1978–79, 50 in June 1992, and 22 on 31 December 1993.
    Mr. Skinner: Is the Minister aware that when I was made redundant in Derbyshire, I had a choice of about five different pits offering work within a radious of five miles? In 1979, people made redundant in the mining industry in

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    Derbyshire had a choice of only two or three pits within a radius of 10 miles. Today, under a Conservative Government, every pit that is closed means that the miners are, almost without exception, thrown on the scrap heap of redundancy. There is no longer any choice. The answer is to stop imports of coal—especially that produced by slave labour in South Africa and Colombia. Any right hon. or hon. Member who wants evidence of that should view the film to be shown in the Grand Committee Room at 7·30 pm today about coal being produced by child labour in Colombia. I hope that all right hon. and hon. Members will attend.
    Mr. Eggar: I had no idea that the hon. Gentleman was so keen on getting a marketing job when he retires from the House. He also forgets that in March 1964 there were 576 pits in the country, and that six years later there were 299 pits. In other words, in six years the Labour Government closed more than 270 pits. The hon. Gentleman is also plainly incorrect: no underground miners have been made compulsorily redundant by British Coal.
    Mr. Oppenheim: Has not the hon. Member for Bolsover (Mr. Skinner) got a cheek to complain about pit closures? Why did he not resign the Whip in the 1970s when the Labour party was closing pits by the score—
    Madam Speaker: Order. The hon. Gentleman knows that that has nothing whatever to do with the Minister. Let us deal with policy matters.
    Mr. Oppenheim: Should the hon. Gentleman not spend more of his time being concerned about those industries which use energy and about the gas industry, in which jobs would be lost if we extended further the 40 years of protection from competition from gas and imported coal which British Coal has had since the war?
    Mr. Eggar: I agree with my hon. Friend. What is more, I wish that the hon. Member for Bolsover (Mr. Skinner) would study the statistics more closely. He would find that there has been a significant fall in steam coal imports in the past year over the previous year.
    Mr. Barron: Does the Minister accept that if any remaining market-tested pits are currently selling all the coal that they produce, they should not close?
    Mr. Eggar: As the hon. Gentleman knows, the pit in his constituency is currently under development. British Coal is in active discussion with a number of private companies about the leasing and licensing of pits that it has already closed. The Government have made it clear, and the British Coal board has agreed, that it will make the pits that it closes available to the private sector.
    Sir Michael Grylls: How many new jobs have been created in the coal closure areas in the past few years?
    Mr. Eggar: Very large numbers of jobs have been created in that period: 84 per cent. of all people who are registered with British Coal Enterprise have found a job or a training opportunity within a year to 18 months of being registered. British Coal Enterprise has an excellent record and Opposition Members who represent mining constituencies know from their experience that that is so. It would be nice occasionally to hear some praise for British Coal Enterprise from the Opposition.
    Mr. O'Neill: Will the Minister congratulate the miners and management of the Castlebridge mine in my constituency, who have just signed a four-year extension to the contract to provide coal for Longannet power station? Is that not evidence that when a generator is also responsible for distributing electricity, it is a more rational system of electricity provision in the country and a commitment to coal? The dreadful figures that the Minister has rehearsed today are in large measure due to the fact that generation and distribution of electricity have been separated and there is a dash for gas, which in Scotland has mainly not taken place, because of the close links between the coal industry and the generators and the customers for electricity.
    Mr. Eggar: The hon. Gentleman seems to forget that there is a major gas-based electricity generating station not far from his constituency. Of course I congratulate the people, the workers and the management of Longannet on succeeding in securing that contract. We need to ensure that coal is produced throughout the United Kingdom at competitive prices and is therefore able to increase its market share and compete effectively against gas and other fuels. On that we can agree.

    GATT
    Mr. Dykes: To ask the President of the Board of Trade if he will make a statement on the GATT agreement concluded last month within the Uruguay round.
    Mr. Heseltine: The conclusion of the GATT negotiations on 15 December is a large step towards more free and open international trade. It will bring more trade within GATT and strengthen the GATT rules. This will mean improved economic efficiency, increased growth, more jobs and lower prices, as well as wider choice for consumers.
    Mr. Dykes: I thank my right hon. Friend for that answer. If he has not done so already, will he send Commissioner Leon Brittan warm congratulations on the work that he did during the negotiations, on behalf of the entire Community? Incidentally, he also defended European media culture—television, films, theatre and art —from a wall-to-wall invasion by dubious American material, but received little credit in the British press.
    Will my right hon. Friend note another agreeable development? Having tussled with each other, Leon Brittan and Trade Commissioner Kantor are now working together to get the Japanese to open up their markets. Is my right hon. Friend confident that the Japanese will co-operate on this occasion?
    Mr. Heseltine: I assure my hon. Friend that I have conveyed warm good wishes to Commissioner Brittan. I share my hon. Friend's view of his work.
    I was in Tokyo on Monday and had extensive conversations with senior Ministers in the Japanese Government. I believe that they welcome the GATT round as much as we do, and that they are working to introduce changes—involving access to services and to their domestic markets—of which Britain is now well placed to take advantage.
    Mr. Grocott: Has the Secretary of State had an opportunity to discuss with his French counterpart the importance attached by the French to the protection and

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    preservation of their film and television industry? Will he reflect on the fact that in this country, under his stewardship and that of his predecessor, the balance of trade in television production has moved from surplus to deficit in the space of some seven years? Moreover, the proportion of British television programmes made and produced in this country has declined dramatically, especially since the passing of the Broadcasting Act 1990. When will the right hon. Gentleman start doing as much for television and films in this country as his French counterpart does in France?
    Mr. Heseltine: The hon. Gentleman will be aware that those industries are not directly sponsored by the Department of Trade and Industry. I am sure, however, that he will welcome the wide-ranging reviews already announced by my right hon. Friend the Secretary of State for National Heritage as much as I do.
    Mrs. Peacock: We all welcome the signing of the GATT agreement. Is my right hon. Friend aware, however, of the great concern in our wool, textile and clothing industries about the lack of agreement on tariffs? He will know of the huge amount that must be paid for many of our goods to enter other countries; is he aware that if the matter is not resolved quickly and satisfactorily many jobs may be under threat?
    Mr. Heseltine: I share my hon. Friend's concern for the textile industries. The round will include a reduction in tariffs in the United Kingdom's main market for textiles. For example, American textile tariffs will be reduced by an average of 27 per cent.
    Mr. Bell: The House will welcome the fact that the President of the Board of Trade went to Japan and spoke to Japanese Ministers. It is very important for the Japanese to open their markets to a greater extent than they have done in the past few years.
    Does the right hon. Gentleman agree that although the Uruguay accords represent a highway to greater trade liberalisation, they constitute only one stage of the process? The creation of the World Trade Organisation will be extremely important, but is the right hon. Gentleman not a little concerned that the ambitious programme that the organisation is setting itself may turn this highway to trade liberalisation into a bureaucratic nightmare?
    Mr. Heseltine: I thank the hon. Gentleman for the kind remarks with which he prefaced his question. I believe that it is generally recognised that the establishment of the WTO in the GATT round is potentially a major step forward in the policing, monitoring and facilitation of the GATT agreement. I think it wrong at this early stage to anticipate its deterioration into a "bureaucratic nightmare". Let us hope that it will be able to do its job effectively and efficiently.
    Mr. Waller: Does my right hon. Friend accept that at the end of the 10-year period to come, the United States will still be erecting barriers to our exports of textiles and clothing which will be very much higher than the barriers to its exports to the European Union? In the negotiations about the details of the GATT agreement that will take place in the coming months, will my right hon. Friend urge Sir Leon Brittan and his colleagues to press for genuinely free trade?
    Mr. Heseltine: My hon. Friend will know that it is the Government's policy, wherever possible, to do precisely that. However, I must be realistic and say that a complex and time-consuming round has now been virtually concluded and it would be unrealistic to think that there will be a major change in the structure of that round in the next year or so while details are being finalised and explored. We all hope that this round is the precursor to the next round where the issues will again be visited and, we hope, more satisfactorily resolved.

    Post Office Closures
    Mr. Parry: To ask the President of the Board of Trade what plans he has to order a review of the programme of post office closures in inner-city areas.
    Mr. McLoughlin: There is no such programme.
    Mr. Parry: My question relates to the closure of Granby street post office in my constituency. The Minister will be aware that that has been opposed by the local city council, church leaders, pensioners and other organisations. Will the Minister agree to meet me and the chairman of the committee opposed to the closure to discuss this matter?
    Mr. McLoughlin: Of course I agree to meet the hon. Gentleman to discuss the issue. However, operational matters are matters for the Post Office. As the hon. Gentleman will know, plans to close Granby street post office in January 1992 were reversed because adjacent sub-post offices were not big enough to accommodate additional users. Since then, the pattern of robberies at Granby street post office has continued. The sub-postmaster and his staff have, understandably, been frightened and demoralised by the attacks and the sub-postmaster has repeatedly sought to resign. Post Office Counters has received no serious or viable applications to take over the Granby street site. In the absence of other options, Post Office Counters has decided to relocate to the neighbouring Lodge lane post office, which has larger premises 400 or 500 yd away. As I have said, however, I will meet the hon. Gentleman.

    Managers
    Ms Coffey: To ask the President of the Board of Trade what monitoring his Department undertakes of the performance and effectiveness of managers in the United Kingdom manufacturing industry.
    Mr. Sainsbury: My Department is continually monitoring the performance of British industry. Management skills are one of the many factors influencing that performance.
    Ms Coffey: The Minister will be aware that much concern has been expressed to the Trade and Industry Select Committee by witnesses in relation to the quality and standard of British managers. I understand that those concerns were also expressed in the report prepared by the Department of Trade and Industry competitiveness unit, which has not been published. In view of the crucial importance of good management in ensuring that people work to the best of their ability, achieve job satisfaction and increase the competitiveness of British industry, and in view of the fact that the British worker has been much

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    abused for the industrial ills of this country, what positive steps does the Minister intend to take to ensure that British management is of the highest quality and pulls its finger out?
    Mr. Sainsbury: I share the hon. Lady's belief that management has a major contribution to make to the competitiveness of British industry in every sector and in every size of industry. That is why I welcome the fact that the level of management training in the United Kingdom is increasing. One statistic that demonstrates that fact is that in 1992 almost 6,000 students graduated with the qualification of master of business administration, compared with just over 1,000 in 1980.
    Mr. John Marshall: Does my right hon. Friend accept that those sectors of British industry that have seen the greatest increases in productivity and investment are those that have been privatised by the Government? Does that not illustrate the fact that we are helping manufacturing industry while the Opposition parties are seeking to depress it?
    Mr. Sainsbury: I agree with my hon. Friend wholeheartedly. One of the damping effects of public ownership has been to deter management from the sort of initiatives that improve competitiveness and identify export opportunities for their businesses. The success of privatised industry, not only in improving its competitiveness and the service given to customers, but in improving its exports, demonstrates the value of that programme.
    Mr. Purchase: Notwithstanding the welcome increase in the number of graduates from the MBA programme, is the Minister aware that a little time ago John Harvey-Jones
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    remarked that, never mind our managers achieving MBAs, it would be welcome if many of them could even read a simple balance sheet? That was from someone who is seen as an expert in business in this country. It is a reflection of the poor professional level of management in British industry over the past 20 years and there is room for much improvement.
    Mr. Sainsbury: Indeed, my right hon. Friend the President of the Board of Trade recently drew it to the attention of the Institute of Directors that perhaps British managers have rather too fulsome an opinion of their own performance. He said that that was a challenge—one to which I am happy to say that British management is broadly responding. The management charter initiative shows that that response is to be found in small companies as well as in the larger ones.
    Mr. Heald: Will my right hon. Friend pay tribute to the work of the Chemical Industries Association and other bodies in that industry which have done a great deal in terms of management training? Does he agree that the results can be seen in the fact that the industry's exports have risen by 25 per cent. in the past five years? Does he agree that training for management is the future?
    Mr. Sainsbury: I am happy to agree with my hon. Friend that that industry has been remarkably successful and that its trade association has made a major contribution to that success. Indeed, I repeat what my right hon. Friend the President of the Board of Trade has said many times—trade associations have an important role to play in encouraging competitiveness and improving management in their member companies.

NATO Summit
3.30 pm
The Prime Minister (Mr. John Major): With permission, Madam Speaker, I should like to make a statement about the NATO summit in Brussels, which I attended with my right hon. Friend the Foreign and Commonwealth Secretary.
On 10 January, the summit launched the "partnership for peace" programme with a framework document and an invitation to 22 states to participate. On 11 January, it issued a declaration. These documents have been placed in the Library of the House.
NATO summits are not held routinely, but only for a specific purpose. This was only the 11th summit in 35 years. It met to carry forward the post-cold war evolution of NATO which began at the 1991 Rome summit.
NATO's core function is to ensure the security of its member states. It has been by far the most successful collective security organisation in history, and it was agreed that the alliance will continue to be the cornerstone of post-war European security.
As this was the first summit attended by President Clinton and Prime Minister Chrétien of Canada, a key objective was to renew the transatlantic relationship. President Clinton's affirmation that the core of American security remained with Europe received a warm welcome. He confirmed his commitment to keep around 100,000 United States troops in Europe.
Over the past five years, new democracies have been born to the east. A pre-eminent challenge for NATO is to develop its relations with those countries in ways which will enhance stability across the whole of Europe. There must be no new dividing line, no new antagonistic blocs. The "partnership for peace" programme is an imaginative response to that challenge. All states which were once within the Warsaw pact have been invited to join, and NATO may also invite other states within the Conference on Security and Co-operation in Europe.
The aim of the partnership is to bring Europe together by building practical military co-operation between nations in ways that reflect their different aspirations and capabilities. That could include joint exercises in peacekeeping, search and rescue or humanitarian operations; it could include joint military planning, exchanges on defence budgeting and the democratic control of armed forces. Each partner will draw up with NATO an agreed partnership programme tailored to that particular relationship. Partnership will be an evolutionary process, and it will bring all partners closer to NATO.
The summit has thus opened a clear perspective of the enlargement of the alliance. It is too soon to determine which countries will be able to meet the obligations of membership or when, but there are obviously strong candidates in the democracies of central and eastern Europe.
A second challenge for the summit was to improve the alliance's ability to mount new humanitarian and peacekeeping operations. During the cold war, NATO's military structures were based predominantly on static regional commands and large-scale formations. Experience in recent years in the Gulf and in Bosnia has shown the importance of flexibility and of mobility.
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The summit endorsed the new concept of combined joint task forces. They will improve NATO's capability to deploy task forces inside or outside the NATO area, but, because they will be available for purely and predominantly European operations, the combined joint task forces could also meet the requirements of the European security and defence identity. They will strengthen the European role within NATO without detracting from its transatlantic character.
Partnership for peace and the combined joint task forces are changes of fundamental significance. The alliance will now begin to implement them.
The summit discussed other important issues. It supported efforts by the United Nations and the European Union to secure a negotiated settlement in Bosnia. We discussed the recent intense fighting in Sarajevo. We reaffirmed our readiness, under the decisions taken last August, to carry out air strikes to prevent the strangulation of Sarajevo.
We also considered ways to solve two other current problems. The United Nations command in Bosnia has recently been prevented from rotating the United Nations Protection Force contingent in Srebrenica and from using Tuzla airport. On a proposal from the United Kingdom and France, the summit asked UNPROFOR to draw up plans for the Netherlands contingent to take over from the Canadians in Srebrenica. We also decided to examine with UNPROFOR how Tuzla airport could be opened for humanitarian relief purposes.
We would prefer not to have to use force, but those who are impeding UNPROFOR at Srebrenica and Tuzla must realise that force is available, if necessary, to support UNPROFOR and its ability to protect relief efforts.
In all our discussions, we were conscious of the importance of closer relationships with Russia's democratic leaders. Russia has a huge contribution to make to stability and to efforts to resolve international problems. I hope that the Russian Government will take up the invitation to partnership with the alliance. If they do, it will be another way in which we can enhance our support for reform and democracy in Russia.
I should briefly describe individual meetings which I held during those two days.
I met the Prime Minister of Turkey and welcomed her country's continuing support for Operation Provide Comfort in Iraq. Mrs. Ciller expressed her commitment to settlement of the Cyprus problem, which is long overdue.
I focused on Bosnia in my meeting with the French Prime Minister. We decided to call for the action in connection with Srebrenica and Tuzla which I have described.
With the German Chancellor and the Italian Prime Minister, I discussed developments in Europe and further efforts to enhance relations with Russia and to support reform there.
I thanked President Clinton for his support concerning Northern Ireland. We welcomed the decisions taken about Bosnia, and looked ahead to our next meeting in Washington at the end of February.
I had a long meeting with the Supreme Allied Commander in Europe, General Joulwan, the chairman of the NATO Military Committee, Sir Richard Vincent. and other senior NATO officers. We examined how "partnership for peace" would be put into effect, and the way in which the combined joint task forces would be set up.

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It was a timely summit. It has reaffirmed northern America's commitment to Europe, and has shown that the allies stand closely together in maintaining their collective security. The summit has carried forward the modernisation of NATO's military structures. It has launched a vital new initiative towards the east, opening the way to new relationships and new members. It has established the outward-looking character of the NATO of the 1990s, with a greater emphasis on operations in support of peace and humanitarian relief.
I believe that the summit has successfully equipped the alliance to meet new challenges, and I commend its results to the House.
Mr. John Smith: We on this side of the House broadly welcome the declaration agreed by the North Atlantic Council yesterday in Brussels. We hope that it is the beginning of a process in which countries and institutions such as NATO seek to come to terms with the opportunities and challenges that result from the end of the cold war.
I particularly welcome the general principles and direction of the "partnership for peace" concept. That offers the prospect of closer co-operation with former Warsaw pact countries, including Russia, and creates the circumstances for an expansion of NATO itself. Military co-operation designed to enhance mutual security is clearly desirable, particularly if it can be developed to encourage wider participation in United Nations peacekeeping efforts.
However, may I suggest that the emphasis on military co-operation should be balanced by encouraging political developments within applicant countries? Ought not the criteria for involvement in "partnership for peace" and eventual NATO membership be expanded to include an effectively functioning multi-party democracy and an acceptable record on human rights, as well as strict civilian control of the military apparatus?
On issues of arms control and disarmament, which were discussed at the council, we welcome the declaration's stated commitment to the indefinite and unconditional extension of the non-proliferation treaty, and are encouraged to see reference to the need for the negotiation of a universal and verifiable comprehensive test ban treaty.
Despite attempts by the British Government to continue nuclear testing, we welcome the US moratorium and similar action by France and Russia, which we hope will soon lead to a treaty being signed. Do the Government accept the target date of September 1996 for the successful negotiation of that vital treaty?
Following the welcome agreement by the United States, Russia and Ukraine to destroy Ukraine's nuclear weapons, will the British Government accelerate the promise made in 1992 to supply British-made nuclear weapons transporters to the Ukraine to help with the removal and to assist Russia in the disposal process?
On the continuing and agonising situation in Bosnia, will the Prime Minister say whether the acceptance of the use of air strikes now is different from or stronger than the apparent commitment made last August, which resulted in no effective action or sustained improvement in the situation?
Does the Prime Minister accept that repeated declarations that are not followed through risk undermining the credibility of both NATO and the whole
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UN operation, and only strengthen the hands of those who have become adept at defying the wishes of the international community?
Will effective action now be taken to open the airport at Tuzla, allow the replacement of UNPROFOR forces in Srebrenica, and lift the siege of Sarajevo? Is it not wholly intolerable that a defenceless population in Sarajevo should be shelled so relentlessly and pitilessly? Was it not disgraceful that, during the so-called "Christmas truce", Sarajevo was bombarded constantly?
Finally, will the Prime Minister put an end to suggestions that British forces in Bosnia might be withdrawn once the winter is over? Do we not need a commitment to increase ground forces, as requested by the UN, to make a greater effort to bring some peace to Bosnia?
The Prime Minister: First, I welcome the right hon. and learned Gentleman's general support for the declaration and the "partnership for peace" policy. I am sure that he is right to say that co-operation, both militarily and politically, with former Warsaw pact countries, including Russia, is vital to our own interests and security as well as to the development of democracy right across the continent of Europe.
On political development and military co-operation, the right hon. and learned Gentleman touched particularly on human rights. I confirm that all countries entering NATO would need to be democracies and we shall certainly look at political developments, but not necessarily as an intrinsic part of the "partnership for peace" proposals.
We shall be prepared to sign the comprehensive test ban treaty as soon as it is negotiated and settled, whether that is by September 1996 or some earlier, perhaps some later, date.
Our offer to help the Ukraine with the removal of nuclear weapons has been there for some time. I do not immediately know whether it is practicable to accelerate it, but I have no objection in principle to doing so if that would be of assistance and if our assistance is required. The agreement reached between Presidents Clinton, Yeltsin and Kravchuk, if carried through, is a remarkable advance in the reduction of nuclear weapons and I very much hope that it will be adequately carried out. To have nuclear weapons removed from Ukraine would be a great bonus.
The declaration on the general level of air strikes as regards Sarajevo was a reiteration of what was suggested on 2 and 9 August. Of course, the practical decisions for that should not be made by politicians some distance away, but should best be made upon the advice of troop commanders near at hand. It is predominantly upon their advice that it would be right for NATO leaders to act. Reservations have been expressed by troop commanders from time to time, and we would be very unwise to sweep those to one side.
It was determined that, in the light of advice that we might receive, the agreement in principle for military strikes exists. What is different in this particular declaration is that the two specific cases of Srebrenica and Tuzla are included under the broad umbrella.
The position in Srebrenica is that the Canadian troops can probably come out—that is certainly possible—but it is not possible at the moment for the Dutch troops to get in.

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It is intolerable when UNPROFOR troops are inhibited from getting into Srebrenica to carry out the necessary humanitarian work.
To be strictly correct in relation to the right hon. and learned Gentleman's question, Tuzla airport is technically open. The problem lies around the airport, because there is a danger of incoming aircraft being attacked. It is not immediately evident precisely what needs to be done on the ground.
It is for that reason that the commanders are finalising the plans that they commenced some time ago with the determination to ensure that Tuzla airport is open—
Mr. Paddy Ashdown: When?
The Prime Minister: As soon as possible. It should be open to assist the humanitarian relief. The right hon. Gentleman may shout, "When?", but, yet again, if we are wise, we will not issue such casual edicts from afar, but will seek the advice of the military commanders on the spot. That is what we are committed to doing.
The right hon. and learned Gentleman asked about the withdrawal of troops from Bosnia. We have committed ourselves to assist with humanitarian aid, and I must tell the House and the right hon. and learned Gentleman that, at this stage, I am not prepared to extend that commitment until I am certain of the security of British troops working for the United Nations there. I have consistently taken that position, and it is also taken by the Heads of other Governments who have troops on the ground in Bosnia. Despite the remarkable work that they have done for humanitarian reasons, our first concern must be the security of the United Nations troops, and in particular those of our own country.
Sir Geoffrey Johnson Smith: If air strikes are authorised, can my right hon. Friend reassure the House that contingency plans are in place to prevent British troops and United Nations troops from being sucked in to the conflict in Bosnia?
The Prime Minister: Yes, it is part of the UNPROFOR determination to discuss with troop commanders on the ground the current position. I am sure that my hon. Friend will realise why I do not go into details of what might have to happen in those circumstances, but I reiterate that the security of our troops would be given the very highest priority of all. The Secretary-General of the United Nations would have to approve air action by NATO on behalf of United Nations troops.
Mr. Ashdown: Does the Prime Minister accept that the future peace and stability of Europe depend on upholding the principle of national integrity of borders, especially in volatile areas such as the new democracies of eastern Europe? If NATO, for very good reasons, has to treat the matter gradually, is there not a case for Europe and the Western European Union to be a little more bold? Specifically, does the Prime Minister accept that the WEU has a role to strengthen and complement NATO's actions in creating a framework for peace in Europe?
On Bosnia, does the Prime Minister recognise that, as he has been warned on many occasions, the bottom line credibility of the United Nations operation in Bosnia is now at risk? As President Clinton said, if we cannot show the determination to deliver our promises, we should not
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make promises. In that context, is not the opening of Tuzla airport central to that credibility? If the Prime Minister will not say exactly when that airport will be opened, will he at least give us an indication of the time scale in which he expects it to happen?
The Prime Minister: With great respect to the right hon. Gentleman, I must tell him that the last part of his question was unreal. It does depend on what is happening on the ground and on the advice that we get from the troop commanders there.
As for not making promises unless we can keep them, we have been very careful about promises we make—unlike the right hon. Gentleman, who has been shifting and manoeuvring throughout this whole operation, advocating everything from all-out war to, apparently, pulling out immediately. His opinions seem to have been moving rapidly on an escalator, so I fear that I am in no mood to accept lectures from him about Yugoslavia.
On the right hon. Gentleman's earlier point, there are practical reasons for adopting, and it is right in principle to adopt, an evolutionary approach to the possible extension of the NATO alliance. Of course the WEU has a role; that is partly why we have combined task forces. As the right hon. Gentleman will know, the Western European Union also has a role as part of the European defence identity and as the European pillar of the NATO alliance. That is most certainly true, and it will remain so.
Sir Nicholas Bonsor: I greatly welcome my right hon. Friend's assurance about the priority given to the security of British and other United Nations forces in Bosnia. I also welcome the cautious approach that he and his colleagues have adopted towards the evolutionary process of bringing the former Warsaw pact countries under the NATO umbrella.
May I ask my right hon. Friend a question about Cyprus? He said that he met the Turkish Prime Minister and obtained assurances from the Turks that they seek a peaceful solution. Will he also approach the Greek leadership and ensure that the Greeks do not adopt too aggressive a stance in attempts to reach that peaceful solution?
The Prime Minister: On the latter point, the straight answer is yes: most certainly. That is a matter that we regularly discuss with the Governments of Greece and Turkey. What was encouraging in my discussions with Mrs. Ciller was her belief that the confidence-building measures were a proper basis for continuing discussions now that elections in the northern part of Cyprus are concluded. I hope that, under the aegis of the United Nations, it will be possible to move much closer to a settlement.
This dispute has gone on for far too long. United Nations troops have been in Cyprus far too long, and I think that there is impatience on all sides that people should move towards a proper settlement of what we have for too long known as the Cyprus problem.
I am grateful for my hon. Friend's remarks about an evolutionary approach to the extension of NATO. I am sure that such an approach is right. For example, once a country enters the NATO alliance, it undertakes an inviolable commitment to defend the security of NATO's borders.
There has been a British Army on the Rhine for 25 years. Once NATO is extended, it is conceivable that, at some stage, there will be a NATO army, not on the

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Rhine but on the Vistula. We need to be careful about extending NATO; it must be done in an evolutionary fashion. That is right in principle, and desirable in terms of the practical way in which NATO should develop.
Mr. Tam Dalyell: May I ask the Prime Minister a question of which I have given his office notice? Are his NATO colleagues at ease about the continuing sanctions and actions against Libya, given the evidence from Edwin Bollier, the Swiss manufacturer of the timing mechanisms that were so crucial to the Lockerbie crime, and the evidence of his engineer, Ulrich Lumpert? Is it true that Lumpert's evidence was given to the Scottish police three years ago?
The Prime Minister: I am grateful for the fact that the hon. Gentleman gave me notice of his question about the Lockerbie bombing. Sanctions against Libya were not the subject of discussion at the summit. As the hon. Gentleman has said, new evidence has been reported in the press, casting doubt on Libyan complicity, but after five years, the inquiry into the bombing has not revealed any evidence that implicates any country besides Libya.
Recent press reports notwithstanding, my right hon. and learned Friend the Lord Advocate remains convinced that the evidence still justifies the warrants issued for the arrest of the two Lockerbie suspects. The inquiry remains open; if anyone has new evidence pertinent to the case, he should pass it to the investigating authorities without delay. But there seems no doubt at the moment that it is right for the two warrants to stand.
Mr. David Howell: Does my right hon. Friend agree that the accepted or agreed new stronger line against Serbian obstruction of humanitarian aid in Bosnia is welcome, provided that the operations are carefully limited, and that it does not lead to any uncontrolled escalation of outside troop involvement in the area?
On the question of NATO expansion, did my right hon. Friend note the comment by the President of Poland, Lech Walesa, a few days ago that it would be a tragedy if Poland and other western and central European countries were not brought by some firm date into a new European security alliance of some kind? Does my right hon. Friend agree that that can be done without in any way isolating Russia and its neighbours, whose security needs are also great? Does he accept that that is the right way forward, and that it would allow us to have a Europe with a new security system, and not one in which many countries feel that they are still in a security vacuum?
The Prime Minister: On Yugoslavia, I can do no other than agree with my right hon. Friend. In terms of the expansion of NATO, for the reasons that I set out some moments ago, it is right to take this matter carefully and to deal, firstly, through the "partnership for peace" proposals. Of course, in the case of Poland and the other Visigrad countries, it is expected that at some stage in the future —perhaps within 10 years or so—they will become members of the Community, the European Union. At that stage, via the Western European Union, it is highly possible that they would enter the alliance more speedily than others.
Mr. Bruce George: The Prime Minister and the other Heads of State and Governments are to be congratulated on evolving NATO even further and, in particular, on confounding those who had hoped that
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NATO and the alliance were now superfluous. While the Prime Minister was discussing "P4P", we were discussing "B2B".
I have three brief questions. First, if NACC—the North Atlantic Co-operation Council—is so important, was there any discussion about providing it with a staff and a budget, and perhaps an assistant secretary-general? Secondly, if Europe is to do more for its own defence, was there any discussion about how that could be done when defence forces and budgets are in near free fall? Thirdly, if there is to be more accountability of executives to legislatures in defence, as a member of the Select Committee on Defence may I ask whether we too may have a little more of that?
The Prime Minister: We are, of course, moving on beyond NACC with what is actually proposed. On the levels of armed forces, of course the intention is that there should be joint task forces, for example, and joint disciplines. There would be more people coming in to he available to deal with peacekeeping and other matters. Of course, those countries that are in "partnership for peace" would also be able to play a role in the joint task forces from an early stage. Therefore, a good deal of practical action can be taken to prepare the countries in the "partnership for peace" proposals for possible eventual accession to NATO.
Mr. Peter Viggers: I congratulate my right hon. Friend and his exceptionally strong support team on the important British contribution to this sound strategic plan for NATO. Does he agree that the worthy objective of the distribution of humanitarian aid in Bosnia requires the active co-operation on the ground of all the local troops manning control posts, be they Serb, Croat or Muslim? How could we be sure that that local co-operation would continue if we had previously taken military action against one of the sides?
The Prime Minister: My hon. Friend points precisely to one of the primary factors that needs to be taken into account before determining whether any military action of any sort needs to be taken. It is easy to say that it is an easy decision, and that one has only to unleash an aircraft or two and all will be well. I say to those who readily advocate that course without careful thought that it may well not be a wise policy. It may be a necessary policy at some stage, but such a policy should be entered into with very considerable caution.
Co-operation among the participating forces on the ground is very patchy. I think that great frustration is building up among Governments, particularly those which have troops on the ground, at what seems to be a complete double standard, with the participants saying in Geneva that they want peace, and acting on the ground in a fashion that denies every single word they utter in the peace negotiations.
Mr. Andrew Faulds: The Prime Minister reiterates yet again the readiness to use air strikes. Can he explain how, over these many months, no action whatsoever has been taken where it has been desperately necessary, and all we have had have been the mumblings and the bumblings of the Foreign Secretary of this country, and of other western countries in Europe? How has he—or has he—the will to ensure that action will be taken to clear up the situations both in Srebrenica and in Tuzla and to

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mount action against the artillery—the Serbian artillery —which is continuing to bombard Sarajevo? Has he personally the will to do such a thing?
The Prime Minister: The hon. Gentleman has just illustrated, with very great clarity, I fear, how easy it is to make declaratory remarks without considering what is necessary on the ground to carry them out and without any understanding whatever of what we might be asking the commanders on the ground to do, and, if they have done it, what the subsequent implications of that would be, either for their troops on the ground, the humanitarian operation, or indeed the civilian population, who are there to be helped, if it became impossible to carry forward the humanitarian operation.
The answer to the hon. Gentleman's question is yes. Every Head of Government at NATO had the will. What we need to be sure of is that it is wise to do so, and on that we must necessarily rely on the advice of the commanders on the ground, and, as the sanctions are in United Nations guise, the sanction of the Secretary-General of the United Nations. What we did was to indicate that, in the right circumstances, the will is there to take that action.
Sir Dudley Smith: In view of what my right hon. Friend has said, does he now feel that there is a key role for the Western European Union to extend the hand of co-operation to central European countries, with a view to furthering their defence and security?
The Prime Minister: Yes. I have no doubt about the present—and indeed the future—role of the WEU. We are at the moment actively considering what can be done, and how it can be done, to give the WEU a more effective and perhaps a larger role. As I told the House a moment ago, the WEU would be the vehicle effectively to provide the European pillar of the NATO alliance, through the European Union's own proposals on defence.
Rev. Martin Smyth: Would the Prime Minister care to elaborate on what obligations he might feel that some countries may not be able to meet in becoming members of NATO? Although I welcome the general thrust of the statement and the Council meetings, does he agree that it is unwise to make promises that may not be able to be fulfilled, and imply threats that are not carried out? In the end, that causes people to ignore the issues.
When he thanks President Clinton for his co-operation in Northern Ireland, will the Prime Minister give us some information as to whether President Clinton is following advice from his embassy in London, or from Dublin, as there seem to be some confused messages?
The Prime Minister: President Clinton has certainly given strong support to the joint declaration issued before Christmas, and he reiterated that in a meeting that we had in Brussels a day or so ago. I have no doubt that we will return to the general issue of Northern Ireland in the meeting that I will have with him on 28 February.
There would be substantial obligations for countries joining NATO. They would, for example, need to join the integrated military structure. Fresh members of NATO would certainly be required to do that. One of the reasons why it is right in practice, as well as in principle, to have
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an interim approach via "partnership for peace" is that one needs to prepare the planning, organisation and management of defence in other nations, to look at a whole range of things, such as equipment interoperability and a proper legal framework for military forces, all of which, when the time came, perhaps, for a country to enter NATO, would need to be determined.
During the period of membership of "partnership for peace", it is hoped that, through those proposals, potential applicant members will begin to make those changes.
Mr. Patrick Cormack: Does my right hon. Friend accept that, if the central and welcome aim of the summit—to enhance the stability of Europe—is to be achieved, it is essential that the conflict in the former Yugoslavia does not expand, and that the carnage is brought to a halt? If he accepts that, will he also accept that, hitherto, Serbia has never taken seriously threats that have been issued, from NATO or anywhere else, and that it is essential that it now understands that we mean business?
The Prime Minister: I agree with my hon. Friend that it would be desirable both to prevent the expansion of the present conflict and then to bring it entirely to a halt. What has happened has tended to happen frequently. There was no doubt at the outset of the conflict that the principal aggressor was Serbia and the principal victims were the Bosnian Muslims.
Since then, the position has become not quite so clear-cut. Each of the three participants in the dispute has been, from time to time, a stumbling block in reaching a negotiated political settlement. Some of the fiercest fighting has been between the Muslims and the Croats, and has not involved the Serbs. In no sense am I seeking to defend Serbia. I am saying that, if it ever was, this is no longer a clear-cut case of one aggressor and one victim, but a most horrible dispute in which each of the participants has committed actions of which it should be thoroughly ashamed.
Mr. Peter Mandelson: Will the Prime Minister accept that at the heart of the issues concerning the future of NATO are Europe's community of interest and the understandable security fears of the Visegrad countries in central Europe? Therefore, will he make it clear this afternoon, as the Foreign Secretary did on the BBC's "Newsnight" the other night, that any physical threat to the security of those countries, irrespective of when they become members of NATO, will be met by effective NATO action to defend them?
The Prime Minister: I am not entirely sure that my right hon. Friend the Foreign Secretary would have put it in quite that crisp fashion. [Laughter.] My right hon. Friend is quite capable of doing almost anything, but I doubt that he spoke precisely in those terms. Of course the security of countries is of great importance to us. However, what the hon. Gentleman invites me to say goes further than he would find anyone going at the moment.
The best way to ensure security for the future of Europe is to ensure that the reform process and the reformers in Russia are sustained and stay there. That is of vital interest not just to Russia but to the rest of central and eastern Europe. If there is one thing that would be of immense value for this generation of politicians across Europe to

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pass on to the next, it would be to have helped Russia to become permanently a good neighbour to Europe, and part of the general western system of democratic nations.
Mr. Tim Rathbone: Could my right hon. Friend elaborate on the integration of the French Government and French forces into future NATO planning and thought? That is crucial both in NATO and in the WEU.
The Prime Minister: French forces have for many years not been part of the integrated command in the same way that other NATO forces have been. As to the joint task forces and the new proposals, France will play precisely the same role in terms of integration as each of the other members of the NATO alliance. France will take a full part, to deal with the point most pertinently, in the joint task forces that are proposed.
Mrs. Margaret Ewing: While many of us will understand the caution being exercised by the Government and their allies in the context of the expansion of NATO, could the Prime Minister elaborate on the criteria that will apply to those who wish to move from partnership into membership, particularly in the context of the time scale that will be applied, not solely in terms of capability? What consideration is being given to the Baltic states, given that Lithuania is one of the applicants for full membership of NATO, as those states that are recently independent from the Soviet Union surely deserve our support?
The Prime Minister: Yes, they certainly deserve our support, and we hope that they will take up the "partnership for peace" proposals. The Baltic states are among the countries that have had the offer, and I both hope and expect that they will take it up.
The obligations placed on potential applicants for NATO are the same as those that are placed on existing NATO states—proportionate, of course, to their size and strength. The criteria, however, will be the same and will include, as I said in response to an earlier question, a democratic system of government.
Mr. John Wilkinson (Ruislip-Northwood): Will my right hon. Friend clarify how exactly the combined joint task forces are supposed to work? He said that they will be able to operate out of the NATO area, and that they will strengthen the European identity in the alliance. As the United States is the only country in NATO with a strategic airlift capability, and as only the United Kingdom, France and the Netherlands of the European member countries have amphibious forces, how will such troops be deployed out of area?
Will the Germans participate out of area, as to do so is against their basic law? Will there be integrated military staffs? Will there be pre-planning, and will combined operations be exercised in advance? To cobble together forces to meet difficult contingencies overseas is not necessarily a recipe for success, as we have seen with Somalia and the Americans.
The Prime Minister: My hon. Friend's last point shows precisely why we need the new combined joint task forces. Many of his detailed questions are being considered by the Supreme Allied Commander Europe, who will report to the North Atlantic Council by the end of March. I suspect that I am able to anticipate most of the report, but it would perhaps be wiser to wait until he has delivered it.
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Although the command and control, for example, of NATO operations in Bosnia has been ingenious and effective, it has necessarily been ad hoc. It is intended to ensure that the alliance is capable of taking on a full range of likely future mission adjustments. The purpose of the combined joint task forces will be to ensure that a proper command and control structure is swiftly available, rather than it having to be provided when a crisis arises.
It is a new concept that is being developed by SACEUR. Its intention is to provide more flexibility, specially earmarked personnel and personnel who are trained, used to working together and deployable, at home or abroad, at short notice under the command of NATO. As my hon. Friend knows, the concept has been employed with some success by some nations—the USA and the United Kingdom in particular—in deploying national forces, but it is a novel idea to use it in NATO.
Mr. Bob Cryer: Was not NATO set up in 1948 in answer to a perceived threat from the Soviet Union? Since that threat has now diminished and disappeared—if it ever existed—and since the Warsaw pact has been disbanded, what is the point of people spending time and a great deal of money looking around for something for NATO to do, simply so that the organisation remains in existence when it has no function and when eastern European countries need encouragement to develop militarisation and further to arm troops like a hole in the head? Why not accept the truth—that NATO is redundant and that we would be a lot better off without it?
The Prime Minister: I am not sure that the hon. Gentleman carries many Labour Members with him—he certainly carries few Members of the House as a whole, and almost no one in the country, with him. He assumes that there will never be a threat again. I do not know the basis on which he makes that assumption. It is certainly not made on any logical basis. He is saying, effectively, that he has an insurance policy and he has not had to claim on it this year, so he will cancel it and assume that he will never need it. The reality is that NATO has been the guardian of our security for more than 40 years. It would be folly beyond belief not to ensure that NATO is securely in place for the next 40 years.
Mr. Cyril D. Townsend: In view of the isolationist tendencies in the United States, should not the President's firm commitment to have 100,000 American troops on the continent of Europe be warmly welcomed by hon. Members on both sides of the House? My right hon. Friend will have read the reports of an era of estrangement between Britain and the United States. Will he and the Foreign Secretary make a new year resolution to do all in their power to ensure that the Anglo-American relationship, while it may be conducted more at arm's length than 30 years ago, remains extremely cordial?
The Prime Minister: As I said earlier, I strongly welcome the re-commitment by the USA and Canada to NATO. President Clinton showed his commitment to the security of Europe in a most practical fashion by making it clear that 100,000 US troops will stay in Europe. I welcome that very much.
As for the second part of my hon. Friend's question, there was one area of disagreement some nine months ago, but apart from that, President Clinton called for the integration of a broader Europe and the integration of the

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former communist bloc with the rest of Europe. As the House will know, I have been advocating that course vigorously—for example, in calling for enlargement of the European Union. Since then, we have agreed in a series of statements and on a series of occasions.
We agreed in Brussels, where President Clinton welcomed the action that I initiated with the French. As he said at his press conference, they agreed with my position, and I strongly agreed with theirs.
When I next meet President Clinton in Washington at the end of February we shall have much to discuss: Russia, on which we have a common view; the free trade agreement; the GATT agreement, on which we worked together to ensure that it came about; the middle east peace process; Lockerbie; sanctions on Iraq. Those are all matters on which the United Kingdom and the United States are in complete agreement and upon which the two Governments have worked together. As I said a moment ago, I was able to thank him for his strong support over Northern Ireland. So the relationship between the United Kingdom and United States is in very good repair.
Mr. Robert N. Wareing: Does the Prime Minister agree that Tuzla airport has become critical precisely because the heaviest, severest and most barbarous fighting is between the Muslims and the Croats in the areas around Mostar and Vitez and is blocking the supply line from the port of Split? Was there no discussion at the NATO conference of the need for pressure to be put on the Croats and the Muslims? How on earth can a one-sided threat of air strikes assist in getting the three parties to sign a peace accord when they meet in Geneva next Wednesday?
The Prime Minister: It is not just a question of signing in Geneva. Quite a lot of agreements have been signed in Geneva. What concerns me is whether the agreements signed in Geneva are honoured in Bosnia. That has been the principal difficulty.
As for putting pressure on all the parties, that point was discussed, and it was agreed that, in terms of diplomatic political pressure, it is desirable to put pressure on all the parties, not only the Serbs. There are particular transgressions by the Serbs, where it may be necessary for
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us to carry out the air strikes we referred to earlier, but pressure undoubtedly needs to be put on all three parties to achieve a negotiated political settlement: the hon. Gentleman is quite right.
Mr. David Atkinson: In view of the recent sale of North Korean long-range missiles to Libya, Iran and elsewhere, and as it is now known that the American Patriot missile was less successful in bringing down Iraqi Scuds during the Gulf war than was suggested at the time, what discussions took place at the summit on the need for global missile defence, particularly in view of the fact that the Americans have ended research and development on the strategic defence initiative?
The Prime Minister: Predominantly, the summit endorsed comprehensive examination by NATO of responses to the particular problems of proliferation. The intention is that that approach will embrace the traditional non-proliferation policies and will also review the nature and size of any ballistic missile threat there may be to the alliance and, if and where that threat exists, what capabilities the alliance has or may need to counter it. Yes, there was substantive discussion on that point.
Mr. John Hutton: The final communiqué at the summit referred to NATO intensifying and expanding its efforts to combat the spread of weapons of mass destruction. Can the Prime Minister tell the House what specific or new proposals he has in mind to achieve this desirable and important objective?
The Prime Minister: It was one of the things that has occurred. It is not simply a matter for the United Kingdom; that, as the hon. Gentleman knows, spreads much more widely. The agreement that was reached with the Ukraine, Russia and the United States is a further move forward. We need to make sure that START and other agreements are fully honoured. All these are elements of the nonproliferation programme. There is also the test ban treaty, which was mentioned earlier. There are a whole range of policies marching in parallel in the direction the hon. Gentleman wishes us to go.
Several hon. Members rose—
Madam Speaker: Order. We must move on.

Points of Order
4.19 pm
Mr. Jack Straw: On a point of order, Madam Speaker. My point of order, of which I have given you and the Secretary of State notice, concerns the availability to Members of the House of the district auditor's report on the designated sales policy of Westminster city council, which was due for publication tomorrow.
The inquiry has been going on for more than four years and directly involves two Members of the House—my hon. Friend the Member for Workington (Mr. Campbell-Savours) as an objector, and the hon. Member for Milton Keynes, South-West (Mr. Legg) as a respondent. Every other right hon. and hon. Member of the House has an interest in the outcome of what, on any basis, has been one of the most major inquiries ever into alleged unlawful spending by councillors.
It was always understood by the objectors and by Westminster city council, if not by the respondents themselves, that, at the end of this stage of the inquiry, two things would happen. First, it was understood that all primary evidence—transcripts, documents and so on— would be made available to the parties but, if further proceedings to surcharge were to take place, not to the public.
But, secondly, it was understood that the district auditor would make available in the public domain his report based upon that evidence—the so-called "Note of provisional findings", which runs to more than 500 pages. That was exactly what happened, and rightly, when the district auditor reported into Lambeth and Liverpool in 1985.
But last night we learned that that report will not now be made available to Members of the House, or generally to the public. All that we and the public will get tomorrow is a five-page summary. It is as if a judge of the High Court, after a four-year action, said, "This is what I have decided, but I am not telling the public why nor what weight I have given to the evidence."
My understanding is that that step has been taken by the auditor as a consequence of what can only be described as constant bullying by lawyers acting for one of the respondents, Dame Shirley Porter. But the decision not to publish will place the House in a most extraordinary position.
The report is a matter of great public interest. What if the two hon. Members, who are parties and who will receive the report, wish to quote from it in the House? Will they then be able to quote from it but none of the rest of us be allowed to ask questions upon it? In any event, since copies will be issued to the parties, it is almost certain that further unofficial copies will be made and then passed round, rather as dog-eared copies of "Lady Chatterley's Lover" were in the days before the law was changed.
Semi-secret justice is no justice at all. It is surely wholly wrong for there to be one rule when publication of an auditor's report concerns ordinary councillors in Lambeth and Liverpool and another rule when it concerns the well-connected and the very rich.
There is a way in which such a low and terrible farce can be avoided, and that is for the Secretary of State to use his reserve powers under the Local Government Finance Act 1982 in relation to the Audit Commission, and to ask the House to make a return so that the auditor's report becomes
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a parliamentary paper to which parliamentary privilege would then attach. Therefore, I ask you, Madam Speaker, as the guardian of the rights of the House, to ensure that that is done, and I ask, through you, for the Minister now to make a statement about this.
The Minister for Local Government and Planning (Mr. David Curry): Further to that point of order, Madam Speaker. I am grateful to the hon. Member for Blackburn (Mr. Straw) for his prior notification of his intention to raise the point of order.
My initial reaction is that the hon. Gentleman has misunderstood the Secretary of State's power under the Local Government Finance Act 1982. My understanding is that the Secretary of State can direct the Audit Commission to provide documents and information, but not the auditor. There might well be a real problem if Ministers could be seen to be putting auditors under pressure in that way.
However, I am pursuing detailed legal advice, and as soon as I receive it I shall write to the hon. Gentleman, and I shall place a copy of that letter in the Library of the House.
Several hon. Members rose—
Madam Speaker: Order. The point of order was to me.
There have been some interesting exchanges, and the House is well aware of the situation. I am grateful to the hon. Member for Blackburn (Mr. Straw) for giving me notice of his point of order. Although it is open to right hon. and hon. Members to table motions calling for documents to be laid before the House, in a case such as that which the hon. Gentleman has in mind, the motion would not constitute a motion for an unopposed return—as described on page 281 of "Erskine May".
Such a motion, therefore, would not enjoy any precedence over other motions, and it would have to be placed among early-day motions or the remaining orders of the day. Whether the Secretary of State chooses to table such a motion is a matter for him. As the hon. Gentleman has made clear, the papers in question are not in the Government's possession. We must leave it at that, with the Minister's response to the point of order.
Mr. David Winnick: On a different aspect of the same point of order, Madam Speaker.
Mr. Straw: I thank you, Madam Speaker, and the Minister for those replies. I want to make it clear that there has never been any question about the independence of the Audit Commission or of the district auditor. I do not believe that the district auditor's independence would in any sense be called into question by the Secretary of State asking the House to make a return for the papers. In fact, the district auditor's independence would be greatly strengthened if such a return were made.
Mr. Winnick rose—
Mr. Dennis Skinner: On a point of order, Madam Speaker.
Madam Speaker: Order. The matter has been dealt with; we cannot go on debating it. The Minister has replied, and we should leave it at that for the time being.
Mr. Skinner rose—
Madam Speaker: Is it a different point of order?
Mr. Skinner: Yes.
Madam Speaker: Very well.
Mr. Skinner: Between 1972 and 1974, when Clay Cross councillors were surcharged under district auditor reports made before 1982, the matter was placed in the public domain, and everybody knew everything about it. In fact, Members of Parliament representing towns and cities other than Clay Cross throughout the country, including Scotland, were involved. The Minister said, however, that since 1982 a clear distinction has been made as a result of the Local Government Finance Act 1982. It is hard to believe that the Government do not have the power to do in respect of Westminster as they did in the cases of Lambeth and Liverpool, which both arose after 1982. Is that because Westminster is Tory controlled and is close to the Tory Government?
Madam Speaker: The hon. Gentleman knows that legal advice is not given by the occupant of the Chair.
Mr. Winnick rose—
Madam Speaker: Is it the same point of order?
Mr. Winnick: It is on a different aspect.
Madam Speaker: I do not think that we need a point of order on another aspect. We are dealing with points of order—this is not a debate.
Mr. Winnick: My point of order concerns the rights of Members of Parliament. If there is legal pressure on the district auditor—as I understand is the position—not to publish a 700-page report on what happened in Westminster city council, right hon. and hon. Members will not be able to read it. Why should not right hon. and hon. Members be able to study the report when that is essential for their understanding of events?
Madam Speaker: I cannot listen to allegations about legal pressure. The Speaker is not in a position to give legal advice. The House heard the Minister's comments, and right hon. and hon. Members must leave it there.

BILL PRESENTED
  SOCIAL SECURITY (INCAPACITY FOR WORK)
  Mr. Secretary Lilley, supported by Mr. Chancellor of the Exchequer, Mr. Secretary Gummer, Mr. Secretary Hunt, Mr. Secretary Lang, Secretary Sir Patrick Mayhew, Mrs. Secretary Bottomley, Mr. Secretary Redwood and Mr. Nicholas Scott, presented a Bill to provide for incapacity benefit in place of sickness benefit and invalidity benefit; to make provision as to the test of incapacity for work for the purposes of that benefit and other social security purposes; to make provision as to the rate of statutory sick pay; to make other amendments as to certain allowances payable to a person who is or has been incapable of work; and for connected purposes: And the same was read the First time; and ordered to be read a Second time tomorrow, and to be printed. [Bill 32.]
  NORTHERN IRELAND COMMITTEE
  Motion made, and Question put forthwith, pursuant to Standing Order No. 99(2) (Matter relating exclusively to Northern Ireland).

  HEALTH SERVICE
  That the Matter of the health service in Northern Ireland, being a Matter relating exclusively to Northern Ireland, be referred to the Northern Ireland Committee for its consideration.—[Mr. Chapman.]
  Question agreed to.

Orders of the Day

  Non-Domestic Rating Bill
  Order for Second Reading read.
  Madam Speaker: I have selected the amendment in the name of the Leader of the Opposition.
  4.28 pm
  The Minister for Local Government and Planning (Mr. David Curry): I beg to move, That the Bill be now read a Second time. It does two things. It honours a pledge given by my right hon. and learned Friend the Chancellor of the Exchequer in his Budget speech on 30 November 1993 to provide yet further help for businesses next year under the transitional arrangements we introduced to phase in changes in rates bills following the 1990 revaluation. Similar help will be provided in Scotland by reducing rate bills, on average, broadly in proportion to the reduction in England.
  Secondly, the Bill gives the Government greater flexibility to introduce, if necessary, further transitional arrangements following the 1995 revaluation. The House will be aware that this is the third time in the past two years that we have brought forward measures to help businesses that are facing rates increases as a result of the 1990 rating reforms. The previous measures were warmly welcomed by the House. I hope that this Bill, too, will be given a swift passage so that local authorities will be able to incorporate the changes when they send out their rate demands before the start of the financial year. Failure to do so could result in uncertainty for businesses and delays in bills or the need to re-bill, with the administrative costs which that would involve.
  Many businesses are already benefiting from the introductioin of the uniform business rate. The occupiers of 1·25 million business properties that have no need of the transitional arrangements can plan ahead in the knowledge that the business rate poundage cannot rise above inflation. By announcing a poundage of 42·3p in the pound, the Government have guaranteed that their bills will rise by no more than 1·7 per cent. next year, enabling them to benefit from the current low rate of inflation.
  For around 360,000 businesses, however, increases in bills will be greater than 1·7 per cent. next year. Those are the businesses which are still moving upwards towards their full new rate bills after the 1990 revaluation. It is inevitable that revaluations shift the burden of rating between businesses. That has to happen if rates are to continue fairly to reflect the relative prosperity of different types of businesses in different areas. Equally inevitably, adjustment to those changes can be painful. It was to cushion such changes and to ease the pain that the Government introduced transitional arrangements in 1990 and additional measures since then further to soften the impact.
  The Non-Domestic Rating Act 1992 froze rate increases beyond the rate of inflation for 1992–93 and allowed businesses whose bills were being phased downwards following the 1990 reforms to see their remaining gains come through this year. That was an extremely generous package which benefited around 900,000 premises throughout the United Kingdom at a cost of around £1·25
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  billion over three years. The Non-Domestic Rating Act 1993 again held rate increases to the rate of inflation for 1993–94 at an additional cost of some £550 million.
  Without any change to the arrangements for 1994–95, businesses that benefited from the two earlier measures would face increases of up to 20 per cent. on top of inflation next year. We do not think that businesses should be asked to face such large increases. However, it is necessary to make some progress towards full rate bills based on the 1990 revaluation. We simply cannot afford a further freeze for all properties. The Bill will, therefore, reduce the increases that businesses would otherwise be facing to 10 per cent. on top of inflation for larger properties and 7·5 per cent. for smaller properties. For smaller properties that are in part domestic and in part non-domestic—the composite hereditament—the Bill will continue the freeze on increases beyond the rate of inflation for a further year.
  The measures will provide relief of some £90 million in forgone revenue for around 360,000 properties in England. A free-standing shop in, for example, Newcastle or York with a rates bill of £4,000 for 1993–94 would save about £305. An office with a rates bill of £10,000 in that year would save about £1,017.
  Mr. Hugh Bayley: The Minister has mentioned my constituency, where many properties will face such enormous increases in their business tax when the uniform business rate is introduced that they will not reach anywhere near the revaluation level at the end of the five-year transitional period. What guarantee can the Minister give that those businesses will not face an enormous £2,000, £5,000, £10,000, or £20,000 increase, as some of them could if transitional relief is not run forward beyond the end of the current revaluation period and into the next?
  Mr. Curry: In 1995, there will be a revaluation based on the values of April 1993—the values of nearly a year ago. Because of the change in business fortunes, many properties may not reach even the rateable values anticipated in the 1990 revaluation; they will not have to complete a transition, because the new values will be lower than those fixed in 1990.
  Mr. Bayley: That is certainly true of some businesses and properties, but for other properties the new revaluation level will be considerably higher than the existing uniform business rate, involving transitional relief rebates. Unless the transitional relief regime continues for some years, to ensure that the rate bills of businesses do not rise from, say, £20,000 to £40,000—unless the system continues in a form similar to that proposed by the Minister for the current year —some businesses will incur massive increases, not this year but next year.
  Mr. Curry: I look forward to receiving the hon. Gentleman's support in the Lobby tonight. The Bill will enable us to mitigate increases that might result from the 1995 revaluation, without necessarily requiring a self-financing system, so that those whose rates are going down need not meet the costs of those whose rates are rising. The purpose of the legislation is to give the Government the necessary power, without necessitating recourse to primary legislation, to enable them, by means of an affirmative resolution in both Houses, to introduce

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  transitional measures financed by a contribution to the pool to compensate for any deficit in the amount that it would otherwise have received.
  Mr. Bayley: The Bill would certainly give the Government the power to roll forward transitional relief. I am asking for a political commitment that they will use that power to protect businesses in my constituency—and, indeed, in the constituencies of other hon. Members.
  Mr. Curry: It is perfectly clear that the total business rate is hypothecated to local government finance. If we introduced measures that resulted in less money being available for the pool than would be available otherwise, local government would expect us to make good the shortfall. I, therefore, give the hon. Gentleman the commitment that we would do so.
  Mr. Keith Vaz: Will the Minister give way?
  Mr. Curry: I was going to give the Opposition time to recover from a state of stunned shock, but I am happy to give way to the hon. Gentleman.
  Mr. Vaz: Will the Minister answer a question that he failed to answer when I asked it during last night's debate on the money resolution for this Bill? Why has he thought it necessary to depart from the principle set out in previous Bills—and, in particular, from a statement made in the House on 13 May last year by his predecessor, now Secretary of State for Wales? During the Report stage of last year's Bill, the then Minister said that full compensation would be paid and that the Secretary of State would make up the entire amount missing from the pool.
  Mr. Curry: The House risks falling into a dangerous consensus. Under the current legislation, if we decide to mitigate, compensation must be provided within the system—unless we introduce measures to enable the Exchequer to finance the deficit. That is the commitment made last year by my right hon. Friend the Secretary of State for Wales, as he now is; and I am fulfilling it in this Bill.
  We are looking ahead to the 1995 revaluation. After that, we may need to mitigate further. We want to have the power to do so in a way that enables the House to scrutinise our proposals fully. The measures will be introduced by means of an affirmative resolution.
  There is a change. We are departing from existing powers that impose a system of self-financing. We can compensate the pool only by means of primary legislation, such as this Bill. We are moving to a system in which we seek powers to make regulation, to give us more flexibility. We do not yet know the nature of the scheme that we might introduce and it would be entirely wrong for us to bind ourselves, by means of a duty, to a scheme that we have not yet devised. The affirmative resolution procedure, however, will give the House a proper opportunity to debate the matter. I cannot understand why the hon. Member for Leicester, East (Mr. Vaz) has such a constitutional hang-up about the problem.
  After that brief consensual interlude, I shall continue. The measures will provide relief for about 360,000 properties in England, to the tune of about £90 million. I quoted examples of offices in Newcastle and York. Some
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  180,000 shops and offices will benefit by over £50 million and 60,000 warehouses and factories will benefit by £7 million. About 120,000 other properties will also gain. Much of the relief—about £73 million—will benefit 236,000 businesses in London and the south of England, because that is where the impact of the 1990 revaluation was felt the heaviest, based as it was on 1988 values. The same principles will be adopted next time.
  Businesses in Wales will save £5 million and in Scotland the rate bills of all 220,000 businesses will be reduced by £10 million overall under separate powers. The reduction will, on average, be broadly in proportion to the reduction in rate bills for businesses in England.
  We believe that this additional relief will be welcomed by businesses in the run-up to the 1995 revaluation. However, that revaluation is likely to result in further shifts in rate bills to reflect the changing economic fortunes of businesses since the peak of the boom in 1988. We may need to introduce further transitional arrangements for 1995–96 onwards and our powers to make further transitional schemes are contained in the Local Government Finance Act 1988, which has just been the subject of my exchanges with the hon. Member for Leicester, East.
  It is still too early to say how the revaluation is likely to pan out. Although the Valuation Office Agency has been collecting the necessary data, this will need careful analysis before final assessment of the rateable value can be determined. We do not expect to have firm indications of the effect of the revaluation before the spring. We shall then be able to look carefully at the overall pattern to see what form any further transitional arrangements might take. Once the proposals have been formulated, we would expect to consult on them by the early summer. We would certainly wish to give businesses a chance to comment on the proposals, and local authorities will need as much time as possible to prepare for the introduction of any new scheme once it has been finalised. We would expect to announce our conclusions in the autumn. Parliament will also have an opportunity to consider any new arrangements. The regulations giving effect to them require the approval of both Houses and must come into force by 1 January next year.
  In some respects, we do not believe that our existing regulation powers are wide enough to do all that we might wish to ease the transition in 1995. The Bill will provide additional flexibility. In particular, our existing powers require the Secretary of State to devise transitional arrangements that are self financing. The Bill will remove that requirement and enable the Government to devise rules that would reduce the burden on businesses. It will enable us, should we wish, to ease the burden for those facing increases as a result of the 1995 revaluation without requiring the full cost to be borne by other ratepayers. We should be able to make up the difference by making an Exchequer contribution to the business rate pool.
  The existing powers also require regulations governing each five-year transitional period to be made before the period starts. That would require the Government to take a view in advance on the extent to which they might be prepared to support the arrangements centrally each year. The Government would wish to have the flexibility to decide that afresh each year in the light of changing economic circumstances. The Bill will allow regulations to be made governing one year at a time.

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  The Bill will give us the powers to ensure that protection against rate increases under any transitional arrangements after 1995 is not lost if a property is subsequently altered to create a new property. In such cases, it will be necessary to derive notional rateable values for the new properties as if they were in existence at the time of the revaluation. The Bill will allow regulations to include provision for the valuation officer to certify such notional rateable values and for ratepayers to be given the opportunity to appeal if they disagree with the certified value.
  We believe that, overall, the measure will provide further relief for many businesses and enable a smoother transition towards the new rate bills that businesses will face following the 1995 revaluation. I commend the Bill to the House.
  4.44 pm
  Mr. Jack Straw: I beg to move, to leave out from "That" to the end of the Question and to add instead thereof
  "this House declines to give a Second Reading to the Non-Domestic Rating Bill because it fails, in future years, to guarantee that any shortfall in the rating pool will be made up by the Secretary of State, fails to guarantee that the cost of transitional arrangements for non-domestic ratepayers will not be borne by council tax payers and fails to make the Secretary of State sufficiently accountable to Parliament."
  When the Government fall, as they surely will, it will be because of their continued abuse of power, their failure to respect the spirit of the rules and conventions of the House, their failure to distinguish between private partisan interest and their public role as trustees of the constitution and because of the contempt and arrogance which Government Members now display for all who disagree with them.
  The House is being asked today to agree to every stage of the Bill without any justification. The fact that the Minister did not devote a single word to attempting to justify the abuse of power spoke volumes for the lack of justification for the procedure that has been adopted. I am sorry that the Minister should be a party to this abuse. Since he became a Minister he has built up a deserved reputation for being reasonable. On two occasions I have heard him say that he comes from the consensual wing of the Conservative party, if that is not an oxymoron. At a conference organised by the city council in the city represented by my hon. Friends the Members for Coventry, South-East (Mr. Cunningham) and for Coventry, North-East (Mr. Ainsworth) I heard the Minister open his remarks by saying that he believed in consensus and that he wanted to develop it. The use of that word used to be a hanging offence in the Conservative party, but he used it. Yet last night he showed contempt for the House. Our anger and astonishment at what he did was palpable when he refused to answer straightforward questions put during the short debate on the money resolution. Today he has offered no explanation for why the Bill should be forced through every stage in one day.
  As the House knows from the excellent speech last night of my hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson), we are not opposed to the principle that businesses should receive a subsidy as a consequence of the continuation of the recession. We made that clear when similar but different Bills were debated last year and the year before. The Bills that were debated last year and the year before followed the normal and accepted procedure for non-emergency Bills. This is not the
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  nationalisation of Rolls-Royce which, although it was introduced by the Conservative party, we accepted had to take place in a day. This Bill is not to deal with an emergency but to provide relief for businesses in respect of their business rates for the next financial year which starts on 1 April.
  Last year and the year before, the Committee stages of those Bills were separated from the Second Reading by well over a week, which is the normal procedure. [Interruption.] That is correct and I will give the Minister the dates if he wants them. The House has developed that procedure regardless of whether a Bill is contentious. The Second Reading debate allows Members to think about and discuss the general principles involved. Detailed questions are asked of Ministers and there is time to reflect on the answers. There is also time to table amendments in the light of the debate on general principles and for them to be debated. If the Minister is wondering why the Opposition, who are a constructive Opposition, dealt with matters expeditiously last year and the year before, it is because Ministers sought to respect the conventions of the House and provided time for reflection. There is another reason. Both those Bills were introduced after the financial year had started. Ministers could have said, "We should not be in this position, but we are. It is an emergency. The financial year has already begun and rate bills are about to be sent out. We want to get this through immediately." They never said that. They took their time, as did the House and, as it happened, neither Bill received Royal Assent until midsummer.
  This Bill was published in December, three and a half months before the end of the financial year. It is having its Second Reading two and a half months before the end of the financial year. We do not want any jiggery-pokery from the Government later, so I must make the point that even allowing for the suspension of the usual channels, given the narrow range of amendments tabled, their grouping and the normal time for discussion, there is no doubt that if there is a majority in favour of the Bill, it could become law by the end of February. That is the earliest that it will be needed by any treasurer. I hope that the Minister will take account of that fact. If he wants to offer an explanation that none of us had spotted as to why councils need such powers now when they know that they are likely to get them in any event before the end of February, I invite him to intervene. It is interesting that he fails to do so, just as he failed to offer the House an explanation during his speech—no wonder he is looking so uncomfortable.
  The Bill differs in two important respects from the two previous Bills, as our reasoned amendment makes clear. Our amendment states that
  "this House declines to give a Second Reading to the … Bill because it fails in future years, to guarantee that any shortfall in the rating pool will be made up by the Secretary of State, fails to guarantee that the cost of transitional arrangements for non-domestic ratepayers will not be borne by council tax payers and fails to make the Secretary of State sufficiently accountable to Parliament."
  The Bill is a masterpiece of obfuscation. I think that the Government have signed up to the "Clear English" campaign, but it is perfectly obvious that the parliamentary draftsmen have not paid their subscription. There has rarely been a less comprehensive Bill. Any member of the public picking it up would think that it was an examination paper for maths A-level rather than a Bill apparently designed to give relief on rates.

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  I shall read out clause 1(2) so that it becomes clear just how confused it is. It refers to
  "sub-paragraph (2A) of that paragraph"
  which, according to clause 1(1), is
  "paragraph 5 of Schedule 7A to the 1988 Act."
  I know that my hon. Friends who are experts in these matters think of little else. Clause 1(2) continues:
  "for the words from 'except that' to the end there shall be substituted the words 'except that for the financial years beginning in 1992 and 1993 X is 100 and for the financial year beginning in 1994 X is—

  (a) 110 if the hereditament falls within sub-paragraph (3) below, and

  (b) 107.5 if the hereditament falls within sub-paragraph (4) below."

  It then gets worse. I am making a serious point. If the House passes legislation, it is important that it should be comprehensible. We know and the Minister knows what the legislation means, but a busy business man who is supposed to be relieved of the burden of government and who wants to know what it means will need A-level maths and will probably have to be a retired parliamentary draftsman as well.
  Buried in clause 3(3)(a) is one of our principal objections to the Bill and the difference between this and previous Bills. It states that
  "in paragraph 9(3A) of Schedule 8 to the 1988 Act (as set out in section 4(1) of the 1992 Act), for the words, 'shall also' there were substituted the words `may also'".
  One of our principal objections is that under the 1988 Act —now the 1990 Act—the Secretary of State is required to make up any shortfall in the business rate pool as a consequence of the introduction of a transitional scheme. Under the Bill, that requirement is turned into a discretion, as my hon. Friend the Member for York (Mr. Bayley) and others have said. That means, first, that there is no requirement on the Secretary of State to enter into a transitional scheme even if one is needed, which will place a burden on businesses facing very large increases—well above the rate of inflation—as a result of revaluation.
  Secondly, where a transitional relief scheme is put in place, the cost of that scheme may not be borne by the Exchequer, as it should be, but will fall as cuts in the overall spending of local councils or will fall to be paid by the domestic ratepayers, or council tax payers, of the area. The domestic residents will be robbed by the Treasury and the Secretary of State in order for the costs of the transitional scheme to be made good.
  Mr. Curry: I repeat what I said to the hon. Member for York (Mr. Bayley), who asked for a political assurance. I said that we did not use the word "duty" because it would be daft to incur an obligation to compensate in respect of a scheme that we have not yet devised, but we accept that the product of business rates is hypothecated to finance local government, that local government will expect that any money that is forgone should be made up and that if we use the powers we shall top up the pool. Why do the Opposition seek to remove those powers?
  Mr. Straw: All that the Minister of State has to do is to accept one of our amendments and change "may" to "shall". He might want to discuss an amendment which states that if there is a scheme, the difference "shall" be made up.
  Mr. Curry: Ridiculous.
  Mr. Straw: It is not ridiculous. The Minister has given half a confession—or coughed only half the job, to use a phrase employed by the Lancashire police. He has coughed the fact that the Government do not know the nature of the scheme to be introduced so he cannot firmly draft the legislation to take account of the undertaking that he has given to the House, which will appear in Hansard but which is not included in the Bill. He has not got a clue about the scheme that will be introduced in the future. It is probably fair to say that, given the way in which things are changing, there is no betting that he will be the Minister this time next year.
  Mr. Curry rose—
  Mr. Straw: I shall allow the Minister to intervene in a moment.
  It is almost certain that the Treasury has insisted on the change because it objects to the fact that it is being required to make good the shortfall under current legislation. I do not doubt the Minister's word, but, having spent 15 years listening to Ministers give their word in the House, I have to say that although he has given his word as an honourable Member there is a world of difference between a Minister giving his word and that word being translated into enforceable Acts. The difference is that Acts can be enforced while the word can be ignored, not by him but by his successor.
  Mr. Curry rose—
  Mr. Straw: I shall give way to the Minister and then I shall make my final point.
  Mr. Curry: Will the hon. Gentleman agree with me on at least one point of logic? If there is no scheme, there is no shortfall, and if there is no shortfall there is nothing for which to compensate. I do not understand why he is making such a song and dance about whether we introduce the scheme. If we introduce the scheme and there is a shortfall, there will be compensation. If we do not, there is nothing for which to compensate, so I do not understand why the hon. Gentleman is disagreeing.
  Mr. Straw: That leads to the second substantive point in our reasoned amendment. We do not want the House to buy a pig in a poke. The House is being invited to provide the Secretary of State with powers to introduce a scheme of indeterminate character subject only to the affirmative resolution, which means an hour and a half of debate late at night during which the Minister need not reply to questions—as was the case last night. The Bill should include the undertaking that the Minister has given to the House to the effect that where there is a scheme, it is not a matter of discretion that the Treasury should pay.
  I recall the School Teachers' Pay and Conditions (No. 2) Bill, which represented a modest U-turn by the Government just before the previous election. The Government abandoned a scheme which was the subject of the No. 1 Bill for a negotiated pay arrangement with teachers and substituted a pay review body. The Treasury was given the power to override the review body's recommendations and to give directions to it. Other review bodies were not subject to such a power. We asked the then Secretary of State, now the Chancellor of the Exchequer, why it was there. He said that it was just there because it was there and would never be used. Those were his

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  undertakings, but it has been used recently, in the decision by the Government to impose a statutory pay policy on all public sector workers.
  The Minister must therefore bear in mind our scepticism. If his words mean what they say, there is no reason on earth why the parliamentary draftsmen, with the skill that they have shown in the algebra that they have put into the Bill, cannot translate his words now into words on the face of the Bill. The Bill gives powers to the Secretary of State which are far too wide, as we say in our reasoned amendment.
  The Bill also allows us to discuss the general principle of the non-domestic rating system and to review the operation of the scheme after its first three years. The law was changed in the 1988 Act and came into operation in April 1990 as part of the poll tax fiasco of that year. The decision to establish a uniform business rate is spelt out in the rantings of the former Prime Minister, now Lady Thatcher, which I have read—although I must tell my hon. Friends, in case they think that I have gone soft, that I have not purchased them, but merely borrowed them from the Library. [Interruption.] I wonder whether Conservative Members have read them. They may need a strong dose of carbolic soap afterwards, but it is none the less an interesting read.
  Mr. Curry: We are waiting for the film.
  Mr. Straw: The decision to impose a national business rate was a result of a frenetic campaign by some sections of the Conservative party and some sections of business against the setting of a business rate by each authority.
  Business rates increased, as did domestic rates, in the early 1980s. They increased faster than inflation, but they increased, not as a result of so-called overspending by local authorities, but as a direct result of cuts in revenue and rate support grant from 61 per cent. in 1978–79 to 46 per cent. in 1985–86. It was a simple matter of arithmetic that if services were to be kept at approximately their previous level, if one cut revenue support grant by that enormous amount—more than 25 per cent.—the effect, especially taking account of gearing, on domestic rates and business rates would be to increase them by an even greater proportion.
  Dame Elaine Kellett-Bowman rose—
  Mr. Straw: I am delighted, as ever, that the hon. Member for Lancaster wishes to intervene. No speech that I make would be complete without an intervention by her, and I give way.
  Dame Elaine Kellett-Bowman: I wonder whether the hon. Gentleman, who has the misfortune to share our county council, can account for the fact—gearing or not —that spending by the Labour-controlled Lancashire county council increased by 186 per cent. after it became Labour-controlled initially. No amount of gearing could account for that.
  Mr. Straw: One reason why I am always delighted to give way to the hon. Lady, courteous though she is. is that it is an invariable truth that any question that she asks contains a major error of fact. If I were allowed to offer a wager across the Floor of the House that spending by Lancashire county council increased by 186 per cent. in, I guess, the first year or so of Labour taking control of the council in 1981, I would not just put a tenner on it. I think
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  that the hon. Lady accepts the wager. If she means in a period of 15 years that—[Interruption.] I think that the hon. Lady is wrong. Lancashire county council has a good record and it was in no different position from any other authority confronted with a dramatic cut in revenue support grant.
  The hon. Lady needs to remember that Labour was elected in 1981 because, as my hon. Friend the Member for Burnley (Mr. Pike) said from a sedentary position, we had terrible services in Lancashire. That is why, in every election since—1981, 1985, 1989 and 1993—when every time the hon. Lady has predicted that the Conservatives would sweep back into power in Lancashire, she has been proved wrong. People have faith in the services that Labour authorities provide, and quite correct, too.
  Mr. David Winnick: Does my hon. Friend agree that, whatever defects Lancashire county council may have—it seems to have very few—those defects cannot be compared with the malpractices which have been carried on by Westminster city council? Lancashire county council has not carried out the type of sleazy political work of that council in London and nor has it had a character like Lady Porter, who should be disqualified for ever from engaging in any form of public life. Should not Lancashire county council—and other local authorities in my hon. Friend's region as well as in mine—be congratulated on not having as members such notorious political characters as those who used to be, and some of whom perhaps remain, members of Westminster city council?
  Mr. Straw: My hon. Friend is entirely right.
  Dame Elaine Kellett-Bowman: So am I.
  Mr. Straw: One of the consequences, which I shall describe, of the profligacy, waste and sleaze in Westminster—as may emerge tomorrow if we ever see the district auditor's report—is that they have been a burden on business because it seems that Westminster city council has wasted millions of pounds of ratepayers' money. A s a consequence, the business rate has had to be much greater than it would otherwise have been and there have been fewer services.
  The Conservative Government were responsible for that —there is no doubt about it, although I knew that amnesia is the first requirement of any Minister these days. There is no doubt about the fact that there was a major cut in the revenue support grant and that was why business rates increased. Despite that, the Government—
  Mr. Clive Betts: Does my hon. Friend agree that there is a further nonsense in the Government's approach in 1979? He is right that the Government's policy of cutting the rate support grant between 1979 and 1985 forced the increase in rates, including business rates, and the Government then brought in legislation to try to tackle that increase. Part of that sequence of legislation resulted in a council tax which the Government also found too high and, as a result, they had to legislate to increase central Government support to local authorities to bring the council tax down. The policy went full circle. In the meantime they destroyed many local services along the way.
  Mr. Straw: My hon. Friend is right. Under rates, despite what the Government say, average domestic rate

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  bills in Labour-controlled areas were always lower than in Tory-controlled areas. It is still the case today, thanks to the excellent work of our Labour councils, that average council tax bills per household in Labour-controlled areas are £14 lower than they are in Conservative-controlled areas.
  Despite the truths that I have spelt out, the Conservatives claimed—that was the so-called intellectual basis, the tissue of their policy proposal for going to a national business rate—that high business rates lost jobs. No Opposition Member—it is rather different on the Government Benches these days—wants taxation of any type to be a pound more than it should be. The Conservative party is, as we know, the party of high taxation, which breaks its tax promises, and Labour is the party of probity on tax, as on other matters. [HON. MEMBERS: "Hear, hear!"] The Government's claim then, however, that there was a link between rates and jobs, not only stank of hypocrisy but had no basis in fact.
  In 1980, I asked the excellent statisticians in the House of Commons Library if they would do a regression analysis which sought to correlate increases or decreases in unemployment with business rate increases in each travel-to-work area. They found no such correlation. I presented that evidence, in the early 1980s, to the then Minister of State, the right hon. Member for Bristol, West (Mr. Waldegrave), now the Chancellor of the Duchy of Lancaster. After much humming and hawing, the Government decided to spend £50,000 of taxpayers' money to carry out a major study into the effect of business rates on the location of employment. Rather a similar story was attached to the publication of that report as to the publication of the Westminster district auditor's report. The Government believe in open government and it is something of an irony that the right hon. Member for Bristol, West should now be in charge of open government.
  My hon. Friend the Member for Rossendale and Darwen (Ms Anderson) will remember all too well that, at the time, the then Minister of State did everything that he could to suppress the report. Why did he do that? Was an issue of national security at stake? Would the report expose an intelligence agent in Iraq, who might be exterminated, as we were led to believe was the reason for suppressing the Iraqgate affair? Were people's personal peccadilloes being revealed in that study on the effects of business rates on the location of businesses? I agree that those should not be revealed. The answer is none of those, but that the £50,000 study, paid for with taxpayers' money, had reached the wrong conclusion.
  The statisticians had been asked to use their expertise and intellect and set up all kinds of mathematical models to establish whether there was a connection between rates and jobs. They did that and came up with exactly the wrong answer for the Government. Their answer confirmed the validity of the work carried out by Mr. Robert Clements, who is now head of the statistical section in the House of Commons Library. For ease of reference for the Minister, the report has been deposited in the Library and he has only to pop downstairs to get it. I have the introduction of the final report, which we had published only by getting hold of an illicit copy, publishing it ourselves and then embarrassing Ministers into making it public.
  The report went into detail about methodology. It said:
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  "Simple graphs and cross-tabulations reveal no relationship. Multiple regression, which enables a more sophisticated analysis of the data, confirms the importance of the structural and other factors, but provides no evidence that the location of manufacturing employment change is related to the level of or change in rates … Preliminary analyses also fail to reveal a relationship between rates and changing number of manufacturing businesses in each area."
  The report went on to say:
  "The report therefore concludes … that with the exception of office employment in and around London"—
  the report found a saving in that regard—
  "it is not possible to detect an influence of rates on the location of employment."
  The report then said that many more detailed studies were needed.
  Interestingly, it is suggested in the body of the report that there might be a relation between higher rates and more jobs because higher rates supported higher public spending which, in turn, supported high local private employment.
  Mr. Jim Cunningham: My hon. Friend will recall that, back in the early 1980s, any surveys carried out could prove beyond a shadow of a doubt that 2 per cent. of business costs were rate costs. So the other 98 per cent. were other costs. I am sure that my hon. Friend will agree with that.
  Mr. Straw: I agree with my hon. Friend and I congratulate him on his clairvoyance. He has not seen my speech in advance, but that was exactly the point that I was about to make. I was going to point out that, despite all the blather and bluster that we get from the hon. Member for Lancaster about the burden of business rates—we do not want business rates to be higher than they should be—we never heard a peep out of the Government about what they were doing about the much bigger burden on businesses, then and now, caused by employers' national insurance contributions.
  In 1978, £3·3 billion was raised from the business rate and £6·1 billion from employers' national insurance contributions. In 1992, £13 billion was raised from rates and £22 billion—the figure is still rising—from employers' national insurance contributions. So if the few Conservative Members present to pay an interest in the level of business rates are seriously worried about the burden on business, they should campaign to reduce employers' national insurance contributions, rather than increase them.
  Mr. Michael Bates: I am trying to follow carefully the point which the hon. Gentleman is making, but it is difficult to understand his assertion that there is no link between where businesses locate and the business rate charged in that area. If that were so, the programme of enterprise zones which allowed free rates for a period of five years and which has been so successful in rejuvenating many parts of the north-east would not have been so successful.
  Mr. Straw: I understand the hon. Gentleman's perplexity because it was widely shared among Conservative Members. In the end, the penny dropped with most of them. I shall send the hon. Gentleman a copy of the study.
  First, as the study shows, businesses move and relocate as a result of factors that are not related to the level of business rate. That is because, as my hon. Friend the Member for Coventry, South-East said, the business rate in

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  relation to overall business costs is so low that it is unlikely to be a factor in location. The study made it absolutely clear that it was not a factor.
  The hon. Gentleman also asked about enterprise zones. The reason why we hear so little about enterprise zones these days is that, as the study showed, they led to a transfer of jobs within a travel-to-work area, from areas where businesses were paying rates to areas where they were not paying rates. There was no increase in jobs, which is why the scheme has disappeared into oblivion.
  Mr. Bill Michie: In the so-called free enterprise zones, where rates may be free, the lease and ground rent charges went up to compensate for the saving that businesses made on their rates. So although the local authority did not receive the rates, some businesses were exploited through their leasing arrangements because they were paying no rates.
  The studies carried out many years ago in Sheffield, which was a major manufacturing base, showed that when employers were asked why they could not be competitive and why there would be job losses—it was not just because of Europe, although that was a significant factor—showed that the energy costs far outstripped any rate rise during the period when the city council controlled the rates. It seems odd that we are still beefing on about that and that the Government are considering VAT on energy costs. They do not know what they are talking about.
  Mr. Straw: My hon. Friend is right and underlines the point that the enterprise scheme was one of the most expensive forms not of job creation but of job transfer ever invented. My hon. Friends the Members for Newcastle upon Tyne, North and for Burnley have just reminded me that, in many cases, the benefit from the rates holiday was taken not by the business located in that area but by the landlord, who increased the rent.
  Mr. Bates: The north-east has attracted some £3·5 billion worth of inward investment, creating or safeguarding some 35,000 jobs as a result of development corporations. Many of those businesses have been created in enterprise zones.
  Mr. Straw: The north-east has done well and it is a testament to the brilliance of Labour-controlled authorities throughout the north-east. The areas of inward investment in the north-east are all in Labour-controlled areas. Inward investment has taken place in Derbyshire, which is another Labour-controlled area.
  Mr. Bates: Will the hon. Gentleman give way?
  Mr. Straw: No. I have already given way twice to the hon. Gentleman.
  I remember it being said that Newcastle's rates and other rates in the north-east were too high. Of course, they are too high as a consequence of the Government's policies, but they did not affect business location or the attractiveness of the area to inward investment.
  Mr. Jim Cunningham: Will my hon. Friend take it from me that, although rates may be a factor, a more important factor for a company corning to a city is what is available in terms of Government grant, skills in the area, the location of the business, transport costs, and good public services to transport people to and from work? If the
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  hon. Member for Langbaurgh (Mr. Bates) wants to check those facts, I am sure that he will find that most local authorities will confirm what I am saying.
  Mr. Bates rose—
  Mr. Straw: I have already given way twice to the hon. Gentleman.
  As Labour authorities score high on good public services, they create jobs while Tory authorities destroy them.
  The Bill provides an opportunity to review the underlying principle of the business rate. I have already dealt with why the Conservatives went ahead with a national business rate. In doing so, they assaulted local democracy and, at the same time, halved the local tax base at a stroke. We objected to that, as did the local councils, but it was easy for the Conservatives to reject those complaints. Many in business and many Conservative Members, however, opposed the change.
  In a letter written to the Local Government Chronicle in December 1991, Mr. Graham Mason, the director of company affairs of the Confederation of British Industry, said that its policy on business rates was set out in a document issued in 1987, but he noted
  "our approach to reforming local government finance was not adopted"
  by the Government. I am not arguing that the CBI was then fully in favour of the local business rate, but it was never in favour of the national non-domestic rating scheme.
  The Institute of Directors is not affiliated to the Labour party, although these days anything could happen and usually does, but it has always been in favour of a local business rate. Interesting statements have also been made by individual business people. Mr. Stephen Boyd, the operations director of Courtaulds, has written:
  "At least with the former system you could talk to those who made the decisions locally on the county or district council and have a good moan. Now the decision is based upon the Retail Price Index.
  Local businesses, whether part of multi national companies or local enterprises, are an essential part of the life of a community. They consume local services. They require local supplies."
  They also employ local people.
  "there is precious little link between the quality of services received and the amount paid out … It seems to me that the gearing imposed by the current financial regime"—
  the gearing consequences of having a national business rate
  have been extremely severe—
  "gives local authorities very little room for manoeuvre.
  Returning UBR to local decisions would bring the gearing factor back to two to one, a far more comfortable position."
  He argued that the system should be changed and that a business charter should set out local business rights. We would support and develop such an initiative.
  Mr. Tony Saint, then director and general manager of British Aerospace at Hatfield, put forward a similar argument in the Local Government Chronicle in December 1991. He wrote that meetings between business and local government representatives had always been constructive and noted:
  "Meetings were a strong influence on county council members when they were considering the level of local taxation to levy each year. The sharp break with the past as a result of the introduction of the uniform business rate has removed this long and steady relationship. No matter how many meetings we now have, nothing the county council does can influence the level of `local' tax that businesses are required to pay."
  Mr. Bill Michie: The Government keep telling the nation that we must keep state hands off the running of

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  businesses. That is nonsense. Next year, the Government may take into consideration the recession and may appreciate that the business rate should be set accordingly, but as the business world has said, it is much easier to talk to the people who run the city or the county about problems. Flexibility was far greater under the old system. I hope that I will have the opportunity to speak later about the problems encountered in Sheffield because of the current system's inflexibility. Unfortunately, we will not have the time to discuss that problem in detail.
  Mr. Straw: My hon. Friend is right.
  It is important to note that Mr. Tony Saint also said:
  "In the past there was a proper consultative process in which my company felt a genuine involvement and through which we had an ability to influence the outcome of the level of the tax in a particular year."
  As a result of the imposition of the central tax, that involvement and influence have gone.
  My hon. Friends will be interested to know that our policy is also supported by the Conservative flagship borough of Westminster city council. Councillor David Weeks, the leader of the council before he was fired, wrote this to the Local Government Chronicle in January 1992:
  "At Westminster we fully support the call of the Institute of Directors for the return of business rates to council control. Since national non-domestic rates were introduced we have vigorously campaigned for the right of local authorities to be held accountable for the taxes paid by and the services provided to their local businesses. The argument we have made carries even more weight for the smaller businesses, which operate only within the boundaries of one local authority."
  If Westminster council was able to collect business rates from every premises used for business purposes, the rate base would be greater and those who pay business rates and council tax legitimately would face a smaller bill because they would not be subsidising those who avoided the business rate.
  Many hon. Members have studies or offices in their private houses. Plenty of people run small businesses from their homes. Neither is separately rated. When anybody lets an office to someone else or runs a separate business from it, questions arise about whether it should be subject to the national non-domestic rate. That brings me to the hon. Member for Rutland and Melton (Mr. Duncan).
  I wrote to the hon. Gentleman as one is required to do —and I always do so—to state clearly that I intended to raise this matter on the Floor of the House. Madam Speaker will be aware of that fact because I sent her a copy of the letter. I also left the hon. Gentleman a telephone message to that effect. I know for certain that he contacted one of my Front Bench colleagues and acknowledged that he had received my letter. I fully anticipated that he would be present today, because he would then be able to answer the questions raised relating to entirely legitimate matters of public interest. I am astonished that he is not here, because in all my years in the House I have never known an occasion when an hon. Gentleman about whom legitimate questions about his conduct of public business have been raised, and who has been given proper notice by an hon. Member that those questions would be put, has not come to the House to deal with them.
  The hon. Gentleman's purchase of No. 17 Gayfere street involved a public subsidy from Westminster city council. That subsidy was paid for by council tax and business ratepayers in Westminster. The question is
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  whether it was right for that subsidy to be passed on to the hon. Gentleman. In my view, that depends, critically, on the circumstances in which the hon. Gentleman made his deal with Mr. Ball-Wilson, the ostensible purchaser of No. 17. When the hon. Gentleman loaned that gentleman most of the purchase price, did he agree with him that, in return, as soon as the three years had elapsed—the restriction governing a sale—Mr. Ball-Wilson would sell the hon. Gentleman the property? That is an important question.
  My second question concerns the business rating of No. 17 Gayfere street. That house is not the residence of the hon. Gentleman, but—
  Mr. Bates: On a point of order, Mr. Deputy Speaker. I seek your guidance because I do not detect that this matter relates to the business before the House.
  Mr. Deputy Speaker (Mr. Geoffrey Lofthouse): I am listening closely to the hon. Member for Blackburn (Mr. Straw) and I assure the hon. Gentleman that if any of his comments are out of order, I will rule them so.
  Mr. Straw: I am grateful, Mr. Deputy Speaker.
  I am raising serious questions about the business rate in Westminster. I quoted from the former leader of Westminster city council—his comments were made well in advance of any knowledge of Mr. Ball-Wilson or the purchase made by the hon. Member for Rutland and Melton—who expressed his support for our policy in favour of local councils having the right to determine the business rate. Anyone who avoided paying that business rate would increase the burden on legitimate business ratepayers in Westminster. That important issue is germane to the purpose of the Bill.
  My second question to the hon. Member for Rutland and Melton concerns the business rating of No. 17 Gayfere street for national non-domestic rating purposes. I understand that that property was used as the headquarters for the leadership campaign of the Prime Minister. I understand from an article in the Evening Standard that it was also used by the author of a biography of the Prime Minister. I do not believe that that book has enjoyed enormous sales—perhaps there is some curse on the property. I am sorry that the hon. Gentleman has decided to duck and run and not to answer my questions, because I know that he is around.
  The Daily Mirror claims that the hon. Member for Rutland and Melton worked for Mr. Marc Rich for six years, during which time Mr. Rich was a fugitive from justice in Switzerland. Did the hon. Gentleman do that work from No. 17 Gayfere street? This raises serious questions about whether the place is rated, whether it should be rated and whether, if it is not rated—it appears not to be, judging by the views of Westminster city council —Westminster ratepayers and the Exchequer have lost revenue as a result. The hon. Gentleman does not seem willing to answer these questions or even to come and listen to them and I am sure that Conservative Members are as astonished as I am that he has ducked out without explanation. But these questions will not go away until he provides a proper answer to them.
  I now set out the Opposition's view on the national non-domestic rating system. We support the subsidy in the Bill because it is needed by business, but we do not believe in the principle of a national non-domestic rate. All our experience of the past three years confirms our view that the position that we took in 1988 was correct. Our view is

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  the same as that of the Institute of Directors, of Conservatives in Westminster and of many in business. We believe that the Government should conduct a thorough review of the NNDR system with a view to establishing an improved system of business rates.
  We do not say that the old system was perfect; indeed, it had its defects. Recently the Institute for Fiscal Studies conducted a major study of various alternatives to the system that should be looked at carefully.
  When we come to government we will establish a local business rate. We will have safeguards to ensure that it cannot be increased any faster than increases in the domestic local tax. We will establish a charter, as proposed by the director of Courtaulds, and we shall consult widely on our proposals.
  At the election the Prime Minister said that if electors voted Conservative on the Thursday, recovery would begin on the Friday. This Bill is proof that, despite that claim, the effect of the recession on businesses continues to be so great that the Exchequer subsidy of business rates is still needed. But the Bill provides no guarantee that all such subsidy will be paid in future years by the Treasury and it gives too much power to the Secretary of State.
  Above all, the manner in which the Bill is being forced through the House is wholly unacceptable. It represents an abuse of power by a petulant, incompetent and contemptible Government, drawn from a party that has lost all moral authority to govern.
  5.32 pm
  Mr. Gordon Oakes: My hon. Friend the Member for Blackburn (Mr. Straw) pointed out that this is a short Bill. It is also, probably inevitably, a technical Bill. I make no criticism of the Government for that, because it is a very important Bill for a large sector in this country.
  First, the Bill affects councils. I speak as a vice-president, serving in a purely honorary capacity, of the Association of County Councils, which is clearly affected by the idea of a uniform business rate. The Bill probably affects district councils even more, because they are the unpaid tax gatherers, for the Government, of the UBR. That is not to say that they have any say in the matter —the proceeds do not come to them but go into a national pool. Nevertheless, they have to collect the money and incur the odium for doing so.
  The Bill affects every domestic council tax payer because there are no guarantees in the Bill that any shortfall in the rating pool will be made good by the Government; nor are there any guarantees that the costs of the transitional arrangements will not have to be borne by the domestic council tax payer. The House heard with astonishment and delight the Minister of State giving a firm assurance about this to my hon. Friend the Member for York (Mr. Bayley), who extracted the assurance from him with the persistence of a true Yorkshire terrier. The Minister said that the Government would bear such costs. If so, why not include that in the Bill? It would be simple to do so. We have an amendment tailor made for the purpose: it changed the word "may" to the word "shall". If the Government accept the amendment, proceedings on the Bill—or at any rate on this point—can be kept short, no doubt to the delight of hon. Members.
  To parody the words of the Chancellor of the Exchequer about an election in the midlands, I fear that some future Minister will come along and say that the Government are
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  not bound by what a Minister of State said in response to an intervention on a wet and windy Wednesday. That is what we shall hear in 1995 or 1996. I plead with the Government to incorporate the amendment, if they mean what they say. The Minister is an honourable and respected figure, and I am sure that he means what he says, but I am not sure that the Government do. They have often backtracked on their words in this House. There was a time when such words were sacred and if Ministers said something in the House the Government would carry it out because they had given their word to the House of Commons, so I hope that council tax payers will be protected in the Bill.
  The Bill will affect business and industry because they face another revaluation in 1995, albeit based on 1993 prices. All the expert advice suggests that that revaluation will mark a shift of the burden from London and the south-east to the rest of the country, especially to the north and the north-west—a reversal of what should happen. The burden will shift from retailing and office development to manufacturing industry, a ridiculous state of affairs in a country which depends so much on that industry. Despite that, the Bill says little about the revaluation and its effects.
  Finally, the Bill affects this House. As my hon. Friend the Member for Blackburn said, it gives more and more powers, by regulation, to the Secretary of State, who can thereby avoid bringing primary legislation, on which all of us can have a say, to the House. I know that the Minister has said that the regulations will be debated here, some of them even under the affirmative procedure, but we all know what that means: the regulations are discussed late at night, when most hon. Members want to go home or have gone home, and the regulations are not amendable. We have to accept them all or throw them out.
  This is not the sort of government that we expect. I deeply regret the fact that the Government, as they have done so often before, are taking more powers against local government—and by the back door, not by debate in the House but by regulation.
  As my hon. Friend asked, why are the Government behaving in this way? They have offered us no explanation as to why they are forcing the measure through all its stages in a single day. We started the Session a fortnight late, on 18 November. Sessions usually start at the beginning of November. We had an extended Christmas holiday. Not much legislation is in the pipeline, as far as I can tell, to keep us going for the rest of the Session—so why adopt this arrogant approach, just as the Government did before Christmas when they shoved two other Bills through in one day? I do not know whether arrogance, incompetence or the Government's fear of Conservative Back Benchers is the reason, but the House will not put up with this: we have the right properly to debate legislation which will affect our constituents.
  The Minister said that the House has accepted other such Bills. Possibly, but the national business rate has never been accepted by the main local government organisations—the Association of Metropolitan Authorities and the Association of County Councils. Both are opposed in principle to the whole idea of a national non-domestic business rate. It drastically reduces the independence of local authorities, which is what the Government want. In 1989–90, locally raised money formed 57 per cent. of local government finance. This year, it was 17 per cent. That is a mark of local government's dependence on central Government, and the concept is

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  wrong. The national business rate goes further in the direction of centrally administered rather than locally administered funds.
  Conservative Members generate many myths about local authorities. Thank God none has been generated in this debate, certainly not from the Minister, and Conservative Back Benchers have chosen not to speak. They say that local authorities are spendthrifts and that they hate and suppress business. That is nonsense. All councils—I speak on behalf not just of Labour-controlled councils but of those controlled by Liberal Democrats or Conservatives—co-operate with chambers of commerce. There may be exceptions to that, but I do not know of any. They also co-operate with local firms because it is in their interests and in the interests of business to do that.
  There is co-operation on planning, on the environment and on services such as waste disposal and removal. There is a great deal of co-operation on roads and other communications, which are vital to businesses and which are, on the whole, controlled by county councils. Such dialogue is important. There is co-operation on education. At one time, I would have said that there was co-operation especially on higher and technical education but, alas, the functions in relation to those have been removed from local authorities. People from technical colleges can no longer see councillors to discuss schemes because the technical colleges are no longer controlled by county councils.
  Local authorities, not the Government, are the best judges of the needs of counties and districts. A uniform business rate is a wedge between business and the council which it should not be. The business rate collected by councils goes into a national pool and the council itself does not benefit from it. As I have said, the 1995 revaluation will be traumatic for business no matter what the Minister says.
  All the forecasts are that the burden of rates and the revaluation will shift from London and the south to the north, the north-west and the midlands. It will shift from retail to manufacturing and such a trend should not be allowed. I passionately believe in manufacturing industry. Service industries such as tourism play a vital role, but a nation depends on what it makes, and to put an additional burden on manufacturing at this time is a shift in the wrong direction.
  We have tabled new clauses and amendments on matters about which the Bill is totally silent, but those matters should be addressed. The Bill says nothing about the utilities of gas, electricity, British Telecom or cable, which were formerly nationalised industries but are now profitable private businesses which can cause more trouble to a local authority than all the chemical industries put together: roads which have been dug up require reinstatement and traffic deployment schemes, but the firms that cause the problems are lightly treated under the rating system. In fairness not just to the domestic ratepayer but to businesses which have to bear the greater part of the burden of rates, the Bill should contain measures to deal with that or we should have a proper Committee stage to address those problems. I know that the rating of utilities is a complex matter but it could still be addressed.
  The Bill gives the Secretary of State undue powers for which he is not accountable to the House. As I have said, even affirmative resolutions are not properly debatable
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  because they are presented at a time when most hon. Members want to go home. They are not amendable and have to be accepted as a whole or not at all. Such crucial matters should be addressed by primary legislation and not by regulations.
  The Government want to go back to basics. There are two age-old-basics: the basic right of democratically elected local councils to provide and be responsible for the needs of their areas, and the right of the House to question, amend or reject any Government measure. The Government want rule by regulation but there should be rule by democratic debate. The Government and the Leader of the House, who is in his place, should carefully consider those basic principles and not try to railroad the House without any reason whatever. There is ample time to pass the legislation long before 1 April, which is the start of the financial year. I do not think that any hon. Member likes that, and the House will not stand for it.
  5.46 pm
  Mr. David Rendel: It is interesting to note that you, Mr. Deputy Speaker, have not had an opportunity to call any Conservative Member. I am surprised that the Government cannot find a Back Bencher to support them, at least vocally. That reminds me of what happened last night, because at the end of the debate on the money resolution for the Bill the Minister was not prepared to answer the questions that had been raised. Some of us felt that that was not a great display of courage because some serious issues were raised. I hope that the Minister will answer some of those questions in the winding-up speech at the end of this debate.
  Yesterday, I said that the origin of the problems of the national non-domestic rate was the lack of revaluation of business premises between 1973 and 1988. I should like the Minister to address that. Perhaps that was due to a lack of political courage by, first, the Labour Government and then the Conservative Government, who feared business reaction to the huge increase in business rates that would have been likely if revaluation had gone ahead. That lack of courage meant that when the revaluation finally took place on the introduction of the national non-domestic rate, there were large increases for some businesses, and the Government were forced to introduce a transitional scheme.
  Mr. Peter L. Pike: Is the hon. Gentleman aware that the flagship of the Conservative Government, the 1987 legislation on the poll tax, included that? It was debated at great length and one of the problems addressed was that transitional arrangements for the non-domestic rate would be overtaken by another transitional arrangement because of another revaluation. The situation in which the Government now find themselves was forecast during the debate on the poll tax legislation, and they are now trying to force legislation through the House.
  Mr. Rendel: The hon. Gentleman makes a valuable point, but what he says is not surprising, because it was clear even at that time that the revaluation would result in enormous changes to business rates and that some sort of transitional arrangement would be needed for a long time.
  The transitional relief was expected to be, and, indeed, was to start with, self-financing in the sense that businesses which suffered big increases in rates were compensated by those that were likely to gain from a reduction. But the

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  gains were not given to them straight away, and that meant that the original scheme was self-financing. However, shortly afterwards, we entered a recession and the Government faced a general election. Just before that general election, the Government decided to allow all the benefits for firms and businesses that were looking for a reduction in their rates to be given to those businesses.
  That was clearly an electoral bribe and it has made necessary the increase in other funds to make up for that drop in rates coming in; that bribe has, therefore, caused the problems that we are facing today—the need to change the transitional relief year by year. The challenge that I gave to the Government last night—I would welcome an answer today, as they did not have the courage to answer last night—is: do they agree that the electoral bribe given in March 1992 is the main cause of the problems now?
  I shall go a little further into how the need for huge transitional relief has arisen and point out that it has been necessary in some areas of the country, particularly the rather more prosperous south-east, which had the tremendous economic boom of the late 1980s, spurious though it has turned out to be. As a result of that boom, there were huge property value rises in the south-east.
  In areas around my constituency, large rateable value increases have led to large increases in the NNDR payable. That has put the south-east and similar parts out of kilter with less prosperous parts, which did not perhaps gain such benefits as were gainable from that boom. We have found, of course, that the recession has had almost the opposite effect. Those parts of the country that benefited in the short term from the boom have been the same parts that have been hit—often worst—by the recession.
  The areas where property values rose at the time of the revaluation of 1988 are often the same areas that will be revalued at a much lower rate under the property revaluation of 1 April 1993. That has led to a curious situation in which there had been huge increases in business rates, which have had to be reduced by transitional relief. But those increases may lead to reductions in the total amount payable once next year's revaluation—it was introduced on 1 April 1993, but the new business rates will become payable next year—comes into effect.
  Those huge increases have led to a number of business bankruptcies in the meantime. It is my fear that if the increases are allowed to go ahead, even at the levels that are being contemplated over the next year, a number of businesses will become bankrupt during that year—businesses that would have found their rates reduced by the revaluation had they survived as long as the beginning of next year.
  I therefore believe that it is foolish of the Government to go ahead with increases in rates charged this year for some of those firms which are likely to be, or could be, put out of business during the next 12 months, but which, if they could survive that period, might survive thereafter and become viable once more.
  There is a good case to be made for saying that the amount of rates relief that has been allowed—or will be if the Bill is passed—is insufficient and will lead to a loss of businesses, which the Government could avoid if they chose to do so. If the Government chose to avoid that loss of business, that might be self-financing because the loss of businesses inevitably means that rates will be lost as well and the country's general level of prosperity will fall.
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  I shall now deal with the details of Labour's amendment, because I have certain sympathy with much of what Labour Members have talked about and much of their amendment in terms of the apparently illogical way that the Government were planning at first not necessarily to make up losses, but now, as promised, are to make them up.
  However, it seems that we should on this occasion support the Government on Second Reading and not support the amendment, because although I have certain sympathy with some of what the Labour party has said today, the point that it is making is a rather technical one. I say that for the following reason. The amount that council tax payers will have to pay in any year depends on what comes back to them not only from the NNDR—the distributable amount—but from the revenue support grant.
  It is open to the Government to make increases or decreases in the revenue support grant as they wish. Were they, for example, not to make up the full amount in the distributable amount as a result of changes to transitional arrangements, it would still be open to them to make up that amount by increases in the revenue support grant. Equally, if they chose to make up the whole amount lost in transitional arrangements, they could nevertheless reduce the revenue support grant. So the ultimate effect on the council tax payer is not in itself determined by the passing or otherwise of the Labour amendment.
  Mr. Betts: Does the hon. Gentleman accept that, first, the total amount of money available in the revenue support grant to local authorities is likely already to have been announced by the Government by the time they announce their decision on whether they will make up any shortfall under the legislation, and, therefore, that there may be a direct impact on local authorities in total from the Secretary of State's decision in the future?
  Secondly, if the money is made up from the revenue support grant rather than through a direct making up of the shortfall under the discretion available to the Secretary of State under the legislation, the impact on individual authorities will certainly be different, and, therefore, so will the impact on individual council tax payers in the services that they receive.
  Mr. Rendel: In practice, the Government will decide the level at which they will make up the distributable amount before they make any announcement on the revenue support grant, whether or not the decisions are announced in the appropriate order. Therefore, in practice it is still within the Government's capability to decide on the total final result for the individual council tax payer.
  Mr. Jim Cunningham: Does the hon. Gentleman accept that, looking at the record of the Government, in practice the local authorities are not compensated by the full amount and that that is one of the problems with the Bill?
  Mr. Rendel: I accept that. The problem is that the Labour amendment does not seem to overcome that difficulty, but I accept that the difficulty exists.
  Mr. Vaz: I am grateful for the hon. Gentleman's sympathy for the Opposition's amendment, but does he not accept, as was said by my hon. Friends earlier, that it would be much better if the commitment that the Minister gave to the House were put in the legislation? Therefore, does he

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  not accept that it is much better to support the reasoned amendment, which calls for that commitment to be put in the legislation?
  Mr. Rendel: To a large extent, I have already given my reasons for thinking that it does not much matter whether that commitment is in the Bill or not. Therefore, my reason for opposing the reasoned amendment proposed by the Labour party is that, in practice, there is insufficient reason for voting against the Second Reading of the Bill when to do so might cause other problems. It is those other problems that I shall particularly put to Opposition Members who wish to see the amendment passed.
  Mr. Robert Ainsworth: I am grateful for the hon. Gentleman's indulgence, as I know that he has given way many times today. I understand the point that he is making, but surely he accepts that we are dealing with a Government who have shown stealth and guile in imposing taxation burdens on everybody in the country over a period and it would be a good thing to remove the opportunity for them to increase other people's taxation by stealth and guile through the mechanisms provided in the Bill. They may well do that. The Minister is saying that he accepts the principle of hypothecation and that all the product of the business rate will go to the pool, but he refuses to put that in the Bill. Surely, if that were in the Bill, we should at least achieve one thing—we should remove one bush behind which the Government could hide when imposing what will effectively be extra tax on ordinary people.
  Mr. Rendel: I have some sympathy with the hon. Gentleman's point, as I said in my remarks about Labour's amendment. However, I do not feel that passing the amendment will enable us to force the Government to play fair in the long term, because they are answering only one of the two parts of the problem, which are the NNDR and the revenue support grant. However, my sympathy is not strong enough to lead my party to refuse to support the Bill as a whole. I have now answered that point four times in a row.
  As I was going on to say, further difficulties are liable to accrue if we do not give the Bill a Second Reading. I ask Labour Members to consider to what extent they feel that they could deal with the problem of the excessive rates in certain areas that are likely to lead to business failures later this year if the Bill or something like it is not passed. We should not forget that, once it receives Second Reading, it can be amended in Committee.
  Furthermore, we must consider not only what would happen to those businesses facing excessive rate rises this year but what would happen after the revaluation has taken place and we see, perhaps in areas rather more relevant to Labour Members, excessive rises next year. The relative value of businesses in some of the more prosperous parts of the country may be reduced compared with the value of businesses in rather less prosperous parts of the community, which have not suffered to quite such a significant extent from the change in business values.
  Mr. Pike: The hon. Gentleman is raising a couple of points for the Labour party to answer. My hon. Friend the Member for Blackburn (Mr. Straw) told the House that we are not opposed to the principal objective of the Bill, but
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  we believe that there should be more time to consider its proposals and that it needs some amendment. The amendment is not aimed at defeating the principle of the Bill. We believe that people outside the House should have the time to put their views on the Bill so that they can be taken into account. Some amendments, such as those that we have tabled today, should be debated and, we hope, agreed to so as to improve the Bill.
  Mr. Rendel: I thought from the previous four interventions that the Labour party was more distrustful of the Government than I am, but that intervention implies that I am more distrustful of the Government's intentions than is the Labour party. If we do not at least give the Bill a Second Reading, thereby giving us a chance to amend it, we may lose the whole thing. If that happened, there would be no guarantee that the Government would introduce another Bill. That would leave businesses facing enormous rate rises. Because my distrust of the Government's intentions is such that I do not believe that they would introduce another scheme for transitional relief, I would rather we had what is on offer in the Bill.
  Mr. Vaz: I do not know what the hon. Gentleman's problem is. My hon. Friend the Member for Blackburn (Mr. Straw) made it clear that the Labour party supports the subsidies that have been given to businesses not just in this Bill but in other similar Bills in the past three years. My hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson), when he led for the Opposition on this matter last year, made it clear then that we supported the subsidy. My hon. Friend the Member for Burnley (Mr. Pike) and earlier my hon. Friend the Member for Blackburn said that it is ridiculous that the Government are pushing this important Bill through in one day.
  The hon. Member for Newbury (Mr. Rendel) was elected to the House in a spectacular fashion, and told the electors of Newbury that the Government should not be trusted. Perhaps he is now showing his true colours. He is more prepared to trust the Government than is the Labour party, which is proposing to scrutinise the Bill carefully and to consult local businesses. Surely he supports that aim.
  Mr. Deputy Speaker: Order. Interventions are supposed to be brief. Unfortunately, today some of them have not been and I hope that the House will take note that in this and other debates interventions should be short.
  Mr. Rendel: That intervention was making the same point as others and it would be wrong of me to repeat my answer to the previous intervention, which was probably adequate. I have made it quite clear that I do not share the Labour party's trust in the Government, and their belief that the Government will introduce a new Bill if this one falls. The problem with Labour's opposition to Second Reading is that the Government might not introduce another Bill. The Opposition are endangering businesses —I accept that they may not intend to do so and that in principle they are supporting the transitional arrangements —by trusting the Government to come back with a further Bill, and I do not have that trust.
  The NNDR system as a whole is not a sensible way to tax businesses for local taxation purposes and we should be moving to the system of site value rating, which the Liberal Democrats have proposed for a long time. That would lead to an increased transfer of the burden of business rates

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  away from struggling businesses and towards the developers out to make a quick buck. That is an excellent principle to work on, and the Government would be well advised to look at it.
  Such a system would be particularly valuable to those parts of the country, including my constituency, that have seen huge pressures of over-development of green-field sites in the past 15 or 20 years. A number of brown-field sites have not been properly developed and could do with further development in place of that damaging pressure on green-field sites.
  Mr. Doug Henderson: Will the hon. Gentleman accept that if he pursues his policy of site valuation, that would effectively mean many small businesses in his constituency and other town centre areas paying excessively increased rates? Would not that be damaging, especially to the small business sector?
  Mr. Rendel: No, that would not be the outcome. If we can get some of the brown-field sites better developed, with higher rateable values, the rates on the town centre small businesses to which the hon. Gentleman referred would not be so high. I do not accept his point. Site value rating would put a lot of pressure on ensuring the most effective, efficient and productive use of every industrial and commercial site. That pressure is not being properly applied by the NNDR system, but the country could do with it for its greater economic benefit.
  I should like to commend one part of the Government's NNDR system, as far as it goes. The Government would do well to develop it further in an effort to overcome some of the problems we have been discussing today. I refer to local authorities giving discretionary rate relief to certain vital businesses. I speak from some experience as a member of a local council who has often sat on panels deciding whether discretionary relief should be applied.
  The problem is that the current system is very restrictive. It is extremely difficult for failing businesses to get an allowance for discretionary relief. The local authorities almost invariably know best which businesses in their areas should be getting discretionary relief and which should not. The trouble is that, although they may know that certain businesses deserve and would get real value from the system, they may well be unable to grant relief to those particular businesses because of the way in which the legislation has been drawn up.
  The legislation does not appear particularly restrictive; the problem is that it has been left to case law to decide whether or not particular businesses fall within the remit. I give the example of a firm in my constituency which manufactured and then either hired or sold period costumes. The business was struggling to survive. The owners and directors of the business were drawing no salaries and, as a result, at the end of the year the company had made what was described in the accounts as a small profit, only because in effect there were no labour costs. As it was making a profit, it was deemed not to be suffering hardship.
  One of the difficulties about the discretionary system is that, in order to be eligible for a discretionary award, a company has to be suffering hardship. That is an example of the way in which the scheme is unnecessarily restrictive and I would welcome any move from the Government to
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  make it clear in the legislation that the scheme should be applied more freely and openly to a number of businesses which otherwise would go under as that business has.
  Under case law, it is difficult for a business to obtain discretionary relief unless it is the only business of that kind in the area concerned. Another case in my constituency involved a copy shop which was providing valuable business services to a number of businesses in Newbury, but which was suffering difficult times because there are other copy shops in the area and competition was severe. As it was not the only copy shop in the area, it was unlikely to be eligible for relief. That seems absurd. The Government, who claim to be in favour of competition between businesses, surely should not be using discretionary relief in such a way that only one or two competing businesses may survive.
  There is a clear case for making discretionary relief less restrictive so that it would be possible to retain both businesses in the town. They are both valuable small businesses in the town centre. It would be of great help for the scheme to apply to such businesses.
  In summary, the Bill offers some valuable help to small businesses and others. It is a pity that the help offered is so small, particularly because of the circumstances of some businesses. Their rates may come down next year, but it may be too late to help them survive.
  It is a pity that the Labour party has not recognised the importance of making sure that at least some help is given to business. To be fair to Labour Members, they have worked hard recently to make friends in business and I welcome that. There has been antagonism between Labour and the business sector for too long and I am glad that they are trying to do something about it. However, it is a pity that their attitude to the Bill does not necessarily fall in with that policy.
  The Government could take further measures. They have the chance to provide further transitional relief, to consider site value rating and to make discretionary relief less restrictive. The Government are trying to help businesses. They could and should have done much more and I hope that they will consider that seriously.
  6.15 pm
  Mr. Robert Ainsworth: Anyone looking in on this place at the moment would be surprised at how we have been conducting business tonight and for quite some time. We are discussing the national non-domestic rates. It is an opportunity for hon. Members on both sides of the House to discuss business, the problems that businesses face and the burden caused by the rates in particular, yet we have not heard a single speech from the Conservative party, which pretends to be the party that represents business.
  What is going on here tonight will surprise people, but when they see the manner and the time in which the legislation is being pushed through, they will be even more surprised. I get nothing but stares of disbelief when I explain to my constituents how we consider business in this place, the holidays we get and the working time in Parliament throughout the last Session and at the start of this Session, yet Bills were guillotined before Christmas.
  We are discussing an important Bill, and the money resolution was pushed through last night without adequate discussion and before the main debate on the principle. It is thus quite clear that the Government have no intention of

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  listening to any of the points raised by hon. Members about the legislation, as the financial arrangements for it have already been pushed through. It certainly leaves a lot to be desired. People talk in jargon about the democratic deficit, which has grown to such an extent that, if we are not careful, Britain shall have no credit because of the way in which the Government are running the country.
  As my hon. Friend the Member for Blackburn (Mr. Straw) said earlier, it was not just the hon. Member for Rutland and Melton (Mr. Duncan) who was reluctant to come to the House today: most Conservative Members seem reluctant to debate such an important issue. People outside will not understand that. It will do no credit to the democratic process and the way in which the Government are running the country.
  The way in which the Government propose to push the Bill through also leaves much to be desired for those who will be affected by it. We would have expected the Bill to provide opportunities for people to make representations and to be consulted about legislation that will be of some financial importance to themselves. That is the normal process of parliamentary scrutiny.
  I am sure that businesses have made representations to the Government about the national non-domestic rate. I am sure that the CBI and the small business organisations have made representations to the Government. They have certainly made representations to the Opposition parties and to individual Opposition Members.
  Organisations should be given time within the parliamentary process openly to make adequate representations to Parliament, not simply to make rushed representations to individual Members while the Government rush the Bill through before anyone understands it in detail. That is disgraceful. It is causing upset in this place and has resulted in scorn being poured on the way in which we conduct our business. It should be condemned in the strongest terms.
  I speak as an ex-chairman of finance in Coventry city council, so I am fully aware of the problems that councils will face in collecting the national non-domestic rate on behalf of the Government. However, there is no need for the time scale that is imposed by the Bill.
  Coventry city council's treasurer's department always took pride in doing its business efficiently and correctly. Its officers took a pride in their work which went beyond political pride. In particular, they took pride in being the first, or almost the first, to send out the bills. Certainly for them, there is no need for this legislation to be passed before the end of February. They will not have completed the decision-making process for the council tax, so there is no need for them to discuss the collection of business rates before the end of February.
  Yet, despite the fact that Parliament has just enjoyed an extended holiday, this legislation is being forced through in our first week back as though we faced a major national disaster to which Parliament must respond. One would have thought that the Russians had invaded the Ukraine and were moving westward. There is no need for it, and it is a disgraceful way in which to conduct business.
  The Opposition's main concern is the pledge by the Chancellor of the Exchequer that further help to business
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  should not be at the expense of the domestic council tax payer. We need to know whether that pledge and the Minister's assurances tonight are worth anything at all.
  As hon. Members have said, it is all very well for the Minister to come to the Dispatch Box and give an assurance that he sees the national non-domestic rate as a hypothecated tax, the product of which will go back into the rating pool and not be interfered with. But such an assurance is not worth a light, particularly given recent comments by other Ministers.
  People in this place and elsewhere have said that pledges given before elections mean nothing and are of no value. They have been dismissed in the most cavalier of fashions. Reference has been made to things said on rainy nights, and so on. The assurance given from the Dispatch Box tonight is worth nothing. In a couple of years, a different Minister may be in post, so the assurance tonight is valueless.
  If the Government want to curtail debate on the Bil, get the business through the House and earn some credit, they need only accept that that guarantee should be built into the legislation, by changing the word "may" back to "shall".
  When we see a single word changed in that way, and given the Government's record, we are entitled to ask why. The Minister has said that effectively it does not mean anything, and that the Government intend to guarantee that all the money raised from the national non-domestic rate will go into the pool. If that is the case, why was the Bill drafted in this way? People are entitled to be highly suspicious about that, and to ask that it be reversed and that the guarantee be built into the legislation. A commitment from the Dispatch Box is not worth anything.
  I disagreed with only one intervention by my hon. Friends during the speech of the hon. Member for Newbury (Mr. Rendel): that was when my hon. Friend the Member for Leicester, East (Mr. Vaz) said that he did not understand why the hon. Gentleman was saying what he was. At the end of those interventions, I understood only too well what the hon. Gentleman was doing. Like me, he is a relatively new Member, but he was doing what his hon. Friends on the Liberal Bench often do, and that is saying two different things. He attacked the Government for not giving business the necessary protection, while saying that the Labour party's amendment was good but that he could not support it because it was not good enough. He then went on to say that the Labour party was effectively leaving business open to higher bills, which he and everyone else knows is not the case.
  We are seeing the classic ploy of the Liberal party. Liberal Members say two different things which are reported in two different parts of Hansard, so that they can tell the natural Labour supporter that they backed the Labour party in the House on the national non-domestic rate, and at the same time tell the natural Conservative voter that the Labour party cannot be trusted because of what it tried to do over this Bill.
  I am sure that, over a period, the hon. Member for Newbury will become much better at that sort of thing and will be able to disguise it much more effectively. He will learn from his hon. Friends, and I am sure that we shall see many similar performances from him, getting better by the day. But let us make no mistake: he was using the old Liberal trick of saying one thing in one place and a different thing in another, so that he always has an appropriate quote to suit his purpose. We need have no doubts about what was going on there.
  Mr. Rendel: Will the hon. Gentleman accept that everything I said today concerned the Opposition's amendment and the Government's policies, and was not personal abuse?
  Mr. Ainsworth: I am sorry if the hon. Gentleman feels offended. I was congratulating rather than abusing him. I am sure that he was doing his best to toe his party line and to behave as other members of his party have behaved over a period. I would not have thought that that was an insult, but if the hon. Gentleman feels that I have insulted or slighted him, I assure him that that was not my intention. Whether I was insulting his party is another matter, which we would need to discuss outside the Chamber, where we could talk more freely.
  Much has been said tonight about the connection between rates and jobs, and the need to protect businesses from excessive rates. My experience of regular discussions in Coventry suggests that the introduction of the national non-domestic rating system was most damaging, in that it broke the tradition of consultation between local authorities and business rate payers. Although such consultation survives in Coventry as elsewhere, it is not of the quality that previously obtained. That is true of both sides.
  It is difficult to motivate business men and their representatives to spend time consulting, under a statutory system, on the level of spending that a local authority is about to set when it will not make a blind bit of difference to the bills that businesses will pay. As a consequence, although we enter into consultations in Coventry with many good people, others are totally out of touch with current legislation, and seem to think that the local authority still sets the district rate. The national system has effectively destroyed the incentive for the business community to consult properly with local government over the way that it conducts its affairs.
  Equally, it is difficult for a councillor to persuade colleagues to spend time discussing with members of the business community who are not themselves liable to pay the business rate why the ruling group has decided to set local taxes at a particular level. Many councillors face a restriction on the amount of time that they are allowed off work, and say, "Why should I spend my valuable time consulting the business community over the level of a tax that is set nationally when I could be participating in determining council policy and decisions?"
  Furthermore, nothing has replaced that traditional consultation. Most businesses could write a letter to the relevant Minister, although whether they would receive a reply is something else—but there is no effective opportunity for effective consultation at a national level.
  Mr. Pike: Does my hon. Friend agree that, when the rate was set locally, business representatives could meet council officers and councillors to discuss the services that they would receive? That direct link meant that they could often persuade the council to respond positively on improvements to car parks, bus services and so on.
  Mr. Ainsworth: My hon. Friend is right. In Coventry, as elsewhere, local chambers of commerce made a massive effort annually to ensure that they properly consulted their own members and made valuable representations to the council. They engaged with the council in a positive dialogue each year. Great efforts have been made to continue that process, but the dislocation of decision
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  making mitigates against that dialogue. It has become far more difficult to motivate both sides to continue that debate—the quality of which, as a result of the break in the link, has deteriorated.
  Government Members have repeatedly said that a prime reason for businesses relocating is the level of local tax, but that is not my experience. It may be a factor for businesses, but Coventry undertook substantial research into the reasons why companies relocate—and I am sure that other local authorities throughout the country in areas of mass unemployment have done the same.
  In Coventry, it was found that the business rate level was a relatively minor element in the decision-making process. Companies were more concerned with finding a location that offered good access to their market; a good infrastructure, in terms of the road and rail network; and a decent environment for staff at all levels. That impacts on directors who want to live in the leafy hinterland of Warwickshire. It was important to company chairmen and directors that they could enjoy a high standard of living in Stratford-upon-Avon, while being able to drive into Coventry relatively quickly.
  Companies also wanted a good environment for their employees, and they sought high-quality recruits. They therefore looked for high spending by the local authority on a good standard of education in the local work force, on whom relocating companies could draw. They did not consider only local tax levels—their decisions had a much more sophisticated basis.
  On the principle of the NNDR, it has been said that the proportion of taxes raised locally has fallen drastically. The main reason is the transfer of the business rate to national level. The percentage accounted for by local taxes was once 57 per cent., but it is now 18 per cent. Any sort of decent accountability by local government cannot be achieved while local government raises such a small proportion of the money that it spends.
  Under any acceptable system, we cannot increase the level of taxation raised at local level unless we increase the tax base. The Government have recognised that fact, and have run away from their own decisions on accountability: when it got too hot, they introduced the poll tax system.
  One of the principles of that system was to increase accountability. However, before long, they were ensuring that VAT rose to an astronomical level to keep poll tax bills down, because they could not handle the heat from their own supporters and opposition of every description. Therefore, they effectively destroyed accountability at a local level by taking away the ability to raise a high proportion of tax. Decisions on the level of council services are now effectively taken at a national level.
  Mr. Rendel: Does the hon. Gentleman accept that one way in which local accountability could be quickly increased would be by a system of local income tax, so that local income taxes could be quickly raised, while national taxes could be quickly reduced? That would enable a larger proportion of taxation to be raised locally and would provide just the accountability that he seeks.
  Mr. Ainsworth: As the hon. Gentleman may have expected, I have discussed the issue of local taxation with many people over a long period and, as somebody who has always earned a living on a pay-as-you-earn system and has paid income tax at the proper rate on the full amount of income, I have usually found that the debate has reached

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  the conclusion that the income tax payer is the only person who pays all the taxes due from him. There are so many fiddles and ways around the taxation system for other people that it is unbelievable.
  One of the emotional arguments against the rates was that it was the only tax that the rich ever had to pay in full, and that was why they were always so scathing about it. It is not wise to propose that we empty the basket of taxation available and load it on to the income tax payer, and that we should have not a property-based tax but an entire system of income-based tax. That is a crazy policy, which I would not support. However, I know that the hon. Member for Newbury does support that idea, and that it is the policy of his party.
  Quality decisions on services are best taken at a local level. One cannot make good decisions at national level about all the matters that are currently dealt with by local government. More responsibility ought to be passed to local government to achieve that quality, rather than decisions being made at national level, which, in the case of Coventry, is 90 miles from where they will take effect.
  We ought to see a big increase in decision-making at local level, yet, by the introduction of a national non-domestic rate system, we have destroyed local accountability and the ability of local government to take decisions about the level of service it wants to provide and for which it is accountable to its electorate.
  The real problem with the national non-domestic rating system is that it deprives local government of the ability to raise taxes locally and pay for services. That ability should be returned in some way to a local level not only for domestic tax but for business tax also.
  6.44 pm
  Mr. Hugh Bayley: I make no apology for speaking in a wholly partisan fashion on behalf of the small businesses in my constituency, because in York the revaluation in 1990 hit harder than in any other district council in the country.
  The average revaluation was a 15·5 times increase—higher than anywhere else. The combination of the 1990 revaluation and the introduction of the uniform business rate was a lethal cocktail which has sent the tax for York businesses spiralling into the stratosphere. The average increase in business rates in York is the ninth highest of all 367 local authorities.
  What is so surprising is that York is alone at the top of the league of massive increases as a northern local authority. Above it are Windsor, Winchester, Kensington and Chelsea, Westminster and Wandsworth. From the top 100 local authorities that faced rises, only another four were in the north of England. Three of those four were in north Yorkshire: Selby, Scarborough and Harrogate. The fourth was South Lakeland.
  Understandably, the increase provoked a wave of protest from businesses in my constituency. More than one third of all the businesses in York appealed against the revaluation and, four years later, all those appeals have still not been heard. It shows how inept and inappropriate the introduction of the UBR and the revaluation was in York. It shows what is wrong when a centralising Government claws the power into Whitehall to set local taxes and overrules generations of local decision making.
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  Local authorities know local businesses, they know who works for those businesses, they know who runs them and they know the local business conditions. They could set rates with the knowledge of what the local economy could and should take. Instead, we have a centralised, ever stronger state which lays down what businesses must pay, with no respect for their ability to do so or to the local variations in economic performance.
  York was especially hard hit by the introduction of the UBR and revaluation, but it was not alone. The political cost of sending the taxes of many small businesses through the roof persuaded the Government to introduce their transitional relief scheme. That was intended to be a bridge over a maximum of five years to enable those businesses that had been clobbered most by the revaluation and the UBR to go through the five easy stages to catch up to the point at which the revaluation had placed them.
  The trouble is that, in cities such as York, the five-year period is nowhere near long enough to enable businesses to catch up to where the district valuer, a central Government official, had said that the new revaluation would put businesses' taxes. Come 1995, when the next revaluation is due, many businesses in York will not have reached the level of taxes stipulated by the 1990 revaluation brought in by the Conservative Government.
  In York, there are 3,867 non-domestic hereditaments. In year four of the five-year period, 2,071 are still receiving transitional relief. The rise in their taxes was so great that they have not caught up to the level of tax that the Government said they should have been paying four years ago. Half the total number of businesses still depend on the safety net.
  In the first year of transitional relief, businesses in York received rebates worth £11 million; this year, the amount is still £6 million. If this were a taper—and if the target were to be met in five years—it would be down to the last £2 million, or even £1 million; but it is not. We are speaking of a botched tax; a blunt national instrument. Although it may have helped businesses in some parts of the country, it is basically a crude implement that did not respond to local needs.
  In 1989–90—the last year of the old local tax system —a butcher in the centre of York paid £722 in rates. In the current year, that butcher will pay £23,550 in uniform business rate, without the benefit of transitional relief—which is just under £7,000: £6,957. That is one year away from the end of the taper. At the end of next year, the transitional relief will run out, and the Bill gives no guarantee that it will continue. As the company is over the £10,000 threshold, next year it will pay an increase equivalent to the inflation rate, plus 10 per cent.; but it will still be a long way from the target set in 1990—by some £5,000, or even more. Unless the transitional relief rolls forward, it will face a £5,000 increase in its business tax.
  Someone who works in that butcher's shop could well be sacked: that is really the only flexible cost that small businesses retain. That is what the Bill will do—not just in one butcher's shop, but in dozens of small businesses in York. In 1989–90, an ironmonger's business paid £3,868 under the local rating system—the amount set by York city council, a Labour authority. Its current UBR bill is £59,100, and this year it will receive transitional relief of £18,700. At the end of the year, however, that relief will be swept away, because the Bill makes it discretionary whether the Government roll on transitional relief.

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  The Minister said that some businesses might receive a reduction following the new revaluation. They may, of course, but at present the revaluation hangs over the heads of small businesses like the sword of Damocles. They do not know whether the Government will kick them or help them; they do not know whether to invest, or to make staff redundant in preparation for yet another tax hike. They have already incurred tax increases well above the rate of inflation each year: as a result of being on transitional relief, their UBR increases have been the highest in terms of percentage.
  That uncertainty will inevitably slow the pace of recovery. It will keep the recession going in York. At the last count, 70 shops were empty in York city centre. They are not all empty because of high business rates; rents have risen, and the recession has played its part. However, we are talking about what is now a national business tax. Rateable values are set by a national civil servant, the district valuer; the poundage is set by the Government in Whitehall. To increase that tax far above the rate of inflation will inevitably increase pressure on vulnerable businesses.
  I hope that the Minister is right, and that some rateable values will fall in the 1995 revaluation. If that happens, it will show that some businesses have been grossly overtaxed in the past five years. If taxes are lowered, that is the only interpretation that can be applied. At the time of the last revaluation, people in York—certainly members of the Labour party—said, "You do not understand the local market and the local economy, and you are grossly overtaxing businesses, especially small businesses in York."
  I suspect that, in most cases, the south-east of England will gain most from the new rateable value. Like York, the south-east had a large increase in the last revaluation. Unlike York, however—thankfully in some ways, from York's point of view—the south-east has been hit especially hard by the recession, and market values have therefore slumped more there than in the north. York has thus lost both ways: it received a southern-scale increase at the last revaluation, but is unlikely to be given a southern-scale decrease in the 1995 revaluation.
  One of the reasons for that is the fact that business rate valuations depend on the assessed rental value of properties. Nearly every commercial lease is now based on upward-only rent reviews, which have penalised small businesses in my constituency to a huge extent during the recession.
  Mr. William O'Brien: That is mirrored in my constituency—and, I imagine, in constituencies throughout the country. It is disappointing that not one Tory Back Bencher is present: there are two civil servants for every Tory in the House. That demonstrates the general attitude of Conservatives to this important debate.
  Mr. Bayley: That is an interesting point. One of our reasons for giving the hon. Member for Newbury (Mr. Rendel) such a hard time is the fact that—apart from the Minister who opened the debate—he is the only non-Labour Member who has spoken so far. Obviously, we must attack the hon. Gentleman; we have no one else to attack.
  Now that my hon. Friend the Member for Normanton (Mr. O'Brien) has set me off, I must tell the hon. Gentleman that Labour has no antipathy to business.
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  Unlike the hon. Gentleman, I speak not as a former district councillor, but as someone who has set up and built up a small business. I see no contradiction between doing that and being a socialist. The business was fully trade unionised, and was highly successful; it generated employment, and large rent rises were a potential problem for it.
  As for the issue of upward-only rent reviews, if the Government wanted to reduce the burden on small businesses, they would legislate against clauses in commercial leases that provide only for such reviews, as they are being urged to do by many small businesses in the current Department of the Environment review. If they believed in market forces, they would do that.
  Businesses are being forced to incur rent rises because their commercial leases include upward-only review clauses, while competing against new businesses with new leases at market rents involving considerably smaller costs. That prevents fair competition. People in the private sector want competition, but they want fair competition.
  Many businesses in York are on a cliff edge. More than half are still receiving transitional relief. If that relief does not roll forward next year, they will face a problem. The Government must give a rock-solid commitment to rolling it forward; otherwise, they will simply roll forward the recession.
  I welcome the Minister's commitment in his opening speech. I am sorry that he is not in his seat now, because I intend to chase him on that political commitment month after month and year after year to ensure that it is implemented for the benefit of small businesses in my and other constituencies. I intend to start now.
  I should like the hon. Gentleman to firm up the commitment and say that, in future, the transitional relief that he said would be rolled forward will limit increases next year and in future years to no more than the limit that the Government are proposing in this legislation for the current year.
  I want a commitment that large businesses in out-of-London constituencies such as mine—businesses with a rateable value of £10,000 or more—will pay no more than 10 per cent. above the rate of inflation each year as their contribution to the catching-up process; that smaller businesses—under the £10,000 threshold—will pay no more than 7·5 per cent.; and that mixed hereditaments which are part residential and part business will pay no increase greater than the rate of inflation. Will the Minister guarantee those figures?
  Mr. Mike Hall: My hon. Friend may have noticed that the Chancellor of the Exchequer is in the Chamber. Perhaps he will intervene and guarantee that the money will be made available.
  Mr. Bayley: I am more than happy to give way to the Chancellor if he wants to give that support to small businesses and economic recovery. However, like other Conservative Members, he seems a little tongue-tied today.
  The Government say that transitional relief is needed this year because the recession is not yet over. The transitional relief scheme is structured so that the money goes to all businesses facing high increases in their business taxes, regardless of whether they can afford to pay. It means that some businesses, such as the large multiple chain stores with city centre shops, are laughing. They are getting a tax break when they do not need it,

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  because they are making huge profits. At the same time, small local firms are going to the wall because they are not getting the relief from tax that they need to keep themselves in business and to keep employees in jobs.
  Is that a wise or just way to spend £100 million of public money? When the Government are saying that they have to cut many of their programmes, including welfare, education and health because of the pressure on their budget, would it not make more sense to target the money that is available for transitional relief on providing help to companies that need it and not to contribute to the profits of companies that do not need it?
  Would it not make more sense to put greater resources into supporting discretionary relief? It has the advantage of being agreed by the local authority so it is local and flexible. It is agreed by people who know the businesses concerned and have time to investigate the trading position of those businesses. It is clearly needed.
  When it was introduced in 1990, only £23,000 was spent nationally on discretionary relief. By 1993, that had risen to £835,000. However, that is still less than 1 per cent. of what the Government are spending on their broad-brush approach to transitional relief.
  On this point, I agree with the hon. Member for Newbury. He raised an important point. Transitional relief goes, in part, to small businesses such as those in my constituency that desperately need it because they are being clobbered by unfair tax rises, but it also goes to larger businesses which do not need the relief and to which it does not make the difference between trading and not trading or between keeping employees and casting them into unemployment.
  If the Government modified the discretionary relief scheme so that they paid 100 per cent. of the discretionary relief instead of just the 75 per cent. that they pay now, that would provide an incentive to local authorities to look carefully at businesses and to award the relief where it was needed. At the moment, the 25 per cent. contribution has to be taken from hard-pressed council tax payers, and there is pressure on local authorities not to award it.
  The Government may say that, if they paid all the money, there would be an incentive to local authorities to hand out the money willy-nilly. I do not think that that would be the case, because there is a tight statutory limitation on how discretionary relief may be used, but it underlines the fact that the uniform business rate is no longer a local business tax set by local authorities, contributing to local authority coffers and spent by local authorities on services for the local community. It is a national business tax, because the money comes to national Government.
  If it was a local tax, there would be an incentive for local authorities not to give relief except in the most extreme circumstances, because it would mean that the spending power of their budget would be cut. That is not the case when it is a national tax. If the Government want to target the resources that they say it is so hard to find this year on the businesses that need it most, they should do more to improve the discretionary relief scheme.
  I am asking simply for a firm commitment that the areas of the country that have been hardest hit by business rate rises will be protected by transitional relief on terms no less favourable than the Government are proposing this year in
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  this Bill. I want a commitment that that will roll forward in future years. Also, I want a commitment that whatever money is available will be targeted on businesses in greatest hardship where jobs are at greatest risk.
  7.6 pm
  Mr. Jim Cunningham: At the risk of being accused of attacking the hon. Member for Newbury (Mr. Rendel), which is not my intention, we must put him right on one or two issues. The Labour party has supported businesses since 1945 and probably earlier. I am sure that the hon. Member for Newbury will accept that from time to time it is right and proper that if a political party feels that it is necessary, it can and should criticise business and business performance. In my view, it seemed a strange logic to be criticising the Government at the same time as criticising the Labour party for tabling an amendment. I am sure that the hon. Member for Newbury knows what he meant when he did that and I would not want to try to read his mind.
  Some of the Government's problems stem from the fact that their manifesto for the 1979 election said that by hook or by crook they would do something about the rating system in this country. By hook or by crook, they have got themselves on a hook. They have not yet come up with a formula that is acceptable to either the business community or ratepayers in general. That is the Government's dilemma.
  I am worried about where the Government go from here. In two or three years the evidence will be mounting that the Government's efforts in controlling the business rate have created problems. One of the problems will be caused because they are creating an artificial platform for the business rate. Therefore, in two or three years business men will receive a hefty bill because the Government will be looking for ways of withdrawing transitional relief.
  A charade has been imposed on local authorities year after year. I have had 20 years experience in local government. It is one thing to be a Minister for two or three years and have various theories about local government, but it is another to have 20 odd years experience of dealing with domestic ratepayers and the business community. In my experience in Coventry, local government representatives sat down with members of the business community to discuss the problem and, where possible, we adjusted our budgets to assist them. The adjustments took many forms, such as allowing the council to provide grants which it is probably not able to do under the present system. Year after year, business men go through the charade of explaining their problems to local councillors and asking for their assistance, but the councillors are powerless to do anything because the power rests with central Government.
  As has been proved by the events of the past eight days, we now have government by regulation, not by debate or scrutiny in Parliament; government conducted on the whim of a Minister who may decide to invoke regulations or create new ones. That is one of the great dilemmas facing the country, not only in terms of local government but in terms of the way the country is run. The way in which the Government are rushing the Bill through the House is symptomatic of that dilemma. No one can scrutinise the legislation. In November most local authorities will have begun consulting the Government to ascertain the rate support level. In about March they will be

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  fixing their budgets, but meanwhile they are going through their annual policy review process. The Government are defying all logic in rushing the Bill through the House without proper scrutiny.
  We now have government by regulation, but let us consider another charade. Local councillors may believe that they are making representations to Ministers, but do the Government give anything or take any notice? No, they do not, because they resent local democracy, a subject which forms part of tonight's debate.
  A contradiction highlighted by the debate is the fact that large companies such as British Gas and the electricity utilities are treated in exactly the same way as the small business community; there is no distinction between big and small in terms of Government assistance. That is because Government policies are ill thought out and ill conceived. In a couple of years, the Government will no doubt find themselves once again having to review how local government is financed.
  I have outlined some of the dilemmas facing the Government and the House, but the problems started way back when the Tory party fought the 1979 general election on the basis that it would do something about local government finance. It ignored the warnings and the pitfalls that were pointed out in the Layfield commission's report. The Government seldom mention that report.
  As I said in an intervention, the Government said that rate levies deterred businesses from setting up in various communities. I am sure that the Government have their own statistics, but their views do not stand up because, according to any survey, rates represented only 2 per cent. of business men's total costs. The Government have never been able to refute that. Coventry city council has lost well over 30 per cent. in terms of rate support relief over 12 years. That means that it has lost more than £200 million. As a consequence of such losses, authorities such as Coventry had to pass on the burden to the ratepayer. The Government did not like that and called the authorities profligate. Yet the Government believed that they themselves could introduce the poll tax and squander £18 billion in the process. They have never been held to account for that, but if any local authority squandered vast amounts of public money its councillors would be disqualified or at the very least subject to investigation.
  For all those reasons, I shall support the amendment.
  7.14 pm
  Dr. Roger Berry: I have been sitting here wondering whether Conservative Members have gone on strike and withdrawn their labour. Are they trying to prevent this debate by the simple device of not participating in it? I suppose that the alternative is that the Prime Minister has set a competition to find who can best define "back to basics" on one side of A4 paper. Conservative Members probably do not realise that whoever performs best in the test has to face the right hon. Member for Old Bexley and Sidcup (Sir E. Heath) on "Newsnight" at 10.30 pm tonight, which is something that no one would want to do on that particular issue.
  I am not surprised that Conservatives are embarrassed by the Bill. It is a cause of embarrassment for a number of reasons. Everyone recalls that when the Government introduced the uniform business rate and made it national with effect from April 1990, and when they set up a transitional relief scheme to deal with that and the rating
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  revaluation, they introduced a scheme that they said would operate for five years. It is significant that the Government had to abandon the original scheme because of the recession and their economic mismanagement and because they did not realise what was happening in the economy. The facts are clear.
  The original intention was that the maximum increases in non-domestic rates in real terms in 1991 would continue throughout until 1995. As we know, however, the Government eventually woke up to the fact that the economy was in recession and, as it turned out, the recession cost businesses billions of pounds—far more than anything provided in transitional relief. The 1992 Budget therefore abandoned the original scheme and froze real-terms rate bills for 1992–93. Nevertheless, there were said to be green shoots of economic recovery all over the place and we were told that that year was a one-off, that it was the one year when there would be a change in the original scheme for transitional relief.
  Unfortunately, the sightings of green shoots had been somewhat premature and the following year the Chancellor had to tell the House, "Oh dear, we have got a recession; we had better freeze the real-terms increase for 1993–94 as well." The Bill does not continue the freeze in non-domestic rates except in the case of small, mixed-use properties. The maximum increases are to be half of those originally intended. I am not sure whether that is good news, in that the Government are now apparently slightly more confident of economic recovery this year than last year, or whether it is bad news because they are less optimistic about recovery than they were three years ago.
  Relief is to be provided to keep down the costs to businesss, which we all support, but if one reflects on the history of non-domestic rating since 1990, one cannot say other than that the Government had to abandon the original scheme simply because of economic mismanagement and because they did not understand what was happening in the economy.
  The damaging effects of the recession on businesses have been so great that they have swamped the small amelioratioon brought about by successive Non-Domestic Rating Bills. Billions of pounds have been lost in sales during the recession. We have just come through the worst recession in any industrial country in 25 years and it is sheer fantasy to pretend that transitional relief schemes could compensate businessses for that. That may be one reason why this year, unlike others, we do not hear the usual chorus of Conservative Members jumping up and down and saying how wonderful their schemes of transitional relief and support for the business community are, and that theirs is the party of business. I suspect that they are not singing that song tonight because they realise that no one would fall for it. Not only have we experienced the worst recession in any industrial country in 25 years, but we have experienced the largest rates of business failures in the country since the war.
  It is horrifying to contemplate the statistics. Business failures in the 1970s peaked at about 10,000 per annum. En the 1980s, they exceeded 21,000 each year. In 1992, they climbed to 63,000. There has not been a scale of business failures of that magnitude in this country in the post-war period. No wonder Conservative Members are reluctant tonight to speak in the Chamber about how they "understand the business community". They have put the business community through the worst recession in living memory.

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  We are now told that 1993 was slightly better than the year before. It is true. Last year, there were only 56,000 business failures, but there was a scale of business failure that in the 1980s, and certainly in the 1970s, would have been regarded as inconceivable. Today, as Dun and Bradstreet and others confirm, every week 1,000 businesses go bust.
  In my region, the south-west, the latest recession has hammered our businesses even more severely than those in the rest of the country. That is probably why, for example, the availability of industrial floor space in Bristol is at its highest since the property slump of the mid-1970s. Even last year, 1993—not quite the unmitigated disaster of 1992—there were more than 7,000 business failures in the south-west. That figure is greater than the national figure for business failures throughout most of the 1970s. Last year, in the south-west region alone, businesses were going bust at a rate that was greater than that for the country as a whole thoughout most of the 1970s. That is the record of a Government who "understand business".
  The most recent figures are also very grim for my region. In 1993, the number of business failures decreased by a mere 4 per cent. It was the smallest reduction in business failures of any region in the country, equalled only by the north-east. In those circumstances, it seems to me that if anyone, whether it be the Minister on his own or the Minister with perhaps one or two colleagues in support, were to present the Bill as evidence of the Government's concern for, and understanding of, business, they would have about as much credibility as the aforementioned "back to basics". The Government have destroyed more businesses, more jobs and, as a result, more families than any Government since the 1930s.
  My third argument about the Bill was made by a number of my right hon. and hon. Friends, and will continue to be made. The Bill provides no guarantee that shortfalls in the business rate pool will be made up from central Government funds. Like my colleagues, I do not want to sound disrespectful and I certainly do not wish to imply that hon. Members are saying things in the Chamber that might subsequently necessarily turn out to be inaccurate. However, when a Minister comes to the Chamber and says, "Yes; it is not in the Bill, but do not worry; there is no question whatever of local government not being reimbursed for any shortfalls in the pool" and one has the assurance, "We have no plan, we have no intention of doing that", so soon after the imposition of VAT on fuel, when, of course, there was no plan and no intention to do that; so soon after an increase in national insurance contributions for employees, after a categorical assurance that that would not happen; and so soon after the biggest tax hike in British history after an election at which we were told that the Conservatives would reduce taxes, I think that the average person in the street might wonder how reliable some of those assurances are.
  If the Government will make up any shortfalls in the business rate pool, why on earth cannot that be set down in the Bill? It is a matter of record that, since the Minister sat down, not a single Conservative Member has stood up to answer that question.
  Given Government policy towards local councils during the past 13 or 14 years, it would be foolish for hon. Members simply to accept that bland assurance.
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  Obviously, we fear that those shortfalls that might occur will not be made up and that local councils will be confronted with the usual choice. As a result of Government decisions, they will either have to jack up the council tax or make further cuts in services.
  The largest local authority that provides services for my constituents in Kingswood is Avon county council. I know that the Government have plans to abolish it, as they have for local councils in one or two other regions, but, given the cuts in the budget of that local authority as a result of Government expenditure capping, those questions need to be answered. Last year, Avon was forced by the Government to cut £37 million of services–7 per cent. of its budget. The party that thinks that "back to basics" is about improving education and about improving good neighbourliness was the party which forced my local council—like many others—to cut our children's opportunities in schools and to reduce day care and home care for the elderly.
  This year, my council is likely to be confronted with another £18 million of cuts and Conservative councillors on Avon county council are saying that more education cuts should be implemented to meet that target.
  Mr. Deputy Speaker (Mr. Michael Morris): Order. I am most grateful to the hon. Gentleman. This is not a general political debate. He wove in one or two general points, which is perfectly fair, but I should be grateful if he would get back to the Bill.
  Dr. Berry: Given those difficult, not to say intolerable, circumstances in which my council and other councils find themselves, if there is any fear that the Government may not secure the business rate pool, resulting in a reduction in funds being redistributed via that mechanism to local councils, we should seek further assurances.
  My final argument is on a subject that was mentioned by some of my hon. Friends—the control of the business rate. The Bill tackles a situation in which the Government have removed from local councils the power to set the business rate. That power was removed as part of a general attack on local councils and has to be viewed in that context, as part of a financial attack on local councils—an attack which has also taken the form of direct attacks on services and the abolition of some tiers of local government.
  When we debate the financing of local councils, we must first be sure what we want local councils to do. If we want our local councils to be important participants in a pluralist democracy—as all parties used to believe—it is necessary not only to take the shackles off local councils, in the sense of allowing them to make democratic decisions properly and freely, but to ensure that they have the financial resources to finance their decisions.
  As long as such a large proportion of the revenue that accrues to local councils is directly under central Government control, as is non-domestic rates income, local government will decline further. It is important that, along with the debates about future funding and transitional arrangements, those who support local government make it perfectly clear that non-domestic rates should not be under central Government control but under the control of locally elected, democratic councils.
  For those reasons and many others, hon. Members should support the Labour amendment. I look forward to hearing contributions from Conservative Members and

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  shall sit here interested to see whether they deal with any of the points raised this evening or whether they have gone on strike.
  7.30 pm
  Mr. Jamie Cann: The national non-domestic rate was introduced in April 1990 along with its ugly sister, the poll tax. Both were essentially attempts by the Government to control the amount spent by local government. The national non-domestic rate has been with us ever since.
  It is a bad tax because it is cumbersome to administer. Previously, local authority treasurers would set a rate, the treasurer would notify businesses, businesses would pay the rate, and that was that. Nowadays, councils do not set the rate. Instead, it is set by the Government and councils are then notified. Councils must then send out demands, collect the rates, and transmit them to London where they are shared out among all the councils. That is a cumbersome procedure and must cost the Government a lot of money.
  That system of taxation seems unable to exist without transitional arrangements year after year. After all, the tax started in April 1990 and we are now in 1994 and still talking about transitional arrangements four years' hence. Can a tax be satisfactory or acceptable if it is never paid in full by everybody to whom it should be applied? The whole system seems to be fundamentally flawed.
  That leads to terrific confusion because people cannot understand why a business down the road pays less tax just because the owner was in that property before they were in theirs. It seems to be fundamentally unfair. If it were ever unravelled so that everybody paid the correct amount, the rate might be more acceptable, but we seem unable to reach that position. Revaluations every five years will clearly carry that on. The confusion then leads to appeals and, as other hon. Members have pointed out, the appeals system is clogged up. People wait for years to have their appeals heard.
  This is a thoroughly bad tax because it is difficult to administer, to make properly accountable and to justify as fair to everybody paying it. Nevertheless, that is not my main complaint about it. My main complaint is its impact on local democracy, particularly in towns and cities. Cities such as Birmingham, Manchester, Liverpool, Leeds and even my small town of Ipswich grew because of the virtuous circle. Local business people paid rates, which were used to develop the town's infrastructure. In Ipswich, a considerable amount of the town centre was built on land that had been drained by the local council. That was paid for out of rates, the town centre developed and the town grew. Ipswich prospered and the town's taxation base grew with it. If the town shrank, as Ipswich did during one period in the mid–1800s, so did the taxation base. Its buoyancy went with business.
  The Government have severed that connection. The money received by the council bears no relation to the prosperity or otherwise of local business. That cannot be right. The virtuous cycle no longer exists, which means that, all too often, the public sector limps along falteringly behind business. Business grows—Ipswich boomed at the end of the 1980s—but what happens to public infrastructure?
  As business grows, there is a need for more car parks, public transport schemes and pollution control. Many
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  facilities need to be provided by local authorities. However, now when business grows, the taxation base of local authorities remains the same, rigidly controlled in Whitehall. A town's success is now penalised because it brings problems that public authorities do not have the wherewithal to solve. That is pernicious and cannot be right.
  The Government should do what the Prime Minister said a few months ago that he would do—stop the warfare against local authorities, trust councils to get on with their business and free them so that they are locally accountable and flexible. I believe that an opportunity to do that will arise when unitary authorities are introduced, because then, for the first time for goodness knows how long, we shall have a system of local government in England that is the same from one end of the country to another. We shall have unitary authorities in the big metropolitan areas, London boroughs, rural areas and shire towns. The Government must free those unitary authorities, as they used to be free, to raise money from local business and the ordinary people of the town through council tax. That is what should be done for the future.
  The introduction of a national non-domestic rate was justified by some because it controlled local authorities' demands on local business. It was argued that local businesses in some parts of the country were being unfairly penalised by having to pay more rates than those in other parts of the country and that that was wrong and needed to be controlled. Although there was some truth in that argument, we are now in a different position from five or six years ago. Now, no council leader would want to be responsible for a business man saying that his business might have to relocate. It would freeze his heart and, if it got into our vigorous and vibrant local press, would ensure that he was not leader of the local council for much longer.
  Every council that I know of—I know of quite a few —works with local business as much as it can for the prosperity and future of the town. Many businesses cannot understand why their local authority does not receive the rates that they pay and why the rates cannot be spent on their town's infrastructure. Again, the virtuous cycle has been severed.
  The future of local government is at a crux. If we continue as we are, within two or three years we shall simply have a system of local administration in the same way as the Department of Social Security is locally administered. Is that really what we want and is it what the Government set out to achieve in 1979 when they said in their manifesto that they wanted to free local government from central Government interference? We have gone a long way from that statement—a long way in the wrong direction. I hope that today we can at least start to reverse that foolishness.
  7.39 pm
  Mr. Clive Betts: The Bill is important because it deals with local authorities and the financial resources that they spend on extremely important public services. They have seen those resources reduced in real terms throughout the 1980s as a result of a series of Government measures. They are under pressure to continue to provide a good standard of basic services for their constituents. They are also under pressure to avoid the

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  necessity of making people redundant at a time when many of their constituents are facing redundancy in the private sector.
  The Bill is important for small businesses, especially when one considers the number which have gone to the wall in recent years, as my hon. Friend the Member for Kingswood (Dr. Berry) amply illustrated. For many small businesses, the recession has not come to an end. I know that many in my constituency are still under pressure. Even though there is the faint prospect of increased demand, small businesses are still saddled with the financial burdens imposed in the past three years. Many of them were able to keep going only by building up debts and those debts must still be serviced. Because of that pressure, they are concerned about the impact of business rates on them. They are anxious about the impact of the Bill on the next financial year and in the future.
  The Bill is important to my constituents who still face the problem of an above-average unemployment rate. In the past few weeks they have seen job possibilities go as United Engineering Steels announced 500 redundancies and Sheffield Forgemasters, where many of my constituents work, announced a further 100 redundancies. My constituents are concerned about job prospects in the private and public sectors, especially since the public sector receives its funding from, among other sources, the business rate. They are also concerned about the services that they receive from their local authorities.
  The Bill is far too important to my local authority, local businesses and my constituents to be rushed through in a day without proper parliamentary consideration. Presumably the Government have decided to rush the Bill through its various stages in one day because they, too, believe in its importance. I can only assume that that is the case, given that they have decided to give the Bill priority and to rush it through far quicker than Opposition Members believe appropriate to the proper exercise of the democratic functions of the House.
  It is of great concern to me, my constituents and those of my hon. Friends who have participated in the debate that only one Conservative Member—the Minister—has so far managed to stay in the Chamber, despite the Bill's importance to the Government. I am aware that others have come and gone, but only one Conservative Back Bencher has contributed. I do not know how the Government square the importance that they obviously attach to the Bill, given that they are trying to rush it through in a single day, with the lack of importance that virtually all other Conservative Members seem to attach to it.
  It appears that most Conservative Members are not interested in business, local authorities, the services they provide and the proper democratic function of the House. No doubt they will turn up in due course to troop through the Lobby to ensure that debate is restricted and the Bill is forced through. They are so uninterested in the Bill's importance to their constituents that, with the exception of the Minister, none of them has bothered to come to listen to the debate.
  The Bill is important for the Government because it deals with revaluations, which have always been extremely important. The Government might like to have had the opportunity to think again about the revaluations that were made in Scotland in the 1980s. The panic that they caused
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  in the Scottish business community spread into the Conservative party. That led to a further panic measure, despite all the advice contained in the Layfield report and the Green Paper on local government finance that the Government produced in the early 1980s, when the Government took steps to avoid subsequent revaluations of domestic rates in Scotland with the introduction of the poll tax. It was then introduced in England as well. Revaluations obviously have a particular place in the history of local government taxation and local government finance and it is important that we subject them to proper detailed scrutiny and adequate consideration.
  I am not opposed to revaluations because as time goes by and circumstances change it is often necessary to consider how the burden of taxation should be spread between businesses. Revaluations do not determine the total size of the Government take to fund taxation, but they determine how much money different businesses should pay towards the agreed total. Revaluation take into account changed circumstances and it is important that it is thought out properly and subjected to detailed scrutiny.
  I do not agree with the hon. Member for Newbury (Mr. Rendel) that we should have some form of site valuation instead of the current system of business rates. A site might be valued in terms of what could be expected from future development, which could prove extremely damaging to small businesses. A site might offer attractive alternative purposes and that might lead to an increase in its valuation. That increase would penalise small businesses on that site, already providing jobs for the local community, which did not want to move. I would caution the Liberal Democrats on that policy because they have not thought out its likely impact.
  I accept that a gain from a particular site might be subject to taxation, and perhaps that will be the subject of a review of the tax law. Perhaps we should tax on planning gain so that the public sector can benefit. We should not, however, change the whole business rate system, as proposed by the hon. Member for Newbury, which could cause immense damage to small businesses.
  Periodic revaluations are made as business circumstances change in order to determine what each business should pay towards the total business rate. We must have some system, however, that reflects the fact that those changes can be substantial. That is why transitional relief was introduced, but the Bill is now attempting to change that. That relief is appropriate, however, because although revaluations are part and parcel of a proper exercise, they tend to have a lumpy effect. They may be conducted once in five years, 10 years or 20 years, and they try to reflect in one go all the changes that may have occurred in that given time. That being so, it is not fair to expect small businesses to absorb, at one go, the impact of changes over a period. So transitional relief is a reasonable response to the problem.
  Opposition Members have no objection to a system of transitional relief backing up a system of revaluation. We have no quarrel with the Government over that. The problem comes with deciding how the relief will be applied. The Government want to give themselves powers to determine by regulation the nature of the transitional relief. We know that Governments rather like handing out goodies to businesses, not taking them away. If Ministers can go round their constituencies pointing out how much extra taxation they have saved businesses, they can make

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  themselves popular. If, on the other hand, they promise to limit the amount of reduction in a business's taxation following revaluation, they will not be so popular.
  The temptation is always—the same applies to this Bill —for Ministers to seek to cap rises following revaluations but not to seek to limit reductions from which businesses will benefit following revaluations. Having set a certain poundage, if the Government limit revaluations upwards but do nothing about revaluations downwards, an asymmetry leading to a shortfall in the money to be raised from the business sector will result.
  Here we come to the crux of our objections to the Government's proposals. If the Government are tempted to cap rate increases that businesses may suffer as a result of revaluations but take no action to limit downward movements, and if a shortfall results so that the money canot be passed on to local authorities, who will make up the shortfall? We have argued strongly that the provision in the Bill stating that Ministers "may" make up the shortfall is inadequate. We say that the Government must make it up, and we have tabled a simple amendment to that end. If the Government truly intend not to make the constituents of local authorities pay for any shortfall that is created, all that they have to do is to accept our simple amendment.
  I could not follow the Minister's argument. He claimed that until he has brought in the transitional arrangements which the legislation empowers him to put in place he cannot agree to legislation stating that the Government will make up any shortfall that the arrangements may create. His argument that he cannot in this legislation prejudge what he will do later by regulation does not seem logical. We do not need to know exactly what the transitional arrangements will be before we are given a commitment in legislation that any shortfall resulting from those arrangements will be made up.
  The only reason I can detect for the Minister's claim that such a commitment cannot be given in legislation now is that he may know of circumstances in which it may not be possible or convenient for the Government to deliver that commitment. He may give the House his word in all honour that he has no plans not to make up the shortfall once the legislation is passed, but unfortunately my constituents have heard Ministers say such things in the past, and then later to say that circumstances had unfortunately changed so that the original commitments could not be honoured. As my hon. Friend the Member for Blackburn (Mr. Straw) clearly said, the Minister giving the House these commitments tonight may not be the Minister in charge in two years' time when they are not honoured.
  I must also tell the hon. Member for Newbury that he is displaying funny logic when he says that we should not vote against Second Reading on the ground that we should trust the Government to bring in another Bill later. My constituents cannot trust the Government because the Government have broken promises in the past, especially during the election, and they would sooner not trust the Government now. We should not allow the Government a Bill that relies on trust, or trust them to introduce another Bill in due course. The House may express the wish not to give the Bill a Second Reading because the Bill is inadequate; it does not give us a commitment that a Minister "shall" make good any future shortfall. It is therefore better to vote the Bill down and then argue the
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  case for a different Bill. Even better, we might persuade the Government to accept our amendment, and then we can all have done with the problem.
  I cannot return to my constituents and tell them that I voted for Second Reading because I trusted a future Conservative Secretary of State for the Environment. Such a remark would leave me in danger of deselection. No Labour Member can trust a Conservative Secretary of State for the Environment with local government finance after what the Minister's predecessors have done to local government finance and services since 1979. Any Labour Member who gave such trust would find it difficult to convince his supporters in the constituency that he had not temporarily taken leave of his senses.
  What would happen if the Bill were passed and the shortfall not automatically made good but left to the judgment of a future Minister? What would be the consequences for local authorities and their constituents? Local authorities would face a choice. They raise almost all their own revenue, with the small exception of charges which, outside the statutory housing account, are fairly limited. If the business rate does not provide the resources and the Government do not increase the revenue support grant, the council tax will have to be put up to compensate.
  Contrary to certain misunderstandings, the Government do not limit the amount of council tax: they cap relevant expenditure. If the business rate is reduced and the relevant expenditure is unchanged, the council tax can be increased to make up the difference. I do not agree with the hon. Member for Newbury, who said that the Government can fiddle the figures as they choose in order to make up any shortfall in the business rate—for instance, by altering accordingly the relevant amount of revenue support grant. We should be trying to render Government actions transparent and to limit their opportunities to switch between headings in a way that disadvantages local authorities.
  This will be a difficult choice for local authorities to make, but I know what Ministers will say. If any Labour-controlled authority faced a reduction in business rate that resulted in a shortfall and then sought to increase the council tax, the Secretary of State would castigate that authority. We can easily imagine which authorities will head the list, according to their political unpopularity at the time—
  Mr. Mike Hall: Wandsworth, Westminster—
  Mr. Betts: Those names do not exactly spring to mind, although given how Westminster has spent public money in the past it may well spring to mind tomorrow when the report is produced. If as a result of the measure local authorities had to increase the council tax, I know what the Minister's reaction would be.
  My hon. Friend the Member for Blackburn spoke about the understanding of business leaders of the current difficulties facing local government. Ministers do not address the enormous problem of gearing, which is central to local government accountability and democracy. When local government revenue is cut by 1 per cent., council tax has to rise by 5 per cent. That is because council tax accounts for less than 20 per cent. of local government revenue. The gearing factor is difficult to explain to constituents. Perhaps that is why Ministers do not bother to address it: they know that it is unpopular, but ultimately it is their responsibility.

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  The Government might decide to tamper with the capping rules, especially by way of the year on year expenditure increase, to try to constrain local government from passing on, by increases in council tax, any shortfall in the business rate. I would not put that past the Government. If local authorities decide, for reasons particular to their areas, that an increase in council tax to support a reduction in the business rate is inappropriate, they can reduce expenditure. But that would be a most appalling prospect for my authority.
  It is easy for Sheffield to calculate the impact this year, under a transitional arrangement, of a shortfall of £90 million which is not made up by the Secretary of State. As Sheffield is approximately one hundredth of the country, it would lose about £900,000. That is, not a large sum compared with the reduction that my authority currently faces. A clear, concise and well argued report from the city treasurer points to a potential shortfall next year of between £30 million and £40 million in the authority's resources to deliver the current standard of services.
  That report is not a political gesture to frighten constituents or to push the Government into a more favourable settlement of the rate support grant. It is not a case of doing away with luxuries in Sheffield, unless the Government think that nursery education, which is not statutory, is a luxury. Some Tory authorities such as the one in Gloucester have never provided that service even though they have had the rate support grant to pay for it. Such services, which the Government regard as luxuries, are threatened in my constituency.
  A shortfall of £900,000 would add to a serious and desperate situation. I shall spell out in simple terms what it would mean for people in Sheffield. It would pay for about 90 home helps. That is one of the most important services provided by local authorities because it allows the elderly to be independent and to stay in their homes. I understood that that was what care in the community was all about, and home helps are a vital part of the process.
  Such a shortfall could mean the closure of three or four primary schools, and that is on top of the review already undertaken by the council. The report of that was sent to the Secretary of State several months ago, but we are still waiting for an answer. The shortfall could mean the complete abolition of nursery education. It could close every library in my constituency and mean the end of refuse collection. Compared with the vast amount that the Government spend each year, £900,000 may not seem like much, but it can have a serious effect on a local authority. Of course, there will be no such effect if we trust the Secretary of State for the Environment, whoever he may be in two years if the Government are still around.
  My constituents have good reason to tell me not to trust Ministers but to argue for guarantees to be written into the legislation so that people will not suffer further increases in council tax or reductions in expenditure. That could happen if Ministers find that plans which they have no reason to implement now may be necessary in the future.
  All our debates on local government finance suffer from the process that went on during the 1980s when the Government's intention was to reduce local government expenditure. They thought they could do it initially by enforcing reductions in rate support grant and became
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  rather upset when Labour authorities raised the rates to compensate and were returned with larger majorities. The Government thought that Labour authorities would have to cut expenditure or impose massive rate increases and be voted out of office. But in the end the Government got the blame and decided to introduce a panoply of measures on capping and on restricting the creation of local authority companies.
  Ultimately, the Government decided to remove from local authorities the power to levy a business rate. When the business rate was centralised the Government realised that they would be criticised when revaluations raised it. They did not like that very much and sought to introduce transitional arrangements. However, the Government have a problem with transitional arrangements which work in only one direction because that creates a potential shortfall and, as my hon. Friend the Member for Blackburn said, the Treasury is not prepared to underwrite it permanently. That is the crux of the argument.
  The Government have passed one piece of legislation after another and have not thought about the consequences. Their sole objective is to control local authorities because they do not agree with the principle of local democracy and accountability and the freedom to deliver services. If those services are wrong and the rates are too high, councillors will be voted out of office. In most of our debates on local government there is a fundamental difference on that issue.
  On one issue after another the Government re-legislate and the matter has got out of hand as they try to keep local authorities under control. Authorities are innovative and often get around the legislation, forcing the Government to introduce further measures. It is sad that there cannot be a partnership between central and local government. The Government talk about that from time to time, but they are not prepared to put their ideas into practice. Some of my hon. Friends spoke about trusting Ministers, but the problem is that Ministers are not prepared to trust local government. Perhaps I should rephrase that by saying that they are not prepared to trust the people who elect councillors to make the right decisions.
  We have heard a good deal about the impact of the measure on business. The hon. Member for Newbury spoke patronisingly about Labour's new-found partnership with business. We have not had much experience of Liberal local authorities entering into partnership with business because there are not many such authorities around.
  However, while the Government have been talking about partnership with business at a national level and producing a massive list of 78 projects of partnership between the public and private sectors—but delivering very few of them—the reality is that in the 1980s those business ratepayers about whom we are talking in the Bill have been entering into partnerships with Labour-controlled local authorities up and down the country to regenerate their cities. That was going on in Sheffield. It was going on when the Government produced a policy document on inner city regeneration which did not mention local government or local authorities once.
  The late Lord Ridley was Secretary of State at the time and was responsible for that. As hon. Members have frequently said in the debate, it is important that we look at the issue of business rates in that wider context and get that issue back on the agenda. The measure is fundamentally wrong because it continues to presume that business rates should be levied and determined by central

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  Government, that they should not be levied at local level, that local government should not be entering into real partnerships with business in their community and that they should levy the business rate and have a meaningful dialogue and proper consultation with local businesses about that.
  When I was leader of Sheffied council, we had regular meetings with local businesses. They started before I became leader and my hon. Friend the Member for Sheffield, Heeley (Mr. Michie), who is present, can remember those meetings, when businesses used to come in and talk to the council about their finances and the level of business rate for the coming year. That is proper.
  I remember one business leader who, once the Government had introduced the changes to centralise business rates as part of their general programme of centralising things to do with local government, taking away local democracy, said, "What is the point in coming? One of the major reasons why we come to talk to you is about the services you provide, and we shall still come to talk about that, but also about the level of business rate."
  We used to have a good turnout. Occasionally we had arguments. We certainly had one or two rows in the early 1980s about the level of business rates. But when the arguments came down to what impact the rates had, we had to accept, as was said earlier, that business rates on the manufacturing industry in Sheffield—there were some large firms in the steel and engineering industry there at that time, most of which are either small or non-existent firms now because of the problems of recession during the 1980s—were about 2 per cent. They were relatively small. Therefore, even a significant change of 10 per cent. did not really make any difference. It certainly did not lead to the massive job losses, redundancies and closures that hit Sheffield in the early 1980s.
  Mr. Pike: Is it not a fact that the type of situation to which my hon. Friend is referring in Sheffield was the norm between most business communities and Labour authorities throughout the country, and was something that the Conservative party failed to recognise existed for the whole of the period back in the 1970s and 1980s, and that many businesses regret that the Conservative party introduced that legislation in 1988?
  Mr. Betts: That is absolutely right. Those discussions, working relationships and the development of partnerships were largely instigated and created by Labour local authorities. It took central Government a long time to recognise that. They preferred to perpetuate the myths of hostility between Labour local authorities and local business.
  The reality is that many local businesses, particularly manufacturing, have come to see that the Labour party cares and wants to respond to their problems, and that the Government no longer believe that manufacturing industry is important to the country. There is something crucial and important there and the penny is beginning to drop with many businesses that they have far more in common with our approach to the long-term development of our economy than with the short-termism and wrong thinking that the Government have gone in for with manufacturing industry.
  That accountability is important. Those meetings are important. As my hon. Friend the Member for Burnley (Mr. Pike) has said, they are important for local authorities.
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  It is important to recognise that there is something wrong with current legislation, which will be continued by the Bill. Local authorities can gain from development of housing through current legislation because if there are more houses, there will be more people living in them and therefore more potential to pay council tax.
  In south Yorkshire we have a policy throughout all local authorities to try to get small firms to grow. The south Yorkshire pension fund has been active in that regard and the pension authority there has a policy of allocating, over a period, 10 per cent. of its pension fund specifically for the purpose of trying to develop new firms and help small firms to grow. But if one has such a policy to attract new business to the area, to help small businesses to start up and grow into medium-sized firms, there is no return at all. The business rate goes off down to the centre.
  What a ridiculous system. Local authorities are collecting all that money around the country. Then it goes back to the Treasury. Then, if we are lucky, and if we can trust the Secretary of State for the Environment, it all comes back to local authorities. It is not in any way distributed according to the success of that local authority in attracting business to its area, but is paid out purely on the basis of per capita allocation which, again, encourages local authorities to take measures perhaps to build houses and bring more population into their areas.
  The issue of the centralisation of the business rate and the continuation of that centralisation, as contained in the Bill, reflects the attitude of the Government. They are not bothered about local authorities getting involved in the promotion and development of their local economy, in working with business to create a successful climate for business, in helping small businesses to grow. None of those things appears to be important to the Government —or, if they are, the measures that the Government have taken by centralising business rates have done nothing whatever to assist in that process.
  I do not understand the Government's arguments against returning business rates to where, in my view, they properly belong—with the local authority, which can then legislate properly in its area, take account of local circumstances and get some benefit from being successful in developing an industrial and economic policy for its area where businesses grow and are created. I should have thought that the Government would want to encourage local authorities to do that, but there is no sign in their policy and no sign in the Bill that their intent will be carried through in the way the proposed legislation is drawn up.
  In the early 1980s, when business rates appeared to pose such a problem for the Government, they eventually took steps to bring them in on a standard basis throughout the country. That was purely because of the arguments about the level of rates that local authorities were levying in response to the cuts in revenue support grant being made by central Government at that time.
  I made the point earlier that we were being elected with bigger majorities where Labour was in control because we were defending local services from the reductions that central Government brought in. In fact, domestic rates were rising faster than business rates at that time, for the simple reason that we had domestic rate relief—the protection that was given at that time for domestic rates. But in the early 1980s, the Government froze that relief at a standard amount and therefore any increase that was levied on rates, because domestic rates were at a slightly lower level than business rates, posed a bigger percentage

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  increase for domestic rates than business rates at that time. Therefore, it appeared that local authorities were simply transferring expenditure on to the business ratepayer. The Government knew that in most cases that ratepayer did not have a vote in local elections, so it was an easy way to raise money without democratic accountability. That was totally wrong, as business rates were linked to domestic rates and the percentage increases for all authorities because of domestic rate relief were higher in the domestic sector.
  If central Government wanted to link business rate increases to council tax increases to ensure that the people who vote in local elections were also tied directly into any increases in expenditure that local authorities went in for, there is no reason why that should not be the case once again. I do not necessarily argue it, but if the Government are concerned about that, there is no reason why it could not be done.
  As I have outlined at some length, it is important that the Government should think again about the essence of what they are proposing. It is clearly an important measure, although it might seem dry and technical. My hon. Friend the Member for Blackburn outlined some of the problems that any constituent might have in digesting, at first glance, some of the wording of the clauses and in understanding what they mean. Despite the convolutions, the Bill could have major consequences for all our constituents if the shortfall in any form of transitional relief were not made up. That would have an impact on our already hard-pressed local authorities, so that they would have to increase council tax further, or cut services further, with implications for jobs.
  That important issue should make all of us stop and think twice about the measure. All that we need to remove all those fears and worries is a simple commitment—from the Secretary of State, the Minister for Local Government and Planning or the Under-Secretary of State—to change one word. Instead of saying that the Secretary of State "may" make up the shortfall if he chooses, we should have the word "shall". If that were done, we should have no worries about cuts in local authority expenditure or increases in council taxes resulting from the Bill. We would be safe and secure in the knowledge that small businesses were protected by transitional relief, which would be proper and right, without the impact on local authorities that many of us are worried about. Many of us are not prepared to trust this or any other Tory Secretary of State to deliver on that in the future.
  8.21 pm
  Mr. George Stevenson: The important issue in the debate is trust. Members of Parliament are being asked whether the Government are to be trusted to do what they have said that they will do if there is a shortfall in the unified business rate pool. That issue is particularly important given the Government's record on local authority finance over the past 15 years.
  With the exception of the Minister's speech, all speeches tonight have come from Opposition Members. While listening to them, I tried to think of one word that would sum up that record, given that they are asking us to trust them. The only description that I could come up with was lousy. On any criteria, their handling of local authority finance, including the unified business rate, has been not
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  only abysmal but costly. If but a fraction of the resources that the Government have wasted in trying to prop up their discredited policies on local government finance had been available for investment in jobs and industry, unemploy-ment might be lower.
  The Government's policies on local government finance have also been about centralisation. The unified business rate was a centralising measure. The Government, deliberately and unjustifiably, set out to pillory local government, saying that it was untrustworthy and inefficient. The history of local government over decades proves that that was a fallacy, but the Government succeeded in shifting the blame for the problems that they had created on to local government. The Government had to bring in a mechanism that put their prejudices into reality and hence was born the unified business rate.
  The Minister of State, who has just come back into the Chamber, said that the Government wanted to build on the success of the unified business rate. I do not know where the Minister has been over the past few years. I know that some time ago he was in the European Parliament, because that was where we first met. The businesses in my constituency would not agree that the unified business rate has been a success. Their view is that it has been an unmitigated disaster. However, even I am prepared to concede a little glimmer of success to the Government in this abysmal saga. It is that they have made local businesses ask for the return of the old rating system. It has put local government in a good light because businesses realise that they were getting a good deal when authorities set and collected the business rate. It was only when the Government got their dirty fingers on the system that business rates rocketed.
  I am advised that the Minister of State is due to visit Stoke-on-Trent shortly to address the local chamber of commerce. We welcome that and we look forward to seeing him there. He will have the opportunity to explain why he is telling the House, the country and the local business community that they can trust the Government to use their discretion, if there is a shortfall in the pool, to make a contribution to meet it. I shall be interested to see what sort of reaction he gets. He would be well advised not to place too much faith in a positive reaction from the businesses in my constituency. I guess that that would apply no matter which part of the country he visited with that message.
  The record does not stack up. The Government have no justification for saying that they are trustworthy. Because of what has happened with the unified business rate, businesses in my constituency are openly saying to me and their councillors that they were duped. The Government said that they would give them a good deal and control their outgoings on the business rate, but the minute they got their hands on it, it rocketed upwards. Businesses were also told they should not trust local government because it was inefficient and would make a mess of it. Now, those businesses are asking for local authority control back, because they got a better deal, and knew to whom they should go.
  Businesses are also asking authorities for discretionary relief, but there is less and less of that available as a result of the cuts in standard spending assessments and the cuts imposed by the Government on local authorities. When they go to the town hall, the treasurers, councillors and Members of Parliament say, "What can we do? It has nothing to do with us; it is those people in Whitehall. Some

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  of you may have voted for them on the basis that, in terms of the uniform business rate, Whitehall knows best". In Whitehall they say, "We can decide what is best for you here. We may be 500 miles away; we may know nothing about your area; we may be completely ignorant about the problems of businesses in your area, but we know best". We are being asked to trust the Government on a record that simply does not allow any reasonable person to offer that trust.
  The Minister of State will have an opportunity to explain to businesses in my area how they have benefited from the uniform business rate. I cannot wish him luck; that would be against my political beliefs. I am sure that he is a skilful person, but I can advise him that he is in for a rough ride. When the Minister comes to Stoke he may well say to local businesses, "Most of the increases in the uniform business rate that you have suffered were not really our fault at all. It was all because of that damned revaluation. It had not been done since 1973 and those Labourites never did it either".
  We are told that 75 per cent. of the increase was due to revaluation. Let us accept that. Let us be generous to the Minister of State.
  Mr. Ken Purchase: Let us not do that.
  Mr. Stevenson: I am prepared to give way, but I notice that my hon. Friend is not pressing the point.
  Let us accept that 75 per cent. of the increase was due to revaluation. Any mathematician would say that, if 75 per cent. was due to revaluation, 25 per cent. must have been for some other reason. That other reason was the Government.
  I have read Conservative manifestos over recent years, and I cannot remember any manifesto statement that said to businesses, "Do not worry, when we introduce the uniform business rate we will increase your business rates by 25 per cent. as a direct result of our actions". The Minister of State will have an opportunity to explain that, to the businesses in Stoke-on-Trent.
  The Minister will also have an opportunity to explain something else. Why is it that, when we are debating a vital issue to every business in Britain, and, if I may be a bit parochial, certainly to the businesses in my constituency, we look across to the Government Benches and at times during this important debate there has not been a single Conservative Back Bencher in the Chamber. I am sure that the Minister of State will want to explain to the businesses in my constituency why there is no interest among Conservative Members in an issue that directly affects their future.
  Mr. Cryer: May I point out to my hon. Friend that, while he is speaking, there are no Conservative Back Benchers whatsoever in the Chamber? A Minister connected with the Lord Chancellor's Department has just left, having rested en route through the Chamber, leaving only the Whip on the Front Bench and the Minister of State. That is the minimum number with which the Government can carry on business. There is clearly a massive dearth of interest in this vital topic.
  Mr. Stevenson: I am grateful to my hon. Friend for that intervention. It underlines the point that I was making. The Government may want to camouflage the fact that there is obviously no interest on the Government Benches in this
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  important issue. I promise, and I am sure that it is a promise which all my hon. Friends will make, that we shall ensure that businesses in our areas are fully aware of the bankruptcy of interest in this important issue.
  Mr. Pike: Is it possible that there are no Government Back Benchers in the Chamber because the Government Whips have persuaded them not to come in because they know that, if they made any comment in the debate today, they would not be able to defend their position at a later date, so it is better for them not to make a comment that they cannot defend outside the House?
  Mr. Stevenson: My hon. Friend is absolutely right. That is particularly the case when we consider the comments made by my hon. Friend the Member for Blackburn about the hon. Member for Rutland and Melton (Mr. Duncan) earlier today. I could not agree with him more.
  If we accept that 75 per cent. of the increase was due to revaluation, the remainder must have been due to other factors such as the economic madness that led to the property boom of the mid and late 1980s which was directly attributable to Government policies.
  If the Government are foolish enough to think that, because they are basing the 1995–96 uniform business rate proposals on 1 April 1993 valuations, that will not create problems, they are in for a great shock.
  It is inevitable that, in a system that tries to impose centrally, as this does, a uniform business rate, there will be massive swings throughout the country. The swing that occurred when it was first introduced was a result of the massive property boom, particularly in the south and the south-east. That led the Government directly to thinking, "Hang on a second. We cannot make the transitional arrangements self-financing. Too many of our voters will be affected by that, so we had better change it. We have to ensure that there are transitional arrangements. If there is any shortfall we will pick up the tab out of taxation because we do not want our traditional voters to be affected too badly".
  All the evidence suggests that the next regional shift will be from the south and south-east to the midlands and the north. I hope that, as a relatively new member of the House, I avoid the accusation of being cynical, but I will risk that this evening by making the following comment: is it a coincidence that, when the effect of the uniform business rate was going to be detrimental to the south and the south-east, the Government changed from self-financing transitional arrangements to topping up the pool if it was necessary?
  Now that the regional shift is in favour of the south and the south-east and detrimental to the north and the midlands, the Government seek to change the system to one of discretion. Is that coincidental or has it something to do with political calculations? I hope that even the present Government are not that cynical, but it is certainly a factor that we have to bear in mind when we consider the Government's record.
  My hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts) was absolutely right to point out the possibility that, with the changes that are taking place, there is bound to be some shortfall in the pool because of the reduction in property values. Now the Government are seeking to change the obligation to a discretion that will allow them the opportunity to creep away from accountability. Who

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  will they try to blame when council tax payers are faced with additional burdens because the transitional contribution to the pool is not there? They will obviously blame local authorities.
  I have another message for the Government. They have got away with blaming local authorities for 15 years, but they will not get away with it again. That record is played out. Businesses know who is to blame for the costs and problems that they face and it is not the local authorities.
  The massive regional swings in the uniform business rate are inevitable because it has no flexibility. It does not allow local areas, regions or local authorities to say what is best for their areas. It prevents them from saying, "We know what we are doing. We will put our proposals to our businesses and, if they do not like them, they will vote against us next time and tell us about it." A uniform business rate has no flexibility, so it is in the Government's interest to take this opportunity to look at the principles behind the uniform business rate which have so clearly failed.
  Mr. Cryer: My hon. Friend makes a good point. That lack of flexibility is reflected in the legislation that we are asked to examine tonight. The Minister is asking for authority to introduce further regulations which will be placed before the House but which the House will not be able to amend. If the local authorities were responsible, there could be a debate, a proposal made or an amendment considered and voted on. However, we have to take the whole lot or nothing at all. Therefore, as my hon. Friend says, this is an extremely centralised and inflexible imposition.
  Mr. Stevenson: My hon. Friend makes the point in his usual direct way perhaps better than I could ever hope to, for which I am grateful.
  Mr. William O'Brien: The Minister should have regard to the fact that the Government are now engaged in capping local authority expenditure and, if they apply a strict cap, as they suggest they will, and then expect local authorities to find the resources in 1994–95 to top up the pool, they are being grossly unfair.
  Mr. Stevenson: That is right. I am grateful to my hon. Friend for making that point. The Government cannot have it both ways. If they are determined to protect the council tax payers from any burden that may fall on them as a result of the Government's inability to top up the pool, or lack of commitment to doing so, they must make either a clear statement today that they "shall", not "may", do it and enshrine that in the legislation—in other words, maintain the obligation rather than changing it to a discretion—or ensure that local authorities are not penalised by the potential additional burden that will fall on council tax payers if the Government choose not to exercise the discretion that we are being asked to give them this evening based on the trust of the House and the country.
  Mr. Curry: I am grateful to the hon. Gentleman for allowing me to arrest him in the middle of such a theatrical moment. I wish to help him out in answering the question put by the hon. Member for Normanton (Mr. O'Brien), who was clearly overwhelmed by the hon. Gentleman's rhetoric. In 1994–95, the Bill provides for compensation in
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  the top-up. There is no question of that being dependent on any hypothetical powers. That is in the Bill. The hon. Gentleman does not understand the Bill, but, in the light of his speech, that is not surprising.
  Mr. Stevenson: I am grateful to the Minister for that extension of his opening remarks which were confusing to many of us and remain so after that intervention. However, I am encouraged because I recall an intervention on another matter by the Minister in a previous incarnation when he said that my speech was lengthy and boring. It is now theatrical, so I seem to be making progress. That is more than I can say for the Government.
  But, seriously, I know the Minister from contacts that I have had with him elsewhere. I have always found him to be an honourable man, so it pains me to have to question whether he is serious in his commitment to the Government's contribution to the pool when he is bringing forward legislation that changes, for the third time in three years, the basis of Government involvement.
  First, the measure was self-financing. Then, when the Government faced electoral disaster, as well the Minister knows—I can tell by the smile on his face; all I need now is for his glasses to steam up and I shall know I am there —they changed it. They had to have an obligation written into legislation in order to help the people in the south and south-east who faced disaster. But now, because the burden seems to be shifting to the midlands and the north, we have the third change.
  All that I ask from the Minister when he replies is to be clear on this issue, which is central to what we are talking about. If the Government have changed their colours three times in three years, is it any surprise that we question their sincerity now? If the Minister, as I think he said when he opened the debate, is fully committed to ensuring that the pool is topped up, and given his latest intervention, why in heaven's name does not he stand up and say, "Yes, I will accept at least that part of your amendment that puts back the obligation rather than making it a discretion"? Why, oh why?
  We appear to agree on this. Therefore, knowing the Minister to be the honourable man that he is, why on the one hand does he say that that is his intention while on the other hand he wants to change the legislation from an obligation to a discretion? Then, speaking on behalf of the Government, he says, "Trust us."
  Mr. William O'Brien: While the Minister is in a frame of mind to respond to interventions, will my hon. Friend press him once more to rise and say at the Dispatch Box that he will guarantee that in future years the Government will continue to top up the pool? Will he press the Minister to guarantee that that topping-up procedure. will be carried out in future years?
  Mr. Stevenson: I am grateful to my hon. Friend for that further intervention. It is a message that I and other hon. Members have tried to get across. If the Government are sincere in that commitment, why change the legislation?
  Mr. Pike: My hon. Friend puts his finger on the crucial issue. Clause 3(3)(a) clearly changes the position from 1996, by substituting the compulsory "shall" to "may". The Government have not explained the reason for that change—which is of considerable concern because if the Government had commitment and honesty, they could completely delete that provision from the Bill.
  Mr. Stevenson: I am grateful for my hon. Friend's further intervention. I hope that the message has got across clearly and that the Government will make that commitment this evening to the business community in my constituency, which—in common with others the length and breadth of the land—suffered so badly as a result of the madness of the Government's economic policies and the uniform business rate. The Government tried to blame local authorities and they got away with that to some extent—but they will not do so in future. We want clear answers from the Government.
  Another aspect of the uniform business rate which is central to Government philosophy is that it apparently makes sense to gather in money locally, using local authorities as a kind of unpaid tax collectors, and send it to Whitehall. The Whitehall mandarins will then get to grips with it on the basis that they know best, and will apply an obscure, convoluted formula before sending some of that money back. What a way to run a chip shop, as people would say in my constituency—and I have no criticism of chip shops.
  The chippies in my constituency would tell the Minister what they think about the uniform business rate. When the Minister visits Stoke, he can talk to the chap who owns my local chippie. That will give him a feel of what real people think of a convoluted Whitehall system that applies an obscure mechanism and says, "We are sending some of the money back. Aren't we good?" That mechanism takes away flexibility, local accountability and the ability of local authorities to identify the needs of their areas. The fundamental logic of that system is that this country needs more Whitehall centralisation and less local government.
  The uniform business rate is damaging and wasteful of resources, administration and the knowledge that people have of their own areas. Having been a Member of Parliament for what seems a long time but is in fact only 18 months or two years, I have listened to many Government speeches about choice and diversity. Why must choice and diversity be denied to local government? Why is it thought essential elsewhere, but that the only way to operate local services is to have them controlled directly from Whitehall? Where is the logic in that?
  Mr. Pike: Would my hon. Friend be concerned to know that there are more Conservative Back Benchers in the Strangers Gallery than there are in the Chamber listening to his speech?
  Madam Deputy Speaker (Dame Janet Fookes): Order. Perhaps the hon. Gentleman has forgotten that the rule is that right hon. and hon. Members do not refer to anyone in the Gallery.
  Mr. Cryer: Are we allowed to refer to Government Members who are in the Bars and absent from this debate?
  Mr. Stevenson: I am grateful for your ruling, Madam Deputy Speaker. I take it that you were not addressing me. Nevertheless, it is encouraging that Conservative Back Benchers are to be found somewhere in the precincts of Westminster.
  Why do the Government base their policies on choice and diversity, but when it comes to local government demand a form of centralisation—based on the premise that Whitehall knows best—that would not be out of place in some totalitarian states? The country, rightly, does not accept that.
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  The comments made earlier by the hon. Member for Newbury (Mr. Rendel) were difficult to understand. On the one hand, he rightly criticised Government policies in respect of local government and the uniform business rate —but he said also that there is no point in supporting the amendment in the name of my right hon. and learned Friend because he distrusts the Government more than he thinks we distrust them. That does not make sense. If the hon. Gentleman supports the Government this evening and not the amendment in the name of my right hon. and learned Friend, he will be trusting the Government, Secretary of State and Minister to use their discretion in the way that they said.
  I said earlier that this is a matter of trust. If the hon. Member for Newbury is prepared to trust—and I make no apology for using that word again—the Government to do anything that they say, he will have to justify that to his electorate, and I am pleased that I will not have to help him. The hon. Gentleman's statement was difficult to understand in that regard. I found it difficult to understand in another sense, too. Having said that he did not trust the Government, but, nevertheless, would not support the Labour amendment, he rightly referred to important areas that the Government's proposals do not address, which we need time to address. He talked of transitional relief. That is not addressed in the Government's proposals and will not be. There is no time to do so, because, once more, the Government are abusing the procedures of the House by rushing through an important measure and denying any reasonable consideration of the important points to which the hon. Member for Newbury referred. I urge the hon. Gentleman to reconsider his views, not because of anything that I or my hon. Friends have said, but because of what he said. If he were to reconsider it in that light, he would come to a different conclusion.
  There is time for the Government to allow the House to consider such important issues, instead of trying to bulldoze the Bill through. After all, as my hon. Friend the Member for Blackburn said, the entire matter could be dealt with by the end of February. In my time in local government, I have witnessed occasions on which there has not been a settlement on the rate support grant until a week or so before we were due to set the rates. Sometimes, the settlement even came afterwards. So time, in that sense, is not as critical as it has been on other occasions.
  The Government are trying to rush through a system that will operate up to 1995–96. It is not a short-term issue, but one that will be with us for some time—not as long as some Conservative Members think because I am convinced that there will be a change of Government before then. I am sure that the businesses that will be affected by the UBR will find it difficult to understand and will not accept that decisions on costs to their businesses, which will have such a profound effect, are being rushed through by the Government in such a way. What have the Government got to hide? Why are they apparently scared of open debate? Is not that what this House is about? If we add together the facts that the Conservative Benches are still empty and that the Government are rushing the Bill through, one is bound to be suspicious of their intentions in wanting to curtail the debate. They know that they are sitting on a time bomb and they have not got any answers to the problems with which that time bomb will confront them.
  Mr. Cryer: Does my hon. Friend agree that by rushing the Second Reading and other stages through so rapidly the Government are effectively preventing the consideration of two important sources of opinion that are directly affected by the Bill: the number of small businesses which will be affected—the Government claim to support small businesses and inaccurately claim that they have increased their number—and the collectors of taxes, the local authorities, which I am sure would be only too anxious to make representations about the progress of the Bill if the ordinary channels were available? Will my hon. Friend comment on that vital issue?
  Mr. Stevenson: That is another important reason why the Government should, even at this late stage, reconsider their basic approach to such an important piece of legislation. My hon. Friend is absolutely right to raise that issue.
  The Government's policy, based on centralisation the like of which the country has not seen for generations, is wasteful, damaging and unaccountable and is being forced through by what I can describe only as an abuse of the rights of the House. If that is what right hon. and hon. Members want, they should vote against our amendment and support the Government. If hon. Members believe that it is too important an issue to be bulldozed through on a wave of prejudice as the Government are doing today and believe that the issues demand, not just deserve, reasonable debate, for goodness sake let them vote for the amendment in the names of my right hon. and hon. Friends.
  9.4 pm
  Mr. William O'Brien: My hon. Friend the Member for Stoke-on-Trent, South (Mr. Stevenson) graphically described the pitfalls that will result if the Bill is enacted in its present form. As he said, the problems currently besetting businesses of all kinds—large, medium and small—are a consequence of the procedures involved in the Government's introduction of the UBR in 1990. At that time, the revaluation was based on a valuation made in 1988, when the value of properties was at its peak. That led to rates that people simply could not afford. They could not understand why the Government had introduced such a system at such a time.
  Many businesses in my constituency, and throughout the Wakefield metropolitan district council area, appealed against their assessments, following legal advice. There were so many appeals that some have still to be heard. Many businesses are still reeling.
  This is about the 60th local government Bill to be considered since the Conservatives came to power in 1979. Each of those Bills has reduced the influence, authority and democracy involved in local government, and the accountability of local authorities to their electorates and the business fraternity. I share the concern expressed by my hon. Friend the Member for Stoke-on-Trent, South about what the chambers of commerce are saying.
  In the days before the UBR, there used to be dialogue between business organisations and local authorities about what services should be provided and what rates should be levied to provide those services, and there was general agreement between businesses and authorities. That was healthy, constructive and democratic. Under the present Government, all that has been taken away; the connection between businesses and local authorities has been reduced, because Conservative Members voted for the UBR. The
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  majority of them are now not interested in the UBR's future; Opposition Members have noted the failure of Conservative Back Benchers to speak in today's debate.
  I pointed out earlier that two civil servants were present for every Conservative Member. The Conservative Members who are absent tonight voted for the 60 local government Bills that have constituted no less than an attack on local government and an attempt to reduce its democracy. It is clear that the Conservative party has no interest in a debate that affects local businesses throughout the country.
  Mr. Cryer: Does my hon. Friend agree that when passing those 60 pieces of major primary legislation the indifference of Conservative Members was such that they allowed huge delegated powers to be passed to Ministers? For example, during 1992, 3,500 statutory instruments were issued by Ministers; many of them, although obviously not all, were concerned with local government. Far too many Conservative Back Benchers adopt a complacent attitude and are willing to hand over the control of local government virtually lock, stock and barrel to a handful of Ministers and their civil service advisers.
  Mr. O'Brien: It is right that my hon. Friend should draw attention to the fact that local government is now being administered by order through the Department of the Environment and the Secretary of State. Throughout the 60 pieces of legislation to which my hon. Friend referred there are references, particularly in connection with the unified business rate, to the fact that the Secretary of State "may" or "will be able" to issue an order. Every clause in those Bills gave additional powers to the Secretary of State for the Environment, reducing the authority of local councils to administer their services on behalf of local businesses and the community.
  During the speech of my hon. Friend the Member for Stoke-on-Trent, South the Minister intervened and said that in 1994–95 there would be protection for businesses from any increase that may occur. He gave an assurance that any increase during that period would not affect the capping of local authority expenditure. Is the Minister prepared to give us a guarantee that that will continue for as long as this legislation applies? The Minister was quick to reassure us about the 1994–95 period, but will he tell us what will happen after that? That is what our amendment is about.
  If the Minister believes that we are wrong—that is what he implied when he intervened on my hon. Friend the Member for Stoke-on-Trent, South—I am prepared to give way to him so that he can tell us how we have got it wrong. We are seeking a guarantee about what will happen. The Minister seems to be refusing my invitation to intervene. That suggests that he is not prepared to give us that assurance. Was he wrongly advising us when he said that there would be protection in the Bill for local authorities so that they would not have to top up the pool? He is not prepared to take up my challenge.
  Mr. Curry: As I have repeated twice already—I shall do so again for the hon. Gentleman—for the financial year that we are approaching the Bill makes provision for the deficit in the pool to be made up by a direct contribution from the Exchequer. For future years, the Bill would provide the Government with the power to make regulations which would mean that instead of having to

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  find compensation for any shortfall from within the system, which is what happens now, we would be able to make contributions directly from the Exchequer.
  I said earlier that we regard the business rates as hypothecated to local government finance, so if we implemented the regulations and if that action led to a shortfall compared to what would otherwise have gone in the pool, we should take measures to ensure that the shortfall was made up. I cannot be clearer than that. As the hon. Member for Clydesdale (Mr. Hood) has had his worry beads, or his prayer beads, out of his pocket three times, at least twice induced by the hon. Member for Stoke-on-Trent, South (Mr. Stevenson), I think it is about time that the Opposition got that point under their belt.
  Mr. O'Brien: The Minister is again shadow boxing. He is saying that if the Secretary of State does not want to make up the shortfall within the confines of local government finance it can be made up by the Exchequer. I want the Minister to say that it will not fall to local taxpayers to meet the shortfall and that any future shortfall will be met by the Chancellor of the Exchequer.
  The Minister should stop trying to fumble his way around or fudge the issue as has happened so often in our debates on local government legislation. He is saying that the Secretary of State "may" make up the difference from local government funding or "may" make up the difference from the Exchequer. That is not an answer to the question. When the Minister returns to his seat, will he give us a straight yes or no? Will he tell us that the funding will come from the Exchequer and that local taxpayers will at no time be called on to make up the funding? Will the Minister respond to that particular point?
  Mr. Cryer: The wide-ranging powers to which the Minister referred include the ability to produce regulations that may make different provisions for different areas. In addition, the Secretary of State has to deal with the issue of the aggregate income of the revenue only as far as is "reasonably practicable". The powers are very wide ranging and the mere fact that the Minister says that the Secretary of State has regulation-making powers does not impose on him a tightly restrictive duty but gives him great discretion.
  My hon. Friend the Member for Normanton (Mr. O'Brien) will recall that the wide powers to which the Minister refers as though they placed on him a narrow obligation are not subject to amendment by the House.
  Mr. O'Brien: Again, my hon. Friend's contribution explains some of our fears that we shall lose the opportunity to raise with the Minister any anomalies or concerns about the unified business rate expressed to us by our constituents; all the power will rest with the Secretary of State. That is not what the House is about—the House should debate the issues that concern our constituents. I am asking for an assurance that at no time will any expense incurred in topping up the pool be borne by local council taxpayers, and that is the assurance sought in our amendment.
  I said earlier that many authorities are now considering their budgets. In doing so, they are mindful of the fact that the Secretary of State for the Environment has warned them that if their expenditure exceeds a certain limit set by him, he will cap them. Many local authorities are considering the situation and they cannot afford to be left in doubt about what will happen in the succeeding year and
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  the year after that. That is what the legislation is about. We want assurances that local authorities will not only be allowed to set their budgets annually, but can look forward to a level of expenditure that will allow them to plan for their services.
  Mr. Stevenson: Does not my hon. Friend find it strange that, on the one hand, the Government will cap a local authority in an attempt to control its expenditure which, in part, may emanate from decisions of that local authority, but, on the other hand, the Government seek to impose further expenditure on a local authority, which would form part of that capping total, by not making their full contribution to the pool?
  Mr. O'Brien: That is the argument that we made earlier, when we tried to extract information and assurances from the Minister on the subject of the Government ensuring that any income required into the pool will be borne by the Chancellor of the Exchequer and not by the local council tax payers. We have not received that assurance tonight and, therefore, we must assume that it is the Government's intention to make the local council tax payers responsible for any shortfall in the pool for the distribution of the uniform business rate caused by the fact that the Government will not be levying a rate that will cover all the requirements to provide the services that local businesses—local shopkeepers, and so on—need to meet their business commitments.
  I must also ask the Minister what consultations about the legislation took place with the local authority associations and the small business assocations. If there has been consultation, perhaps the Minister will advise us of the views that were expressed by the small business associations and the local authority associations. Those are the people at the coal face, as I would term it, when we discuss businesses and the uniform business rate.
  When we were discussing the legislation in 1988, and when other local government Bills were discussed, I suggested that there should be a type of rate rebate for local businesses and small businesses which fall on hard times, similar to the rebate for the ordinary domestic ratepayer. Labour Members could see no reason why small businesses should be allowed to fail because they could not pay their rates. That has happened under the Conservative Government for years, but if some assistance from local authorities had been allowed, many of the small businesses that fell on hard times could have survived. Local government was asking for the power to help small businesses.
  Because the Government created unemployment, people received redundancy pay. Baroness Thatcher, when she was Prime Minister, encouraged people to invest in small businesses. Those people invested all their savings or their redundancy pay in small business, only to be told later that, as a result of the recession, there would be no help for them. Many people lost their business and their home.
  Families were broken up because the Government did not help those small businesses to survive a difficult period. Labour local authorities wanted to help those businesses over the difficult period, but the legalisation enacted by Conservatives who are absent from the Chamber tonight prevented them.
  It should be placed on record that those who introduced legislation that crippled small businesses are not here to listen to, and participate in, a debate which we hoped

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  would help to salvage many small businesses in the future. It is sad to relate that that apathy exists among Conservative Members.
  In rural areas, the shortfall in help is even greater. The demise of small businesses in rural areas has been greater under this Government than under any other. Local post offices and stores have been driven out of rural areas because of the Government's policies, including the unified business rate. Any Conservative Member representing a rural constituency should have been here tonight to defend his community and help it to retain its businesses.
  The Labour party is pleading with the Government either to support the communities that they profess to defend or to withdraw completely and allow a Labour Government to take over and follow through the promises that we have made to secure and defend small businesses throughout the community, particularly in rural areas.
  The final clause in the Bill says that the measure applies only to England and Wales. As a Member with an interest in Northern Ireland, I know that the Bill will be imposed by order on businesses in Northern Ireland. We shall have to accept that the issue will not be debated and no amendments will be made. That is totally unfair and undemocratic, and does not help to sustain a good relationship between the regions of the United Kingdom. Tonight, we are discussing the unified business rate only for England and Wales. The Government have many issues to address with regard to statutory instruments on the provision of services in Northern Ireland. Everything in Northern Ireland is done by quangos and the Government are responsible for that.
  If the Minister has any semblance of support for local government, he should give us the assurances that we seek tonight. Will he assure us that the shortfall in the pool will not be made up by local council tax payers but will be borne by the Chancellor of the Exchequer? Failing that, we shall have no alternative but to vote for the amendment.
  9.28 pm
  Mr. Ken Purchase: My hon. Friend the Member for Burnley (Mr. Pike) suggested that the Conservative Benches may be empty because the Government do not want their supporters to open their mouths and put their feet in it. I think that that is a rather kind explanation.
  Mr. Bill Olner: He is a big softie.
  Mr. Purchase: That is true. I have a rather different explanation, because I believe that Ministers do not want their rather naive and innocent Back-Bench colleagues to see what a "fine mess they have gotten us into, Stanley."
  The origin of that fine mess is Mrs. Thatcher, as she then was, who stamped her feet in the mid-1970s and determined that her policy and that of her subsequent Government should be designed to do something about the rating system. Those who recall the arguments, the discussions and the frayed tempers will also recall the common saying, "We pay our taxes in sorrow and our rates in anger."
  At that time, our rates fell through the letter box on to the mat with a resounding thump. Mrs. Thatcher decided there and then that something had to be done to protect
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  those she felt she represented—the middle-class, property-owning democracy. It never occurred to her that that was a contradiction in terms, but we can let that pass.
  It is sensible to remind ourselves of the original system that was so hated by the Conservatives, who have tried three times to make sense of it according to their own plans. That rating system had the perfect properties of all sensible taxes. First, it was cheap to administer; historically, less than 1 per cent. of the total take from the old rating system went on the administration and collection of the rates. Secondly, it was easy to collect, because it was based on property that did not move about from place to place, so the rates could be levied with certainty and collected with ease.
  In my time in local government, the amounts written off under the rating system were extremely small. We used to talk about a few thousand pounds being written off about three years after a company had gone into liquidation or someone had absconded with the money. That represented a tiny proportion of the amount collected.
  For all the criticisms of that system, it was broadly progressive. It was based upon the size of the property or the premises occupied, and that was a good indicator of wealth and ability to pay. Once rebates were introduced, the system became even more sensible, and progressive into the bargain.
  The Governmen's failure to revalue the rates are borne out of disgraceful gerrymandering. They knew that the weight of that revaluation would undoubtedly fall on the Tory heartlands. They put if off year after year. In the early 1980s, Government decimated the industrial manufacturing base of the west midlands in particular. I do not mean that they reduced it to one tenth of its original size, but they certainly caused great damage.
  As a consequence, the rateble value in the west midlands and in my borough of Wolverhampton was extremely high in comparison with that set in other parts of the country. Had a revaluation been made at a proper time and in a proper way, the west midlands, the north-west, Yorkshire and the north would have benefited.
  As it was, those regions suffered from the changes brought about by Tory loony economic policy, which wiped out the value of properties and premises in those industrial heartlands. That revaluation would have moved the burden, as it properly should have been, to those regions in the south which were then still exceedingly prosperous. During that period, the west midlands moved from being the second wealthiest region in the United Kingdom to being the second poorest—second only to the poverty and deprivation of Northern Ireland.
  This sort of financial gerrymandering was not confined to revaluation. The formula for the distribution of revenue support was changed from what had been a relatively scientific process, based on historical costs and unavoidable growth, to a wholly subjective formula that was intended to favour the counties and the Tory voters. While trying to give the appearance of being fair, rational and scientific, the formula became so convoluted that no computer installation in this country could handle it, and the job was carried out in Houston, Texas—such was the mess that the Conservatives got the country into by trying to change the way in which the tax fell.
  It soon became obvious that this gerrymandering affected not only domestic ratepayers; in the inner cities it

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  pulled down companies, so there were fewer and fewer jobs, people became poorer and poorer, and it was more and more difficult for companies to pay the rates.
  We have often made the point that proper services are worth paying for. The rates used to form only a minor part of an industrialist's costs—certainly that was true under Labour Governments. No more than 2 or 3 per cent. of a company's raft of costs was dedicated to paying the rates. Of course, no industry wants to pay any additional costs that do not appear to work to its advantage immediately, but the services that companies used to receive in return, and the education that their workers received, made the costs seem well worth while.
  Even 2 per cent., however, when no profits are being made, can begin to seem an impossible burden, and when that rises to 4 or 5 per cent., it becomes absolutely impossible for any company to bear. So industry's screams for mercy had to be answered in some way, and we saw the start of the cynically dishonest process of blaming local government. We were told that local government was putting up the rates.
  The Government were not prepared straightforwardly to tell the people that their own gerrymandering of the revenue support grant formula had hit industry and commerce hard. Instead, they blamed local authorities, using the dreadful ploy to which we have now become accustomed. Nothing is ever the fault of this morally bankrupt Government—it is always someone else's fault.
  Mr. Derek Enright: Has my hon. Friend noticed that the scourge of local government, the hon. Member for Colne Valley (Mr. Riddick), has not been here throughout the debate, but will no doubt appear, like rain-sodden pulp, to file through the appropriate door?
  Mr. Purchase: I dare not disagree with my hon. Friend's elegant point, which no doubt will bear examination at a later date.
  It is perhaps interesting to consider whether we can actually trust the Government to be fair. We know that we cannot. The enterprise zones are an example. Sir Geoffrey Howe, now Lord Howe, had a splendid idea about enterprise zones which would not have to pay rates.
  If the Government had bothered to read a few lines by Ricardo, that long-ago economist, they would have learnt about the nature of rent. As one set of costs fall, landlords inevitably increase the rent to make up the difference. That is what happened in the enterprise zones. When the Government ended the rates that enterprise zones had to pay, the rest of us had to meet the increase in rent, and there was no advantage to anyone.
  How can we trust a Government who cynically use that system to prevent a proper input from the Treasury to make up the shortfall in the rate support grant? The Government are mealy-mouthed. Although my hon. Friend the Member for Wakefield (Mr. Hinchliffe) prods and pushes, how can we trust a Government whose record throughout the 1980s was to take from local government, which had to pay for initiatives out of whatever was left? We cannot trust them, and shall vote against Second Reading.
  9.41 pm
  Mr. Doug Henderson: In the six and a half years that I have been here, I cannot recall a major Second Reading debate in which not one Conservative, apart from the Minister, has been prepared to
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  support the Bill. Conservative Members usually prattle on about how companies are under great strain from the burden of business rates. Where are those Members now? They are either so embarrassed at their thinking being proved wrong, or they have so little confidence in their Government that they are not prepared to be here to support them. It is probably a combination of the two.
  This important Bill affects every business and the ability of every local authority to raise revenue and use it to provide the services that people want and need. We are extremely concerned about the procedure and the timetable adopted by the Government. They amount to no less than an assault on the democracy of the House. It is an outrage that the money resolution was taken yesterday before the principles of the Bill were discussed on Second Reading. That is the first time that that has happened since the poll tax debate in 1991.
  It is also outrageous that the Bill may go into Committee immediately after Second Reading without any organisation in the land having had time to reflect on what has been said by the Opposition and to make representations and promote amendments.
  Mr. Curry: This "outrage" was announced before the Christmas recess. Will the hon. Gentleman explain why Opposition Members were on a one-line Whip, and 59 of them turned up to vote last night?
  Mr. Henderson: The hon. Gentleman's intervention is quite irrelevant. The issue is that the procedures of the House to enable democratic debate to take place have been negated by the Government. That is the real issue. It is presumptuous to believe that the House will go in a certain direction before the debate takes place. That amounts to a contempt of the House, and that point has been reinforced by many of my hon. Friends.
  As my hon. Friend the Member for Blackburn (Mr. Straw) said, there is no argument from the Labour party on the general need to introduce a timetable to deal with business rates, because the previous procedure was costly and created instability among the business community. But there is no excuse for the Government to introduce their timetable on the Bill. They do not even have the support of local authorities.
  I have a letter from Birmingham city council that makes it quite clear that it does not need to have the figures until the middle of February to calculate the appropriate rates. I do not need to bring forward the representations that Birmingham city council has made, because the Department of the Environment has made those representations in a letter of 30 November 1993 to the chief executive of local authorities around the country.
  In it, the Department says that authorities will be required to calculate their provisional contribution in January on the assumption that the pre-Budget transitional limits will apply, and that it will not be possible to make calculations that anticipate the passage of the Bill in case it is delayed. The letter also says that regulations will be introduced once the Bill is enacted to enable authorities —this is the key phrase—to recalculate the amount of their contribution to take account of the changes.
  Government officials themselves are accepting that there is no need to rush into regulations and legislation early in January, because local authorities have to make provisional estimates and then re-do them once they know the transitional arrangements that have been made.

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  The argument that the Government used last night, which they were again using when the Minister of State opened the debate—that it is necessary to expedite the introduction of changes in the business rates—is totally without foundation. That is why there is such anger among Labour Members and among all those organisations which would want to make representations on these important matters.
  There are many things that I would want to say in relation to the Bill if I had more time, but we are pressed for time. I shall summarise the position of the Opposition. There are serious concerns not only about parliamentary democracy and the timetable but about economic circumstances. As my hon. Friend the Member for Kingswood (Dr. Berry) has said, the Government have been forced into introducing further transitional changes because the economy is not strong enough to take the impact of the revaluation.
  That point has been made by many business organisations, ranging from the CBI, the Institute of Directors and many of the chambers of commerce to the TUC. There is clearly agreement in the country that the business community is suffering from the economic recession; that there are virtually as many businesses going bankrupt this year as there were in those dreadful years 1992–93; that there are major regional variations in the way that the economic recession impacts, and consequently on the way that there is a need for different treatment on rates; and that there are also a number of different solutions proposed.
  We have serious concerns on the long-term movement in business rates. What will happen after 1992? Will the transitional relief continue? On what will it be based in 1995? We have serious concerns about the future structure. Will the Government introduce further transitional arrangements? If so, will they top up the rating pool so that local authorities will not suffer? If they do that, will they account for that in the calculation of their external financial limits?
  Those are crucial questions. I believe that people who are affected by the proposed legislation, in making a judgment on whether the provisions for this year are appropriate, will want to know what is in store for future years, because it is impossible to make a sensible calculation without having that information before us.
  We then have to ask whether the system is the right one in the first place. All the evidence that I have collected from a wide range of institutions, again including chambers of commerce, the Institute of Directors and, as my hon. Friend the Member for Blackburn (Mr. Straw) said, the ex-Tory leader of Westminster city council, shows that it is far better that those matters are determined at a local level. In that way, local businesses can have some influence on the rating provisions affecting them, and local authorities can be influenced by business organisations in their community.
  Apart from that, there is a basic democratic issue at stake. Where decision making can be devolved to a local level to make it more sensitive to the needs of local people, that should happen. There is no need for the excessive centralisation incorporated into the Bill and many of the Government's other approaches to local government matters.
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  The Opposition are not opposed to the purpose of the Bill. We recognise that there is a need for transitional relief. We are not even arguing that there should be different transitional arrangements. We are arguing that all right hon. and hon. Members, including Ministers, should be prepared to listen to the representations that people might want to make before making a decision on how appropriate the proposals are.
  This evening, the House can accept either the Bill or the reasoned amendment. The latter stands for giving local communities a chance, giving the business community a chance to make its views known, and giving democracy a chance both in the House and in the country.
  9.51 pm
  The Parliamentary Under-Secretary of State for the Environment (Mr. Tony Baldry): The debate has been characterised by rather a lot of polished perturbation and some unpolished perturbation. Although it has taken all day, only four points have been raised—objection in principle to the non-domestic rates, concern about the procedures for dealing with the Bill, a continuous argument about the difference between duties and powers and the question why we should have the scheme anyway. Perhaps I should briefly look at each of those four points.
  If hon. Members were ever concerned about why the business rates were introduced in the way that they were, it would be worth their while going back and reading some of the documents from the mid-1980s. I have refreshed my memory of what the Association of British Chambers of Commerce had to say in 1986, because it has been prayed in aid quite a lot this evening:
  "A large majority of … Chambers support the principle of a UBR … The majority of Chambers would prefer to see a genuine national rate—i.e. a business rate."
  We have heard a good deal about the relationship between business rates under the old system and jobs. This document, which I commend to the Opposition, who have clearly forgotten it, gives a litany of chambers of commerce making representations about how high increases in rates were destroying jobs in their areas.
  The hon. Member for Wolverhampton, North-East (Mr. Purchase), the last Opposition Back Bencher to speak, might be interested to know that, in 1986, the chief executive of the Wolverhampton chamber of commerce and industry said:
  "Discussions … in Wolverhampton clearly indicate that the high level of rates in our area is a major deterrent to companies purchasing industrial and commercial property. Indeed, it has been a significant factor in preventing local economic revival. It is, for example, our firm belief that the level of Rates was responsible for one firm (who formerly employed over 600 people) moving out of the area."
  If anyone wants to be reminded of why we introduced the non-domestic business rate, he has only to look at the evidence that was there in 1986.
  Mr. Robert Ainsworth: The Minister has quoted the views of the Wolverhampton chamber of commerce in 1986. Will he tell us what its views are now? Have they changed? I bet they have not.
  Mr. Baldry: I have no reason to believe that the views of either the Association of British Chambers of Commerce or the CBI have changed. Anybody who reads Hansard tomorrow will notice that at not one point have

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  the Opposition prayed in aid representations or concerns from any chamber of commerce or the CBI as to how the business rate—
  Mr. Jim Cunningham: Will the Minister give way?
  Mr. Baldry: No. I have considerable ground to cover.
  Then there was concern about the procedures for dealing with the Bill. I suspect that everyone on both sides of the House, you, Madam Speaker, and my auntie Flora in Aberdeen know that the concerns raised this evening are fairly synthetic. They owe far more to the fact that there has been a breakdown in the usual channels than to real concerns about the substance of the Bill. The smiles on the faces of Opposition Front-Bench Members are testament to that. They know that, in previous years, such Bills have been dealt with speedily.
  As the hon. Member for Newcastle upon Tyne, North (Mr. Henderson) acknowledged last night, last year and in previous years such matters have been dealt with almost on the basis of a sweetheart deal. This year, for the first time, we have had a long, protracted debate because the usual channels have broken down and Opposition Members want to make a fuss about it.
  Mr. Henderson: Will the Minister give way?
  Mr. Baldry: No.
  The truth is that billing authorities need to send out rate bills from late February. [Interruption.] I am not frit. Hon. Members have spoken at great length and they would complain if I did not respond to the points raised in the debate.
  The NDR Bill changes will reduce rate bills for some ratepayers. Authorities will need to reprogramme their software so that bills for ratepayers in transition reflect the changes. Obviously, some authorities will be reluctant to do that until after the Bill receives Royal Assent.
  The hon. Member for Newcastle upon Tyne, North banged on about provisional estimates. Provisional estimates are very different from the actual bills that local authorities will have to issue. Of course, local authorities need as much certainty as possible.
  Mr. Olner: On a point of order, Madam Speaker. Is it not a fact that there is no limit on the debate, so there is no reason for the Minister not to give way to hon. Members who want to make a proper intervention?
  Madam Speaker: It is up to the Minister whether or not he gives way. The Minister has the floor.
  Mr. Baldry: That was a spurious point of order, following a spurious debate.
  Clearly, a delay would cause confusion and uncertainty for businesses. The Bill needs to be passed speedily so that local authorities can deal effectively with the delays.
  Mr. Straw: Will the Minister give way?
  Mr. Baldry: No.
  The other point of substance which the Opposition sought to argue this evening—
  Mr. George Howarth: On a point of order, Madam Speaker. Will you confirm that there is no time limit on the debate?
  Madam Speaker: The House has first to pass the 10 o'clock motion.
  Mr. Baldry: The third concern was about powers and duties. There is an important distinction between the character of the provisions we are seeking for 1994–95 and those for future years. For 1994–95, a specific scheme of relief has been drawn up in detail, and to ensure its implementation in time we must spell out all the detail on the face of the Bill, and we have done that. For years beyond that, we do not know yet whether transitional relief arrangements will be required.
  My hon. Friend has made it clear on numerous occasions that, if local authorities' revenue needed to be made up and if there were a shortfall, it would be made up in a way that was not at the expense of council tax payers. I am not sure how many times, and in how many ways, we have to make that clear.
  Mr. Betts: Will the Minister give way?
  Mr. Baldry: No.
  Any reasonable hon. Member looking at Hansard tomorrow will recognise that the debate about hours and duties has been totally spurious. As the Opposition readily acknowledged, they are not opposed to the principle of the Bill; they have made it clear that they support the subsidy in the Bill; they are not opposed to the purposes of the Bill; and they know it to be a sensible Bill that will give much needed help to businesses. I commend it to the House, and suggest that, the sooner it is passed, the better it will be for every business in the land.
  Question put, That the amendment be made:—
  The House proceeded to a Division—
  Madam Speaker: Order. The Serjeant-at-Arms is to investigate a possible hold-up in the Aye Lobby.
  The House having divided: Ayes 253, Noes 327.

  Division No. 61]

  [9.59 pm

  AYES

  Abbott, Ms Diane

  Canavan, Dennis

  Adams, Mrs Irene

  Cann, Jamie

  Ainger, Nick

  Chisholm, Malcolm

  Ainsworth, Robert (Cov'try NE)

  Clapham, Michael

  Allen, Graham

  Clark, Dr David (South Shields)

  Anderson, Donald (Swansea E)

  Clarke, Eric (Midlothian)

  Anderson, Ms Janet (Ros'dale)

  Clarke, Tom (Monklands W)

  Armstrong, Hilary

  Clelland, David

  Ashton, Joe

  Clwyd, Mrs Ann

  Austin-Walker, John

  Coffey, Ann

  Banks, Tony (Newham NW)

  Cohen, Harry

  Barnes, Harry

  Connarty, Michael

  Barron, Kevin

  Cook, Robin (Livingston)

  Battle, John

  Corbett, Robin

  Bayley, Hugh

  Corbyn, Jeremy

  Beckett, Rt Hon Margaret

  Corston, Ms Jean

  Bell, Stuart

  Cousins, Jim

  Benn, Rt Hon Tony

  Cryer, Bob

  Bennett, Andrew F.

  Cummings, John

  Benton, Joe

  Cunliffe, Lawrence

  Bermingham, Gerald

  Cunningham, Jim (Covy SE)

  Berry, Dr. Roger

  Dafis, Cynog

  Betts, Clive

  Dalyell, Tam

  Blair, Tony

  Darling, Alistair

  Blunkett, David

  Davidson, Ian

  Boateng, Paul

  Davies, Bryan (Oldham C'tral)

  Boyes, Roland

  Davies, Rt Hon Denzil (Llanelli)

  Bradley, Keith

  Davies, Ron (Caerphilly)

  Bray, Dr Jeremy

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

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

  Denham, John

  Burden, Richard

  Dewar, Donald

  Byers, Stephen

  Dixon, Don

  Caborn, Richard

  Dobson, Frank

  Callaghan, Jim

  Donohoe, Brian H.

  Campbell, Mrs Anne (C'bridge)

  Dowd, Jim

  Campbell, Ronnie (Blyth V)

  Dunnachie, Jimmy

  265

  Dunwoody, Mrs Gwyneth

  McMaster, Gordon

  Eagle, Ms Angela

  McNamara, Kevin

  Eastham, Ken

  McWilliam, John

  Enright, Derek

  Madden, Max

  Etherington, Bill

  Mahon, Alice

  Evans, John (St Helens N)

  Mandelson, Peter

  Fatchett, Derek

  Marek, Dr John

  Faulds, Andrew

  Marshall, David (Shettleston)

  Field, Frank (Birkenhead)

  Marshall, Jim (Leicester, S)

  Fisher, Mark

  Martin, Michael J. (Springburn)

  Flynn, Paul

  Martlew, Eric

  Foster, Rt Hon Derek

  Maxton, John

  Fraser, John

  Meacher, Michael

  Fyfe, Maria

  Meale, Alan

  Galloway, George

  Michael, Alun

  Gapes, Mike

  Michie, Bill (Sheffield Heeley)

  Garrett, John

  Milburn, Alan

  George, Bruce

  Miller, Andrew

  Gerrard, Neil

  Mitchell, Austin (Gt Grimsby)

  Godman, Dr Norman A.

  Moonie, Dr Lewis

  Godsiff, Roger

  Morgan, Rhodri

  Golding, Mrs Llin

  Morley, Elliot

  Graham, Thomas

  Morris, Estelle (B'ham Yardley)

  Griffiths, Nigel (Edinburgh S)

  Morris, Rt Hon J. (Aberavon)

  Griffiths, Win (Bridgend)

  Mowlam, Marjorie

  Grocott, Bruce

  Mudie, George

  Gunnell, John

  Mullin, Chris

  Hain, Peter

  Murphy, Paul

  Hall, Mike

  Oakes, Rt Hon Gordon

  Hanson, David

  O'Brien, Michael (N W'kshire)

  Hardy, Peter

  O'Brien, William (Normanton)

  Harman, Ms Harriet

  O'Hara, Edward

  Hattersley, Rt Hon Roy

  Olner, William

  Henderson, Doug

  O'Neill, Martin

  Heppell, John

  Orme, Rt Hon Stanley

  Hill, Keith (Streatham)

  Parry, Robert

  Hinchliffe, David

  Patchett, Terry

  Hoey, Kate

  Pendry, Tom

  Hogg, Norman (Cumbemauld)

  Pickthall, Colin

  Home Robertson, John

  Pike, Peter L.

  Hood, Jimmy

  Pope, Greg

  Hoon, Geoffrey

  Powell, Ray (Ogmore)

  Howarth, George (Knowsley N)

  Prentice, Ms Bridget (Lew'm E)

  Howells, Dr. Kim (Pontypridd)

  Prentice, Gordon (Pendle)

  Hoyle, Doug

  Prescott, John

  Hughes, Kevin (Doncaster N)

  Primarolo, Dawn

  Hughes, Robert (Aberdeen N)

  Purchase, Ken

  Hughes, Roy (Newport E)

  Quin, Ms Joyce

  Hutton, John

  Radice, Giles

  Ingram, Adam

  Randall, Stuart

  Jackson, Glenda (H'stead)

  Raynsford, Nick

  Jackson, Helen (Shef'ld, H)

  Redmond, Martin

  Jamieson, David

  Reid, Dr John

  Janner, Greville

  Robertson, George (Hamilton)

  Jones, Barry (Alyn and D'side)

  Robinson, Geoffrey (Co'try NW)

  Jones, Ieuan Wyn (Ynys Môn)

  Roche, Mrs. Barbara

  Jones, Jon Owen (Cardiff C)

  Rogers, Allan

  Jones, Lynne (B'ham S O)

  Rooker, Jeff

  Jones, Martyn (Clwyd, SW)

  Rooney, Terry

  Jowell, Tessa

  Ross, Ernie (Dundee W)

  Kaufman, Rt Hon Gerald

  Rowlands, Ted

  Keen, Alan

  Ruddock, Joan

  Kennedy, Jane (Lpool Brdgn)

  Sedgemore, Brian

  Khabra, Piara S.

  Sheerman, Barry

  Kilfoyle, Peter

  Sheldon, Rt Hon Robert

  Leighton, Ron

  Shore, Rt Hon Peter

  Lestor, Joan (Eccles)

  Simpson, Alan

  Lewis, Terry

  Skinner, Dennis

  Litherland, Robert

  Smith, Andrew (Oxford E)

  Livingstone, Ken

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

  Lloyd, Tony (Stretford)

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

  Llwyd, Elfyn

  Smith, Llew (Blaenau Gwent)

  McAllion, John

  Snape, Peter

  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

  266

  Straw, Jack

  Williams, Alan W (Carmarthen)

  Taylor, Mrs Ann (Dewsbury)

  Wilson, Brian

  Thompson, Jack (Wansbeck)

  Winnick, David

  Tipping, Paddy

  Wise, Audrey

  Vaz, Keith

  Worthington, Tony

  Walker, Rt Hon Sir Harold

  Wray, Jimmy

  Walley, Joan

  Wright, Dr Tony

  Wardell, Gareth (Gower)

  Young, David (Bolton SE)

  Wareing, Robert N

  Watson, Mike

  Tellers for the Ayes:

  Wicks, Malcolm

  Mr. Dennis Turner and

  Wigley, Dafydd

  Mr. Eric Illsley.

  Williams, Rt Hon Alan (Sw'n W)

  NOES

  Ainsworth, Peter (East Surrey)

  Conway, Derek

  Aitken, Jonathan

  Coombs, Anthony (Wyre For'st)

  Alexander, Richard

  Coombs, Simon (Swindon)

  Alison, Rt Hon Michael (Selby)

  Cope, Rt Hon Sir John

  Allason, Rupert (Torbay)

  Couchman, James

  Alton, David

  Cran, James

  Amess, David

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

  Arbuthnot, James

  Curry, David (Skipton & Ripon)

  Arnold, Jacques (Gravesham)

  Davies, Quentin (Stamford)

  Arnold, Sir Thomas (Hazel Grv)

  Davis, David (Boothferry)

  Aspinwall, Jack

  Day, Stephen

  Atkins, Robert

  Deva, Nirj Joseph

  Atkinson, David (Bour'mouth E)

  Devlin, Tim

  Atkinson, Peter (Hexham)

  Dickens, Geoffrey

  Baker, Rt Hon K. (Mole Valley)

  Dicks, Terry

  Baker, Nicholas (Dorset North)

  Dorrell, Stephen

  Baldry, Tony

  Douglas-Hamilton, Lord James

  Banks, Matthew (Southport)

  Dover, Den

  Banks, Robert (Harrogate)

  Duncan, Alan

  Bates, Michael

  Duncan-Smith, Iain

  Batiste, Spencer

  Dunn, Bob

  Beith, Rt Hon A. J.

  Durant, Sir Anthony

  Bellingham, Henry

  Dykes, Hugh

  Bendall, Vivian

  Eggar, Tim

  Beresford, Sir Paul

  Elletson, Harold

  Biffen, Rt Hon John

  Evans, David (Welwyn Hatfield)

  Blackburn, Dr John G.

  Evans, Jonathan (Brecon)

  Body, Sir Richard

  Evans, Nigel (Ribble Valley)

  Bonsor, Sir Nicholas

  Evans, Roger (Monmouth)

  Booth, Hartley

  Evennett, David

  Boswell, Tim

  Faber, David

  Bottomley, Peter (Eltham)

  Fabricant, Michael

  Bottomley, Rt Hon Virginia

  Fenner, Dame Peggy

  Bowden, Andrew

  Field, Barry (Isle of Wight)

  Bowis, John

  Fishburn, Dudley

  Boyson, Rt Hon Sir Rhodes

  Forman, Nigel

  Brandreth, Gyles

  Forsyth, Michael (Stirling)

  Brazier, Julian

  Forth, Eric

  Bright, Graham

  Fowler, Rt Hon Sir Norman

  Brooke, Rt Hon Peter

  Fox, Dr Liam (Woodspring)

  Brown, M. (Brigg & Cl'thorpes)

  Fox, Sir Marcus (Shipley)

  Browning, Mrs. Angela

  Freeman, Rt Hon Roger

  Bruce, Ian (S Dorset)

  French, Douglas

  Bruce, Malcolm (Gordon)

  Fry, Sir Peter

  Budgen, Nicholas

  Gale, Roger

  Burns, Simon

  Gallie, Phil

  Burt, Alistair

  Gardiner, Sir George

  Butcher, John

  Garel-Jones, Rt Hon Tristan

  Butler, Peter

  Garnier, Edward

  Butterfill, John

  Gill, Christopher

  Campbell, Menzies (Fife NE)

  Gillan, Cheryl

  Carlisle, John (Luton North)

  Goodlad, Rt Hon Alastair

  Carlisle, Kenneth (Lincoln)

  Goodson-Wickes, Dr Charles

  Carrington, Matthew

  Gorman, Mrs Teresa

  Carttiss, Michael

  Gorst, John

  Cash, William

  Grant, Sir A. (Cambs SW)

  Channon, Rt Hon Paul

  Greenway, Harry (Ealing N)

  Chapman, Sydney

  Greenway, John (Ryedale)

  Churchill, Mr

  Griffiths, Peter (Portsmouth, N)

  Clappison, James

  Grylls, Sir Michael

  Clark, Dr Michael (Rochford)

  Gummer, Rt Hon John Selwyn

  Clifton-Brown, Geoffrey

  Hague, William

  Coe, Sebastian

  Hamilton, Rt Hon Sir Archie

  Colvin, Michael

  Hamilton, Neil (Tatton)

  Congdon, David

  Hampson, Dr Keith

  267

  Hanley, Jeremy

  Merchant, Piers

  Hannam, Sir John

  Milligan, Stephen

  Hargreaves, Andrew

  Mills, Iain

  Harris, David

  Mitchell, Andrew (Gedling)

  Haselhurst, Alan

  Mitchell, Sir David (Hants NW)

  Hawkins, Nick

  Moate, Sir Roger

  Hawksley, Warren

  Monro, Sir Hector

  Hayes, Jerry

  Montgomery, Sir Fergus

  Heald, Oliver

  Moss, Malcolm

  Hendry, Charles

  Needham, Richard

  Heseltine, Rt Hon Michael

  Nelson, Anthony

  Higgins, Rt Hon Sir Terence L.

  Neubert, Sir Michael

  Hill, James (Southampton Test)

  Newton, Rt Hon Tony

  Hogg, Rt Hon Douglas (G'tham)

  Nicholls, Patrick

  Horam, John

  Nicholson, David (Taunton)

  Hordern, Rt Hon Sir Peter

  Nicholson, Emma (Devon West)

  Howard, Rt Hon Michael

  Norris, Steve

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

  Onslow, Rt Hon Sir Cranley

  Howell, Rt Hon David (G'dford)

  Oppenheim, Phillip

  Howell, Sir Ralph (N Norfolk)

  Ottaway, Richard

  Hughes Robert G. (Harrow W)

  Page, Richard

  Hughes, Simon (Southwark)

  Paice, James

  Hunt, Rt Hon David (Wirral W)

  Patten, Rt Hon John

  Hunt, Sir John (Ravensbourne)

  Pattie, Rt Hon Sir Geoffrey

  Hunter, Andrew

  Pawsey, James

  Hurd, Rt Hon Douglas

  Peacock, Mrs Elizabeth

  Jack, Michael

  Porter, Barry (Wirral S)

  Jackson, Robert (Wantage)

  Porter, David (Waveney)

  Jenkin, Bernard

  Portillo, Rt Hon Michael

  Jessel, Toby

  Powell, William (Corby)

  Johnson Smith, Sir Geoffrey

  Rathbone, Tim

  Johnston, Sir Russell

  Redwood, Rt Hon John

  Jones, Gwilym (Cardiff N)

  Rendel, David

  Jones, Nigel (Cheltenham)

  Renton, Rt Hon Tim

  Jones, Robert B. (W Hertfdshr)

  Richards, Rod

  Jopling, Rt Hon Michael

  Riddick, Graham

  Kellett-Bowman, Dame Elaine

  Rifkind, Rt Hon. Malcolm

  Kennedy, Charles (Ross, C&S)

  Robathan, Andrew

  Key, Robert

  Roberts, Rt Hon Sir Wyn

  Kilfedder, Sir James

  Robertson, Raymond (Ab'd'n S)

  King, Rt Hon Tom

  Robinson, Mark (Somerton)

  Kirkhope, Timothy

  Roe, Mrs Marion (Broxbourne)

  Kirkwood, Archy

  Rowe, Andrew (Mid Kent)

  Knapman, Roger

  Rumbold, Rt Hon Dame Angela

  Knight, Mrs Angela (Ere wash)

  Ryder, Rt Hon Richard

  Knight, Greg (Derby N)

  Sackville, Tom

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

  Sainsbury, Rt Hon Tim

  Knox, Sir David

  Scott, Rt Hon Nicholas

  Kynoch, George (Kincardine)

  Shaw, David (Dover)

  Lait, Mrs Jacqui

  Shaw, Sir Giles (Pudsey)

  Lang, Rt Hon Ian

  Shephard, Rt Hon Gillian

  Lawrence, Sir Ivan

  Shepherd, Colin (Hereford)

  Legg, Barry

  Shepherd, Richard (Aldridge)

  Leigh, Edward

  Shersby, Michael

  Lennox-Boyd, Mark

  Sims, Roger

  Lester, Jim (Broxtowe)

  Skeet, Sir Trevor

  Lidington, David

  Smith, Sir Dudley (Warwick)

  Lilley, Rt Hon Peter

  Smith, Tim (Beaconsfield)

  Lloyd, Rt Hon Peter (Fareham)

  Soames, Nicholas

  Lord, Michael

  Speed, Sir Keith

  Luff, Peter

  Spencer, Sir Derek

  Lyell, Rt Hon Sir Nicholas

  Spicer, Sir James (W Dorset)

  Lynne, Ms Liz

  Spicer, Michael (S Worcs)

  MacGregor, Rt Hon John

  Spink, Dr Robert

  MacKay, Andrew

  Spring, Richard

  Maclean, David

  Sproat, Iain

  McLoughlin, Patrick

  Squire, Robin (Hornchurch)

  McNair-Wilson, Sir Patrick

  Stanley, Rt Hon Sir John

  Maddock, Mrs Diana

  Steel, Rt Hon Sir David

  Madel, Sir David

  Steen, Anthony

  Maitland, Lady Olga

  Stephen, Michael

  Malone, Gerald

  Stern, Michael

  Mans, Keith

  Stewart, Allan

  Marland, Paul

  Streeter, Gary

  Marlow, Tony

  Sumberg, David

  Marshall, John (Hendon S)

  Sweeney, Walter

  Martin, David (Portsmouth S)

  Sykes, John

  Mates, Michael

  Tapsell, Sir Peter

  Mawhinney, Rt Hon Dr Brian

  Taylor, Ian (Esher)

  Mayhew, Rt Hon Sir Patrick

  Taylor, John M. (Solihull)

  268

  Taylor, Matthew (Truro)

  Waterson, Nigel

  Thomason, Roy

  Watts, John

  Thompson, Sir Donald (C'er V)

  Wells, Bowen

  Thompson, Patrick (Norwich N)

  Whitney, Ray

  Thomton, Sir Malcolm

  Whittingdale, John

  Thurnham, Peter

  Widdecombe, Ann

  Townend, John (Bridlington)

  Wiggin, Sir Jerry

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

  Wilkinson, John

  Tracey, Richard

  Willetts, David

  Tredinnick, David

  Wilshire, David

  Trend, Michael

  Winterton, Mrs Ann (Congleton)

  Trotter, Neville

  Winterton, Nicholas (Macc'f'ld)

  Twinn, Dr Ian

  Wolfson, Mark

  Tyler, Paul

  Wood, Timothy

  Vaughan, Sir Gerard

  Yeo, Tim

  Viggers, Peter

  Young, Rt Hon Sir George

  Waldegrave, Rt Hon William

  Wallace, James

  Tellers for the Noes:

  Waller, Gary

  Mr. David Lightbown and

  Ward, John

  Mr. Irvine Patnick.

  Wardle, Charles (Bexhill)

  Question accordingly negatived.
  Question put, That the Bill be now read a Second time:—
  The House divided: Ayes 325, Noes 138.

  Division No. 62]

  [10.19 pm

  AYES

  Ainsworth, Peter (East Surrey)

  Campbell, Menzies (Fife NE)

  Aitken, Jonathan

  Carlisle, John (Luton North)

  Alexander, Richard

  Carlisle, Kenneth (Lincoln)

  Alison, Rt Hon Michael (Selby)

  Carrington, Matthew

  Allason, Rupert (Torbay)

  Carttiss, Michael

  Alton, David

  Cash, William

  Amess, David

  Channon, Rt Hon Paul

  Arbuthnot, James

  Chapman, Sydney

  Arnold, Jacques (Gravesham)

  Churchill, Mr

  Arnold, Sir Thomas (Hazel Grv)

  Clappison, James

  Aspinwall, Jack

  Clark, Dr Michael (Rockford)

  Atkins, Robert

  Clarke, Rt Hon Kenneth (Ruclif)

  Atkinson, David (Bour'mouth E)

  Clifton-Brown, Geoffrey

  Atkinson, Peter (Hexham)

  Coe, Sebastian

  Baker, Rt Hon K. (Mole Valley)

  Colvin, Michael

  Baker, Nicholas (Dorset North)

  Congdon, David

  Baldry, Tony

  Conway, Derek

  Banks, Matthew (Southport)

  Coombs, Anthony (Wyre For'st)

  Banks, Robert (Harrogate)

  Coombs, Simon (Swindon)

  Bates, Michael

  Cope, Rt Hon Sir John

  Batiste, Spencer

  Couchman, James

  Beith, Rt Hon A. J.

  Cran, James

  Bellingham, Henry

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

  Bendall, Vivian

  Curry, David (Skipton & Ripon)

  Beresford, Sir Paul

  Davies, Quentin (Stamford)

  Biffen, Rt Hon John

  Davis, David (Boothferry)

  Blackburn, Dr John G.

  Day, Stephen

  Body, Sir Richard

  Deva, Nirj Joseph

  Bonsor, Sir Nicholas

  Devlin, Tim

  Booth, Hartley

  Dickens, Geoffrey

  Boswell, Tim

  Dicks, Terry

  Bottomley, Peter (Eltham)

  Dorrell, Stephen

  Bottomley, Rt Hon Virginia

  Douglas-Hamilton, Lord James

  Bowden, Andrew

  Dover, Den

  Bowis, John

  Duncan, Alan

  Boyson, Rt Hon Sir Rhodes

  Duncan-Smith, Iain

  Brandreth, Gyles

  Dunn, Bob

  Brazier, Julian

  Durant, Sir Anthony

  Bright, Graham

  Eggar, Tim

  Brooke, Rt Hon Peter

  Elletson, Harold

  Brown, M. (Brigg & Cl'thorpes)

  Evans, David (Welwyn Hatfield)

  Browning, Mrs. Angela

  Evans, Jonathan (Brecon)

  Bruce, Ian (S Dorset)

  Evans, Nigel (Ribble Valley)

  Bruce, Malcolm (Gordon)

  Evans, Roger (Monmouth)

  Budgen, Nicholas

  Evennett, David

  Burns, Simon

  Faber, David

  Burt, Alistair

  Fabricant, Michael

  Butcher, John

  Fenner, Dame Peggy

  Butler, Peter

  Field, Barry (Isle of Wight)

  Butterfill, John

  Fishburn, Dudley

  269

  Forman, Nigel

  Lang, Rt Hon Ian

  Forsyth, Michael (Stirling)

  Lawrence, Sir Ivan

  Forth, Eric

  Legg, Barry

  Fowler, Rt Hon Sir Norman

  Leigh, Edward

  Fox, Dr Liam (Woodspring)

  Lennox-Boyd, Mark

  Fox, Sir Marcus (Shipley)

  Lester, Jim (Broxtowe)

  Freeman, Rt Hon Roger

  Lidington, David

  French, Douglas

  Lightbown, David

  Fry, Sir Peter

  Lilley, Rt Hon Peter

  Gale, Roger

  Lloyd, Rt Hon Peter (Fareham)

  Gallie, Phil

  Lord, Michael

  Gardiner, Sir George

  Luff, Peter

  Garel-Jones, Rt Hon Tristan

  Lyell, Rt Hon Sir Nicholas

  Garnier, Edward

  Lynne, Ms Liz

  Gill, Christopher

  MacGregor, Rt Hon John

  Gillan, Cheryl

  Maclean, David

  Goodlad, Rt Hon Alastair

  McLoughlin, Patrick

  Goodson-Wickes, Dr Charles

  McNair-Wilson, Sir Patrick

  Gorman, Mrs Teresa

  Maddock, Mrs Diana

  Gorst, John

  Madel, Sir David

  Grant, Sir A. (Cambs SW)

  Maitland, Lady Olga

  Greenway, Harry (Ealing N)

  Malone, Gerald

  Greenway, John (Ryedale)

  Mans, Keith

  Griffiths, Peter (Portsmouth, N)

  Marland, Paul

  Grylls, Sir Michael

  Marlow, Tony

  Gummer, Rt Hon John Selwyn

  Marshall, John (Hendon S)

  Hague, William

  Martin, David (Portsmouth S)

  Hamilton, Rt Hon Sir Archie

  Mates, Michael

  Hamilton, Neil (Tatton)

  Mawhinney, Rt Hon Dr Brian

  Hampson, Dr Keith

  Mayhew, Rt Hon Sir Patrick

  Hanley, Jeremy

  Merchant, Piers

  Hannam, Sir John

  Milligan, Stephen

  Hargreaves, Andrew

  Mills, Iain

  Harris, David

  Mitchell, Andrew (Gedling)

  Haselhurst, Alan

  Mitchell, Sir David (Hants NW)

  Hawkins, Nick

  Moate, Sir Roger

  Hawksley, Warren

  Monro, Sir Hector

  Hayes, Jerry

  Montgomery, Sir Fergus

  Heald, Oliver

  Moss, Malcolm

  Hendry, Charles

  Needham, Richard

  Heseltine, Rt Hon Michael

  Nelson, Anthony

  Higgins, Rt Hon Sir Terence L.

  Neubert, Sir Michael

  Hill, James (Southampton Test)

  Newton, Rt Hon Tony

  Hogg, Rt Hon Douglas (G'tham)

  Nicholson, David (Taunton)

  Horam, John

  Nicholson, Emma (Devon West)

  Hordern, Rt Hon Sir Peter

  Norris, Steve

  Howard, Rt Hon Michael

  Onslow, Rt Hon Sir Cranley

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

  Oppenheim, Phillip

  Howell, Rt Hon David (G'dford)

  Ottaway, Richard

  Howell, Sir Ralph (N Norfolk)

  Page, Richard

  Hughes Robert G. (Harrow W)

  Paice, James

  Hughes, Simon (Southwark)

  Patnick, Irvine

  Hunt, Rt Hon David (Wirral W)

  Patten, Rt Hon John

  Hunt, Sir John (Ravensbourne)

  Pattie, Rt Hon Sir Geoffrey

  Hunter, Andrew

  Pawsey, James

  Hurd, Rt Hon Douglas

  Peacock, Mrs Elizabeth

  Jack, Michael

  Porter, Barry (Wirral S)

  Jackson, Robert (Wantage)

  Porter, David (Waveney)

  Jenkin, Bernard

  Portillo, Rt Hon Michael

  Jessel, Toby

  Powell, William (Corby)

  Johnson Smith, Sir Geoffrey

  Rathbone, Tim

  Johnston, Sir Russell

  Redwood, Rt Hon John

  Jones, Gwilym (Cardiff N)

  Rendel, David

  Jones, Nigel (Cheltenham)

  Renton, Rt Hon Tim

  Jones, Robert B. (W Hertfdshr)

  Richards, Rod

  Jopling, Rt Hon Michael

  Riddick, Graham

  Kellett-Bowman, Dame Elaine

  Rifkind, Rt Hon. Malcolm

  Kennedy, Charles (Ross, C&S)

  Robathan, Andrew

  Key, Robert

  Roberts, Rt Hon Sir Wyn

  Kilfedder, Sir James

  Robertson, Raymond (Ab'd'n S)

  King, Rt Hon Tom

  Robinson, Mark (Somerton)

  Kirkhope, Timothy

  Roe, Mrs Marion (Broxbourne)

  Kirkwood, Archy

  Rowe, Andrew (Mid Kent)

  Knapman, Roger

  Rumbold, Rt Hon Dame Angela

  Knight, Mrs Angela (Ere wash)

  Ryder, Rt Hon Richard

  Knight, Greg (Derby N)

  Sackville, Tom

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

  Sainsbury, Rt Hon Tim

  Knox, Sir David

  Scott, Rt Hon Nicholas

  Kynoch, George (Kincardine)

  Shaw, David (Dover)

  Lait, Mrs Jacqui

  Shaw, Sir Giles (Pudsey)

  270

  Shephard, Rt Hon Gillian

  Thumham, Peter

  Shepherd, Colin (Hereford)

  Townend, John (Bridlington)

  Shepherd, Richard (Aldridge)

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

  Shersby, Michael

  Tracey, Richard

  Sims, Roger

  Tredinnick, David

  Skeet, Sir Trevor

  Trend, Michael

  Smith, Sir Dudley (Warwick)

  Trotter, Neville

  Smith, Tim (Beaconsfield)

  Twinn, Dr Ian

  Soames, Nicholas

  Tyler, Paul

  Speed, Sir Keith

  Vaughan, Sir Gerard

  Spencer, Sir Derek

  Viggers, Peter

  Spicer, Sir James (W Dorset)

  Waldegrave, Rt Hon William

  Spicer, Michael (S Worcs)

  Wallace, James

  Spink, Dr Robert

  Waller, Gary

  Spring, Richard

  Ward, John

  Sproat, Iain

  Wardle, Charles (Bexhill)

  Squire, Robin (Hornchurch)

  Waterson, Nigel

  Stanley, Rt Hon Sir John

  Watts, John

  Steel, Rt Hon Sir David

  Wells, Bowen

  Steen, Anthony

  Whitney, Ray

  Stephen, Michael

  Whittingdale, John

  Stern, Michael

  Widdecombe, Ann

  Stewart, Allan

  Wiggin, Sir Jerry

  Streeter, Gary

  Wilkinson, John

  Sumberg, David

  Willetts, David

  Sweeney, Walter

  Wilshire, David

  Sykes, John

  Winterton, Mrs Ann (Congleton)

  Tapsell, Sir Peter

  Winterton, Nicholas (Macc'f'ld)

  Taylor, Ian (Esher)

  Wolfson, Mark

  Taylor, John M. (Solihull)

  Yeo, Tim

  Taylor, Matthew (Truro)

  Young, Rt Hon Sir George

  Thomason, Roy

  Thompson, Sir Donald (C'er V)

  Tellers for the Ayes:

  Thompson, Patrick (Norwich N)

  Mr. Timothy Wood and

  Thornton, Sir Malcolm

  Mr. Andrew MacKay.

  NOES

  Adams, Mrs Irene

  Dunwoody, Mrs Gwyneth

  Ainger, Nick

  Eagle, Ms Angela

  Ainsworth, Robert (Cov'try NE)

  Eastham, Ken

  Anderson, Ms Janet (Ros'dale)

  Etherington, Bill

  Ashton, Joe

  Faulds, Andrew

  Austin-Walker, John

  Field, Frank (Birkenhead)

  Banks, Tony (Newham NW)

  Flynn, Paul

  Barnes, Harry

  Fraser, John

  Bayley, Hugh

  Galloway, George

  Benn, Rt Hon Tony

  Gapes, Mike

  Bennett, Andrew F.

  George, Bruce

  Benton, Joe

  Gerrard, Neil

  Bermingham, Gerald

  Godman, Dr Norman A.

  Berry, Dr. Roger

  Godsiff, Roger

  Betts, Clive

  Golding, Mrs Llin

  Boyes, Roland

  Graham, Thomas

  Burden, Richard

  Gunnell, John

  Byers, Stephen

  Hain, Peter

  Caborn, Richard

  Hall, Mike

  Callaghan, Jim

  Hanson, David

  Campbell, Mrs Anne (C'bridge)

  Hardy, Peter

  Campbell, Ronnie (Blyth V)

  Heppell, John

  Canavan, Dennis

  Hill, Keith (Streatham)

  Cann, Jamie

  Hogg, Norman (Cumbernauld)

  Chisholm, Malcolm

  Home Robertson, John

  Clapham, Michael

  Hood, Jimmy

  Clarke, Eric (Midlothian)

  Hoon, Geoffrey

  Clelland, David

  Hughes, Kevin (Doncaster N)

  Coffey, Ann

  Hughes, Robert (Aberdeen N)

  Cohen, Harry

  Illsley, Eric

  Connarty, Michael

  Jackson, Glenda (H'stead)

  Corbyn, Jeremy

  Jackson, Helen (Shef'ld, H)

  Corston, Ms Jean

  Jamieson, David

  Cummings, John

  Janner, Greville

  Cunliffe, Lawrence

  Jones, Barry (Alyn and D'side)

  Cunningham, Jim (Covy SE)

  Jones, Lynne (B'ham S O)

  Dalyell, Tam

  Jones, Martyn (Clwyd, SW)

  Davidson, Ian

  Jowell, Tessa

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

  Kennedy, Jane (Lpool Brdgn)

  Denham, John

  Khabra, Piara S.

  Donohoe, Brian H.

  Kilfoyle, Peter

  Dowd, Jim

  Lewis, Terry

  Dunnachie, Jimmy

  Litherland, Robert

  271

  Livingstone, Ken

  Prentice, Gordon (Pendle)

  McAllion, John

  Purchase, Ken

  McAvoy, Thomas

  Radice, Giles

  Macdonald, Calum

  Redmond, Martin

  McKelvey, William

  Robinson, Geoffrey (Co'try NW)

  Mackinlay, Andrew

  Rooney, Terry

  McWilliam, John

  Ross, Ernie (Dundee W)

  Madden, Max

  Sedgemore, Brian

  Mahon, Alice

  Sheldon, Rt Hon Robert

  Mandelson, Peter

  Simpson, Alan

  Marshall, David (Shettleston)

  Smith, Llew (Blaenau Gwent)

  Martin, Michael J. (Springburn)

  Spearing, Nigel

  Maxton, John

  Squire, Rachel (Dunfermline W)

  Michie, Bill (Sheffield Heeley)

  Steinberg, Gerry

  Miller, Andrew

  Stevenson, George

  Mitchell, Austin (Gt Grimsby)

  Tipping, Paddy

  Mudie, George

  Walker, Rt Hon Sir Harold

  Mullin, Chris

  Wardell, Gareth (Gower)

  Oakes, Rt Hon Gordon

  Wareing, Robert N

  O'Hara, Edward

  Watson, Mike

  Olner, William

  Wicks, Malcolm

  Orme, Rt Hon Stanley

  Winnick, David

  Parry, Robert

  Wise, Audrey

  Patchett, Terry

  Wray, Jimmy

  Pickthall, Colin

  Wright, Dr Tony

  Pope, Greg

  Prentice, Ms Bridget (Lew'm E)

  Tellers for the Noes:

  Mr. Bob Cryer and

  Mr. Dennis Skinner.

  Question accordingly agreed to.
  Motion made—[Mr. Andrew Mitchell]—and Question put forthwith, pursuant to Standing Order No. 61 (Committal of bills), That the Bill be committed to a Committee of the whole House:—
  The House divided: Ayes 327, Noes 247.

  Division No. 63]

  [10.34 pm

  AYES

  Ainsworth, Peter (East Surrey)

  Brooke, Rt Hon Peter

  Aitken, Jonathan

  Brown, M. (Brigg & Cl'thorpes)

  Alexander, Richard

  Browning, Mrs. Angela

  Alison, Rt Hon Michael (Selby)

  Bruce, Ian (S Dorset)

  Allason, Rupert (Torbay)

  Bruce, Malcolm (Gordon)

  Alton, David

  Budgen, Nicholas

  Amess, David

  Burns, Simon

  Arbuthnot, James

  Burt, Alistair

  Arnold, Jacques (Gravesham)

  Butcher, John

  Arnold, Sir Thomas (Hazel Grv)

  Butler, Peter

  Aspinwall, Jack

  Butterfill, John

  Atkins, Robert

  Campbell, Menzies (Fife NE)

  Atkinson, David (Bour'mouth E)

  Carlisle, John (Luton North)

  Atkinson, Peter (Hexham)

  Carlisle, Kenneth (Lincoln)

  Baker, Rt Hon K. (Mole Valley)

  Carrington, Matthew

  Baker, Nicholas (Dorset North)

  Cash, William

  Baldry, Tony

  Channon, Rt Hon Paul

  Banks, Matthew (Southport)

  Churchill, Mr

  Banks, Robert (Harrogate)

  Clappison, James

  Bates, Michael

  Clark, Dr Michael (Rochford)

  Batiste, Spencer

  Clarke, Rt Hon Kenneth (Ruclif)

  Beith, Rt Hon A. J.

  Clifton-Brown, Geoffrey

  Bellingham, Henry

  Coe, Sebastian

  Bendall, Vivian

  Colvin, Michael

  Beresford, Sir Paul

  Congdon, David

  Biffen, Rt Hon John

  Conway, Derek

  Blackburn, Dr John G.

  Coombs, Anthony (Wyre For'st)

  Body, Sir Richard

  Coombs, Simon (Swindon)

  Bonsor, Sir Nicholas

  Cope, Rt Hon Sir John

  Booth, Hartley

  Couchman, James

  Boswell, Tim

  Cran, James

  Bottomley, Peter (Eltham)

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

  Bottomley, Rt Hon Virginia

  Curry, David (Skipton & Ripon)

  Bowden, Andrew

  Davies, Quentin (Stamford)

  Bowis, John

  Davis, David (Boothferry)

  Boyson, Rt Hon Sir Rhodes

  Day, Stephen

  Brandreth, Gyles

  Deva, Nirj Joseph

  Brazier, Julian

  Devlin, Tim

  Bright, Graham

  Dickens, Geoffrey

  272

  Dicks, Terry

  Jessel, Toby

  Dorrell, Stephen

  Johnson Smith, Sir Geoffrey

  Douglas-Hamilton, Lord James

  Johnston, Sir Russell

  Dover, Den

  Jones, Gwilym (Cardiff N)

  Duncan, Alan

  Jones, Nigel (Cheltenham)

  Duncan-Smith, Iain

  Jones, Robert B. (W Hertfdshr)

  Dunn, Bob

  Jopling, Rt Hon Michael

  Durant, Sir Anthony

  Kellett-Bowman, Dame Elaine

  Dykes, Hugh

  Kennedy, Charles (Ross, C&S)

  Eggar, Tim

  Key, Robert

  Elletson, Harold

  Kilfedder, Sir James

  Evans, David (Welwyn Hatfield)

  King, Rt Hon Tom

  Evans, Jonathan (Brecon)

  Kirkhope, Timothy

  Evans, Nigel (Ribble Valley)

  Kirkwood, Archy

  Evans, Roger (Monmouth)

  Knapman, Roger

  Evennett, David

  Knight, Mrs Angela (Erewash)

  Faber, David

  Knight, Greg (Derby N)

  Fabricant, Michael

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

  Fenner, Dame Peggy

  Knox, Sir David

  Field, Barry (Isle of Wight)

  Kynoch, George (Kincardine)

  Fishburn, Dudley

  Lait, Mrs Jacqui

  Forman, Nigel

  Lang, Rt Hon Ian

  Forsyth, Michael (Stirling)

  Lawrence, Sir Ivan

  Forth, Eric

  Legg, Barry

  Fowler, Rt Hon Sir Norman

  Leigh, Edward

  Fox, Dr Liam (Woodspring)

  Lennox-Boyd, Mark

  Fox, Sir Marcus (Shipley)

  Lester, Jim (Broxtowe)

  Freeman, Rt Hon Roger

  Lidington, David

  French, Douglas

  Lightbown, David

  Fry, Sir Peter

  Lilley, Rt Hon Peter

  Gale, Roger

  Lloyd, Rt Hon Peter (Fareham)

  Gallie, Phil

  Lord, Michael

  Gardiner, Sir George

  Luff, Peter

  Garel-Jones, Rt Hon Tristan

  Lyell, Rt Hon Sir Nicholas

  Gamier, Edward

  Lynne, Ms Liz

  Gill, Christopher

  MacGregor, Rt Hon John

  Gillan, Cheryl

  Maclean, David

  Goodlad, Rt Hon Alastair

  McLoughlin, Patrick

  Goodson-Wickes, Dr Charles

  McNair-Wilson, Sir Patrick

  Gorman, Mrs Teresa

  Maddock, Mrs Diana

  Gorst, John

  Madel, Sir David

  Grant, Sir A. (Cambs SW)

  Maitland, Lady Olga

  Greenway, Harry (Ealing N)

  Malone, Gerald

  Greenway, John (Ryedale)

  Mans, Keith

  Griffiths, Peter (Portsmouth, N)

  Marland, Paul

  Grylls, Sir Michael

  Marlow, Tony

  Gummer, Rt Hon John Selwyn

  Marshall, John (Hendon S)

  Hague, William

  Martin, David (Portsmouth S)

  Hamilton, Rt Hon Sir Archie

  Mates, Michael

  Hamilton, Neil (Tatton)

  Mawhinney, Rt Hon Dr Brian

  Hampson, Dr Keith

  Mayhew, Rt Hon Sir Patrick

  Hanley, Jeremy

  Merchant, Piers

  Hannam, Sir John

  Milligan, Stephen

  Hargreaves, Andrew

  Mills, Iain

  Harris, David

  Mitchell, Andrew (Gedling)

  Haselhurst, Alan

  Mitchell, Sir David (Hants NW)

  Hawkins, Nick

  Moate, Sir Roger

  Hawksley, Warren

  Monro, Sir Hector

  Hayes, Jerry

  Montgomery, Sir Fergus

  Heald, Oliver

  Moss, Malcolm

  Hendry, Charles

  Needham, Richard

  Heseltine, Rt Hon Michael

  Nelson, Anthony

  Higgins, Rt Hon Sir Terence L.

  Neubert, Sir Michael

  Hill, James (Southampton Test)

  Newton, Rt Hon Tony

  Hogg, Rt Hon Douglas (G'tham)

  Nicholls, Patrick

  Horam, John

  Nicholson, David (Taunton)

  Hordem, Rt Hon Sir Peter

  Nicholson, Emma (Devon West)

  Howard, Rt Hon Michael

  Norris, Steve

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

  Onslow, Rt Hon Sir Cranley

  Howell, Rt Hon David (G'dford)

  Oppenheim, Phillip

  Howell, Sir Ralph (N Norfolk)

  Ottaway, Richard

  Hughes Robert G. (Harrow W)

  Page, Richard

  Hughes, Simon (Southwark)

  Paice, James

  Hunt, Rt Hon David (Wirral W)

  Patnick, Irvine

  Hunt, Sir John (Ravensbourne)

  Patten, Rt Hon John

  Hunter, Andrew

  Pattie, Rt Hon Sir Geoffrey

  Hurd, Rt Hon Douglas

  Pawsey, James

  Jack, Michael

  Peacock, Mrs Elizabeth

  Jackson, Robert (Wantage)

  Porter, Barry (Wirral S)

  Jenkin, Bernard

  Porter, David (Waveney)

  273

  Portillo, Rt Hon Michael

  Sweeney, Walter

  Powell, William (Corby)

  Sykes, John

  Rathbone, Tim

  Tapsell, Sir Peter

  Redwood, Rt Hon John

  Taylor, Ian (Esher)

  Rendel, David

  Taylor, John M. (Solihull)

  Renton, Rt Hon Tim

  Taylor, Matthew (Truro)

  Richards, Rod

  Thomason, Roy

  Riddick, Graham

  Thompson, Sir Donald (C'er V)

  Rifkind, Rt Hon. Malcolm

  Thompson, Patrick (Norwich N)

  Robathan, Andrew

  Thomton, Sir Malcolm

  Roberts, Rt Hon Sir Wyn

  Thumham, Peter

  Robertson, Raymond (Ab'd'n S)

  Townend, John (Bridlington)

  Robinson, Mark (Somerton)

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

  Roe, Mrs Marion (Broxbourne)

  Tracey, Richard

  Rowe, Andrew (Mid Kent)

  Tredinnick, David

  Rumbold, Rt Hon Dame Angela

  Trend, Michael

  Ryder, Rt Hon Richard

  Trotter, Neville

  Sackville, Tom

  Twinn, Dr Ian

  Sainsbury, Rt Hon Tim

  Tyler, Paul

  Scott, Rt Hon Nicholas

  Vaughan, Sir Gerard

  Shaw, David (Dover)

  Viggers, Peter

  Shaw, Sir Giles (Pudsey)

  Waldegrave, Rt Hon William

  Shephard, Rt Hon Gillian

  Wallace, James

  Shepherd, Colin (Hereford)

  Waller, Gary

  Shepherd, Richard (Aldridge)

  Ward, John

  Shersby, Michael

  Wardle, Charles (Bexhill)

  Sims, Roger

  Waterson, Nigel

  Skeet, Sir Trevor

  Watts, John

  Smith, Sir Dudley (Warwick)

  Wells, Bowen

  Smith, Tim (Beaconsfield)

  Whitney, Ray

  Soames, Nicholas

  Whittingdale, John

  Speed, Sir Keith

  Widdecombe, Ann

  Spencer, Sir Derek

  Wiggin, Sir Jerry

  Spicer, Sir James (W Dorset)

  Wilkinson, John

  Spicer, Michael (S Worcs)

  Willetts, David

  Spink, Dr Robert

  Wilshire, David

  Spring, Richard

  Winterton, Mrs Ann (Congleton)

  Sproat, Iain

  Winterton, Nicholas (Macc'f'ld)

  Squire, Robin (Hornchurch)

  Wolfson, Mark

  Stanley, Rt Hon Sir John

  Wood, Timothy

  Steel, Rt Hon Sir David

  Yeo, Tim

  Steen, Anthony

  Young, Rt Hon Sir George

  Stephen, Michael

  Stern, Michael

  Tellers for the Ayes:

  Stewart, Allan

  Mr. Sydney Chapman and

  Streeter, Gary

  Mr. Andrew MacKay.

  Sumberg, David

  NOES

  Abbott, Ms Diane

  Byers, Stephen

  Adams, Mrs Irene

  Caborn, Richard

  Ainger, Nick

  Callaghan, Jim

  Ainsworth, Robert (Cov'try NE)

  Campbell, Mrs Anne (C'bridge)

  Allen, Graham

  Campbell, Ronnie (Blyth V)

  Anderson, Donald (Swansea E)

  Canavan, Dennis

  Anderson, Ms Janet (Ros'dale)

  Cann, Jamie

  Armstrong, Hilary

  Chisholm, Malcolm

  Ashton, Joe

  Clapham, Michael

  Austin-Walker, John

  Clark, Dr David (South Shields)

  Banks, Tony (Newham NW)

  Clarke, Eric (Midlothian)

  Barnes, Harry

  Clarke, Tom (Monklands W)

  Barron, Kevin

  Clelland, David

  Battle, John

  Clwyd, Mrs Ann

  Bayley, Hugh

  Coffey, Ann

  Beckett, Rt Hon Margaret

  Cohen, Harry

  Bell, Stuart

  Connarty, Michael

  Benn, Rt Hon Tony

  Corbett, Robin

  Bennett, Andrew F.

  Corbyn, Jeremy

  Benton, Joe

  Corston, Ms Jean

  Bermingham, Gerald

  Cousins, Jim

  Berry, Dr. Roger

  Cryer, Bob

  Betts, Clive

  Cummings, John

  Blair, Tony

  Cunliffe, Lawrence

  Blunkett, David

  Cunningham, Jim (Covy SE)

  Boateng, Paul

  Dafis, Cynog

  Boyes, Roland

  Dalyell, Tam

  Bradley, Keith

  Darling, Alistair

  Bray, Dr Jeremy

  Davidson, Ian

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

  Davies, Bryan (Oldham C'tral)

  Burden, Richard

  Davies, Rt Hon Denzil (Llanelli)

  274

  Davies, Ron (Caerphilly)

  McAvoy, Thomas

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

  Macdonald, Calum

  Denham, John

  McFall, John

  Dewar, Donald

  McKelvey, William

  Dixon, Don

  Mackinlay, Andrew

  Dobson, Frank

  McLeish, Henry

  Donohoe, Brian H.

  McMaster, Gordon

  Dowd, Jim

  McNamara, Kevin

  Dunnachie, Jimmy

  McWilliam, John

  Dunwoody, Mrs Gwyneth

  Madden, Max

  Eagle, Ms Angela

  Mahon, Alice

  Eastham, Ken

  Mendelson, Peter

  Enright, Derek

  Marek, Dr John

  Etherington, Bill

  Marshall, David (Shettleston)

  Evans, John (St Helens N)

  Marshall, Jim (Leicester, S)

  Fatchett, Derek

  Martin, Michael J. (Springburn)

  Faulds, Andrew

  Martlew, Eric

  Field, Frank (Birkenhead)

  Maxton, John

  Fisher, Mark

  Meacher, Michael

  Flynn, Paul

  Meale, Alan

  Foster, Rt Hon Derek

  Michael, Alun

  Fraser, John

  Michie, Bill (Sheffield Heeley)

  Fyfe, Maria

  Milburn, Alan

  Galloway, George

  Miller, Andrew

  Gapes, Mike

  Mitchell, Austin (Gt Grimsby)

  Garrett, John

  Moonie, Dr Lewis

  George, Bruce

  Morgan, Rhodri

  Gerrard, Neil

  Morley, Elliot

  Godman, Dr Norman A.

  Morris, Estelle (B'ham Yardley)

  Godsiff, Roger

  Morris, Rt Hon J. (Aberavon)

  Golding, Mrs Llin

  Mowlam, Marjorie

  Graham, Thomas

  Mudie, George

  Griffiths, Nigel (Edinburgh S)

  Mullin, Chris

  Griffiths, Win (Bridgend)

  Murphy, Paul

  Grocott, Bruce

  Oakes, Rt Hon Gordon

  Gunnell, John

  O'Brien, Michael (N W'kshire)

  Hain, Peter

  O'Brien, William (Normanton)

  Hall, Mike

  O'Hara, Edward

  Hanson, David

  Olner, William

  Hardy, Peter

  O'Neill, Martin

  Harman, Ms Harriet

  Orme, Rt Hon Stanley

  Hattersley, Rt Hon Roy

  Parry, Robert

  Henderson, Doug

  Patchett, Terry

  Heppell, John

  Pendry, Tom

  Hill, Keith (Streatham)

  Pickthall, Colin

  Hinchliffe, David

  Pike, Peter L.

  Hoey, Kate

  Pope, Greg

  Hogg, Norman (Cumbernauld)

  Powell, Ray (Ogmore)

  Home Robertson, John

  Prentice, Ms Bridget (Lew'm E)

  Hood, Jimmy

  Prentice, Gordon (Pendle)

  Hoon, Geoffrey

  Prescott, John

  Howarth, George (Knowsley N)

  Primarolo, Dawn

  Howells, Dr. Kim (Pontypridd)

  Purchase, Ken

  Hoyle, Doug

  Quin, Ms Joyce

  Hughes, Kevin (Doncaster N)

  Randall, Stuart

  Hughes, Robert (Aberdeen N)

  Raynsford, Nick

  Hughes, Roy (Newport E)

  Redmond, Martin

  Hutton, John

  Reid, Dr John

  Ingram, Adam

  Robertson, George (Hamilton)

  Jackson, Glenda (H'stead)

  Robinson, Geoffrey (Co'try NW)

  Jackson, Helen (Shef'ld, H)

  Roche, Mrs. Barbara

  Jamieson, David

  Rogers, Allan

  Jones, Barry (Alyn and D'side)

  Rooker, Jeff

  Jones, Ieuan Wyn (Ynys MÔn)

  Rooney, Terry

  Jones, Jon Owen (Cardiff C)

  Ross, Ernie (Dundee W)

  Jones, Lynne (B'ham S O)

  Rowlands, Ted

  Jones, Martyn (Clwyd, SW)

  Ruddock, Joan

  Jowell, Tessa

  Sedgemore, Brian

  Kaufman, Rt Hon Gerald

  Sheerman, Barry

  Keen, Alan

  Sheldon, Rt Hon Robert

  Kennedy, Jane (Lpool Brdgn)

  Shore, Rt Hon Peter

  Khabra, Piara S.

  Simpson, Alan

  Kilfoyle, Peter

  Skinner, Dennis

  Lestor, Joan (Eccles)

  Smith, Andrew (Oxford E)

  Lewis, Terry

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

  Litherland, Robert

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

  Livingstone, Ken

  Smith, Llew (Blaenau Gwent)

  Lloyd, Tony (Stretford)

  Snape, Peter

  Llwyd, Elfyn

  Spearing, Nigel

  McAllion, John

  Speller, John

  275

  Squire, Rachel (Dunfermline W)

  Wicks, Malcolm

  Steinberg, Gerry

  Wigley, Dafydd

  Stevenson, George

  Williams, Rt Hon Alan (Sw'n W)

  Stott, Roger

  Williams, Alan W (Carmarthen)

  Strang, Dr. Gavin

  Wilson, Brian

  Straw, Jack

  Winnick, David

  Taylor, Mrs Ann (Dewsbury)

  Wise, Audrey

  Thompson, Jack (Wansbeck)

  Worthington, Tony

  Tipping, Paddy

  Wray, Jimmy

  Vaz, Keith

  Wright, Dr Tony

  Walker, Rt Hon Sir Harold

  Walley, Joan

  Tellers for the Noes:

  Wardell, Gareth (Gower)

  Mr. Eric Insley and

  Wareing, Robert N

  Mr. Dennis Turner.

  Watson, Mike

  Question accordingly agreed to.
  Bill committed to a Committee of the whole House.
  Committee tomorrow.
  Mr. Straw: On a point of order, Mr. Deputy Speaker. One of the Government Whips has just failed to move the 10 o'clock motion. I have long thought that the Government Whips Office was incompetent, but tonight's action is confirmation of its utter inability to run the business of the House. [Interruption.]
  Mr. Deputy Speaker (Mr. Michael Morris): Order. [Interruption.] Order. I hope that this is a matter for me, not a statement from the Opposition Front Bench.
  Mr. Straw: Can you confirm that in your experience, Mr. Deputy Speaker, it is extraordinary, if not unheard of, for the Government to introduce a Bill that they claim is important and then for them to be unable to find a single supporter either to sit and listen to Ministers or to speak?
  Mr. Deputy Speaker: My experience is not a matter for a point of order.
  Mr. Straw rose—
  Mr. Deputy Speaker: Order.
  Mr. Cryer: On a point of order, Mr. Deputy Speaker. Given that the Government had informed the House that they would go ahead with all the stages of the Bill tonight, but have now not moved the 10 o'clock motion, have you had any indication that the Leader of the House is prepared to make a statement from the Dispatch Box about the reasons for that turnabout and complete incompetence on the Government's part?
  Mr. Deputy Speaker: No.

  Insider Dealing
  10.48 pm
  The Economic Secretary to the Treasury (Mr. Anthony Nelson): I beg to move,
  That the draft Insider Dealing (Securities and Regulated Markets) Order 1993, which was laid before this House on 8th December, be approved.
  The order is required to enable the insider dealing legislation contained in the Criminal Justice Act 1993 which repeals and restates the law on insider dealing to be brought into force. We plan to commence the Act's insider dealing provisions on 1 March.
  The House will know that during the passage of the Criminal Justice Act the House considered at length the broad question of how to prevent insider dealing. It is not the function of the order to address that question. Instead, the issues with which it deals are much more specific and it is to them that I intend to confine my remarks during the course of this debate.
  First, the House may find it useful if I set the order in the context of the Criminal Justice Act. Under the Act, the first test of whether an offence has been committed is that an individual has information whose publication would significantly affect the price of a security. Where that is the case, the Act makes it illegal, subject to the exceptions and defences, to do any one of four things: first, for that individual to deal on a regulated market in that security; secondly, for him or her to deal as a professional intermediary or through such an intermediary in that security; thirdly, for him or her to encourage another to deal in that security; fourthly, for him or her to disclose the information with a view to others profiting from it.
  I think there is general agreement within the financial services industry that the new legislation represents a sensible broadening of our existing law while carrying forward the thrust of the present regime; that those who possess privileged information should not be permitted to misuse it to the detriment of others.
  While the legislation contained in the Criminal Justice Act is an important element in the fight against insider dealing, there are others which I should like to mention briefly. I think that most people would agree that the most effective way to curb insider dealing is to restrict the opportunities which the potential wrongdoer has for misusing information. That can be achieved only if companies meet their obligations under the stock exchange rules to announce, as soon as possible, significantly price sensitive information to the market as a whole, rather than to disclose such information selectively. I know that the stock exchange will strive to ensure that listed companies continue to honour this obligation and I welcome the work which they are leading on drafting new guidance concerning the dissemination of price sensitive information.
  Also of importance is the role of market surveillance, which is vital in the detection of possible offences. I am pleased therefore to see that the Securities and Investments Board is taking forward work to build upon the present surveillance system by considering how regulators can be given access to information about activity in all parts of the cash and derivatives markets in equities, comprising transactions done over the counter as well as on exchange.
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  The order has three functions. First, it specifies the securities to which the Criminal Justice Act is to apply. The effect of the order is to apply the law to securities which are market related, reflecting the fact that the legislation is designed to protect the integrity of the market in its broadest sense.
  The order therefore applies to any security falling within schedule 2, that is, shares, debt securities, warrants, depository receipts, options, futures and contracts for differences. A security of those types which is officially listed in a state within the European Economic Area would be caught by the order. In addition, any such security which either is admitted to dealing on, or has its price quoted on or under the rules of, a regulated market is a security for the purpose of insider dealing.
  The order also includes alternative conditions for derivatives of shares and debt securities, which are required so that an insider dealer is not able to circumvent the law by, for instance, dealing in an unlisted security of these types which relate to shares or debt securities which are themselves listed.
  The second function of the order is to specify what is meant by the term "regulated market", which is important for determining whether a transaction in a particular security is covered by the legislation. Transactions in securities will be covered if they occur on regulated markets; or if they are done off-market in reliance on a professional intermediary. Regulated markets are stock exchanges within the European Economic Area, relevant domestic derivatives exchanges—LIFFE, the London International Financial Futures and Options Exchange, OMLX, the London Securities and Derivatives Exchange —and the recognised overseas investment exchange, NASDAQ.
  Dealings in securities which are traded on these markets will be subject to United Kingdom law provided that they have a significant United Kingdom component. This allows us, for example, to apply the law to an insider dealer in London who tries to avoid the law by buying shares in a company with multiple listing on the Paris bourse rather than on the London stock exchange.
  Finally, the order specifies what is meant by the term "market regulated in the UK". That is important, because the Government intend that all dealing which occurs on securities markets operating within the United Kingdom should fall within the ambit of the legislation, regardless of the whereabouts of the dealer. A United Kingdom regulated market is any market which is established under the rules of the London stock exchange and LIFFE and OMLX.
  The order brings into effect the legislation that has been considered at length by the House. In doing so, it updates and, I think, significantly improves the existing legislation.
  Mr. Hugh Dykes: I thank the Minister for his work in this field. Bearing in mind the fact that the single market in financial services and stock exchange dealings has now begun in earnest, is he optimistic that the order and the related legislation in this and other countries will enable us to deal on a common basis with insider dealing infringements in all the markets of the member states?
  Mr. Nelson: Yes. I am much more confident that the order goes a long way towards providing an assurance about free and fair markets within the European Economic Union—Community.
  Mr. Alistair Darling: Union.
  Mr. Nelson: All the pillars of the union will have free and fair markets.
  More importantly, the investment services directive provides the passport for investment services from one member state to another. That will come into effect eventually and has been carefully negotiated. I hope to ensure free, fair and transparent markets and, critically, to ensure that this country's financial services industry, which is extremely important and a large employer that attracts significant liquidity and competitive industry from abroad, is preserved and its future competitiveness enhanced.
  Mr. George Mudie: The Minister says that he is fairly confident that the protection will work. The order refers to Liechtenstein. Is the Minister aware that Barlow Clowes opened a stock exchange company there in which only the directors and not the shareholders need to be identified? It is not hard to see how insider dealing could work in that country, as Barlow Clowes obviously worked out. How will these arrangements protect investors in that country?
  Mr. Nelson: The inclusion of Liechtenstein results from the extension of the ambit and jurisdiction of the order to the European Economic Area. That means that outside the Community it includes Austria, Liechtenstein, Finland, Iceland, Norway and Sweden. That is a necessary requirement under the directive.
  It is important to understand that the order and part V of the Criminal Justice Act will enable us to investigate and bring prosecutions in cases where people place an insider dealing order through a professional intermediary or on a particular regulated exchange. That is a question of fact which must meet the criterion and must be on one of the regulated exchanges here.
  I shall now explain investigation and how the information is obtained. The market surveillance group of, for example, the stock exchange is principally involved in trying to spot—I acknowledge the difficulties at home and abroad—cases in which insider dealing may have arisen. When it is done through nominees at home or abroad, it can present as many difficulties in the future as it has in the past.
  The hon. Member for Leeds, East (Mr. Mudie) made a fair point. It is extremely difficult in this area and in others to craft catch-all legislation that will deter or prevent all sorts of insider dealing. However, the directive provides significant clarification of the existing law. The fact that it is a directive and that it has been accepted by the members of the European Economic Area means that it is far more likely to work. By signing up to it, those member states are saying that they will comply with the standards of disclosure, investigation and prosecution that we shall apply.
  For all those reasons, I believe that the order, which brings the Act into force, marks a significant improvement in legislation. It strikes the right balance between deterring, prosecuting and investigating insider dealing, which is not
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  a victimless crime, and ensuring that we do not deter or inhibit those professional companies that are so important to our financial services industry and the economy.
  10.59 pm
  Mr. Alistair Darling: The Minister has given us an excellent factual, but theoretical, explanation of how the legislation is supposed to operate, but there is a simple reason for opposing it. There is no point in the House continuing to pass legislation that will not be effective, and will not be enforced in many cases. It is complicated, it is difficult to understand and, at best, it will provide a dripping roast for the many lawyers who make a fortune in a sector where the Government's track record of enforcement is poor.
  It is important to put criticism of the insider dealing legislation and of regulation in general into the context of the importance of the financial services industry to the country, both to those working in it and internationally. More than 2 million people are employed in the industry. It produces 18 per cent. of the gross domestic product. Many towns and cities depend on it for employment. In addition, London is still the pre-eminent and dominant market in the world. We enjoy an international reputation, and it is important that we keep it.
  Another matter should be considered. Other world financial centres such as New York, Chicago, Tokyo and, increasingly, those in the far east are dominant in their field because of the strength of their domestic economy. In contrast, London's dominant position is despite the performance of our domestic economy. People come to London because of the critical mass of expertise here and the reputation of the City of London. It is important that the House recognises that and acts at all times to ensure that London's reputation, particularly its reputation as a clean market, is upheld. I fear that, unless the Government take action to ensure that legislation is workable and enforceable, it will not act as a deterrent to the minority of people who are determined to exploit the system for their own considerable personal gain.
  Insider dealing is far more widespread than the Government care to admit. The record shows that the legislation is little deterrent. Since 1987, 104 cases have been reported. Only 33 have been prosecuted, and only 16 of those cases resulted in a conviction. Anybody operating in the financial services industry will say that insider dealing is taking place all the time, to a greater or lesser degree, not just in London but throughout the world. That is the very nature of the industry. If we are to assert the importance of London, to keep promoting it and the rest of the financial services industry, it is important that the legislation works, and that people know that it is not worth cheating on the system because they will be caught and convicted.
  There are problems with conviction, and that is why we must explore the merits of using a complementary system of effective regulation. Apart from anything else, there is a different standard of proof. If one falls foul of the regulatory system, the penalties that may be visited upon the offender may be far greater than those that would be visited upon him by the criminal system. That is especially so when one considers the record of the courts.
  It is interesting that the debate is taking place on the Floor of the House because of pressure from the Labour party. If the Government had had their way, the order

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  would have gone through, on the nod, in a Committee. We insisted on the debate because it is high time that the Government stopped their continuing silence on the problems in the financial services industry and their apparent uninterest in the face of obvious difficulties. There is a feeling that there is little chance of being caught, even less chance of being prosecuted, and every chance of getting off if one goes in for insider dealing or other City crimes.
  When it comes to sentencing, the law is becoming laughable. Everyone remembers Roger Levitt. Few people will forget him laughing his way out of court after getting community service in the same week as a pregnant woman was sentenced to imprisonment for failing to pay her television licence. Levitt was described as "markedly dishonest" by the judge, yet he got community service.
  Ministers were prepared to condemn the fact that a young boy was sent round the world as part of his rehabilitation, yet not one single Minister got up to condemn what happened to Roger Levitt or others convicted of serious crimes. Ernest Saunders was the only man in the world to have got senile dementia and recovered. Terry Ramsden was convicted of £90 million fraud and received a suspended sentence in the same week as a poacher in Scotland got three months in prison for poaching salmon.
  The record of sentencing in the courts in Britain is abysmal. In the same week that the Government have been lecturing the nation on law and order and their policy of "back to basics", we have heard absolutely nothing about that branch of the law. We should remember that Gerald Ronson was fined £5 million—[Interruption.] I know that Conservative Members are getting very upset because they know that their record is abysmal. Gerald Ronson had £2 million of his fine paid by his own colleagues. They thought so much of his conduct that they now have him back behind his desk—[Interruption.]
  Mr. Deputy Speaker (Mr. Michael Morris): Order. There seems to be barracking from all sides of the Chamber. There is barracking from one side and cheering from the other.
  Mr. Darling: I am grateful from your protection, Mr. Deputy Speaker. It is interesting that the newly promoted Minister of State for the Armed Forces was leading the barracking and has now slunk out of the Chamber.
  When we look at the record, at Saunders, Ramsden, Levitt and Ronson, I cannot understand why Asil Nadir has anything to fear from British justice.
  It is not just the Labour party that believes that the enforcement of insider dealing is ineffective. The London stock exchange also believes that we need a new system of enforcement. Representatives of the stock exchange wrote to me last year saying that they believed that a central enforcement body was necessary. It is not their primary duty to take care of such matters, but they detect through their duties under the Financial Services Act 1986 that insider dealing might be going on. They believe that a centralised body is necessary to enforce such matters.
  Andrew Large, the chairman of the Securities and Investments Board, alluded to the fact that we do not have a centralised enforcement body when he addressed the
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  same conference as the Economic Secretary last autumn. The Economist, in an editorial last April complained that enforcement is not taken seriously.
  We need to use a judicious mix of the criminal law, where there is allegation of criminal conduct, and regulation, which requires a different standard of proof, but carries far more draconian penalties where conduct falls short of criminal activity, because the wrongdoer can be prevented from carrying on business.
  Why will the Government not consider the problem? Why, when they complain about every other aspect of the breakdown of law and order, sometimes justifiably, sometimes not, do they do nothing about an increasing problem which is recognised not just by the Opposition but by respected bodies in the City of London and elsewhere?
  I also believe the time has come for the Government to look at the work of the Serious Fraud Office. It has its own problems and operates in a difficult area. However, it is clear from its record over the past few years that the time has come to assess, among other things, its relationship with the City of London police. It has to be asked whether cases are being prosecuted in an appropriate manner and whether indictments are too long.
  The Government should take some responsibility, yet we hear absolutely nothing. If we had a new enforcement agency with responsibility for criminal and regulatory powers, that would be a major step forward and I am sorry the Minister has said nothing about it. However, a new enforcement agency could be established only as part of the overall regulatory system. An increasing number of people in the industry believe that self-regulation must be brought to an end now.
  The pension scandal, unveiled at the end of last year and, incidentally, detected by the SIB, the direct regulators, not by any of the self-regulating organisations that are supposed to look at such matters, revealed that up to 500,000 people may have been wrongly advised and transferred to personal pensions. The home income plans that emerged in the late 1980s led to thousands of elderly people losing everything.
  Surely, when everyone else realises that the system is not working, the Government might show some interest in the matter. But what have we got? We have had three years of horse trading over the new Personal Investment Authority, about which controversy continues. The much respected Jim Stretton of the Standard Life Assurance Company resigned this week. I disagree with the reasons that led him to resign, but I agree with his conclusion that we would be better off with direct regulation.
  The problems of Lloyd's show what happens under self-regulation. Surely the time has come for the Government to examine it. When one considers the cost of regulation to the industry and, therefore, to members of the public who pay for it, we cannot afford to limp on for another four or five years when a growing number of people realise that a radical overhaul is absolutely necessary.
  Self-regulation must stop and we must have direct regulation by the SIB reporting to Parliament. There is no point limping on. It would be far better for everyone to get the system right now. Let us set up something that gives the public confidence, without which the public will not do business with the industry.
  Even on the question of narrow self-interest, the industry should have recognised that proper regulation is necessary for confidence. In the future, more and more

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  people will want to make provision for themselves, whether through pensions or savings plans. If the Government ask them to do that, they must ensure that regulation works. Effective regulation is not a burden; to coin a phrase, it is a price well worth paying.
  The SIB should have direct responsibility for prudential supervision. If we provided for that, together with the reform of banking supervision which is now long overdue, the regulatory system would be seen to be of positive assistance to the industry and a safeguard to the public in the United Kingdom and throughout the world.
  Yet we have heard nothing from the Government. All that we heard was a well-read resume of the theoretical position on insider dealing legislation. The Minister does not seem to acknowledge that there is even a tremor of concern anywhere. I assume that he sees the cuttings in the newspapers. I assume that he speaks to people operating in London and the other financial centres in the United Kingdom. Yet he said nothing about that.
  Before the hon. Gentleman became a Minister he regularly, and to his credit, expressed great concern about these matters. I understand the problem that he had when he worked under the right hon. Member for Kingston-upon-Thames (Mr. Lamont), who took a more Thatcherite view of these matters than perhaps the hon. Gentleman did. Yet the present Chancellor, who I know has a reputation for not being interested in the small print of these matters, might have been expected to take an interest in the matter. If the Government do not act, we shall be faced with scandal after scandal until the regulatory system is put in order. Yet the Government sit by as a disinterested spectator.
  The Minister got angry earlier today when he and I appeared on television and I suggested that part of the problem is that too many Conservative Members are deeply involved in the City of London for their own personal gain and they cannot see the wood for the trees, and that is why so many of them are reluctant to see any action being taken. But the Government should rise above that and accept that there are problems which must be met now.
  The public believe that the Government should act because regulation would ensure that the wrongdoers, people such as Gerald Ronson, would not return to their desks after a brief sojourn in an open prison.
  When the Government attack single parents, young people, social workers and anyone who lived in the 1960s, it is surprising that they have nothing to say about Ronson, Saunders and Levitt. We are not prepared to put up with this charade any longer. That is why we shall oppose the order by voting against it tonight.
  11.13 pm
  Mr. Paul Marland: In order that there should be no confusion, I remind the House that I am a name at Lloyd's. I want to speak about Lloyd's and explain why it should be brought under a beefed-up version of the order that we are debating.
  It is widely understood that insurance is a risk business and that, within reason, there are losses as well as profits. For names at Lloyd's it used to be reassuring that Lloyd's is a 300-year-old institution, run by men who did much to uphold the City of London's reputation for integrity and decency, as well as being bound by the Lloyd's Act 1871, which states that one of the society's main objectives is
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  "the advancement and protection of the interests of the Members of the Society".
  Mr. David Jamieson: What a laugh.
  Mr. Marland: I agree—what a laugh.
  In 1982, the House reviewed the 1871 Act, but self-regulation continued. As a result of SASSE litigation, members of Lloyd's ruling council ensured that they protected themselves against being sued for negligence —thereby relieving themselves of any duty of care to names at Lloyd's.
  How did Lloyd's, free from any obligations under the Financial Services Act 1986 and from any duty of care, exploit its investors by insider dealing? There are many ways in which it did so, but I will explain just three.
  First, there were baby syndicates. That was a device whereby a few insiders—usually underwriters, agency directors and their families—got together to form a small syndicate that skimmed the cream off the business going into the main syndicate run by that agency. That favoured group sliced off the best business and, when necessary, reinsured itself into the main syndicate under its control. That ensured that when there were profits, the baby syndicate fared handsomely—and when there were losses, they were picked up by others. It was a win and no lose situation. I may add that I was never a member of a baby syndicate.
  All that was done at the expense of Lloyd's external names. At the beginning of the 1980s, there were more than 90 baby syndicates. At Lloyd's one previous chairman was an expert on baby syndicates, as we learned from a television interview on 3 November 1992, in which he denied his involvement. That chairman was on four baby syndicates run by his agency. Three of them—184, 207 and 998—enjoyed huge profits, all at the expense of the members of the main syndicates. That is an utter disgrace.
  Furthermore, Sir David Walker's recent inquiry into Lloyd's showed conclusively that many other insiders favour themselves on to the safest syndicates.
  The second way in which insiders favour themselves is by churning the market and fleecing external investors. The House will be aware that churning is illegal on the stock exchange, but not at Lloyd's under self-regulation. Lloyd's professionals make money out of commission, which is usually paid at the rate of 10 per cent. each time business changes hands. Business changing hands can be simply a matter of the broker moving from one box to the next. When some Lloyd's brokers wanted to increase their earnings, they simply passed the parcel within the business and helped themselves to the commission—which in some cases they shared with the underwriters.
  When, however, the risk had been split up, rebundled and passed on 20 times, all the premium income had gone in commission. In many cases, so vague were the details of what was in the bundle of risk that some underwriters ended up reinsuring themselves.—[Laughter.] I agree that that is ludicrous. Proof of that activity emerged after the Piper Alpha disaster. A claim of $750 million gave rise to the movement of $15 billion within the insurance market. The money moved was 20 times the value of the claim. No money was left to pay out—no insurance premiums were left. The insiders at Lloyd's simply turned to the names and said, "Pay up"—and it should be remembered that names are liable down to their cufflinks.

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  Instead of stopping that churning, Lloyd's committee —the regulators—participated, as can be seen from the results of the syndicates run by those legislating at Lloyd's. Two thirds of the London market of excess loss money—more than £600 million in 1989—went to the syndicates managed by council members. The Merritt syndicates removed £256 million from the spiral in 1989; the Murray Lawrence syndicates removed £134 million; and the Sturge syndicates removed £120 million—as well as taking vast salaries from the markets.
  All of that was done while Lloyd's names were forced to sell their houses. Some regulation that was—some duty of care.
  The third way in which the Lloyd's insiders abused their professional knowledge is perhaps the most pernicious of all. In the mid-1980s, Lloyd's agents actively recruited, and were encouraged by the Lloyd's council to recruit, unwitting names, which the regulator allowed to be recruited, on to syndicates already known to be heavily tainted with pollution and asbestosis claims, so that the new recruits were there to be fleeced when they were needed. By the spring of 1982, more than 15,000 claims for asbestosis had been registered at Lloyd's.
  Evidence of that practice and of the magnitude of claims has recently emerged in the minutes of an auditors meeting in February 1982 with Ken Randall, who was then Lloyd's audit manager. The auditors were understood to have called the meeting to express grave concern about asbestosis reserves for the 1979 accounting year and warned that some syndicates held inadequate reserves. The auditors claimed that if proper reserves were made the market would effectively be bankrupt.
  As a syndicate may not close an account with inadequate reserves, the auditors said that badly hit syndicates should leave the 1979 account open. What happened? I can see that you are curious, Mr. Deputy Speaker. All but one of 404 syndicate accounts closed and the market declared a false £229 million profit for the year. It is alleged that some accounts were closed improperly and that the 1980 members inherited liabilities for which reserves were inadequate and that those liabilities were concealed from them by lack of disclosure.
  Nevertheless, the 1980 names were enrolled in droves with the promise to clean up at Lloyd's after the Lloyd's Act 1982 and many existing names were persuaded to increase their capacity.
  At more or less the same time, the show of wealth required to join Lloyd's was reduced to £37,500—not the £250,000 of which we hear talk. From Lloyd's point of view, that exercise was a great success because from 1983 to 1988, Lloyd's capacity doubled to £14 billion—a growth rate of 15 per cent. compared with an annual growth rate of 3 per cent. between 1967 and 1983.
  An example of one of the new recruits was Mr. George Aldrich who joined in 1984. Mr. Aldrich is a retired chemist from Evesham who sought to augment his pension and protect his life savings from inflation. One of the things that Lloyd's agents used to say was that investment in Lloyd's was inflation proof. He was a man of modest means and now he is a man of virtually no means. He enjoyed a couple of years with small profits, but then demands for payment and cash calls began rolling in,
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  which exceeded by 100 times what he had been told was the worst possible scenario. He has been well and truly fleeced, as were so many others.
  Mr. Paul Flynn: Will the hon. Gentleman give an assurance that no Members of the House were involved in the baby syndicates?
  Mr. Marland: I cannot possibly give that assurance. I do not know the identity of the people who were in the baby syndicates. I have taken the trouble to research one or two, but I do not know who all the members were.
  Sir Richard Body: No Members of the House were members of the baby syndicates.
  Mr. Marland: I am grateful for the intervention of my hon. Friend. It was a job for the insiders. I am glad that the hon. Member for Newport, West (Mr. Flynn) is following what I am saying so closely because it is a serious matter.
  Imagine the horror of the names who had been fleeced when they learned that Mr. Robert Hiscox, the deputy chairman of Lloyd's, had said when referring to Lloyd's names:
  "If God had not meant them to be sheared he would not have made them sheep."
  In order that there shall be no misunderstanding, I will repeat that. The deputy chairman of Lloyd's said of his investors:
  "If God had not meant them to be sheared he would not have made them sheep."
  That is backed up by another member of the Lloyd's regulatory body, whose identity I know, but I am not sure of the quote and therefore I shall not accredit it to him. He was heard to say, in effect, "If we find a mug, we use him." That is the way in which the Lloyd's regulatory authority refers to its investors. There is not much duty of care there.
  Dame Elaine Kellett-Bowman: Would my hon. Friend care to repeat what he has said this evening outside the House?
  Mr. Marland: I should be happy to repeat it, but the quotation from Mr. Robert Hiscox is on the record. I am sorry that my hon. Friend thinks that this is not on the public record; it is all on record—it is all in the newspapers. I can produce chapter and verse for all that I have said, and I can back up what I am going to say to show just how disgraceful are the goings on at Lloyd's.
  The Lloyd's hierarchy put it about that they do not make people bankrupt. In the recent past, Lloyd's has made 169 people bankrupt—except those whom it has forced into independent voluntary arrangements—and has levelled similar threats at a further 3,500.
  What is so misleading about the statement, "We do not make people bankrupt", is the fact that the banks do it for Lloyd's, through the bank guarantee offered to Lloyd's as security by those who struggle to qualify. Lloyd's then calls the guarantee; the bank then asks the Lloyd's investor how he will service the borrowings, and if he cannot do so the bank makes him bankrupt.
  I suppose that, strictly speaking, it is true that Lloyd's does not make people bankrupt; but, to quote Lord Armstrong, that is being very economical with the truth. The horror continues when we realise that the regulators at Lloyd's have been fiddling the unregulated system, and that until very recently the chairman of Lloyd's and the Lloyd's regulator was one and the same person.

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  Lloyd's investors are not shrinking violets: they have been to court and secured a judgment in their favour about duty of care. But can you believe it? Lloyd's appealed. It was in the Court of Appeal that the negligence of the Lloyd's regulator was clearly exposed. No less a person than Sir Thomas Bingham, Master of the Rolls—sitting with Lord Justice Hoffman and Lord Justice Henry on 13 December 1993—made the following statement:
  "The Managing Agents owed a tortious duty to the Names to take reasonable care not to cause them economic loss. It was not easy to think of a non contractual commercial relationship in which a duty of care more obviously ought to exist than the relationship of Managing Agent and Name".
  Sir Thomas then threw out the Lloyd's appeal against the duty of care.
  It is greatly to the credit of my right hon. Friend the Member for Wokingham (Mr. Redwood) that, when he was a Minister at the Department of Trade and Industry, he saw and understood what was going on at Lloyd's and appointed Sir David Walker—then chairman of the Securities and Investments Board—to investigate what was going on. The chairman of Lloyd's tried to convince the world that he had appointed Sir David Walker to investigate, but that simply was not true.
  What did Sir David find? He found that Lloyd's had kept no records. He had to design his own computer system to find out what had been going on there, despite the Boydell undertaking given to the House in July 1981 that within two years Lloyd's would adopt true and fair accounting practices. Twelve years later, Sir David found that Lloyd's had done nothing. It had no measurement of risk against premium; the Lloyd's professionals were doing substantially better than the external investors. The LMX underwriters, he found, were considered a "soft touch", and the regulator had done nothing about it. On the contrary—the regulators were helping themselves to the funds, as I have already mentioned.
  Sir David found that there was little consideration of duty of care by Lloyd's insiders in regard to names' interests. It will come as no surprise that a majority of names are either in litigation or threatening litigation against the Lloyd's professionals, and that the Serious Fraud Office is investigating the activities of Mr. Anthony Gooda and Mr. Derek Walker while they ran Gooda-Walker, now one of the most notorious agencies at Lloyd's.
  Mr. Peter Hain: The hon. Gentleman is describing a massive case of not merely insider dealing but corruption on a grand scale. As he has demonstrated very eloquently, insider names—underwriters and managing agents—have protected themselves and dumped all the losses on external names. The question that he and, surely, the Government Front Bench must answer is this: why did the Government not institute a proper inquiry into Lloyd's to ensure that this corruption, fraud, mismanagement and insider dealing was rooted out and the culprits prosecuted?
  Mr. Marland: I hope that what is going on in the House tonight may stimulate the Government into action. The hon. Gentleman has put his finger right on the point.
  I believe that it will surprise you, Mr. Deputy Speaker, when I tell you that so far more than 30 Lloyd's investors have killed themselves or died early as a direct result of their Lloyd's losses and Lloyd's attitude towards them.
  Sir Gerard Vaughan: I, too, am a name at Lloyd's, although I have never taken part in or
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  been involved in any baby syndicate. My hon. Friend is expressing a clear argument. Does he agree that the conclusion is that insider dealing and other financial manipulations are rife within Lloyd's and that the whole system of self-regulation in Lloyd's and other parts of the financial market has failed? It is totally unreasonable to expect the self-interested to be self-regulating. It is time that not only Lloyd's but the other parts of the market which do not come under the Financial Services Act 1986 were brought within that Act.
  Mr. Marland: I appreciate that intervention. That is precisely the point that I am trying to make and I am glad to have my hon. Friend's support.
  Sir Richard Body: Does my hon. Friend agree that the House was deceived by Lloyd's when we considered the Lloyd's Bill? When some of us, on both sides of the House, queried whether Lloyd's should be regulated from outside, massive arguments and much persuasion were used to dissuade us from any regulation. We were deceived factually.
  Mr. Marland: I agree with that. That is another helpful intervention. The proof of that is the fact that the Boydell undertaking which was given in 1981 was never implemented. Twelve years later, Sir David Walker went back to investigate Lloyd's and found that nothing had happened. It had said that within two years it would tidy up its act.
  Mr. Darling: Does the hon. Gentleman agree with the proposition that, while he and others who are Members of the House and members of Lloyd's agree with the view that he is expressing, they are in the minority and that the majority of those who are Members of the House and members of Lloyd's do not agree with him? Does he agree that when the House discusses the regulation of Lloyd's it would be better if all members of Lloyd's who are Members of the House took no part in the proceedings? There should not be the taint of self-interest when we are discussing regulatory matters.
  Mr. Marland: That is a valid point and perhaps it should be discussed at a later date. There is no doubt that a great deal of elbow clutching went on in the House during the early 1980s when the Bill went through. We were told, "Don't worry, old boy, it will all be all right. Would you like to come and have lunch with the chairman?" Many of us were put through that treatment.
  I want to return to the 30 people who killed themselves or died early as a result of Lloyd's losses. Mr. Harold Weston, a 51-year-old solicitor, hanged himself from the bannisters of his home in north west London. Several others have hanged themselves. Some have shot themselves and others have gassed themselves in their cars. I will spare the House the gruesome details, but my hon. Friend the Member for Lancaster (Dame E. Kellett-Bowman) will be reassured to know that they have all been written up and reported in the newspapers.
  There were two further suicides in Canada which Peter Middleton, Lloyd's chief executive, admitted were as a direct result of their Lloyd's losses.
  This is only the tip of the iceberg. Thousands of families up and down the land and across the world are facing trauma and massive anxiety as a result of the goings on at No. 1 Lime street.
  Mr. Roy Beggs: To help those of us who do not completely understand the position, can the hon. Gentleman tell us whether those who took their lives because of what had happened to them relieved their families of responsibility by doing so?
  Mr. Marland: That is a very good question and I am coming to it. The fact is that Lloyd's liability continues beyond the grave. As I was saying, many families across the land are facing trauma because of the goings on at No. 1 Lime street. Even those names who want out cannot get out if they have been hoodwinked into open syndicates. As I said, Lloyd's liability goes beyond the grave.
  Why am I making this speech in a debate on insider trading? In a few words, I am doing so because events have shown that insider trading was rife at Lloyd's and there is no evidence to suggest that insider trading is not still rife at Lloyd's. I have had many letters and telephone calls from all over the world about financial malpractice at Lloyd's, urging the Government to do something about Lloyd's internal practices.
  Like many others, I have immense respect for Peter Middleton, the new chief executive of Lloyd's, but reform is a lonely business and setting right the wrongs of the past is a difficult task, especially if the sinners have friends in high places.
  It is proving very difficult to get justice at Lloyd's for those who have been wronged and the victims need my hon. Friend the Minister's interest. Leopards do not change their spots, so one should not hold one's breath waiting for Lloyd's to reform itself. I urge my hon. Friend to keep a watchful eye on what is happening at Lloyd's. I ask him to insist that the Government have regular updates on proposed changes at Lloyd's and that the changes are monitored closely to ensure that they come about.
  Mr. Peter Viggers: I declare an interest as an underwriting member of Lloyd's since 1973 and as a member of the council which has regulatory responsibilities for the past two years. I understand my hon. Friend's deep concern about Lloyd's and the fact that he is deeply interested in the matter as he has described. However, he is not paying proper tribute to Lloyd's importance to the City of London and to the export business as leader of two out of five insurance risks in the City. I must also say that if my hon. Friend were to repeat his speech outside the House I think that he would find himself subject to a number of libel writs because much of what he has said is simply not true.
  Mr. Marland: I am not the least bit surprised that my hon. Friend has intervened because, as he said—I hope that we all heard him—he is a member of the Lloyd's council. I hope that he is deeply ashamed of what his friends in Lime street have been up to. I also hope that when he goes there tomorrow he will be man enough to tell them what the House thinks of their deceitful ways. Lloyd's may have historically contributed to the balance of payments, but things are changing and now it is the other way around. I hope that my hon. Friend will be man enough to tell his friends on the council at Lloyd's what the House thinks of them.
  I want my hon. Friend the Minister to ensure among other things that Lloyd's—
  Mr. Flynn: The hon. Gentleman alleged that there had been "elbow clutching" when the House took a decision.
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  Does he mean that improper influence was brought to bear on hon. Members during a debate? If so, it is a very serious allegation and one that the House must examine. Is that what he meant by "elbow clutching"?
  Mr. Marland: I meant that a member of the Lloyd's council who was also a Member of the House at the time tried to reassure other hon. Members that if the Lloyd's Act 1982 was passed everything would be put in order. However, as I have explained, it did not happen.
  I am anxious that my hon. Friend the Minister should ensure among other things that Lloyd's is solvent. If the Government were seen to conceal insolvency at Lloyd's, they would be guilty of concealing from policy holders the fact that Lloyd's was insolvent. In all likelihood, the Government would be liable to pay up. As I understand it, Lloyd's today faces future liabilities standing at more than £.8·5 billion.
  11.38 pm
  Mr. William Ross: I do not propose to follow the hon. Member for Gloucestershire, West (Mr. Marland) or to comment on what he said other than to say that his remarks will echo in Lloyd's and in many other places in the country for a long time to come, with consequences that are not as yet foreseen for not only Lloyd's but perhaps for the Government.
  I bring to the Minister's attention one small matter that has been put to me. It concerns the capacity of some analysts who work in the City of London. It has been put to me that some analysts are of such ability and reputation and are so respected that the publication of their investigations into a company will cause its share price to rise substantially. Would such a person's employers be guilty of insider dealing if the information were made available to their clients, who acted on it knowing that, when it is more widely available under the analyst's name, the price will rise substantially? I am told that that applies especially to non-FTSE stock where the market size is limited. A number of City firms feel that they cannot deal in such stock for some days after the information is published, but their clients could then say that the firm had not acted in their best interests. I appreciate that this is a grey and difficult area, but some guidance should be given.
  11.40 pm
  Mr. John Greenway: I declare an interest as an elected member of the Insurance Brokers Registration Council.
  Much of what the hon. Member for Edinburgh, Central (Mr. Darling) said needed to be said, but I did not agree with everything that he said by any stretch of the imagination.
  The debate has ranged perhaps wider than it should have within the confines of the order—
  Mr. Deputy Speaker: Order. I shall be the judge of that, if the hon. Gentleman will allow me.
  Mr. Greenway: I stand corrected, Mr. Deputy Speaker.
  A number of the scandals to which the hon. Member for Edinburgh, Central referred did not relate to insider dealing. He is right to be concerned, as all of those who are involved in regulation in the City are, about the reputation of London and of the insurance and financial services industry, but it is far too soon to leap to the conclusion that the Financial Services Act 1986 has failed and that we need

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  statutory regulation. The one thing that proponents of statutory regulation have not shown is the benefits that it would bring.
  The problems that were revealed in cases such as that of Roger Levitt, which caused much anger throughout the country and in the House, had much more to do with the criminal justice system than with whether we should have self-regulation or statutory regulation of the financial services industry. The way in which that case appears to have been handled by the Serious Fraud Office and the Crown Prosecution Service and the complexity of prosecuting fraud trials under the jury system are what need to be considered and addressed. The case is not evidence that self-regulation is not working.
  It is too soon to say—my hon. Friend the Economic Secretary knows my views on this—whether the proposed Personal Investment Authority can succeed. The House must recognise, however, that it is probably the best option that the industry is likely to have for some time, and it behoves everyone to try to make it work. There is, however, as Mr. Jim Stretton's resignation from the shadow PIA board showed yesterday, disagreement in the industry about what needs to be done.
  Scandals such as Roger Levitt's were unearthed by the self-regulatory system that was set up under the Financial Services Act. It is, therefore, the criminal justice system that needs to be addressed. Is not it a strange coincidence that tonight the hon. Member for Edinburgh, Central attacked such scandals, yet last night his party did not support the Second Reading of a Bill that sought to address some of the weaknesses in the criminal justice system which are the cause of the difficulty? [Interruption.] I will not be interrupted. Mr. Deputy Speaker, day after day in the House the Labour party demonstrates its tunnel vision.
  Mr. Darling: Will the hon. Gentleman give way?
  Mr. Greenway: I will not give way.
  Labour Members demonstrate tunnel vision when they complain one day about one issue, and the next day they say the very opposite of what they said the day before.
  I suppose we should ask my hon. Friend the Member for Gloucestershire, West (Mr. Marland) whether the surveillance of insider dealing and of the financial services in the City by the Securities and Investments Board will be adequate and whether, when fraud or malpractice is unearthed, they will be prosecuted as vigorously as they should be. That question lies at the heart of the measure. I fervently believe that it is to the criminal justice system that we need to look for yet more reform to make that effective.
  11.45 pm
  Mr. Austin Mitchell: Mr. Deputy Speaker, the hon. Gentleman just made a curious argument, because if he is saying that we could deal with the problem through the criminal justice system he is leaving out of account the obscene spectacle of many fraudsters and criminals—people who have been responsible for defrauding shareholders and for the collapse of companies, with the consequent suffering of all the stakeholders—who have escaped scot free at the end of their activities. There was the case, for instance, of Levitt, who received an unimportant, minute sentence of 180
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  hours community service at the end of a massive fraud trial. Many others who have gone before have escaped scot free.
  The argument that was made by the hon. Member for Gloucestershire, West (Mr. Marland) was much more serious and telling. He was illustrating the consequences, and the consequences on the institution of Lloyd's, of the spectacle of insider trading.
  The Minister gave a polished performance. He always gives us a polished performance with a high intellectual content, but it is usually an apology for inadequate policies, and that was what it was tonight. The policies that are proposed to solve the problem will not do so; they are totally inadequate. The legislation is ineffectual; it simply will not work. It might be that that is a faithful reflection of what the Government want, because there has been no indication by the Government in 14 years in power that they want to deal firmly and strongly with the obscenity of insider trading.
  The people who have been defrauded are the smaller shareholders. The people who the Government want to buy shares in companies, the people who the Government want to invest in the system, are being defrauded by those who have privilege, power and insider information and are using it to enrich themselves. A Government who want to encourage a shareholder democracy should put that problem at the forefront of their priorities and propose effective methods for dealing with it.
  The problem distorts markets and swindles the shareholders. It reduces the reputation of the City of London, which, as my hon. Friend the Member for Edinburgh, Central (Mr. Darling) pointed out, depends now, not on a powerful manufacturing economy, which is behind the American share market, but on its international reputation and its skills. That international reputation is being reduced by the spectacle of scandal and fraud that has grown in the past few years and is still not dealt with.
  I have only one central argument tonight: the proposals are ineffectual. The only way in which we shall solve the problem is by substantial reform. It is interesting to hear the voices on the Conservative Benches now speaking in favour of that; it is interesting to hear the growing chorus of demand for an end to a system of self-regulation which has not worked, is not working and cannot be made to work because the vested interest of the self-regulators precludes them from regulating in the wider public interest. The Mafia cannot regulate the Mafia in the way that is proposed.
  We should have a system similar to the Securities and Exchange Commission in the United States, a statutorily based independent regulator, properly staffed, properly paid, with the power to carry through its decisions and the power to deal directly and immediately with that type of crime against the system. We should scrap the structures of self-regulation that were introduced in the Financial Services Act 1986. The Opposition warned against that in the Committee which debated the legislation. Indeed, the Minister supported us in some of our warnings as we tried to strengthen the Bill. Our basic argument was that self-regulation could not work unless there was a statutorily based independent regulator, freed from the vested interests of the sector that it regulates.
  As self-regulation has failed to deal with the problem of insider trading, we must now return to the drawing board and say, "Let's build a new structure which, alone, can deal with that problem." Like the United States Securities and

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  Exchange Commission, such a new structure would answer ultimately to the House but would have independent authority. Working under that commission and chaired by commissioners would be regulators of the different sectors of the economy. We need a banking regulator—a banking commission—because the Bank of England is an inadequate regulator for banking. It must be freed from its Bank of England role and banking regulation must be given to a banking commission. We need an accounting and audit commission and an effective Securities and Investments Board to work under our securities and exchange commission. Each of these regulators would work in its own way.
  Answerable to the whole structure, and working for the commission, should be a powerful enforcement agency that can fine, disbar, punish, proceed by civil and criminal action, and strike at crimes as they are committed, as effectively as the Securities and Exchange Commission does in the United States in a much bigger and more complicated system.
  Until the Government return to the drawing board and bring to the House proposals for which their own Members are calling, and for which an increasing number of voices in the City are calling—indeed anyone concerned with the reputation of this country's financial sector and with putting an end to the squalor—the measures that we are discussing tonight will be ineffectual.
  11.51 pm
  Mr. Nick Hawkins: I rise in response to the speech by the hon. Member for Great Grimsby (Mr. Mitchell) because, to hear him talk, one would think that the Securities and Exchange Commission in the United States had eliminated fraud. But the problems with junk bonds still exist and other financial frauds involving savings are still committed. Fraud and crime will always exist, whatever the policing or regulatory regime.
  I have no interest to declare, but I have a background in this subject. For five and a half years prior to coming to the House, I worked in financial services compliance. As my hon. Friend the Minister knows, I am no longer commercially involved in that area, but I was working closely with the regulatory authorities, the Securities and Investments Board, and am now heavily involved in the all-party group on financial services and insurance, chaired by my hon. Friend the Member for Ryedale (Mr. Greenway).
  My experience in those areas leads me to believe that we need a gradual improvement in regulatory regimes, which is already well under way. I hold no brief for the bureaucratic nightmare that the Financial Services Act 1986 created, but we are now seeing an improvement in the regulatory structure, with the core principles of the Securities and Investments Board, the streamlining of new subsidiary regulatory bodies, and a new Personal Investment Authority getting rid of the problems of regulatory arbitrage.
  All the problems cannot be solved overnight. There will always be financial frauds, as there are on a much larger scale in the United States under the system of the Securities and Exchange Commission, which is so vaunted by the hon. Member for Great Grimsby.
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  This country is moving gradually towards an improved regulatory regime. There may be some scope for further statutory regulation. I believe, as my hon. Friend the Member for Gloucestershire, West (Mr. Marland) does, that there have been massive problems in Lloyd's of London, but we have every opportunity to continue to see the City of London develop, as it has for many years, as an enormously important contributor to the British economy.
  Despite all the fine words of Opposition Members, the number who support the City of London because of what it contributes to the British economy and who do not vote consistently for policies which would undermine the City could be counted on the fingers of one hand. Until there are Opposition Members who understand the positive contribution of the City, their words cannot be taken seriously.
  I hope that the Government will not be persuaded by the fine words, which butter no parsnips, of the hon. Member for Great Grimsby and his hon. Friends. They do not understand the City. They do not believe in the system that has done so much for the country. It is not perfect, but the last thing we want is to replace it with an equivalent of the Securities and Exchange Commission, which has not prevented far worse abuses in the United States.
  11.55 pm
  Mr. Geoffrey Hoon: I hope that the hon. Member for Blackpool, South (Mr. Hawkins) will forgive me if I do not comment directly on his speech.
  It has been curious for the Opposition to hear so many Conservative Members declare their interests in financial services. We have heard trenchant criticism of self-regulation, because those who self-regulate tend to be self-interested. As I heard Conservative Members declare their interests, I wondered whether they are confident that they are capable of commenting objectively on the order. We have criticised self-regulation. It follows that those hon. Members who are self-interested to the extent that they must declare their financial services interests must have some difficulty—I say that with the greatest respect to Conservative Members—in dissociating their own self-interest from the relevant legislation. That is a matter of considerable concern in relation to Lloyd's.
  Mr. Roger Knapman: If hon. Members are not allowed to talk about particular subjects in which they might have an interest, is it possible that certain Opposition Members should not contribute to debates on trade unions and other subjects in which they may have some interest?
  Mr. Hoon: The difficulty about that argument—[Laughter.] Perhaps I should try to answer the question before Conservative Members descend into hysterical amusement. I am talking about financial self-interest. Conservative Members derive financial benefit from the interests which they are then required to declare according to the rules of the House. There is a clear difference between that and interests connected with trade union legislation. If Conservative Members cannot understand that, I feel sorry for them.
  I am surprised that Conservative Members are not calling for tougher legislation on insider trading, because that would ensure a free market in securities. Insider dealing prevents the operation of that market. Conservative Members stress the need for such a market for everything else that I have heard them speak about. I understand that

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  it is one of the central pillars of Conservative party belief. Why have those Members not demanded tougher legislation to ensure a free market in the sale of securities, which is prevented by insider trading? When the Opposition argue for tougher regulation and enforcement, they are arguing for more effective operation of free market forces in the sale of securities.
  The main debate in the European Community about the issue has been concerned with enforcement and whether existing rules and practices in each of the member states represent sufficient compliance with legislation such as the order. The Community wants to establish whether there is sufficient consistency between the practices of different member states to ensure that there is a single market in securities, and, importantly, a single system of regulation.
  Statistics on enforcement in the United Kingdom are instructive, given the importance of the United Kingdom's financial services to the rest of the Community. We have had legislation against insider dealing since 1980, since when only 22 people have been convicted of the offence. Only 17 people have been convicted since 1987, despite the fact that 104 cases have been referred for prosecution by the stock exchange in London. If he has time to wind up, I hope that the Minister will refer to the disparity between the number of cases referred and the number of convictions secured.
  Mr. Mudie: Does my hon. Friend agree that it is sad that this measure has not been introduced in response to the scandals since 1986, but has been brought here simply in order to implement a 1989 EC directive?
  Mr. Hoon: I hope that my hon. Friend will forgive me if I do not pursue his point, but I thank him for making it.
  When this matter was discussed through the legislative process in the European Community, there was an argument for a European-style SEC, an institution that would regulate insider dealing right across the single market. The Government presumably support the idea of a single financial market in the Community, yet I understand that in Council meetings it was the British Government who most strongly resisted the idea of a European institution to try to regulate the sale of securities across the single market. I hope that the Minister will comment on the Government's attitude to the European-wide enforcement of these regulations.
  If we are to have a single market in the sale of securities, it is important also that there be a single market in the enforcement of this sort of legislation. Without consistent enforcement, it is highly unlikely that the legislation will be effective. The statistics that I have mentioned tend to suggest that the enforcement of the legislation in the United Kingdom has been less effective than we might have liked.
  Mr. Peter Ainsworth: Does the hon. Gentleman think that one reason for the lack of successful convictions might be the fact that the burden of proof required under our criminal justice system is just too great, so the extension of the civil law into these matters might be helpful? That is a far cry from what the hon. Gentleman suggests—even tougher legislation.
  Mr. Hoon: That point has already been made. We need a more sophisticated approach and more resources to ensure that insider dealing is investigated. The Government should commit themselves to a body of
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  enforcement and investigation along the lines of the SEC, as my hon. Friend the Member for Great Grimsby (Mr. Mitchell) suggested. That sort of body would expose far more cases of insider dealing and would provide the prosecuting authorities with the sort of support and back-up that they enjoy in the United States.
  I hope that the Minister will agree that this should be the next stage: a more sophisticated system of enforcement. I hope that the Government will state tonight how they intend to ensure that this legislation is properly enforced.
  12.3 am
  Mr. Paul Flynn: The hon. Member for Gloucestershire, West (Mr. Marland) suggested in a courageous speech that "elbow-clutching" has been going on—undue influence exerted. He identified Lord Kimball, the former Member for Gainsborough, as the man he was talking about.
  We must look to the reputation of the House and the influences brought to bear on it. It is true that 14 per cent. of Opposition Members have financial interests outside the House, according to the latest survey, but 85 per cent. of Conservative Members have such interests. When votes are taken on matters in which hon. Members have a direct financial interest, we should apply the rules that apply to local authorities whose members have to declare their interests and may not be allowed to vote.
  Another group of people have been greatly hurt by the system of self-regulation, the death knell of which will sound from the Chamber at the end of this debate. They are not the hundreds or perhaps thousands at Lloyd's, but the millions who have been robbed by the lack of regulation in the system. Some of those people were identified by my hon. Friend the Member for Edinburgh, Central (Mr. Darling) when he spoke about the 500,000 people who were tempted to transfer from occupational pensions to personal schemes. At least 2 million others were tempted to leave the state earnings-related pension scheme and now have personal pensions that run counter to their financial interests. In 10 or 20 years' time, those people will find that they have been robbed. Those are the real victims, the innocent sheep who have been sheared by the failure of the regulatory system.
  I should like the Minister to have sufficient time to answer fully the charges that have been laid. Therefore, I conclude by saying that the system of self-regulation has failed in the City, and its death knell must be sounded.
  12.5 am
  Mr. Nelson: I passionately believe that all Members are honourable. As a Back Bencher who now sits on the Front Bench, I urge the House to be extremely careful about limiting the voting rights of hon. Members. People with a personal interest often bring experience to our debates and decisions and as long as the interest is transparent and overt, we have nothing to fear. By sectioning ourselves we have a great deal to lose.
  Mr. Darling: Will the Minister give way?
  Mr. Nelson: Perhaps the hon. Gentleman will forgive me if I do not give way. I have a limited amount of time and I wish to do justice to hon. Members who have spoken. He will have other opportunities.
  The hon. Members for Newport, West (Mr. Flynn) and for Edinburgh, Central (Mr. Darling) raised the serious

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  issue of personal pension plans, and I wish to touch on that. The Life Assurance and Unit Trust Regulatory Organisation reported its concerns to the Securities and Investments Board; the SIB commissioned a study of the subject; shortcomings in the marketing of personal pensions were discovered and are being acted upon, and the SIB has presented proposals for the co-ordination of remedial action to those who may have been sold inappropriate personal pensions. That shows that the system is working. One cannot decry as inadequate a system that uncovers and seeks to redress wrongs. It could be criticised if it covered them up or did nothing about them.
  I am the first to admit that there are shortcomings in our system of regulation. But anybody who suggests that we should switch to a system of total statutory control and that that would in some way be a panacea for all our ills and would change the attitude of the door-to-door salesman with a variety of investment products and would change overnight the practice in individual markets needs his head tested.
  As the United States and other countries with statutory systems have found, it will always be difficult to ensure absolute, high standards of investor and depositor protection. One must always try to approximate. I can speak with some confidence from the Dispatch Box because people know my background before I became a Minister. I am not wedded to an absolute statutory system. I should like to see our system toughened by evolution, and that is what I have been about.
  I can point to many things that have been done in the past two years significantly to improve standards of investor and depositor protection. To engage in revolution rather than evolution of the system would not only visit great uncertainty and cost upon financial services industries, which, at the end of the day, are paid for by the industry's customers, but would lead to a blight of uncertainty that would not be in the interests of that great industry, which provides benefit and employment for our country.
  My official advice is not to say anything about Lloyd's because it is a matter for the Department of Trade and Industry, but I shall speak about it, because it concerns the House. I wish to reflect carefully on what has been said by my hon. Friend the Member for Gloucestershire, West (Mr. Marland). He will be aware that I cannot say much about Gooda Walker, which is the subject of a Serious Fraud Office inquiry, or about the affairs of Lloyd's generally, which are for the Department of Trade and Industry. However, I can say that the Government are concerned about the probity and reputation of major financial institutions, including Lloyd's. Of course we shall not stand by and see people ruined and misdeeds going on without taking an interest. That applies to the Treasury in co-operation with the DTI.
  As my hon. Friend the Member for Gosport (Mr. Viggers) said, there is much that is good as well as much that is bad. Sir David Walker's inquiry showed that, while much of the internal dealing led to some advantage to professionals within the organisation, it was not necessarily of a massive order above the names outside. It is also a fact that the Neill report significantly increased the
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  representation of outside names and their representatives on the council of Lloyd's. That should provide some reassurance.
  Mr. Darling: Will the hon. Gentleman give way?
  Mr. Nelson: I will not, because I shall not be able to comment on the speeches made by hon. Members if I do so. The hon. Gentleman had a good opportunity and made a long speech at the beginning of the debate, and I wish to refer to some other points.
  The hon. Member for Londonderry, East (Mr. Ross) asked about analysts' reports of companies, and asked whether if companies issued reports to clients in advance of issuing them to the market they would be liable for insider dealing. The answer is that, assuming that the information supporting the recommendation is in the public domain, by virtue of section 58(2)(d) of the Act, the information will not be insider information, even if it is price sensitive.
  Further, dealing based on the logic underlying the recommendation will not be prohibited because it would have taken place, regardless of the fact that when the recommendation is published the share price is likely to move. Dealing in such circumstances is, therefore, covered by the third of the general defences set out in the legislation. I hope that when the hon. Gentleman studies those words they will provide him, and thus those who have made representations to him, with the reassurance that he seeks.
  I thank my hon. Friends the Members for Ryedale (Mr. Greenway) and for Blackpool, South (Mr. Hawkins) for the measured and sensible contributions that they made to the debate. They recognise that nothing is perfect in the present regime, but that it would be foolish to toss it aside. There is a great deal of benefit in a sensible process of change and toughening up of investor protection where it is necessary. I believe that the proposals promulgated by Andrew Large, the chairman of the SIB, for improving regulation and the interface between the SIB and the self-regulatory organisations and for significantly improving the monitoring and the coming down hard in cases where that is justified will bring a stepped change in the perceptions and the delivery of investor protection. If it does not, the House will have to look at it again. I do not have a closed mind. I am not ignoring the long-term possibilities of what may need to be done because of short-term difficulties in introducing a toughening up of the present situation.
  However, many people give of their time and have to be attracted into the difficult process of regulation of our financial markets. I am not about to pull the rug of authorisation from under their feet when they are trying to institute much-needed changes to ensure that we have the standards and reputation that the industry requires, and that reputation requires that we provide free and fair markets. Therefore, I am not opposed to evolution of the system, but it is irresponsible in the extreme to suggest that we toss all that aside while we are trying to deliver significant improvements in investor and depositor protection and lurch into an uncertain statutory future without much greater consideration of the matter.
  The problems of delivering such protection to investors and depositors are not just about the regimes that we set up here, whether for Lloyd's or the investment industries. At the end of the day, they are about the people who sell the products and about the efficiency and effectiveness of the

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  people who regulate. One does not necessarily get a satisfactory solution in statutory change. Therefore, I welcome what my hon. Friends the Members for Ryedale and for Blackpool, South said in that regard, particularly what my hon. Friend the Member for Rydale said about the importance of adequate surveillance of insider dealing. The stock exchange surveillance market group is significantly improving its surveillance of that matter, and working closely with the SIB to determine how best that can be done.
  The hon. Member for Ashfield (Mr. Hoon) said that the order was not sufficiently tough and others suggested that the Government had introduced the measure simply to conform with a European directive. However, in 1980 it was a Conservative Government who made insider dealing a criminal offence for the first time and in 1985 consolidated the legislation and changed and improved it.
  A Conservative Government have again come forward, not just to comply with our European obligations under the directive, but to move beyond the minimum requirements, to conform with existing legislative responsibilities and to move with the times to ensure that certain products that were not included in the previous legislation, such as debt securities and certain derivative products, are covered.
  We have not been inactive. We are not soft on City law and we abhor and are concerned about the invasion of investor and depositor rights. At the end of the day, the decisions of the courts in such cases as Levitt and Ronson, which have been mentioned tonight, are matters for the courts.
  The House knows better than I that the courts have minds of their own. If somebody is given a community service order instead of what the law could provide—up to seven years' imprisonment—it is not for a Minister of the Crown to question the decision of the court.
  We have provided the penalties for the courts and the mechanisms to ensure that those who are responsible for defrauding others are detected and brought to book. Whether it is the Serious Fraud Office, the SIB or my right hon. Friends the Chancellor of the Exchequer or the President of the Board of Trade—all of whom have prosecution and investigation obligations in that regard —we will not flinch from the responsibility of ensuring that the high standards of investor and depositor protection are maintained.
  For all those reasons, I commend the order implementing insider dealing legislation to the House. It will bring improvements and perceptive changes in the free and fair markets for which Britain is well known and we shall ensure that the legislative changes that have taken place in recent years are respected.
  I was asked in particular about the number of convictions and prosecutions that have been brought. Some 22 individuals have been convicted of insider dealing, out of a total of 49, but what is much more important is the deterrent message that that sends to a wider audience. [Interruption.] Of course it is. All company law, including regulatory control, is more about the deterrence in the message that it sends than picking up the pieces afterwards.
  We must have laws and systems in place which ensure, through deterrents and the ability to detect and use those penalties, that we provide high standards of investor and depositor protection. That is what the order and the relevant provisions of the Criminal Justice Act will do and I commend them to the House.
  Question put:—
  The House divided: Ayes 309, Noes 232.

  Division No. 64]

  [12.17 am

  AYES

  Ainsworth, Peter (East Surrey)

  Deva, Nirj Joseph

  Aitken, Jonathan

  Devlin, Tim

  Alexander, Richard

  Dickens, Geoffrey

  Alison, Rt Hon Michael (Selby)

  Dicks, Terry

  Allason, Rupert (Torbay)

  Dorrell, Stephen

  Amess, David

  Douglas-Hamilton, Lord James

  Arbuthnot, James

  Dover, Den

  Arnold, Jacques (Gravesham)

  Duncan-Smith, Iain

  Arnold, Sir Thomas (Hazel Grv)

  Dunn, Bob

  Aspinwall, Jack

  Durant, Sir Anthony

  Atkins, Robert

  Dykes, Hugh

  Atkinson, David (Bour'mouth E)

  Eggar, Tim

  Atkinson, Peter (Hexham)

  Elletson, Harold

  Baker, Rt Hon K. (Mole Valley)

  Evans, David (Welwyn Hatfield)

  Baker, Nicholas (Dorset North)

  Evans, Jonathan (Brecon)

  Baldry, Tony

  Evans, Nigel (Ribble Valley)

  Banks, Matthew (Southport)

  Evans, Roger (Monmouth)

  Banks, Robert (Harrogate)

  Evennett, David

  Bates, Michael

  Faber, David

  Batiste, Spencer

  Fabricant, Michael

  Beggs, Roy

  Fenner, Dame Peggy

  Beith, Rt Hon A. J.

  Field, Barry (Isle of Wight)

  Bellingham, Henry

  Fishburn, Dudley

  Bendall, Vivian

  Forman, Nigel

  Beresford, Sir Paul

  Forsyth, Michael (Stirling)

  Biffen, Rt Hon John

  Forth, Eric

  Blackburn, Dr John G.

  Fowler, Rt Hon Sir Norman

  Bonsor, Sir Nicholas

  Fox, Dr Liam (Woodspring)

  Booth, Hartley

  Fox, Sir Marcus (Shipley)

  Boswell, Tim

  Freeman, Rt Hon Roger

  Bottomley, Peter (Eltham)

  French, Douglas

  Bottomley, Rt Hon Virginia

  Fry, Sir Peter

  Bowden, Andrew

  Gale, Roger

  Bowis, John

  Gallie, Phil

  Boyson, Rt Hon Sir Rhodes

  Gardiner, Sir George

  Brandreth, Gyles

  Garel-Jones, Rt Hon Tristan

  Brazier, Julian

  Garnier, Edward

  Bright, Graham

  Gill, Christopher

  Brown, M.(Brigg & Cl'thorpes)

  Gillan, Cheryl

  Browning, Mrs. Angela

  Goodlad, Rt Hon Alastair

  Bruce, Ian (S Dorset)

  Goodson-Wickes, Dr Charles

  Bruce, Malcolm (Gordon)

  Gorman, Mrs Teresa

  Budgen, Nicholas

  Gorst, John

  Burns, Simon

  Grant, Sir A. (Cambs SW)

  Burt, Alistair

  Greenway, Harry (Ealing N)

  Butcher, John

  Greenway, John (Ryedale)

  Butler, Peter

  Griffiths, Peter (Portsmouth, N)

  Butterfill, John

  Gummer, Rt Hon John Selwyn

  Campbell, Menzies (Fife NE)

  Hague, William

  Carlisle, John (Luton North)

  Hamilton, Rt Hon Sir Archie

  Carlisle, Kenneth (Lincoln)

  Hamilton, Neil (Tatton)

  Carrington, Matthew

  Hampson, Dr Keith

  Carttiss, Michael

  Hannam, Sir John

  Cash, William

  Hargreaves, Andrew

  Channon, Rt Hon Paul

  Harris, David

  Churchill, Mr

  Haselhurst, Alan

  Clappison, James

  Hawkins, Nick

  Clark, Dr Michael (Rochford)

  Hawksley, Warren

  Clarke, Rt Hon Kenneth (Ruclif)

  Hayes, Jerry

  Clifton-Brown, Geoffrey

  Heald, Oliver

  Coe, Sebastian

  Hendry, Charles

  Colvin, Michael

  Hill, James (Southampton Test)

  Congdon, David

  Hogg, Rt Hon Douglas (G'tham)

  Conway, Derek

  Horam, John

  Coombs, Anthony (Wyre For'st)

  Howard, Rt Hon Michael

  Coombs, Simon (Swindon)

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

  Cope, Rt Hon Sir John

  Howell, Rt Hon David (G'dford)

  Couchman, James

  Howell, Sir Ralph (N Norfolk)

  Cran, James

  Hughes Robert G. (Harrow W)

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

  Hunt, Rt Hon David (Wirral W)

  Curry, David (Skipton & Ripon)

  Hunt, Sir John (Ravensbourne)

  Davies, Quentin (Stamford)

  Hunter, Andrew

  Davis, David (Boothferry)

  Hurd, Rt Hon Douglas

  Day, Stephen

  Jack, Michael

  301

  Jackson, Robert (Wantage)

  Redwood, Rt Hon John

  Jenkin, Bernard

  Renton, Rt Hon Tim

  Jessel, Toby

  Richards, Rod

  Johnson Smith, Sir Geoffrey

  Riddick, Graham

  Johnston, Sir Russell

  Rifkind, Rt Hon. Malcolm

  Jones, Gwilym (Cardiff N)

  Robathan, Andrew

  Jones, Nigel (Cheltenham)

  Roberts, Rt Hon Sir Wyn

  Jones, Robert B. (W Hertfdshr)

  Robertson, Raymond (Ab'd'n S)

  Jopling, Rt Hon Michael

  Robinson, Mark (Somerton)

  Kellett-Bowman, Dame Elaine

  Roe, Mrs Marion (Broxbourne)

  Kennedy, Charles (Ross, C&S)

  Ross, William (E Londonderry)

  Key, Robert

  Rowe, Andrew (Mid Kent)

  Kilfedder, Sir James

  Rumbold, Rt Hon Dame Angela

  King, Rt Hon Tom

  Ryder, Rt Hon Richard

  Kirkhope, Timothy

  Sackville, Tom

  Knapman, Roger

  Sainsbury, Rt Hon Tim

  Knight, Mrs Angela (Erewash)

  Scott, Rt Hon Nicholas

  Knight, Greg (Derby N)

  Shaw, David (Dover)

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

  Shaw, Sir Giles (Pudsey)

  Knox, Sir David

  Shephard, Rt Hon Gillian

  Kynoch, George (Kincardine)

  Shepherd, Colin (Hereford)

  Lait, Mrs Jacqui

  Shepherd, Richard (Aldridge)

  Lang, Rt Hon Ian

  Shersby, Michael

  Lawrence, Sir Ivan

  Sims, Roger

  Legg, Barry

  Skeet, Sir Trevor

  Leigh, Edward

  Smith, Sir Dudley (Warwick)

  Lennox-Boyd, Mark

  Smith, Tim (Beaconsfield)

  Lester, Jim (Broxtowe)

  Soames, Nicholas

  Lidington, David

  Speed, Sir Keith

  Lightbown, David

  Spencer, Sir Derek

  Lilley, Rt Hon Peter

  Spicer, Sir James (W Dorset)

  Lloyd, Rt Hon Peter (Fareham)

  Spicer, Michael (S Worcs)

  Lord, Michael

  Spink, Dr Robert

  Luff, Peter

  Spring, Richard

  Lyell, Rt Hon Sir Nicholas

  Sproat, Iain

  MacGregor, Rt Hon John

  Squire, Robin (Hornchurch)

  Maclean, David

  Stanley, Rt Hon Sir John

  McLoughlin, Patrick

  Steel, Rt Hon Sir David

  McNair-Wilson, Sir Patrick

  Steen, Anthony

  Madel, Sir David

  Stephen, Michael

  Maitland, Lady Olga

  Stern, Michael

  Malone, Gerald

  Stewart, Allan

  Mans, Keith

  Streeter, Gary

  Marland, Paul

  Sumberg, David

  Marlow, Tony

  Sweeney, Walter

  Marshall, John (Hendon S)

  Sykes, John

  Martin, David (Portsmouth S)

  Tapsell, Sir Peter

  Mawhinney, Rt Hon Dr Brian

  Taylor, Ian (Esher)

  Merchant, Piers

  Taylor, John M. (Solihull)

  Milligan, Stephen

  Thomason, Roy

  Mills, Iain

  Thompson, Sir Donald (C'er V)

  Mitchell, Andrew (Gedling)

  Thompson, Patrick (Norwich N)

  Mitchell, Sir David (Hants NW)

  Thornton, Sir Malcolm

  Moate, Sir Roger

  Thurnham, Peter

  Monro, Sir Hector

  Townend, John (Bridlington)

  Montgomery, Sir Fergus

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

  Moss, Malcolm

  Tracey, Richard

  Nelson, Anthony

  Tredinnick, David

  Neubert, Sir Michael

  Trend, Michael

  Newton, Rt Hon Tony

  Trotter, Neville

  Nicholls, Patrick

  Twinn, Dr Ian

  Nicholson, David (Taunton)

  Vaughan, Sir Gerard

  Nicholson, Emma (Devon West)

  Viggers, Peter

  Norris, Steve

  Wallace, James

  Onslow, Rt Hon Sir Cranley

  Waller, Gary

  Oppenheim, Phillip

  Ward, John

  Ottaway, Richard

  Wardle, Charles (Bexhill)

  Page, Richard

  Waterson, Nigel

  Paice, James

  Watts, John

  Patnick, Irvine

  Wells, Bowen

  Patten, Rt Hon John

  Whitney, Ray

  Pattie, Rt Hon Sir Geoffrey

  Whittingdale, John

  Pawsey, James

  Widdecombe, Ann

  Peacock, Mrs Elizabeth

  Wiggin, Sir Jerry

  Porter, Barry (Wirral S)

  Wilkinson, John

  Porter, David (Waveney)

  Willetts, David

  Portillo, Rt Hon Michael

  Winterton, Mrs Ann (Congleton)

  Powell, William (Corby)

  Winterton, Nicholas (Macc'f'ld)

  Rathbone, Tim

  Wolfson, Mark

  302

  Wood, Timothy

  Tellers for the Ayes:

  Yeo, Tim

  Mr. Sydney Chapman and

  Young, Rt Hon Sir George

  Mr. Andrew MacKay.

  NOES

  Abbott, Ms Diane

  Enright, Derek

  Adams, Mrs Irene

  Etherington, Bill

  Ainger, Nick

  Evans, John (St Helens N)

  Ainsworth, Robert (Cov'try NE)

  Fatchett, Derek

  Allen, Graham

  Field, Frank (Birkenhead)

  Anderson, Donald (Swansea E)

  Fisher, Mark

  Anderson, Ms Janet (Ros'dale)

  Flynn, Paul

  Armstrong, Hilary

  Foster, Rt Hon Derek

  Ashton, Joe

  Fraser, John

  Austin-Walker, John

  Fyfe, Maria

  Banks, Tony (Newham NW)

  Galloway, George

  Barnes, Harry

  Gapes, Mike

  Barron, Kevin

  Garrett, John

  Battle, John

  George, Bruce

  Bayley, Hugh

  Gerrard, Neil

  Beckett, Rt Hon Margaret

  Gilbert, Rt Hon Dr John

  Bell, Stuart

  Godman, Dr Norman A.

  Benn, Rt Hon Tony

  Godsiff, Roger

  Benton, Joe

  Golding, Mrs Llin

  Bermingham, Gerald

  Graham, Thomas

  Berry, Dr. Roger

  Griffiths, Nigel (Edinburgh S)

  Betts, Clive

  Griffiths, Win (Bridgend)

  Blair, Tony

  Grocott, Bruce

  Blunkett, David

  Gunnell, John

  Boateng, Paul

  Hain, Peter

  Boyes, Roland

  Hall, Mike

  Bradley, Keith

  Hanson, David

  Bray, Dr Jeremy

  Hardy, Peter

  Brown, Gordon (Dunfermline E)

  Harman, Ms Harriet

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

  Hattersley, Rt Hon Roy

  Burden, Richard

  Henderson, Doug

  Byers, Stephen

  Heppell, John

  Caborn, Richard

  Hill, Keith (Streatham)

  Callaghan, Jim

  Hinchliffe, David

  Campbell, Mrs Anne (C'bridge)

  Hoey, Kate

  Campbell, Ronnie (Blyth V)

  Hogg, Norman (Cumbernauld)

  Canavan, Dennis

  Home Robertson, John

  Cann, Jamie

  Hood, Jimmy

  Chisholm, Malcolm

  Hoon, Geoffrey

  Clapham, Michael

  Howarth, George (Knowsley N)

  Clark, Dr David (South Shields)

  Howells, Dr. Kim (Pontypridd)

  Clarke, Eric (Midlothian)

  Hoyle, Doug

  Clarke, Tom (Monklands W)

  Hughes, Kevin (Doncaster N)

  Clelland, David

  Hughes, Robert (Aberdeen N)

  Clwyd, Mrs Ann

  Hutton, John

  Coffey, Ann

  Illsley, Eric

  Cohen, Harry

  Ingram, Adam

  Connarty, Michael

  Jackson, Glenda (H'stead)

  Cook, Robin (Livingston)

  Jackson, Helen (Shef'ld, H)

  Corbett, Robin

  Jamieson, David

  Corbyn, Jeremy

  Jones, Jon Owen (Cardiff C)

  Corston, Ms Jean

  Jones, Lynne (B'ham S O)

  Cousins, Jim

  Jones, Martyn (Clwyd, SW)

  Cryer, Bob

  Jowell, Tessa

  Cummings, John

  Kaufman, Rt Hon Gerald

  Cunliffe, Lawrence

  Keen, Alan

  Cunningham, Jim (Covy SE)

  Kennedy, Jane (Lpool Brdgn)

  Dalyell, Tam

  Khabra, Piara S.

  Darling, Alistair

  Kilfoyle, Peter

  Davidson, Ian

  Lestor, Joan (Eccles)

  Davies, Bryan (Oldham C'tral)

  Lewis, Terry

  Davies, Rt Hon Denzil (Llanelli)

  Litherland, Robert

  Davies, Ron (Caerphilly)

  Livingstone, Ken

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

  Lloyd, Tony (Stretford)

  Denham, John

  McAllion, John

  Dewar, Donald

  McAvoy, Thomas

  Dixon, Don

  McCartney, Ian

  Dobson, Frank

  Macdonald, Calum

  Donohoe, Brian H.

  McFall, John

  Dowd, Jim

  McKelvey, William

  Dunnachie, Jimmy

  Mackinlay, Andrew

  Dunwoody, Mrs Gwyneth

  McLeish, Henry

  Eagle, Ms Angela

  McMaster, Gordon

  Eastham, Ken

  McWilliam, John

  303

  Mahon, Alice

  Roche, Mrs. Barbara

  Mendelson, Peter

  Rogers, Allan

  Marek, Dr John

  Rooker, Jeff

  Marshall, David (Shettleston)

  Ross, Ernie (Dundee W)

  Marshall, Jim (Leicester, S)

  Ruddock, Joan

  Martin, Michael J. (Springburn)

  Salmond, Alex

  Martlew, Eric

  Sedgemore, Brian

  Maxton, John

  Sheerman, Barry

  Meacher, Michael

  Shore, Rt Hon Peter

  Michael, Alun

  Simpson, Alan

  Michie, Bill (Sheffield Heeley)

  Skinner, Dennis

  Milburn, Alan

  Smith, Andrew (Oxford E)

  Miller, Andrew

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

  Mitchell, Austin (Gt Grimsby)

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

  Moonie, Dr Lewis

  Smith, Llew (Blaenau Gwent)

  Morgan, Rhodri

  Snape, Peter

  Morley, Elliot

  Spearing, Nigel

  Morris, Estelle (B'ham Yardley)

  Squire, Rachel (Dunfermline W)

  Mowlam, Marjorie

  Steinberg, Gerry

  Mudie, George

  Stevenson, George

  Mullin, Chris

  Strang, Dr. Gavin

  Murphy, Paul

  Thompson, Jack (Wansbeck)

  O'Brien, Michael (N W'kshire)

  Tipping, Paddy

  O'Brien, William (Normanton)

  Turner, Dennis

  O'Hara, Edward

  Vaz, Keith

  Olner, William

  Walker, Rt Hon Sir Harold

  O'Neill, Martin

  Walley, Joan

  Orme, Rt Hon Stanley

  Wardell, Gareth (Gower)

  Parry, Robert

  Wareing, Robert N

  Patchett, Terry

  Watson, Mike

  Pendry, Tom

  Wicks, Malcolm

  Pickthall, Colin

  Williams, Rt Hon Alan (Sw'n W)

  Pike, Peter L.

  Williams, Alan W (Carmarthen)

  Pope, Greg

  Wilson, Brian

  Powell, Ray (Ogmore)

  Winnick, David

  Prentice, Ms Bridget (Lew'm E)

  Wise, Audrey

  Prentice, Gordon (Pendle)

  Worthington, Tony

  Primarolo, Dawn

  Wray, Jimmy

  Purchase, Ken

  Wright, Dr Tony

  Quin, Ms Joyce

  Young, David (Bolton SE)

  Radice, Giles

  Raynsford, Nick

  Tellers for the Noes:

  Reid, Dr John

  Mr. John Spellar and

  Robinson, Geoffrey (Co'try NW)

  Mr. Alan Meale.

  Question accordingly agreed to.
  Resolved,
  That the draft Insider Dealing (Securities and Regulated Markets) Order 1993, which was laid before this House on 8th December, be approved.

  Business of the House
  12.32 am
  The Lord President of the Council and Leader of the House of Commons (Mr. Tony Newton): With permis-sion, Madam Speaker, I should like to make a short business statement. The business for tomorrow will now be as follows: timetable motion on the Non-Domestic Rating Bill, followed by the conclusion of the Committee and remaining stages of the Non-Domestic Rating Bill. The Opposition day previously announced will now be taken on another occasion.
  Mrs. Margaret Beckett: The House and the country will observe that the Leader of the House has not even bothered to offer any justification for what is an absolutely ridiculous step taken by the Government. The debate so far, as the right hon. Gentleman will recognise, has been a Second Reading debate curtailed at 10 o'clock, as is the norm in the House. Does not he recognise that the country will see that the Government are running away, first, from a perfectly normal process of debate on matters which are of considerable interest to British business in every constituency, every town and every village in the country and, secondly, from a debate on the health service? [Interruption.] There has been no debate on the health service in Government time since 1991. If the Government are so confident of their position, why are they so gutless tonight?
  Mr. Newton: The last Bill of the kind that we have been discussing today took three hours from beginning to end. Already, this Bill has had far more time than that and anybody who has been present today will understand why the motion has been moved.
  Mr. Derek Enright: Is not it quite outrageous—[Interruption.] It is all well and good for Conservative Back Benchers who came nowhere near the debate to boo and coo, especially the Financial Secretary to the Treasury, who has been up to no good this week. It is an abuse of the House. It is quite impossible to get in touch with local government at this stupid time of night and it would be far better were it left to next week. It is quite scandalolus.
  Mr. Newton: The Bill has been available since before Christmas.
  Mr. A. J. Beith: Since the Bill is rather necessary to business and ought not to be delayed, is not it rather difficult to choose between synthetic indignation and Government vindictiveness?
  Mr. Newton: The right hon. Gentleman may find the choice difficult. I think that it is absolutely clear that the Government are simply trying to proceed in a reasonable fashion.
  Madam Speaker: I call Mr. Skinner. [Interruption.]
  Mr. Dennis Skinner: This is my college tie, Madam Speaker.
  A week before Christmas, I warned the Leader of the House that he should use all the available time for parliamentary business when he pushed through two measures on a guillotine. Instead, this Tory Government —who do not know whether they are on this earth or

  305
  Fuller's earth—decided to pack up and have an extra week's holiday. As a result, they cannot get their legislation through. This is a direct attack not on Members of Parliament, but on the 1 million people who are on national health service waiting lists. The Government have not the guts to debate that.
  Mr. Newton: If I may say so, the Opposition's tactics are an attack on the interests of both local authorities and British business.
  Mr. Alex Salmond: Am I right in thinking that, because no "usual channels" exist now, no one had any prior knowledge of the contents of the right hon. Gentleman's statement? If he is to decide when the Opposition parties take their Opposition days, does that mean that he will also decide the subject matter?
  Mr. Newton: We did warn the Opposition.
  Mr. Peter Kilfoyle: Will the Leader of the House answer two questions? First, he referred to the Opposition's tactics. Why did not a single Conservative Member speak in today's debate? How does the right hon. Gentleman justify, in the context of the Opposition's tactics, Conservative Members' refusal to join in the debate on an important Bill that affects every local council in the country?
  Mr. Newton: Conservative Members know that the Bill is helpful to business, and needs to be passed quickly.
  Mr. George Stevenson: Most hon. Members who are present tonight will find it remarkable that, the more the Government abuse the rights of the House, the funnier Conservative Members find it. Most of them—
  Madam Speaker: Order. This is question not statement time. May I hear a question from the hon. Gentleman?
  Mr. Stevenson: This is my question, Madam Speaker. Why is a guillotine motion necessary, given the serious point made in tonight's debate? It was pointed out not only that there is time for adequate consideration to be given to this important measure, but that local authorities say that there is time for that to happpen without any curtailment of their ability to set the rates accordingly. There is no question of businesses' being penalised; the Government are running away from the issue.
  Mr. Newton: The motion will provide for adequate consideration.
  Mr. Hugh Bayley: What a farce it is when the Leader of the House comes here—
  Madam Speaker: Order. I need a question, not a statement.
  Mr. Bayley: Is it not a farce, Madam Speaker, when the Leader of the House comes here at half-past 12 at night to rearrange tomorrow's business? What other Parliament in the western world would have a Leader of the House tearing up the following day's agenda, and denying the Opposition the opportunity to debate an important issue involving the national health service? I have put in for it
  306
  myself. What other Parliament in the western world would behave in a way that makes a mockery of our democratic system?
  Mr. Newton: What is a mockery is the way in which the Opposition have tried to delay business needlessly.
  Mr. Clive Betts: Is not the Leader of the House admitting that the Government wanted to push through the measure without adequate debate in the Chamber? Does he object only to the fact that, this afternoon, it was Opposition Members who wanted to question and scrutinise the legislation? The right hon. Gentleman talks of what happened this afternoon. Is he aware—Conservative Members simply would not know —that, during large parts of the debate, not a single Conservative Back Bencher was present to listen or participate?
  Mr. Newton: I was here on various occasions and I heard what was going on.
  Mr. Michael Bates: On a point of clarification—
  Several hon. Members rose—
  Madam Speaker: Order. Let me put the House in order. This is a narrow statement. Hon. Members must ask questions only on the subject matter that has been raised by the Leader of the House.
  Mr. Bates: Is my right hon. Friend aware that it has twice been said that no interventions were made during the debate on the Bill? I made two interventions during the speech of the hon. Member for Blackburn (Mr. Straw) and did not receive an answer to my questions.
  Mr. Newton: I am sure that my hon. Friend is right.
  Mr. Bill Michie: Apart from one hour, since half-past four I have been here in the House throughout, except for 10 minutes to pay a call. That is more than can be said for any Tory Member except for three Front-Bench Members and the one Member who made an intervention. I was not called. The reason for that—
  Madam Speaker: Order. I keep reminding hon. Members that I need a question, not a statement. Will the hon. Gentleman reflect on what he wishes to say and put a question to the Leader of the House?
  Mr. Michie: Does the Leader of the House agree that I was not called to make my speech on the important issue of industrial rates because the Conservative party was frightened to death? They have not allowed enough time to debate these matters. Not only are we not allowed to speak tonight, but we are guillotined tomorrow.
  Mr. Newton: The hon. Gentleman should have plenty of opportunity to make his speech tomorrow.
  Mr. Mike O'Brien: Is not it an outrage that debate on a subject that is crucial for businesses in the west midlands, where I come from, as well as throughout the rest of the country and for local authorities is being curtailed in a way that prevents hon. Members from voicing their severe concerns about what the Government are proposing? Should not the

  307
  Government get their act together to enable hon. Members to fully debate this piece of legislation and to express the views of their constituents?
  Mr. Newton: The Committee stage of the last such Bill took 20 minutes.
  Mr. Bob Cryer: Is the Leader of the House complaining because debate on the Bill was taking more than three hours? If that is the case, why did the Government table the 10 o'clock business motion to allow the business, "though opposed", to continue "until any hour"? Surely the Government must have expected it to go beyond 10 o'clock. It was their decision, not ours, not to move the 10 o'clock business motion. Does not it seriously undermine Parliament if the Government decide to impose a guillotine if something takes more than three hours? Surely that is an abrogation of democratic rights. Even Mussolini made the trains run on time. The Government do not even do that.
  Mr. Newton: I do not agree with that. In the light of what happened today, we considered the Opposition's evident intention to delay unnecessarily the passage of this necessary legislation.
  Mr. Harry Barnes: Why are we going through the Government's procedural farce when, since 18 July, the House has sat for only 39 days in almost six months? Surely there is sufficient time for us to be able to debate matters correctly. Perhaps if we were here a little more often, the Tories would not get themselves into such a mess while we are away.
  Mr. Newton: There is enough time; that is what the motion provides for.
  Mr. Nigel Spearing: Does the Leader of the House or the Prime Minister plan to make a statement after business questions tomorrow? At what time does the Leader of the House expect the guillotine debate to start and finish and what time does he expect to be allotted to the four amendments—with Divisions.—that have been selected so far?
  Mr. Newton: We shall have to see tomorrow but the less time taken on the guillotine, the more time there will be for the Bill.
  Mr. Bill Olner: It is disgraceful that the Minister who replied to the debate this evening would not give way so that hon. Members could ask questions—
  Madam Speaker: Order. I require a question.
  Mr. Olner: Why was the 10 o'clock motion not moved in order to allow a proper debate? Does not the Leader of the House agree that it is disgraceful that there is not to be a debate on the national health service when the Government have not held such a debate since 1991 and when we all know about the problems that are prevalent within the service?
  Mr. Newton: The motion was not moved for the reasons that I have already given several times.
  Mr. John Home Robertson: Will the Leader of the House reflect on the fact that the title of his office is "Leader of the House of Commons"? Is it not a
  308
  pretty shabby way of leading the House to move guillotine motion after guillotine motion on Bill after Bill? How does he intend to serve the House in future?
  Mr. Newton: My role entails enabling the House to take decisions in a reasonable and orderly manner. That is what I am doing.
  Mr. Robert Ainsworth: The Leader of the House has attempted to justify the guillotine motion on the basis of what happened last time. If he had been present during the debate he would know that there are significant differences between the Bill that we were discussing today and the previous one, the most significant difference being that there is no commitment in this Bill to protect the rating pool from a shortfall. That is the real issue. Why are not the Government allowing it to be properly debated in the House?
  Mr. Newton: I was here on several occasions and I have already made it clear that my case rests on what happened today, not on what happened last time.
  Mr. Andrew Miller: As the Government are clearly frightened of a debate on the national health service, and as the Leader of the House is prepared to manipulate the business to the Conservative party's advantage, will he find time tomorrow to ask his colleagues from the Department of National Heritage and the Treasury to make a statement—
  Madam Speaker: Order. That does not relate to tomorrow's business.
  Mr. Dennis Canavan: Does not the Leader of the House realise that his statement tonight renders him unfit to hold the title "Leader of the House"? He is not the Leader of the House; he is merely the lackey of a discredited Government who should be voted out of office at the earliest opportunity. Let us get back to the real basics and have a general election and get rid of the lot of them.
  Mr. Newton: No, I do not recognise the hon. Gentleman's position and I do not think that anyone else will.
  Mrs. Beckett: May I ask the Leader of the House to tell us something that has not emerged from our exchanges so far? Why is it necessary this year to guillotine in January a Bill that has not passed through the House before May in previous years?
  Mr. Newton: Because of the change in the timing of the Budget.
  Mr. Spearing: On a point of order, Madam Speaker. May I check with you that it is the case that we have heard a statement getting rid of the supply day today? [HON. MEMBERS: "Tomorrow."] It is today in real time, although it may be tomorrow in Parliament.
  Secondly, I asked about the timetable, but the Leader of the House has not yet told us when we might complete the guillotined Committee stage tomorrow. As my question has not yet been answered, is there any way that he can answer before we finish today?
  Madam Speaker: That question should have been put to the Leader of the House at the time.

  Salmon Farming (Scotland)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Arbuthnot.]
  12.49 am
  Mr. Gerald Bermingham: On a point of order, Madam Speaker. Before the House disperses, may I raise a major constitutional point? Am Ito understand that if, in future, the Government do not like the conduct of the Opposition, they will make a business statement seeking to destabilise the normal process and to rearrange business? If so, we might as well not sit at all.
  Madam Speaker: That is a question for the Government's business managers; it is not a question for me. It should be raised with the Leader of the House
  Mr. James Wallace: This is a welcome Adjournment debate as it affords an opportunity, albeit a brief one, to discuss the future of the Scottish salmon industry. I thought that the House was packed to hear about this important industry, but it appears that the ranks are depleting. Nevertheless, I am grateful to hon. Members on both sides of the House who have remained to hear the debate.
  The Minister is well aware of the background to the debate. He has received a host of representations and has been good enough on at least two occasions in recent weeks to meet delegations from my constituents, who have been ringing alarm bells about the future of the industry.
  Quite simply, the industry believes, with good evidence to back it, that overproduction of salmon in Norway has led to dumping on the European market, which has driven down prices to below the cost of production. Indeed, in the eight weeks before Christmas, Norwegian producers are believed to have exported to the Community as much farmed salmon as the entire Scottish annual production and almost three times as much as was exported in the same period in 1992. The prospect for 1994 is worse, with an expected additional 50,000 tonnes coming on to the market.
  It is obvious that, if such market conditions persist, the viability of the industry will be threatened, at a cost of 6,000 jobs in areas where alternative sources of employment are few and far between and at a cost to our national balance of payments.
  What have the Government done when confronted with that threat to such an important national industry? It is true that Ministers have voiced concern and have indeed asked the Commission to talk to Norwegian Ministers and the industry in Norway. No doubt this evening the Minister will tell the House that on 16 November the Secretary of State for Scotland wrote to Commissioner Paleokrassas expressing concern about the market and asking the Commission to take appropriate action.
  The uncharitable analysis would be to say that the Secretary of State has acknowledged the seriousness of the situation but has failed to discharge his duty to the industry by asking the commissioner to take action only when it was open to the Government to follow the example of the Irish Government and to seek to invoke safeguard action under article 24 of the European Community regulation, as the British Government did in November 1991.
  Perhaps, however, one may subscribe to the more charitable view: that the Secretary of State for Scotland
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  recognised the seriousness of the situation, wanted to invoke safeguard action—indeed, Scottish Office statements have been sympathetic to the industry—but was blocked elsewhere in Government. Indeed, in writing to the commissioner on 16 November, the Secretary of State for Scotland took collective responsibility to its very limit.
  Whichever is the more accurate version of events, the Minister owes the House an explanation of why the Government did not formally ask the Commission for safeguard action to be taken. Was the blockage in the Foreign and Commonwealth Office, the Department of Trade and Industry or the Treasury? Where was the blockage and what are the reasons behind it, because no one in the industry can understand why action that was appropriate in 1991 and, the industry believes, would be more appropriate in 1993 was not sought by the Government?
  I shall not be satisfied this evening, and nor will people who have an interest in the industry, with the response that eventually a minimum import price was imposed. The Scottish Office was well warned of the ineffectiveness of such a measure. That was based on experience of events in 1991–92, when there was a minimum import price, and is borne out by present experience. Indeed, shortly after the minimum import price was imposed the Scottish Salmon Growers Association was quoted as saying:
  "the effect of the European Union Minimum Import Price … has been to lower the price in the substantial French market to that level"
  of the MIP.
  Furthermore, the message with which representatives of the Scottish, Shetland and Irish industries came away after a meeting with Commission officials in Brussels in December, at which officials of the Scottish Office were also present, was that all likely survival routes for the industry depended on the support of the United Kingdom Government. That was support which, until now, has been voiced often enough but has been substantially lacking in the arenas where it matters.
  I also expect the Minister to tell us that, from 1 January, the European Union has had a reference price in place. In another place yesterday the Lord Fraser of Carmyllie told their Lordships that the Scottish Office representations had resulted in the reference price being fixed at 16 per cent. above the minimum import price. Nevertheless, even at that level, the Parliamentary Under-Secretary of State, the hon. Member for Dumfries (Sir H. Monro), is on record as expressing his disappointment that it was not fixed at a higher level.
  Any reference price is virtually meaningless unless it is backed up by a political will to take the appropriate action when the market place undershoots the reference price. Yesterday Lord Fraser indicated that the reference price was a type of benchmark against which future safeguard action can be considered. Will the Minister please give the House a clear statement whether and in what circumstances the United Kingdom Government will seek safeguard action if, as has been the case since the new year, the market price falls below the reference price?
  Will the Minister take the opportunity to confirm that, under article 19 of the general agreement on tariffs and trade, a tariff concession can be withdrawn or modified if produce is being imported into the European Union
  "in such quantities and under such conditions as to cause or threaten serious injury to domestic producers"?

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  Does the Minister accept that such conditions currently exist—that we are in a situation in which there is a threatened serious injury to domestic producers? Will he acknowledge that as trout, for example, are subject to a 12 per cent. charge at the point of entry into the European Union, but salmon does not have such a charge, that is a concession? Is that a concession which the Government intend to modify or withdraw in current market conditions?
  The Minister will be aware that, under article 11 of the GATT rules, a countervailing charge is available as a remedy, but only if there are measures in place in the European Union to control domestic production. In other words, at the very least there should be a voluntary producer organisation in place in the European Union, with production controls and an extension of those controls to non-producer organisation members through what is called the extension rule.
  The Minister knows that the concept of producer organisations commands widespread support throughout the industry and the European Union, but the Government, to say the very least, have been lukewarm in giving that development active encouragement and have not been prepared to take the necessary measures to enforce the extension rule to make them effective. In a letter that was sent just before the new year to the chairman of the SSGA, Mr. Payne, the Secretary of State for Scotland effectively ruled out any moves on the part of the Government to enforce an extension rule.
  Quite apart from the critical role which producer organisations can play in rendering the reference price effective, I believe—and indeed the industry believes—that they also offer an effective way of smoothing out the recurring boom and bust cycle of the industry, while ensuring, through market intelligence and research, that producer organisations have the flexibility to respond to market developments. With production control aimed specifically at smolt placements, there is plenty of scope for competition and a premium for the efficient producer.
  It is sometimes said by Government that at the present time it would not be effective to have producer organisations because the Norwegians are not interested. In the December issue of the Norwegian Fish Farming magazine, the Norwegian Fisheries Minister, Mr. Jan Henry Olsen, said:
  "The fish farming industry needs to be guided. We need to have growth in the industry which is under control … You quickly find out that a free market does not solve any problems in the industry. That is why the Norwegian Fish Farmers Association should continue to discuss Producer Organisation cooperation rather than abandoning the work which was in progress. If we are to get a solution to the market situation in Europe, we must have cooperation."
  It would appear from that article that producer organisations are still on the Norwegian Government's agenda.
  Has consideration been given to the possibility of the Secretary of State for Scotland meeting the Norwegian Fisheries Minister to discuss how that olive branch of co-operation might be taken further? I should welcome hearing from the Under-Secretary this evening that he is willing to re-examine the producer organisation issue.
  I do not believe in sudden conversions, but the industry has been disappointed by the negative nature of the Secretary of State's letter to Mr. Payne. It questioned whether, in some important respects, the Secretary of State proceeded on a factually correct basis.
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  I hope that the Government are prepared to re-examine the producer organisation issue and allow the industry to present the facts of the case to the Secretary of State. Will the Minister acknowledge the fact that, if the reference price is to be effective, the Government must be willing to give real political backing to the measures that will make it effective, including the role of producer organisations? It will simply not do constantly to pass the buck to Brussels. The Commission has said that the implementation and impetus must come from the member state.
  We shall no doubt also hear from the Government exhortations to the industry to come forward with specific allegations of dumping. The industry will no doubt try to do that. Indeed, it has already given a considerable amount of information to the Scottish Office and is in regular contact with the Commission's anti-dumping unit. It has been pumping information into the Scottish Office on the Norwegian costs of production, in support of its dumping allegations. What is being done with that information?
  I have also received details from a company in my constituency about a scheme intended to defeat the minimum import price. I shall pass it on to the Minister, but we should not necessarily flag it up in public as it might give people ideas about how to circumvent that. However, it should be recognised that companies have difficulty in finding real evidence. What are our embassies, particularly our embassy in Oslo, doing to try to get some of that back-up information to substantiate the case? Ultimately, it should be the responsibility of the Government and the Community to enforce the rules which the Community has made. We may be stretching the concept of neighbourhood watch too far if we try to make the industry the policeman in this case.
  I should welcome an assurance that the Government will encourage the Commission to investigate the extent to which Norwegian state aid to its banking sector has directly or indirectly led to subsidies being channelled to its fish-farming sector.
  There is a widely held view within the Scottish and Shetland industry that competition has not been fair. Banking failures have resulted in a substantial part of the banking sector in Norway being taken over by the state. Regional aid schemes in Norway result in 50 per cent. loans being guaranteed. There are cases of fish farms folding one day and, because the fish are still there, the industry proceeds under a different name the following day with a substantial part of its capital debt written off. Those matters merit close attention by both the Scottish Office and the Department of Trade and Industry.
  I can do no better than to finish by quoting the Under-Secretary of State, the hon. Member for Dumfries, (Sir H. Monro), in a Scottish Grand Committee debate on fishing and fish-farming in Scotland, initiated by my hon. Friends in the Liberal Democrat party. He said:
  "We must deal with the dumping of salmon from Norway … We cannot have salmon which sells at £.1·50"—
  today' s industry would say, "If only it would sell at £1·50", given that we have minimum import and reference prices far below that. The Under-Secretary, who was then a humble Back Bencher, said:
  "It will destroy the immensely important fish-farming industry—especially in the west and north of Scotland—which means so much to us.
  It would be a total waste of the money that the Government and industry have invested in the fishing industry if action is not taken. I have read the correspondence and listened to debates in

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  the House, but it is action that is needed to deal with the Norwegian dumping."—[Official Report, Scottish Grand Committee, 11 July 1991; c. 31]
  It is action that the industry has long awaited from the Government.
  1.4 am
  The Parliamentary Under-Secretary of State for Scotland (Sir Hector Monro): I welcome the debate because the salmon farming industry is of considerable importance to the Scottish economy, in particular to that of the Highlands and Islands.
  Fish farming, partioularly salmon farming, is one of the most successful new industries built up in Scotland during the 1980s. We have more than 250 marine salmon farming sites in Scotland. Some 6,000 jobs are dependent on the future of the industry. Perhaps only 2,000 are directly dependent on salmon farms, but the number is significantly above that when one includes those connected with feed suppliers, medicines to control disease, packaging, processing and distribution. Most jobs are located in our remote communities in the north-west of Sutherland, Lewis and Shetland.
  I welcome the fact that the hon. Member for Orkney and Shetland (Mr. Wallace) has initiated the debate. Considering what the Government have done in the past year to help fishing in the Shetlands, however, particularly the salmon industry, it was rather sad for us to have to put up with the criticisms of the past fortnight. Those criticisms are disappointing when one considers that the Government rightly and willingly went to tremendous lengths to establish the environmental committee to monitor any ill-effects of the Braer disaster, to help in connection with the exclusion zone for fishing and to offer support for the salmon industry and the bridging loans. We went to every length that we could to ensure that the watchword from Shetland was that only quality fish would be sold. We made it clear that we would do all that we could to help Shetland achieve that aim.
  In eight years, Scottish salmon production has expanded more than tenfold, from 3,900 tonnes in 1984 to 40,600 tonnes in 1991. In 1992, output dropped to 38,000 tonnes, reflecting more difficult trading conditions. In 1993, Scottish production increased rapidly again to around 45,000 tonnes, an increase of 18 per cent. That is dwarfed, however, by the Norwegian production, which expanded even more rapidly in 1993 to around 180,000 tonnes, an increase of 28 per cent. Its projected production for this year is yet higher.
  The Government are well aware that the industry faced very difficult market conditions in the final quarter of last year, following the large surge in Norwegian production and imports of farmed salmon to the European Community. Overall, the European market is increasing only relatively slowly because of the recession. It is unable to absorb those rates of increase in production without significant falls in prices.
  Salmon prices on the European market fell rapidly, particularly during October and November 1993, by up to 50 per cent. for some categories of fish compared with September. Average prices for the largest category of round salmon, at 5 kg and more, fell from £1·74 per lb at the end of September to as low as £1·11 by mid-November, with reports of even lower prices for some consignments.
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  We expressed serious concern about the fall in salmon prices on the European market to the Commission in Brussels. A number of meetings were held and ultimately the Secretary of State wrote to Commissioner Paleokrassas on behalf of the United Kingdom Government expressing this concern—as the hon. Member for Orkney and Shetland mentioned—and asking for appropriate measures to be taken. Following that letter, the Commission introduced emergency safeguard measures in the form of minimum import prices on 20 November Minimum import prices for round salmon were set at £1·20 per lb, for gutted salmon at £1·33 per lb, and for gutted salmon without heads at £1·46 per lb. We welcome this decision as a step forward, providing as it does a temporary floor for the market while the longer-term problems facing the industry can be dealt with.
  The minimum import prices will have effect until 31 January this year. They will be reviewed by the Commission before the end of January in the light of market trends. I spoke to Commissioner Paleokrassas on 20 December and urged him to extend the MIP to 31 March and to press Norway as hard as possible on the issue of dumping.
  Mr. Tam Dalyell: Mr. Pattinson tells us that, at these prices,
  "the Scottish industry will continue to lose £1 million revenue each week, and more jobs and communities will be put at risk."
  Is he right?
  Sir Hector Monro: I do not know. I could not possibly tell the hon. Gentleman whether the industry will continue to lose £1 million a week or not. I hope not.
  There has been some recovery in market prices—for example, the average price of round salmon over 5 kg had increased from £1·11 per pound in mid-November to £1·31 per pound at the end of 1993. Round salmon of between 3 and 4 kg increased in price from £1·18 to £1·44 at the end of the year. That is above the reference price of £1·38.
  I do not underestimate the problems that the industry faces, but it is interesting to note that round salmon sales to the continent in November were 677 tonnes and in December 1,130 tonnes, an increase of 73 per cent. There was also an increase in the sale of gutted salmon of up to 53 per cent. That certainly gives the impression that the MIP has helped to stabilise the market, albeit at a price that I think is too low. It is pushing up the market price towards the reference price.
  Mr. Elliot Morley: Is the Minister hinting that some of the problems that the industry faces are market oriented, or does he accept that the problem is being caused by the dumping on the market of Norwegian salmon?
  Sir Hector Monro: Of course it is. I have not yet come to dumping, but it is crucial. Without the enormous importation of salmon from Norway into the Community, the problem would not arise. Of course dumping is the root cause of our problems and I do not disguise the fact.
  The reference price is important and I am glad that the Commission introduced it on 1 January 1994 at a level above the MIP, although I should have preferred it to have been higher than £1·38 rising to £2. We made as many representations as we could, and the figure was set at 16 per cent. above the minimum import price.
  Mr. Calum Macdonald: Does the Minister accept that for the reference price to be effective there must be producer organisations? Will he therefore offer his wholehearted support to the setting up of such organisations?
  Sir Hector Monro: I do not agree that the reference price is in any way related to the producer organisation issue. The key issue is the attempt to get Norway to adopt a reasonable attitude and to get the Commission to agree that Norway is dumping salmon. We must put an end to that as soon as possible and get the Norwegians to understand that there has to be a fair market. It certainly is not fair now and that is the target of all our efforts.
  My officials are going again to Europe next week and I am going the week after to talk to Mr. Paleokrassas. I hope that we will be able to make progress towards action on the anticipated Norwegian dumping.
  Mr. Roy Beggs: I congratulate the hon. Member for Orkney and Shetland (Mr. Wallace) on securing the debate. Will the Minister bear it in mind that the adverse effects of dumping on the Scottish industry also have an effect on my constituency which has Northern Ireland's only salmon farm?
  Sir Hector Monro: When we go to Brussels or Luxembourg we do our level best for the Northern Irish fishing industry, in the same way as we do our level best for that of all the United Kingdom. We have the welcome support and co-operation of the Irish Government who are as concerned about low prices affecting their fish farms as we are about them affecting ours.
  It is for the Commission to consider whether, under article 23 of EC regulation 3759/92, a countervailing charge should be introduced for imports of salmon to the European market if prices fall below the reference price. We understand that the Commission considers that to do so may risk a challenge under the GATT arrangements. We are in close touch with the Commission to try to resolve that dilemma.
  Market instability is in no one's interest, including that of Norway. Regulations are in place in the Community to ensure fair trading between member states. If and when Norway becomes part of the EC, she will be required to operate within the Community rules.
  There is a history of allegations by the Scottish and Irish farmed salmon industry that Norwegian producers are trading unfairly by dumping salmon on the European market at prices below the cost of production. A complaint made in 1989 was investigated by the Commission, which concluded that there was evidence of dumping by Norwegian producers.
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  A further complaint was made in 1991, but the Commission has yet to carry out an investigation based on that complaint. The Government have consistently argued that the Commission should carry out such an investigation, and this remains our position.
  Last year, the Commission invited the salmon farming industry to update the information previously provided to the Commission in 1991. The hon. Member for Orkney and Shetland implied that it was the Government's duty to produce all the facts and figures. We will gladly help the industry, but it must help us. It is not easy to produce the facts and figures and we must work together to provide the information as quickly as possible so that the Commission can decide what to do to stop further massive importation into the Community of Norwegian salmon. As the hon. Gentleman knows from various discussions and meetings that I have had with him, I am keen to resolve this matter in the interests of the Scottish farmed salmon industry, and I shall add a word for Ireland.
  Mr. Beggs: Northern Ireland, please.
  Sir Hector Monro: I shall add a word for Northern Ireland and for Ireland as well.
  It will not be easy to get a quick solution. I have to attend Commission and Council meetings and the rate of progress in getting almost anything achieved in the Council of Ministers is frustrating. We have to work at it as hard and as quickly as we can to help an industry that is in a serious position because of prices that are so much below the cost of production.
  I have said that prices have been creeping up since the autumn, and thank goodness they have, but we still have a long way to go before the industry reaches profitability.
  The hon. Member for Orkney and Shetland and other hon. Members have mentioned compulsory producer organisation. The Government believe firmly that we could proceed much more quickly by having a voluntary producer organisation and there is no reason why the industry should not get together and get started on that right away. We would be able to give some financial help towards the adminstration of a voluntary producer organisation. However, no producer organisation, despite what the hon. Gentleman said, will be effective unless we can get co-operation from Norway.
  The motion having been made after Ten o'clock and the debate having continued for half an hour, MADAM DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
  Adjourned at nineteen minutes past One o'clock.